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Output Expense > Policy Advice > Economic, Industry and Regional Development

Description

This output expense provides policy advice encompassing the development, evaluation and overview of economic, industry and regional development policies and initiatives to promote sustainable economic development.

This includes the ongoing development and implementation of the Government's Growth and Innovation Framework (GIF); the researching and analysis of factors influencing the capability and performance of firms, industry sectors, and regions; undertaking work on overarching infrastructure issues; and monitoring New Zealand Trade and Enterprise (NZTE).

Quantity, Quality, Timeliness and Cost

Work Programme

Policy advice projects were delivered in accordance with the terms of the work programme as agreed with the Minister. Changes to deadlines were negotiated with the Minister.

The following outputs were included in this output expense for 2005/06.

Regional Development Policy

This output provides policy advice relating to economic development initiatives in the regions of New Zealand. A focus for regional policy is improving the business environment at the regional level, a key influence on individual firm performance. This includes the design and monitoring of NZTE programmes to facilitate regional economic development capability, as well as policy work that addresses whole-of-government issues that affect regional development. In 2005/06, the output included the following.

The design and implementation of the Regional Partnerships Programme (RPP), following a review undertaken in 2003/04 aimed at designing a more flexible menu of programme options.

In July 2005, Cabinet agreed to a number of changes to the RPP to recognise changes in the operating environment and reinforce the RPP objectives of promoting regional partnerships, collaboration and capability. These changes introduced greater flexibility into the programme. The paper also established a major work stream to develop a framework for the medium- to longer-term direction for regional economic policy, and established some specific deliverables to contribute to this work, including, for example, a review of the Major Regional Initiatives (MRI) component of the programme to establish its usefulness as a regional economic development tool. Following this Cabinet decision, a key focus for the regional work programme has been advancing the policy advice on the longer-term direction and focus of regional economic development policy.

A project on city economic development performance, with particular emphasis on Auckland and with linkages to the Sustainable Cities process.

Initiatives undertaken as part of the Auckland Sustainable Cities Project included completion of a comprehensive study into Auckland's economic performance and key economic characteristics. This was completed by the newly established cross-agency Government Urban and Economic Development Office (GUEDO) in Auckland.

Implementing changes to the Cluster Development Programme following an evaluation in 2003/04.

The Ministry's policy review and evaluation of the Cluster Development Programme (CDP) resulted in a recommendation that CDP be discontinued and funding shifted elsewhere in the Vote to assist with focus and prioritisation.

Evaluating the performance of the Regional Initiatives Fund (RIF).

The RIF was evaluated as part of the Budget 2006 deliberations and was discontinued from 30 June 2006. It has been replaced with the Regional and Industry Development Fund (RIDF).

Growth and Innovation Framework

This output provides policy advice relating to the ongoing development of economic development strategy with supporting activities undertaken in regions, sectors and firms. The focus is on building a cross-sectoral strategy which is informed by evidence, relevant and supported by effective systems.

Strategic policy development, including cross-sector leadership on growth and innovation strategy, ongoing strategy development, and advice on future direction setting.

On 6 March 2006, Cabinet agreed that economic transformation would be one of three priorities for the next decade. The Ministry subsequently advised that delivering economic transformation requires a sustained, focused and well executed strategy that is widely supported and understood by the public and private sectors. The Ministry has since led the economic transformation strategy process across government, and this has involved supporting the development of a clear and broadly agreed strategic direction as well as identifying critical issues to be addressed and agreed priority actions. A suite of Cabinet papers was prepared that captured these issues. These papers were endorsed by Cabinet in August 2006.

Developing an evidence base to support the future development of innovation policy, including commissioning an independent OECD review of the performance of New Zealand innovation institutions, as well as an internal study of the national innovation system, incorporating relevant case studies to support future development of innovation policy.

The OECD team visited New Zealand in March 2006 to carry out an independent review of institutions in New Zealand across the innovation system, including international comparisons. The evaluation is due for completion and consideration in September 2006 and will include recommendations on how to improve performance.

Advice on integrating evaluation of activity and progress across GIF work streams.

In the second and third quarters of the financial year, the Ministry provided Ministers with advice on the further development of the Growth and Innovation Framework and supported discussion between front-bench Ministers and public sector chief executives about broad economic priorities. On 6 March 2006, Cabinet agreed that economic transformation would be one of three priorities for the next decade.

Growth and Innovation Advisory Board

The function of the Growth and Innovation Advisory Board (GIAB) is to provide the Prime Minister and senior economic Ministers with informed advice on how the Government can best promote its growth and innovation programme. This output provides secretariat support to enable GIAB to perform this function and interface with business and other innovation stakeholders. In 2005/06, this output included the following:

• The Growth and Innovation Advisory Board (GIAB) has been increasingly integrated into the strategy development process. Six Board meetings were held during the financial year as well as joint hosting of a symposium focusing on Auckland's performance as a city.

Firm Capability

This output provides policy advice on the firm-level factors that can influence the performance of individual firms. This includes the design, implementation and ongoing operation of industry programmes delivered through NZTE. In 2005/06, this output included the following:

Ongoing monitoring and review of NZTE industry programmes, including an annual stocktake of the effectiveness and efficiency of industry and firm-level assistance programmes.

During the financial year, the Ministry completed the following evaluations and prepared a Cabinet paper, which led to decisions on their future development.

• Cluster Development Programme
• Growth Services Fund
• Enterprise Development Grants Scheme
• Major Events
• Enterprise and Business Culture
• Enterprise Training
• Brand NZ

Other evaluations of NZTE programmes are progressing well, and reports will be submitted to the Minister in the near future. These include Sector Facilitation, Information Products, and Investment New Zealand.

Commissioning research on the indicators of management capability in New Zealand.

The Business Capability Partnership Programme is a collaborative partnership between business and government focused on raising business, management and leadership capability in New Zealand. The Partnership completed a stocktake of New Zealand business capability research. A project plan was prepared and initial research undertaken to determine whether there would be benefits of implementing management capability indicators.

Sponsorship of a joint OECD/APEC research project on barriers to Small to Medium Enterprise (SME) exporting.

The Ministry designed two surveys on the barriers to SME internationalising. One was for government officials and seeks the rationale for government programmes that aim to assist SMEs to internationalise. The second was for SMEs across the 44 economies involved with the survey to fill in and rank the barriers they see to internationalising. The survey responses are being collated by a consultant engaged for this purpose by the OECD and will be reported to a conference to be held in Athens in November 2006.

Research, Evaluation and Monitoring

This output provides research, evaluation and monitoring of industry and regional development programmes. In particular, monitoring and evaluation information supports evidence-based policy development, which in turn serves to strengthen the overall efficiency and effectiveness of government interventions.

In 2005/06, this output included evaluations of NZTE programmes as outlined under the Firm Capability outputs above. In addition, in November 2005, the Ministry provided an aggregate assessment of industry and regional policy impacts, which draws together the evidence to date from evaluations and from other sources. The Review of Economic Industry and Regional Development Policies and Programmes:

• explains the objectives behind policies and programmes;
• provides assessments of progress and achievements over the past three to five years;
• examines how implementation of policies and programmes might be improved; and
• sets out some key opportunities for improvement.

The assessment report was published to enhance broader understandings of development policy impacts and inform public debate.

Sector Development Policy

This output provides policy advice on the factors that influence the level and quality of sustainable economic growth from an industry development perspective. The focus is on those factors that influence the growth of industry sectors and New Zealand's international connections. This includes the design, implementation and ongoing operation of sector programmes developed by and through NZTE. It also provides advice on industry sector engagement and the Ministry's work with NZTE to develop sector strategies in high priority sectors. In 2005/06, this output included the following:

Oversight and advice on implementing the Government's industry sector engagement processes, in particular, engagement with the food and beverage sector; and the provision of advice on NZTE sector-related activities, in particular, contributing to the evaluations of the NZTE Major Events, Brand New Zealand and sector facilitation programmes.

The Ministry worked with the Ministry of Research, Science and Technology (MoRST) to set up the Technology Partnership New Zealand programme as a partnership between the Foundation for Research, Science and Technology and the Danish Technological Institute. The programme provides a brokerage service to help New Zealand firms identify the expertise they require and match them to someone who may be able to help from an international network of experts.

Advice on the key factors that influence foreign direct investment and the Government's role in attracting quality investment, leading to an evaluation of the activities of Investment New Zealand.

A report on retaining the benefits of successful New Zealand companies (focusing on foreign direct investment) was prepared and followed by a series of strategy sessions on the critical issues raised in this report. This was followed by a report on similar issues, focusing on particular characteristics of high growth companies and using the software firm Right Hemisphere as a case study. The evaluation of Investment New Zealand has revealed a range of policy issues that will be addressed over the first part of the year.

Establishment of an agenda for cooperation on industry development policy between Australia and New Zealand, in particular, with the Federal Department of Industry, Tourism and Resources (DITR).

A successful strategy session was held with the Ministers of Economic Development and Trade in April on the future relationship with Australia in the context of Single Economic Market (SEM) and Closer Economic Relations (CER). New Zealand (the Ministry/MoRST) is hosting the next Commonwealth State and Territory Advisory Council on Innovation (CSTACI) meeting in November 2006. A key achievement has been to obtain support and agreement for food and beverage to be the topic of the business dialogue to be held in conjunction with the forthcoming CER Ministerial in September 2006.

Infrastructure Advice

This output covers the Ministry's research and analysis of a range of infrastructure issues not covered under Votes: Energy or Communications. The work is directed to improving the contribution of the transport and water sectors, and of infrastructure generally, to economic development. The Ministry also leads the development of national guidance for infrastructure under the Resource Management Act (RMA).³

The Ministry is leading the infrastructure theme in the Government's economic transformation agenda. Good progress has been made in identifying priority issues in energy, ICT and transport. In addition, during 2005/06, the Ministry:

• progressed work (jointly with MfE) on the proposed content and benefits of National Policy Statements and National Environmental Standards under the RMA for electricity transmission, electricity generation and telecommunications;
• participated in the Ministry for the Environment (MfE) project on the Urban Design Protocol (UDP);
• contributed to work the Ministry of Transport is leading on road transport pricing in Auckland; and
• led work on pandemic planning by infrastructure providers.

Projects not included in the 2005-2008 Statement of Intent

High Growth Firms - Advice was provided on the role of government in supporting high growth firms, particularly in high tech sectors, which involves working directly with two firms to negotiate pilot agreements for providing direct support that will result in wider public benefits.

Review of the Large Budget Screen Production Grant - The contribution of the Large Budget Screen Production Grant to the growth of the screen production industry in New Zealand has been reviewed, and recommendations to retain the grant in its present form were accepted by Cabinet.

Buy Kiwi Made - Advice was provided on the design of the Buy Kiwi programme proposed in the cooperation agreement with the Green Party. As at 30 June 2006, recommendations were being considered by Cabinet.

Establishment of the Technology Partnership New Zealand Programme - The Ministry worked with the Ministry of Research, Science and Technology to set up the Technology Partnership New Zealand programme as a partnership between the Foundation for Research, Science and Technology and the Danish Technological Institute. The programme provides a brokerage service to help New Zealand firms identify the expertise they require and match them to someone who may be able to help from an international network of experts.

Crown Entity Monitoring

The Ministry, in conjunction with the Ministry of Foreign Affairs and Trade (MFAT), reviewed and provided comment to the Minister on the performance of New Zealand Trade and Enterprise (NZTE), within agreed timeframes. This included providing advice on NZTE's Statement of Intent, 2006/07 Output Plan and financial documentation.

The Ministry also assisted with the appointment of four new Board members to the NZTE Board.

Cost

(Figures are GST exclusive)

Sources of Revenue Other

Major Budget Variances

The variance between 2005/06 and 2004/05 for actual expenses mainly relates to the establishment of the Government Urban and Economic Development Office (GUEDO) ($618,000); the full year impact of implementing the Regional Economic Statistics project ($266,000); the full year impact of transferring the Growth and Innovation Advisory Board ($627,000) secretarial functions from the Ministry of Research, Science and Technology; and increasing the Ministry's capacity to contribute to infrastructure policy beyond energy and ICT sectors, offset in part by one-off costs associated with undertaking a Regional Development Conference.

The Supplementary Estimates decrease ($150,000) reflects a transfer to Vote: Commerce to meet cost pressures within the policy advice work programme.

Output Expense > Policy Advice > Small Business

Description

This output expense provides policy advice on issues relating to lifting the capability and performance of Small to Medium Enterprises (SMEs), including development, coordination and implementation of policy advice concerning SMEs.

Quantity, Quality, Timeliness and Cost

Policy advice projects were delivered in accordance with the terms of the work programme as agreed with the Minister. Changes to deadlines were negotiated with the Minister.

The following outputs were included in this output expense for 2005/06.

Publication and analysis of the results of the first Business Operations Survey conducted by Statistics New Zealand.

Delays in the delivery by Statistics New Zealand of the data from the survey mean that it is now expected that the first results will be released in September 2006.

Assisting the Small Business Advisory Group (SBAG) to complete the tasks it has assigned itself in its strategic plan, including the preparation of its second Annual Report/ Briefing for the Incoming Minister.

The second SBAG report was signed off by SBAG in February 2006 and published in March 2006.

SBAG met each month from July to December 2005 and February to June 2006. It undertook one major research project on the quality of departmental Regulatory Impact Statements. The report of the project is due for publication in September 2006.

The Ministry also assisted the government in the publication of its response to the first SBAG report, which was released on 13 December 2005.

Leading the strategy for the development of biz.org into a world-leading business portal (including incorporation of biz centres).

The Ministry is represented on the Project Steering Committee for the design and establishment of the new biz.org information portal. The project is being delivered by NZTE. A stakeholder group also has approved the strategy and the design concept for the project.

Implementing compliance cost reduction proposals such as the introduction of the Dutch Standard Cost Model, the establishment of a cost of regulations review body, and providing a six-monthly list of government cost compliance reduction measures.

A study was completed in June 2006, using the proposed new Securities regulations as the example, to demonstrate the extent to which the Dutch Standard Cost Model and the Australian Business Cost Calculator could measure the compliance costs associated with these regulatory changes. The use of the Australian Business Cost Calculator was recommended and was subsequently agreed for two-year trial by the government. In addition, an OECD study using the Standard Costing Model had an initial report completed by 30 June 2006 and will have a final report in September 2006.

Completing and publishing the Business Finance Survey.

A report on the Business Finance Survey was published on 12 October 2005. Two related papers were prepared and presented at international conferences in Brasilia and Warwick, in order to expose our analysis to the scrutiny of experts and peers.

Projects not included in the 2005-2008 Statement of Intent

Publication of report on SME Statistics.

Two editions of SMEs in New Zealand: Structure and Dynamics were published this year on 5 August 2005 and 31 May 2006.

Cost

(Figures are GST exclusive)

Sources of Revenue Other

Major Budget Variances

The variance between 2005/06 and 2004/05 for actual expenses mainly relates to the Central Online Management and Export Trade Project (COMET), targeted at providing exporting assistance to 30 small to medium enterprises, via electronic commerce ($296,000).

The Supplementary Estimates increase ($285,000) reflects a transfer from 2004/05 due to timing of the Central Online Management and Export Trade Project (Project COMET).