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Councillors at yesterday's economic development committee meeting approved the request for $72,000, a $12,000 increase from last year, to help pay for the programme in 2014-15.
They also voted to tweak the rules allowing staff to approve similar funding requests for the remainder of the year, despite concerns from Cr Lee Vandervis.
The decisions came after a report by council economic development unit manager Des Adamson said the extra funding would help place 48 interns with city businesses during the year.
That was up from 40 interns, helped by council funding totalling $60,000, the previous year.
Councillors supported the increase after deputy mayor Chris Staynes said the internship programme had been ''very successful'' so far.
The initiative, launched in 2008, had helped place more than 200 interns in temporary roles, leading to more than 100 securing permanent jobs, a report to yesterday's meeting said.
The programme was a partnership between the council, companies and tertiary education providers. The cost of wages was shared between the council and participating businesses.
The initiative was run by Enterprise Dunedin but supported by the Grow Dunedin partnership, itself a product of the city's economic development strategy, which recommended the funding increase to the council.
However, a vote to change the rules under which funding for similar initiatives could be approved proved more contentious.
The rules allowed Mr Adamson to approve grants not exceeding $10,000, while those worth between $10,000 and $50,000 needed sign-off by three senior figures, including council chief executive Dr Sue Bidrose.
In addition, individual grants worth more than $50,000 needed the approval of the finance committee.
Mr Adamson told yesterday's meeting the rules needed to be reconsidered, to clarify whether multiple small grants, together worth more than $50,000, also needed the committee's approval.
Some larger projects, such as Export Education Uplift, had smaller sub-projects which also needed funds, and the rules risked slowing down progress, he believed.
He wanted the trigger point for combined funding across multiple sub-projects lifted, from $50,000 to $100,000, before the committee's approval was needed.
Individual grants worth more than $50,000 would still need the approval of councillors, he added.
Cr Vandervis questioned the need for urgency, saying the rules concerning council grants were ''already pretty generous''.
Smaller sums still needed the oversight of councillors, otherwise he would be left feeling ''like a rubber stamp''.
''I don't like the idea that we are giving grants at short notice to anybody ... unless some real urgency can be shown, this committee needs to know about, and needs to approve in advance, what is being granted.''
Cr Richard Thomson disagreed, saying the the funding was already overseen by one governance body, in the Grow Dunedin partnership.
Adding another layer, particularly when councillors had not been involved at an early stage, would be ''fraught'', he believed.
''I think that's actually bad governance.''
Councillors voted to accept the change.
Cr Vandervis recorded his vote against it.