Tuesday, 28 July 2015

Are enterprise zones finally “a thing”?

Ideas percolate slowly.

So it's encouraging to see the Government is at least entertaining the idea floated publicly this week by Local Government New Zealand (LGNZ) [and for many years by many others] for 'Special Economic Zones.' It shows the Government may be relaxing its more purist and laissez faire approach from before the Northland election and looking at some more pragmatic ideas.

The reason the thinking in that quoted paragraph is so confused is because it’s written by the frequently befuddled Bernard Hickey (an idiot who seems to think the best thing about a Special Economic Zone is the cut the government gets!), but the story he reports is still a good-news one.

A 'special economic zone' could allow a struggling region such as the Manawatu/Wanganui or Northland or the East Coast to trial the relaxation of either national or local laws or revenue raising measures to see if it might kick-start economic growth. Any local Government in that region would in exchange for relaxing the law then get to share in the benefits of economic growth, possibly through some sort of income tax or GST sharing arrangement.

Clearly, Hickey shares the idiot-focus with LGNZ.

LGNZ did not spell out exactly how they might work or who might use them [if central Christchurch isn’t screaming out to you right now as the obvious first candidate that can only be because your brain is switched off], but the idea is out there now and, unusually, has not been rejected outright as other regional development suggestions have been in the past.
The idea was initially run up the flagpole in New Zealand last September by NZ Initiative Head of Research Dr Eric Crampton after a visit to Hong Kong. China has used special zones extensively to try out new ideas on relaxing taxes and other regulations, and with great success, especially across the border from Hong Kong. He also pointed to a special zone used in Honduras to allow free trade and different types of government. Dr Crampton suggested local Governments could relax Resource Management Act (RMA) rules in such a zone.

And so they could. And much more besides.

The NZ Initiative has since circulated more detailed economic zone ideas amongst policy makers in Wellington and received a positive reception from all sides. Another suggestion was for rules restricting overseas investment to be relaxed for a specific region.
    LGNZ President Lawrence Yule then included the idea in the association's 10 point plan for local government funding reform released at this week's conference in Rotorua. He later said such a zone could include minimising RMA rules or fast-tracking consents, or even the potential for tax or rates relief.
    LGNZ also suggested in its funding reform plan that the central Government share the fruits of any extra economic growth generated by such a zone, to provide an incentive for Councils to 'go for growth'. That could include granting Councils a share of income taxes or GST generated in their region from the extra growth.
    The lack of incentives for growth in many regions is more of an issue than many think.

And this, really, is all that encourages Hickey and LGNZ and, no doubt, the likes of Looney Len to get excited. They read a proposal containing the words “granting Councils a share of income taxes or GST generated in their region” and they simply start frothing at the mouth.

Mind you, at least in that same proposal we also have the words “the fruits of any extra economic growth generated by such a zone,” which is the most recognition you’ll ever get from bloviating blowflies like Bernard that liberty and spontaneous order might just be better for humanity’s progress than regulation and central planning.

And if it takes a bit of rates/income tax ju-jitsu from Dr Crampton and the Initiative to get the grey ones on board, so be it.

1 comment:

  1. I wonder if this is a backdoor route to RMA reform? I would prefer outright repeal of the horrible thing, but if a sly round-about approach will get the job done then let's do it.


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