It’s time for jets to come to Bay

It’s time for jets to come to Bay

Published HBT 24 April 2017 

Hawke’s Bay Airport is booming. For the six months to Dec 31 2016, profit after tax was nearly one million dollars on the back of a 21.4% lift in revenue combined with slightly reduced operating expenses. 

The outstanding feature of the past year has been a huge increase in passenger numbers which for the half year were 326 489 up 55 978 or 20% over the same six months the previous year. For the full 2016 calender year 622 409 people flew into or out of Hawkes Bay up by 113 644 or 20% from the 508 765 a year earlier. For the previous 2014/15 financial year the airport handled 456 672 passengers a figure scarcely changed from the 449 126 in 2008, seven years earlier. 

This increase is mostly due to Jetstar adding Hawke’s Bay to their network from December 2015. As part of the Qantas empire they had the financial resources to avoid being driven out of business by Air New Zealand as happened to both Origin Pacific and Trans Air. 

Apparently the 20% growth has continued since the end of last year and I noticed during two recent afternoon visits there were still 8 Air NZ and 2 Jetstar flights scheduled to operate each way between Napier and Auckland. Assuming there were a similar number of flights earlier in the day there could be around 20 return services or 1000 seats each way a day just to Auckland. We still need competition on flights to Wellington and Christchurch routes which have not benefited from increased competition and as a result airfares remain relatively high. 

The real pity is we might have been in this position many years ago had it not been for the apathy, resistance and lack of vision of local mayors, their councillors and the airport board. Rather than being proactive and tackling our over priced airfares these leaders chose to pour tens of millions of dollars into projects that have failed to have any meaningful impact on our economic well being such as the $18 million museum and $15 million Opera House. In comparison the recent improvement in air services has cost ratepayers nothing. 

To better illustrate this point, before Jetstar arrived the Mayor of Napier claimed we were not being over charged by Air New Zealand ( HBT 5/09/2014 ) then suggested Jetstar could damage Hawkes Bay by taking all the highest paying passengers away from Air New Zealand (RNZ nine to noon 19/06/15). 

In my six and a half years as a Hastings Councillor I cannot remember a single instance of the Airport Board recommending a course of action to create competition, improve air services or add new routes though I certainly remember the many occasions when they recommended doing nothing. Just as the council owners have wasted money the airport poured 5 million dollars into a business park which has only attracted one tenant and needed a nearly one million dollar write down in value. Currently the emphasis is on a major terminal upgrade even though it will actually contribute little to the Hawke’s Bay economy. Terminals don’t attract passengers. Only new routes plus better and cheaper air services do that. 

Population is the major driver of air travel. It doesn’t matter that Hawke’s Bay is growing at only 0.9% p.a. because both ends of each city pair contribute to demand by being both a source and a destinations for travellers. With Auckland expanding at 2.8% p.a, this will translate into a nearly 4% annual increase in passengers. 

Other factors that contribute to demand but not necessarily in order of importance include the passenger perception of quality. People prefer bigger aircraft which they consider safer, faster, quieter, less cramped, more comfortable and less prone to turbulence. The Jetprop type of aircraft flying in and out of Hawke’s Bay account for a miniscule proportion of world commercial aviation. The major aircraft manufactures Boeing and Airbus do not even bother to make such aircraft. 

Only routes connecting Auckland, Wellington and Christchurch to Hawke’s Bay justify any air service at all. Auckland should have the numbers for jets and if we are to establish Hawke’s Bay as a place of significance that is what we need. 

However there are destinations in Australia including Sydney and Brisbane/Gold Coast that would also provide the necessary passenger numbers for direct services and this is also what we need as well. 

The increase in passengers numbers over the past year is multiple times the total numbers that visit the Museum, the Opera House and most other council owned facilities which lose money. We seem not to know who all these new travellers are but they must be contributing significantly to our growing economy.  The airport contributes to our economy, makes money and pays a dividend to the Council owners.   

Hawke’s Bay needs better tertiary education opportunities

Hawke’s Bay needs better tertiary education opportunities 

Published HBT 11 October 2017

Despite all the hoopla about how well Hawke’s Bay is doing these days there are still some serious shortcomings that need to be addressed. The latest ASB Main Report gave us 4 stars out of a possible 5, but most of the economic and demographic ratings actually placed us near the bottom of the 16 regions including 4^th from bottom in population growth ahead of Taranaki, Marlborough West Coast and Southland, and 3^rd from bottom for employment growth.

Where we fail spectacularly is getting our share of government spending. No major Government Departments, no military bases and serious underspending on tertiary education. We are the largest urban area in the country without a university campus. Gacinda Ardern’s promise of fee free study will actually disadvantage Hawke’s Bay students who need to study elsewhere because they must still pay for their living expenses unlike those from university cities who are able to live at home.

We do have the EIT offering level 7 qualifications including some degree courses but it is not enough. Not nearly enough. With just 12% of Hawke’s Bay people holding Bachelor degrees or level 7 qualifications we are way behind Wellington on 25%, Auckland 22%, Otago 18% and Canterbury 16%. We are even behind the Waikato (14%) and Manawatu/ Wanganui (13%). We do however scrape ahead of Northland, Taranaki, Gisborne, Marlborough and Southland all on 11%, and the South Island West Coast at under 9%.

So who cares? Well there is clear evidence that the higher the educational attainment the greater the earning potential and lower the likelihood of being unemployed. The 2013 census also revealed the following relationship between qualifications and income for people over 15 years.

• $19,400 with no qualifications
• $25 500 for people with level 1 certificate
• $37 400 for people with level 5 or 7 diploma
• $46 700 for people with bachelor’d degree or level 7 qualification
• $56 100 for people with post graduate and honours degrees
• $58 300 for people with masters degree
• $83 600 for people with doctorate degree.

Of course higher education is not the only path to skills and knowledge but for many education will have a huge impact on their success in the workplace and how much they earn.

Formal qualifications also provide evidence of specific leaning and an ability to learn.

Universities are a huge drivers of economic activity in their own right, employing thousands of well paid highly qualified people and injecting millions of dollars into local economies. Dunedin estimates Otago University contributes $0.75 billion.

There are eight recognised Universities in New Zealand, Auckland, Waikato, Massey, Victoria, Canterbury and Otago, Lincoln, and AUT and several such as Massey have multiple campuses. Presumably the new Tauranga Campus will remain part of Waikato University.

In total Government spends over $4.3 billion supporting tertiary education. Student fees, research funding and other sources of income more than double this. Currently Hawke’s Bay is seriously missing out on this spending.

There are over 400 000 tertiary students, nationwide and nearly 50% attend universities. In theory on a pro rata population basis we should have about 8000 polytechnic students plus a further 8000 university student, but interestingly the EIT has just over 3000 full time equivalent students.

This discrepancy may be partly explained by many of our young choosing to study elsewhere but the reality is nearly a quarter of our population have no qualifications, compared to less than 15% for Wellington and Auckland.

Successive governments have been under providing and underfunding Hawke’s Bay tertiary education. They have been assisted by our civic leaders who appear besotted by high visibility monuments rather than prioritising the things that will make a real difference to our economy and wellbeing. In my time on an EIT Industry advisory committee we were not permitted to advertise our courses in other parts of the country yet universities were free to promote their offerings here. This restriction may no longer exist but it is a clear example of how Government policy has disadvantaged Hawke’s Bay.

Education may not be a core council responsibility but who else will push this issue if local government doesn’t.

As one of the candidates standing for Mayor in the approaching Hastings elections I will be making this a key policy issues.  

Decent gorge alternative needed

Decent gorge alternative needed

Published HBT 7 Sept 2017

Hawke’s Bay depends on trade, be it overseas exports, supplying the needs of our domestic markets, bringing in raw materials or attracting visitors. All have a significant transport component and the efficiency of our transport network determines whether we are competitive or not. In other words if we want to prosper we must have the most efficient and most appropriate transport links.

Some months ago a major slip closed the Manawatu George almost certainly forever. This is not the first time the gorge road has been closed. In 2011 a large slip closed the Gorge for 14 months and cost $15.8 million to repair whilst in 2015 two slips cost more than $800,000 to clear.

The closure imposes a significant cost on the Hawke’s Bay economy but this issue seems to have slipped below the radar. To her credit the Tararua District Council Mayor Tracy Collis has been pretty vocal, understandable of course because the towns of Woodville and Dannevirke have been hit particularly hard.

There are two local alternatives to the Manawatu gorge, the Saddle Road and the Pahiatua Track. Neither however offers the convenience of the now closed gorge route. Whilst $8.5 million has been budgeted for improvements to the saddle road the fact is larger vehicles such as trucks and buses now take an additional 25 minutes to climb then descend these steep and somewhat difficult roads. For cars an extra 15 minutes is needed and whilst that might not seem a lot, when the cost is aggregated for the thousands of vehicles affected the total is in the many millions of dollars.

If we look at the bigger picture it is clear we are very vulnerable. Effectively we have just three highways connecting us to the rest of the country, SH5 to Taupo, the SH2 Rimutaka hill road to Wellington and the Manawatu Gorge. All can be and often are blocked and when this happens we are effectively isolated. None are true alternatives to the others though the gorge route offers the some versatility especially for the crucial the SH5 Napier Taupo road. If the Mohaka bridge is put out of commission the Manawatu offers the only realistic alternative even though it is hundreds of Kilometers further. A major earthquake could knock any one of these these routes for a year or more as happened following the Kaikura quake a year ago.

The present Government has committed to significant spending on roads of National Significance including Waterview $1.4billion, Transmission Gulley out of Wellington $850 million plus the joining 24Km $630 million Kapiti Expressway which opened last February, the Puhoi to Wellsford toll road, $790 million additional for the Waikato expressway and the $455 million Tauranga Eastern toll road.

It has been announced during the election campaign that the Napier/Hastings expressway will be widened to 4 lanes which will improve local connectivity and additionally the Manawatu connection has been identified as very important but there seems to be no specific plan or budget for the gorge option. Nor is it clear if the other political parties are committed should there be a change of Government.

In reality continuing improvements to the Saddle Road and Pahiatua track can only be short term solutions. These will always be steep, winding and time consuming and the only acceptable alternative must surely be a level roadway be it a tunnel or bridge.

It can be done. In 1999 the $25 million half kilometre Otira Gorge Viaduct opened by-passing a similarly unstable slip prone cliff face. This what we need and nothing else is acceptable. 

No such thing as free parking

No such thing as free parking 

Published HBT 4 July 2017

The era of free parking in the Hastings CBD is over and there have been many letters and text messages protesting the move. Of course free parking to one person means someone else is footing the bill. 

The experiment started two years ago following a symposium in August 2015 when the CBD was in serious decline, a situation many blamed on the HDC decision to sell Nelson Park and allow the site to be developed into the Mega Mall. At the Symposium the Hastings City Business Association suggested free CBD parking would attract shoppers back into the CBD. 

On Sept 24 the Hastings Council opted for a four month trial from November 2015 to Feb 2016 funded to the tune of $330 000 from the 2014/15 rating surplus even though a similar 2013 trial in Rotorua and trialling of a more complicated system in Nelson suggested disappointing results were likely. 

Whilst a 13.4% annual lift in retail sales followed the trial, the increase was even more pronounced for both those retailers operating after normal hours and those located outside of the CBD (presumably Mega Mall and The Plaza), suggesting the increase was due more to a general lift in the economy.

On Feb 18 2016 the Council extended the trial to 30 June 2016 but reintroduced paid parking for the pay and display areas. An annual plan consultation process was established to determine the communities preferences. Whilst CBD businesses and shoppers, not unexpectedly, were in favour of “free parking” tear off forms sent to household with the Annual Plan statement showed 80% preferred meters whilst a citizens Citizens Panel favoured meters by 68%. 

The only decision then made by councillors was a further extension of free parking to December 2016 (perhaps helped by the proximity of elections) when the decision was made for a fourth trial to 30 June 2017 plust more community consultation.

This last round of consultation revealed a similar 68% support for a return to meters rather than a $22 annual increase in rates. 

For various reasons adding parking costs to rates is inequitable. Many retailers including big boxes and supermarkets provide their own customer parking and pay council rates on those parks. Some people don’t own cars, whilst rural residents especially those north of Napier seldom if ever come into the Hastings CBD. Additionally out of town shoppers would have effectively been subsidised by locals.

At one dollar an hour for meters or 50 cents an hour for “pay and display” Hastings must have the cheapest parking in the country. The lack of technology solutions for payment will be remedied with the introduction of the “Park Mate” mobile phone payment system, though there is a small additional user cost. 

Though the average increase in urban rates in the coming year is only 1.4% this does not tell the full story. Valuation changes mean Havelock North and Hastings property owners will experience significantly larger percentage increases. Had the $22 annual parking charge been applied, Hastings rates would have increased by around 1% more on average and Flaxmere ratepayers by an even higher percentage. 

The cost of the trials is put at $805 000 paid from rates surpluses and parking reserves. These funds might have been better employed providing more off street parking. 

Annual revenues from parking meters and “Pay and Display” parks total nearly half a million dollars a year. Had retailers and other CBD businesses been serious about the benefits of “free parking” they could have offered to contribute directly. After all whilst increasing valuations in Hastings and Havelock North will result in an increased share of rates falling on residential areas, CBD property owners will be better off because of the reduction in values. 

Clearly the CBD is experiencing a renascence but the reason as recently explained by one property owner is the influx of new people into Hawke’s Bay. It was good whilst it lasted but there is no such thing as a free meal. 

Connecting the dots on water safety

Connecting the dots on water safety

Published HBT 26 June 2017

The horrific pictures of London’s Grenfell tower in flames with it’s doomed residents outlined in the windows has left us incredulous. No sprinklers, alarms that apparently were not working, and a highly inflammable composite cladding all contributed to a disaster that clearly was just waiting to happen. People are asking how could this happen in a leading first world city?

We have had our fair share of disasters in this country as well including Cave Creek, the collapse of the CTV and PGG buildings during the 2011 Christchurch earthquake, plus Pike River. All have resulted in considerable loss of life and like Grenfell just should not have happened in an advanced country like ours. Innocent people are dying through no fault of their own.

Our own gastro outbreak last year was clearly not in the same league but still 3 people died and over 5500 people became ill. We are now famous for what has turned out to be the worst campylobacter outbreak in the world.

All these tragedies were avoidable if only the dots had been connected. Some have been pointing at elected officials such as myself, and I ask what should I have done to avoid this event. I do remember back in 2015 asking about the seemingly endless flushes of chlorine I had noticed in the Havelock North water supply and was advised the system was being disinfected following maintenance work. To be honest this seemed reasonable but just maybe if I had dug further I might have discovered we were actually having regular but seemingly unconnected problems with e- coli. Actually I had never heard of campylobacter but during the enquiry I decided to google the word and there it was. Havelock North had experienced a quite serious outbreak in 1998 following a similar combination to last year of heavy rain and probable contamination of the aquifer with sheep manure.

It seems clear both here in Hawke’s Bay and elsewhere in New Zealand we have not been taking water safety seriously enough. So now, I am asking what other water issues are we not taking seriously enough? Of course some in our community have been making submissions to our council for years, but are only now starting to be heard.

One possible risk is the old Roys Hill rubbish dump one of at least three in Hawke’s Bay. Nearly 40 years ago when I came to to the area there was no land fill. We simply took our junk to the dump and left it there. Thousands of tonnes of trash, some domestic, some industrial including paint, batteries and oil products are still sitting where we dumped them, covered only by a concealing layer of soil, out of sight and out of mind. Whilst the Hastings District Council does have a monitoring programme I cannot remember the issue ever being seriously discussed by councillors. The question we must now ask is what is happening to all that material. Are we all waiting to be poisoned by damaging leachate slowly feeding into our water supply.

A second risk that is starting to concern me is the potential for run off into the unconfined aquifer from our roads and commercial buildings along Omahu Road. I have to admit being a strong supporter of these much needed job creating developments but now I am starting to worry about the risks involved.

Now I see yet another possible problem. Whilst I have been aware for several years that serious soil contamination has been causing delays getting some new housing areas in Hastings to market, only now am I now starting to appreciate the possible danger. The contamination I refer to is the result of lead arsenate sprays being used used to control codlin moth and other pests in the early years of orcharding. These are long lasting chemicals and HDC advises against growing vegetables or fruit trees on these soils and property developers must remove all contaminated soil before subdivision. Some of the resulting large piles of contaminated soil are now going to be used it to create noise dampening bunds along major roads.

Working in the media has given me heightened awareness of certain risks such as flooding, slips, subsidence, earthquake dangers and traffic hazards but now I realise just how many other things can affect our wellbeing. I do not intend to become paranoid about these dangers but I do intend to be much more committed to following up when I see things that do not look right.  

Abandoning the Heretaunga Plains Urban Development Strategy

Abandoning the  Heretaunga Plains Urban Development Strategy

Published HBT  8 May 2017

The Hastings, Napier and Regional Councils have been asked to sign off the first five year review of the Heretaunga Plains urban development strategy (HPUDS). HPUDS is intended to minimise urban sprawl which has merit but the emphasis on favouring horticulture above all other parts of the economy is unbalanced and could inflict significant damage on the Hastings and wider Hawke’s Bay economy.

Whilst the growing sectors are core to the economy many of the jobs provided are seasonal, poorly paid and low skilled and in fact are so unattractive that the growing industry has to import thousands of workers from undeveloped third world Pacific countries. Clearly the quality of employment provided contributes to our high levels of poverty and deprivation.

The claim recently made by the Mayor of Hastings (HBT 20/04/2017) and oft repeated that we have “some of the best soils in the world” seems unsupported by any authoritative supporting research. Whilst the Heretaunga plains are highly productive by New Zealand standards, New Zealand is considered to have quite poor soils.

The most recent version of HPUDS provides for a faster rate of population growth than previously anticipated and now estimates a further 10 600 new housing sites will be needed by 2045, up 2600 from the 2010 document. Of these, 40% are to be provided by intensification in the first 10 years rising to 60% in the final 10 years, with 50 % to be greensfields dropping to 35% and 10% rural declining to 8%.

If we are to achieve the intensification targets for the first 10 years an additional 214 dwellings a year will be needed at a density of 20 – 30 households a hectare, double that for greenfield developments. Such concentration is often resisted by existing property owners who feel it will change the character of their neighbourhood in much the same way a many object to building on the hills.

The strategy also calls for a balance in supply between Napier and Hastings, a requirement that seems to have no logic. That Napier has already agreed to sign off is hardly surprising because the policy clearly prevents Hastings exploiting its natural advantages. Hastings has more land on which to build both houses and factories and is providing the majority of new jobs. Most importantly it is not threatened by natural hazards such as tsunami, liquefaction and the possible threat of becoming a coastal hazard zone if the predictions of climate change and rising sea levels eventuate. Only last week at a public meeting in Napier the HBRC seemed enthusiastic about managed retreat from coastal areas. Hastings councillors also need to ask whether agreeing to HPUDS risks the HDC becoming libel for compensation in the event of these risks eventuating, in the same way councils became partially libel for leaky homes.

Townhouses and apartments are another option and certainly these seem ideal in Napier where they can be combined with ocean views but they are not for everywhere or everyone. Housing Corp past experience in both cities have been fairly disastrous and we do not want to impose Soviet style workers accommodation on our communities.

The issue of protecting the land is not new. Many decades ago another Hastings Council also reasoned the best soils needed saving and built Flaxmere on stony unproductive land. In doing so they created a suburb that is disconnected from the rest of the Hastings urban area and as it turns out was built some of the best grape growing land we have.

New housing is also needed to offset the ongoing conversion of residential areas to commercial use. Agricultural activity is also contributing to rural land losses because of the need to build Packhouses and Coolstores.

Additionally it seems HPUDS is making land banking attractive thereby restricting the availability of building sites, reducing competition and pushing up the cost of houses, exactly the type of activity government is threatening to legislate against in Auckland. It seems somewhat contradictory that the main supporters of HPUDS seem often to own large dwellings on attractive sections in rural settings.

We need an economy based on more than just horticulture and putting all our eggs in one basket could easily see return us to the conditions we experienced following the freezing works closures in the 1980’s and 90s.

To this councillor HPUDS seems to have become a roadblock to the development flexibility needed to provide a vibrant economy. Just why the Hastings Council has surrendered its sovereignty to the Napier and Regional Councils is unfathomable and if possible the HDC should withdraw from the joint policy so we can get on with the job.

I have to wonder if the two responders to my recent Talking Point on HPUDS actually read past the two sentences commenting on soil quality. Whilst Noel Congdon clearly has vast experience of soil science and as a former grower I can concur with his claim we have good soils. The point I was making was if we are to claim to have the best soils in the world this must be based on verifiable evidence not unsubstantiated opinion. Additionally I suspect our success in growing apples, grapes and some other crops is significantly improved by climate, drainage, irrigation, and infrastructure and fertilisers.

I am surprised Frank Long’s Vitriolic response was published as he seemed to contribute nothing to the discussion. Nor can I explain why he has an apoplectic fit every time he sees my name.  

HPUDS and the shortage of sections

In his recent Talking Point (23/03/17) Peter Bevan chastises Hastings District Councillors for agreeing to provide additional land for housing which he described as wasteful and profligate. Growers have previously also objected to industrial developments.

There is no doubt the pipfruit industry is crucially important to the Hawke’s Bay economy with over 20 000 containers of apples worth at least $200 million being exported from the region each year. But here is the catch. The pip fruit industry provides mainly seasonal employment, pays many of its staff low wages, and generally does not pay them at all if it rains or if the varieties are not ready to pick.

Horticultural is clearly a major contributor to our very low incomes and consequent high levels of deprivation and other problems. The industry struggles to attract workers and finds it necessary to bring in thousands of RSE employees from the Pacific for harvesting. Recently Radio NZ found evidence incomes for RSE workers in the grape industry are actually lower than 10 years ago. Whilst the RSE scheme contributes hugely to the success of horticulture, injects, millions into the Hastings economy and is easily this country’s best international aid scheme, its very existence suggests picking apples for a pittance is not attractive to many.

Most horticultural jobs involve minimal skills that can be taught in a day or less. Skill levels have a major impact on incomes as was clearly shown in the 2011 census. For someone without qualifications the medium income was $19 400, $27 200 with NCSA level one, $37 400 with advanced trade certificate, and $46 700 for those with a bachelor degree.

Mr Bevan has previously told me he would use all means possible to oppose direct flights to Australia in effect dismissing the needs of tourism and others sectors. An industry with this sort of employment history does not have the economic or moral right to impede other sectors from obtaining the resources they need.

He claims each hectare of land taken for housing results in the loss of three horticultural jobs, a figure that surprises me based on my 20 years growing for Watties. A report prepared for the HDC in 2016 estimated that adding 31 hectares of rural production land to the Omahu Road North Industrial zone would boost regional GDP by $168 million and create 724 high paying jobs, against a loss of $1,561,625 and 21 jobs if used for pip fruit.

Published HBT 1 April 2017

In Hastings a hectare of land provides a minimum of 12–14 housing lots including allowances for reserves and roading. If each of these were occupied only by couples receiving national super, the annual value to the local economy would still be nearly half a million dollars plus millions more in land development and building costs.

The HDC has a responsibility to the community that extends beyond the pipfruit industry and the decision to release more sections is in response to a clear shortage especially in Havelock North. This shortage is costing jobs and encouraging land banking causing rising section prices, thus making it especially difficult for first time buyers. In desperation some are now building in Napier on land already identified as being at risk of liquefaction and/or tsunami with the additional possibility of being declared a hazard zone if predictions of rising sea levels prove correct.

Reverse sensitivity issues with the mushroom farm has prevented further development on Arataki Road but the inflexibility of the HPUDS (Heretaunga Plains Urban Development Strategy) has further delayed the substitution of land in Brookfields Road. As the Middle/Te Aute road development also appears delayed the HDC has decided to release 21 Hectares in Howard St, an area currently used for lifestyle and grazing horses.

HPUDS calls for 60% of growth to be accommodated with intensification. But this still requires willing developers, sellers and buyers. The Hastings Council supports intensification and has significantly reduced development levies to encourage infill housing.

That 75% of new housing is being built on greenfields or rural land shows cramming shoe boxes onto existing sections does not meet the needs of many people. Additionally neighbours often object because they perceive the character of their area will be changed, whilst multi storied and semidetached developments that are clearly attractive close to the waterfront in Napier, seem acceptable in Hastings.

Whilst Marie Antoinette is alleged to have said “let them eat cake” when told the peasants were starving, times have changed. If horticulturalists want to be taken seriously they could start paying a living wage. In any case we should not have all our eggs in one basket. One severe hail storm could wipe out an entire season. More industry could greatly improve the lives of many people.

Interestingly there never seems to be any shortage of growers willing to sell their land for development.

Selling the Port

Published HBT March 25 2017

The suggestion by Napier MP Stuart Nash that Hawke’s Bay must retain ownership of the Port of Napier may appealing but is not necessarily the best way forward.

In recent years two of this countries ports have been badly damaged by earthquakes. Cruise ships are still bypassing the Port of Lyttelton seven years after the 2010 Christchurch earthquake whilst container and other cargoes destined for Wellington are being diverted to ports including Napier as a result of damage following the Kaikoura earthquake last year.

Hawkes Bay is not immune from tectonic upheavals as we all know and therefore there is always the possibility of our own port being similarly affected.

The Port of Napier needs a significant injection of new funds to finance the expansion of facilities to provide for the expected growth in export volumes. The financing options include increased borrowing or attracting additional local or outside equity. Whilst borrowing the funds means the Regional Council retains ownership it also continues to carry the full risk of both natural catastrophes or manmade disasters including economic downturns and unfavourable commercial events such as shipping companies deciding to consolidate their operations elsewhere.

These risks which will be borne by the people of Hawke’s Bay can be reduced with a some external shareholding. External equity might also bring in additional expertise to improve port operations. The Port of Tauranga is a publicly listed company and it seems to have done them no damage. What ever we decide we must avoid creating an opportunity for another port to take control so as to concentrate trade elsewhere at our expense.

Of course allowing some outside shareholding must not result loss of control. The port is much more than a few million dollars a year to help keep regional council rates down. It is our gateway to the world for a whole range of horticultural, viticultural, agricultural and wood products.

The additional cost if shippers had to truck their products through another port such Tauranga is estimated to be around $1600 per container. For a container load of apples worth say $US6500 this extra cost could seriously affect the viability of horticulture. Additionally there would be a significant increase in the risk of damage to the cargo. When multiplied by the 22 000 containers of apples we currently export the additional cost of shipping to another port could cost us many tens of millions of dollars. If we add half a million tones of pulp, over a million tons of logs and as many containers again of meat and other products, the true value of our port becomes apparent.

So whilst the profit the port makes is useful, the true value of our port is the contribution it makes keeping exporters and importers cost effective and competitive.

We can go further and ask ourselves whether Heinz Watties could remain here without the ability to directly import tinplate and other materials needed for their manufacturing, then export high volume relatively low value food products to markets around the world.

Even the $20 million estimated spend by cruise ship passengers is totally dependant on the port, plus the port is a major local employer of highly skilled well paid workers.

We might even better secure the present income stream the port provides by reinvesting some of the capital now locked up in the business though I too share Stuarts concern over past decisions made by the Regional Council.

For now we have all our eggs in one basket and that can be a risky as both Lyttelton and Wellington have discovered. We must consider our own vulnerability when deciding how to move forward but what ever we decide we must do what is best for Hawke’s Bay and not allow ideology to steer us in a direction that impedes the Ports ability to provide the links that are essential for our prosperity.   

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.