Monday 11 February 2019

Counting jobs

I really really hope that somebody in the bureaus is running proper probity over whatever Shane Jones is up to in the Provincial Growth Fund. Because every time we hear news on it, it's just a bit off. 

Here's Jason Walls in today's Herald:
Numbers published on the Ministry of Business, Innovation and Employment (MBIE)'s website show more than 10,000 jobs are expected to be created as a result of Provincial Growth Fund (PGF) announcements made last year.

Of that, 7000 – almost 70 per cent – are estimated to come from just one project: The East Bay of Plenty Regional Development Project Implementation.

This project was allocated just under $240,000 for "funding a position to manage and report on 65 key economic development projects".

That 7000 jobs estimate is based on a feasibility study provided to the Provincial Development Unit, which oversees the PGF, by the Ōpōtiki District Council.
It isn't nuts to run forecasts of expected employment from projects that haven't yet gotten started, but this kind of accounting doesn't seem right.

And this seems just a bit off as well, from the head of the Provincial Development Unit:
The day after Goldsmith said just 54 PGF jobs had been created, the Provincial Development Unit issued a press release which said "job creation does not happen overnight" and that more than 10,000 jobs may be created as a result of all the PGF investment approved to date.

Speaking to the Herald, the head of the Provincial Development Unit Robert Pigou said the statement was only released to provide "clarity" around how the PGF was structured.

He said he was not able to say how many jobs had been created because of the PGF last year, as he "did not have that detailed information yet" but said it would be higher than 54.

"We're working with the [PGF] applicants because many of them are just starting to get into that employment phase [of the projects]."

The 10,000 jobs expectation is based on the estimates of the PGF project applicants, a Provincial Development Unit spokesman said.

"When applicants outline their project, they include an estimate of the number of jobs to be created both directly through the project and indirectly, as a result of the investment."

For larger scale projects, such as the $40 million to expand the TranzAlpine service, financial modelling by an independent economic firm has been used.
I would expect Shane Jones to advertise numbers based on the job creation estimates provided by folks seeking grants from him; he is a retail politician.

I would expect a neutral and impartial public service to be a bit more sceptical about claims made in those applications and not use them to tally up big numbers to put on the Ministry's website. And that makes me a bit nervous about what the heck is going on over there more generally.

It’s always been a mistake to try and sell this stuff on short-term job creation numbers. The point of the fund, as I’d understood it, was to get infrastructure and other bits in place for longer term development in the regions. There are better and worse ways of trying to do that – a pile of loans to business that no commercial outfit would take a punt on isn’t a great idea, but getting better infrastructure in place so that regions that don’t have a strong enough economic base can have a fair go – that’s not crazy.

So I think it was silly to advertise this stuff as aiming at lots of jobs quickly.

That said, it is a bit odd to count as current benefits the estimated increase in jobs that might transpire if a bunch of other projects that haven’t yet been funded all panned out as well as expected by the folks pitching the projects. I haven’t seen the underlying studies, but if the Herald’s description is accurate – it’s an odd way to do things. It’s fine to base expected numbers on projections from studies, but we might have expected the basis to be a bit stronger than that.

I also really hope that there are sufficient checks in place in the bureaus vetting these projects and approving them, making sure that none of them would cause problems for any of our international agreements around subsidies, and making sure that there’s sufficient probity around the projects.

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