New Zealand Initiative's Executive Director Dr Oliver Hartwich says councils should be given the power to create their own Special Economic Zones to boost growth.
The New Zealand Initiative says councils should be given the power to create their own Special Economic Zones to boost growth.
‘we’re often trying one-size-fits-all policies designed in Wellington, in Parliament, in the Beehive, and then applied across the whole country. We think we should actually try different policies and we should trial them out first on a smaller scale just doing it with one council at a time first and see whether these new policies actually work.’
The New Zealand Initiative’s Executive Director Dr Oliver Hartwich told TV One’s Q+A programme, that councils should also get a share of the taxes that come from the new growth.
‘If it works, of course the West Coast would keep some of the extra proceeds of growth; it would keep some of the taxes generated, and then we could see whether we could try something similar across other parts of the country as well.’
Dr Hartwich told Q+A, ‘we think, rather than waiting for this faraway day where we get wholesale reform of the RMA, we could actually trial out some of the liberalisations locally. And I think the chances of that happening are far greater than waiting for this day when we actually get the reform that the RMA really needs.’
Dr Hartwich also said, ‘if Wellington, for example, wanted to increase its foreign direct investment intake, we could actually take Wellington out of the Overseas Investment Act…
‘..because, frankly, we are not facing the kinds of Crafar Farms, Lochinvar Station problems in Wellington because there’s not much farmland around. So Wellington would be the perfect place to try out liberalisation of the Overseas Investment Act.’
Dr Hartwich said, ‘this country needs to have a debate about the role of local government and its relationship to central government.’
RAW DATA: Q+A transcript: New Zealand Initiative’s Executive Director Dr Oliver Hartwich
Watch the interview here
GREG Welcome back. The business-backed think-tank The New Zealand Initiative says councils should be given the power to create their own special economic zones to boost growth. It’s the key argument in a new study on finding new ways to grow regional prosperity. Their report also suggests councils should get a share of the taxes that come from that new growth too. The New Zealand Initiative’s executive director, Oliver Hartwich, joins me now. What do you want these economic zones to look like first and foremost? Is the RMA and change in the RMA the first target?
OLIVER No. What this is all about is a realisation that New Zealand is one of the most centralised countries in the developed world. 91 cents of every dollar of government spending, for example, are spent by central government; only nine spent locally. The other thing is, actually, with a degree of centralisation comes a degree of centralisation of decision-making, so we’re often trying one-size-fits-all policies designed in Wellington, in Parliament, in the Beehive, and then applied across the whole country. We think we should actually try different policies and we should trial them out first on a smaller scale just doing it with one council at a time first and see whether these new policies actually work. If they work, great. We can actually copy these experiences and we can roll it out across the country. If it doesn’t work, of course, the damage is limited to just this one council. But this way, we could actually experiment with different policies.
GREG Give me an example. Give me a real-life example. Let’s take the West Coast, for example. It’s been hit, as we know – mining closures, unemployment. What would you do to the West Coast to make life better? What changes, first and foremost, would you do?
OLIVER First of all, we know that when it comes to mining exploration, minerals exploration, New Zealand is a very difficult place, actually, to navigate. We know that other places are much better when it comes to encouraging mining. Take a look at Australia, for example. Have a look at South Australia in particular. And if the West Coast actually wanted to take inspiration from that, they would be able to roll out that scheme. There would be no damage to the rest of the country; we would just see whether it works in a New Zealand context as well. If it works, of course the West Coast would keep some of the extra proceeds of growth; it would keep some of the taxes generated, and then we could see whether we could try something similar across other parts of the country as well.
GREG The West Coast, though, of course, would be a loaded example in so much as you’ve got the conservation side of it. And I can imagine a lot of other people are not going to like any changes that perhaps gave the green light to more mining or more environmental impact. What do you say to that?
OLIVER Of course, but that is really the strength of our approach because we’re not imposing anything on anyone. We’re actually asking local communities to make their own decisions. So this would really be government for the people by the people and close to the people because we’re actually strengthening local democracy, and local communities could have a say in all of this. They could balance the economic growth and the proper opportunities with environmental concerns. Probably they could do it far better than just simple bureaucracy in Wellington.
GREG Steven Joyce, though, says things in the regions are growing and going well. Why is this needed at all?
OLIVER Well, some places could probably do with a bit more growth. Take a look at Wellington, for example. That was one of the regions that the Prime Minister says is not doing so well. If Wellington, for example, wanted to increase its foreign direct investment intake, we could actually take Wellington out of the Overseas Investment Act. We could actually let the council decide whether they would like to be a bit more liberal about foreign direct investment because, frankly, we are not facing the kinds of Crafar Farms, Lochinvar Station problems in Wellington because there’s not much farmland around. So Wellington would be the perfect place to try out liberalisation of the Overseas Investment Act.
GREG Okay, there appear to be three key points here. First of all, the RMA. Secondly, the Overseas Investment Act, and, perhaps more dramatically, changing taxes province to province. The first one, I think the government would want to get rid of that red tape if possible, as well – the RMA – wouldn’t they?
OLIVER Well, the RMA is an act, of course, that’s been with us for more than 20 years and over this time we’ve basically tried to reform it every single year with not much success. So we think, rather than waiting for this faraway day where we get wholesale reform of the RMA, we could actually trial out some of the liberalisations locally. And I think the chances of that happening are far greater than waiting for this day when we actually get the reform that the RMA really needs. But it’s not really about the RMA. It’s about trialling out different policies. It could be about the RMA; it could be about planning; it could be about immigration; it could be about all sorts of things. The key to all of this is really that we’re enabling, we’re empowering local communities to have their say rather than trialling out one-size-fits-all policies which, in the end, often turn out to be one size fits none.
GREG Is there a risk, though, that central government’s going to say, ‘Well, all fine and well. You’re empowering local councils, but that’s taking power away from central government.’ And they’re not going to let it happen.
OLIVER Well, it could actually be a positive for central government as well, because we’re talking about generating some kind of economic development, economic growth, which otherwise would never happen. So in the end, we’re talking about some deal between central and local government whereby the proceeds of this extra growth would be shared between central and local, so there’s a positive in it for both central and local government.
GREG Have you spoken to the government? Have you spoken to Steven Joyce?
OLIVER We’ve spoken to Steven Joyce. We’ve spoken to other government ministers. We’ve spoken to the Opposition. Of course we’ve talked to councils as well. And we see that there is a growing interest in these ideas.
GREG And first of all, Steven Joyce, because he’s the one who’s going to yea or nay it, I guess, ultimately. What’s the reception been like?
OLIVER Well, I think what we’re seeing with all of these politicians is actually a degree of curiosity about this idea because it’s never been tried in New Zealand. It’s something that’s been tried elsewhere. There are 3500 special economic zones around the world in 130 countries. The UK is currently experimenting with schemes that are really going in our direction. New Zealand, I think, is one of the laggards when it comes to introducing special economic zones, so therefore I sense a degree of curiosity among our politicians to try out something like that here.
GREG One example, as well, that was given – I’ll try and break this down as best I can. If you make a region more attractive with, say, the RMA gone, more people are going to go there. If more people go there, more people are going to live there. More people live there, that’ll take the pressure as well off the housing market like, say, ooh, I don’t know, Auckland. Is that going to happen? Or is that just too far down the pipe?
OLIVER No, that’s exactly what we would like to see happen. The other thing, of course, we want to see happen is once you install a special economic zone in one place and it works, it’s successful, other places in New Zealand should have an automatic right to get the same exemptions from national legislation as well. So the idea is not to create favours, not to really just single out a specific region, say, ‘This is the region we want to grow and we’re picking a winner.’ We actually want to find out what works. If it works, we can apply this experience to the rest of the country. Say something works in Wellington or in Auckland, then Dunedin should have an automatic right to say, ‘That’s what we want as well.’
GREG So ultimately, if some of these were to put in place, are you looking at attracting international business or just moving businesses that are already here out of the central cities and off to the regions? Who are you aiming this at?
OLIVER We want to see more foreign investment, of course. We want to see more international business in New Zealand, and we want to make it easier for companies that are already operating in New Zealand to grow, because we’re not picking any winners. We just want to create economic growth. We want to create growth for communities, and we want to experiment with different policies that we can then apply to the rest of the country.
GREG Okay, so where to from here? What do you do next? You’ve got your book. You’ve got this here, and I imagine this is a fairly comprehensive report. What now?
OLIVER There needs to be more work to be done. There’s more work to be done on actually designing the specifics of local government finance reform. That’s another project that we are currently tackling at the New Zealand Initiative. And more broadly speaking, we need a debate about local government and about localism. Again, as I said, other countries are currently moving in the direction of having greater power for local communities. In New Zealand we’re still talking about a very centralised form of government, and I think this country needs to have a debate about the role of local government and its relationship to central government.
GREG The housing crisis in Auckland - we did touch on this before. Do you really think this could go some way to addressing that?
OLIVER Absolutely, because part of the housing crisis, of course, is the crisis of delivering infrastructure. So we’ve got some ideas on how to incentivise delivery of new land for development by making it easier for councils to finance the infrastructure needed. For example, we had a previous report where we said we could probably earmark the GST paid on new developments and basically rebate that GST to councils so they can actually finance the required infrastructure for these new housing developments. We could also talk about relaxing, for example, some density or height regulations which would just make it easier for a council like Auckland to deal with the challenges that come from a growing population.
GREG All right, thank you so much for your time.
