Saturday, May 28, 2011

Frank Newman: Kick-starting the economy


Last week the Northland Regional Council (NRC) heard submissions to its Annual Plan. The main point of contention was the Council’s proposal to hike rates 19% largely to create a funding pool for “worthy” projects.

Their reason for doing so, in the words of one councillor, was because the market place had failed to uplift the region. He pointed to the fact that Northland was disgracing itself by lagging behind all other regions in key social statistics like crime, household income, education standards, life expectancy, and so on. His point was this. Because the free market was failing to deliver the desired social well-beings, the NRC would have to do so.

What was especially concerning was that rabid greenies had not stormed the council's parapets at the last election. The councillors are by and large conservative, meat eating individuals you would expect to see at your local rotary club. One or two have even run successful businesses.

One must therefore wonder how they could be so seriously out of touch to think the free market has failed Northland. It's my view that it is our rule makers, not businesses, who have failed their community.

When the conditions are right, business is very good at doing what businesses do – create wealth by providing consumers with the things they need or want. The trouble is our regulators, particularly our local body politicians, have not created the right conditions for business to thrive. They have made careers of creating layer upon layer of rules and regulations that have chased enterprising individuals and firms away.

Quite frankly, ambitious people are not going to waste years battling people hiding behind clipboards; arguing for pragmatic and common sense solutions that can be solved in 5 minutes and without engaging countless experts. Instead, they take their capital and their initiative to more fertile pastures, and leave behind under utilised resources and social failure. To see the lost potential just look at how everyone in Australian has benefited from the mining boom. In contrast, our minerals and oil wealth remain in the ground because we are told extracting it will damage our clean green image.

Contrary to popular belief, most of the wealth business people create does not go into the bulging pockets of the business owners. Most, probably 95% on average, goes to others who have an input into the business (suppliers and employees), and then the government takes about 35% of what’s left which it consumes or redistributes to others. It’s the community that is the main beneficiary of local business, not the business owners.

I agree with the NRC that it is time to take drastic measures if our poorest regions are to pick themselves up from the gutterof dispair. Perhaps regions like Northland need to declare themselves a crisis zone like Christchurch so they too can have essential projects fast-tracked through the bureaucratic process.

When referring to the 10-hectare reclamation of Lyttelton's Port to assist with Christchurch's economic recovery, Environment Minister Nick Smith is reported to have said, “It wasn't practical to subject the project to the normal consent process, which would take six months and then be open to appeals to the Environment Court - potentially taking another 18 months”. Instead the job would start in five days!

If only Northland could have such urgency to deal with the social crisis that already exists in the region. Imagine how many projects would get started if resource consents were processed within weeks rather than years. For a start many projects would become viable because applicants would not have to waste many tens of thousands of dollars, sometimes hundreds of thousands, on waffle-talking lawyers and planners and consultants; and lose hundreds of thousands of dollars of dead money locked up in land lying idle while all the tick-boxes get ticked and everyone has had their say and extracted their pounds of flesh.

Now that would do a lot more for the shameful social statistics in Northland than any local council increasing rates so they can fund “worthy” projects to benefit ratepayers. It would actually kick-start the many worthwhile projects that have been shelved because go-getters have gone to do business elsewhere.

5 comments:

Ray said...

Quite a sad commentary really, and laughable to.
I suspect the "Worthy Project Money Pool" would be used up by "waffle-talking lawyers, planners and consultants" with the end result of stuck at square one.
By the way, you forgot to include IWI.

Frank Newman said...

I had Iwi in mind when I mentioned pounds of flesh... "and lose hundreds of thousands of dollars of dead money locked up in land lying idle while all the tick-boxes get ticked and everyone has had their say and extracted their pounds of flesh."

Seymour said...

"Red tape," here, there and everywhere seems to
be a hazard known by everyone, from the W'gton
woodenheads - down. How then does it prevail?

Anonymous said...

The job of local government is to provide the planning and infrastructure that encourages people to invest and develop.Incredably restrictive District Plans with consultants being given free rein to charge huge fees to process consents is not going to encourage business to invest. The thought of politicians picking winners, with all the potential connotations, using ratepayer money is scarey indeed.

panoramia said...

Across the board we need simplicity based on objective facts.

Instead we get waffle, in droves. Cunning people use waffle as a tool to increase their 'share'; and given the conditions, who can blame them?

For a start we need mutually agreed definitions — as in: what does 'Free Market' really mean? Dog-eat-dog 'capitalism', or the Trader's Ethic of value-for-value? Until we have a common language we go nowhere, and waffle wins.