Auckland export economy- one of NZ's weakest

17 Nov, 2009
IPP Director, David Wilson
IPP Director, David Wilson

Auckland can never be the growth engine people expect – or that the country requires – as long as its export economy remains as one of the lowest in New Zealand, a senior economist warns.

BERL Chief Economist Dr Ganesh Nana says Auckland can’t be a service economy to the rest of the country.

“Auckland is a trading town and we have to do something about this trading town to make it a better trading town,” he says. “We need to build a business-friendly Auckland.

“Businesses need to see public policy signals focused on what is right for business such as a transport infrastructure, building consents, transactional costs, et cetera. Business needs certainty to take risks.

“To catch up with the rest of New Zealand Auckland governance needs to put rules in place and stop moving the goalposts.”

Dr Nana made his comments at the launch of a joint report by AUT’s Institute of Public Policy (IPP) and Business & Economic Research Ltd (BERL).

The report entitled: The Auckland Economy: Situation and Forecast looks at the challenges facing Auckland communities and businesses, and its ensuing development.

The report forecasts a sombre export picture for manufacturing and at best, modest employment growth.

IPP Director David Wilson also emphasizes the need for certainty in Auckland as a platform for business investment and development.

“We’ll be looking for a Super City mayor who brings real civic leadership with a clear vision of the Auckland economy. If businesses are prepared to invest for the next ten to 15 years they need to know that the frameworks are in place and won’t keep changing.”

Dr Nana adds that Prime Minister John Key said once ‘if New Zealanders want to have a first world life style we’ve got to learn how to earn like a first world country’.

“I wish he would say that every time he speaks.”

Dr Nana says that Auckland entered the recession before the rest of New Zealand started to feel the pinch.

“Auckland started to shed jobs around 12 – 18 months earlier than most of the country, but its prospects are marginally better and will come out quicker, although not by much,” he says.

“But if New Zealand and Auckland are serious about rising productivity levels we have to be prepared to move away from a property-focused economy to a productivity and export-focused economy and we have to invest in it.

“If we’ve a country that is serious about productivity it doesn’t come cheap, we have to spend.”

The exchange rate is another factor hampering growth, says Dr Nana.

“Export is not going to get off its knees until the exchange rate sorts itself out. The market is a wonderful being but it doesn’t respond quickly.

To end, Dr Nana also cautions against the futility of boats loaded with logs headed for overseas manufacturers.

“It takes 25 years to grow a tree, 25 years to think about what we can do with that tree and we cut it down and put it on a ship. I ask, is that really the best we can do? And we call ourselves an innovative nation.”