Industry New Zealand - Business Growth Fund Grant to The Warehouse

29 July 2003

Mr Rodney Hide MP
Parliament Buildings

Dear Mr Hide


1. You wrote to the Auditor-General on 6 November 2002 regarding a Business Growth Fund (BGF) grant of $75,000 made by Industry New Zealand to The Warehouse Limited (The Warehouse).

2. You were concerned that The Warehouse does not meet the eligibility criteria for BGF funding, specifically in relation to the size and the growth potential of the recipient of the grant.

3. We apologise for not being able to respond to your concerns earlier, but as you will see from our response, the issues raised by your letter were complex and needed considerable time to work through.

4. We have discussed the grant with Industry New Zealand (INZ) and more recently with New Zealand Trade and Enterprise (NZTE) – the Crown entity formed from 1 July 2003 from the merger of INZ and Trade New Zealand. We set out our findings and conclusions from our review of the grant as well as NZTE’s response to the issues we have identified.


5. We found that The Warehouse was not a direct beneficiary of the BGF grant. The beneficiaries were the ten suppliers of The Warehouse. None of the ten supplier companies are part of The Warehouse group of companies.

6. However, we found that the grant did not meet the size or growth criteria set out by Cabinet for the BGF in Cabinet Economic Development Committee minute (DEV (00) M21/1 dated 13 September 2000). The reasons for our view are explained in paragraphs 22 to 46 of this letter...