Provincial growth fund no panacea to rural-urban divide

By Paul McBeth

June 11 (BusinessDesk) - Economic consultancy Infometrics doesn't see the provincial growth fund as the best vehicle to dealing with New Zealand's persistent rural-urban divide.

Urban centres rated significantly higher than rural areas in seven of nine well-being categories used by Infometrics in its 'Regional Well-being' report, due largely to a greater mix of skilled employment options, white-collar work, higher pay, and lower crime rates. The provinces outperformed in housing and civic engagement categories, where property is cheaper and declining election turnout wasn't as steep as the cities.

"Often when well-being is being discussed, it is only considered at a national level. But nationwide figures ignore the very real and significant differences in well-being for people in different parts of New Zealand," Infometrics economist Brad Olsen said in a statement.

The Infometrics report said the under-performance in rural areas isn't limited to the traditional economic measure of relative incomes. That offered some justification to the government's policy focus on improving outcomes in the provinces.

New Zealand First has been taking the lead in the coalition government's attempts to revive the nation's provincial economies, giving minister Shane Jones responsibility for overseeing a $3 billion fund to support those regional initiatives.

Olsen said Northland and Gisborne - which were near the bottom of most of Infometrics' well-being categories - had received significant allocations from the provincial growth fund.

"However, Infometrics’ analysis suggests there are wider societal issues that will not be addressed by the Fund’s current focus on jobs," he said. "Broader social policy initiatives are needed to prevent further declines in provincial well-being."

The report said business and economic initiatives need to be linked to broader social policies over a long period of time to deal with intergenerational issues.

"Simply creating jobs in these regions is of limited use to the community if there remains a significant proportion of people who are not ready or able to work," it said.

Jones will appear before Parliament's economic development, science and innovation select committee on Thursday to answer questions over his infrastructure and regional economic development portfolios.

The government presented its first well-being budget last month, making greater use of the Treasury's living standards framework to explain the thinking behind policy goals and how they're funded. Infometrics' 30 indicators differ to those used by the Treasury and Statistics New Zealand, often because there isn't enough reliable data at a regional level.

Eastland - spanning Whakatane, Kawerau, Gisborne and Wairoa - scored poorly across all indicators except environment, and had the worst results for jobs and earnings. Otorohanga, South Waikato, Waitomo and Ruapehu in the central North Island also scored poorly across most categories, especially in knowledge and skills with low levels of children attending early childhood education.

Northland had low well-being across a range of categories, with housing and social connections of more concern. Tararua and Horowhenua scored poorly in most categories, with knowledge and skills, and income and consumption weighed down by the districts' low household incomes.

The West Coast was the worst-performing district in the South Island, with high suicide rates weighing on its health category.

Wellington was one of the best performers with six of nine well-being categories at or near the top. Auckland ranked highly in the income and consumption, and jobs and earnings domains, but didn't rate well on the housing measures.

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