Recent trends in regional and local demographic and economic inequality in New Zealand and associated regional development implications

Abstract

Regional and local demographic and economic inequality appears to be increasing in New Zealand. Drawing on recently released statistical data, this paper reflects on and considers the implications of growing differences. The dominance of the cities and selected regions contrasts with demographic decline and relative contraction of the economic share of the less advantaged regions. New Zealand's government is currently formulating a new approach to regional development which should focus not just on comparative advantage but also on addressing equity concerns.

Keywords

demographic economic New Zealand regional development

Introduction

The New Zealand Government (NZG) is in the process of formulating a new approach to regional development. However, the current focus of emerging policy on foreign investment and regional comparative advantage, as opposed to responding to equity concerns, is unlikely to address the challenges of what seems to be growing regional inequality, as is reflected in recent census and economic data. Concerns of regional inequality will require more concerted attention and prioritisation if the government wishes to address the trends reflected by recent data.

Regional inequality in demographic and economic terms is a realty within most national economies and the international space economy and according to Harvey (2006) is a key element within the production and reproduction of capital. The inevitable outcome of this situation is the reinforcement of spatial inequality and the frequent entrenchment of the phenomenon of ‘lagging regions’ (Pallares-Barbera, 2012). Associated with this, processes of path dependency can become self-reinforcing which can either selectively perpetuate regional economic difference, which in turn can restrict opportunities for change and corrective actions, or it can encourage processes of regional resilience (Martin, 2011; Pike et al., 2010; Simie and Martin, 2010). Within the New Zealand, space economy regional inequality has been a long-accepted reality which, from the 1980s, was exacerbated by the scaling down of the role the state played, particularly in the more economically marginal regions and the associated loss of traditional regional development interventions (Nel and Stevenson, 2014). More recently, a new strategy on regional development is being formulated (NZG, 2014a), which as this paper argues needs to acknowledge and respond to prevailing patterns of economic and demographic growth and decline.

Local Government New Zealand (LGNZ), which is the national body representing the interests of the country's local governments, has expressed concern about the uneven nature of recent growth trends in the country, which are enhancing spatial disparities and it has committed itself to finding ways to achieved ‘balanced growth’ across the country, making regional development one of its core policy priorities: ‘New Zealand currently faces uneven economic growth with some regions growing faster than others and some regions attracting population and others losing population. LGNZ is committed to enabling and supporting economic growth across the whole country’ (LGNZ, 2014).

The recent release of the 2013 New Zealand population census (Statistics New Zealand [Stats NZ], 2013a, 2013b) and of regional economic data (Stats NZ, 2014) provides a lense to reflect on the nature of current trends, patterns and processes of regionally based population and economic change. A key point which this paper seeks to make is that while economic data at the regional level, as the national government argues (NZG, 2014b), is suggesting of a narrowing of the gap between the economic performance of the various regions and that of the largest regional economy, Auckland, and that all 16 regions, bar one are experiencing population growth, at the sub-regional level a different, and less optimistic picture is emerging. This paper first presents a review of population shifts within the country between the 2006 and 2013 population census counts, before moving on to consider economic change between 2007 and 2013 and the relative shifts between regions in terms of both population and economic activity. If regional development is to be taken more seriously in the country, as recent pronouncement by national government suggests it is (NZG, 2014a), and if balanced economic growth is an objectives as LGNZ (2013) argues, then cognisance must be taken not just of the leading nodes in the space-economy but also of those where particular growth related challenges and blockages need to be addressed.

Population change: National, regional and in the cities

The national population recorded positive growth between the 2006 and 2013 census counts, growing from 4.02 mn to 4.24 mn (or 5.3%). Administratively, New Zealand is divided into 16 regions which include urban and rural areas and the 54 Districts Councils (the basic unit of local government) and the 13 city councils. Table 1 reflects the population change in the 16 regions between 2006 and 2013 and the percentage change in regional populations over that period. Relative to the national average growth rate of 5.3%, it is apparent that five regions are equalling or exceeding the national growth rate (Auckland with an impressive 8.5%, Waikato (which includes the city of Hamilton), Taranaki, Tasman and Nelson). Ten are growing but at less than the national average and one, Gisbourne, is declining by 1.9%. While these statistics suggest an overall positive impression in demographic terms, what they in fact hide is significant sub-regional population loss which is masked by the growth of selected key centres in the same regions, as will be discussed later in this paper.

Table 1.

Population change in regional council areas (including the cities): 2006–2013.

Region	Population 2006	Population 2013	% change
Northland	148,470	151,689	2.2
Auckland	1,304,962	1,415,550	8.5
Waikato	380,823	403,638	6.0
Bay of Plenty	257,379	267,741	4.0
Gisbourne	44,496	43,653	−1.9
Hawkes Bay	147,783	151,179	2.3
Taranaki	104,124	109,608	5.3
Manawatu- Wanagnui	222,423	222,669	0.1
Wellington	448,959	471,315	5.0
Tasman	44,625	47,157	5.7
Nelson	42,888	46,437	8.3
Marlborough	42,558	43,416	2.0
West Coast	31,326	32,148	2.6
Canterbury	521,832	539,433	3.4
Otago	193,803	202,470	4.5
Southland	90,876	93,339	2.7
New Zealand Total	4,027,947	4,242,048	5.3

Source: Stats NZ, 2013a.

Table 2 compares the percentage of the national population within each of the 16 regions, with the percentage of the national gross domestic product (GDP) generated in those regions. While there is a noteworthy similarity between the scores recorded in each column, what is significant to observe is the degree to which Auckland dominates the country economically and demographically, having a third of the population and generating over 35% of the economy. The dominant position of the North Island, relative to the South Island is also apparent. What is equally striking is the degree to which the four regions which host the country's largest cities dominate the economy and population profile. Collectively Auckland, Waikato (which includes the city of Hamilton), Wellington and Canterbury (which includes the city of Christchurch) are home to 66.3% of the population and they generate 70.5% of economic activity. The remaining 12 regions, by implication host 33.7% of the population and 29.5% of economic activity, suggesting at an extreme degree of both concentration in the key cores and regional inequality.

Table 2.

Regional shares of population and GDP: 2013.

Region	Population 2013 %	GDP 2013 %
Northland	3.6	2.6
Auckland	33.4	35.3
Waikato	9.5	8.5
Bay of Plenty	6.3	5.3
Gisbourne	1.0	0.8
Hawkes Bay	3.6	2.9
Taranaki	2.6	3.9
Manawatu-Wanagnui	5.3	4.0
Wellington	11.1	13.5
(Total North Island)	76.3	76.7
Tasman/Nelson	2.2	1.8
Marlborough	1.0	1.0
West Coast	0.8	0.7
Canterbury	12.3	13.2
Otago	4.6	4.3
Southland	2.2	2.4
(Total South Island)	23.7	23.3
New Zealand Total	100	100

Source: Stats NZ, 2013a, 2014.

Note: Stats NZ data sets combine the Nelson and Tasman regions for GDP.

New Zealand currently has 13 cities, and as shown in Table 3, their growth rates differ markedly. Relative to the national average population growth rate of 5.3%, six of the 13 cities have experienced growth rates in excess of that rate, with several – Auckland, Hamilton, Wellington, Tauranga and Nelson growing at 6.4% or more in seven years which, by Organisation for Economic Cooperation and Development (OECD) growth rates, is a very significant gain. It should be noted that the decline of Christchurch is an anomaly occasioned by the loss of property and residential space consequent on the 2011 earthquake and while some people have permanently left the city, many more relocated to adjacent district council areas, which have experienced the fastest sub-regional growth in the country, and continue to work in the city. The fastest growing cities largely mirror the growth rate of their regions (Table 1) – in the case of Auckland, Hamilton, Wellington and Nelson. In the case of Tauranga, significant sub-regional differences in the growth rates within the host Bay of Plenty region account for the differential performance of the city and its host region.

Table 3.

Population change (in %) in New Zealand cities: 2006–2013.

Cities	% Growth
Auckland	8.5
Hamilton	9.3
Tauranga	10.5
Napier	3.4
Palmerston North	3.0
Porirua	6.5
Upper Hutt	4.6
Lower Hutt	0.5
Wellington	6.4
Nelson	8.3
Christchurch	−2.0
Dunedin	1.3
Invercargill	2.7

Source: Stats NZ, 2013a.

Sub-regional population change

While, as argued above, at the regional level, all regions, bar one, are growing in demographic terms, if one examines sub-regional data a far less optimistic picture emerges, which has implications for the economic health and well-being, quality of life and service provision in scores of smaller urban centres and rural areas. Table 4 was constructed by examining trends in the 54 District Council areas, excluding the cities. Within these areas, there are 983 statistical Area Units, which variously could be small towns, parts of larger towns or rural areas. By comparing the data for these 983 units between 2006 and 2013, certain trends become apparent.

Table 4.

Population change in District Council areas (excluding the cities): 2006–2013 – According to statistical Area Units (rural and urban).

District council	No. of Area units	No. growing	No. declining
Far North	38	16	22 (58%)
Whanagrei	56	44	12
Kaipara	11	7	4
Thames	12	8	4
Hauraki	8	10	2
Waikato	33	32	1
Matamata	13	7	4
Waipa	29	28	1
Otorohanga	7	5	2
S. Waikato	17	7	10
Waitomo	9	2	7
Taupo	32	19	13
W.Bay of Plenty	22	18	4
Rotorua	40	23	17
Whakatane	22	14	8
Kawerau	1	–	1
Opitiki	7	2	5
Gisbourne	22	3	19 (86%)
Wairou	10	1	9 (90%)
Hastings	41	27	14
Central Hawkes Bay	7	3	4
New Plymouth	37	35	2
Stratford	7	4	3
S. Taranaki	22	9	13
Ruapehu	14	1	13 (93%)
Waganui	29	10	19
Rangitikei	9	–	9
Manawatu	18	13	5
Tararua	11	2	9 (82%)
Horowhenua	16	10	6
Kapiti	18	7	1
Masterton	12	9	3
Carterton	4	4	–
S. Wairarapa	6	4	2
(Total North Island)	640	393	247
Tasman	31	26	5
Malborough	23	20	3
Kaikoura	12	1	1
Buller	16	12	4
Grey	22	13	9
Westland	19	10	9
Hurunui	10	8	2
Waimakairi	39	31	8
Selwyn	20	19	1
Ashburton	16	15	1
Timaru	24	16	8
Mackenzie	7	4	3
Waimate	3	2	1
Chatham	1	–	1
Waitaki	22	11	11
Central Otago	9	6	3
Queenstown	21	20	1
Clutha	13	4	9
Southland	36	17	19
Gore	9	2	7 (78%)
(Total South Island)	343	247	96
Total New Zealand	983	640 (65.1%)	343 (34.9%)

Source: Stats NZ, 2013a.

Of the 983 Area Units, 343 (34.9%) declined demographically in the period under review, while 640 or 65.1% grew. This picture stands is in stark contrast to the positive trends suggested in the regional data and, while based on relative change and not absolute data, the scores indicate that significant loss is taking place in demographic terms across more than a third of the country's non-city local areas. The figures in brackets in the last column indicate where significant numbers of Area Units are in decline in selected District Council areas. In Wairou, 90% of units are experiencing decline, 93% in Ruapehu and 86% in Gisbourne (reinforcing the regional decline noted above in this region). Population loss in over third of the country's Area Units must raise question over whether there is a need for redistributive support or social intervention, or whether market forces will simply be left to exacerbate these trends.

Based on actual population numbers (not tabulated here) derived from the 2013 Census scores, it is apparent that of the 54 District Councils, 20 or 37% have experienced population loss ranging from 0.2 to 8.1%. By comparison, 16 or 30% grew at over 5.3% (the national average growth rate) and the balance of 18 grew but under the average growth rate (Stats NZ, 2013a). The correlation in total percentage changes between the Area Units and the District Council population scores suggests that real population loss is taking place in more than a third of the country's Area Units and District Councils.

Regional economic change

The focus now shifts to examine economic changes in the relative performance of the country's 16 regions as measured in terms of changes in GDP. Sub-regional GDP data could not be accessed for this research, so unfortunately this theme cannot be reported on. An examination of Table 5 once more reflects the evident spatial imbalances and regional inequalities which exist across the country.

Table 5.

Economic change in regional council areas (including the cities): 2007–2013.

Region	GDP NZ$m 2007	GDP NZ$m 2013	% change	GDP per capita NZ$ 2007	GDP per capita NZ$ 2013	% change
Northland	5049	5562	10,1	32,916	35,068	7
Auckland	60,968	74,746	22.6	44,004	49,217	12
Waikato	14,684	17,935	22.1	37,166	42,968	16
Bay of Plenty	8915	11,174	25.3	33,427	40,236	20
Gisbourne	1264	1613	27,7	27,474	34,472	25
Hawkes Bay	5357	6050	12.9	35,150	39,035	11
Taranaki	5558	8200	47.5	51,799	74,341	44
Manawatu-Wanagnui	7176	8534	18.9	31,282	36,688	17
Wellington	23,398	28,472	21.7	49,932	57,941	16
(Total North Island)	132,369	162,286	22.6	41,309	47,612	15
Tasman/Nelson	3038	3795	24.9	33,602	39,683	19
Marlborough	1697	2032	19.7	38,754	44,357	14
West Coast	1150	1535	33.4	35,721	47,793	31
Canterbury	20,856	27,843	33.5	38,295	49,447	29
Otago	7282	9147	25.6	36,249	43,086	19
Southland	3550	5001	40.9	38,089	52,701	38
(Total South Island)	37,573	49,353	31.4	37,383	47,269	26
New Zealand Total	169,942	211,639	24.5	40,371	47,532	18

Source: Stats NZ, 2014.

Note: Stats NZ data sets combine the Nelson and Tasman regions for GDP.

The first two columns once again reflect, now in economic terms the dominance, in absolute terms of four core regions, namely Auckland, Waikato, Wellington and Canterbury which, as noted above, generate 70.5% of the GDP and have 66.3% of the population. What is however noteworthy is that in relative terms, high growth rates are being recorded in some regions which have not experienced strong rates of population growth such as Southland (2.9% population growth but 40.9% GDP growth) and even Gisbourne which is experiencing population loss. Taranaki also performs very well based on growth in the oil and gas industry, as does Bay of Plenty based on trade and agriculture. Five regions which underperform in terms of population growth are all performing well economically, namely Gisbourne, West Coast, Canterbury, Otago and Southland. It is interesting to note that the last four are all in the South Island and the mismatch between the demographic and economic scores could reflect on trends such as agricultural intensification and the growth of high value-adding activities.

The last three columns in the Table which show changes in per capita GDP once again reflect the pattern noted in the first part of the Table, with strong improvements noted in the same regions, with average scores in Taranaki and Southland now exceeding the national average. It is important to note that these scores do not necessarily translate into improved personal incomes nor can it be assumed that that there is regional or sub-regional equity in terms of growth and employment opportunities.

Table 6 examines shifting regional shares of the population and GDP between 2006/7 and 2013. While percentage shifts are reasonably small, it is apparent that, in percentage terms, the share of the population in South Island is declining in relative terms and that with the exception of Auckland, all regions are in fact declining in relative terms, reinforcing an apparent trend towards urban primacy in the country. In terms of the last three columns, it is evident that while the above-mentioned four core regions dominate the economy in absolute terms (with Auckland generating over 35% of the GDP alone), in relative terms there has been a slight decline in that city's share of the GDP and the best performing regions are Taranaki and the South Island generally. The later reflects on the major Christchurch rebuilding programme and the positive performance of primary industry, particularly the dairy sector.

Table 6.

Regional shares of population and GDP: 2006/7–2013.

Region	Population 2006 %	Population 2013 %	Change	GDP 2007 %	GDP 2013 %	Change
Northland	3.7	3.6	↓	3.0	2.6	↓
Auckland	32.4	33.4	↑	35.9	35.3	↓
Waikato	9.5	9.5	–	8.6	8.5	↓
Bay of Plenty	6,4	6.3	↓	5.2	5.3	↑
Gisbourne	1.1	1.0	↓	0.7	0.8	↑
Hawkes Bay	3.7	3.6	↓	3.2	2.9	↓
Taranaki	2.6	2.6	–	3.3	3.9	↑
Manawatu-Wanagnui	5.5	5.3	↓	4.2	4.0	↓
Wellington	11.1	11.1	–	13.8	13.5	↓
(Total North Island)	76.0	76.3	↑	77.8	76.7	↓
Tasman/Nelson	2.2	2.2	–	1.8	1.8	–
Marlborough	1.1	1.0	↓	1.0	1.0	–
West Coast	0.8	0.8	–	0.7	0.7	–
Canterbury	13.0	12.3	↓	12.3	13.2	↑
Otago	4.8	4.6	↓	4.3	4.3	–
Southland	2.3	2.2	↓	2.1	2.4	↑
(Total South Island)	24	23.7	↓	22.1	23.3	↑
New Zealand Total	100	100	–	100	100	–

Source: Stats NZ, 2013a, 2014.

Note: Stats NZ data sets combine the Nelson and Tasman regions for GDP.

It is important to understand whether GDP per capita is being translated into median personal income. The data reflected in Table 7 below suggests that this might not always be the case. Relative to the national median income of $28,500 per annum, it is apparent that while in some regions, such as Taranaki and Southland, regional growth is translating into above national average incomes, the same cannot be said for Gisbourne and Bay of Plenty. For the latter region, the 2013 census indicates that incomes fall as low as $18,700 in the case of Kawerau district, re-emphasising the spatial inequality which exists within regions (Stats NZ, 2013b).

Table 7.

Annual median personal incomes (2013) by region.

Region	Income NZ$s
Northland	23,400
Auckland	29,600
Waikato	27,900
Bay of Plenty	26,200
Gisbourne	24,400
Hawkes Bay	26,100
Taranaki	29,100
Manawatu-Wanagnui	25,000
Wellington	32,700
Tasman	25,700
Nelson	27,900
Marlborough	27,900
West Coast	26,900
Canterbury	30,100
Otago	26,300
Southland	29,500
New Zealand Total	28,500

Source: Stats NZ, 2013b.

Reflections and conclusion

The information presented above vividly reflects the degree to which there are evident demographic and economic inequalities in the New Zealand space economy. While four regions, namely Auckland, Waikato, Wellington and Canterbury dominate the country demographically and economically, having over 66% of the national population and economic activity, the urban primacy of Auckland is self-evident. This must inevitably raise questions about spatial equity, and the potential over-concentration of state and other forms of investment in selected parts of the country. Dependent on one's economic persuasion this can either be regarded as maximising efficiency or exacerbating inequality nationally, with regional inequalities, according to Harvey (2006), being symptomatic of modern capitalism and a key element in the production and reproduction of capitalism, albeit often at the cost of social equity.

In demographic terms, while all regions, bar one, are growing, when one disaggregates the data a far less positive picture emerges with over a third of the country's Area Units and District Councils experiencing population loss between 2006 and 2013. Particularly hard hit are the far northern parts of the country, and parts of the centre and east of the North Island. While there is decline in the South Island too, it does not seem to be as severe, possibly because this comes after earlier phases of loss following restructuring in the 1980s.

Economically two seemingly contrasting trends emerge, with, at one level, the dominance of the four primary regions and Auckland in particular being apparent in absolute terms. Relatively however higher rates of economic growth and/or changes in the regional share of the economy are taking places in places such as the South Island, Taranaki and Gisbourne. Whether this growth benefits all residents and centres is debatable and more than likely reflects growth in selected industries – such as oil and gas and in farming communities.

In terms of the way forward, it can be argued that LGNZ's concern about the need to ensure balanced regional economic growth is justified (LGNZ, 2013) and that the government's latest regional development strategy (NZG, 2014a) needs to also consider the social, economic and infrastructural implications of the significant population loss which is taking place in over a third of the Area Units and District Council areas in the country and not just focus on issues of economic growth. Underutilisation of resources, facilities and infrastructure in certain areas at the expense of new developments in others, does not, at the surface level, appear to be the best use of resources or a way to ensure a balanced quality of life across the country. In its current form, the new approach to regional development which is being formulated in New Zealand (see Nel, 2014), with its current focus on foreign investment and comparative advantage is unlikely to address the above-mentioned challenges of regional inequality and may in fact exacerbate them by focussing economic growth in areas of high potential economic returns such as Taranaki and Auckland. If equity concerns are not addressed by emerging policy, regional inequality is likely to increase, leaving a serious challenge to future generations. From a data point of view, it is important for further research to clarify the degree to which the selected economic growth noted above translates into local jobs and real local income gains as opposed to just corporate profits.

Footnotes

Funding

This research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors.

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