growing northland

Why has Northland remained one of New Zealand's poorer regions? Identified as a surge region it has now been allocated more than $126 million so far from the Provincial Growth Fund.

In the second of a three-part series into what this means for the region, Lindy Laird looks at the what might be needed to make this happen.

There was a collective gasp of pain and hurt pride from Northland cheerleaders when economist Shamubeel Eaqub said Whangārei was in danger of becoming a zombie town.

That was back in September 2014, when Eaqub used the analogy that on an international ranking Auckland, Wellington and Canterbury were comparable to France, Finland and Saudi Arabia, and Northland to Timor-Leste.

Then a principal economist with the New Zealand Institute of Economic Research's (NZIER), Eaqub said his harsh comments were meant as a wake-up call based on Northland's — and to be fair, a couple of other regions — ''catastrophic economical decline'' and small population nearing ''tipping point''.

Without change, Northland would become impoverished and irreparably divided from other thriving centres, Eaqub said. Just down the road Auckland was growing in all ways, which could provide huge opportunities for Northland, he said; not least helping to provide infrastructure to ply back into the super-city.

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The comments hinted that Northland wasn't trying hard enough or smart enough but there is more to its perceived economic and infrastructural stagnation than a failure to hook into a neighbouring giant's riches or to magic up a quick fix.

A year before the zombie town prediction, three MPs vying for leadership of the Labour Party came through the Roadless North on a "pick-me" roadtrip: David Cunliffe who got the job, lasted only one year and bailed from politics altogether; Shane Jones, born and bred in Te Taitokerau, party-jumper and now holder of the Regional Economic Development portfolio and PGF ''putea''; Grant Robertson, now Minister of Finance along with other portfolios.

Northland needed more central government help to get out of the doldrums, and based a large part of the solution on better transport and freight networks, they said.

Cunliffe captured the zeitgeist when he shouted, ''Get the railway to Northport, fix the rail tunnels from here to Auckland, that in itself will create jobs.

"We need central government intervention to ensure the infrastructure is in place for the regions to use, that's one way to boost regional economies.''

Northland is a National stronghold, but when the leadership contestants talked hard line about regional development even true blue voters cheered.

In November 2014, at a public meeting in Kerikeri, then Prime Minister John Key told the audience he should bring the new Minister for Transport Simon Bridges up to Northland to show him the bad roads. With Key, it was sometimes hard to tell if he meant to be quite so funny — but poor roads, not least the thin gray line that is for much of its length the Roadless North's only link to Auckland, have long been the bane of Northland.

John Bain, chairman of the Regional Transport Committee believes a four-lane highway should be part of the discussion when it comes to the region's transport woes feature. Photo / Michael Cunningham
John Bain, chairman of the Regional Transport Committee believes a four-lane highway should be part of the discussion when it comes to the region's transport woes feature. Photo / Michael Cunningham

They're the bane, too, of Northland Regional Council member and Regional Transport Committee chairman John Bain, who is still fuming over a war of words, number crunching and changing narratives over the now-you-see-it, now-you-don't, and now totally off the agenda, four-laning of the highway south of Whangārei.

Bain believes dropping the Warkworth to Wellsford leg of the $3.2 billion, 200km long four-lane motorway from Cambridge to Warkworth was due to ''pork barrel politics''.

''Many years ago, NZTA was set up to stop pork barrelling, but I believe politicians are now telling the road planners what they want.

''As soon as politicians get involved, it becomes a battle of who can speak the longest and the loudest. It's not based on need.''

At any case, Northland's boundary is Te Hana, north of Wellsford, so this region isn't even on the map, Bain said.

''We still need a four-lane highway to make sure that we are prosperous in the North and we are at least on a par with the rest of New Zealand.''

He is against reinstating and upscaling a rail corridor, believing the money should be spent on highways as the region will grow and the volume of road users increase.

The roading situation from the North is one of the important issues facing the region. Photo / Michael Cunningham
The roading situation from the North is one of the important issues facing the region. Photo / Michael Cunningham

Political gunslinger Shane Jones disagrees a four-laner is the answer to Northland's transport woes and has accused Bain of having a ''cargo cult mentality''.

Nor does he accept the pork barrelling charge, saying such thinking — even the language — is a relic from an older age of politics.

''I wish John Bain no ill will, and I think these contretemps are unhelpful,'' Jones said.
''The truth is, our existing roading network has been starved of money for a very long time. John must take his fair share of responsibility for that neglect as, for many years, he was one of those in a position to do something about it .''

Jones is among a phalanx of local and central government politicians and departments, other authorities and quangos pushing hard for a rail spur from a point on the almost mothballed North Auckland rail line to Northport's deep-water facility at Marsden Point - the only large port in the western world not serviced by rail.

The old main line's condition and likely repair costs have been investigated, and geotech testing done on the proposed Marsden Pt spur route. That spur is key to dramatically reducing the endless, road jamming line of heavy transport to and from Auckland, and an expanded port will bring in jobs and other import/export associated business.

Northport and Marsden Point Oil Refinery are at the heart of Northland's development. Photo / Tania Whyte
Northport and Marsden Point Oil Refinery are at the heart of Northland's development. Photo / Tania Whyte

Already logs and timber, milk products and a swag of Northland's fruit and other crops leave the country from that point, but a bigger port could also solve some of Auckland's own problems. For example, thousands of imported vehicles, and other goods, could be shipped into Northland, parked on hectares of currently empty space at Marsden Pt and railed to distribution points, freeing up some of Auckland's most valuable waterfront land in the process.

At the beginning of the year, Winston Peters and other big engines, Shane Jones and KiwiRail chairman Greg Miller, shunted up for an announcement at a siding where a Marsden Pt spur would meet the highway — either to join a revamped North Auckland main trunk line or a road transport depot.

Everything seemed on track for an announcement it would go ahead, but it was a intentions only pep talk. Jones said at the time he was frustrated it wasn't yet time to bring out the ''picks and axes''.

 KiwiRail chairman Greg Miller (left), Deputy Prime Minister Winston Peters and Regional Development Minister Shane Jones at a rail announcement in Northland earlier this year. Photo / Tania Whyte
KiwiRail chairman Greg Miller (left), Deputy Prime Minister Winston Peters and Regional Development Minister Shane Jones at a rail announcement in Northland earlier this year. Photo / Tania Whyte

Regarding the Marsden Pt link, he said the Government would be neither surprised nor discouraged at a cost of more than $100 million for a historic piece of infrastructure - the first building of a significant branch line in more than 50 years.

The decision about the rail option is due to be announced in the next week.

If it's a green flag, eventually a large dollop of PGF money will be likely be invested on its back. NZTA has already received $500,000 from the Provincial Growth Fund (PGF) for a business case development aligned to the rail proposal.

A tale of two cities

It is generally agreed a rail link would take pressure off Northland's roads and encourage expansion of the region's deep water port, but the region does not live up to its potential in many areas.

''I make no apology for making it clear that the North needs to catch up with the rest of the country. Would I like things to happen at a quicker pace? Yes,'' said Economic Development Minister Jones.

''I simply do not accept the fact that the North should remain 25 per cent poorer than the Waikato, or any other region.''

Within Northland's ''poorer than'' picture, there are divisions.

''It's a tale of two cities,'' Jones said. ''There are pockets of dysfunctionality, pockets of economic deprivation, and then of course, mainly along the east coast, pockets of great wealth.''

Prime Minister Jacinda Ardern and Regional Development Minister Shane Jones announce funding from the Provincial Growth Fund at Otamatea Marae Photo / John Stone
Prime Minister Jacinda Ardern and Regional Development Minister Shane Jones announce funding from the Provincial Growth Fund at Otamatea Marae Photo / John Stone

The largest portion of Northland's GDP, the highest government-funded, biggest spender and biggest employer is the lumped-together public health and social assistance sectors; a whopping 7.7 per cent of GDP, compared to the national 6 per cent.

Through population-based funding, Northland District Health Board (NDHB) received $640 million to deliver health services in 2018. Of that, NDHB directly funds Māori health contracts specifically and through service contracts to other Māori service providers to $39.2m.

A series of health and social issues that have long festered — many say the roots go back as far as colonisation — still plague Māori who experience low health status across a range of health and socio-economic criteria. Added to other indices, the statistics tell a sad story of deprivation.

But iwi are also at the front of change and are brokering on many fronts for a better future. By reclaiming the means of production — land, Treaty settlement money, education, entrepreneurial new businesses, partnerships — Māori will play the bigger role in restoring health, healthy housing, jobs, growth and a positive future with a much higher level of freedom from deprivation.

In the middle

Northland has lagged below national GDP increases at varying levels over the past decade, with the exception of a few notably strong years - 2004/5 and 2015/16.

''In the context of all the regions of New Zealand, we have performed fairly well over 10 years. We're in the middle of the pack for annual average growth,'' Northland Regional Council economic policy adviser Jon Trewin said.

The second largest slab of Northland's economic turnover came from ''property operators and real estate'' at 441.2m.

That figure does not reflect the recent influx of people buying-down and shifting from Auckland and other new immigrants coming to Northland.

''I don't think people moving here to buy cheaper houses has necessarily had an effect on the allocation of the PGF,'' Trewin said.

Does the high number of retirees swing the PGF?

''In terms of retirees/pensioners, Northland does have a higher dependency ratio than New Zealand as a whole, 71.1 per cent versus 53 per cent. This means Northland has more people in the non-working age categories (under 15 and over 65) than working age and therefore more people to support by the working age cohort.''

Third ranking, thanks to the Refining NZ site at Marsden Point, is a category called petroleum and coal product manufacturing, $430.3m; a sizeable 6.8 per cent of the region's GDP but oddly out of sync with the national picture where it's a $1.145 billion industry, but with only .5 per cent share of the total GDP.

Northland's dairy/cattle farming comes next, at $276.4m (4.4 per cent of Northland's money-go-round) and education and training next, at $249.6m (3.9 per cent of the region's total).

Action stations

The Tai Tokerau Economic Action Plan 2016 which followed the 2015 Northland Growth Study has been significant in drawing attention to and organising Northland's priorities and focusing funding efforts around a number of thematic areas.

It is also rolled out as the Bible upon which the NRC-funded regional development agency Northland Inc bases many of its ''go forth and multiply'' sermons about big think projects.

The plan pre-dates the PGF but will likely be around after the PGF is gone, so it provides a longer term focus, and it's currently being refreshed.

While PGF money has gone to a wider range of activities than those highlighted in the economic action plan, a number of the applications were sourced from recommendations in the economic action plan, Trewin said. They were ready to go when the PGF came along.

(Northland Inc's former chief executive David Wilson is on the advisory panel to the politicians making PGF decisions.)

But as a lot of the PGF funding to date is for business cases, not development, long-term effects will take some time to be felt.

The Hundertwasser Art Centre will have a short term economic effect in term of creating business and jobs.
The Hundertwasser Art Centre will have a short term economic effect in term of creating business and jobs.

''Some of the funding for 'spade ready projects', for example Whangārei's Hundertwasser Art Centre, will yield short-term economic effects in terms of creating business and jobs for the construction sector.

''It is worth noting there are quite a few infrastructure projects. These have the effect of bringing forward investment that might have otherwise occurred later, for example through the National Land Transport Fund.

''The business cases tend to be the lower dollar amounts, an exception being the NZTA work on the Twin Coast Discovery Route as this is a package of business cases valued at $6.25m.''

Christina Leung, a principal economist with NZIER, said Infometrics' latest figures indicate there is some forward movement in Northland's growth, away from the bleaker picture some years ago of a stagnant region.

''New Zealand has experienced very strong migration-led population growth over the past five years. While much of this growth has been concentrated in Auckland, there has been spill-over effects to its neighbouring regions. The surge in Auckland house prices has led people to move to other regions in search of more affordable housing, and the neighbouring regions have also benefited from increased tourism activity,'' Leung said.

Economic growth in Northland averaged 1.7 per cent per annum over the last 10 years compared with an average of 2.1 per cent in the national economy. But is that enough to signify real growth or the region just holding its head above water?

''Northland faces many challenges such as a high unemployment rate and its less favourable connectivity to Auckland, relative to Waikato and the Bay of Plenty,'' Leung said.

''Northland growth has lagged the rest of the economy over the past decade, but there is potential for it to pick up should connectivity to the other regions improve. This will require investment, such as on roading infrastructure.

''Unlike some of the dairy-intensive regions, Northland has not benefited from strong demand in China over the past decade. It has potential to increase tourism income, again should connectivity to the region improve.''


The PGF money, of course, is a more than a grand gesture, it's a practical solution that kicks a few starting blocks out of the way. But is it crystal ball gazing to try to quantify returns in job creation or tourism spending, for example?

''It's hard to say without knowing the details of each investment,'' Leung said.

''Quantifying the returns would involve figuring out what growth in Northland would have looked like in the absence of the investments.''