Rich Katherine: Estimates Debate — In Committee 
Rich Katherine: Estimates Debate — In Committee 
[Volume:632;Page:4183] 
KATHERINE RICH (Chairperson of the Commerce Committee): 
 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 2000 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 $70000 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.