Short term thinking holding back our regions

New Zealand is categorised as a first-world country, but the social and economic conditions in some of its regions resemble those of developing countries.

Major regions such as Auckland, have experienced rapid urbanisation, and economic prosperity. More than half of New Zealand's population resides in these regions including big cities such as Auckland, which contribute to over 55 percent of the country's national GDP and account for approximately 60 percent of the total employment.

In contrast, regions such as Northland, have experienced slow economic growth, widespread poverty, declining populations, a shortage of skilled and educated workers, and a trend of youth migration to major metropolitan areas. In 2020, the West Coast made the smallest contribution to the national GDP at 0.6 percent, slightly less than Gisborne's 0.7 percent. The average household income in Wellington is $30,600 higher than the mean household income in Manawatu-Whanganui.

The issue of regional disparities has often become one of the central issues of policies of different governments and parties, particularly during election periods.

These regional disparities are not an inevitable consequence of Aotearoa’s geography but are informed and often the direct result of political and economic policy.

We have investigated the context and history of regional disparities in New Zealand using a research framework on a Māori proverb, “Ka mua, ka muri”, which means walking backward into the future. While the future evolves from the past, it is not bound to repeat it. Ka mua, ka muri as the methodology urges us to learn from the past to navigate the future.

Our investigation of New Zealand governments’ regional development policies covers three periods -- pre-neoliberal reform, post-reform until 2017, and recent government investments in regions. It shows that various factors have generated and exacerbated regional disparities in New Zealand.

The unique geography of New Zealand does mean some regions such as the West Coast are more isolated than others, but the country's colonial history significantly contributed to the uneven distribution of resources and opportunities across New Zealand. This is at least partly because our planning system has largely been informed by planning practice in the United Kingdom, which is, of course, another country.

After World War II, different New Zealand governments used policies to try to reduce unemployment and poverty in regions around the country, but, often driven by short-term interests and political motivations, they have fallen short and have largely exacerbated regional disparities. For example, after the Economic reform in 1984 (Rogernomics), the market-driven regional economic policies prioritised regions’ competitive advantages, which referred to the unique political and economic strengths and capabilities of regions, allowing them to outperform their rival regions.

After the War, following the Keynesian economic model in Western societies, which encouraged government interventions in managing the overall level of economic activity, New Zealand governments implemented state-based plans to redistribute economic resources and activities by supporting industrial and economic development in disadvantaged regions.

Governments supported and subsided private sector industries such as mining in regions, and played the main role in the development of regions through direct investment in and operation of state mining, forestry, and farming, as well as providing transport and other infrastructure. These, however, failed to mitigate uneven regional development because they were often associated with significant costs as well as the conflicting political interests of different political parties and stakeholders.

In 1984, Rogernomics significantly changed the role of government in allocating resources and funding development projects, particularly in regions, focusing instead on encouraging competition among the regions to attract local and international private investment. The lack of investment in regions such as the West Coast resulted in a significant decline in job opportunities, the quality of services and industries.

From the late 1990s, influenced by Tony Blair's 'The Third Way' and primarily by the OECD's 'Local Economic and Employment Development' policy, New Zealand's governments adopted a novel approach to regional economic development rooted in 'new regionalism.' This approach encompassed the integration of a bottom-up community approach, the coordination of a comprehensive whole-of-government strategy, the provision of regional infrastructure, and the equitable treatment of all regions. However, it's important to note the government primarily played the role of a facilitator in regional projects and development. What it didn’t do was provide infrastructure and development through direct investments tailored to the unique needs and characteristics of each region.

Regional investment became one of the major policies for the coalition government after the 2017 election. This marked a significant turning point, as the coalition government established a new Ministry of Regional Economic Development and an Independent Advisory Panel (IAP). Additionally, they allocated NZ$1 billion annually for regional development under the Provincial Growth Fund (PGF).

Between 2017 and 2020, the substantial investment of NZ$2.3 billion resulted in the creation of 8,416 jobs in regions. However, the PGF distribution was uneven. Northland, for instance, received a substantial $527 million from the PGF, nearly doubled the amount received by the Bay of Plenty and Gisborne, which were the second and third regions with the highest levels of investment.

Following the 2020 election, the Ministry of Regional Economic Development was disestablished, and the new government continued its regional investments based on the pre-existing Provincial Development Unit (PDU), which was later renamed to Kānoa in 2021 and became a unit of MBIE. The implementation of the PGF has sparked controversy and faced criticism due to perceived conflicts of interest.

Our conclusion, following an investigation into regional development policies in New Zealand, is that that these policies have tended to be ephemeral, susceptible to alterations driven by the short political tenures of governments, party agendas, and the prevailing economic and political ideologies of the time. Consequently, these policies have frequently presented contradictions, ultimately falling short in effectively addressing the needs of regions or aligning with their unique comparative advantages.

How can we effectively tackle regional disparities with a sustained, enduring commitment? We propose a new framework that intertwines what we call Universalism and Particularism. This would involve the development of a national long-term vision for the country, the Universal, along with the Particular, regional place-based initiatives based on the distinctive characteristics and needs of specific and idiosyncratic regions.

The national vision is necessary, offering an integrated approach to regional development. This approach (intertwining the Universal with the Particular) has been successfully adopted by countries like Scotland, Wales, and Northern Ireland. They utilise national plans/visions to steer their regional development strategies effectively.

Our proposed framework extends further to incorporate region-specific development policies, tailored to the unique characteristics, needs, and advantages of each region. The framework approach ensures development initiatives are firmly grounded in both a cohesive national vision and local considerations. It would transcend the limitations imposed by prevailing political cycles and their corresponding shifts in dominant ideologies.