Regional Development Policy Paper | Taking the Right Risks
Our previous work on regional development laid out the evidence that large parts of New Zealand are facing a 30 year wave of change leading to economic and demographic stagnation or decline. This policy paper weighs up the international evidence for and against a wide range of regional development policies designed to assist regions to face this wave of change head on.
It draws on more than 200 studies covering more than 90 places in 24 different countries, and delivers four key overall lessons and four policy recommendations for New Zealand’s leaders in central and local government. Our goal is to assist communities, towns, cities, regions, and our nation as we grapple with the forces of globalisation, automation, ageing populations, and climate change.
The first step is to acknowledge the long-term reality that a region is facing by undertaking a growth and decline stocktake. To this end, we provide a checklist of indicators of regional growth or decline; and a dashboard of economic and demographic performance. These are designed to empower local regional planners to maximise positive outcomes for their communities.
The second step is to understand how Smart Growth and Smart Decline policies might turn potential pathways into real positive change in our regions. We consider the international evidence on how to: improve local resilience and productivity; attract inward investment; and increase the supply of labour. We also show how New Zealand is lagging behind other countries and communities the world over in using Smart Decline policy alongside growth policy to maximise wellbeing.
When considering improving local resilience and productivity we look at the use of R&D grants and tax credits, migration’s effects on firm level innovation, picking “industry or sector” winners, the effects of top down funding on innovation and the use of smart specialisation. Turning toward how places attract inward investment we explore the use of non-financial incentives like small place revitalisation, investing in physical assets or heavy infrastructure, the role of rebranding and flagship developments and the attraction of creative industries. We also explore the use of financial place-based subsidies, finding that these often redistribute rather than reinvigorate economic activity. Looking at how places have tried to improve the underlying supply of labour we study the use of youth initiatives and the retraining of older workers, spatial migration solutions, and the use of welcoming and settlement policy.
Turning towards Smart Decline policy solutions, we examine the role that rightsizing, densification policy, demolition or green space creation, and the use of multi-use planning can have on people’s wellbeing. We also survey the increasing role that relocation and exit policy will play in New Zealand’s future, emphasising that relocation or exit must be led by the local communities themselves.
What becomes apparent from the international literature is that there are no ideal “drag and drop” solutions guaranteed to work in New Zealand. Rather, regional development policy is both high risk and needs to be highly tailored to local conditions. At the same time however, four key lessons emerge from within the literature. Taken together, these lessons provide a framework to help minimise the “bloody big risk” of spatial regional development policy:
- Goals: Communities and governments must be clear in what they want to do to enable evaluation of outcomes and the resulting adjustment of initiatives;
- Governance: Multi-level governance is crucial to success—neither top-down nor bottom-up solutions are sufficient on their own;
- Funding: Regional development funding needs to support multi-level governance and minimise the creation of dependencies; and
- Focus: Regional development strategies need to be comprehensive and include both growth and decline policies at the same time if they are to be successful.
Maxim Institute suggests that the following four policy recommendations shape both central and local government spatial policy. We recommend that New Zealand should:
- Develop clear regional development goals and rank and prioritise them to make evaluation of initiatives possible.
- Trial smart specialisation as a regional development policy tool, with the aim of boosting collaboration, and co-operation across firms and regions.
- Use special policy zones as a way to trial spatial policy change, including funding models.
- Require all council long-term planning documents to incorporate both growth and decline scenario planning.
These policy recommendations will be meaningful first steps towards ensuring the regions of New Zealand are enabled to be all that they can be, in times of growth and decline. As New Zealand moves increasingly towards harnessing the great potential benefits of spatial policy tools, we must do all we can to minimise the associated risks. It is important to bear in mind that this type of spatial “[p]olicy experimentation implies a certain tolerance for failure. Regions can be excellent laboratories, and policy makers need to be given space to learn from mistakes.” Implemented well, these policies should give our regions the chance to flourish that they deserve.