Town and country, Brian Easton

Growing Apart: Regional Prosperity in New Zealand
Shamubeel Eaqub
Bridget Williams Books, $15.00,
ISBN 9781927277614

When the Farm Gates Opened: The Impact of Rogernomics on Rural New Zealand
Neal Wallace
Otago University Press, $30.00,
ISBN 9781877578724

In the last hundred years, the median population centre of New Zealand has moved from near Nelson (which is at the geographic centre of New Zealand) to near Hamilton. The drift north has been remorseless, as has been the drift to the cities. A hundred years ago, one in two New Zealanders lived rurally; today it is one in six, fewer than those who live in Auckland.

Does it matter? Those living in regions think so – they would, wouldn’t they? Those living in the large cities don’t – ditto. What do economists think? Shamubeel Eaqub, a principal economist at the New Zealand Institute of Economic Research, thinks it matters. He probably travels around New Zealand more than any other economist, and so has a feel for both sides.

His Bridget Williams Books (BWB) Text, Growing Apart: Regional Prosperity in New Zealand, opens with a brief review of the available regional data. Measured by median household income, there are three groupings: the three biggest cities, all above the national average; Northland, which is well below; and the remaining rural or rural with provincial cities, which cluster around about 85 per cent of the national average. That may well be the pattern one would expect and, Northland aside, perhaps not a matter of concern. (There appears to be much less variation at the bottom of the household income distribution – presumably the result of social assistance.)

It is when the population change is considered that the worries begin. According to the Population Census, 16 local authorities in the North Island and three in the South Island had population declines in the 2006 to 2013 period. (I’ve excluded Christchurch because its population decline reflects the population moving outside the city boundaries after its earthquakes.)

But why has the falling population been occurring? Eaqub goes into some detail, but the key effect seems to be that the declining regions have slow growing industries in employment terms. Without job opportunities, the working-age population moves out (or, in the case of those doing tertiary training or OE, do not return).

It is this differential migration which is the greater worry. Natalie Jackson, of the University of Waikato’s National Institute of Demographic and Economic Analysis, argues that many regions (or local authorities) face a challenge of providing for their elderly population on a diminishing revenue base. It is also harder for centrally provided institutions – such as hospitals – to provide where there are strong economies of scale.

That leads to the remedy of promoting more jobs in the regions, but it is a lot harder to say which. The government-subsidised (and infamous) Matai Industries making plasticware on the West Coast in the 1970s did not last long. Broadband may be key to many employment opportunities, including self-employed home workers supplying services offshore. You will not be surprised that, as a general rule, the declining regions get a worse service.

Eaqub does not recommend particular policies, instead arguing for further careful investigation. He is right. Too often we grab a policy which is simple, attractive, expensive and doesn’t work.

And there is the flip side (hardly discussed in the book). About 15 years ago, some economists – led by Treasury, as I recall – saw the need to strengthen Auckland in order that some industries had a chance to survive in New Zealand rather than move offshore to Sydney: head offices, finance, biotech … We need to avoid the ambition of a past minister of regional development who wanted all our regions to grow at an above average rate. Economic forces will continue to have some regions growing slowly or even declining. Perhaps the primary public policy objective should be to reduce the damaging social consequences.

Before turning to the second book, a word about BWB Texts. They have a wide ambition and some may become an important resource for those outside the inner economic debate. I don’t think professional economists deliberately exclude the public, but the platforms for public exposition are narrow (and narrowing); magazines and business pages are more likely to commission journalists who do not have a good grasp of the issues. BWB Texts may help fill the gap (allowing greater length than blogs, another gap-filler). Other recent releases are Wellbeing Economics by Paul Dalziel and Caroline Saunders and The Piketty Phenomenon: New Zealand Perspectives (in which I have a contribution). Hopefully, they will enable those outside the inner debates to get a better idea of the issues the profession is struggling with, without the dumbing down of magazines and newspapers.

When the Farm Gates Opened describes rural events of a quarter of a century ago, when neo-liberals applied their policies to the farm sector (as they were doing elsewhere). It was a time of great adjustment, compounded by a crushing drought. Farmers went under; others managed to struggle through. Journalist Neal Wallace tells the story through the memories of some of the survivors. The result is a picture of the transition which is not as glowing as the neo-liberals claimed it was – but that is generally true – and reminds us that, whatever the economic outcome, the stress on individuals and families was huge.

The anecdotes don’t always stack up. Many recall farmer suicides, but, as historian John Weavers reports in his thorough Sorrows of a Century: Interpreting Suicide in New Zealand, 1900–2000, farm suicides occur all the time, and there was no obvious rise during the Rogernomics period.

Aside from the intrinsic interest of the adjustment, Wallace is also telling the start of a story germane to Eaqub’s book. The new economic framework led to farm consolidation. The productivity gains meant that while there is (roughly) the same amount of farm land, there are fewer workers on it. That is one of the drivers of Eaqub’s report of poor employment growth in some regions, especially as fewer on-farm workers can mean fewer to service them. The poor regional performance is not entirely an economic disaster, even if it may generate a social one.

Brian Easton is an economist and public policy analyst who is writing a history of New Zealand. He has recently moved from writing a fortnightly column for The New Zealand Listener to the Pundit blog. 

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