Wairoa and Central Hawke's Bay face an economic double-whammy of population drift and falling commodity prices which will make them unsustainable as stand-alone districts, according to a newly-released report.
The report, Understanding the Hawke's Bay Region Economy, was written by consultancy firm PwC for the Local Government Commission. The commission used the report as part of its assessment of a proposal to amalgamate the region's five local body authorities into a single council.
In the report, PwC describes Hawke's Bay as a region of "two distinct halves" with very different futures in terms of economic and population growth.
While Hastings and Napier have enjoyed strong employment growth and an increase in population, which is expected to continue through to 2031, Wairoa and Central Hawke's Bay are both struggling with falling employment and populations, the report says.
The total population of the Hawke's Bay region is projected to increase by approximately 6000 people over the next 20 years but growth will be limited to Hastings and Napier with small declines forecast for Wairoa and Central Hawke's Bay. "The declining population in Wairoa and Central Hawke's Bay poses several complications for infrastructure and governance; a decreasing population over a large land area makes for expensive, hard-to-fund infrastructure requirements," the report says.
It says the projected drop in residents, combined with the aging of the population, will make it harder for Wairoa and Central Hawke's Bay councils to collect the rates needed for providing adequate infrastructure in their districts.
The report says the two districts face a further blow due to their strong reliance on sheep farming given predictions of a drop in future wool and meat export receipts.
The Local Government Commission announced last month it was proposing Hawke's Bay's five councils be merged in a single authority which it believed would give the region "the best option for dealing with future trends in population movement and economic development".
The plan is strongly opposed by the Mayors of Napier, Wairoa and Central Hawke's Bay but supported by Hastings Mayor Lawrence Yule. The issue is likely to be the subject of a region-wide referendum late next year.
Last week the commission released a number of documents, including the PwC report, that formed the basis of its decision.
While the PwC report painted a generally negative economic outlook for Wairoa and Central Hawke's Bay, it also highlighted potentially positive developments for the two districts.
It said the proposed $265 million Ruataniwha water storage project in Central Hawke's Bay could help transform the local economy, leading to more stability in employment and population.
Wood harvesting in Wairoa is expected to double over the next decade and this could boost employment in the district, the report said.
Central Hawke's Bay Mayor Peter Butler said yesterday the Local Government Commission was following a central government agenda in favour of the amalgamation of councils around the country.
"It's going to be us that are the thorn in the backside of the pro-amalgamationists when it comes to the [referendum] vote."
Wairoa Mayor Craig Little said amalgamation would not improve services for the Hawke's Bay region's smaller centres because their infrastructure needs would remain well down the list of priorities under a single council which it is proposed would be headquartered in Napier. Mr Little said amalgamation would also lead to job losses in Wairoa as council services were centralised, and that would result in further decline.