Consistency of the Proposed Services with Agreed Design Principles
41. The service design principles agreed by Cabinet [CAB Min (02) 30/4 refers] have been adopted in developing the integrated service range. Specific comments on key principles are as follows.
Services Will Be Delivered by the Provider(s) That Offer the Best Value for Money, with Consideration Given to Capability Development for Providers
42. Trade and economic development assistance services supported by government can be funded and delivered through one or more of the following:
- services provided by the agency itself
- services provided by an external agent contracted to the agency
- funding support to businesses for the purchase of services.
43. In determining how services should be delivered, officials have considered whether there are existing or potential providers of different services, and the desire to encourage contestability and non-government provision of services over time wherever feasible. This can be achieved, even when directly providing services, by considering charging mechanisms and having low barriers to entry. In terms of the three service range areas:
44. There also needs to be a recognition that NZTE's role in delivery should evolve over time. For example, if a key issue in the provision and take-up of management training is one of building up levels of supply in regions, then contracts for service delivery might be initially used to encourage supply capability. As supply develops, and given the ultimate aim of all government trade and economic development assistance is to encourage market and non-government solutions wherever feasible, consideration might be given over-time to allowing part-charging and/or supporting firms directly to purchase the services on a contestable basis. Over the long-term little or no support might be required.
Subsidies Reflect the Mix of Public and Private Benefits; Charges and Grants are Simple and Clear for Clients to Understand and for the Organisation to Administer
45. Officials have considered the issue of subsidisation of services as a continuum, based on assumptions about the level of public benefits and appropriability of private benefits from the assistance provided. Officials also consider that two additional principles should be adopted in shaping the level of support for different NZTE services over the long-term:
- support should be as transparent to firms and markets as possible
- there should be a consistent approach to support for similar services (whether provided in-house, through grants, or contracted delivery).
46. Enabling services are largely fully funded on the basis that there are major collective action problems and the private benefits of facilitation or promotion are highly dispersed and uncertain. As sectoral and regional facilitation services lead to the implementation of projects, and private benefits become more transparent, the services use partnership and part-funding arrangements.
47. Foundation services of information and training are also currently fully funded. There appear to be opportunities to move to part-funding arrangements for training, as the 2002 BIZ evaluation demonstrated that many firms are prepared to pay for additional training after a certain threshold of training has been reached and firms begin to recognise the benefits they gain, although this needs to be analysed further by region and client group. NZTE could test part-charging on some BIZ courses in 2003/2004. It is also proposed that the Enterprise Development Grants scheme specify a clear 50% part-funding contribution. Officials consider the costs of administering a variable subsidy for this scheme would outweigh the benefits, given the level of grants.
48. Given that there will always be significant and reasonably clear private benefits from growth services, cost-sharing arrangements should be typical. The proposed Growth Services Fund will operate using a variable subsidy arrangement (up to 50%), with the proportion depending on the client manager's detailed appraisal of needs and benefits and the purpose to which the funding is used.
49. Although Trade NZ currently utilises part-charging arrangements for specialist international market development services, the precise level of support varies and in some cases is uncertain. It will be important in the longer-term that NZTE ensures the proportion of funding support attached to specialist services that have the potential for contestability, e.g. market research reports, is consistent with the level of support attached to grant monies that are paid out for similar purposes. As indicated in companion Paper 6 - Transition Costs,1 it is recommended that an output pricing review be considered for the full range of NZTE's services to gauge the level of funding support for and pricing of these services. Such a review would particularly assist in the evaluation of the growth services range of initiatives.
Services are Consistent with New Zealand's International Obligations
50. The broad design of the proposed services has taken into account international trade policy issues. The Growth Services Fund, in particular, represents an extension to the existing funding mechanism. Because most firms accessing this fund will have an export focus, NZTE and officials will need to pay careful attention to the design and implementation of this fund to avoid any risk that this fund is seen as an export subsidy. The Ministry of Foreign Affairs and Trade will work closely with NZTE to ensure that the implementation of all services will be consistent with New Zealand's international trade policy commitments.
Consideration of the Interface with Other Agencies
51. NZTE will have an important role in building and maintaining linkages with business and other organisations. Through its engagement with business, sectors and regions, issues will emerge that come within other policy agencies' areas of influence e.g. Tertiary Education Commission (TEC) for skills related issues, MFAT on trade access issues and offshore network activities, and MED on business and regulatory policy issues. It is expected that NZTE will inform these agencies of and work with them on business issues of relevance.
52. More proactively, this role extends to helping to ensure that assistance is aligned, and delivery of services is seamless, across government. The foundation services range will need to be closely coordinated with the work of the Māori Business Facilitation Service and Pacific Business Trust. The Growth Services range, particularly the Fund, has potential for overlaps with Technology New Zealand services.
53. During the stakeholder consultation process, some groups queried how Tourism NZ and Technology NZ will work with NZTE and indicated strong support for a more coordinated approach across the three agencies.
54. NZTE will consult with other assistance agencies in the detailed design of its services. In addition, in September 2002, Cabinet directed the Department of the Prime Minister and Cabinet (DPMC), in consultation with a range of other departments and agencies, to report to POL and Cabinet by December 2002 on progress in enhancing wider co-ordination and alignment across broader business assistance functions - with any recommendations for further change, including whether a technology transfer component should be delivered by the new structure [CAB Min (02) 24/2 refers]. This report back has been deferred until September 2003 to allow the integration of Industry NZ and Trade NZ to be bedded down. The report back will include consideration of the interface between the new organisation's service range and the services to business delivered by the Māori Business Facilitation Service, Pacific Business Trust, TEC, Tourism NZ and Foundation for Research, Science and Technology.
Delivery to Māori, Pacific Peoples and Other Groups
55. A key principle for NZTE's programme design is that services are flexible to meet differing and evolving needs; in particular services are accessible and responsive to the needs of Māori, Pacific Peoples and women.
56. A number of stakeholders indicated during the consultation process that some economic development services have not always been responsive to Māori or Pacific Peoples' needs and that NZTE needs to have people within the organisation (across all services) that understand the dynamics of Māori and Pacific Peoples communities. There is clear support from Māori and Pacific People stakeholders for the Māori Enterprise Team (from Trade NZ) to continue in its role.
57. NZTE will work to ensure that each of the broad service areas will be accessible and responsive to Māori, Pacific Peoples and women:
- Foundation services - Participation, satisfaction and levels of effectiveness will continue to be monitored and assessed to ensure that the services deliver appropriate levels and quality of services to these groups. NZTE also proposes to expand BIZ Training services for pacific people and Māori trustee training from 1 July 2003. The BIZ Training programme is also being audited by Te Puni Kōkiri (TPK) to determine its effectiveness for Māori, with a report back to Cabinet by July 2003. Any recommended changes to delivery will be considered after the report back.
- Enabling services - regional and sectoral facilitation services specifically seek to involve iwi/Māori and Pacific Peoples in the development of collective strategies and initiatives. It is clear from the stakeholder consultation process that NZTE will need to give further attention to ensuring a partnership approach in the implementation of these services. The review of the Regional Partnership Programme, for completion in July 2003, will identify issues related to Māori and other groups' participation in the programme.
- Growth services - NZTE will maintain the dedicated Māori Enterprise Team as part of its client management team. In addition to export businesses and related assistance (which the Team currently services through Trade NZ), the Team will also deal with wider domestic capability issues and developing businesses.
58. Gathering statistics for Māori, Pacific People and women participation in Industry New Zealand's Enterprise Awards and Business Growth Services and Fund has been complicated, as it is difficult to determine the "ethnicity" or "gender" of a business (data can be collected at an individual and contact level but the individual does not necessarily represent the business as a whole) and some clients are unwilling to provide this information. Hence figures on these schemes by ethnicity and gender, for example by applicant, are not necessarily an accurate reflection of take-up by different groups. As part of the detailed design of services, NZTE will look at methods for improving the collection of this information to allow better analysis of the effectiveness of the Enterprise Development Grants scheme and Growth Services and Fund for Māori, Pacific People and women. Any methods will need to be balanced with the costs of collecting the information.
59. TPK also indicated in POL (02) 169 that, to ensure services meet the needs of Māori, the following additional issues need to be considered: appropriate targets and outcome statements which flow right through the organisation; communication strategies to engage Māori stakeholders; quality tracking and reporting data; appropriate monitoring and evaluation frameworks; and, appropriate staffing strategies to ensure quality service delivery for Māori. MED, MFAT and NZTE will consult with TPK in the development of the output agreement and other relationship documents, detailed service design and monitoring and evaluation arrangements, and communication strategies.
60. The Ministry of Women's Affairs (MWA) has identified that although women are enrolling in BIZ training (55%) and Investment Ready training (30%), only a small proportion of women appear to apply for growth services and funding (around 10%) - notwithstanding the difficulties in obtaining accurate data. Low take-up may be due to a focus on particular sectors and/or the mechanisms by which the services are delivered. NZTE will consult with MWA in developing the detailed design of the growth services. In addition, the effectiveness and responsiveness of services for women will be assessed as part of the evaluation of each of the service areas as indicated in paragraph 63. Evaluations also typically involve background research on key issues associated with the objectives of the programmes and services (e.g. access to finance) and MED will consult with MWA, TPK and the Ministry of Pacific Island Affairs (MPIA) on the research programme underlying the evaluations.
Service Design Will Include Consideration of Monitoring and Evaluation Requirements
61. The Ministry of Economic Development and Ministry of Foreign Affairs and Trade will be jointly responsible for monitoring and evaluating NZTE's services, working closely with NZTE. Consistent with the principles of effective evaluations [CAB Min (00) M 19/2 refers], the evaluations will include assessment of the adequacy of delivery and administration, the effectiveness of the various services and whether they meet their objectives, whether services provide value for money, and whether services are still necessary. In addition, MFAT will work closely with NZTE to ensure services continue to be consistent with international obligations.
62. A number of stakeholders emphasised that clear performance measures for NZTE will be critical for evaluating the success and value of the Government's investment in trade and economic development assistance. Performance measures need to align with NZTE's objective of supporting internationally competitive business and the wider GIF indicators agreed by Cabinet [CAB Min (02) 34/5 refers]. These measures will be developed as part of long-term strategy and accountability documents for the organisation.
63. The accompanying papers specify the following milestones for evaluation of and report backs to the Ministers of Finance, Industry and Regional Development and Trade Negotiations on different components of NZTE's service range:
- Regional Partnership Programme - by July 2003
- Investment New Zealand - evaluation of the implementation of Investment New Zealand support and the Strategic Investment Fund - by November 2003; full evaluation of the effectiveness of Investment New Zealand by December 2006
- Industrial Supplies Office - by June 2004
- Incubator Support Programme - by October 2004
- Polytechnic Regional Development Fund - by December 2004
- Growth Services and Fund - by June 2005
- Enterprise Development Grants scheme - by June 2005
- Cluster Development Programme, incorporating Export Networks - by November 2005
- Promoting an Enterprise and Business Culture initiative, Brand New Zealand, Major Events Support - by December 2005
- BIZInfo and BIZ Training - by December 2005
- Sector Facilitation, Beachheads, International Sector Specialists - by June 2006.
64. In addition to these formal evaluations, MED and MFAT will work with NZTE to undertake an annual stocktake to summarise available information on service implementation, delivery and performance, which can then be used to improve delivery (without changes to agreed policy parameters) or to direct further research or policy development work.
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