A Labour Government would pour as much as $200 million into projects like developing Opotiki Harbour, Dunedin's Hillside railway workshops, and reopening the mothballed Napier-Gisborne rail line in a bid to breathe life into regional economies.

Unveiled at the Local Government New Zealand (LGNZ) conference in Nelson yesterday by leader David Cunliffe, the plan would involve central Government working with local authorities and the businesses to develop "tailored regional growth plans" that identified opportunities to "boost growth and create jobs".

A Labour Government would support those plans by co-investing in "infrastructure and industry projects" alongside the private and local government sectors with the Crown's share of the money to come from a new "Regional Development Fund" which would allocate as much as $200 million over four years.

Mr Cunliffe said the fund would focus on investments "that will make a real difference, rather than spreading its money too thinly, as has often been the case in regional development initiatives in the past".


"We envisage project contributions in the tens of millions, rather than single millions."

Labour's plan comes amid growing fears for the future of regional towns. Last week the Royal Society released a report based on Census data which warned of "challenges for rural areas in maintaining service levels for an ageing and possibly dwindling population" and suggested some communities might have to be "red zoned" by local authorities.

Also in recent days, NZ Institute of Economic Research economist Shamubeel Eaqub published a book in which he, too, warned of similar issues including the emergence of "zombie towns" in the regions as dwindling populations left local authorities short of cash to maintain infrastructure.

Yesterday, Mr Eaqub, who heard Mr Cunliffe speak at the LGNZ conference, said he was not convinced Labour's plan would work.

"It seems like we're trying to offer the same solutions we've offered in thepast."

He believed there were multiple issues causing the current problems for regions and they were unstoppable.

Mr Eaqub saw poverty and lack of good educational outcomes as the key challenges for regional economies.

However, Local Government NZ and Business NZ welcomed Labour's policy.

Economic Development Minister Steven Joyce criticised the proposal, saying: "Labour's classic response to problems is to throw money around, and today David Cunliffe is doing that again in another desperate attempt to revive his leadership."

Possible projects

• Contenders for a slice of Labour's proposed $200m co-invest fund for regional development projects, include:
• A $10.7m plan to re-establish and operate a rail service on the now mothballed Napier to Gisborne line.
• The Opotiki Harbour Transformation Project to enable all-weather, all-tide access into Opotiki Harbour, seen as critical to the success of the local aquaculture industry. • Already has $18m in regional government funding but is looking for a similar amount from central Government.
• A rail link to Marsden Pt Port enabling it to compete with Port of Auckland and Port of Tauranga which comes with a price tag of over $150m.