Date posted: 30/05/2019 4 min read

Building blocks for improving productivity

Charlotte Evett CA, New Zealand Government Relations Lead for CA ANZ says reform of vocational education sector benefits from low uptake on Free Fees Programme.

In Brief

  • $197 million underspend on Fees Free programme reallocated to vocational education sector reform
  • $300 million investment to fill ‘funding-gap’for mid sized start-ups
  • Mana-in-Mahi – Strength in Work receives $50 million funding for an additional 1,850 participants

One of the Government's five Wellbeing Budget 2019 priorities was to support a thriving New Zealand in the digital age through innovation, social and economic opportunities.

This initiative was headlined by the announcement of a modest $240 million diversion of capital from the New Zealand Superannuation Fund (NZS Fund), to mid-sized New Zealand start-ups via the New Zealand Venture Investment Fund (NZVIF). "Mid-sized" refers to start-ups valued between $2-15 million. Evidence suggests that these businesses are struggling to obtain capital due to a funding gap in the capital markets.

The $240 million, when combined with NZVIF's existing assets of $60 million, forms a total investment pool of $300 million. The purpose of the new fund is to alleviate the funding gap, by supporting strong early stage capital markets, and a healthy New Zealand start-up ecosystem. Effectively in this instance the Government is putting its money where its mouth is and backing New Zealand innovation.

While this is positive, we need more detail about the criteria for investment by the new fund in mid-sized New Zealand start-ups, and how the new fund performs over time. While only a fraction of the $9.6 billion forecast to be contributed to the NZ Super Fund over the next five years, the $240 million investment and its returns will be part of the plan to fund superannuation payments to the rapidly growing percentage of our population eligible for superannuation when the money is returned to the Crown in the 15 years outlined by the Government.

"In addition to contributing in a small but important way to a more productive economy, this initiative fits well within the theme of the inaugural Wellbeing Budget - a more inclusive economy, and a country where no one is left behind."
Charlotte Evett CA, New Zealand Government Relations Lead

It is positive to see the $197 million underspend on the Fees Free Program reallocated to the reform of our vocational education system. A proposed radical reform and restructure of the sector was announced earlier this year, aimed at addressing widely acknowledged sector wide issues which have contributed to a shortage of skilled tradespeople. Quality, fit for purpose reform of the sector is essential to ensure that the status and quality of, and access to, vocational education and training are enhanced. However, the reforms will be resource intensive and therefore expensive. Given the magnitude of the proposed reforms, it remains to be seen if the $197 million set aside in the current Budget will be sufficient to make the changes required. Regardless, it is a positive step in the right direction.

In addition, the Government committed an additional $50 million dollars to the the subsidised apprenticeship program - Mana in Mahi – Strength in Work. This funding will allow around 1,850 additional young people currently on a benefit, to enter the programme, developed to provide them with supported employment and a training qualification pathway. At approximately $27,000 per additional participant, this funding could make a huge difference to the lives of many.

CA ANZ coverage for Budget 2019

Expert commentary and analysis leading up to and on the day of the Budget.

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