Provincial Development Corporation Bill

1. Title

This Act is the Provincial Development Corporation Act 2020.

2. Commencement

This Act comes into force on the day after the date on which it receives the Royal assent.

3. Purpose

The purpose of this Act is to merge the Regional Growth Fund and the Regional Investment Corporation into a new Provincial Development Corporation, while ensuring it is a non-profit entity.

4. Interpretation

In this Act, unless the context otherwise requires,—

Climate Change Commission refers to the Climate Change Commission set up under the Zero Carbon Act 2017

climate change impacted communities mean communities or regions who are negatively impacted either by the impacts of climate change, or the impacts of measures to reduce greenhouse gas emissions, as designated by the Provincial Development Corporation and the Climate Change Commission

climate change impact mitigation infrastructure means infrastructure with the purpose of mitigating impacts of climate change or adapting a community or region to the impacts of climate change

The Corporation means the Provincial Development Corporation

local community means the community or region significantly or partly reliant on the particular mining project for employment or economic development which is the source of the relevant mining royalties, as deemed by the Provincial Development Corporation

responsible Ministers means the shareholding Ministers

rural infrastructure project means any private enterprise which would improve local infrastructure within the jurisdiction of a district council.

sustainable jobs are jobs that have minimal environmental impact or have a clearly demonstrated impact towards improving environmental conditions and will likely provide permanent long term employment

Part 1: Provincial Development Corporation

Establishment and functions

5. Establishment

(1) The Provincial Development Corporation is established by this section.

(2) The Corporation—

(a) is a crown entity company as defined in the Crown Entities Act 2004; and

(b) may acquire, hold and dispose of real and personal property; and

(c) may sue and be sued.

(3) The Provincial Development Corporation is a non-profit entity which pays no dividends to the Crown.

(4) the shareholding Ministers are the Minister for State Services and the Minister for Regional Economic Development.

6. Functions of the Corporation

(1) The Corporation has the following functions:

(a) to administer farm business loans, including by—

(i) providing such loans to farm businesses, subject to relevant lending criteria being satisfied; and

(ii) consulting with commercial lenders and other industry bodies representing persons likely to seek a loan; and

(iii) determining, in accordance with the strategies and policies decided by the Board, the terms and conditions on which approved loans are provided; and

(iv) taking security for approved loans; and

(v) charging for transaction costs incurred by the Corporation in relation to an approved loan; and

(vi) managing approved loans, and if required, enforcing the security taken for an approved loan; and

(vii) reviewing loans provided, and the terms and conditions on which approved loans are provided, periodically;

(b) to administer, on behalf of the Government, financial assistance in relation to rural infrastructure projects, including by—

(c) to administer, on behalf of the Government, financial assistance in relation to rural infrastructure projects, including by—

(i) liaising, negotiating and cooperating on possible rural infrastructure projects; and

(ii) providing advice to responsible Ministers on a rural infrastructure project; and

(iii) implementing directions of the responsible Ministers under section 11(3) to enter into agreements, on behalf of the Government, for the grant of financial assistance to in relation to rural infrastructure projects; and

(iv) reviewing financial assistance granted, and the terms and conditions on which such financial assistance is granted, periodically;

(d) to administer, on behalf of the Government, financial assistance to foster economic development and sustainable job creation in climate change impacted communities, including by—

(i) liaising, negotiating and cooperating on possible economic development and sustainable job creation projects; and

(ii) providing advice to responsible Ministers in relation to economic development and sustainable job creation projects; and

(iii) implementing directions of the responsible Ministers under section 11(3) to enter into agreements, on behalf of the Government, for the grant of financial assistance to in relation to economic development and sustainable job creation projects; and

(iv) reviewing financial assistance granted, and the terms and conditions on which such financial assistance is granted, periodically;

(e) to administer, on behalf of the Government, financial assistance in relation to climate change impact mitigation infrastructure projects, including by—

(i) liaising, negotiating and cooperating on possible climate change impact mitigation infrastructure projects; and

(ii) providing advice to responsible Ministers on a climate change impact mitigation infrastructure project; and

(iii) implementing directions of the responsible Ministers under section 11(3) to enter into agreements, on behalf of the Government, for the grant of financial assistance to in relation to climate change impact mitigation infrastructure projects; and

(iv) reviewing financial assistance granted, and the terms and conditions on which such financial assistance is granted, periodically;

(f) to set, and adjust as required, the interest rates applicable to loans and financial assistance;

(g) on its own initiative or at the request of a responsible Minister—to provide advice to the responsible Minister on the activities that are or could be undertaken by the Corporation;

(h) to provide advice and assistance to—

(i) borrowers in relation to approved loans; or

(ii) prospective borrowers in relation to loans;

(i) to administer programs prescribed by the rules;

(j) any other functions conferred on the Corporation by this Act, the rules or any other Government law—

(i) to do anything incidental to, or conducive to, the performance of the above functions.

(2) In performing its functions, the Corporation must act in a proper, efficient and effective manner, and in relation to managing the use, development, and protection of natural and physical resources, shall take into account the principles of the Treaty of Waitangi (Te Tiriti o Waitangi).

7. Distribution of mining royalties

(1) The government must allocate 30% of all royalties paid under section 99H of the Crown Minerals Act 1991 to the Provincial Development Corporation.

(2) The Provincial Development Corporation must invest money allocated under subsection (1) within the community that the royalties derive from with the purpose of promoting—

(a) sustainable industrial diversification; or

(b) increased levels of employment over time; or

(c) increased participation in the workforce; or

(d) productivity growth.

(3) The government must allocate 10% of all royalties paid under section 99H of the Crown Minerals Act 1991 to the Provincial Development Corporation.

(4) The Provincial Development Corporation must use money allocated under subsection (3) to provide financial assistance to foster economic development and sustainable job creation in climate change impacted communities and in relation to climate change impact mitigation infrastructure projects.

8. Powers of the Corporation

The Corporation has power to do all things necessary or convenient to be done for or in connection with the performance of its functions.

9. Corporation does not have privileges and immunities of the Crown

The Corporation does not have the privileges and immunities of the Crown in right of the Government.

Part 2 - Operating Mandate

10. Minister to provide operating mandate direction

(1) The responsible Ministers must, by Order in Council, give directions (the Operating Mandate) to the Corporation about the performance of the Corporation’s functions.

(2) Without limiting subsection (1), a direction forming part of the Operating Mandate may be given in relation to the following:

(a) the objectives that the Corporation is to pursue in administering:

(i) farm business loans; or

(ii) financial assistance in relation to rural infrastructure projects; or

(b) expectations in relation to the strategies and policies to be followed for the effective performance of the Corporation’s functions;

(c) eligibility criteria for loans or financial assistance;

(d) financial arrangements in relation to the Corporation, including how amounts received by the Corporation are to be dealt with and the circumstances in which they are to be remitted to the Government;

(e) any other matters the responsible Ministers think appropriate.

(3) The Operating Mandate must not direct, or have the effect of directing, the Corporation in relation to—

(a) a particular farm business loan; or

(b) a particular loan provided by the Corporation under a program prescribed by the rules under section 10(5).

11. Responsible Ministers may give other directions to the Corporation

Farm Business Loans

(1) The responsible Ministers may give a written direction to the Corporation in relation to a class of farm business loans, but may not give a direction in relation to a particular farm business loan.

(2) Before giving a direction under subsection (1), the responsible Ministers must seek the Board’s advice.

Rural Infrastructure Projects

(3) The responsible Ministers may give a written direction to the Corporation to enter into an agreement, on behalf of the Government, for the grant of financial assistance in relation to a particular rural infrastructure project. The direction may specify terms and conditions to be included in the agreement.

(4) Before giving a direction under subsection (3), the responsible Ministers must seek the Board’s advice on the particular rural infrastructure project to which the direction relates.

Economic Development and Sustainable Job Creation Projects

(5) The responsible Ministers and the Minister for the Environment may give a written direction to the Corporation to enter into an agreement, on behalf of the Government, for the grant of financial assistance in relation to a particular economic development and sustainable job creation project. The direction may specify terms and conditions to be included in the agreement.

(6) Before giving a direction under subsection (5), the responsible Ministers and the Minister for the Environment must seek the Board’s advice on the particular rural infrastructure project to which the direction relates, and the advice of the Climate Change Commission.

Climate Change Impact Mitigation Infrastructure Projects

(7) The responsible Ministers and the Minister for the Environment may give a written direction to the Corporation to enter into an agreement, on behalf of the Government, for the grant of financial assistance in relation to a particular climate change impact mitigation infrastructure project. The direction may specify terms and conditions to be included in the agreement.

(8) Before giving a direction under subsection (7), the responsible Ministers and the Minister for the Environment must seek the Board’s advice on the particular rural infrastructure project to which the direction relates, and the advice of the Climate Change Commission.

Location of Corporation

(9) The responsible Ministers may give a written direction to the Corporation about where the Corporation is to be located.

Part 3 — Board of the Corporation

12. Establishment of the Board

The Board of the Corporation is established by this section.

13. Functions of the Board

(1) The functions of the Board are—

(a) to decide, within the scope of the Operating Mandate, the strategies and policies to be followed by the Corporation; and

(b) to ensure the proper, efficient and effective performance of the Corporation’s functions; and

(c) to sign an agreement, on behalf of the Government, for the grant of financial assistance in relation to a rural infrastructure project; and

(d) to appoint the CEO; and

(e) any other functions conferred on the Board by this Act or the rules.

(2) The Board has power to do all things necessary or convenient to be done for or in connection with the performance of its functions.

(3) Anything done in the name of, or on behalf of, the Corporation by the Board, or with the authority of the Board, is taken to have been done by the Corporation.

14. Membership

The Board consists of the Chair and 6 other members.

15. Appointment of Board members

(1) Board members are to be appointed by the responsible Ministers by written instrument, on a part time basis.

(2) A person is not eligible for appointment as a Board member unless the responsible Ministers are satisfied that the person has:

(a) appropriate qualifications, skills or experience in one or more of the following:

(i) agribusiness and the financial viability of businesses within the agricultural sector;

(ii) banking and finance;

(iii) rural infrastructure planning and financing;

(iv) issues concerning rural industries and communities;

(v) economics;

(vi) financial accounting or auditing;

(vii) Government funding programs or bodies;

(viii) law;

(ix) environmental policy and management;

(x) te ao Māori and katiakitanga.

16. Chair

The responsible Ministers must, by written instrument, appoint one Board member to be the Chair.

17. Term of appointment

A Board member holds office for the period specified in the instrument of appointment. The period must not exceed 5 years.

18. Acting appointment

(1) The Minister for Regional Economic Development may, by written instrument, appoint a Board member to act as the Chair—

(a) during a vacancy in the office of Chair (whether or not an appointment has previously been made to the office); or

(b) during any period, or during all periods, when the Chair:

(i) is absent from duty or from New Zealand ; or

(ii) is, for any reason, unable to perform the duties of the office.

(2) The Minister for Regional Economic Development may, by written instrument, appoint a person to act as a Board member—

(a) during a vacancy in the office of a Board member (whether or not an appointment has previously been made to the office); or

(b) during any period, or during all periods, when a Board member—

(i) is absent from duty or from New Zealand; or

(ii) is, for any reason, unable to perform the duties of the office.

19. Leave of absence

(1) The Minister for Regional Economic Development may grant leave of absence to the Chair on the terms and conditions that the Minister for Regional Economic Development determines.

(2) The Chair may grant leave of absence to another Board member on the terms and conditions that the Chair determines.

(3) The Chair must notify the responsible Ministers if the Chair grants another Board member leave of absence for a period that exceeds 3 months.

20. Outside employment

A Board member must not engage in any paid work that, in the opinion of the responsible Ministers, conflicts or could conflict with the proper performance of his or her duties.

21. Other terms and conditions

A Board member holds office on the terms and conditions (if any) in relation to matters not covered by this Act that are determined by the responsible Ministers.

22. Resignation

(1) A Board member may resign his or her appointment by giving the responsible Ministers a written resignation.

(2) The resignation takes effect on—

(a) the day it is received by the responsible Ministers (or if the Ministers receive it on different days, the later of those days); or

(b) if a later day is specified in the resignation—on that later day.

23. Termination of appointment

(1) The responsible Ministers may terminate the appointment of a Board member—

(a) for misbehaviour; or

(b) if the Board member is unable to perform the duties of his or her office because of physical or mental incapacity; or

(c) if the responsible Ministers do not have confidence in the Board member.

(2) The responsible Ministers may terminate the appointment of a Board member if—

(a) the Board member—

(i) becomes bankrupt; or

(ii) applies to take the benefit of any law for the relief of bankrupt or insolvent debtors; or

(iii) compounds with his or her creditors; or

(iv) makes an assignment of his or her remuneration for the benefit of his or her creditors; or

(b) the Board member is absent, except on leave of absence, from 3 consecutive meetings of the Board; or

(c) the Board member engages in paid work that, in the opinion of the responsible Ministers, conflicts or could conflict with the proper performance of his or her duties (see section 20. (outside employment)); or

(d) the responsible Ministers are satisfied that the performance of the Board member has been unsatisfactory for a significant period.

Part 4 — Chief Executive Officer, staff and consultants

24. Chief Executive Officer

There is to be a Chief Executive Officer of the Corporation.

25. Functions of the CEO

(1) The CEO—

(a) may sign, on behalf of the Corporation, a loan agreement to be administered by the Corporation; and

(b) is otherwise responsible for the daytoday administration of the Corporation.

(2) The CEO has power to do all things necessary or convenient to be done for or in connection with the performance of his or her duties.

(3) The CEO is to act in accordance with policies and strategies determined by the Board. Board directions

(4) The Board may give written directions to the CEO, not inconsistent with any direction given to the Corporation under Division 2 of Part 2, about the performance of the CEO’s duties.

(5) The CEO must comply with a direction under subsection (4).

(6) A direction under subsection (4) is not a legislative instrument.

26. Appointment

(1) The CEO is to be appointed by the Board by written instrument, on a full time basis.

(2) The CEO holds office for the period specified in the instrument of appointment. The period must not exceed 5 years.

(3) The Board must not appoint a Board member as the CEO.

(4) The Board must consult with the responsible Ministers before appointing the CEO.

27. Acting appointment

(1) The Board may, by written instrument, appoint a person (other than a Board member) to act as the CEO—

(a) during a vacancy in the office of CEO (whether or not an appointment has previously been made to the office); or

(b) during any period, or during all periods, when the CEO—

(i) is absent from duty or from New Zealand ; or

(ii) is, for any reason, unable to perform the duties of the office.

28. Leave of absence

(1) The CEO has the recreation leave entitlements that are determined by the Remuneration Tribunal.

(2) The Board may grant the CEO leave of absence, other than recreation leave, on the terms and conditions as to remuneration or otherwise that the Board determines.

29. Outside employment

The CEO must not engage in paid work outside the duties of his or her office without the Board’s approval.

30. Other terms and conditions

The CEO holds office on the terms and conditions (if any) in relation to matters not covered by this Act that are determined by the Board.

31. Resignation

(1) The CEO may resign his or her appointment by giving the Board a written resignation.

(2) The resignation takes effect on the day it is received by the Board or, if a later day is specified in the resignation, on that later day.

32. Termination of appointment

(1) The Board may terminate the appointment of the CEO—

(a) for misbehaviour; or

(b) if the CEO is unable to perform the duties of his or her office because of physical or mental incapacity.

(2) The Board may terminate the appointment of the CEO if—

(a) the CEO—

(i) becomes bankrupt; or

(ii) applies to take the benefit of any law for the relief of bankrupt or insolvent debtors; or

(iii) compounds with his or her creditors; or

(iv) makes an assignment of his or her remuneration for the benefit of his or her creditors; or

(b) the CEO is absent, except on leave of absence, for 14 consecutive days or for 28 days in any 12 months; or

(c) the CEO engages, except with the Board’s approval, in paid work outside the duties of his or her office (see section 29 (outside employment)); or

(d) the Board is satisfied that the performance of the CEO has been unsatisfactory for a significant period.

(3) If the Board terminates the appointment of the CEO, the Board must notify the responsible Ministers of the termination.

33. Staff

(1) The Corporation may employ such persons as it considers necessary for the performance of its functions and the exercise of its powers.

(2) An employee is to be employed on the terms and conditions that the Corporation determines in writing.

34. Consultants

(1) The Corporation may engage consultants to assist in the performance of its functions.

(2) The consultants are to be engaged on the terms and conditions that the Corporation determines.

Part 5 — Miscellaneous

35. Terms and conditions of loans

A person who is a party to a loan provided by the Corporation must comply with the terms and conditions of the loan.

36. Recovery of costs

(1) If the Corporation provides a loan to a person, the Corporation may charge the person to recover all or any of the transaction costs incurred by the Corporation in relation to the loan.

(2) A cost charged under subsection (1)—

(a) is a debt due to the Corporation; and

(b) is recoverable by the Corporation in a court of competent jurisdiction.

37. Delegation by Corporation

(1) The Corporation may, in writing under its seal, delegate all or any of its powers or functions under this Act or the rules to—

(a) a Board member; or

(b) the CEO.

(2) In exercising any powers or performing any functions under the delegation, the delegate must comply with any directions of the Corporation.

38. Review of operation of Act

(1) The Minister for Regional Economic Development must arrange for a review of the operation of this Act to be undertaken.

(2) The review must be finalised on or before 1 July 2024 and consider—

(a) the scope of the Corporation’s activities after 30 June 2026; and

(b) the appropriate governance arrangements for the Corporation after that date.

(3) The persons who undertake the review must give the Minister for Regional Economic Development a written report of the review.

39. Repeal of the Regional Investment Corporation Act 2018

The Regional Investment Corporation Act 2018 is repealed.

40. Repeal of the Regional Investment Corporation Amendment Act 2019

The Regional Investment Corporation Amendment Act 2019 is repealed.

41. Repeal of the Income Tax (Provincial Growth Fund Limited) Order 2020

The Income Tax (Provincial Growth Fund Limited) Order 2020 is repealed.

42. Repeal of the Public Finance (Provincial Growth Fund Limited) Order 2020

The Public Finance (Provincial Growth Fund Limited) Order 2020 is repealed.

Explanatory Note

This bill aims to merge the Regional Growth Fund (RGF) and the Regional Investment Corporation (RIC) into a new Provincial Development Corporation (PDC). The new PDC will retain large parts of the original RGF and RIC. It will be a non-profit, which pays no dividends to the crown, which in turn ensures there is more money available for development activities.

B.328 - Provincial Development Corporation Bill was authored by /u/Sylviagony (Labour) and is sponsored by the Minister of Rural Affairs, /u/ItsKittay (Labour), on behalf of the government.

Committee will conclude at 6 PM, 24/09/2020.