Government Spending

The allocation of most Government services such as police, hospitals and social welfare is based on population tweaked a little to reflect specific regional differences.

However there are some areas of Government spending where the playing field seems far from level, and where Hawke's Bay seems to miss out rather badly.

The first of these is Government funded institutions.

For instance there are universities in Auckland, Hamilton, Palmerston North, ( Palmerston North also has a teachers training college ) Wellington, Christchurch ( where there are two universities ) and Dunedin. These are hugely beneficial to local economies through the employment of many well paid staff, as well as through general spending.

Local economies are also boosted by student spending, especially those students attracted from other parts of the country or from overseas.

Where there is a university the population is likely to be better educated giving these areas a competitive advantage when trying to attract new businesses. Undoubtedly lack of a university is one reason why we rank poorly for the number of people with tertiary qualifications.

We are the largest major centre in the country without a university. Many of Hawke's Bay's young people must travel outside the area to obtain skills and training. This is a huge drain on theirs, and their families finances, and extracts vital spending out of our own economy.

Military bases are another important boost to some areas, but not Hawke's Bay. Palmerston North is clearly a winner with two. An air base at Ohakea, and a major Army Base at Linton. Auckland also gains with an air force base at Whenuapai, plus the Navel facility at Devonport.

Of course the big winner from Government spending has to be Wellington as the capital city, where not surprisingly incomes are the highest in the country.

Some areas also seem to get a very generous share of Governments spending on one off projects. Te Papa museum in Wellington was built entirely with Government money and a major part of its annual running cost is also met by Government.

Helen Clark generously promised some 190 million dollars to upgrade Eden Part for the Rugby World Cup when she was Prime Minister. An upgrade that will provide huge long term advantages over other parts of the country when competing for major events in the future.

The present Government has thrown in another $20 million for a half share contribution to purchase Queens Wharf in Auckland to provide a giant party centre for the rugby world cup with more on promise.

Infrastructure spending by Government is also significant. Hardly a week goes by without an official announcement of some major new public works somewhere in the country.
Wellington looks likely to get a billion dollars to build a new motorway through transmission Gully to the north of the city, one of the seven roads of national significance to be given funding priority.

The new Victoria Park Viaduct & Tunnel Project in Auckland is expected to cost over $400m and there are several other huge roading projects proposed for our largest city.

Only a few years ago Tauranga was given a 250 million dollar harbour bridge as part of the deal to gain Winston Peters support for the minority Labor administration.

Commuter rail systems in our two major cities are also being upgraded at tax payers expense. Double tracking of the line north of Wellington and extending the electrification to Wakanae will cost $90 million.

These are all important projects which could not proceed without Government funding but Hawke's Bay seems to be missing out.

With 150 000 people Hawke's Bay is about 1/10th the size of Auckland. On a per capita basis we might expect to get about 1/10th as much as Auckland and perhaps a quarter to a third as much as Wellington. It doesn't seem to happen though.

For instance the $190 million spent on Eden Park equates to $19 million for McLean Park. Well as I recall we got just $2.1 million.

So who is responsible for this sad state of affairs?

Well I blame the politicians starting with our local Mayors and Councils. Compared to the endless string of demands coming out of Auckland we seem to insist on nothing.

For instance our two Mayors let the Crown refuse to contribute to the airport upgrade , when there was a legally binding agreement that specified Government was to pay half of any development costs.

Of course both our Mayors seem to have developed separate but parallel career paths in Wellington so perhaps their willingness to compromise Hawke's Bay's interests are understandable.

I think we also have a problem with our Parliamentary representatives. In spite of having up to five MP's including two cabinet ministers living locally until recently we seemed to have no effective voice.

Unless we start getting a better share of meaningful Government spending we can expect our local economy to continue performing poorly.

Population Growth

Recently released new population projections forecast the number of people in Hawke's Bay will increase by a maximum of 0.2% a year, until 2026 when numbers are expected to start falling. There are only 3 other areas where a decline is forecast.

Some people may think this is good news, after all the planet can only support so many of us. We are using up the worlds renewable, and finite resources at an alarming rate.

Water is under huge pressure and tap water is now obtained from purified sewerage in some places like the UK and parts of Australia. Some fish stocks have been cleaned out and may never recover. Oil production has also plateaued and will likely start declining within the next decade.

So there is a conflict between sustainability and economic survival, however we need a touch of realism.

Hawke's Bay could sink beneath the Pacific Ocean and it would not make a dot of difference to world sustainability. Unless the world at large is willing to grapple with the issue huge economic damage will be done by moving out of sync with the rest of the world.

By 2027 Hawke's Bay is forecast to have another 3000 people. This compares with another 600 000 people for the country overall so we will shrink compared to the rest of the country.

While these numbers are at odds with the 8200 increase expected by 2045, according to the Heretaunga Plains urban development strategy proposed by the Regional Council, both sources are effectively projecting low growth.

The problem with a low growth is two fold. As our share of the nations population diminishes our claim to resources will decline accordingly. Already we seem to miss out on Government spend ups. We have no university, so our young are forced elsewhere. Some of our hospital services are already sourced from Palmerston North and as specialisation intensifies more services could be relocated.

The second problem is population growth is a major driver of economic growth. As more people settle here the economy is stimulated by boosting demand for housing, and infrastructure, such as roads, water, sewerage, airports and so on.

To the people that matter we are recognised as the 5th largest urban area in the country. But by next census we may have slipped to 7th place behind Tauranga and Dunedin, and then suddenly we may find we are just not as important as we used to be.

Nothing will drive people away from an area faster than a lack of jobs, and if more people start leaving more jobs will be lost. Already people are leaving Hawke's Bay in droves and although births are helping off set these losses the net result is low growth.

Population stagnation will mean economic stagnation.

In the city of Detroit in the USA, once the center of American automobile manufacturing industries started leaving, so more businesses packed up. Then even more people lost their livelihood. Within about 40 years the population halved. Suburbs are derelict and abandoned. The city is broke, crime is rampant, and people are still leaving.

If we want a half decent future we must not allow this to happen to Hawke's Bay.

So how fast should we grow? That of course is the key question and I do not know the answer, but I firmly believe 0.2% is way too low.

Sports Park

The recent disclosure that a $500 000 donation by Higgins Contracting towards the Regional Sports Park was conditional on the company being awarded $1.8 million in work, raises serious issues about the way council matters are being handled.

The announcement of the so called gift was made with great fan fair a week earlier by the Sports Park Chairman who happens to also be the Mayor. It is no secret the park has struggled to get sponsorship due to the economic downturn that started to bite way back in 2007 and it seemed like the first positive step in breaking the funding drought.

In the early days of the park development, local entrepreneur Sam Kelt was in charge of the fund raising and was being paid $300 000 a year for his troubles. Almost certainly nothing was raised though strenuous efforts were made to conceal the details. At the time we all believed he would be donating one million dollars towards the development. It is still not entirely clear if any money has, or ever will be received under this arrangement. Certainly the chances seemed to shrink after some sort of disagreement between the Mayor and Mr Kelt.

It's impossible to find out exactly what is going on at the Sports Park because many decisions have been made behind closed doors, and much of what has been said has been subject to serious spin doctoring, necessary only when the truth is unpalatable.

As I recall the contracts for construction of the all weather athletics track and parts of the Grandstand were also awarded to Higgins without any formal tender process.

Again the Mayor claimed these were very good deals. Perhaps!! But the reality is the only way to know for sure that something is a very good deal is for all interested parties to submit their best prices. Other than “for free” anything else costs ratepayers.

Now while nod nod, wink wink hand shake deals might be convenient there is no place for them when public money is involved. Remember we are talking about millions of dollars.

There are several things seriously wrong with the latest sports park deal. The fact that substantial contracts were let without being subject to competitive tender breaks the councils own rules. Shifting control to a 100% council owned trust is simply manipulating the situation to avoiding the rules that normally apply. For instance the price for work could have been jacked up to cover the cost of the donation. The next step on such a path is graft.

The process has also disadvantaged other contractors . They employ people, pay rates and contribute to our society. The risk is over time others may become cynical and not bother to submit their best deals in future because they know its a waste of time. It may even force some not to stay in business or not to stay in Hawke's Bay.

The fact it was necessary to exclude any public scrutiny makes clear the deal was not squeaky clean. The whole sordid business was opposed by only a handful of councillors who realised the full implications of favoritism when handing out valuable work. Full marks to those who did stand up and be counted but clearly nepotism is not dead at the Hastings District Council.

When I read of the Mayor claiming he had done no wrong, ringing in my ears was US President Richard Nixon proclaiming “I'm not a crook” just before he was impeached by congress over the Watergate scandal.

Its now time to ask other questions about the sports park. Much has been said about the $3.5 million pledged for the Velodrome by Unison and the Regional Council. On the surface quite generous but this money is in effect all public money that has been taken from the community. A lot more is still needed and it seems significant contributions will be required from Government and/or Bike New Zealand.

In addition to providing a valuable facility for aspiring Olympians such a facility could boost our visitor industry but we cannot count on it happening.

We are not the only ones pitching for official endorsement. Palmerston North, Wanganui and Auckland are all aspiring to have the first all weather north Island velodrome. So if we don't win this battle for funding do we lose the $3.5 million already pledged or can it be used for other Sports Park projects?

It is time for the Mayor to stop fudging the facts and reveal the exact state of affairs.