Federated Farmers: Driving better rural infrastructure

Stephen Selwood

New Zealand's rural economy is the engine room of the national economy. Around three quarters of the nation's exports by value depend on production of raw inputs from regional New Zealand.

Ensuring our rural economy grows and our rural communities remain vibrant is a national priority and the foremost tool of public authorities to generate opportunity in our rural hinterland is infrastructure.

Current planning, regulatory and governance arrangements, however, do not support infrastructure investment to drive growth in our provinces.

There have been some very positive rural infrastructure developments in recent years. The Government's Roads of National Significance programme will allow large swathes of rural land adjacent to our largest cities to evolve in response to better access to markets and labour.

Rural broadband is connecting rural communities and businesses to the world. Irrigation projects including Ruataniwha and Central Plains will provide a massive boost for aging and declining populations in parts of Hawke's Bay and Canterbury as more intensive land use becomes possible and, with it, jobs, investment, revenue and growth.

For rural communities battling unemployment, social challenges, aging population and a general lack of opportunity, projects like these can't come soon enough. Yet far from accelerating their delivery to promote social and economic prosperity in our rural hinterland, our governing and regulatory systems provide a constant barrier to their delivery.

In the first instance, other than the nationally-focused Government, there are few councils with the capacity to deliver rural infrastructure which will make a tangible difference to rural communities. Stripping out the big city councils of Auckland, Wellington and Christchurch, the average size of New Zealand's local councils is 30,000 residents. That's one Horowhenua. Horowhenua has an annual roading budget of $5 million, less than $200,000 of which is available to support new roads.

Local councils do not have the balance sheets, rates bases or strategic capacity to identify economic and social opportunities and realise those opportunities with targeted investment. In instances where they do, current legislation hardly supports investment to generate growth. The Local Government Act emphasises cost-effective local infrastructure for households and businesses, not strategic infrastructure to maximise economic and social opportunities.

This places the overwhelming majority of reliance on central government to provide the investment needed to grow rural economies. Here, the small size of councils acts as a double whammy against rural communities. The shouts for more Government money in consolidated cities like Auckland and Christchurch is many times louder than anything a local mayor of 10,000 residents can muster. As a consequence, taxpayer money heads towards the big centres, further increasing their opportunities and attraction relative to the provinces.

When central government or councils do rally the momentum needed to deliver rural infrastructure investment, proponents come up against the Resource Management Act. The RMA is set up to manage negative effects and provides every opportunity to oppose investment while economic and social uplift takes a back seat.

This not only slows infrastructure investment, deferring jobs and opportunity to a later generation, it increases risks to investors. Higher risk demands higher returns and, as a direct result, many viable projects which could materially improve the lot of rural communities never get out of the starting blocks.

What's needed is a fully integrated planning, governance, funding, regulation, delivery, and resource management system that will drive regional social and economic development, improve environmental outcomes and strengthen local democracy and community engagement. More importantly, councils will need the resources and incentives to go for growth.

Change of this kind requires participation by all New Zealanders. It cannot be led by councils themselves or any single government department. NZCID therefore considers that an independent Royal Commission into local government and planning law reform in New Zealand is needed.

The commission would undertake a first principles consultative review of the planning framework and the purpose, structure and funding of local government in New Zealand. It would report back to Parliament and provide recommendations on a preferred option.

If the rural community was to get behind such an initiative there would be a huge opportunity to drive changes to legislation and local government which better support productive rural infrastructure and growth.