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Opinion: Government wants better co-ordination between regions

By Michael Daly of NZPA

Friday 1st September 2006

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As it works on transforming the country's economy, the Government is "refreshing" the way it goes about supporting economic development in the regions.

Economic Development Minister Trevor Mallard outlined the proposals in a speech to the Economic Development Association of New Zealand (EDANZ) conference in Dunedin.

In doing so he portrayed the policy of the past six years as a success, saying a major impetus at the start was the low growth and low employment certain regions were experiencing.

Some of those regions were now "surging" ahead, he said pointing to Northland's growth of 2% annually, comparing it to, among other regions, Auckland where the rate is an anaemic 0.9%.

A week earlier in a cabinet paper Mallard identified the Government's regional policy as a factor in the general raising of economic development capability across the country.

But he also acknowledged the role a positive economy had played.

"Every region in New Zealand has benefited from the period of economic growth that the country has experienced, and unemployment has been reduced in every region, including those regions that were previously regarded as having acute needs," he said.

In the June quarter, Statistics New Zealand put the national unemployment rate at a lowly 3.6%. Northland remained a laggard with a rate of 5.2%, although it was doing better than Wellington where the rate was 5.8%.

Despite the good employment news Mallard acknowledged in his EDANZ speech that the economy still faced "significant challenges", pointing to sluggish productivity in particular.

The Government has established five themes in its bid to deal with those challenges.

Those themes are globally competitive firms, world class infrastructure, innovative and productive workplaces, environmental sustainability, and Auckland - an internationally competitive city.

Mallard said the present regional development policy had resulted in many regions tending towards an inward focus.

Now he wanted to see what could be done regionally to support the Government's national objectives.

EDANZ chief executive Bevan Graham told NZPA that economic development challenges had changed.

A decade ago the challenge was to reduce unemployment. Now unemployment was low and participation in the workforce high the issues were around skills shortages, he said.

Improvements in people's wellbeing had been a sign of the economic times, and the "economic planets having been in alignment for a while with good commodity prices".

But it was important to look at the performance in comparison with other countries New Zealand compared itself to, Graham said.

"All that's happened in the past few years is that our strong growth performance has stemmed the decline (in living standards relative to comparison countries)."

Many people in New Zealand had bright ideas, but "what we lack is sufficient people ... who can actually take a smart idea and turn it into a viable commercial proposition", he said.

"Part of what we're doing in economic development ... is help facilitate those sort of things happening, the commercialisation of technology, for example."

Strategies sought to ensure the environment was right for economic development, while economic development programmes delivered at the national, regional and local levels, were aligned and co-ordinated, Graham said.

He acknowledged it was difficult to measure the contribution made by regional development programmes.

Growth in GDP, jobs and productivity could be measured but it was difficult to say whether such improvements were a result of such programmes.

"What you can do is at the next level down, you can look at individual programmes and you can measure the outputs of them," he said.

As long as those programmes were aligned with such national objectives as raising productivity and higher growth then "you are making a contribution".

Mallard is proposing making some of the Government's regional development funding contestable, and reducing the number of regional groups the Government deals with.

The contestability would come in for so-called major regional initiatives under which up to $2 million is provided every three years for specific projects. There are now 19 such initiatives around the country.

"The major regional initiative process has proved a great success in building collaboration and sharpening the focus on what matters for your regions," Mallard said.

"But to support economic transformation, we need very high quality projects that support both regional strengths and national priorities."

Mallard also wants a reduction in the number of regional partnerships run by government agency New Zealand Trade and Enterprise, from 26 now to about 14.

"This is a big proposed change for the Regional Partnerships Programme (RPP), but one that I believe is essential if regional economic development is to take the next step upwards and really make its mark on how we do as a country offshore," Mallard said.

Projects under the RPP include the major regional initiatives, as well as grants of up to $100,000 every three years for strategic planning, and up to $100,000 a year to build regions' economic development capability.

Experience with the RPP had shown that collaboration within and between regions did not come easily, Mallard said in his cabinet paper.

Central government had a key role in providing leadership to overcome some of the co-ordination failures that prevented regions from achieving an optimal business environment.

"As we look to deepen the level of collaboration within and between regions there may be some cases where this will require more intensive work by government," he said.

The Government needed to think carefully about how it prioritised its actions, as it was not feasible for it to engage in a co-ordinated way with even 14 regions.

Also, a range of government activity now operated at the regional level, dealing with drivers of regional economic development, and depending on regional buy-in to be effective. Feedback from some regions suggested that activity was not as well co-ordinated and aligned as it could be, Mallard said.

Officials are now working to identify issues or activities in regions that would benefit from a greater level of co-ordination, and are to report back by December 1.

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