Opposition leader Andrew Little has announced a Labour-led government would spend up to $20 million to boost the Gisborne economy.

Little announced it would match dollar for dollar local investment to construct a factory for building materials.

"One of the biggest strengths of the Gisborne region's economy is timber, yet too many logs are being shipped straight offshore without jobs and value being created for locals," Little said.

"This money will match dollar for dollar investment from businesses and local economic development agencies, and be subject to a robust and transparent tender process."


Gisborne and Hawke's Bay have the highest unemployment rate in the country.

Little said he intended to marry Gisborne's need for jobs with its wood assets and the country's need for affordable housing.

The policy announcement said the stimulus package of up to $20m would enable the construction of a timber prefabrication plant and associated infrastructure.

"This funding could be used for construction of the plant, investment in necessary infrastructure upgrades to support it, or supporting sawmilling technology to help provide the lumber. What's important is that this investment underpins local aspirations.

"Our plan also elevates Gisborne's industry and talent-base into a key role for building of new homes. The housing shortage in New Zealand is growing by 16,000 homes each year and the Government has no plan to deal with the housing crisis."