Regional Development

April 30th, 2013 at 3:00 pm by David Farrar

The Governnment has just published a very readable regional economic activity report. It is full of data and graphs such as this one.

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It’s a great resource for people wanting to understand our economy at a regional level.

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Not very hands off

January 24th, 2013 at 12:00 pm by David Farrar

David Shearer is going to give a speech next week and claim the Government is a hands off economic manager, and Labour will be a hands on economic manager and this is the big difference. It’s a speech that may have been true in the early 90s, but anyone who seriously claims the Key Government is hands off is letting ideology get in the way of reality.

Personally I think the Government should be more hands off. I think many economic interventions are well intentioned but often have unforeseen consequences.

The Press reports:

A large Canterbury irrigation scheme may be among the first considered by a new Crown company that will act as a bridging investor.

Minister of Primary Industries David Carter said yesterday that the Government was setting up a company that would invest in feasible, affordable and profitable irrigation schemes.

The Cabinet decided late last year that a company was needed to run the Government’s $400 million irrigation fund. It would receive $80m in this year’s Budget for its first year of operation, he said.

It was appropriate the Government took the investment role to ensure the right projects got under way, Carter said.

“The Crown-owned company will be a minority investor in any development project and it will also plan to be a relatively short-term investor,” he said. “A number of groups are developing proposals for these larger, regional-level schemes, and the Government expects to consider at least one proposal in the next 12 months.”

Irrigation New Zealand called the move “well deserved”.

Chairman John Donkers said irrigation schemes were a huge financial pressure for farmers and farming communities.

“For many years farmers have personally carried the cost of water infrastructure, which can run into the millions of dollars yet benefits regional economies enormously,” he said.

“Having a government-owned company invest in the initial stages takes the pressure off small communities to find that kind of capital upfront. The benefits for regional New Zealand can’t be underestimated.”

It was important to realise the Government was not giving away money. “This is equity funding. The Government is going to want it paid back over time,” he said.

So when David Shearer claims the Government is ideologically averse to hands on involvement in the economy, I hope someone asks him about the $400 million irrigation fund, the $1.5 billion for ultra-fast broadband, $100m for export assistance, $15m for business capability, $30m for sector and special events, $30m for international growth opportunities, $50m for large budget screen productions, $10m for major events, $12m for venture capital, $10m for primary industry grants, $9m for sustainable farming, $70m for primary growth partnerships, $220m for CRI funding, $178m for high value manufacturing and services research, $106m for biological industries research, $84m for health and society research, $47m for Marsden Fund and so on.

Anyone who thinks John Key, Bill English and Steven Joyce are neo-liberal hands-off ideologues is somewhat demented. Personally I wish they were a bit more hands off.

This is not to say there are no differences betwee National and Labour in terms of how involved the Government should be in the economy. There are differences, and reasonably important ones. Labour thinks the Government must own 100% of certain assets, for example. But the current differences between National and Labour in terms of involvement in the economy tend to be around the details, not a fundamental disagreement that the Government has a role in economic development. ACT has that view. Ruth Richardson (God bless her) has that view.

Shearer knows there are few votes to be won in claiming “our interventions in the economy will be better than National’s”. So what he will try and do is say National doesn’t intervene at all, and we will. He hopes enough people will believe that. The truth is far more mundane.

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