PM Key says central government rethinking its position on regional development; says understands problem of shrinking populations outside Auckland, Christchurch

By Bernard Hickey

Prime Minister John Key has told the annual Local Government New Zealand conference the government is rethinking its position on regional development.

Key was asked by high-profile Otorohonga Mayor Dale Williams about whether central government should relocate government departments and redirect industries to lower-cost and contracting cities and towns in the regions to take some of the infrastructure pressure off the must faster big cities such as Auckland and Christchurch.

"There's a lot of validity in those kind of statements," Key said in response.

"One of the risks for us is that there's heavily pronounced economic development in Auckland, but not in the rest of the country. That creates two problems. It creates enormous pressure on the infrastructure in Auckland. Equally it means you have under-utilised infrastructure around the rest of the country and that would be the wrong thing to occur and not in New Zealand's best long term interests," Key said.

"So the question is how do you encourage that economic activity and we've been doing a bit of thinking around that area and I wouldn't say it's completely crystallised yet," he said.

"What I can say is the sorts of things that help are when we continue to build infrastructure around the rest of the country."

Key referred to how recent announcements of massive new roading and rail investments in Auckland had been done separately from the Land Transport Fund paid for from petrol taxes.  "Otherwise it takes away from the roading projects that occur around the rest of the country," he said.

He also referred to the government's investment in Ultra Fast Broadband and Rural Broadband as another way it was still investing in regional infrastructure.

"There are ways of us doing it and we are giving it some thought," Key said. 

He went on to talk up the benefits of locating businesses in smaller towns and cities outside of Auckland, given they had more stable and often lower cost workforces.

The tone of Key's comments more sympathetic to regional development contrast with those in recent months from Regional Development Minister Stephen Joyce. He said on June 28 when releasing the first official regional GDP statistics that it was up to the regions themselves to promote and encourage businesses to set up and stay in their areas. 

Ageing and contracting

Williams said the problems of contracting and ageing populations in smaller cities and towns was a theme of the conference after Waikato University demographer Natalie Jackson presented a sobering outlook for most councils of ageing and falling populations.

She said 36% of New Zealand's Territorial Local Authorities (TLAs) had seen their populations drop since 1996 and this was likely to deepen and extend throughout most of New Zealand big cities, except Auckland and Christchurch, over the coming decades.

"Populations are ageing and that's bringing us towards the end of (population) growth," Jackson told the conference.

"We may not have to deal with it today, but we must put it on the agenda," she said.

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18 Comments

While there are no jobs for life - the endless restructuring that occurs in the public sector can mean someone who moves to a small town for a job, needs to move again when they are restructured out of a job as it is unlikely there are any other suitable roles in their town. At least in a city, especially the 3 big ones, there are often multiple opportunities for other work to be able to pay that mortgage.

Key was asked by high-profile Otorohonga Mayor Dale Williams about whether central government should relocate government departments and redirect industries to lower-cost and contracting cities and towns in the regions to take some of the infrastructure pressure off the must faster big cities such as Auckland and Christchurch.
What a wonderful idea...    Is there any reasons why we can't do this..??

Government certainly has it within its power to relocate Government departments, although it cannot force staff to move with them if they don't want to - so such a move may be at the expense of the quality of those departments' work, or at the expense of reducing the availability of skilled staff for other local businesses. 
 
Central Government has no power to force private companies to set up in places where they don't want to be.   Local government can try to encourage industries to locate in their regions, by providing excellent local services and infrastructure and competitive rates, but again there's nothing that can force them.

Oh boy. Oh boy. Oh Boy. It's all been done before. This organism called NZ.INC has no memory. It was called "Regional Development Subsidies" Many large companies gorged on it. Spectacular expensive failure. Costly also for the many people who followed the pied-piper-of-hamlin

Williams said the problems of contracting and ageing populations in smaller cities and towns was a theme of the conference after Waikato University demographer Natalie Jackson presented a sobering outlook for most councils of ageing and falling populations.
.......................
I don't recall the old farmers feeling it was "grim" in the old days around Lytellton Harbour. One of the Gardiners at Purua didn't want a road as "that would let the public in"

Thank goodness someone is thinking along these lines.  I'd be happy to help them with  some of the "crystallisation"! 

Kate,
I suspect it will need your help, as one gets the sense they've been thinking about it for 5 minutes, and have no ideas in practice how to deliver such plans.

It seems to me, as an ex Aucklander that it is in fact a quite poor town.  Despite maybe 100,000 people who are doing quite well, mostly the population are just hanging on economically, with massive rentals and other costs, and local government there who are quite unable to afford the neccessary infrastructure.
I would like to know for sure, but I think it's probably 50 years since I saw the first plan for the rail loop.  And despite all the ducking and diving, no one yet has worked out how to pay for that.  Nor all the other things that are undone.
These things need to be paid for, and those funds need to come out of the pocket.   The costs are so huge that it will significantly impact standards of living of the locals who pay.  No way around it. 
Rural areas appear to have high costs per person for roads etc.  But I am not sure that overall the costs are expensive, and there is a case for believing that the infrastructure costs in big urban areas are far more expensive, even per person. 
Given the problems the size of Auckland is causing itself, and the lack of determination there to pay for it's own costs, it seems unreasonable that other areas of the country are expected to pay for it.
While artifical promotion of regional development might not be desirable, Mr Key and his government need to reconsider the excessive subsidy and support it gives Auckland including things such as an unequal accommodation allowance.  Amongst a host of others.

Thing ya has to bear in mind with the Key/Joyce interactions is that SJ is the attack dog:  make a bold statement, get the reactions, surface the data and ideas.  Then and only then can a deal start to be formed.
 
Always surprises me how the media fail to get this bad-cop/good-cop or black-hat/white hat double act.   Considering how often it's played (although, to be fair, the hat wearers do get swapped around a bit).
 
Still...

Better start buying some houses in the regions then. Another great property investment opportunity coming up me thinks.

 YL - watch the Councils trip over themselves.

I feel some election bribery coming along... The message being "we have sold the power generator so we can give your community a new bridge/motorway/tunnel".... "Don't applaud now just put the tick in the right box"....
 
And there will be no questions on why we couldn't deficit spend or borrow to provide that bridge/motorway/tunnel... The only way you can get that needed public service is to sell those natural publicly owned monopolies to my rich mates...
 
And there certainly will be no questions about why those local communities couldn't keep some of their taxes and decide for themselves what infrastructure they need.
 
It is obvious that the smiley chap in Wellington knows best...  Remember to vote!

IRD could relocate to Bluff and use the aluminium smelter buildings. I hear they will be free soon. Old Tim boy will be good for them.
 
Lets see ACC could go to Gore for a SI branch and how about Eketahuna for the NI branch.
 
Put the RBNZ in little town like Tapawera - I think they would like permanent cell phone coverage there. There is an old forestry headquarters they could convert.
 
Now who else???? EQC...........Chatham Islands perhaps? Oh.. that's right the already have distance from the people. Move along.....
 
If the staff don't want to relocate - sorry there is no job and definately no redundancy.
 
 
 
 
 

Great ideas. This will get the government out into the country. 

Meebee we could relocate the IRD to whichever island Australia decides to send the boat people to ....
 
... there'd be more incentive not to drown on the way to Oz in a leaky boat ... a nice coconut palm or two to sit under , whilst gainfully employed terrorizing NZ's taxpayers ...
 
Win / Win !!

Naru island perhaps......

FYI from a reader on the issue of picking winners. Not strictly about regional development, but along similar lines:
 
Bernard
 
I know the current government does not want to pick winners in Hi tech but we do this every day in our primary sectors.
Our deep capability sectors are meat, dairy and horticulture (and rugby).
MBIE invests probably $200-$300 million + a year into Ag Research, Crop and Food etc. to build this “deep capability” so NZ has 'staying power" and can create enduring wealth.
We even have Universities like Lincoln that are dedicated to turning out skilled agricultural experts.
But we think we can do the same in our hi tech sector without the same type of “deep capability” investment or skills training support which is why we fail - exit. We never create an export base with "staying power" to create enduring wealth.
The areas where NZ is probably building some early hi tech capability is in hi tech agriculture technology, cloud and 3D.
Why not back these sectors with similar style investments and capability skills in our Universities and schools.
And our goal should be that every child should know how to program a computer before they reach college.

cheers

And oversea it is not just Central government that invests in "deep capability" industrial support to provide "staying power" for their important industries. Local government provides vital support too.
 
I have a friend who is a business administration lecturer in Vaasa, Finland. Vaasa has only 60,000 people yet can afford to run a university from local body taxes. My friend says that every department in his University is focused in one way or the other on the cities 2 major private sector employers Wärtsilä– diesel engines and ABB Strömberg – industrial and power electronics and automation equipment. http://en.wikipedia.org/wiki/Vaasa
 
Those industries in Vaasa would not exist if the local Council lacked the capability to sustain its Universities.
 
Is there a lesson here for New Zealand?