The inequality debate reaches beyond individuals to towns and regions, so what can we do when an entire town is in the doldrums?

One of the main topics on The Nation this past weekend was inequality, with Paula Bennett being the main guest, supplemented by a very interesting interview with Shamubeel Eaqub, NZEIR's principal economist.

His NZEIR paper with John Stephenson, Regional Economies, (and forthcoming book Growing Apart) seems to be a must read for anyone wanting to understand the structure of the contemporary New Zealand economy.

Shamubeel’s most startling revelation in the interview was the existence of “zombie towns” in New Zealand.

"Lisa Owen: So if there are no quick solution as you point out then is there irreversible decline in some town some towns? Does someone need to close the door and switch the light off in certain cities and say ‘it’s a lost cause’?

Shamubeel Eaqub: It’s horrible to say but yes we have zombie towns and some of them do have to close. And you know it’s going to be devastating for those communities but it will be better for New Zealand if we target our resources in places that have some hope of growing and creating prosperity."

I once got an OIA on the government’s strategy to deal with a zombie attack. After thorough research I was surprised to find we did not have one. But apparently the enemy lurks within. Perhaps a new role for the Counter Terrorist Action Group (CTAG)... except they would need to be renamed CZAG.

Interestingly Shamubeel made the comment that parts of New Zealand - Northland - has incomes comparable to Timor Leste, which rather recalls Jonathan Boston’s comment that the worst of poverty resembled India. This does not mean that whole regions are so afflicted, but there are parts of Northland (Kaikohe), the East Coast and Central North Island (Murupara), where life is pretty bleak, and people do not see a way out. I grew up a few miles from Murupara. Back then it was a busy forestry town, admittedly a bit rough, but work was plentiful. Over the years I have occasionally driven through it, and its decline is very evident. It is less the problem of material wealth, but more the air of hopelessness that pervades the town.

Interviewing Paula, Lisa Owen concentrated on the recent MSD report on inequality and Jonathan Boston’s work on child poverty. In particular, the plight of the poorest 35,000 children was the focus of the interview. She asked Paula whether increasing the general level of the benefits was necessary. Paula’s answer was “no”, that another $20 or $30 added to all benefits would not solve the problems of these children. Rather the focus needed to be on specific health, welfare, education and housing programmes aimed at this group.

We don’t yet know Labour’s view on increasing general benefit levels, but I suspect the answer will be similar to that of National. If it is significantly different, that will mean unwinding the consensus on this subject that has prevailed between the two major parties for 20 years. However, one would expect Labour to have more programmes aimed at these children, especially in the provision of state housing.

This leads back to the issue of the “zombie towns”. I imagine the population of these towns and related small communities is upward of 30,000. The great majority of the children will be in benefit dependent families and will be in severely inadequate housing, which may have had no maintenance for 30 or more years. Perhaps as many as one third of all the most poverty stricken are in these zombie towns.

Shamubeel asked whether it was worth spending hundreds of millions in these towns, when there will be little prospect of employment and opportunity.

Is there are better solution? Should people be encouraged with incentives, such as a new state house, to leave these towns? But as the town de-populates, life will become even more restricted for those who stay. It is a bit like the problems that face the residents within the red zones of Christchurch who for whatever reason choose to stay within the zone. But they are likely to be ultimately subject to a compulsory purchase order, which however reluctantly received, will enable people to start again.

Is this what we have to do for the zombie towns - make an offer so attractive that people will want to leave and re-establish themselves in places where there is more opportunity?

It seems a drastic solution, and could be seen as effectively forcing people to shift from where they live and then closing down the town. It hardly seems the New Zealand way. It may be OK for a national calamity, such as the Christchurch earthquake, but would it really be possible where the problem is a slow and insidious decline?

But for instance a case study could be made into whether it would make sense for say Kaikohe, Moerewa and Kawakawa to be consolidated into one place which had more opportunity for growth and opportunity. Yes, it would be economic and social engineering, but so was the establishment of the timber and power towns of a former era. 

Or are these questions now simply too hard to ask?