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Regional Economic Development Planning in New Zealand: Who Owns It?

Professor Paul Dalziel
Professor Caroline Saunders

4. Who Owns Regional Economic Development Planning?

The three New Zealand case studies presented in the previous section can be used to illustrate how the key theoretical concepts identified in section 2 are strongly relevant in actual practice. From the earliest stages of creating New Zealand's regional partnership programme, policymakers were aware of the need to maintain a broad focus for regional economic development planning, as illustrated by the following extract from a cabinet paper prepared by the Office of the Minister for Industry and Regional Development (anderton, 2000a, par. 21):

a focus on sustainable development recognises the wide range of inter-related issues that impact on industry and regional growth and subsequent wealth and job creation, such as human capability, infrastructure, regulations, and the sustainable use of natural resources.
... Regional development could adopt a narrow focus solely on business and employment growth, but this would ignore significant factors in the environment that impact on individuals, businesses, industries and communities. For this reason a narrow focus would be limited in its ability to create jobs, close the gaps and foster sustainable development. Given this, a broader focus for regional development policy is necessary to weave the issues into a cohesive fabric that will underpin local strategies for sustainable, inclusive growth.

Despite this recognition, questions remain about whether the regional partnerships have been inclusive in practice. In this section, the paper uses the same headings as in section 2 to examine the core issue of who defines the property rights and therefore determines who benefits from and/or owns regional economic development planning.

4.1 Objectives and structure of the partnership

The three partnerships of section 2 have adopted very different structures within the requirements of the regional partnerships programme. In the Canterbury partnership, the governance structure is comprised entirely of local government representatives. Further, the work of the partnership is the responsibility of the Canterbury Development Corporation, which is wholly owned by the Christchurch City Council (although with some business and education representation on its Board). Thus local government largely determines the definition of property rights in the Canterbury regional partnership.

The CDC is not isolated from important sectors in the community. In 2001, for example, the CDC signed a Memorandum of Understanding with Te Runanga o Ngai Tahu (the governing body of the local Maori Iwi or tribe) 'to develop an effective working relationship focussed on accessing opportunities to promote sustainable economic development' (CDC, 2002, p. 38). The consultation for its regional economic development strategy included business and community group participation throughout the region. Nevertheless, this structure creates challenges at two levels. First, such a large geographical region may find it difficult to maintain political agreement for a single strategic plan among all eleven constituent councils. Recognising this, the CDC has sought to devolve some of its work to smaller regional economic development agencies in North, Mid and South Canterbury. Second, such dominance by local government tends to create barriers to participation by business and community leaders in specific partnership projects. The Canterbury Employers' Chamber of Commerce, for example, is not engaged in the regional partnership, but is active in alternative projects such as Prosperous Christchurch that have similar objectives.

In the Eastern Bay of Plenty partnership, the governance structure is comprised of direct representation by the three local councils, by a business person appointed from each of the three districts and by six nominees of the Mataatua Iwi Forum. Thus the Eastern Bay of Plenty approach is to create a partnership in two dimensions - across three local government districts, and involving local government, business and Maori representation. The local government partners face similar issues to the Canterbury regional partnership, in the sense that the two smaller District Councils are concerned whether their ratepayers would get value for money from contributing funds to a regional economic development agency based in the largest district. Nor has inclusion of business and community members per se resolved the question of local government dominance. The business representatives are nominated by the mayors (rather than by the Chamber of Commerce), and although the Mataatua Iwi Forum nominates an equal number of Iwi representatives, it lacks the financial resources and business experience of the other partners. Consequently, the authors were told that the initiative is widely perceived as being defined by local government, rather than representing a genuine partnership of key actors in the local economy, and that this ownership is concentrated in the largest District Council. At the time of the research, these issues were threatening to paralyse the work of the partnership.

The Marlborough partnership took a very different approach from the other two case studies. It is based on close collaboration between the Marlborough District Council and an independent Marlborough Economic Development Trust. Further, the MEDT trustees are expressly prohibited from representing a particular sector or interest group in the community, but must act to promote the objectives of the Trust, centred on economic development in the region. There is no formal governance body for this arrangement, so that the partnership relies on both partners finding mutual benefits from working together. In practice, this means agreeing on specific short-term projects and appointing a manager for each one. Each project typically requires contributions from different sectors of the community, facilitated by the project manager, and so there is considerable flexibility for participation depending on the nature of each project. This is consistent with some successful partnerships in other countries that set up project-based working groups under the direction of a relatively small Board.

4.2 Legitimacy and accountability

at the same time, the central government's regional partnership programme offers significant financial incentives for participation, including the prospect of a $2 million central government contribution to a major regional initiative. This financial injection might be sufficient to justify local government involvement whether or not the partnership delivers any genuine development benefits. Under these circumstances, the ability of the local partnership to define property rights (and therefore determine who benefits) is reduced and the involvement of the central funding agency is increased as the local partnership adapts itself to the requirements of the programme. This was particularly obvious in the Eastern Bay of Plenty partnership. At the time of the RPP's introduction, there already existed a Whakatane Economic Development Office accountable to an Eastern Bay of Plenty Economic Development Board. The Development Office played a key leadership role within the Eastern Bay of Plenty regional partnership under the RPP, which some believed was at the expense of some of its original objectives, putting economic development in Whakatane into a holding pattern for twelve months. Indeed, there were plans to dissolve the Whakatane Economic Development Office in favour of a new regional economic development agency created under the RPP, illustrating how a local initiative can by swamped by a national programme's requirements.

a similar tension exists in the Canterbury partnership, where the RPP has the potential to cut across other initiatives for collaborative regional economic development. As noted in the previous sub-section, for example, the Canterbury Employers' Chamber of Commerce is involved in an initiative known as Prosperous Christchurch. This initiative aims to bring together Council, business and community leaders to promote economic development in the city of Christchurch. Although it has strong business involvement, it lacks the financial resources available under the RPP policy. On the other hand, the absence of business representation on the Canterbury regional partnership weakens its legitimacy with key business organisations such as the Chamber of Commerce.

In the Marlborough partnership there is no formal authority for the MEDT to act as a lead agency for regional development, and so legitimacy is something that it must continuously earn for itself. Initially its legitimacy was founded on the extensive public consultations that led to its formation in 2000. As time goes by, its legitimacy depends more on maintaining the confidence of its major funders (New Zealand Trade and Enterprise, the Marlborough District Council and local industry), which in turn depends on its success in meeting its regional economic development objectives. In this sense, ownership of the Marlborough partnership is always contestable, providing strong incentives for performance that may be weaker in a regional economic development office owned by the local Council.

The research team were told that the Trust's autonomy and single focus on regional development are also considerable advantages in bringing together different business and community groups for projects. The Trust is able to engage in honest dialogue with the District Council on some issues in a way that would be far more difficult if the Council owned the Trust. Similarly, because the Trust is not identified with established business, this can be helpful in dealings with some parts of the community.

4.3 Culture and leadership of the partnership

The energy, enthusiasm and judgement of the six MEDT Trustees are crucial for the success of the regional partnership in Marlborough. They are paid a small honorarium, and there are clearly profile benefits from being a Trustee, but these rewards do not cover the opportunity cost of involvement, particularly for the majority of Trustees who are self-employed. Trustees interviewed for this project explained their motivation comes from a commitment to an element of public service, and advised they would not be comfortable if paid a significant amount for their position. They also suggested that being unpaid promotes efficiency by discouraging time-wasting, and contributes to their legitimacy when asking others in the community to volunteer for aspects of the partnership's work. To date there had been no difficulty in finding good people prepared to be nominated as Trustees. It was suggested that providing greater payments to Trustees would allow a wider cross-section of people from the community to become involved, but it might also attract people without the sense of public service that is regarded as an important quality of the current Trustees.

The other two case studies sought to institutionalise leadership within the partnership by setting up a specialist regional economic development agency to carry out the work of the partnership. This is shown in figure 2. The chief executive officer of the regional economic development agency is expected to provide leadership under the supervision of a broadly representative governance group (or advisory board), but the partner organisations are not involved directly with the work themselves.

The structure in figure 2 can result in effective ownership of the regional partnership being passed to the regional economic development agency, in which case its CEO may become the most important actor in the process of defining property rights affecting regional development planning. This can create problems for a partnership that crosses geographical boundaries. A person recognised as an effective leader in one community may not have the same level of commitment or support in a neighbouring region. although the Eastern Bay of Plenty has a strong regional identity, for example, the three districts have significant differences that a single person might find difficult to satisfy. Depending on how the Economic Development Office was financed, this could lead to views that one or two districts were either being short-changed by the REDA or were being subsidised by the third district.

The model in figure 2 also reveals potential problems for the REDA if there are unresolved cultural conflicts within the governance group. Again the Eastern Bay of Plenty partnership provides a good case study. First, the partnership brings together three District Councils without a strong history of working together and which may be suspicious that the partnership represents a possible step towards local government amalgamation. Second, the Mataatua Iwi Forum was created at the time the Regional Partnership Programme was introduced, so that the local Iwi are also experimenting with their own novel form of partnership for Maori economic and social development.

Third, the partnership seeks to bring representatives of local government, business and Iwi, with all their diverse backgrounds and working practices, into a single decisionmaking body. If all these areas of potential conflict are not resolved, either the REDA will lack proper guidance for its work programme or it will face possibly irreconcilable priorities from the different members of the governance group.

Considerations such as these suggest that it may be very difficult to set up any structure that provides effective common ownership for such a broad concept as regional economic development planning. An alternative approach is to design an institutional framework that recognises different partnerships (and hence different definitions of property rights and thus different beneficiaries and/or ownership) for different projects. This is the approach taken in the Marlborough partnership, considered in more detail in the following section.

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