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Economic well-being
- Encouraging economic development
- Partnerships
- Preconditions for growth
- Have a well-designed strategy
- More strategic regional focus
One of the important functions of local government is to promote the economic well-being of their community, both in the present and the future. However, this needs to tie in with the other goals of promoting social, cultural and environmental well-being. In areas where there is steady economic and population growth, leaving the economy reliant on market and other forces can threaten the environment and quality of life. It is the responsibility of the council to ensure that there is balance, and also that the economic prosperity of the community is planned for and not simply left to chance.
Encouraging economic development
The Local Government Act 2002 (LGA 2002) says the role of a local authority is to give effect, in its region or district, to the purpose of local government.
The average expenditure for all councils on economic development is five percent of the total council budget – and 92 percent expect economic development expenditure to increase or remain the same. Local authorities budgeted to spend $148.6 million on economic development in 2002/03.
Paeonies grown in Southland for the United States 2003 Christmas market languished in the field because the airline lacked hold space for their transport.
Partnerships
Most local government economic development activity is delivered through partnerships of some sort. Most councils are involved in multiple partnerships – joint tourism promotion and central government-supported Regional Partnerships Programmes are the most common.
District plans are used by 42 percent of local authorities to encourage economic development. This ranges from streamlined consent processes to areas designated for ‘greenfield’ development. The main area of spending in the larger councils is on events promotion, closely followed by tourism. 71 percent of councils fund an economic development agency, or have an in-house economic development unit. Only 33 percent of local authorities use the rating system to retain or attract new businesses, because many local authorities regard rates remissions as a ‘blunt instrument’ for economic development.
Wayne Hutchinson, Enterprise Manager Rural Development of Venture Southland, proudly points out the areas of tree and shrub crops at Venture Southland’s cold-climate crops facility.
Preconditions for growth
The Ministry of Economic Development (MED) recognises that LGA 2002 offers local authorities unprecedented opportunities to promote community well-being. Economic development is a core element of this – and the Ministry is at a starting point for accelerated economic development. In 2004, MED said: “There is much work that local authorities can still do – and will need to do.” An important part of this is increasing collaboration and the depth and breadth of partnerships that local authorities enter into.
Have a well-designed strategy
It is important that local authorities think broadly about how they can best work with central government to further their communities’ economic (as well as environmental, social and cultural) aspirations. The Ministry of Economic Development has facilitated a number of central government-local government partnerships for economic development, including its Regional Partnerships Programme (RPP) and its Major Regional Initiatives (MRI) Programme. MED stresses that it is critical to have a well-designed strategy that the community and stakeholders have bought into, rather than looking at the MRI in isolation as a driver of growth. Their emphasis is on the strategic thinking, not simply funding. MRIs are a tool to encourage collaboration as well as an economic development goal in themselves. MED emphasises whole regions can get flow-on benefit from the hub that is created around the MRI. A well-designed MRI should be able to catalyse further development around the target sector and related areas. Such approaches have a better chance of success than local authorities engaging alone in dispersed local initiatives.
More strategic regional focus
After three years’ experience with RPP, MED said there is:
- a more strategic regional focus, and agreed economic development direction
- strengthened and extended economic development networks and more collaborative approaches to projects
- better co-ordination and alignment between central and local government resources.
The Ministry of Economic Development says many of the barriers to economic development councils identify can be overcome by collaboration and a more strategic approach to spending. Perceived barriers include:
- economic development is too risky – some local authorities feel they lack resources and capacity to foster economic development. They do not want to ‘pick winners’
- central government policies have increased compliance costs without providing funding.
Some councils also had capacity issues, such as:
- small staff numbers in economic development agencies
- small ratepayer bases and limited funding for economic development
- the limited experience of regional councils, who have only recently been permitted to undertake economic development
- lack of understanding about economic development by local communities and local politicians.
