Auckland’s Actions on Economic Development

As I have discussed in previous blog articles, Auckland needs to enhance strengths and improve weaknesses in achieving goals set for economic development. There are two news articles strongly drew my attention.

The first one is written by Bernard Orsman on 6^th May, in the article, he explains that Mayor Len Brown is seeking a further $3.9 million to rebuild Auckland as major event city. The strategy was a critical part of Mayor’s vision to improve Auckland as a visitor destination and improve the region’s contribution to the nation’s economy. This year’s Rugby World Cup is seen as the trigger of the rebuilt. The development of major event city in the nation is seen as an investment in the city’s future in transport, parks, environment and communities and at the heart of economic development.

Another news article by Diana Clement (29^th May) gives an explanation on new mechanism of government supporting businesses. As part of the rejig, development agency New Zealand Trade and Enterprise (NZTE) is axeing its Escalator programme, which provided specialist skills for companies wanting to take on investors and raise money for expansion. Auckland businesses must now approach the new council-controlled organisation Auckland Tourism, Events and Economic Development (Ateed). Ateed, which is planning a marketing campaign in the coming months to educate business owners about the changes, will employ capability consultants charged with assessing local firms. The consultants will direct business owners to privately or publicly run training and information services which meet their particular needs. Ateed will have offices in Orewa, Albany, Henderson, Auckland CBD, Manukau and Pukekohe providing on-the-ground support, says Clyde Rogers, business and sector development manager for the new organisation.

These two articles reveal that Auckland city and its council is seriously looking into current strengths and weaknesses, and have clear strategy and implementation approaches for further improvement. Economic development indeed requires a vision, following with specific actions, which from this perspective, Auckland is achieving something.

Auckland Economy’s Good Time:

After year 2007 international financial meltdown and recession, New Zealand economy is heavily impacted since then. The recession hit Auckland earlier and harder than New Zealand as a whole, but it was already out-performing the rest of the country in terms of economic activity through the last three quarters of 2010, said Goldman Sachs economist Philip Borkin.

The impact seems to be recovering from the gloom slowly recently. According to Brian Fallow’s (21^st April 2011) article from New Zealand Herald, he states that:” the city's economy should be growing by between 3 and 3.5 per cent by the end of the year. Growth over the entire year could average around 2.5 per cent, compared with the 1.5 he expects for the country as a whole, which is more optimistic than the consensus 1.1 per cent.”

Auckland GDP status and forecast

Auckland’s economic recovery reveals local peoples’ confidence is relatively higher than other regions nationally. Same article states that: “The Auckland region recorded the highest level of consumer confidence, overtaking Wellington.” However, Auckland acts as a leading city nationally, it is highly sensitive to financial conditions, the council is play a vital role on stabilising recession and recovering regional economy in an effective way, thus to lead overall national economic recovery.



Innovative Cluster in Auckland

“The Auckland Council is promoting the clustering of similar businesses as part of its economic vision for the city. The "innovation clusters" were mapped out in the Auckland Unleashed discussion document, which lays out ideas on where the council might take the city over the next three decades. The document stressed the importance of manufacturing to the Auckland economy and claimed it contributed 38.4 per cent to the region's GDP and produced more than half of the city's exports.” Stated by Hamish Fletcher (4^th April 2011) on one article from New Zealand Herald.

In recent years there has been a fundamental shift in the way regional economic development is viewed. Promoting economic cluster formation has become an important new strategy for regional competitive advantage and entrepreneurial growth. In short, ‘clusters’ is a tool for economic development. Specifically, it is a new way of thinking about an economy and organizing economy development, aligned with nature of competition and sources of competitive sectors. And it recasts the role of the private sector, government, trade associations and educational or research institutions, involves firms of all sizes, creates a forum for constructive business-government dialog. It is a means to identify common opportunities, not just common problems. Furthermore, economic cluster is also a lesson for economic development policymakers and practitioners.

Current cluster exist in the Auckland region has boat building. Relate with Porter’s competitive diamond, boat building is one of factors of production which has great kiwi value. Take account of Auckland as ‘city of sails’, boat building would also effect by demand conditions. Boat building supplier and related industries those are internationally competitive. This supports cost-effective supplier and stimulates innovation. At same time, Auckland has great waterfront nature resource, skilled labour to created, organized and managed firm rivalry and strategies.

The innovative cluster in Auckland can be used to stimulate innovations, facilitating commercialisations in associate with incubator programmes. If we are looking for more vibrant future economic environment, why don’t we adopt and establish innovative clusters more promptly?

Te Hana Tourism and Economic Development Continued

Last blog article I have done is regarding the opportunities that Te Hana has, and can be utilised. However, that is more visionary than practical. To successfully implement the project and make Te Hana can actually contribute in regional scaled economic development, the key stakeholders are necessary to be looked into.

This project is highly depending on the involvement of a number of stakeholders from the public sector, community organisations, funding trust as well as volunteers from local. Te Hana Community Development Charitable Trust is formed as the initiator of the community project, with aiming of enhancing community’s reputation and recognition by the council and develops Te Hana as one of New Zealand renowned Maori cultural tourism spot.

The Trust plays vital role of turning visions into actions and to make the objectives achieved. In order to achieve this, first thing first is to enhance community cohesion by getting support from local residences and providing skill training to help volunteered residences working in a more effective and efficient way. Local volunteer although may provide support to contribute on the project, it may, somehow not adequate in making the project works. The community at this stage needs to consider bringing talents with relevant skills or knowledge to contribute on working the project.

Once the project is designed and gained local support, the Trust may now apply for council’s support. Some certain degrees of refining and developing social and physical infrastructures are needed now to make the community have a better environment, $58,000 set aside by Rodney District Council Community Plan 2008 for up-grade Te Hana community’s living quality (Te Hana Community Development Charitable Trust, 2007). Council’s support also includes the political aspects, the Maori traditional building restoration in Te Hana may be rare and council may not deal with it before, with community’s explanation, the council will be able to understand the project’s purpose. Te Hana is a community with strong cohesion and self-awareness, to support this kind of community is obviously what the council should do, for political aspects of this project, council should allow the maximum development of Maori traditional building with intension of protecting natural environment, whereas Maori people see themselves as guardian for the natural environment, this will not be an issue. Special rate on commercialised land should be provided special rate, as another political support from council to promote Te Hana’s community project.

Auckland council has one council controlled organisation - Auckland Tourism, Events and Economic Development (ATEED), which play role in attracting and planning for major events, it will also develop tourism products and run visitor information centres (Auckland Council, 2011). ATEED here has the role of helping Te Hana to plan and run the cultural tourism project with better suggestions. The community also needs to ask the council to include them into Auckland’s long term plan and provide appropriate level of promotions.

In tourism village developing stage, the Trust will need to seek for individual charity donations as well as possible funding sources from interested organisation, corporations as well as financial companies. Here the ASB Community Trust funds organisations working in the arts or cultural sectors, which would be a great opportunity for the community organisation to apply for.

Once the development is complete, Maori cultural activities such as Haka, welcome ceremony, traditional hospitality will be run by local residences as vast majority of residence are Maori is a privilege. Local residences also need to volunteer taking the responsibility of local security for the tourism village as well as the tourists.

Tourism Strategy and Opportunities for Te Hana

It is been quite a bit while since last time I think about the relationship between Te Hana and Auckland economic development, today I have looked into some specific aspects of Te Hana, that can develop as strength and contribute to the overall regional economic development of Auckland.

Following are the aspects I have identified for Te Hana can be developed for future opportunity:

- refine of cultural tourism village

- become one tourism destination rather than by-pass stop

- promote with utilising the privileged strategic location

- promote by increasing recognition nation wide

- raise its community profile

These aspects can be categorised as developing local tourism project as economic driver. The visionary bigger picture for developing this project is to promote Te Hana’s community and economic development, in order to achieve the objectives, the community organisation will have to take specific actions in regard with above objectives.

Firstly, Te Hana Community Development Trust is formed to build a liveable vibrant community with good living quality, adequate jobs and opportunities, and to build a connection between Te Hana and the world, these objectives are relatively same as the objectives of cultural tourism project. In order to enhance local reputation and recognition, community organisation have to further enhance the community cohesion, due to Te Hana is a relatively small community, developing tourism village is highly depending on local residences’ voluntary work. The Trust has role to explain the benefits that this project will bring, once local residences are interested in and willing to participate voluntary job, the Trust may provide relevant skill training, or bring talents from elsewhere. As a consequence, these actions are able to provide local working opportunities and reduce un-employment rate; increases community cohesion and relatively raise local residences education level.

Secondly, once the community forms strong cohesion and with reputation enhanced, community organisation now have the role to get in touch with the councils. As mentioned above, under current New Zealand legislation of Resource Management Act 1991 and Building Act 2004, there are no regulations in regard with Maori traditional building restoring but only states Maori special affairs will be considered by the council. Thus it requires community organisation to communicate and explain the project to the council. Once the community is recognised by the council and project is approved, the Trust may launch the project and build a collaboration relationship with the council.

Thirdly, in order to build and to promote Te Hana as one renowned Maori cultural tourism spot, community organisation is required to ensure the adequacy of public facilities and social and physical infrastructures. By doing this, the community will be further more attractive to the tourists and passengers, in consequence to bring more opportunities and enhances community development as well as economic development.

In fact, the Te Hana Community Development Charitable Trust as the community organisation has already launched the project, and starts trying to make this project to be incubated and commercialised. All they need is political support or other supports from council or other interest organisations.

Rugby World Cup 2011

New Zealand’s hosting of the 2011 Rugby World Cup offers the country a unique opportunity for economic development on an unprecedented scale. Hosting global events is an inherently loss making business in the short term, but if leveraged correctly, the long term legacy benefits can go far beyond even the most optimistic expectations.

Rugby World Cup 2011 (RWC 2011) will run for 45 days (1.5 months), beginning on Friday 9 September 2011 and concluding on Sunday 23 October 2011. The tournament offers several immediate opportunities for New Zealand’s businesses: 1) Supplying goods and services to RWC 2011; 2) Business from those organisations associated with the tournament; 3) Joining the RWC 2011 commercial family as an official sponsor or official supplier; 4) Benefitting from the influx of people for customer service based companies; 5) Contracts or subcontracts related to the infrastructure build-up for the tournament. RWC 2011 will definitely be the opportunity for council or other organisations to help commercialising ideas, or in other words, to incubate small businesses.

It is now great opportunity for Auckland to tie RWC 2011 to our economic development. The lead-up to the event will be a time of preparation around the Auckland region. Infrastructure is being upgraded; consumables and equipment needed for every aspect of the event will be purchased. Training and match venues are being re-vamped. All of this offers opportunities for different sectors of Auckland business. And independent analysis predicts a spending boost to the Auckland economy of $267 million. Auckland Plus, Auckland’s development agency, has placed great emphasis on foreign investor attraction in the build up to the RWC. The RWC 2011 business club offers opportunities that link local businesses to investment prospects. Launched in April 2010, the business club will see foreign businesspeople that visit New Zealand during the RWC hosted by local businesses who work in the same sector. Organisers hope that long term professional relationships will subsequently be built, which could encourage foreign direct investment in the future. In addition, in the build up to the RWC, Auckland Plus has also hosted a number of offshore events, such as the one in London in 2008, where the Auckland business brand has been promoted, with the opportunities offered by the RWC at the core of the conversation.

During the RWC itself, Auckland Plus will also be showcasing a number of chosen business sectors in events and displays on Queen’s Wharf. Playing to their strengths, Auckland Plus will look to showcase the offering of its food and wine, marine construction, information and communication technologies, health IT and biotech, as well as film industries. Queen’s Wharf will be the hub of activity for international visitors during the RWC and the event offers Auckland, and New Zealand, the opportunity to demonstrate their business aptitude to the world.

The Te Hana Trip!

Finally we come back from the Te Hana Trip, to be honest, I was a little rejected and was not keen to go this trip at all, but when we came back from it, this becomes the most exciting and unforgettable trip I have ever joined in New Zealand!

The three days and two night trip gave me a whole bunch of new experience and knowledge, I really appreciated that, and again, I really would like to say thank you to all Te Hana people and all organisers and lecturers from the university! A story of how one Maori tribe was originate, how they developed their community, what sort of pain they have suffered, what makes them keep trying, and their great aspirations for the future, these consisted all my memory for the trip, and these are simply just memorable treasures to my life!

Lovely people from Te Hana!

Back to the theme, I and other group members are focusing on incorporating Te Hana into Auckland Plan through economic aspect. So far, from my understanding, Te Hana is one Maori ethnicity based community with strong community cohesion and great aspiration, looking for economic development opportunities through advancing its strengths and improving or avoiding its weaknesses. Although before the trip, I have never heard of such a township, but it locates on one strategic advanced place – the northern most point of new Auckland city. It is also their willing to establish and promote Te Hana as the Northern Gateway of Auckland region. The reason for that is Te Hana is developing a cultural tourism village, with more recognition of Te Hana by Auckland, and the entire nation, cultural tourism is definitely their opportunity for economic development.

Regionally, I interpret the reform of governance is towards a city with more economic and community development opportunities. Auckland wants to add more economic growth, then it is the new council’s obligation of looking into the most possible successful sectors, and set them as pilot projects, through utilising of a bottom-up approach, enhance the economic contribution through promoting the economic development in certain areas. Investing before gaining benefits is what I think to be most necessary.

Overall, I think Te Hana’s cultural tourism village has great potential, once council has its full recognition and promotion to this, it will be able to contribute to Auckland’s economic development significantly.

Investing in Auckland!

“The massive bill for rebuilding Christchurch will not put the Government off spending more money on Auckland, Prime Minister John Key says. Mr Key said as the "flagship city", Auckland is important for New Zealand.” Stated by Paul Harper and Hayden Donnell (23^rd March, 2011) from article in New Zealand Herald.

This year’s planning course 330 introduced a new term to me, which is a “world-class” city. This term refers to a specialised city deemed to be an important node point in the global economic system. The concept comes from geography and urban studies and rests on the idea that globalization can be understood as largely created, facilitated and enacted in strategic geographic locales according to a hierarchy of importance to the operation of the global system of finance and trade. As PM John Key recognised Auckland as the “flagship city” is vital to New Zealand’s economy.

Auckland has the greatest scale of population and a strategic privileged location in New Zealand, its economic development is relatively advanced than other major cities as well. Auckland can enhance its strengths by doing:

- creating business friendly environment

- making destinations for tourist

- developing entrepreneurial cultural

- growing leadership for Auckland economy

- increasing export capital

- attracting overseas talents and growing local talents

- refining and promoting local heritage and culture

- developing economic opportunities

- improving social and physical infrastructures

By improving above aspects, I say it is cost rather than investment, a cost to make Auckland more competitive. A more liveable with advanced community and economic development is always the vital key to become a world-class city, and to contribute to national economy in a more prompt manner.

Petrol Price Gone Up Again…

“World oil prices may have eased, but a declining Kiwi dollar means motorists may face even harder times since the latest 5c rise at the pumps. That follows a 13c rise in the litre price of petrol and an 18c one for diesel since the start of last week - including a 5c lift on both fuels on Tuesday.” Stated by Mathew Dearnaley (10^th March, 2011) from one article in New Zealand Herald.

This is already the fourth “big add” to petrol price this year; petrol price is almost the same as record price of $2.16/litre in 2008. Due to personal interest, I have looked into the proportion of rates and other costs in current fuel price (as Figure 1). Apart from 48% of pure fuel cost which depends on the world crude oil price and 2% of shipping cost, one quarter of current fuel price are margin of importer, and the rest accounts GST and other tax applied by government. Since the 2.5% GST increase from last year, most grocery and other basic need products’ price have gone up more than simply just 2.5%, this may be also caused by inflation, but what I am trying to say is that prices of everything is going up in a rapid trend and is way beyond people’s buying capacity against income increase. New Zealand is also one of the highest GST revenue countries, whereas Australia’s GST is 10%.

In my opinion, the increase in price can lead to following issues:

- people losing faith in local economy

- reduce in purchasing capacity

- reduce GDP nationally

- government lose GST revenue

- reduce in community and economic development capacity

- further impact on already weaken economy

I identify the government’s revenue as the main sector in influencing market price. This will finally lead to a further weakening in economy nationally. The worst situation is that people lose faith in economy and government goes to financial bankrupt. Solution that I may think of is that government should emphasis on economic development rather than trying to squeeze more revenue from citizens. However, my perspectives may be true, or may be too naive?

Evaluation on Auckland Governance Reform

In my personal perspective, the reform reveals the fail of functioning of last governing body in Auckland. The reform brings benefits in accordance with making corrections to the past governing structure with radical change, although, it still faces a number of challenges. The challenges are associated with associating institutions, and planning and policy instruments. Since the new Auckland City Council is established, I am really interest to look a bit into the viability of the new council.

The transitions to sustainability will continue to occur in Auckland with complexity, uncertainty, diversity and change. Dr. Bruce Hucker states that they will not be removed by simply governance structure reform (2010). These factors are caused by the unpredictable future, and with successful designed institutions and collaborative relationships between institutions, these factors’ negative influences will be mitigated. However, the reform is just begun, to Auckland it is a radical change, the governing body and twenty one local boards along with seven council controlled organisations are newly formed less than half a year of time, there are still quite a number of relationships need to be built and the institutions themselves still needs to be refined so that they can function appropriately.

The seven council controlled organisations are facing crucial challenges of functioning and performing well in their roles. Firstly, the seven CCOs are adopted by new governing body while there are already forty CCOs in existence, this means the seven CCOs are extremely big in scale with more complexity and powers than the ones in existence; secondly, the CCOs’ expertise and strategic ability may not match new governing body, contrarily, the CCOs may actually turn over and control Auckland Council due to the raises of organisations’ prospect rather than being controlled (Hucker, 2010).

However, the reform is not complete by simply changing the governing structure, new council should be precautionary rather than react when issues are raised. it is crucial that to have a complete awareness of key issues in existence and forecast future challenges in order to reduce uncertainty, these are especially required during the governing body is developing its long-term vision and direction planning and policy instruments. Dr. Bruce Hucker (2010) states that, the success of Auckland governance reforms depends among how political legitimacy, democratic accountability and sustainable development are achieved together in practice. The legitimacy’s fundamental is how strong the relationships and partnerships are formed between the institutions. Democratic accountability is highly depended on the public participation in decision making procedure, whereas the local boards are working with governing body on behalf of communities. In order to achieve sustainable development, governing body has to develop appropriate directions and visions for local boards as well as CCOs. As new governing body is developing its long-term planning instruments, council should take communities’ needs and well-being into account as priorities in the upcoming instruments. The instruments should also include a mechanism to be able to quickly deal with situations involving complexity, uncertainty, diversity and change in the future.

Overall, for new Auckland Council in order to prevent failing in functioning, it still requires council look into issues after the reform and make changes, ability to adapt to the changes and uncertainties  are key determinants to test new council’s viability.

New Auckland City’s governing structure under Reform

From November 1, 2010 Auckland governmental structure is reformed to a single unitary authority to lead the whole Auckland region, and to replace the past existed seven territorial authorities and one regional council.

The reform of Auckland governance is driven by the work of three bodies: the Royal Commission on Auckland Governance, the New Zealand Government and the Auckland Transition Agency (Hucker, 2010). The Auckland Council’s establishment is in accordance with the eighteen months investigation and analysis report from Royal Commission on Auckland Governance. The constituents under current institutional framework are the governing body led by the mayor and twenty elected councillors, the twenty one local boards as well as the seven council controlled organisations.

In accordance with the Royal Commission’s 18 months analysis on Auckland governance, the Royal Commission’s analysis report on Auckland governance consisted with two key points: 1, Auckland’s governance system was weak and fragmented; 2, as a consequence of the structure the engagement between the territorial local authorities and communities was poor (Royal Commission on Auckalnd Governance, 2009). The provisions of a unitary authority are now expected to increase transparency while reducing bureaucracy, duplication of functions, provide more precise decisions with focuses on specific issues, avoiding decision making power overlapping, and thus to deliver more effective and efficient services to the citizens of Auckland in accordance with policy instruments newly made by the new unitary council.

Currently, the unitary authority – Auckland supercity Council as the key and only governing institution, has two constituents in government decision making parts: the governing body led by elected Auckland mayor, Len Brown and twenty councillors elected from thirteen wards; and the twenty one local boards. As the Local Government Act 2002 states, Government cannot and should not do everything, the governing body is in charge to have visionary plans, policies, and strategic instruments; local boards on the other hand are specifically dealing with local issues, and decision making on behalf of local community etc. According to the Local Government (Auckland Council) Act 2009 (New Zealand Government, 2009)

The new Auckland council is transforming with intention of creating a more liveable new Auckland super-city, which will definitely influence the economic development in a positive manner, and let us hope we are coming to a brighter future with more emphasis on economic development by the new council, whereas a world-class Auckland requires a better economic environment as fundamental.