The so-called “Prince of the Provinces”, Shane Jones, went home last Friday.
Perhaps not quite literally home, more like 20 kilometres down the road from his house on the outskirts of Kerikeri.
With its airport, its rapidly growing (mostly retired) population, and a commercial centre with all the big retail brands, Kerikeri looks (and is) relatively prosperous.
But 20km down the road at Kaikohe it’s another story.
Kaikohe’s main drag is punctuated with charity shops, a large vaping outlet with heavily barred windows and takeaways offering hangi food or fatty pork dishes.
The town’s largest employer is the nearby Ngawha prison.
Yet Kaikohe is only an extreme version of a string of other towns in the north: Kaitaia, Rawene, Dargaville or Kawakawa, all struggling to keep up with the rest of New Zealand and, in the process, seeing their young people give up and head away, usually to Australia.
Northland’s unemployment rate last year was higher than the national average, but the most startling statistic is the number of “NEETs”: those who are in neither employment education nor training, or 16.1% of the population aged between 15 and 24.
These are the “nephs” that Shane Jones famously promised to get off the couch when he was the Regional Development Minister in the Ardern Government.
Now, having just turned 65 and having had the opportunity to reflect during three years out of Parliament, he has returned with a new sense of urgency to address the problem.
He convened a Northland regional economic forum on Friday, where he set out his mission.
The Forum was at a meeting facility near Ngawha, just east of Kaikohe.
“This facility stands next to Ngawha prison where there are too many young men and women whose lives are blighted by the fact that the sons and nephews are in that facility,” he said in his opening address to the Forum.
“One of my main missions as a regional development minister is to ensure that infrastructure, jobs, but most importantly investment, can proceed with a minimum amount of fuss so that we create opportunities where such facilities over time don’t have such a high level of occupancy. “
Jones’ previous attempt to address this challenge was the $3 billion 2017 – 2020 Provincial Growth Fund, which offered grants to enterprises ranging in size from KiwiRail to the hot springs not so far from the building hosting the Forum on Friday.
The big change with the 2023 – 26 version is that it has only half the budget ($1.2 billion) and will focus on investments rather than grants. It is now called the Regional Infrastructure Fund.
It is primarily a capital fund that provides funding through a mix of loan and equity investments; grants will be available in only very limited cases.
Currently, a crown entity, Crown Regional Holdings Ltd is structured to hold the investment stakes in the entities the fund invests in.
This is a substantial difference to the Provincial Growth Fund.
“Once you have a co-investment, you need an institution within the crown to manage the Crown’s interests,” Jones told POLITIK.
“The challenge will be to ensure that the Crown has the sophistication to manage the public interest in these co-investment projects.”
For the north, infrastructure is an ever-present challenge.
Just this year, slips on State Highway One on the Brynderwyn Hills cut off the region from the rest of the country from February until late June.
Trucks and cars had to take long detours to get to Whangarei.
Then, last June, the main power transmission line into Northland was cut, and it took over 24 hours before power was fully restored to the region.
The Government has responded to the State Highway One challenge by confirming that the highway will now be four lanes from Warkworth to Whangarei and that it will include a deviation around the Brynderwyn hills.
State Highway One is the only way in and out of Northland. It carries logs, fish, and produce out and brings tourists in.
A group of Northland business leaders have been campaigning for the four-laning of the highway as has Northland MP, Grant McCallum.
The chair of the business group, John Faithfull, reminded Friday’s Forum of the results of a New Zealand Institute of Economic Research study earlier this year which found that a new high-quality expressway between Auckland and Northland would save Northland businesses over $3.7 billion a year in costs and create over 6000 jobs.
But though the Government has committed to that, there are widespread problems with Northland’s roads, which are built on unstable clay foundations in a region with high rainfall.
Graeme Morrell, the chair of the Te Puna Topu o Hokianaga Ahu Whenua Trust, which is invested in forestry on mana whenua land, asked Jones what could be done about local roads.
Jones asked the Far North District Council Mayor, Moko Tepania, to respond.
He said that the way the Land Transport Fund and the Regional Transport Fund operated was too complex.
Big slips which cut Kataia off in 2022 have only just been funded, he said.
And the Council could not meet Waka Kotahi’s requirements to seal a road near Morell’s village of Mitimiti which would mean that logging trucks would be operate more easily.
“Sorting out Hokianga’s roads as a package is never going to meet Waka Kotahi’s objectives but is going to absolutely unlock the economic potential of Hokianga’s incredibly remote communities,” he said.
“We need a little bit of flexibility.”
That was greeted with applause.
Even so, it is clear that the decision to build the four-lane highway has been a huge morale booster for the north and offers up the possibility of linking Northland’s economy more closely with Auckland.
“We are a region that can contribute to the national economy and support the growth of Auckland,” said the Northland Corporate Group chair, John Faithfull.
“We need to be clear and in agreement on where we will invest that will produce transformational shifts.
“We believe success will come from focusing on a small number of transformational initiatives that can have a multiplier effect.”
There is already a candidate, and that is a proposal from Northland’s two lines companies, Top Energy and Northpower, to upgrade and duplicate Transpower transmission lines in and out of Northland and to develop a substantial renewable electricity generation industry.
Top Energy has already started with a geothermal power station at Ngawha.
Last year, it had to get an exemption from the Electricity Authority to allow it to nearly double its Ngawha geothermal generator to 117 MW and build a 10 MW solar farm.
That plan is ambitious and would require Ngawha to produce as much power as some of the smaller stations, like Karapiro on the Waikato River.
The Government has now relaxed the law to allow lines companies to own large-scale generation assets.
The largest solar farm in New Zealand already operates at Kaitaia, and there are multiple proposals for more in the north.
The idea is that Northland, which has to pay high transmission costs because of its distance from the main power generators, could not only become self-sufficient in power and thus reduce those transmission costs but also an “: exporter” of power to Auckland.
The power companies are looking to Jones’ fund for investment.
Northpower CEO Andrew McLeod said one of the main reasons to invest in generation in the north was resilience; had the region not had the Top Energy Ngawha geothermal generation during the recent pylon crisis, Whangarei would have “gone dark”.
He said that if Northland became a net exporter of power, there would be no argument to charge it for transmission costs, which are some of the highest in the country because of the region’s distance from the generators.
But though Top Energy CEO Russell Shaw said his company could have the additional generation in place at Ngawha by the end of 2028, he warned that the New Zealand electricity market would continue to be volatile until generation capacity exceeded demand.
The former Labour Minister, Dover Samuels, said some of our regions were going to the wall because some of the major businesses were collapsing and hurting many people in places “that resemble this community.”
“I want to know if, in fact, the geothermal capacity that drives Ngawha would be an asset to contribute to the sustainable energy network that you’re talking about, to bring down the prices that our businesses currently have a challenge in addressing,” he said.
Shaw said that Ngawha would eventually be a solution because, along with solar and unlike coal and gas, there were no fuel costs involved in its generation.
Just recently wholesale power prices peaked at $750 a Megawatt Hour.
“Then it rained, and the wind blew, and power prices went to a cent,” he said.
“So, the key to this is actually managing the volatility in price while we go through the transition.”
Jones believes cheaper power will be a key factor in driving economic growth in Northland, partly because of the potential to process the region’s huge timber resources.
“Without good cheap energy, those logs are all going to go, if not to China, Korea, to some other place,” he said.
“The challenge will be that we are unable to trust the current structure of the energy sector in New Zealand.
“The share market companies are too big, too powerful and consistently thumb their noses at the crown.”
That was why he was an advocate of the recent decision to relax the restrictions on lines companies owning generation assets.
“We then need to find $100 to $200 million, which I hope to go to look for with Grant (McCallum) and others and then all the energy that we create, beyond what we need, can be sent to Auckland.”
The only obstacle to making Northland a major geothermal and solar energy generation centre is bureaucracy, particularly local body planning restrictions.
Jones is already a strong advocate of the Fast Track legislation, but he also exhorted the 300 or so Northland leaders at the Forum to realize that there had to be a tradeoff between economic growth and environmental considerations.
“We do need regulations,” he said.
“We do need safeguards, but they need to be realistic because unless we have a buoyant economy in our region, we will not keep our churches open; we will not sustain our schools; we will not keep local businesses flourishing, and we will watch our young people disappear out of the North not to other parts of New Zealand but to Australia.”
That is what drives him: to make Northland a home for everyone’s children and their grandchildren.
People who know him well see a new intensity and a new seriousness as he goes about his campaign.
He will shortly travel to Singapore looking for investment funding to co-invest with his fund but perhaps also to look at its state-owned investment vehicle Temasek, which invests to transform the Singapore economy.
That is because that is what he is about, long term investment to transform the economy.
