Estimates Debate — Vote Economic, Industry and Regional Development

It is a shame that the Minister for Economic Development, Trevor Mallard, is not able to sit in the chair, but we are glad that Annette King has opted to stand in. I am sure she will be very interested in what the Opposition has to say. The economic development budget area is quite a huge area—some $286 million dollars is spent on it each year. This area actually had a 21 percent decrease in the amount put to this Budget. The Opposition did not jump up and down about that, mainly because the value for money we are getting out of this portfolio at the moment is so poor and we have officials who are not able to tell us what value many of the programmes the country is currently funding have; whether they work; and when, if at all, we will get a result for the investment that New Zealanders are making in the area of economic development.

There has been a lot of documented evidence that, in fact, many of the programmes have not been working at all. Members will remember the audit report of 2004 and also the Ministry of Economic Development report last year, which stated that spending was poor, that we did not know what we were getting for our investment, and that there was a lot of wastage in this area.

To be honest, I feel a bit sorry for Trevor Mallard in some circumstances, because when he took over from Jim Anderton, this entire portfolio was a mess. Jim Anderton’s view of economic development was that he just took a pot of cash, travelled the country handing out oversized cheques, said “cheese”, and got his photo in the local paper. His view of economic development was not grounded anywhere in academic thinking, practical thinking, or, in fact, sound economic policy. So when Minister Mallard took over he found that well over 50 business development grant programmes existed, that businesses did not know about many of them—he had not been aware of some of them himself—and that some outcomes were so poor they begged the question why we were funding some of these programmes in the first place.

But I have to say that the Minister has not done a very good job of explaining why he has cut some programmes. The cluster development programme is one that we on this side of the Chamber thought was working quite well. The Minister has since slashed the regional initiative fund, the Strategic Investment Fund, and the enterprise training scheme. He has done so without much fanfare, but that is basically because he has been cleaning up Labour’s mess. All of those programmes were initiated post-1999. They were set up in a hurry, some with no thinking behind them, and that is why a lot of officials’ reports have concluded that some of them simply do not work. No evidence existed that some of those programmes would work in the first place, and they certainly have not.

It is an important issue for our country to look at the reasons why some of the programmes have not worked. The Strategic Investment Fund was hailed by Jim Anderton as a vital ingredient in this country’s economic policy. Only 3 months before the end of the last financial year, only 3 percent of that funding had been spent. Why? Because overseas investors were not considering New Zealand as a viable option for their investment. New Zealand Trade and Enterprise has told the Opposition that it simply was not getting applications. New Zealand did not cut the mustard as an investment destination. Why? Because this Government seeks to regulate, as opposed to looking at non-regulatory options. It meddles in business affairs, and since 1999 it has put in place over 2,000 more regulations than had previously existed.

So I think that that in the long term has put a lot of business investors off. New Zealand is not looked at as a good destination for money at the moment. That is why that scheme will be canned—simply because not enough investors were looking at New Zealand to be able to draw from the fund.

We know that the Ministry of Economic Development is a mess, but Minister Mallard has chosen to expand programmes in some areas, such as the market development schemes, even though we have no evidence that even those will work. I know that in his heart of hearts the Minister knows that a $70,000 grant to a Christchurch school to teach entrepreneurship was never a good investment of this country’s money. No child will suddenly become an entrepreneur simply because he or she is able to say the three-times table in rap. That is what this country has paid for, and the whole area is now a mess.

It is nice to have this opportunity to speak to the appropriation for Vote Economic, Industry and Regional Development. First up, it is a very good opportunity for me to give some plaudits to those who work in that area. The Ministry of Economic Development may sometimes wonder, given the number of questions we ask of it, whether we are rather anti. That is not the case. Many things being done through organisations like New Zealand Trade and Enterprise are making a difference.

When we read about the programmes the vote is focused on, we have to say that some good things are happening, like the programme to lift the capacity of firms to innovate. I have been personally involved in setting up a number of incubators funded through that programme. They have made a fantastic difference to high-growth start-ups, and I applaud those initiatives. Building the connection of firms with international markets—the Beachheads programme—is a wonderful initiative, which introduces New Zealand companies to international markets by helping them set up bases offshore.

In lifting the skills and talents of the work force, many training programmes are making a contribution and a difference to the economic development of New Zealand. So much within this appropriation of $286 million is making a good difference to New Zealand, and some very good people inside organisations like New Zealand Trade and Enterprise are working hard with companies to help them grow.

But it is interesting to look at what the overview for this appropriation says about evaluation. It states that if economic development is to work for New Zealand it has to be implemented effectively, and that complex judgments determine which interventions may make a difference and which may not be beneficial. I feel it is very relevant to raise the issue of effective implementation, as in the overview document, because Minister Mallard, like us, noticed very early in the piece—when Katherine Rich, Chris Tremain, and I started to look at programmes in December and January—that many programmes had many problems. We started to raise those concerns with the appropriate parties—and what did the Minister do in about February or March? He said he thought we had better have a review of those programmes because he, like the National Party members, had noticed that some were not working and that it was necessary to make sure they were being implemented appropriately.

One programme that has not worked very well—I say this because our job is to hold the Government accountable when it spends significant amounts of taxpayers’ money—is the attempt by New Zealand Trade and Enterprise to invest in retail. I will focus particularly on why on earth the Government has wanted to invest in setting up a retail operation in Hong Kong. I have no issue with the Government looking to help companies enter markets like Asia, but it was interesting to see reports over the weekend of a discussion now taking place, within New Zealand Trade and Enterprise, that says we should not look at entering China via Beijing, Shanghai, or Hong Kong. We will not succeed in those markets because they are too busy. Those markets—Beijing, Shanghai, Hong Kong—are too big and too busy. If New Zealand is to make a successful entry into China, it should look at regional China. It should look at cities like Xiamen in the Fujian Province, because it is there, in those smaller cities, that it will be able to make a difference. It is fascinating, then, that the New Zealand Government is investing $1.4 million, and has an annualised spend of $1.3 million, in a retail store in Hong Kong.

I have been told that the location of the retail store is very poor. It makes sense that that location is poor, because the Government does not understand, or get itself involved in, retail. It has no expertise in retail, so it makes a heck of a lot of sense that when the Government wants to open up a retail store, and does it on its own recognisance, it will open it up in a poor location. The Minister, in answer to a question, said recently that the location is satisfactory. It was most interesting that in answer to a personal question to me earlier he had said that the New Zealand focus in Hong Kong served as a “high-profile site”. Yet after we started asking questions in the House, he changed his mind and in a different answer said: “I am advised the location is satisfactory.” The fascination about that is that I have met a number of people who have visited Hong Kong and who have asked me “Where in the hell is this store? We can’t find it.” I suppose I am talking about this because the overview paper for Vote Economic, Industry, and Regional Development says that if economic development is to work effectively for New Zealand, it has to be implemented effectively. The New Zealand Government opening up retail stores on its own in Hong Kong, at a huge cost to the taxpayer, is not what I would call successful implementation.

The Minister has just done a review of the growth services programme, as part of his review and as part of the Budget. I put the Minister on notice that although we have mentioned that many good things are coming out of the programme, one of the things we will watch with great interest is the growth services range. There is a series of programmes, adding up to a cost of $57 million, and the Minister’s own people are saying they are not sure whether results are coming out at the other end. They are investing money in the programmes, but they are not sure about them. There is $57 million worth of “unsure if they are working” programmes, because we do not know how to measure them very well, at all. The Minister has recognised that in a review, and we on this side of the Chamber have also recognised a weakness with those programmes. The Minister’s officials have identified the weakness, and we will be watching with interest to see how he manages to make changes to ensure much better “effective implementation”.

On behalf of the Minister I rise to take a short call on this vote. I do note the history, in terms of regional development—I will deal with that first—of the National Government in the 1990s. It was a policy that we would have to say sold out the regions, by withdrawing services and support from them, and as a result—and the economic figures stand for themselves—growth in our regions plummeted through the 1990s. There was no growth. There was negative growth and huge unemployment, as we know.

We will look at the facts, not the rhetoric from the Opposition. I note that Katherine Rich spent 5 minutes criticising our regional development policy. She came up with no policy or ideas of her own, but hey, we are becoming used to that. But let us now look at what we did. Who opened up the heartland centres? We did. Who rejuvenated the regions, injected wealth into them, supported them, and provided services for them? As a result of that, and as a result of hard-working Kiwis in those regions, if we go to places like the West Coast or Invercargill, or if we go to any regional area around the country or to the far north, we see those places are booming. That is a fact. That is the stark difference between us and those members over there in the Opposition—the whingers, who pour scorn on a Government policy that works, but of course never provide any alternatives to it.

I now turn to Mr Blumsky, the eminent New Zealander, former Mayor of Wellington, and great success who sort of tripped over, fell down, and ended up in Parliament or down some stairs. He was tripped up by a mirror, I suspect. He is the man who is very experienced and qualified to talk about business practice and economics, after having led a failed pizza parlour and a failed shoe business. I am told that at one point Mr Blumsky declared that he was chief executive officer of Norsewear in Hawke’s Bay. That proved to be a little odd, because he was a consultant or something. Yet tonight he stood up and told us the secret of his success and waxed eloquent about business practice and regional development.

I say to Mr Blumsky, about the New Zealand Focus centre in Hong Kong, that one can find it. He should open his eyes. I was there last week. I went in with one of our diplomats and looked at it. I spoke to some of the customers and people in there, and it is a fantastic state-of-the-art site. Of course, Mr Blumsky may not like it. He may not like the fact that we invest in one of the biggest economic portals in Asia. Hong Kong is a growing gateway to China and other places. He may not like that centre because, as has been pointed out by my colleague Mr Mallard, it has something to do with him promoting a competitor or his mates. We are not interested in doing that; we are interested in standing up and having a go at a damned good project. The New Zealand Focus centre is a good prototype that has a heck of a lot of traction. I have been there. Mr Blumsky should go and look at it. He should go and look at the state-of-the-art equipment, the promotion of education, and the promotion of New Zealand food and products. He might note that a heck of a lot of expats live in Hong Kong and that word has spread about the centre.

But what would Mr Blumsky do if he were the Minister responsible for regional development and trade? It is possible that he might open a shoe shop in Hong Kong. That would not work; it did not work in Wellington. Mr Blumsky might open a pizza parlour or a pizza business in Hong Kong. That did not work here, but it might work there, although I doubt it. But Mr Blumsky waxes eloquent—he does so authoritatively and with a great amount of skill and experience—about his great lineage in business.

Mr Blumsky lectured us and told us what a dismal failure the New Zealand Focus centre is, in his opinion. I do not know about other people, but I would back the big successful companies like Fisher and Paykel that are in there—they are not a failed Al Bundy shoe salesman—against Mr Blumsky’s experienced and skilled opinion about whether the New Zealand Focus centre in Hong Kong is working. I say that it is. I say that it is again an example of innovation, and of the Government going out and testing new ideas and looking at new ways to promote New Zealand. This is not a Government that goes out and asks what the best way is to promote its mates. I wonder whether Mr Blumsky has actually been to the New Zealand Focus centre. He said he could not find it; he said he did not know where it was.

💬 Darren Hughes: It was the wrong time of night.

It was the wrong time of night: the bars were still open, and he was still standing.

I say to National members that they should put up or shut up. They can have a go at our appropriations, at the estimates, and at the funding. I see Simon Power is looking contemplative, but National members have not brought up one alternative policy. I see the old feather duster wandering around over there in the Opposition. He waxed eloquent today on regional development at Local Government New Zealand. I am told he made a hash of it and is being counselled by his mates in the National Party. If ever there was a relic, it stands over there in the Opposition.

I raise a point of order, Mr Chairperson. I am not sure whether I heard the Minister correctly, but if he made a disparaging comment about one of our members, in particular our leader, I think that was most inappropriate and I ask him to withdraw and apologise.

The CHAIRPERSON (Hon Clem Simich): No, I listened very carefully. It may have been clear to some, but the speaker did not actually identify, even closely, the person he was talking about.

I raise a point of order, Mr Chairperson.

The CHAIRPERSON (Hon Clem Simich): It had better be helpful.

It will indeed. I must come clean. I was indeed talking about the leader of the National Party, Don Brash, and for that I do withdraw and apologise.

I raise a point of order, Mr Chairperson. I am sorry to interrupt you, but during your ruling the list member Jackie Blue called out a swear word and directed it at another member in the Chamber—and if the National Party junior whip is going to be so sensitive about what people say in here, then we will not have people sitting in the wrong seat throwing swear words around.

The CHAIRPERSON (Hon Clem Simich): I am sorry to interrupt the member, but the time has come for me to report progress.

Progress reported.

Report adopted.

The House adjourned at 9.56 p.m.