The paper trail tracking the Government’s handling of $640 million in the Provincial Growth Fund (PGF) was so poor that auditors had to ask officials to recall what happened in their meetings, Parliament has been told.

“We have no position on whether the PGF reset does or does not represent good value for money,” said Brent Burton, senior performance auditor at the Office of the Auditor-General (OAG).

“At the moment we can’t see how it’s tracking.”

OAG staff appeared before the economic development, science and innovation committee this morning, following the office’s damning review of the Government’s monitoring of the PGF reset money.

The reallocation of the remains of the $3 billion fund took place during the depths of the Covid-19 pandemic, aiming to create jobs in the regions within six months. Funding was approved for several projects including in the rail, ports, construction and renovation, and workforce training sectors.

Burton said it was a time of uncertainty and Kānoa, the unit administering the fund within the Ministry of Business, Innovation and Employment (MBIE), was trying to get money out the door urgently while dealing with staff shortages.

Upgrades to rail infrastructure were part of the spending in the PGF reset. Photo / Michael Craig

Kānoa did some tasks well, he said, including finding the $640m to be repurposed and being diligent when checking applicants. But the applications themselves were “inconsistently” assessed, risk management needed more attention, and there was such a dearth of record-keeping that auditors ended up interviewing staff.

“This was a time of great stress urgency and uncertainty. We weren’t looking for immaculate paperwork, but we were looking for solid and compelling evidence of some of these processes,” Burton said.

But there was “little to no evidence” of record-keeping or note-taking.

“So we did use interviews. Kānoa arranged those people and they were very forthcoming and helpful to the audit, but some of the finer detail would be very difficult if not impossible to recall.”

The OAG review said that the interviews yielded additional evidence of project assessment for some projects, but not for others.

“From our point of view, it’s $640m, a lot of money, and there are certain standards of transparency that we absolutely have to expect for that sort of amount of money,” Burton said.

Asked what the total loss to taxpayers might be, he said there hadn’t been an evaluation of the benefits - though that didn’t mean they weren’t going to happen.

It might take years before the economic, social, cultural, or environmental impacts of any of the projects can be properly assessed, he said, but planning for a proper evaluation needed to happen “rather urgently.

“We recommend the committee asks Kānoa about when such an evaluation should take place ... The public deserves to better understand how the money has been used, not just what projects but what outcomes they are getting.”

National MP Michael Woodhouse noted similar observations from the OAG about the monitoring of PGF money in 2020, when the office called for better reporting of how well the money was meeting the fund’s objectives.

“The very mechanisms enabling us to draw a conclusion were not there in 2020, you recommended they should be, and three years later for the reset that’s still the case,” Woodhouse said.

Acting Assistant Auditor-General Gareth Ellis replied: “You’ve summed that up accurately. There is a need for the system to change.”

Departments can meet obligations under the PFA [Public Finance Act] without saying what’s being spent and how well the money is being spent, he added.

The Government has said it is taking the OAG’s review seriously and looking at what improvements can be made.

MBIE has been approached for comment.