Why and how does the Investment and Growth Reserve contribute to the region’s economic development?
The Northland Regional Council established the Investment and Growth Reserve in 2010-2011 to reverse the cycle of under investment and lead by example through investing directly in projects that deliver real benefits to current and future generations of Northlanders. The aim is to find new ways to bring investment into the region and create rewarding business and employment opportunities.
Economic development is vital for generating the resources needed to address some of the pressing problems affecting Northland such as poor housing, health and education. In times of economic recession there is a greater need to invest in economic development to give confidence to others so they will invest here to reduce socio-economic disparities and stimulate employment growth.
What are the objectives of the Investment and Growth Reserve?
To invest in economic projects/ventures within Northland to increase:
- Jobs in Northland;
- The average weekly household income of Northlanders; and
- The GDP of Northland.
What are to be the types of funding allocations made?
Loan funding or directly invested funds for:
- Capital expenditure for new ventures or expanding of existing businesses.
- Operating expenditure for a finite period of time on condition of sufficient capital expenditure committed to the project and a satisfactory business plan to demonstrate how operating expenditure will be covered after this time.
- Equity investment (that is the Reserve can be used to buy shares/an ownership interest in a company).
What are the principles of the Investment and Growth Reserve?
Loans, direct investments or equity investments that will deliver an appropriate rate of return taking into account the level of risk, revenue flows and anticipated economic development and well-being improvement. (Appropriate return includes percentage return on investment, any potential capital and broader indirect benefits to the community.)
To safeguard against risk the following guidelines will be adopted:
- All potential recipients of funding will be assessed for credit worthiness.
- All parties who intend to conclude major contracts with will be subject to formal credit approval.
How is the Reserve to be managed?
- All projects’ will be assessed for funding eligibility against a business case assessment tool.
- Northland Inc Board considers all projects and makes a recommendation to the Northland Regional Council
- Council makes the final decision on the funding of projects.
What is the Assessment Process?
What is the quantum of funding available?
The following graph provides an indication of the value of the Investment and Growth Reserve and how it will grow over time. Note that this does not take into account the effect of projects being approved and drawing funds out of the Reserve or revenue returned through investments.
In terms of the quantum of funding available for specific projects, there is no set value, however consideration will be given to:
- The extent to which the project promotes sustainable, regional economic development;
- The contribution the project will make to improving the social, economic, environmental and cultural well-being in the region;
- The extent to which the project aligns with the vision of other organisations in the region;
- The project’s fit with the Northland Regional Council’s economic development priorities;
- The extent to which the business case demonstrates that the people involved have the capacity and capability to undertake the project;
- Return on investment;
- Opportunity cost;
- Risk and in particular, the extent to which the project is inter-dependent with other projects;
- The amount of investment and type of commitments other parties are making to the project;
- Any security provided to secure the funding; and
- The need for Reserve funding.
To learn more about the Investment and Growth Reserve
Contact the ‘Investment Manager’ at Northland Inc
Phone: 438 5110
- Ministerial Direction to Callaghan Innovation, 4 February 2013:Minister of Science and Innovation
- Allocating and Administering Funding - Systems and Procedures, February 2013 : Callaghan Innovation
- An Investor’s Guide to emerging growth opportunities in NZ f&b exports Report, August 2012: Coriolis
- Explore New Zealand Minerals, June 2012 : NZ Govt
- Investment opportunities in the NZ Honey industry report, May 2012: Coriolis