Direct trans- Tasman flights next step

Published HBT 20 Sept 2016 

I spotted a piece of great news recently embedded in an advertisement by Hawke’s Bay Airport Limited for two new management positions. These new jobs may or may not be good news in themselves and for the moment it doesn’t matter because in the general background about the airport  was the revelation that passenger numbers were up 90 000 or 19% year on year. 

It’s unlikely the airport has ever experienced this sort of growth before and of course there is essentially just one reason for it happening, and that is Jetstar. Jetstar started flying to Hawke’s Bay on December 1st last year and have added 135 000 extra seats a year all of them between Napier and Auckland. Whilst  Air New Zealand’s media announcements are always vague they seem to be claiming to have added another 35 000 seats. Whether this increase is spread across all three of their Hawke’s Bay routes or just flights to Auckland is unknown.

We can assume the year on year period referred to is the 12 months to 30 June 2016 the airport balance date. So effectively we have five more months of the Jetstar effect and therefore could end up with perhaps 130 000 extra passengers by the end of this year. 

This is fantastic but unfortunately there is no research on exactly who all these extra passengers are. Some will be on business, others on holiday or visiting friends and family and there may even be a few genuine tourists with no connections here. My cousin used to drive down every couple of years but now she can afford to visit every couple of months and I am sure many other people are similarly able to travel by air now that the price barrier of our previously outrageous fares has been removed. 

This is great news for Hawke’s Bay because at last we are starting to move into the 21st century. However had our Mayors not been so obstructive and their councillors so apathetic we might have been in this position ten years ago. The airport board also lacked vision and commitment, preferring the easy option of building more car parks.  Chairman Stuart McKinley was the only exception but was not reappointed by the Mayors possibly because he looked like being successful.  For the record I have opposed the appointment of all the other council directors because I think they lack the stuff we need to move our great region forward.

In fact the airport story is a graphic example of how Hawke’s Bay has ended up at the bottom of economic rankings for much of the last decade. We have far to many elected representatives and their various appointees willing to sit on their rumps rather than dong the hard yards. Back in 2004 when I first became involved in the airport issue both Qantas/Jetstar and Pacific Blue were providing domestic services. To attract them to Hawke’s Bay required a runway extension because these companies then employed jet only fleets. Estimated cost was around $5 million and this was said to be too risky. Yet around the same time the Mayor of Napier had no trouble blowing $18 million on the museum extensions whilst the Mayor of Hastings spent $15 million refurbishing the Opera House which is now requires a further  $11 million plus, for earthquake strengthening. The $5 million for the runway extension was a pittance and was eventually funded by the airport at absolutely no cost to ratepayers. The Museum and the Opera House together have yet to attract a fraction the number of additional patrons the airport has gained in just one year. The Museum and the Opera House have cost ratepayers well north of $40 million and need millions more each year to keep operating. Remember also the Mayor of Hastings wanted to spend $24 million on a velodrome and still hopes to use $5 million of ratepayers money for a new CBD hotel. Instead of gobbling up ratepayers money the airport now pays the council owners an annual dividend. 

For the record the two Mayors surrendered governance control of the airport to government, contrary to the original 1963 agreement and entered into a lease agreement on the airport land that effectively transferred millions in potential rental from the Councils to Government, whilst preventing public scrutiny of the proposed arrangements.  

Clearly the people we chose as leaders and their airport appointees got this issue seriously wrong choosing to listen to opinion from wingeing pseudo experts, advisers who were seriously comprimised by their association with Air New Zealand and a disingenuous monopoly claiming they were not over charging when clearly they have been doing so for years. We should now question every piece of advise Air New Zealand has ever given starting with their claims there is insufficient traffic between Hawke’s Bay and Australia to justify direct flights. If the arrival of competition can flush out more than 100 000 extra passengers on domestic services to just one destination in a single year, just imagine what direct trans-Tasman flights would do to Hawke’s Bays well being. We must also encourage Jetstar to start offering direct flights to Wellington with connections to Christchurch.  

We can continue doing nothing for another decade and remain at the bottom of regional rankings or we can start doing something about catching up. Local Government voting has already started. If instead of simply putting a tick beside the names of candidates that are recognisable because they are standing for the umpteenth time voters could do themselves a favour and seek those candidates with the knowledge, experience and track record to actually make a meaningful difference. 

Remember also politicians promises are being made with your money. 

Support should be tied to success of HOY event

 Published HBT Saturday  6 August (Paragraph in highlighted in red not published)

In her July 29 Talking Point Jessica Maxwell has raised a number of significant issues regarding “Horse of the Year”. As one of the HDC Councillors involved I believe more needs to be explained.  

For a start crucial decisions have been made without all relevant information being disclosed. When councillors were first informed of plans to tender the event in 2015 we were not told this situation had been precipitated by Kevin Hansen of EventPro, requesting a fee increase. Some including the Mayor may have known but most of my collogues had no idea of this situation.  

Councillors also had no role in the decision to appoint SMC Events Management and were told of the decision after it had been made. SMC were said to offer advantages as an experienced management company but information that has subsequently been gleaned casts some doubt on the wisdom of the decision. For instance SMC’s involvement in the Ellerslie flower show was not fully appreciated. SMC bought the Flower Show in 2004, ran it for just 3 years before selling it in 2007 to the Christchurch City Council for $3.0 million, receiving an average of $658 000 to manage each event. Whilst the first show in 2009 made a $224 700 profit, in every subsequent year the show incurred losses, other than 2011 when it was cancelled due to the earthquakes. In 2014 following a loss of $516 000 SMC’s contract was not renewed and further shows cancelled.

Also unknown was SMC’s involvement in another failed event, the A2B Blue Water Classic, a proposed race for super and maxi yachts from Auckland to Bluff. The event in 2014 was expected to cost $1.5 million with Government committing $440 000. Government actually contributed $100 000 up front and the Invercargill City Council $115 000. Venture Southland and Invercargill City had previously spent $15 000 on a feasibility study, but yacht racing legion Grant Dalton had warned as early as 2011 that the event would struggle to attract entries. Two years later when this eventuated the event was cancelled with none of the advanced money being returned. 

SMC do have some success stories such as the Wheet-Bix Kids Tryathlon and Port of Tauranga Marathon but these do not compare with HOY for complexity or difficulty. 

Following the revelation of the $170 000 loss by Horse of the Year in 2016, HDC Councillors were advised SMC had struggled with the complexity of the event and that there had been problems with the transfer from Eventpro the previous organiser. Additionally there had been additional costs of $50 000 for cleaning out the stables, $172 500 for temporary fencing and $30 000 for irrigation. 

For the record in HDC contributed $35 000 in 2015 and at the urging of the Mayor this was doubled to $70 000 for 2016. Effectively the combination of the $170 000 loss and the additional $35 000 grant means the event finances were $205 000 worse off. The initial $90 000 initial shareholder advance had already been used up

On July 19 Councillors were asked to approve a rescue package consisting of:

• $250 000 to recapitalise HOY 

• $150 000 annual contribution

• $600 000 reserve to cover future event risk

A decision on the $600 000 was deferred pending further investigation (but strongly opposed by this councillor), the annual contribution was whittled back to $120 000 a year (but still opposed by 4 councillors), and a one time bail out of $170 000 approved but opposed by 2 councillors. 

One councillor asked if the HDC would have been so accommodating had the Deputy Mayor not also been Chair of Horse of the Year? This raises the issue of whether this back door involvement by council is wise. All who remember the V8 fiasco in Hamilton will be wary of council’s direct involvement in eventing.

There was also support for a $200 000 grant to the A & P show grounds for fencing and an irrigation system, part of an unallocated $500 000 assistance provision. Helping the A & P society to provide these facilities meant a potential annual saving of $30 000 for HOY and also offered a permanent upgrade of this important local venue for all users. The value of these improvements effectively translates to a further increase in the annual grant to HOY.    

We are told repeatedly that HOY contributes $12.5 million to the local economy a figure supported by council officers but not verifiable by councillors. It is unquestionably an iconic Hawke’s Bay event but his does not mean council should be providing a blank cheque year after year. Clearly in hindsight it might have been very much cheaper to have agreed to the fee increase requested by Eventpro, but that option was never explored. 

Whilst the hiccups for 2016 seem plausible and some help justified, the HDC has been locked into additional support beyond 2017 if that year produces a similar outcome. The option of pulling the plug must be retained. 

Havelock has run out of sections

Published HBT 18 July 2016

Recently the Hastings District Council arranged a “building industries forum on residential land supply”. It seemed mostly to be a PR exercise by council officers to mollify the concerns of the local building industry over the perceived shortage of building sites especially Havelock North. The council maintains there is no shortage, but nearly 100 industry representatives surely can’t be wrong. 

Residential land development is a long convoluted process made more difficult by the Heretaunga Plains Urban Development Strategy or HPUDS which attempts to control the erosion of productive land by urban development.  Because of the time it takes to get bare land to the stage of being available for housing, wise and timely planning is essential, and its clear council has scored an own goal by failing to take the industry’s views seriously when the issue was bought to Council’s Economic Development Committee over 18 months ago. 

The problems are two fold. Council predictions are based on past averages but the market is cyclical so when demand accelerates as is now happening, supply may be inadiquite. Additionally in Havelock North the odour coming from the mushroom farm has resulted in the Arataki Extension being put on hold though the problem has also been known about for a long time. 

One solution is to develop Brookvale Road but unfortunately there is currently no structure plan so it will be at least a couple of years before anything happens, assuming landowners are interested. A second area is to the south of Havelock North between Te Aute and Middle Roads is more promising but will also be subject to a delay of at least 12 months and probably longer. 

Effectively Havelock North has run out of sections and there are also delays in bring more sections to market in both Northwood and Lyndhurst.

Council seems to think if no building consent has been issued then an empty section is available for someone to buy, but this is quite wrong. It’s possible the section owner has purchased the block with the intention of building at some undefined time in the future. Alternatively an empty section could be part of a builders supply chain to ensure as work on each dwelling comes to an end construction can commence on the next dwelling. This means builders must have a continuing supply of subdivided and serviced residential land. Larger building companies may be committed to buying a significant number of sections even though it may be some time before they are all built on. The reality is an empty section can only be assumed to be available for sale if council approaches the owner and confirms its availability. 

Nor is it realistic to assume that if a handful of sections are unsold there are still sections available for everyone. We live in a market economy not some Eastern European controlled economy. Not every section will appeal to every buyer. Yet it is important there are enough sections so all buyers can be satisfied. 

It is essential there is a good supply of sections. Single dwelling residential construction is a hugely important economic driver here in Hawke’s Bay as elsewhere with many individuals and businesses involved. If council does not ensure enough land is available, and  in the right areas, then millions of dollars of privately funded spending will be denied to the local economy. Shortages will also result in less competition and both higher section prices and land banking is likely to occur. Conversely if a developer thinks prices will be stable because of adequate supply they will be keen to move their sections to market. 

Council seems concerned  it will be left owing the money it has borrowed for infrastructure if it does not collect the development contributions. This must have happened in parts of Flaxmere where council owned sections have been unsold for decades but record low interest rates at present minimises the risks. The proposed 260 sections in Howard St will require $3.3 million for infrastructure, and the interest on this money at say 5% is just $165 000 a year.  When compared to the $750 000 cost of the free Hastings CBD parking trials, or the million dollars already spent on Civic Square, neither of which has provided any economic benefit, the risk on residential development seems affordable.  

Hawke’s Bay is a great place to live but in terms of population we are nearly the slowest growing region in the country. One of the reasons for this is a lack of well paid permanent jobs.The Hastings District Council invests heavily in economic development so clearly believes it has an important role to play yet seems willing to permit a damaging shortage of residential sections to happen.

At last weeks Horticultural Field Days in Hastings BNZ economics guru Tony Alexander suggested Hawke’s Bay will not share in New Zealand’s rapidly growing economy. He also predicted the current housing boom would run out of steam by the end of next year, as interest rates started to increase again. It would be a great shame if lack of timely action on residential development by the HDC further impacted on our well being.  

Wrong parking strategy in Hastings

Published HBT 8 July 2016

The Hastings District Council has finalised its 2016/17 budget with a proposed rate increase of 3.1%  for RA1 the urban area, and 1.5% for the rural area RA2. 

The average increase could have been 0.5% higher had council not decided to raid the million dollar parking reserve instead of using rates to fund the $270 000 of lost revenue resulting from the third free parking trial. Councillors ignored the 80% of respondents to the Council’s Annual Plan survey and confirmed by 80% of those taking part in a focus group consultation who stated they wanted paid parking rather than a rates increase. A cynic might connect the reluctance to make a hard decision with the forthcoming local government elections. 

In theory at least, the parking experiment has not directly impacted on rates. The first trial from November 2015 to February 2016 resulted in $170 000 of lost revenue paid from the rating surplus, plus a further $109 000 for consultants from the parking reserve. The second trial from March to June 2016 differed from the first by reintroducing pay and display charges in council off-street carparks, suggesting perhaps that people may be willing to pay for their parking. The total cost for the three trials is approaching a massive three quarters of a million dollars. 

  

The consultants analysis following the first trial revealed whilst Hastings has experienced a significant improvement in business conditions, retail turnover had actually increased by more for those businesses operating outside of regular shopping hours, and also for those retailers offering free parking. Whilst welcomed by shoppers free parking made no difference to spending. This should not have been a surprise because Councillors were advised that a similar exercise in Rotorua had found no significant impact on either pedestrian counts or retail turnover.

Whilst free parking is very nice it is debatable whether a third trial was necessary. Additionally free parking has not been matched by a reduction in costs so the lost revenue has had to be met from elsewhere. Clearly in time either parking charges will have to be reintroduced, or rates increased to make up the shortfall, but either way the parking reserve will be depleted.

Whilst the total cost of the free parking trials is significant it is just one of the dream schemes council has come up with in recent years to rescue the CBD, all welcomed around the council table with glowing oratory and much enthusiasm. Many have simply vanished from sight or have failed to make any difference but not before gobbling up quite a lot money and great deal of staff time.  

• Over $4 million has been spent on street improvements and new parks. 
• In 2010 a $3.7 million scheme was hatched to remove the fountain and reconnect the two halves of Heretaunga St. 
• A proposal to inject two million dollars of ratepayer funds to encourage a chartered club merger was thwarted when the idea was rejected by the National Service Club. 
• A proposal for pedestrian access linking the 300 block to the Council’s Queens St car park was abandoned but not before costing a couple of hundred thousand dollars.
• The $12.5 million Civic Square or Tihei Heretaunga proposal is on hold but has already cost up to a million dollars. 
• The $5.0 million CBD hotel investment seems unlikely to proceed. 
• The proposed $10 million strengthening the Opera House is being partly justified by the promised boost to the CBD. 

The things that seem to have worked best are generally those with the least council investment. New office developments, the new Farmers store and the Kiwi Bank call centre have probably done more to boost the CBD than anything the council has done on its own. Sure Council was involved in the Kiwi Bank initiative but the money was mostly private as was the risk. 

There seems to be an unwillingness around the council table to understand basic issues. Firstly the population of Hawke’s Bay is expanding at near the slowest rate in the country. Secondly if we want Kmart and Mega Mall type developments, and it seems we do, then there will be fewer shoppers and less money for CBD retailing. This situation is likely to be further exacerbated by the imminent relocation of both Briscoes and Rebel Sports. Thirdly Internet or on-line buying will also continue eating into traditional retailing with an increasing share going to overseas suppliers. And lastly the continuing growth of Havelock North must also be dragging shoppers away from the Hastings CBD.

Providing free parking will have an on going cost of between $500 000 and $1 million a year. Rather than throwing more good money at bad ideas perhaps Council would be better to start spending these funds on shrinking the CBD by buying up then demolishing some of the buildings and using the freed up space to increase free parking, whilst at the same time reducing the cost of parking administration. 

Hastings has the wrong council

The Hastings District’s Gross Domestic Product (GDP) is equal to the combined output of Napier, Wairoa and Central Hawke’s Bay. Hastings’ advantages include it’s location in the middle of the highly productive Heretaunga plains, has plenty of room to expand both housing and industry (if permitted by local councils), and  combines with Napier to make up the 5th largest urban area in the country. Anyone driving along the expressway early morning or late afternoon will be left in little doubt that Hastings is where the jobs are, and employment growth is happening. 

Yet Hastings, like Hawke’s Bay generally, has done poorly for years ranking along with Northland and Gisborne at the bottom for economic performance and near top for deprivation. After a 3 decade long economic winter, things are looking much better right now with a 4 star performance in the latest ASB/Main report, but we have seen these glimmers of hope before and they have soon petered out as another recession bites. Remember also we started from a very low base and the fact we have been joined by Northland suggests much of the improvement is because Auckland’s boom has run out of slack capacity and now the benefits are spilling over elsewhere. In population Hawke's Bay is still expanding at near the slowest rate in the country. 

There are many reasons for our anaemic track record including isolation, demographics, ethnicity, low population growth and an excessive reliance on primary industries. 

One possibility that seems never to be considered is that Hastings is disadvantaged by having a council with both rural and urban responsibilities. New Zealand has dozens of rural only district councils and almost all have static economies and shrinking populations. There are a few including Whangarei, Rotorua, Gisborne, Wanganui, Timaru and New Plymouth that like Hastings combine urban and rural areas. Interestingly these also rank near the bottom in economic performance.   

In contrast the fastest growing places including the three main centres plus Hamilton and Tauranga are controlled by city councils and are not burdened with rural responsibilities. There are also some cities that are not doing especially well including Dunedin, Palmerston North, Invercargill, and Nelson. Clearly being a city is not a guarantee of top performance but being a district council seems to align with poor performance. Interestingly both Hamilton and Tauranga have shed their surrounding rural areas into separate slow growing district councils, 8 for Hamilton and 4 for Tauranga.  

Population growth and job creation are essentially a feature of urban areas. Most people live and work in town, most of the rates money is collected and spent in town, and most of the development and all of the challenges are concentrated in urban areas. Urban areas have extraordinarily diverse needs ranging from potable water, sewerage, storm water, libraries, animal control, swimming pools, parks, parking plus housing and industrial development, all requiring specialist expertise. Again in contrast the rural heartland is generally shrinking as evidenced by closing schools and abandoned businesses. Rural areas are mostly concerned with just two issues, roads and bridges.

So whilst combining urban and rural areas into district councils may well have been done to make some councils financially viable, the generally poor performance of our mixed urban/rural councils raises the question of whether this model is sensible. 

In Hastings this composite design has had a second and possibly unforeseen consequence. Effectively it has distorted representation. So instead of city people looking after city issues and rural people looking after roads and bridges, in Hastings rural representatives have ended up with a major say in urban matters. Effectively, a bunch of farmy types pop into town to decide on the rules and finances for urban folk, yet strangely often find reasons why the people they are connected to should be exempt from contributing to the costs. 

  

This is not just a function of having mixed rural and urban responsibilities but is a situation that has been deliberately created by the Mayor. Of the six key chairing positions four are occupied by people associated with the rural area. The Mayor is of course a former farmer (though apparently now living Napier), the Deputy Mayor lives rurally in Central Hawke’s Bay, the  Chair of the Finance committee  represents the rural Mohaka Ward, whilst the Chair of the Hearings committee is a retired Farmer representing the rural Kahuranaki Ward.  I call this group who almost never disagree with the Mayor the tight five because they vote as a block.  One of the two Heretaunga Ward councillors is also a farmer and also almost always votes with the group.   

This imbalance means the wrong council structure and wrong key appointments  are contributing to Hastings poor performance. Had the local Government Commission been less myopic during their evaluation of amalgamation options they might have considered the possibility of combining the Hastings pastoral farming areas with either Wairoa and Central Hawke’s Bay thereby creating local councils with either urban or rural responsibilities rather than a mixture of both.

People power against ruling elites

Published Hawke’s Bay Today 21/06/2016

Whilst there is no direct connection between the amalgamation issue here in Hawke’s Bay and things going on in other countries it is clear that ordinary people are fed up with the bureaucratic excesses of an elite who have grabbed all the power and simply don’t want to listen to any views other than their own. 

Last year the proposed merger of Hawke’s Bay’s five councils into one council was rejected by voters with a massive two to one majority. Many saw the proposal as an elitist dream heavily promoted by a small group of influential and mostly wealthy individuals, most of whom kept their heads down despite pouring huge amounts of money into a very expensive campaign. The few who did declare their support including the  Mayor of Hastings, former MP Rick Barker and Iwi leader Ngahiwi Tomoana were seen as trying to advance their own personal power seeking agendas. Similar outcomes were likely in both Northland and Wellington where the Local Government Commission abandoned its proposals. 

On June 23  Britons will be going to the polls to decide if they wish to remain a member of the European Union, an event now commonly known as Brixit. Between 1961 and 1973 Britain made four separate applications to join the European Common market trading block only 20 miles distant at its closest point and now with 500 million people, but views have changed. 

Whilst still a trading block the European Union has become an immense Brussels based political organisation intent on controlling every possible aspect of European lives. The common European currency required individual countries to dump their own currencies and surrender their monetary policy to EU technocrats. Britain declined to join and probably feels totally vindicated when observing the austerity demands imposed on Greece, Spain and other members during and following the Global Financial Crises. 

Faceless European Commissioneers are seen as unconnected, uncaring and unaccountable. Whilst immigration may tip the balance it is growing EC regulation that created the pressure to leave the EC. Ordinary people feel the EC bureaucracy is taking over their lives. A simple example is a recent EC edict limiting the power of vacuum cleaners to1600 watts which will be further reduced to just 900 watts in 2017, half the average power of vacuum cleaners sold previously. 

Even British farmers who have benefited from the Common Agricultural Policy feel EU policies (read subsidies) have distorted markets creating gluts of products including butter and milk whilst swallowing up to 39% of the EU's budget for a sector that accounts for less than 2% of GDP.

The worry is that Brixit may start a mass exit by other member countries. Yet rather than try and accommodate dissenting views the bureaucracy has marched on dreaming up ever more controls so they can justify their existence and hang onto power. 

Prior to her government being voted from office in 2008, Helen Clarke’s made the same mistakes with proposes to eliminating incandescent light bulbs and limit flow rates on shower heads. These and the UN inspired anti smacking bill attracted the description “Nanny State” .     

The third event suggesting people may be rallying against the ruling elite is the astonishing rise of Donald J Trump from being the least popular Republican presidential hopeful to the party’s presumptive presidential nominee. Republican and Democratic candidates are all seen to be connected to the elitist establishment.  

For the moment he appears to be trailing Hillary Clinton and we will have to wait until November to find out who will prevail. However it is already clear that Donald Trump has given a voice to a previously ignored significant voter segment many of whom feel government promoted international trade agreements and globalisation have left them seriously disadvantaged. 

There is nothing new in dissension but suddenly ordinary people in western democracies are being given the tools to express their frustrations and anger at situations they could not previously alter. Amalgamation failed, Brixit looks increasingly likely, and Donald Trump may still be the next President of the United States. Perhaps if those with power had listened a little more carefully to ordinary people the outcomes recent events might have had different outcomes. 

Jetstar boost highlights poor leadership

Published HBT 23 April 2016

After a decade of near stagnation passenger numbers through Hawke’s Bay Airport for the 6 months to December 31 increased by 13.5%, (HBT 5/04/2015) possibly the most significant performance improvement in the entire history of the airport. 

Whilst this included just one month of Jetstar operations their pending arrival in provincial New Zealand had been announced way back in June, so Air New Zealand had plenty of time to take action to preempt the increased competition. 

It seems certain passenger numbers will exceed half a million by the end of this financial year, (June 30) and as most of the 135 000 additional Jetstar seats between Napier and Auckland will only become available in the second half of the financial year, it seems likely passenger numbers could reach 600 000 by Christmas this year, at least 3 years ahead of the airports own projections.  

Whilst it’s great the airport is financially viable thereby lessoning the risk of needing council and crown support, the primary purpose of the airport is not to make money but to facilitate essential air links with the rest of New Zealand and the rest of the world. Without these links our businesses would be seriously disadvantaged, our visitor industry much reduced, and Hawke’s Bay would be a much less desirable place in which to live, as has been the case for far too long. 

Airport management tells us business travellers make up an astonishing half of all passengers, proof if any is needed that we have been subject to some very unreasonable treatment from the national carrier. Antidotal evidence suggests there has now been a significant correction since Jetstar arrived on the scene.  For far too long those visiting friends and family and tourists have been deterred from coming here by excessive airfares. Suddenly these people can afford to fly, often for the first time in their lives.  Businesses are also able to visit their clients and suppliers more often and more affordably.  

Yes Hawke’s Bay is on a roll and the increase in passenger numbers through the airport is evidence we may have turned a corner. However the reality is we could have been in this situation many years ago had our MP’s, Mayors, Councillors and the Airport Board committed to getting competition and better air services rather than just paying lip service. It needs to be said our leaders did nothing to get Jetstar here, despite their endless efforts to gain a share of the glory. Perhaps if they had declined a few Air New Zealand lunches and had instead tackled the airline’s management over their service levels things might have been different. 

For years these naysayers claimed it would require over $10 million of runway and terminal  improvements to get another airline. Strangely the Napier council was quite happy to spend $18 million on the museum upgrade catering for fewer than 40 000 paying visitors plus $2 million for a couple of reconditioned buses that managed just one passenger per trip. Hastings also had a $15 million spend up on the Opera House that attracted just 60 000 customers, and now needs a further $10 million for earthquake strengthening.  At the same time the the airport board spent $5 million developing a business park which attracted just one tenant and has already taken a near million dollar impairment charge.

Now Napier plans to spend a further $15 million on a velodrome whilst Hastings intends spending untold millions on Civic Square, a hotel and other projects, none of which will provide any significant economic benefit, or provide for more than a tiny fraction of the 600 000 people expected to pass through the airport this year. Additionally these dreams all require substantial ongoing ratepayer support, unlike the airport which actually makes money and plays the council owners a dividend.    

Good times never last forever and we need to be proactive in seeking ways to sustain the growth we are now experiencing.  We have finally got competition and look at the difference it is making. We now need Jetstar to start flying south to Wellington and/or Christchurch. We need larger more traveller attractive A320 pure jets linking us with Auckland, and we need to get direct flights to Australia. All of which we might have achieved years ago if those charged with making a difference had actually made a difference. 

Our so called leaders have been too willing to accept Air New Zealand claims they were meeting our needs. The 135 000 additional seats now being provided by Jetstar, (plus another 29 500 from Air New Zealand) in the space of just one year is clear proof of  how seriously wrong they have been all along. It is time to replace the negative thinkers who seem control so much of Hawke’s Bay with people of vision, appropriate expertise and proven performance. 

Arrival of Jetstar not thanks to visionless leaders

Published HBT 27 Feb 2016

My recent talking point headlined  “tourism expensive for ratepayers”  in response to a request by Tourism Hawke’s Bay for a further $900 000 of ratepayer funding may have given the impression I was hostile to the visitor industry. Nothing could be further from reality. 

I consider the visitor industry to be a vital part of our local economy and my commitment to this sector includes two years on the board of Wine Country Tourism an organisation funded solely by its members not ratepayers, plus for the past 12 years I have battled against the inexplicable resistance of our civic leaders towards better air services. Whilst these individuals are now clambering for recognition they deserve no credit. 

Thank goodness Jetstar have arrived, not because of the actions of our leaders, but because it was apparent to the airline that Hawke’s Bay offered the best opportunity for additional passengers. Why else would we and Nelson be the first to receive the new services and the only places to get four daily return flights to Auckland? The reality is the 50 seat Q300 Bombardier aircraft being used became surplus to Qantas/Jetstar needs following the severe down turn in demand transporting fly in/ fly out mine workers in Australia. 

Their four new daily return flights have added 20% or 135 000 additional seats annually between Napier and Auckland. This is more than 4 times the increase promised by Air New Zealand at a recent parliamentary select committee hearing. That all flights still seem full despite this huge increase in capacity is surely proof that Air New Zealand have been under providing seats at affordable prices for a very long time. 

Some of these new passengers will be first time flyers, some will be Hawke’s Bay people on business or visiting friends and family. Perhaps half will be visitors bringing money into our region to spend on accommodation, food, retail and elsewhere. If each spends just $500, our economy will be better off to the tune of $20 million a year . 

Of course had the former Mayor of Napier Barbara Arnott and current Hastings Mayor Lawrence Yule not created so many impediments we might have built the runway necessary to attract either Qantas/Jetstar or Virgin Blue many years ago. Others were also unhelpful but it was our community leaders who demonstrated the greatest lack of vision. The proof of how poorly they understood the need is that Jetstar have added 135 000 extra seats and Air New Zealand are promising 29 500 more seats in the space of just one year. 

Whilst showing so little enthusiasm for better air services the Mayor of Napier was championing an $18 million museum extension that is attracting just 38 000 visitors annually, actually less than the older smaller museum, plus supporting a $2 million spend on the now failed Art Deco bus venture that struggled to attract a single passenger per trip. At the same time the Mayor of Hastings was spending $15 million upgrading the Opera House and Municipal Buildings which now need a further $10 million for earthquake strengthening for the Opera House alone and $6 - 8 million for the Municipal Buildings. All for just 60 000 patrons a year.    

Interestingly whilst Tourism Hawke’s Bay has been highly visible since Jetstar first announced they might fly into Hawke’s Bay I cannot remember them previously commenting about high airfares, lack of competition, or the need for better air services. 

Despite the clear benefits arising from Jetstar’s arrival, rather than committing to further improvements in our air connections Napier now wants to spend $15 - 25 million building a Velodrome whilst the Hastings council is promoting Tehei Heretaunga a $40 million spend up that will do little to improve the local economy. Unlike the airport both will need significant ongoing ratepayer support. 

It’s pleasing to see Air New Zealand scheduling an additional12 flights in the two days prior to the International Marathon in May, plus a similar number in the two days following the event. Interestingly there is no evidence of increased capacity being provided for for Art Deco, Horse of the Year, the Festival of Hockey or any other event. Of course as sponsor of the Marathon Air New Zealand would hardly want to see people having to use Jetstar because of lack of seats.  

Right now tourism is booming. Over 30 000 visitors arrived for Art Deco and no vacancy signs are becoming the norm. But let us be honest the whole country is on a roll and we are simply being dragged along for the ride. At the end of every upswing is a downturn and we need a plan to create continued growth to ensure we are still doing well when the inevitable happens.  

Competition is a wonderful thing as Jetstar have already proved. It is time for those who are tying to claim credit for having already bought Jetstar here such as our Mayors, Councillors, business and tourism heads to demonstrate real vision and take what ever steps are necessary to get Jetstar to also link Napier to Wellington and Christchurch. 

Instead of more flights to Auckland we need improve our image and upgrade to pure jets. 

Then we need to go for the jackpot, direct flights to Australia.

Air New Zealand should disclose details

Published  4 Feb 2016 

The Air New Zealand PR machine wound up again last week during a parliamentary select committee hearing. In response to Napier MP Stuart Nash telling airline boss Christopher Luxon that “the biggest barrier to doing business in Hawke’s Bay was the price of airfares”, Mr Luxon responded by claiming the airline was adding an additional 29 500 seats to Hawke’s Bay services this year. This is less than a 5% increase or just one daily return service using the airlines smallest aircraft the Bombardier Q300 or just five return flights a week on the larger ATR 72. Interestingly at the same time the airline announced an additional 100 000 seats between Auckland and Queenstown.   

He did not reveal the division of the extra seats over the 3 existing Hawke’s Bay destinations so it is unclear how exactly these extra seats will be provided and whether there will be any improvement on Wellington or especially Christchurch services where prices still seem very high and ground alternatives unappealing. Probably few people realise that 29 500 seats is actually less than one quarter the135 000 additional seats now being provided by Jetstar’s 4 daily return flights between Napier and Auckland. Air New Zealand may have the lions share of local passengers but it is Jetstar who are providing most of the growth. 

Checking Air New Zealand’s forward schedule reveal no significant change in either the frequency or the mix of aircraft on Hawke’s Bay services for the rest of the year. Perhaps the increase has already been implemented as a result of the change from 50 seat Q300 aircraft to the larger 68 seat ATR 72 on most Auckland flights. The airline should now be required to specify exactly how these extra seats will be provided if only to ensure services are improved. 

Thank you Stuart Nash for bringing this issue up in the formal environment of a parliamentary select committee. 

Published HBT 23 April 2016

After a decade of near stagnation passenger numbers through Hawke’s Bay Airport for the 6 months to December 31 increased by 13.5%, (HBT 5/04/2015) possibly the most significant performance improvement in the entire history of the airport. 

Whilst this included just one month of Jetstar operations their pending arrival in provincial New Zealand had been announced way back in June, so Air New Zealand had plenty of time to take action to preempt the increased competition. 

It seems certain passenger numbers will exceed half a million by the end of this financial year, (June 30) and as most of the 135 000 additional Jetstar seats between Napier and Auckland will only become available in the second half of the financial year, it seems likely passenger numbers could reach 600 000 by Christmas this year, at least 3 years ahead of the airports own projections.  

Whilst it’s great the airport is financially viable thereby lessoning the risk of needing council and crown support, the primary purpose of the airport is not to make money but to facilitate essential air links with the rest of New Zealand and the rest of the world. Without these links our businesses would be seriously disadvantaged, our visitor industry much reduced, and Hawke’s Bay would be a much less desirable place in which to live, as has been the case for far too long. 

Airport management tells us business travellers make up an astonishing half of all passengers, proof if any is needed that we have been subject to some very unreasonable treatment from the national carrier. Antidotal evidence suggests there has now been a significant correction since Jetstar arrived on the scene.  For far too long those visiting friends and family and tourists have been deterred from coming here by excessive airfares. Suddenly these people can afford to fly, often for the first time in their lives.  Businesses are also able to visit their clients and suppliers more often and more affordably.  

Yes Hawke’s Bay is on a roll and the increase in passenger numbers through the airport is evidence we may have turned a corner. However the reality is we could have been in this situation many years ago had our MP’s, Mayors, Councillors and the Airport Board committed to getting competition and better air services rather than just paying lip service. It needs to be said our leaders did nothing to get Jetstar here, despite their endless efforts to gain a share of the glory. Perhaps if they had declined a few Air New Zealand lunches and had instead tackled the airline’s management over their service levels things might have been different. 

For years these naysayers claimed it would require over $10 million of runway and terminal  improvements to get another airline. Strangely the Napier council was quite happy to spend $18 million on the museum upgrade catering for fewer than 40 000 paying visitors plus $2 million for a couple of reconditioned buses that managed just one passenger per trip. Hastings also had a $15 million spend up on the Opera House that attracted just 60 000 customers, and now needs a further $10 million for earthquake strengthening.  At the same time the the airport board spent $5 million developing a business park which attracted just one tenant and has already taken a near million dollar impairment charge.

Now Napier plans to spend a further $15 million on a velodrome whilst Hastings intends spending untold millions on Civic Square, a hotel and other projects, none of which will provide any significant economic benefit, or provide for more than a tiny fraction of the 600 000 people expected to pass through the airport this year. Additionally these dreams all require substantial ongoing ratepayer support, unlike the airport which actually makes money and plays the council owners a dividend.    

Good times never last forever and we need to be proactive in seeking ways to sustain the growth we are now experiencing.  We have finally got competition and look at the difference it is making. We now need Jetstar to start flying south to Wellington and/or Christchurch. We need larger more traveller attractive A320 pure jets linking us with Auckland, and we need to get direct flights to Australia. All of which we might have achieved years ago if those charged with making a difference had actually made a difference. 

Our so called leaders have been too willing to accept Air New Zealand claims they were meeting our needs. The 135 000 additional seats now being provided by Jetstar, (plus another 29 500 from Air New Zealand) in the space of just one year is clear proof of  how seriously wrong they have been all along. It is time to replace the negative thinkers who seem control so much of Hawke’s Bay with people of vision, appropriate expertise and proven performance. 

The folly of a council funded hotel

Published HBT 2 Feb 2016

Since 1989 I have been under the mistaken illusion that Havelock North was part of Hastings. I now discover that the proposer of one amalgamated council thinks otherwise. Mayor Yule claims (HBT 30/01/15) “we are the only city in New Zealand without a hotel” yet in the same paragraph acknowledges the new $20 million hotel being built in Havelock North. 

Apparently he has been in China again pitching the idea of a CBD hotel to potential investors with the added incentive of $5 million of risk reducing council funding, a trip incidentally the majority of HDC councillors were unaware of. This begs the question of what has happened to the earlier local investor? 

I also believe the council is attempting to coattail the hotel development onto the Opera House strengthening knowing there is significant community support for the latter and serious opposition to both the hotel and Civic Square projects. Creating the $50 million Tihei Heretaunga extravaganza is simply creating complication to help push unpopular ideas through.   

Whilst the HDC is implying that the $20 million currently included in the long term plan means it will not cost ratepayers or that it must be spent is quite misleading. There will be substantial interest, loan repayment and long term operating costs attached to each, and there is nothing to stop them being  abandoned. 

Like it or not  the new Porters Hotel will strengthen the Havelock North accommodation and restaurant hub and committing insane amounts of ratepayers money to overturn what the market is dictating will be futile and wasteful. 

Funding Tourism Promotion

Published HBT 27 Jan 1016  

The heading in HBT Tourism Big drain on Ratepayers  was somewhat misleading as the item was about  the funding of tourism promotion . This is the unedited version. 

We expect our councils to spend ratepayers’ money wisely.

In late 2014 Hastings District Councillors were asked by Tourism Hawke’s Bay to support its submission to the Regional Council requesting a $900 000 a year increase in funding. The request was made during an unexpected appearance by Tourism Chair, George Hickson and GM Annie Dundas. No information was supplied in advance, minimal details were provided on how the money would be spent and nothing useful was provided  to help councillors with any subsequent deliberations.  Plus there was no consultation between Hastings councillors and staff, despite an assurance from the Mayor on 18 Feb 2015 that the proposal would be subject to scrutiny.  

On 28th May 2015, councillors were surprised to learn staff had already made a supporting submission to the HBRC and were given the options of withdrawing the submission, making clear it was a staff, not councillor submission or accepting the submission without an in-depth examination. The last option was approved by 7 votes to 6 and effectively supported a $450 000 a year Regional Council rates increase for those in the Hastings District. This is equivalent to a 0.75% increase in Hastings rates. Subsequently the Regional Council decided to stage the increase over 3 years. 

The Regional council’s involvement goes back to 2004 when former Napier Mayor Barbara Arnott and current Hastings Mayor Lawrence Yule seemed quite willing to hand over responsibility for the management of the regional development agency Vision 20/20 despite being at odds over the direction and worth of the organisation. 

However the Regional Council’s lack of involvement in tourism, plus an absence of staff or elected councillors with relevant expertise in the visitor industry soon showed up with increasing dissatisfaction from tourism providers. On taking over in September 2004, a new organisation Hawke’s Bay Inc was created with farmer and former Regional Council chairman Ross Bramwell at the helm. Disasters piled up. The first CEO  left after just 10 months in the job and the second lasted only a year. The organisation’s accounts were subsequently described as a “dogs breakfast”(HBT 27 April 2007).  In March 2008 a 3rd CEO took office, and  on 1 July 2009 the organisation was renamed Venture Hawke’s Bay. In May 2010 the 3rd CEO departed following revelation of a $250 000 unfunded expenditure blowout for the 2009/10 financial year. 

In 2014  the tourism and economic development functions of the Regional Council were split up again, leading to the creation of Tourism Hawke’s Bay which combined the ratepayer funded tourism operations of Venture Hawke’s Bay with the member funded Wine Country Tourism Association. Whilst Tourism Hawke’s Bay initially received both private and ratepayer funding private funding contributions now seems to have ceased. 

It is far from clear just how much impact Tourism Hawke’s Bay is having on our visitor industry. Both the Hastings and Napier councils have invested heavily in creating attractions including Splash Planet, the Regional Sports Park, the Museum, Aquarium, and Kennedy Park plus they fund and operate many non-commercial sporting and recreational facilities. In addition the two councils also engage in their own promotional and advertising activities.  

Napier is the driver of tourism in Hawke’s Bay, provides some 2/3rds of regional commercial accommodation and has a long history of successfully managing its tourism destiny. Whilst giving lip service to the co-operation between the City Council and Tourism Hawke’s Bay in reality the city seems to be forging ahead on its own. In the past year Napier has ramped up support for major spectator sports events including the Waikato Hawkes Bay Ranfurly Shield match, Melbourne Storm vs Dragons league match, All Blacks vs Argentina Rugby test and the recent Elite Road National Championships. 

There are also a great many non-council created events including Art Deco, Horse of the Year Show, the Mission and other concerts plus the Woman’s International Hockey Festival now in its 3rd year. 

Whilst Tourism Hawke’s Bay has bought us the  “Big Easy”  weekend with about 1500 cyclists and the high end food extravaganza “FAWC" with about 4000 ticket sales, these are actually small numbers. 

There seems to be a reluctance to challenge the role and performance of Tourism Hawke’s Bay but this hands off approach means that those who are actually providing the facilities and events have no say. Perhaps this is because Tourism Hawke’s Bay presentations are very slick and carefully stage-managed to prevent meaningful examination of the information provided. 

That tourism is a vital part of our economy is not in doubt but doubling the ratepayers’ contribution for visitor promotion and events creation to almost $2 million justifies a robust examination of the organisation, their performance, and plans. 

This whole saga shows contempt for those who have no say in whether they pay or not and Hastings councillors should have done more to protect their interests.

The pretendors

The clammer for unearned credit - blog published only 

We have now been experiencing the benefits of aviation competition in Hawke's Bay for nearly two months and although it’s early days it seems there has been a leap in the number of people travelling by air as well as a significant reduction in airfares.  Jetstar have alrady added 150 additional seats a day each way between Napier and Auckland (from February this will increase by a further further 50 seats each way.) More Air New Zealand “grab a seat” deals are appearing on my phone than ever before and for travel only days, not months away.   

For over 10 years I campaigned for competition. For all this time these efforts were frustrated and blunted by the Mayor of Hastings and former Mayor of Napier Barbara Arnott. All sorts of other so called Hawke’s Bay leaders have been conspicuous for their lack of support rather than action. Now however that Jetstar has arrived these very same people are trying to claim they have also been trying to get competition for years. Of course in the public domain there are records that suggest otherwise. For instance Napier’s new Mayor Bill Dalton  famously said:

- to Hawke’s Bay Today June 19th 2013, “ Air New Zealand were not price gouging on Hawke’s Bay services”. 

- and to Radio New Zealand Sept 5 2014   “Jetstar could damage Hawke’s Bay” 

Flying to Auckland a few of weeks ago I discovered a statement from Bill Dalton in the Jetstar inflight magazine claiming “We have been trying to get competition into the Hawke’s Bay skies for years.  it’s going to make Napier a much more affordable place to visit.”  

This is a graphic demonstration of just how disingenuous these people can be. I always felt Mrs Arnott was especially determined to achieve nothing and wondered if she was trying to mollify the Clarke/ Cullen government who were clearly opposed to the runway extension, at a time when the Napier Council were trying to obtain significant Government funding for the museum extension. Around this time  Hastings Mayor Lawrence Yule was also seeking government contributions first for the Opera House upgrade, then subsequently the velodrome project. Perhaps he was also compromised by his role as president of Local Government New Zealand

Hastings Mayor Lawrence Yule is another trying to gain undeserved credit for himself. Following the launch of the new Jetstar service he was reported as being a long time proponent of getting competition into the regions airways (HBT 2 Dec 2015 )  and claimed “As a region we have worked for this for four years”  adding “so many people had worked hard with undaunted determination to get another regional airline into Hawke’s Bay”. In my view he clearly was not talking about himself. He also clearly did his best to make sure I was not involved in any official effort. 

Of course eventually luck was on our side. As a result of the mining slowdown in Australia and the reduction in fly- in/ fly-out  workers five Q300 aircraft became surplus to QANTAS/Jetstar requirements allowing them to be transferred to New Zealand. 

Others who seem to have forgotten how disengaged they previously were includes Chamber of Commerce head Wayne Walford. There is no evidence of Chamber involvement in getting improved air services since the departure of Murray Douglas some years ago. Tourism Hawkes’s Bay Annie Dundas is another conspicuously absent from the ranks of those calling for better air services. She has certainly been much more conspicuous since Jetstar executives first arrived back in August 2015. Perhaps its worth  mentioning it had been a priority when I was an elected board member of the privately funded  Wine Country Tourism Association prior to her arrival some five years ago.Of course  Air New Zealand had covered their base’s by having their General Manager of Online and Leisure Dave Simmonds appointed to the Tourism Hawke's Bay board.

I have always been critical of our MP’s for their lack of meaningful support. Certainly Rick Barker did nothing to help, however I have come to accept it was only after Chris Tremain and Craig Foss became our MP’s, and National the Government that the insurmountable impediments dissolved away.   

The thing to remember is whilst all these individuals try to get a share of the credit for Jetstar’s arrival the fact is that once Jetstar had decided to move into  provincial New Zealand, they were effectively committed to coming to Hawke’s Bay. Our airport was already in the top four busiest provincial airports in the country, and additionally the Auckland Hawke’s Bay route carryied more passengers than any other provincial connection. It was a no brainer.

In the event either Jetstar or Air New Zealand decide on a further upgrade of air services we at least now have a runway suitable for domestic jet services if not trans-Tasman.