Friday, 21 October 2016

International Visitors – Can We Cope?

It is very clear that New Zealand, and the South Island in particular, is on the verge of an exponential increase in international visitors. Tourism is now the country’s biggest industry with $14.5 billion generated in the current year. We are expecting 4.5 million visitor arrivals by 2022. This year we will host 380,000 visitors from China and that will grow to 500,000 in 2017. These are big numbers and this is a critical industry for our country.

New Zealand is sold to the world largely on the majesty and beauty of the South Island, even though a disproportionate number of tourists land in Auckland and concentrate their visitor experience in the North Island. However, the secret is out. Tourism numbers to the South Island, especially free independent travellers, who spend significant sums of money, are on the increase and we are seeing increasing pressures on our general infrastructure as numbers grow. This is a very positive problem for New Zealand and for the South Island in that tourism provides a diverse range of job opportunities, a significant amount of foreign exchange earnings and also assists to connect our country better with other countries to realise other opportunities.

However, we have some challenges. The capability of many of our tourism operators needs to be enhanced and they need to manage the growth accordingly. Growing companies face issues with regards to capital constraints, internal business processes and human capability.

We also have infrastructural challenges. Our international air carriage capacity is increasing in a carefully coordinated way, particularly into markets with high visitor potential. Our roads are in relatively good shape, but we are under increasing pressure with regard to visitor accommodation. This is not only as a result of the earthquakes but in the other areas throughout the South Island accommodation is becoming choked.

Then of course we see the issue of how small communities can provide facilities for visiting tourists, such as toilets and hospitality offerings. This is a particularly fraught issue when it comes to rate payers in small areas being expected to provide significant tourism facilities.

While we welcome all of the opportunities that increasing international tourism brings to the South Island we must be careful we do not destroy the very offerings they have come to see. Guardianship of our prime tourist offerings is vital as is the spread of visitors right across the South Island to take pressure off the hot spots. We also need to explore how we can continue to host our visitors across the year, not just in the peak season. A South Island wide coordinated visitors strategy will be critical. In Christchurch we now have a strategy in its early stages of development and it is important that that be developed alongside the overall aspiration for our city. Tourism will continue to be a leading contributor of our economy, with Christchurch operating both as a gateway to the South Island and also a tourism destination in its own right.

New tourism offerings such as the Christchurch Adventure Park need to continue to be developed to ensure we get a good spread of activities to entertain and enthral our international visitors. We also need to ensure that across our population we welcome and relate to visitors from other countries. Next to our scenery, the prime reason tourists visit the South Island of New Zealand is our people and that of course includes our cultural heritage and diversity. We are on the doorstep of the biggest economic opportunity of our generation. We need to do it well and we need to get it right.

Tuesday, 11 October 2016

Post-earthquake workplace dynamics

Workplace dynamics are changing quickly everywhere with the increased use of technology and changing expectations of employers and employees. Nowhere has this been more evident than in Christchurch in a post-earthquake environment.

The earthquakes forced an acceleration of changes in workforce and workplace dynamics through necessity which will be locked into the city and the region’s future. For example, there was an increase in flexibility in the workplace. The change in the working environment for many of us necessitated flexibility as did the importance of our families’ welfare in a tumultuous post-earthquake environment. Although this has its challenges in some employment situations, generally it provides a better working environment, increased productivity and a better employer/employee relationship.

We have also seen a rapid increase in employees operating in empowering environments. The emphasis on outcomes rather than on prescriptive work agendas has been accelerated post-earthquake. In my opinion it is the responsibility of every good employer to create a partial vacuum of opportunity around all of the employees to reduce boundaries and to create news spaces in which employees can migrate and realise their real potential.

Another area of rapid change has been the reinforcement of the trend towards open plan. Work spaces post-earthquake many companies were forced to work in temporary and sub-optimal worksites which more often than not involved crowded working conditions and employees working, whether they liked it or not, in an open plan environment. A consequence of that is that most of the employers and employees who were forced to work in an open plan environment now find that a preferable and more efficient way to work.

It was very clear in Christchurch that after the tumultuous events of September 2010 and February 2011 people learned how to work better together. We have seen across a wide range of Canterbury companies much better collaborative endeavours with employees stepping outside their specified areas of activity to work on whatever it takes to achieve better outcomes for themselves and for their companies.

In addition to collaborating internally we have seen a much greater emphasis on employees and employers working together across sectors especially where companies were thrown together by necessity in a post-earthquake environment. Working with each other delivers extremely positive outcomes compared to the entrenched silo mentalities of the past. For five years many of us have led a day to day nomadic existence. Now that we are moving back into rebuilt, permanent office space it is very interesting to note how employees right across the corporate spectrum are thinking more strategically. New Zealanders are not good strategic thinkers and this is a very healthy trend that we are seeing unfolding in the context of the regeneration of our city.

Finally, from an employment perspective it is most encouraging to see how more and more employees in Christchurch are recognising and appreciating the independencies not only across the city but between the city and the wider region. In the day’s post-earthquake all of us in the city realised just how dependent we were on the wealth creators right across our region and how that activity helped to support us through the dark days of 2010/2011. That understanding is now engrained in our workforce and our corporate sector very much to the betterment of our city and our region. We are working better together and we need to.

As we continue to regenerate greater Christchurch these workplace dynamics will continue to evolve and in my opinion will put this region ahead of the rest of New Zealand in terms of complementary highly productive workplace outcomes. This is the sort of post-earthquake legacy that should never be taken for granted.

Friday, 23 September 2016

Business expectations of Local Government

With the Local Government elections looming it is important to reinforce what the business community expects from Local Government, in the context of being supportive of business, given how critical it is for any community to have a healthy business sector.

Local Government needs to be business friendly. Being business friendly means providing opportunities for interaction by business with the city in a friendly, efficient and cost effective manner and in a way that optimises sustainable economic growth for the benefit of all.

It is timely to remind all candidates why being business friendly is important. Fundamentally it is about the compelling linkage between sustainable, profitable business, community wellbeing, and individual welfare. However, a business friendly Council is also important because the local economy must grow to achieve the Council’s aspirations as expressed in its Long Term Community Plan. Of course, we need to generate wealth for our community to thrive. Christchurch is still regarded, relatively speaking, as a low wage economy and businesses and employers are determined to change that.

Christchurch City Council has a mission of adding value to the local economy and has declared its intent to advocate in the interests of the whole economy including the business community. It follows therefore that the Council must be seen to be inadvertently business friendly in the context of wider community support. As we regenerate our city, most of us understand that vibrant businesses are a critical component of a liveable city. During this regeneration phase the Council must be seen to be overtly business friendly to optimise positive business outcomes. A Council that stands in the way of sustainable profitable business will impose a major barrier for good business outcomes and will discourage the investment of capital in our city.

Our challenge to the incoming Council, which has been our challenge to the Council for many years, is that the Christchurch City Council be recognised as the most business friendly Local Government in New Zealand. It can do that by making a declaration to be business friendly, because attitude is important, and because this will give us an edge over other communities. Everyone in Council, both elected representatives and staff, must be encouraged to think business friendly. Council must ask itself constantly what it can do to support and encourage local business activity.

The Council should be intent on actively attacking and reducing compliance costs. It should think of compliance through the eyes of the business community. The Council should activity support local business given all other factors being equal. It should make sure that its infrastructure is supportive of business activity and it should be fair in apportioning the city’s running costs, rates and user charges. The Council must not subsidise one business against another or offer cash incentives or selective rates relief. They distort the economy.

The Council needs to work closely, collaboratively and constructively with local business support agencies and it needs to support cross community collaboration to grow the economy. It is important that the Council is seen to be prepared to be accountable and rectify issues that are seen to be anti-business. It needs to have a long term sensible and predictable planning framework. It is critical that we are overtly promoting sustainable business growth in our community and that we have new models of collaboration in a very busy post earthquake period to encourage efficiency and to maximise productivity. A business friendly Council can materially assist in this endeavour. We lay down the challenge and we look forward to working with the incoming Council to achieve our common objectives.

Wednesday, 21 September 2016

Prime Minister and Mayor jointly open The Chamber offices

The new home of the Canterbury Employers’ Chamber of Commerce was officially opened on Thursday 15 September by the Rt. Hon. John Key and Hon. Lianne Dalziel at a special opening celebration.

Peter Townsend, CEO Canterbury Employers’ Chamber of Commerce, led the formalities before the Prime Minister and Mayor unveiled the plaque, declaring the new facilities officially open. The Prime Minister and Mayor were invited to jointly open the building as a signal of local and central government’s commitment to work together on the rebuild of our city and central business district.

The Chamber relocated back to 57 Kilmore Street in July after spending five and a half years in various locations following the February 2011 earthquake.

“It’s been quite the journey since that devastating day. Our first post-earthquake residence was at my personal house in Holmwood Road where the team worked tirelessly to support Canterbury businesses to get back up on their feet. Six months later we moved to the Westpac Hub, then to Colombo Street, and now we’re back home … for good. Words can’t express how great it feels!” Peter Townsend said.

Construction for the new facilities started in December 2015 and was completed in July 2016. The building has an open plan workspace for their 30 staff and allows for future growth. In addition, it features multi-functional meeting spaces and two fully equipped function rooms which will accommodate the majority of The Chamber’s training courses and many of their events.

“This is the first time in The Chamber’s 157 years of existence we’ve had purpose-built facilities for our members. The Chamber offers over two hundred events and training courses every year which are attended by thousands of Canterbury business people. It’s great to be able to hold the majority of those in our new home allowing members to be better connected and supported by us” said Leeann Watson, General Manager of The Chamber and project manager for the facility rebuild.

“It’s been a long time in the planning so it’s wonderful to see it be officially opened today; we are extremely proud of the legacy we have created for our members. Miles Construction and Canterbury Property Investments Group have done a superb job creating a flexible and future focused facility. We must also thank those who helped us over the last five and a half years, and to our members for their continued support – it’s been an incredible journey.

Peter Townsend talked of the future for The Chamber and what a facility like this means.

“We’re a membership organisation who are about helping our members do business better. This is the beginning of a number of changes as we head into a period of transformation and positive change. We’re under no illusion – the business world is changing dramatically with the digital evolution - we are going to be a part of that to ensure Canterbury businesses feel well supported and have the necessary tools to continue to thrive.” Townsend said.

“Members have always been at the heart of everything we do at The Chamber. The new building locks in a future-proofed legacy for us; we are here to support Canterbury businesses long-term.”

Today’s opening was well attended by over 100 special guests of The Chamber and featured a ‘best of our region’ food theme. The Chamber is holding an Open Day on Friday 7 October for all members to view the new premises and be updated on the future of The Chamber. Members are encouraged to drop in anytime between 11am – 2pm. 

Monday, 12 September 2016

How critical is lobbying and advocacy?

The organisation that I am proud to lead, the Canterbury Employers’ Chamber of Commerce (the Chamber), plays a vital role in lobbying and advocating for businesses to be able to operate in a supportive environment. This is one of the critical functions of the Chamber ably assisted by its affiliations with the New Zealand Chambers of Commerce and Industry (NZCCI) and BusinessNZ.

The lobbying role often goes unnoticed and is sometimes taken for granted. However, if we did not have business support agencies such as the Chamber and its associated entities there would be no coordinated voice for business and we would be on the receiving end of rules and regulations that would work actively against the ability for businesses to operate.

The Chamber for many years has been lobbying and advocating for sensible employment legislation, realistic health and safety laws, the sustainable use of water in our region, simple and transparent tax regimes, and issues around energy usage and climate change both directly and through our other relationships. For example, BusinessNZ is currently advocating on the issues of taxation of employee share schemes, competition law, Holidays Act problems, anti-dumping legislation and has recently, together with the Chamber, been advocating against the Minimum Wage (Contractor Remuneration) Amendment Bill.

The Minimum Wage (Contractor Remuneration) Amendment Bill known as the Contractor Bill was a potential piece of legislation promoted through a Private Members’ Bill that had the ability to blur the difference between a contracting relationship and an employment relationship. Contracting relationships and employment relationships are both legitimate forms of utilising labour. In late August, there was a real possibility that the Contractor Bill would become law and create a massive amount of confusion for the business community at large. Despite the fact that BusinessNZ, which is partially funded by the Chamber, opposed the bill as far as back as September 2015, it had reached the stage that it had a majority of political support to be passed by Parliament. That would have resulted in a bill that was impracticable, uneconomic and breached basic legal principles.

The Private Members’ Bill was put forward by the Labour Party and supported by the Greens, New Zealand First and Maori Party. It was also originally supported by the MP, Peter Dunn. The combined voting power of that group would have given it sufficient votes to be passed through Parliament.

The business community through business support agencies such as the Chamber made it clear that the bill was poorly drafted and would result in confusing the employment contracting interface. It was obvious that it would cause significant damage across the contracting sector. We went on to assert that contracting is a legitimate method of providing services and the bill attempted to draw more closely together the contracting and employment relationships. We maintained that if passed it would result in confusion and be impossible to regulate. We insisted the bill needed to be dropped to avoid a wide range of destructive unintended consequences and that we could do much better for our employment and contracting communities.

Our view was shared by business support agencies across the country who lobbied hard to ensure that the bill did not become law. As a direct result of that intense lobbying the voting shifted to the extent that the Minimum Wage (Contractor Remuneration) Amendment Bill was defeated by one vote in Parliament in late August.

This is just one example of the importance of lobbying and it is great to see how effective we can be if we work together in the interests of business and the wider community. Good legislation is critical; poor legislation can be incredibly destructive. The Chamber is a strong advocate of transparent mutually beneficial, high quality, employment and contracting relationships. We strongly oppose poor legislation that would undermine either or both relationships.

Friday, 26 August 2016

Good Health Threatened

There has been a great deal of media coverage recently about the Canterbury health system and the constraints it faces. Amid the confusion, it is timely to recognise what the total health system (led by the Canterbury DHB) has actually achieved.

Despite the challenging circumstances post the 2010/2011 earthquakes, our health system has continued to deliver the very best care to our community. There will always be people whose needs haven’t been met, but our health system has always been there for the people of Canterbury. The leadership of our health system has made a personal commitment to ensuring that, whatever happened after the earthquakes, the community could rely on its health system.

Keeping the Canterbury health system on track has necessitated creative solutions to problems never faced by any organisation before.  The system needed to keep services running safely from damaged buildings, including delivering surgery during thousands of aftershocks and it needed to find innovative ways to change services in response to the changed needs of broken and fragmented communities. This included a dramatic increase in mental health demand.  It also needed to have an eye to the future and planning future services and facilities. 

The enormity of these challenges cannot be underestimated. The 18,000 people that work in community and primary care, hospital, mental health and public health services took this opportunity to make the Canterbury health system even better. And they have. In every respect it rates highly amongst its peers as an efficient, effective health system. It is internationally recognised and praised as one of the top five integrated health systems in the world.

Solutions developed in Canterbury are now being adopted around the world. In the UK another journey is starting, to implement the Canterbury way of working. This follows in the footsteps of most of Australia. The NHS England transformation strategy “Five Years Forward” was informed by what they learned from Canterbury.  Canterbury clinicians and leaders are sought-after speakers in international forums. Locally, the Canterbury approach has been used as a case study by the Productivity Commission, the States Services Commission and ACC. Internationally, the list is longer and includes the World Bank, the Kings Fund and the World Health Organisation. And last year the Canterbury Clinical Network won the IPANZ Supreme Award for public sector value.

These are high accolades indeed!

But all of this is at risk as yet another challenge is thrown at a system which is already so stretched. The replacement acute hospital is still two years away and our population is increasing rapidly. However, and inexplicably, Canterbury’s share of national funding is declining which is placing extreme financial pressure on the DHB.

With everything Canterbury has had to deal with, and in unique circumstances, I would have thought that the Ministry of Health might have considered the impact of continuing to apply the standard funding formula. They might have questioned a formula that reduces Canterbury’s share of national funding, despite an increasing population. Other experts have noted that post earthquakes, population changes and changes in health need, make the use of a population based funding formula inappropriate.  Canterbury is leading the world in understanding the impacts of a major natural disaster, on a first world country and the possibilities of an integrated system. The rest of the world is watching Canterbury!

The level of impact on the health and wellbeing of this community as a result of New Zealand’s largest natural disaster is unprecedented. In my opinion it is now time for the DHB to be supported and encouraged to continue to do what it has done so incredibly well – meet the needs of its community, without negative interference, under funding, or undermining from the Health Ministry.

Friday, 12 August 2016

Post-Earthquake: The Facts, The Figures, The Forecast

As part of my role with the Canterbury Employers’ Chamber of Commerce I am often asked to speak publicly about where we are at in post-earthquake Christchurch, particularly from an economic perspective. Given the ever changing nature of the recovery I often just speak “off the cuff” without notes, however I am frequently asked for a summary of my address (particularly the facts and figures) which many in my audiences have found of great interest. So here is my up to date assessment of where we are at in the story of the regeneration of Christchurch.

2016 will see us halfway through the reconstruction of our city. We have a total of approximately $32 billion of reconstruction activity out of a total earthquake cost of between $45 and $50 billion. This year we will have spent to date around $17 billion on residential reconstruction, commercial reconstruction and public sector rebuild. The total expected cost of residential repairs is around $12.7 billion, commercial reconstruction will total around $13 billion and public sector/civil reconstruction around $6.5 billion. These costs do not include the costs of land damage, land remediation and regeneration activity outside physical construction. We are currently spending $100 million a week on the rebuild which totals around $5 billion per year. That is expected to continue through to the end of 2018 when it will gradually decline through to 2024/2026.

The good news is we are halfway through our reconstruction; the other good news is we still have halfway to go. Any perception that the rebuild has peaked needs to be eliminated from our thinking. The rebuild has plateaued and we will continue to spend $100 million a week regenerating our city for some years to come.

One of the interesting aspects of the rebuild that is not well understood is the role of insurance. Insurance monies, including private sector insurance of $20 billion and EQC of around $13 billion, is very much underpinning the regeneration of our city. Total insurance of $33 billion being applied to a population of around 360,000 is unprecedented worldwide. Although we have had our issues with the insurance companies the reality is that Christchurch was the best insured community ever to have been struck by a major disaster when measured on insurance cover per capita. Also, when looking at the total cost of the earthquakes, I know of no other community of 360,000 people anywhere in the world that has incurred the damage of $45 billion in such a confined area. We are all living through a unique experience.

The other interesting issue about insurance is how it is playing out in terms of the regeneration of Christchurch. The $33 billion of insurance proceeds is underpinning the rebuild. Just looking at our housing stock $3 billion of insurance proceeds has already been applied to repairing 70,000 houses that had under $100,000 of damage through the Fletchers EQR programme (which is now complete). A further $10 billion of insurance money is being applied to rebuilding and repairing approximately 25,000 houses that had in excess of $100,000 worth of damage or were red zoned or destroyed altogether. We lost a total of around 10,000 of those homes completely.

The really interesting statistic is that of those 25,000 homes, approximately 5,000 will be rebuilt or repaired through insurance managed processes. The balance of 20,000 homes will be cash settled and the cash proceeds will be in the hands of the homeowner to affect the rebuild or repair. We can expect some slippage with some of those insurance proceeds with people deciding to spend money elsewhere, however it is very evident that a lot of people who are repairing or rebuilding homes are applying more money to the rebuild or repair than their insurance company has paid them. This will mean that we are going to end up with a lot of high quality, new, energy efficient, strong and safe homes in our city.

From a commercial perspective we are also seeing a massive amount of insurance money being reinvested into the commercial rebuild in our city. The total of $13 billion that will be applied to restoring the commercial building fabric of mainly central Christchurch will result in a high quality offering of accommodation, hospitality, office and retail space. There are some signs that there may be a short term over supply of office space, particularly in the central city and in the suburbs of Christchurch, as people start to move around and back into the central city. That will be a normal part of the process of regeneration and we can expect a bit of bouncing on the way through in the terms of supply and demand. However, again the end result will be a high quality building stock which is well designed, strong, functional and offering much better accommodation of all types than was the case prior to the earthquakes.

Our civil construction is advancing satisfactorily with the horizontal infrastructure largely due for completion by the end of 2016 at a total cost of around $3 billion. The other civil and public sector investments are starting to manifest themselves in the city. The most obvious of which are clearly evident with the Justice Precinct, Environment Canterbury’s new building, the Bus Interchange and the Avon River Precinct redevelopment all making their presence felt.

The official end date for the rebuild of Christchurch is projected to be 2026 with the tailing off of regeneration from 2018/2019. The opportunities throughout the city and Canterbury, together with the massive challenges ahead in construction across New Zealand, will ensure that opportunities to actively participate in the economy will continue. Christchurch is indeed a city with opportunity and that opportunity in the context of a rebuild is with us for a long time yet.