Spreading It Around

Budgets are not what they use to be and the Budget 2017 is no exception. Much of what Finance Minister, Hon Stephen Joyce, announced in the budget yesterday had been clearly signaled in pre-budget announcements. The increase in social investment, more money for the film industry, more spending on housing, millions to be spent on infrastructure (including Kaikoura), irrigation, schools, money dedicated to conservation and more funds for vulnerable children had all been announced prior to the budget and were simply reinforced in the context of the budget messaging. The new announcements also came as no surprise.

Increases in Working for Families and generally looking after families with lower incomes were clearly signaled before the election. The changes in tax thresholds which also impact on lower income earners were strongly hinted at prior to the budget announcements. The combination of the Working for Families increases and the changes in tax thresholds will cost the Government around $2 billion per year. That is additional money that will be circulating in our communities and that should be good for everyone.

This budget was all about spreading available funds around and pleasing as many people as possible in an election year budget. Minister Joyce is fortunate as he had the ability to do that with the economy in good shape, the Government projecting significant surpluses and the prognosis for our economy being quite bright. That is also the case here in Canterbury as a microcosm of New Zealand’s economy. We can expect things to stay, from a domestic perspective, strong and stable and there is every indication that we can enjoy continuing relatively strong economic growth.

We are a lucky province in what, in the international environment today, can be described as a lucky country.

However, you make your luck. The New Zealand economy is in good shape because of consistent economic policies, but also because of the determination of the business community to diversify, to add value, to innovate and to concentrate on export and tourism growth. With GDP growth expected to be over 3% for the next five years the Governments’ of the future have the ability to flex spending. We can all recall prior budgets where it was all about conserving cash and reducing expenditure. It appears that the Government’s target of reducing debt to 20% of GDP by 2020 is achievable. It also appears that the country is well positioned for unexpected economic downturns. So, all in all a positive unsurprising budget, taking into account current economic conditions and prospects.

However, New Zealand is not without its challenges. There is no doubt that our interest rate levels will have to trend up at some stage in the future and many of us are carrying high levels of debt, particularly with respect to our investment in housing stock. That poses a high risk to certain sectors of our economy. We constantly hear of short fallings in infrastructure, roading, rail, tourism amenities and rural broadband. In a rapidly growing environment those infrastructural shortcomings will be exacerbated. There will need to be a quantum shift in investment in diverse infrastructure in the future. We also face the risk of international volatility and uncertainty. We know that the world economies are doing OK, but we also know that there is a real risk of unexpected economic upheaval, and we live constantly with international uncertainty. This is exacerbated by the increasing tendency for other countries to adopt isolationist policies which will disadvantage New Zealand in an international forum.

So Budget 2017 has delivered some benefits to most of us. It has partially addressed the need to look after those with lower incomes across our economy and it has every indication of a relatively well performing economy across most sectors. We can be comfortable with that, but certainly not complacent. 

Making Democracy Work

Every year the Christchurch City Council (CCC) invites submissions on its Draft Annual Plan or Long Term Planning processes. The Canterbury Employers’ Chamber of Commerce (the Chamber) comprising almost 3,000 companies, the majority of whom are domiciled in the CCC catchment, has always submitted to the Council in an endeavor to fairly represent the interests of the business community.

While the consultation process is appropriate, it often goes under the horizon and participation from most sectors of the community is very limited. We think it is important that our voice is heard and listened to. We work very closely with the CCC on different fronts on a myriad of issues. Fundamentally we have the same objectives which is to ensure that our city and its surrounds have an offering which is conducive to people living and working here. From the Chamber perspective, we also fully understand the interdependence between sustainable, profitable business and community wellbeing. You simply cannot have one without the other. Accordingly, we submit constructively and are appreciative of the open and transparent platform upon which the Council generally operates and its demonstrable accountability to the community.

There are always areas we will disagree on, usually with respect to different ways of achieving the ultimate objective. For example in this year’s submission we have emphasised our desire for the Council to minimise rate increases and borrowings and continue to assess the merits of realising capital through sales of assets that are not core to its operations. We respect the right of the Council to borrow more and increase rates rather than accrue cash from other sources, but we question the merits of that in the context of a sound financial policy.

We have also commented this year on the need for the CCC to be more aggressive in realising the reality of Christchurch for its citizens. We have noted that the Council has proposed a $152 million reduction in spending on its capital works programme which may ease the burden short term but has a critical impact on existing and future capability and capacity. We question the merits of that.

We also noted that in the exceptional circumstances of the recreation of our city it is important that the Crown and the Council are seen to be working constructively and jointly together and we are pleased to see positive progress in this area. It is still however, a work in progress and there is still much to be done.

Of fundamental importance is the need for more clarity on the strategic direction of our city. In other words, what does all the work that is going on in various sectors of the city (whether it be sub-terrain infrastructure, roading, developing the public realm, or Council owned land and buildings) look like?  What is the end game, what does the “big picture” look like and how will all the work going on result in positive and optimal outcomes for all of us? We believe that there would be much more tolerance in the community of the disruption that is occurring across the city as the new city takes shape, if people had a clearer picture of how things will look and function when the job is done.

Finally, we also think it is legitimate for the Council to address shortcomings in current plans through pausing and reflecting on progress to date and different ways of doing things in the future. We do not believe that this city should be bound by existing plans and strategies just because they are there. We are all in this together, it is important that we all have our say, and it is important that as a result of democratic input we get the right result.

Keep an Eye on the Prize

At a recent Business Leaders Forum hosted by the Chamber, there was discussion concentrating on where our city is at, where we are going and what are our challenges? 

Depending on where you are and what stage you are at, those challenges manifest themselves in different ways. We do know however, there are still a sizable proportion of our population that are not in a good space from a housing and social perspective which all of us have a responsibility to address. We know there are a small number of people still struggling with their insurance companies and people who are “repairing the repairs” which is causing frustration. There are areas in our central city that are causing angst, particularly derelict sites, issues around how accessible our city is currently, and how accessible it will be in the future. Of course, there is the gnarly issue of the Cathedral, which particularly from an external perspective, tends to drag the city down. 

These frustrations need to be addressed and addressed quickly. There is always going to be pain as you build a new city after the most expensive natural disaster in our lifetime - there is inevitably a cost associated with that. As we progress the construction of our new city it is important that we recognise why we are going through some pain. It is also important that we move on from Christchurch being dominated and defined by being an “earthquake city” into the new Christchurch with its existing and new offerings presenting a compelling opportunity for anyone who wishes to participate. 

It is clear that 2017 is a tipping point when what the centre of Christchurch is going to look like is more clearly understood and when we move through to 75% of the construction phase of the rebuild being completed by the end of this calendar year. It is therefore timely to consider what are the unique points of difference that our city has and will have which will make it a city of choice, the most liveable city in New Zealand. From this perspective, it is important that we do not lose sight of what was in place prior to 2010: 

This city has a good health system, which is internationally recognised; 
Its education system and the quality of the offerings are unique in New Zealand; 

• We have good infrastructure, which is being replaced as is necessary and it underpinned by an airport operating 24/7 and a port that is expanding; 
• We are geographically well positioned and proximate to some of the most beautiful scenery in the world; 
• We have a balanced economy which has seen us through difficult times and will continue to see us thrive and prosper into the future; and 
• We are a city that is small enough to be easily accessible and big enough to have all of the offerings afforded by larger cities. 

The Business Leaders Forum determined that we should move from being “stuck in earthquake related issues” and we should celebrate the progress we are making. We need to put positive messages out to our employees and we need to move away from our city being defined by the earthquakes. We need to reinforce what makes us different and attractive from any other city in New Zealand or beyond. Those differences are generally positive and underpin opportunity. 

Our city of the future will be defined by the experiences of its residences and its visitors. Members of the Business Leaders Forum all affirmed that they were in Christchurch because it is the best place to live and bring up their families. It is important to share this message with and beyond our city.  

Canterbury Build Magazine Editorial: Mongolia – Much to be Learned

Recently I travelled to Mongolia, to the capital city Ulaanbaatar, to address a seminar on private strategies for disaster resilience mitigation of small to medium enterprises in Mongolia. This seminar was sponsored by the United Nations Office for Disaster Relief Reduction and the International Labour Organisation, with the support of MONEF – Mongolia’s Employers’ Federation.

These agencies were well aware of what had happened in Christchurch and how important the lessons we learnt in Christchurch were from a perspective of optimising business survival. It was a real privilege to be able to appear before a group of interested Mongolian businesses and tell them some of the stories that might have application to the Mongolian community in the event of a calamity.

Mongolia is vulnerable to multiple hazards including storms, floods, blizzards, heavy snow falls, wild fire and droughts. Between 1990 and 2016 Mongolia was hit by 21 disasters that resulted in economic damages totalling almost US $2 billion effecting 4.2 million people.

As the 18th largest country in the world by area with a relatively small population of 3 million people, Mongolia is positioning itself for its future in the context of increased risks from natural disasters. The meeting identified the needs and challenges that SMEs experience before, during and after disasters and from my presentation the learnings that came out of the Christchurch earthquake experience.

The attendees came away with an improved understanding of SME disaster risk protection and increased awareness of the potential opportunities for collaboration to improve disaster mitigation and a better understanding of the practical risk management tools tailored specifically for the business community.

We should never under estimate how important the lessons we have learned in Christchurch are and how relatively well our business community has done in the context of unprecedented natural calamity. There is much to be learned and much to be gained through sharing.

I was grateful to be sponsored to Mongolia which is a fascinating country full of opportunity and challenge. We have played a small part in making them better prepared for the inevitability of significant further natural disasters.