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Regulators, not businesses have failed the Region

Last fortnight, the Northland Regional Council (NRC) heard submissions to its Annual Plan.

The main point of contention was the Council’s proposal to hike rates by 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 that free market has failed Northland.

It is our rule makers, not businesses, who have failed their community.

Unfriendly attitude

When the conditions are right, business is very good creating 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.

Ambitious people will not waste years battling people hiding behind clipboards, arguing for pragmatic and common sense solutions that can be solved in five minutes and without engaging countless experts.

Instead, they take their capital and their initiative to more fertile pastures leaving 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 that extracting it will damage our clean green image.

Community benefits

Contrary to popular belief, most of the wealth that businesses 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 is left, which it consumes or redistributes to others.

Community 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 gutter of despair.

Perhaps regions like Northland need to declare themselves a crisis zone like Christchurch so that they too can have essential projects fast-tracked through the bureaucratic process.

Fast track 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 was not 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!

Imagine how many projects would get started if resource consents were processed within weeks rather than years. Many projects would become viable because applicants would not have to waste tens of thousands of dollars, on waffle-talking lawyers and planners and consultants.

They would not 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.

Frank Newman is the author of numerous books on investment. He has worked as a share broker, investment adviser and University lecturer. He was a member of the Whangarei District Council for six years. The above article appeared in the New Zealand Centre for Political Research Weekly, reproduced with the permission of its Editor Dr Muriel Newman ©

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