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Budget 2018 - Investing ahead of the curve for our regions

Budget 2018 - Regional Economic Development

Murray Dunn, KPMG Partner in Hamilton, shares his perspectives on Regional Economic Development and signals the need for Government to have a continued focus on fuelling prosperity in all our regions.

Murray Dunn - KPMG NZ - Partner

Partner - Audit, Office Managing Partner - Hamilton

KPMG in New Zealand


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Regional Economic Development

Our regions are part of our national identity and the sum of all our regions make up the successful nation we are today. If we’re going to fuel New Zealand’s prosperity nationally, we need sustained investment supported by a long term strategy that supports all areas of the country – so each region can perform at an optimum level socially, environmentally and economically and achieve their full potential.

Murray Dunn, KPMG Partner in Hamilton, shares his perspectives on Regional Economic Development and signals the need for Government to have a continued focus on fuelling prosperity in all our regions.

The key focus areas

Budget 2018’s main funding for the regions is the $1b Provincial Growth Fund, in the Coalition Agreement between Labour and New Zealand First. Broadly the Fund comprises:

  • $535m of new operating funding and $236m of new capital funding for investment-ready initiatives and the Government’s “one billion trees” planting programme.
  • $148m of existing operating and $80m existing capital funding now reclassified as included in the Fund.    

Other Budget 2018 priorities which have a regional focus include:

  • Additional funding for the Ministry of Primary Industries for biosecurity protection and $85m to deal with the cattle disease Mycoplasma Bovis.
  • Additional $15m in funding for the Sustainable Farming Fund, to invest in agricultural applied research projects that deliver economic, environmental and societal benefits to New Zealand. However, this is more than offset by “reprioritisation” of spending away from Crown Irrigation Funding ($68m) and Primary Growth Partnership Funding ($80.6m)
  • The additional health, education, and infrastructure spending in Budget 2018 can also be expected to impact the regions.
  • Deductions for bloodstock acquisitions (c$5m).


Driving regional potential

The Budget, primarily through the Provincial Growth Fund, aims to drive success in the regions. This acknowledges that the strong economic performance of the regions is necessary for, and will benefit all of, New Zealand.

Within our regions, we see a variability in terms of economic strengths, weaknesses and overall performance – while there are some similarities, they all face different challenges. They have different resources and opportunities therefore there needs to be an awareness of what these are in order to get everyone reaching their potential. The more diverse our economy, the more sustainable and resilient it will be to any future trends and unexpected shocks.

In the Waikato, the region has seen significant investment in roads. This will facilitate further business development and help make the Waikato a place where people continue to visit, live, and invest in.

Growing development means growing ‘diverse’ populations

As our regions work on building their own thriving economies, we’re seeing significant population growth, for example in the golden triangle of Hamilton, Tauranga and Auckland. It is important that the Government directs their investment in the right areas, so that they are looking ahead of this growth curve rather than trying to play catch up.

There is no foreseeable slowing down of the regional activity in these areas, and others around the country for that matter, as we see a halo effect of success flowing from region to region – of course all with degrees of variability.

Investment in infrastructure, digital and technology will all enhance our regions’ connectivity and their economic competitiveness. We’re seeing huge stresses on our roading and other infrastructure as our regions grow, and this means we need to be building and investing for tomorrow - not just for today.

One important element worth highlighting is the loyalty Kiwis have to their regions. There are a lot of factors other than job opportunities that go into the decisions of where we want to live. Family and support networks are a major factor – people are reluctant to leave these and aren’t necessarily chasing job opportunities regardless of the location. They want to reside in an area that means something to them and where they are connected to the community. Investment in wellbeing and social infrastructure, as well as housing affordability, will ensure our regional population have opportunities for recreation, leisure, and a high quality of life – all drawcards that bring and hold people to our regions.

Futureproofing our regions for future generations

It’s important to consider global trends and macroeconimic factors that will affect us as a nation. These elements combined can create a level of uncertainty for our economy and our workforce, so the Government must continue to keep an eye on future trends and apply a global perspective on their local investments.

One main trend we have seen come out of the Government this year is a focus on our future generations. There is a real awareness that we need to be making our regions better for the future - it’s not just about the here and now but about tomorrow as well. We expect to see a continuation of the good work already underway with initiatives like the one billion tree plantings by 2027.

Balancing fiscal responsibilities

There’s an unlimited amount of demand where investment could be made in regional infrastructure. The Government will need to continue to be clever about balancing this with other priorities and how they can divvy up the pot. It’s all about getting the best bang for their buck and making investments that are sustainable now and investing in the future.   

© 2020 KPMG, a New Zealand Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

KPMG International Cooperative (“KPMG International”) is a Swiss entity.  Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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