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• Refreshing Our Approach ...

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57. It is recommended that the Committee

1. 1. Note that our approach to regional economic development policy requires refreshing to ensure that it remains aligned with the government's overall goals for economic development;
2. 2. Note that the key aspects of this refreshed approach are:
   1. 2.1 local and regional decisions will have a bearing on the economic competitiveness of New Zealand and the success of government policy, particularly the economic transformation agenda;
   2. 2.2 neither the market nor local government will deliver an optimum business environment without central government involvement due to barriers to co-ordinating multiple objectives and market failures;
   3. 2.3 government has a key role in communicating national level priorities to regions; and
   4. 2.4 government support should be focused on building the capability of regions and ensuring that centrally funded activity is aligned with national priorities.
3. 3. Agree to this refreshed approach to regional economic development policy;
4. 4. Note that a number of changes will be required to give effect to this:
   1. 4.1 the number of regions for the purposes of NZTE funding will be consolidated from 26 to about 14;
   2. 4.2 strategy and capability funding will be revised to get more of a focus on building capability to undertake strategic planning for economic development;
   3. 4.3 the MRI should be revised to generate higher quality large scale projects through contestability; and to ensure alignment with other funding streams;
   4. 4.4 the role of government agencies other than NZTE will be increasingly important for regional economic development, and where possible activities should be aligned with the regional economic development strategy; and
   5. 4.5 because of the importance of maintaining local buy-in, the transition path to the refreshed framework will be critical. It could take up to two years to complete, and some flexibility in funding may be required to incentivise this process.
5. 5. Agree that ministers should make final decisions on the large scale regional grant following advice from the NZTE board;
6. 6. Agree that officials will undertake further work on each of the items in recommendations above and report back to Cabinet by 1 December 2006 with detailed proposals, including a detailed transition and communication plan;
7. 7. Agree to release this Cabinet paper on the MED website; and
8. 8. Note that I intend to signal these changes at the EDANZ conference on 30 August 2006.