New Zealand Budget

Analysis

Regional Development: Developing our “within New Zealand” story

2017 New Zealand Budget

By Linda Meade

For many years we have been developing our “New Zealand story” – how we project ourselves to the world.  Some might say that in doing so we have finally come of age as a country. The narrative presented by Budget 2017 – that New Zealand is a country growing in confidence able to make choices about its future – certainly supports this.

For many years, the United States has successfully projected itself as the land of opportunity and Australia has styled itself as the lucky country. Yet New Zealand did not project itself in a similarly positive way. But in the 1990s international tourism started to boom off the back of cheap airfares and Tourism NZ launched the “100% Pure” brand. The wine industry started to flourish and we started to think of ourselves as sophisticated. And as the Internet took off we found the tyranny of distance less problematic than in the past.

More recently, our political and economic stability has helped us weather the global financial crisis and survive three devastating earthquakes. While there are a number of challenges we still face, through an international lens, we are doing well and our global brand is on the rise. New Zealand has come a long way in a relatively short time.

A large part of our success has been buoyed by the success of Auckland on the global stage. Like other global cities, Auckland is viewed as a destination for domestic and international capital and labour. This is not by accident. It happened through the process of natural urbanisation that was facilitated by a number of deliberate policy settings, including the establishment of an integrated regional local government.

But in some respects Auckland has become the victim of its own success.

Auckland’s growing pains have prompted important discussion around what the roles of other regions and cities should be as part of the New Zealand story. What roles should our regions, including Auckland, play in concert to support our overall success? We refer to this as the “within New Zealand” story.

As any investment advisor will tell you, putting all your eggs in one basket is never a good idea. Luckily for New Zealand, the foundations provided by the agri-economy and the continuing exponential growth of tourism provide useful anchors for the economy. While ensuring Auckland’s success continues to be of paramount importance, in our view there also needs to be consideration of how to actively support economic growth outside of Auckland.

As already noted, there has been much effort on developing the New Zealand story that we project to the world. What’s less developed is the within New Zealand story.

This is the next stage of the conversation. What roles should Wellington and Christchurch, for example, play in New Zealand’s success? How should they also be encouraged to outperform the market and be global cities in their own right – but different to Auckland?

So what could a within New Zealand story look like? Perhaps it might have some of these features:

  • Wellington and Christchurch could agree a “city deal” with central government which encourages investment in specific initiatives to drive growth based on pre-existing strengths in those cities.
  • Rationalisation of the broader transport sector to take a “system” view of roads, rail, ports and airports.  For example, not all major cities need a port so long as there is an excellent and reliable rail link to another port and a resilience strategy in place in the event of a natural disaster.
  • New local development authorities (LDAs) could be established, alongside special economic zones – perhaps with some targeted tax incentives such as R&D tax credits for medium sized companies. The LDAs could support delivery of affordable housing at scale while the economic zones would focus on local strengths to generate jobs – safe in the knowledge that workers would have access to decent quality and affordable housing.

To what extent did Budget 2017 help define this journey? At a level it did. It provided funding for important regional transport infrastructure, including $9.17 billion to be invested into the state highway network over the next four years, and $812 million for repairing State Highway 1 in and out of Kaikoura. And the Budget delivered $178 million for tourism infrastructure. But these haven’t changed the existing paradigm of New Zealand’s urbanisation story.

There are any number of ideas but ultimately our other cities and their surrounding regions need to attract global talent and capital and differentiate themselves from Auckland. Having at least three global, but different, cities is not an unrealistic goal. Done properly it would accelerate New Zealand’s overall growth, increase our resilience and improve the relative competitiveness of our regions.

 

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