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64. It is recommended that the Committee:

1. Note that in August 2006 Cabinet agreed that officials would report back on the changes required to give effect to the refreshed approach to regional economic development policy [CAB Min (06) 31/4 refers];

2. Note that the overarching goal of refreshed regional policy is to improve the quality of the regional business environment to support the development, attraction and retention of globally competitive firms;

3. Agree that, in order to facilitate the transition from 26 to about 14 regions, NZTE be given flexibility in 2007/2008 only to offer existing RPP regions up to $0.05m to meet one-off costs directly caused by the aggregation of RPP regions and establishing the associated governance structures;

4. Agree that the strategy and capability funding under the existing RPP be replaced with the Enterprising Regions Fund, and that regions (excluding the Chatham Islands) be eligible for up to $0.75m over three years from 1 July 2007 (limited to 50% of the total amount in any one year);

5. Agree that funding under the Enterprising Regions Fund will be for specified projects associated with the development and implementation of regional economic development strategies, and that align with the objectives of the fund;

6. Agree that the objectives of the Enterprising Regions Fund are to:

6.1 Encourage regions to take a medium to long-term approach to their economic development strategic planning by developing strategies that reflect the full range of opportunities and activities that will contribute to the achievement of their economic goals and priorities (not just those influenced by central and local government), with a clear implementation path against which progress can be monitored and reviewed;

6.2 Encourage regions to take a productivity based approach to improving the quality of the regional business environment to support the development, attraction and retention of globally competitive firms;

6.3 Ensure regions involve all relevant government and non-government stakeholders in the development and implementation of strategies and utilise any existing resources, skills and expertise that they can provide (for example, NZTE business assistance programmes and MSD and DOL labour market activities);

6.4 Reinforce appropriate regional governance structures for long-term regional economic development; and

6.5 Ensure strategies take into account and, where relevant, are consistent with, the government's broader national economic goals, strategies and priorities, and other relevant regional and local policies and processes (for example, LTCCPs, and regional transport, tourism and labour market strategies);

7. Agree that, should the Chatham Islands be unable to join one of the other regional groupings (or it is not in their best interests to do so), they be eligible for up to $0.15m every three years from 1 July 2007 for strategic capability development and working with other regions on specific projects, as appropriate;

8. Agree that, for 2007/2008, 2008/2009 and 2009/2010, $1.0m per year be ring fenced for funding projects that contribute to both the Auckland economic transformation agenda and regional development outcomes, with funding decisions made by the Minister of Industry and Regional Development;

9. Agree that the MRI component of the RPP be reshaped into a new fund to be called the Enterprising Partnerships Fund that makes funding available for initiatives that:

9.1 Further the creation or exploitation of regionally based collaborative partnerships and networks, and other regional institutions, that promote knowledge sharing, facilitate innovation processes and grow international connections;

9.2 Involve and benefit multiple regional stakeholders (rather than focus on individual firms or sectors), with evidence of meaningful and useful collaboration required;

9.3 Are commercially driven and have a strong commercial component, while building on areas of economic opportunity identified through a region's (or regions', where more than one region is involved) strategies and generating substantial economic benefits and opportunities for the region(s); and

9.4 Align with the government's national economic goals and priorities, where these have been articulated, and are consistent with the government's broader economic, social and environmental goals and New Zealand law and international obligations; and

10. Agree that the amount of funding available for individual initiatives under the Enterprising Partnerships Fund be limited only by the annual appropriation for the fund;

11. Agree that the Enterprising Partnerships Fund have up to two funding rounds per year, with Cabinet making final decisions, and that the amount of funding be approximately $9m in 2007/2008, $10.5m in 2008/2009 and 2009/2010, and $11.5m in 2010/2011 and outyears;

12. Agree that, for the Enterprising Partnerships Fund, the decision to hold the second funding round of the year, and the amount of funding available in that round, will depend on the amount of funding remaining in the annual appropriation following Cabinet decisions in the first funding round;

13. Agree that approval for funding outlined in recommendations 4-8 be subject to a regional financial (cash) contribution equivalent to no less than 20% of the cost of each project to be funded;

14. Agree that approval for funding outlined in recommendations 9-12 be subject to a regional financial (cash) contribution equivalent to no less than 30% of the cost of each activity to be funded;

15. Agree that MED and NZTE in consultation with Treasury will report back to the Minister for Industry and Regional Development on the detailed criteria and operation of the funding outlined in recommendations 3-8 by 30 April 2007 and by 18 May 2007 for funding outlined in recommendations 9-12;

16. Note that MED, in consultation with relevant departments, LGNZ and EDANZ, will undertake further work and report to the Minister of Industry and Regional Development by 30 December 2007 on:

16.1 a stocktake of current government activity at the regional level that impacts on the regional business environment, assess how these activities align and identify any opportunities for improving co-ordination;

16.2 undertake a review of existing and potential models for coordinating central government input to regional economic development processes, with a view to making this information available to stakeholders as best practice advice; and

16.3 identify national level information about the government's economic goals, priorities and strategies most relevant to regional economic development, and determine and implement the most effective mechanism(s) for communicating this to regional stakeholders;

17. Note that from 2007/2008 and outyears the funding for the annual Regional Partnerships and Facilitation Other Expense to be Incurred by the Crown appropriation increases by $15m to a total of $17.756m to support both the development of business incubators and regional clusters, and grants to assist regional partnerships to identify, develop and implement sustainable economic growth strategies;

18. Note that the Regional Partnerships Fund is being disestablished and replaced with Transition Funding, Enterprising Regions Fund, Chatham Islands Funding, Auckland Regional Economic Transformation Fund and Enterprising Partnerships Fund, and that a change in the scope of the appropriation Regional Partnerships and Facilitation, Other Expenses to be Incurred by the Crown, is required to give effect to this replacement;

19. Approve the following changes to appropriations to reflect the refreshed regional economic development policy with a corresponding impact on the operating balance:

20. Agree that the scope of the appropriation Regional Partnerships and Facilitation, Other Expenses to be Incurred by the Crown, shown in the Estimates be amended to "Provision of advice and grants to support the development of business incubators and regional clusters, and to support regional partnerships to develop and implement sustainable economic growth strategies";

21. Note that MED is scheduled to complete an evaluation of the effectiveness of the Regional Partnerships Programme and that this will be reported to Cabinet by June 2007;

22. Agree that MED, in conjunction with NZTE and the Treasury, evaluate the Enterprising Regions Fund and the Enterprising Partnerships Fund and their contribution to regional economic development and report back to Cabinet by June 2010; and

23. Agree to the release of this Cabinet paper on the MED website.