Part 1: Introduction

New Zealand Trade and Enterprise: Administration of the Visiting Investor Programme.

The Visiting Investor Programme (VIP) is a managed visit programme for companies and individuals who are considering New Zealand as a location for establishing all or part of their operations. This may include a new operation, a joint venture or partnership with an existing New Zealand company, or a substantial investment in one or more existing New Zealand companies.

The VIP targets investment that will create jobs (particularly higher value jobs), provide profitable and sustainable export market access, and introduce new technology and management expertise. It focuses on 6 key sectors:

  • information and communication technology;
  • biotechnology;
  • creative (particularly the screen production industry);
  • wood processing;
  • niche manufacturing; and
  • food and beverage.

The VIP is used to either generate initial interest in New Zealand or facilitate the closing of deals by likely investors. Investors are brought to New Zealand to meet with local business leaders and decision-makers, Ministers, and the executives of central and local government bodies.

The visiting investors are treated as guests of the Government. VIP funds are used to cover costs such as food, accommodation, travel, and recreational activities.

Why we decided to look at the Visiting Investor Programme

Earlier in 2004, the Commerce Committee of the House of Representatives reviewed financial information relating to Industry New Zealand (the entity then administering the VIP). The Committee raised concerns –

… over the use and spending of monies allocated to the Visiting Investor Programme, particularly in regard to the lack of disclosure on the use of monies because of commercial sensitivity.1

As a result, the Committee invited the Auditor-General to examine the VIP. At that time, we were already conducting a performance audit on the administration of grants by New Zealand Trade and Enterprise (NZTE). We agreed to examine the Visiting Investor Programme.

We agreed with the Committee that we would examine payments made under the VIP to determine whether:

  • robust and appropriate policies and procedures were in place to ensure payments made under the VIP were provided in accordance with programme policy objectives;
  • these policies and procedures were being complied with; and
  • there was appropriate monitoring and evaluation of payments.

What we examined

When the Commerce Committee asked us to examine the VIP, we asked Investment New Zealand for a list of all the visiting investors that had been brought to New Zealand, and the expenditure incurred for each visit.

Investment New Zealand was unable to provide us with complete information for the 2000-01 and 2001-02 financial years, when Trade New Zealand was the entity administering the VIP. For those years, it was not possible to obtain a breakdown of expenditure for each visit.

Investment New Zealand was able to provide us with the expenditure for each visit for both the 2002-03 and 2003-04 financial years.

We decided that we would examine:

  • for the 2002-03 year, all files and associated costs for visits that had incurred expenditure of more than $1,000 (23 visits totalling $243,165); and
  • for the 2003-04 year, all files and associated costs for visits (18 visits totalling $109,053).

Another issue arising from our audit

The figures above are based on the files provided to us by Investment New Zealand, which are derived through its system of coding invoices. There is some discrepancy between this information and the information provided to a Member of Parliament in response to a Parliamentary Question.2

The Member of Parliament had been told that in the 2002-03 financial year, expenditure of $232,403 was incurred for 21 visiting investors. When the Member of Parliament was provided with the response, it was noted that the information:

  • had been compiled by adding together all the expenditure coded to the VIP for that year; and
  • had not been physically matched to the invoices for the individual visits.

We examined files for the same period, but looked only at visits that had incurred expenditure of more than $1,000. We found 23 visits totalling $243,165. We did examine individual invoices for each visit, and matched them to the coded expenditure entries.

Structure of our report

Our report is divided into 3 further parts:

  • Part 2 describes the origin and administration of the VIP.
  • Part 3 describes the operation of the VIP.
  • Part 4 describes how the VIP is evaluated.

1: Report of the Commerce Committee (2004), 2002/03 Financial review of Industry New Zealand, House of Representatives, Wellington.

2: Question for written answer 13277 (2003).

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