PM dismisses Labour's 'slush fund'

Prime Minister John Key is dismissing Labour leader David Cunliffe's plans for a new regional infrastructure fund as a "slush fund".

The fund would pale into comparison next to the cost a Labour government would impose on the regions, Key said.

Cunliffe confirmed at the Local Government New Zealand conference today that if elected he would establish a fund of "at least" $200 million. Regional projects would compete for Crown co-funding from the fund.

Citing projects such as Opotiki improving the navigability of its river bar, a rail link to the Northland Port and restoring Dunedin's engineering industry, Cunliffe said he envisaged projects requiring about $10 million along with local funding to be eligible.

But Key dismissed the idea as a "slush fund", saying Labour was "behind the eight ball". National was already investing in regional irrigation projects, improved roading and ultrafast broadband.

"They can set up a small slush fund but that's not actually going to help when you think about all of those other costs that they're going to put to put on the regions," Key said.

This included a capital gains tax "on all business", Key said, while a likely Labour/Green coalition would oppose the oil and gas industries and expansion of aquaculture and horticulture.

"In reality a small slush fund is not going to make up for all of the anti-growth initiative that their government would have," Key said.

He dismissed claims the regions were suffering, saying official figures showed that in eight out of 11 regions growth was higher and unemployment lower than in Auckland.

"The facts show that the regions have been growing strongly, employment growth has been strong, and most of them have a lower unemployment rate than our largest city."

Cunliffe said incomes in most regions were lower now than when Key became prime minister in 2008.

He denied the regional plan would be a slush fund, saying that initially the Government would develop strategic plans for the regions before a rigorous process through which projects would need to be subjected to before money was spent.

If a project was "ready for analysis, we'd sit down with local partners and work it through," Cunliffe said.

"We're looking at things that will achieve a step change in the ability of a region in its strongest sector, acknowledging that every region has different resource endowments, and we grow the value of the whole of the economy when we do what we do even better," Cunliffe said.

"We are stressing the rigorous strategic criteria that will need to be part of any project approval. That will focus on both the resource endowments of the region, the industrial or economic strengths of that region, and then take it to the next level.

"Clear co-funding commitments ... [This] would not just be dished out by ministers running around with a chequebook as National might envisage."

A group of local government, iwi and business leaders would be used to advise on the projects although ultimately they would require the sign-off of Cabinet, Cunliffe said.

Numerous projects would boost the regions if they got over the line, Cunliffe said.

"I don't think there's anyone in this room who doesn't know of at least one project that would help grow their region's wealth, but that can't get across the line because of a lack of available investment," he said.

"In my time as regional development spokesperson I've seen more than a few.

"They're ideas like the Opotiki harbour development which would create nearly 300 jobs - in a town with twice the national rate of people on the benefit. And the tragic events of recent weeks indicate the importance of creating jobs in communities like that."

Other projects he named were the Gisborne-to-Napier rail line and rebuilding Dunedin's heavy engineering capability.

Key signalled that his Government was also considering funding the Opotiki project, in the highest profile comments on it so far.

The region claims that if navigation into the river were improved, it would help unlock pent-up interest to invest in a major aquaculture project in the Eastern Bay of Plenty. However, the local council says it can not afford to fund the improvements itself and is calling on the Crown to contribute.

Longtime Opotiki Mayor John Forbes recently called for the Government to invest in the project, as the town faced scrutiny over its gang issues after the recent death from a stabbing.

Forbes said what the region really needed was jobs to improve the fortunes of its residents.

"We're aware of their particular project and we've having a look at their particular project," Key said, adding that the Government saw "some logic" in what was being proposed.

"From time to time on an ad hoc basis the Government does get involved and we can see logic about what they're talking about there," Key said.

The Dominion Post