The new $1bn Regional Development Fund is in danger of being targeted for projects such as tourism infrastructure and local government shortfalls – that would be a mistake, writes Dr David Wilson, chair of Economic Development New Zealand (EDNZ) and CEO of Northland Inc.
In our briefing to incoming ministers, EDNZ sought a paradigm shift in the way regional economic development is delivered and three things in particular stand out in that respect; a new minister for regional economic development, a $1bn regional development fund, and an aspiration for New Zealand to reach R&D investment at 2% of GDP.
The combination of these things has the potential to be very powerful for the regions. However, all of these components must be part of a wider national economic development strategy which the regions, building on local strengths and comparative advantages, can support.
The $1bn fund is in danger of being targeted for large infrastructure projects and local government shortfalls in, for example, tourism infrastructure, toilets and carparks. These investments should be a given, and there are lots of different ways we might deliver on those investments, such as bonds, PPPs, asset re-investment and so on, but not from this fund.
While infrastructure is absolutely vital, and can be an enabler for economic development it is only the platform. It does very little to change the structure and strategic direction of our economy.
Government’s goal is to re-focus our economy on productive and export-led sectors to create wealth, which we wholeheartedly endorse. The real work must be done on the ground in business development, building deep capability in our productive sectors, taking advantage of our intellectual property and natural assets through smart specialisation, innovation and targeted R&D, and through targeted capital investment to support the growth of internationally competitive NZ businesses that employ New Zealanders.
Value-adding and sustainable economic development do not happen because you build a road, rail line or shift a port. We need Economic Development 201 now, not ED 101.
The challenge for the Government will be to develop a robust process and framework to ensure that the fund delivers maximum benefit to our regions and their goal of an export-led economy.
Popular political projects are not always strategic, robust or sustainable in the long term. A debt-fuelled housing bubble in Auckland is a sugar hit that benefits NZ, and Auckland, little in the long run. Long-term strategic economic development takes effort and political fortitude. This government are showing signs of that fortitude. Let’s make sure we use this fund, and related regional economic development tools, to create increased value in our exports and resilience in our regional economies.
Let’s make sure we use this fund, and related regional economic development tools, to create increased value in our exports and resilience in our regional economies.