Regional Development Minister, Shane Jones, Photo: RNZ / Angus Dreaver
The Regional Infrastructure Fund is open to applications from today, but is mostly focused on loans and equity investments rather than grants.
The minister behind it says its focus on resilience is aimed at climate adaptation, not mitigation - and until the rest of the world cuts emissions New Zealand's ability to do so is "somewhere near zero".
The $1.2 billion fund was promised in National's agreement with New Zealand First and revealed in the Budget in May, with $200m set aside for flood infrastructure.
It includes $400m a year over three years, with $300m each year in capital spending and $100m a year in operating. Initial Budget documents suggested it would focus on projects of between $1m and $50m.
From today, groups with infrastructure projects that improve regions' ability to handle shocks, or support growth through productivity or connectivity, can apply for funding.
Regional Development Minister Shane Jones told RNZ that while some grants would be made available, he expected they would make up only about a quarter of the funding doled out.
"The focus very much is on enticing, incentivising enterprises and other entities to spend their own money as well.
"After all, investment is going to unlock potential in the regions with the fast-track legislation. I'm confident we'll see more investment but there will be a case from time to time to try and accelerate investment through this fund, as well as shore up our regional infrastructure."
Instead, the majority of the funding would be for loans and equity investments, granting the government some way of recouping at least some of the money.
Jones said it was a move from "co-governance to co-investment".
"Co-investment means that one and one can equal three. Now, some of the co-investment will be private sector from time to time, some may even be regional and local government - that's going to depend on the priorities of the regions.
He said the different approach was a result of challenging economic circumstances.
"This fund is operating in a set of economic circumstances that are quite challenging," he said.
"We need to both harness and unlock other sources of capital. There's over a trillion dollars worth of capital in various private sources in New Zealand. And if we can entice some of that into the new generation of wealth-creating job-rich enterprises in regional New Zealand, that'll be a fantastic outcome."
Jones said there was no shortage of interest in the fund, and the focus was on "where we can harness the power of the market, but we may need to de-risk an element of the development question".
When asked about what that de-risking would refer to, he said the previous Provincial Growth Fund had dedicated funding to mining, and "that funding has since been paid back by the gold miners - that may or may not happen again. There are other projects: in the food sector, in the aquaculture sector, in the infrastructure sector".
About half the $200m set aside for flood protection is going towards 42 projects identified in the combined regional councils' Before the Deluge 2.0 report, falling short of the $200m investment and 80 projects the councils requested co-investment on.
Jones said the money was to "address the egregious cases of flood vulnerability" reflected in the list provided by the Regional Councils of New Zealand, and it was about addressing the challenges posed by climate change.
"I personally have had enough of the shrillness and the uncosted hysteria coming from various quarters about climate change. We need money to cope with adaptation.
"The first major allocation of the 1.2 billion is an investment in adaptation, as we deal with more volatile weather. And obviously this is an ongoing challenge as our weather situation continues to challenge communities, local and regional government, and this is a practical response."
He rebuffed the suggestion there was also a case for mitigation, however.
"This is not a fund that is dedicated to climate mitigation. I'm a politician who's predominantly interested in adaptation. Until the rest of the world reduces their emissions, the capacity of New Zealand to influence the global emissions profile is somewhere near zero," he said.
"None of us are unmoved by the images we see in the media about the effects of the weather in the Tai Rāwhiti, broader area Wairoa, parts of Heretaunga, parts of Tai Tōkerau. But just complaining about it, and just joining a chorus of fearfulness is not going to change anything.
"I only hope and pray that we do get various proposals forward, that will lead to us increasing the adaptive responses that New Zealand has to make."