Many people think of councils as the providers of a limited number of services; roads, drinking water, libraries, and parks for example. It is less common, in my experience, for people to associate local councils with economic development.
Most of us understand that good roads, safe drinking water and the ability to build and live in an area are all important to economic development in that area. Many places have all these, but also have a stagnating economy.
We need to ask, is there more that councils can do to foster economic growth in their areas? And in case people say that fostering economic development is surely a “nice to have” rather than a “must have”, can I say that every service that a council provides relies on a rate-payer base that has the economic resources to sustain the required expenditure.
Traditionally councils have often approached economic development by looking to sponsor events and/or large projects.
Over my lifetime, I have heard many cities talk about how if they could get the Commonwealth Games or a large sporting event to come to their city, that an economic bonanza would follow. You may recall the talk about how much economic value would be created by hosting the 36th America’s Cup in Auckland. But studies afterwards found that hosting the event had left New Zealand $293 million worse off.
That finding is very common, with a Harvard Study concluding that overall, the supposed economic benefits of hosting an event are vastly overestimated in advance.
Another approach favoured by many councils involves building structures such as stadiums, halls and event centres.
Christchurch recently decided to build a new $700 million stadium even though the council’s own studies showed the cost of building and running the stadium would far outweigh the economic benefits of the new stadium.
Some of the economic impacts from the development of an event centre or stadium arise from the costs of construction, labour, and materials. In practice however, much of that money ends up going outside the region building the event centre or stadium. A parallel example is the cost of the road works between Carterton and Masterton.
How much of the $23 million dollars being spent on that stretch of road will remain in the Wairarapa? Probably not much.
The materials come from elsewhere, and the designers and management of the project live elsewhere.
An example from the South Wairarapa involves the money we spend on water infrastructure.
I would estimate that most of that money leaves the district and moves elsewhere. Water infrastructure is one of our Councils largest items of spending. If we could retain more of that money in the region, then we would be doing something positive and long lasting for the economic health of the district.
Over the next year I intend to challenge some of our procurement policies so that more of what we spend stays in the district.
This involves employing companies and contractors within the district who understand that they too have a responsibility to deliver economic, social, and environmental benefits to the community that employs them.