Amalgamation

Published HBT June 2014

The slanging match over debt is sidetracking the amalgamation debate. In the end debt will have very little impact on whether or not Hawke’s Bay will be better off with a single council. If amalgamation turns out to be wrong there will be no chance of going back to what we have now.

Is surely the supporters who must prove their case because it is they who are agitating for change and their motives are questionable. Some may be bitter because they have already been rejected as representatives by the community.  Others are members of the wealthy and influential provincial elite who crave more power than they already have, while others appear to be seeking a way to continue holding office without seeming like stale bread.

Will it save money?

Where is the proof amalgamation is going to make us more efficient?  Centres with comparable populations to the proposed Hawke’s Bay Super Council such as Hamilton, Tauranga, and Dunedin have debt levels that are multiples of our combined debt, plus their rates are higher. 

The Winder report claimed at least 100 jobs could be eliminated with one council but similar staff reduction claims were made about Auckland, though these seem to have been conveniently forgotten now our largest city employs over 1000 more staff than before amalgamation, while salary levels have exploded with over 1500 staff earning more than $100 000. If this was the private sector such expectations would be realised, but in Local Government such savings are unlikely. For example we could see five chief executives being replaced with one earning double the present highest salary, plus four additional lieutenants each earning at least as much as the people they are displacing. 

Cost reductions in other areas such as roads, and the three waters are also unlikely because most of the spending in these areas by the existing councils is awarded by competitive tender meaning there is little if any opportunity for further cost reductions. 

How exactly will we be better off ?

Those claiming the Hawke’s Bay economy will perform better under one council need to provide evidence to support their position. Yes we have lost businesses and jobs. Yes our wages are low and unemployment high. But can those proposing amalgamation provide a single verifiable example of a business that has decided not to come here, or one that has left because of our Local Government structure?

The Local Government Commissions had a myopic view of the issue. Both Winder and the Commission seemed interested only in proving a predetermined outcome and in doing so completely ignored the concerns of the four councils opposing amalgamation. It is loss of control  over funding arrangements and spending priorities that that people are worried about not who actually does the work. The present structure actually has some advantages. We now have an element of competition( rare in local Government), and each area is able to concentrate on their strengths and needs. Perhaps it was this concentration of effort that made the difference in helping attract Kiwitbank to bring over 100 jobs to Hastings. 

The Local Government Commission and Winder could have looked at the possibility that poor quality investment decisions by our councils is a better explanation for Hawke’s Bay’s anaemic economic performance. The $18 million museum upgrade with $4 million annual running cost, plus the nearly $30 million( total cost to date) poured into Opera House are costly spend ups that have contributed very little to our economic performance. If we add the Art Deco Buses plus the cost of the proposed Civic Square upgrade it’s not difficult to tote up nearly $100 million of wasted opportunity. 

Is it possible we will be worse off? 

It’s actually possible many things could get worse with a single Council. We have only to look at Auckland to appreciate the sort of things that might happen here. The people who have been running our affairs for many years have the best chance getting elected to any amalgamated Council and If that happens why will the outcomes be any different?  

Hastings cavalier takeover attitude could also backfire. It will have a maximum of just one third of the representatives on both the Transition Board and the merged council and its representatives will easily be out voted by those whose concerns have until now been ignored.   

Amalgamation will be expensive and disruptive. We need to make sure it is worth it. 

Gaza Update

Published HBT 16/08/14

Hamas cannot win the military battle they have bought with Israel, so why do they bother with their continuing rocket attacks, that actually cause little real damage?  It's not clear how much support Hamas has, but In what other country are the people condemned to die because of the actions of their government? Perhaps Israel has fallen into a trap set by Hamas to provoke a military reaction so as to motivate a whole new generation of militants, suicide bombers, martyrs and others willing to perpetuate the fight. With 50% of the population of Gaza 18 years old or under there may be no shortage of volunteers for decades to come. 

The first casualty of war is truth. Initially Israel claimed Operation Protective Edge that started on 8 July was a response to the rocket attacks from Gaza,. Then they claimed it was the tunnels built to allow insurgents access to Israel. Possibly the real reason is retribution for the murders of the three Israeli teenagers. Israel may have an advantage with its confident english speaking spokespeople but Hamas have the evidence of destruction and hundreds mutilated and dead children. 

Few dispute Israel's right to protect itself. However many are questioning the killing of nearly 2000 people, 73% of them civilians including nearly 500 children, injuring over 10 000 more, driving hundreds of thousands from their homes, destroying the only power station including fuel supplies, wrecking sanitation and water reticulation systems, and ruining untold livelihoods. Rebuilding is estimated cost at least $6 billion.  It is the rest of the world who will eventually foot the bill, not Israel who caused the damage, or the USA who supplied the weapons.   

Israel's battering of Gaza repeats the 1998/99 invasion and the 2011/12 bombing. Despite having every conceivable weapons option including tanks, drones, precision guided bombs plus troops on the ground, the Hamas rocket attacks have not stopped. This military option may eventually fail despite overt support from Egypt and Saudi Arabia who view Hamas as akin to the Muslim Brotherhood, Isis, and Iran, a view supported by many Western countries especially the USA. 

This is different from the previous wars Israel has fought successfully with hostile neighbors because it is essentially a guerrilla campaign where the combatants are indistinguishable from the general population, and hide amongst them. As the USA and French discovered in Vietnam, America, Britain and Russia found in Afghanistan, and again by America in Iraq,  military might does not necessarily produce a successful outcome when the enemy is so elusive. Even the Hamas tunnels have a similarity to Viet Kong tactics that helped wear down the USA in Viet Nam. 

Also time may be running out for Israel because both the UK and Western Europe are becoming increasingly Muslim as a result of both a huge influx of refugees fleeing various Islamic countries, plus their higher birth rates. Muslims already number nearly 3 million( 4.4%)  in UK and are increasing 10 times faster than non Muslims. In the Western European Union 19 million (3.8% )are Muslims and estimates suggest over the next 15 years 85% of population growth will be Muslim This could mean in the not too distant future this group will acquire the political clout to force governments to cease their support for Israel.  

Killing so many non combatants is seem by many as immoral, inhumane and totally excessive, and matching evil with evil will not bring peace or prosperity to the Middle East. Whilst Israeli Prime Minister and hard liner Benjamin Netanyahu has the support of a majority of Israelis they may be loosing the moral high ground. Netanyahu seems incapable of developing a non military solution and his approach has also cost the lives of over 60 Israeli military personal, a terrible price to pay for pandering to public opinion. The Iron Dome missile defense system has ensured Israel was never seriously threatened by primitive Hamas rockets . Whilst the destruction of tunnels was clearly justified it is unlikely they have all been found. Israel is going to have to yield some ground with a political solution and find a way to convince Palestinians they can have a better life without Hamas who for now are the elected legitimate government of Gaza. 

Gaza & Israel

Published HBT 25/07/14

Whilst the totally unjustified shooting down of MS 17 in the Ukraine has grabbed the headlines we should not ignore what is happening in the Middle East  where Israel is engaged in a one sided clash with Palestinians in the Gaza Strip, home to nearly 2 million people and one of the most densely populated parts of the world. 

Israel claims to be trying to stop the thousands of missiles being fired by Hamas militants but these are are unsophisticated unguided limited range weapons and their inadequacies combined with the effectiveness of Israel's Iron Dome anti missile system means minimal damage and only one death. The disproportionate Israeli response from land sea and air has so far killed and maimed hundreds, mostly civilians including women, children, non combatants and old people. People who there have little option but to continue doing so. 

The abduction and murder of three civilian teenager's was totally wrong and the perpetrators must be bought to justice. Whilst Israel felt quite entitled to barge into the Gaza arresting and beating up dozens in their search for the culprits, (which they failed to find)  the Palestinians apparently had no such rights to do the same to solve a retaliatory crime committed against one of their own.  

Israel  should remember their own violent history including terrorist acts and murder. This includes killing 91 people with the terrorist bombing of the King David Hotel in Jerusalem in 1946, numerous instances of attacks on British forces, and the massacre of many non jewish settlers.  

Israel has successfully defended itself on many occasions from neighbors bent on her destruction. These threats have not disappeared but this is not the situation today in Gaza. Certainly most living in Gaza would like to see the demise of Israel but they lack the means and ability to do so. Whilst dealing to those responsible for the rockets is justified, deliberately killing and maiming innocent civilians is criminal. In fact it has a certain similarity to the treatment of Jews prior to WW2.  Even the total blockade of Gaza seems reminiscent of the containment of Jewish ghettos by the Nazies.

Jews (or Israelites) have been persecuted for most of history especially by the German Third Reich and their determination to create a safe homeland is entirely understandable. However at the time of the official formation of Israel jews were a minority in the area and others who lived there have been systematically and driven out. For instance Israel regularly bulldozes the homes of non Jews in the West Bank to make room for its own settlements even though the area was annexed in 1967 and not originally assigned to Israel.  Its little wonder so many hate the Jewish state. 

Israel is creating a dispossessed people who have no hope of escape or a better future. Their highly effective  PR machine is trying to convince us their brutality is justified. This is not collateral damage, Israel is committing atrocities and its actions are unacceptable.These are not the actions that create peace and harmony but the conditions that will create terrorism. One day as a  consequence of this wholly one sided conflict something may happen either by intent or accident  that will impact on the rest of the world. If for no other reason Israel must be made to stop these excessive attacks or the rest of us will eventually pay the price. Meanwhile Israel seems determined to make the place as miserable and dangerous as possible and appears intent on totally annihilating Gaza and its people if at all possible.  

It is wrong that the world at large is doing nothing to stop Israel's barbaric actions and one day there may well be consequences that may affect us all. The downing of flight MH17  by either Russia or pro Russian separatists demonstrates graphically just how quickly and unintentionally and tragically innocent people can become involved in issues not of their making. 

Hero's of the rebuild

There are plenty of hero's in the community including sports, business, and  arts people, philanthropists and volunteers, all making an invaluable contribution to society.

I personally have huge admiration for those who succeed in business  because although they are driven by personal ambition, they also create real prosperity, and opportunities for others.

They take huge chances often risking everything including their homes as they battle against all the obstacles imaginable. I can attest to the many challenges business people face having managed myself to survive the downturns of both the 1980's and the past few years.

For some the rewards are huge as evidenced by local businessman Rod Dury's topping the Hawke's Bay rich list with his IT company Zero, but for most its pretty much just working extremely hard often for little more than an average wage.  

Two individuals presently stand out because they are having, or are about to have,  a profound impact on our city centers, especially in Hastings. 

The Hastings CBD has been a pretty much static scene for decades. The old Power Board, State Insurance, Wattie Industries and three bank buildings all date back to at least the early 1970's.

Now suddenly we are seeing a massive rebuild thanks primarily to two entrepreneurial individuals, Jonathan Wallace and Michael Whittaker.

The renaissance started when Wallace Development Company built the new Farmers Store on Heretaunga Street west which happened to incorporate Hawke's Bays first escalator. Next was the rebuild of the old Woolworths building one block nearer town across from the clock tower. Completing the trio and now apparently nearing completion is the rebuilt for Power Board building in Heretaunga St East, soon to be occupied by Hawke's Bay Today.

Now Michael Whittaker son of the former Mayor of Havelock North has purchased the derelict old Albert Hotel and is developing ideas for site. Whilst many of us had a nostalgic hope the oldest commercial building in town could be saved, it has become increasingly clear the choices were to demolish and redevelop or wait until it collapsed in a cloud of borer dust and rat droppings. At the same time he has purchased the old Bon Marche building on the opposite side of the street.

Whilst his plans are uncertain at this stage, it is clear he has the vision and the financial clout to do something worthwhile.

Following the hammering we received  from rodgernomics  in the 1980's Heretaunga  St has been at a standstill. Successive councils have tried  to change the situation including turning part of it into a mall,  then when that didn't work,  abandoning that idea and opening it back up to traffic. The outcomes have been far from successful despite the considerable cost to ratepayers .

So now, at no cost to ratepayers we have two individuals with the confidence necessary to rescue our CBD. I am confident they will succeed if only because they are taking on the risks, and that is always a major incentive to get it right.

It couldn't have happened a moment too soon. The impact of the Christchurch earthquakes is the realisation many of our buildings  would not stand up to a similar seismic event. 

I love old architecture. It  has a grace and elegance that is mostly missing from today's structures. The jewel in the Hastings crown has to be the Opera House and adjacent Civic Chambers, but there are plenty of other great examples of Art Deco and Spanish Mission structures, and most are likely to need work to bring them up to even the minimum 33% of code.

This could have resulted in wasteland  as owners decided strengthening or rebuilding was just not financially viable. We might have ended up with large areas demolished and used for  car parking or even abandoned. In a worst scenario the  CBD could have been deserted in favour of a full migration in the direction of the old Nelson Park. Have a look at Market St North without Farmers, The Warehouse and Stationery to see where we might have been headed.

Its impossible to see that happening now. With Farmers anchoring the redevelopment of Heretaunga St and  many other new developments in the pipeline we seem to have turned the corner. 

Hastings history is full of other visionary people including Francis Hicks, Thomas Tanner, the Williams and the Chambers, but in the decades to come we  are likely to be thankful for the vision and enterprise shown by Michael Whittaker and Jonathan Wallace because they started the rejuvenation of Hastings .

We need more people

It's official, we are shrinking. The most recent population estimates from Statistics New Zealand reveal we have fewer people living in Hawke's Bay than a year ago.

Population growth is a major driver of economic activity. More people means more houses, more tradesmen, more appliances, more roads, in fact more of just about everything.

For many decades we have rated as the 5th largest population  centre in the country, but this may no longer be the case. Almost certainly Tauranga has eclipsed us and Dunedin is not far behind. Less people means contraction, and lets not fool ourselves, that is where we are heading unless we find ways to turn things around.

Generally anyone setting up new businesses need to be where the action is. Big cities are huge magnets dragging in even more people, more jobs more everything. If we shrink we will not only fail to attract new employers, we will likely start loosing some of those we have.

Already Auckland is ten times larger than all of Hawke's Bay. Projections of another million in our largest city when we are expect to remain static means in just a few decades Auckland will be nearly 20 times larger.

Already our best and brightest young are being sucked out at an alarming rate, attracted by educational opportunities jobs and the lure of the bright lights. We will never match Auckland for size or growth but if we allow ourselves to start contracting we will soon find ourselves in deep trouble.

For a start we will loose what little political bargaining power we still have. Suddenly services we take for granted will be sourced elsewhere. Areas such as specialist medical services and education will likely be early casualties. This already happens but it could be very much worse.

Last month the city of Detroit, once home of the automobile industry, declared itself bankrupt owing $US 18 billion. Between 2000 and 2010, the number of residents declined by 250,000 continuing a pattern that has seen the city population decline by some 60% from it's 1950's peak.  

I take some small comfort in the fact that the Mayor of Hastings agreed with me when he recently wrote  “Hawke's Bay needs to wake up to what is happening to our economy and region.” (HBT 2/7/13) Sadly though, I have to point out that we are in this sorry state after he has spent nearly two decades on council, twelve as Mayor. 

Hawke's Bay's leadership has been too engrossed for far too long with building monuments such as Splash Plant, the Opera House, the Aquarium and Museum. Looking at all the concrete and glass knowing it was “their baby” makes them feel good . The problem is the economic justification has been weak, so inevitably these structures have become a burden on ratepayers. In Hastings this has been especially severe because the projects have been debt financed.

Such projects may have served political objectives but have done nothing to improve economic performance, and it is the latter we badly need.

There is an unwillingness by our leadership to acknowledge the true state of affairs. I was told recently that we must be positive. My response is we must acknowledge our problems if we have any hope of solving them. So how are we to turn things around?  

Tourism a mainstay of our economy struggles as visitor numbers decline according to the Statistics New Zealand Commercial Accommodation Monitor.

We need to do something about the inadequacy of our air services. If we were as close to Auckland as Hamilton and other places are, it would not be an issue, but many of the destinations we compete with are much closer to our major cities, and/or have more affordable air connections. The tyranny of  Air New Zealand's  monopoly position must be broken if we want Hawke's Bay to be an attractive place to visit.

Better air services will also help us retain and attract businesses. Any  organisation trading with the rest of the country or the world needs to travel, and if we are more expensive or difficult than elsewhere then we will be less competitive.

To cap it all off, yet another independent report, the Winder report stage 1 tells us that our work force is under qualified and we have only half the national average percentage of university graduates.

Huge amounts of money are being sucked out of our economy so our young can receive the education they need. We need more of this money to stay here and we need the job opportunities a bigger and more diverse education offering would provide.

We all know we have a great climate, an enjoyable lifestyle, and fairly affordable housing. That's why so many of us came and stayed. Whilst we are attractive to those at, or approaching the end of their working lives it is clear people are leaving in droves, and these are the young, the brightest, and the most motivated. 

This sorry state of affairs has not just happened. It has been clear for for many years that Hawke's Bay was slipping behind. If our leaders have failed to see the signs and develop growth policies, there is little chance they will do so if returned to office in the forth coming elections

Higher Education will boost the economy

Most recent commentaries on Hawke's Bay draw attention to our near bottom rating in many social and economic indices. Some also draw attention to disparity in the educational qualifications of our labour force, compared with national averages.

The recently released Winder Report on economic prosperity reveals only 14.2% of the Hawke's Bay/Gisborne population have university qualifications, compared to 27% nationally. This is a huge disparity, and is a serious indictment on our business and political leaders. Formal qualifications measure both knowledge and academic achievement, and therefore give a strong indication of having the skills to do the job.     Simple logic suggests if we do not have a work force with the right qualifications, we will not attract high skilled, high paying jobs..

The report also shows we have a very much higher proportion of jobs in lower paid occupations such as Agriculture, Forestry and Fishing (16.4% verses 7.1% nationally) where incomes are just half the average for all employment categories, plus many fewer (5.3% verses 8.5%) in the very much higher paid Professional, Scientific and Technical categories. Not surprising of course because we are a centre of primary production.

That Hawke's Bay has a lower proportion of academically qualified people  should be of concern to us all. We may find it difficult to attract businesses and organisations that need highly qualified people, and our businesses may not be able to compete  against businesses elsewhere. We may also miss out on knowledge industries and all this means people are more likely to earn lower incomes.

It also suggests as a community we may not be placing a high value on formal qualifications. That is parents are less likely to see higher education as a priority for their children, and if the problem becomes multi-generational  we risk ending up with a general dumbing down of the population.

There are a range of reasons for our poor figures but the single most significant has to be the lack of educational opportunities for our young people. This is not to suggest the EIT is doing a poor job, but rather we need additional opportunities. We simply do not have the range of tertiary education offerings of other comparable centres. Polytechnic education is part of the mix, not a substitute for university level qualifications.

We are the 5th largest urban area in the country after the three main centres and Hamilton all of which with Dunedin and Palmerston North, have both stand alone universities, and polytechnics of at least comparable size and offering to our own EIT. In fact Auckland Wellington and Christchurch have multiple university campuses.

We are also missing out on the huge economic injection a University campus would provide. A just released investigation has estimated direct spending by students and staff, plus downstream effects from the University of Otago to be  worth $780 million dollars annually to Dunedin, providing 16% of GDP and 17 000 full time equivalent jobs.

Whilst Hawke's Bay is unlikely to gain a similar 21 000 student facility, a stand alone branch campus of an existing institution is essential. As most university funding comes from Government our own campus will not inflict increased costs on ratepayers. Additionally Hawke's Bay parents and their children will save huge sums now being spent obtaining university level qualifications elsewhere.

Hawke's Bay has a near static population because so many people leave the area. Offering better educational opportunities would help stem the outflow especially of our young people.

We must not permit Government to fob us off any longer.  We must have a more skilled and better educated workforce if we want a dynamic economy. It's time we got serious about this issue

The decline of tourism

The last cruise ship has left our shores for this season leaving behind we are told, some $25 million spent by 80 000 passengers. This is an astonishing $312.50 for each passenger. Considering most are here for just a few hours, and spend nothing on accommodation, and not a lot on food, this figure seems highly suspect. Even if the passenger numbers are understated and the correct figure is nearer 100 000 this still equates to a dubious $250 each.

Just how well our visitor industry is doing is hard to determine. Some operators such as Splash Planet in Hastings  and Horse of the year seem to have had a very good year. but others such as the Mission Concert were  down significantly.

The visitor industry is vitally important to Hawke's Bay accounting for 5 - 10% of all economic activity. Our local economy is dominated by horticulture, viticulture, forestry, and pastoral farming,  and much of our manufacturing is also closely aligned to these activities. Visitors provide diversification meaning not all is bad when adverse climatic events such as droughts happen.

Whilst all visitors are welcome they are not all equal in terms of their economic impact. The most valuable are the people who stay in paid accommodation, such as motels or hotels, and homestays, eat out in our many good food places and visit the various activities on offer including Art Deco, Horse of the year and the Mission.

Especially valuable are business travellers who mostly seem willing to splash out on food and accommodation. Those attending conferences are also very valuable and even a medium sized event can be worth $100 000 to our region. Conferences unfortunately seem to be bypassing Hawke's Bay these days.

Whilst we are very good at crowing about our successes we seem to be reluctant to acknowledge where we are not doing so well. The Statistics New Zealand Commercial Accommodation Monitor  records the numbers staying in our motels, hotels, backpackers and camping grounds. For 2012 these reveal Napier Visitor arrivals were down -32,627 or -11.0% on just a year earlier and guest nights down -47,884 or -8.4%, continuing a trend that started in 2005. From the peak in 2005 Napier arrivals are now down 66 600 and bed nights down 90 400.

Hawke's Bay Tourism believe these official figures miss many who stay privately or in home stays, and now adjust the official numbers with the results of a Private Household Survey, a survey of unknown reliability and relevance. Certainly the official figures appear the ones with the consistency necessarily for regional comparisons, or  comparisons over time.  There is a risk we may be deluding ourselves if the results are simply being used to paint a better picture.

So we are getting mixed messages. If we look at passenger numbers through Hawke's Bay airport we see a reduction. Between 2008 and 2012 passenger numbers have declined from 449 126 to 444 708. We also know numbers were down for the Mission concert, and the Hawke's Bay Opera House is struggling to attract conferences that just a few years ago were quite regular.

We also need to be wary about the boom in cruise ship visitors because we have no control over their their itineraries or whether they continue calling here. After all when summer is over the ships simply leave for other destinations and for six months or more we are deserted.  Additionally once Europe and North America move out of the economic doldrums the shipping companies may simply decide there are richer pickings elsewhere.

There are many hard working and very committed individuals trying to make this industry succeed yet there is evidence we are doing less well than we could be. Its timely we question whether we are handling our visitor promotion efforts in the most effective way. Ratepayers are providing  $850 000 a year in funding to Hawke's Bay Tourism, and Napier and Hastings councils and individual businesses spend millions more.

Is the Hawke's Bay Regional Regional Council the appropriate organisation to be controlling Hawke's Bay Tourism? The councils previous efforts through Venture Hawke's Bay and Hawke's Bay Inc were not highly successful, though this should hardly be surprising since neither the staff or councillors appear to have serious tourism experience. It seems strange to hand over the right to market Hawke's Bay to an organisation with no other involvement in the visitor industry, when the Hastings and Napier  Councils have invested a hundred million dollars or more on amenities.

Another potential conflict is the presence on the tourism board of Dave Simmons a senior Air New Zealand executive who clearly is not going to point the finger at Hawke's Bay air services as many others here and elsewhere appear to be doing.

One thing is certain. If Hawke's Bay is to capitalise on the potential of this vital sector, the true state of the visitor industry must be revealed, there needs to be better coordination between the players, and a clearly defined, and widely accepted strategy agreed on, so we are all moving in the same direction.