The Labour Party is pledging up to $20 million, if elected, to support the region's timber processing sector, possibly by helping fund a prefabricated housing plant.

Such an initiative would dovetail with Labour's KiwiBuild policy to fund construction of 100,000 affordable homes over a decade.

The announcement, by party leader Andrew Little at Gisborne's Prime Sawmill today, is the second in a series of targeted regional development investment announcements Labour plans to roll out in election year for a total of $200 million in commitments, which would only be fully spent if matched dollar for dollar by local government or private sector funds.

A fortnight ago, the party announced the first in this series: a $10 million package for Dunedin's technology sector.

For Gisborne, Little pledged that "a Labour-led government will provide a stimulus package up to $20 million to enable the construction of a timber prefabrication plant and associated infrastructure in Gisborne."

"This money will match dollar-for-dollar investment from businesses and local economic development agencies and be subject to a robust and transparent tender process," he said, citing Gisborne's mature plantation forests as a source of economic strength that was underexploited because most of it left the region as raw logs. Prime is already investing in a wood engineering technology plant.

"This funding could be used for the construction of the plant, investment in necessary infrastructure upgrades to support it or supporting sawmilling technology to help provide the lumber. What's important is that this investment underpins local aspirations," Mr Little said.

Local aspirations include reopening of the railway line between Gisborne and Wairoa, which washed out in 2012 and which KiwiRail says is uneconomic to restore to service. The Hawke's Bay Regional Council this week called on the Gisborne District Council to commit funds for a joint feasibility study into reopening the section of line between Wairoa and Gisborne. Plans are been made already for the Napier-Wairoa stretch to reopen.

Bolstering a housing prefabrication industry would also assist efforts to overcome high construction and the under-supply of homes in some parts of the country, Labour argues.

(BusinessDesk)