Summary
There are spatial differences in well-being – some neighbourhoods and regions score notably worse on indicators such as income, unemployment and education. Many of these differences are not problems, but rather result from choices made by people and firms in response to varying regional characteristics. Often differences represent one point in a necessary process of regional adjustment.
Indeed, some regional differences are good for New Zealand. Cities provide benefits to both producers and consumers and are important for New Zealand’s economic development. Cities are centres of economic growth – in general, productivity is higher and people earn more in cities. The costs of assisting struggling non-urban regions may be to offset the positive impacts of agglomeration in Auckland and other centres.
However, regional differences are of particular concern in two cases:
- When groups of low well-being people live together, there may be negative spillovers or ‘neighbourhood effects’ that perpetuate social problems and result in even poorer outcomes for these groups.
- In declining rural regions, there may be some people who become ‘stuck’ when they are unable to find work or move to areas where there are jobs.
When we look at deprivation in New Zealand we see that Auckland contains by far the largest number of deprived neighbourhoods (36.5%), followed by the Waikato. Furthermore, the proportion of Auckland’s population living in deprived neighbourhoods has increased between 1986 and 1996. Thus Auckland has to be a prime focus of attention, given the importance of cities for wider economic performance, the likelihood that negative spillovers are a problem in South Auckland, and the evidence that, despite geographical proximity, deprived Aucklanders are not very well connected to the rest of the metropolitan region.
Despite having many fewer deprived neighbourhoods, rural regions warrant attention if many people have no local employment options and face real barriers to relocation. As job opportunities reduce in non-urban areas, and those who can relocate do so, the risks of negative neighbourhood effects in the communities that remain increase. Gisborne and Northland have the highest proportion of any regional population living in deprived neighbourhoods (around 24%). Whilst Gisborne has been persistently deprived, it is gradually improving its relative position, whereas Northland has declined significantly between 1986 and 1996.
Non-spatial policies can have spatial impacts (e.g. the level of cash benefits and the minimum wage); further work is required on the implications this has for policy. In terms of spatial policies to assist deprived areas, focusing on education is of key importance. Improving physical and social connectedness is also an important role for government. In addition, facilitating mobility in deprived regions is necessary to help people and regions adjust. In deciding which policies to pursue, the Government needs to be aware that the costs of assisting struggling non-urban regions are ultimately borne by those regions that are not assisted. In the end, the Government needs to decide to what degree it is prepared to bear the costs of intervening to sustain declining communities, particularly if, in so doing, it is discouraging adjustment. Careful evaluation of the consequences of different approaches should help in future policy selection.
