- Rod Oram presented on reinventing Auckland's economy at a Green Growth Symposium.
- Currently Auckland's economic growth is slow, exports make up a small percentage of activity, and key industries are small and slow growing.
- The plan targets higher long term growth through focus on sectors like food/beverage, marine, and tourism, but these sectors face constraints to large increases.
- Auckland needs to attract more foreign direct investment to capitalize on knowledge and resources to build export industries, which sustainability initiatives could help enable.
2. Slowth
• No faster after recession than before recession (or before 2008 election)
• …need 2x faster to close gap with Australia by 2025
3. Urban New Zealand
• As a nation, we largely define ourselves by our rural and wild parts
• …and we believe rural business underpins the national economy
Y t ’ f th t b i d l ti i th ld• Yet, we’re one of the most urbanised populations in the world
• …87% of us live in towns and cities
• …most people earn livings far removed from the rural economy
• Our urban places are in trouble….
• …their built environments are increasingly unsustainable
• …their economies anemic, inward looking, g
• Christchurch pre-earthquake had a lot of marginal businesses, buildings
• Auckland mainly serves only its own population
• Wellington’s tourism & events strategy earns little; public sector shrinkingWellington s tourism & events strategy earns little; public sector shrinking
• Dunedin is slipping away
• …and every smaller town has its own story to tell, positives & negatives
• Challenge:
• Reinvent, reinvigorate our urban communities and economies
4. Low urban density
• Low density uneconomic:
• Makes good infrastructure more expensive
• Reduces network effect of wealth generation• Reduces network effect of wealth generation
• …and we invest piecemeal, behind the growth
5. Aucklanders navel gaze
O 9% f ’• Only 9% of Auckland’s economic activity is exports…
• …Auckland’s businesses are intensely domestic
• We won’t remain an attractive place if we can’t afford too invest…
• and we can’t invest unless we earn a bigger living in the world economy• …and we can t invest unless we earn a bigger living in the world economy
6. Auckland – current economyy
• Existing growth drivers fading or shrinking
• Housing boom…and downstream jobs
• Low wage low skill large footprint activities running out of people land• Low wage, low skill, large footprint activities running out of people, land
• Some promising growth sectors
• Particularly in marine niche high tech manufacturingParticularly in marine, niche high tech manufacturing
• …but they are small scale, slow growing, vulnerable
• …and some inherently low value, volatile…and some inherently low value, volatile
• …tourism (at least as we currently sell it…short-term distractions)
• Challenge:g
• Helping people develop high growth, resilient businesses
7. People, planetp , p
• Vision 2050
• A very challenging roadmap
for corporate development byp p y
World Business Council for
Sustainable Development
10. Innovation
How Green Will Save Us: September, 2009 edition:p ,
“There is no alternative to sustainable development.
“Our research shows that sustainability is a mother lode of
organisational and technological innovations that yield both
bottom-line and top-line returns…
…In fact, because those are the goals of corporate, g p
innovation, we find that smart companies now treat
sustainability as innovation’s new frontier.”
11. “The future redefined”
• Further evidence of the same big drivers…
• …from PWC’s 2011 survey of APEC chief executives
14. Auckland’s economic development planp p
• Current long-term growth rate 2.1%:
= GRP of $85bn in 2031, of which exports $17bn
• Target long-term growth rate 5+%:Target long-term growth rate 5+%:
= GRP of $190bn in 2031 (2+x)…of which exports $60bn (3+x)
• If achieved, Auckland would rise 20 places in 20 years in OECD rankings ofIf achieved, Auckland would rise 20 places in 20 years in OECD rankings of
city regions…from 69th out of 85 currently
• The Plan focuses on seven sectors:
•Food & beverage mfg; marine; screen & creative; tourism; ICT;
health; and export education
Pl tti th• Plus cross-cutting themes…e.g:
•Auckland as an Asia Pacific innovation hub
•Internationally connected
Vibrant and creative world city•Vibrant and creative world city
15. Some issue arisingg
• The seven sectors are currently small..e.g:
• Screen & creative = 2.5% of GRP; food & beverage mfg 3%;
marine 3%; tourism 4%; and ICT 7%marine 3%; tourism 4%; and ICT 7%
• …and slow growing:
• Typically, their export growth rates are less than half the rate requiredyp y, p g q
• The plan foresees productivity growth of only 2%...
• …which means the sectors’ growth must come from volume increases
• …but what are the human and physical constraints to that?
• Innovation requires a rich, complex ecosystem...
b t f ff th• …but we are very far off the pace
• Where’s the business involvement in the strategy?
• Auckland will be an eco-city with ambitious targets on e.g. GHG reductions
• But where are the plans and economic strategy for delivering that?
16. Foreign investmentg
• Auckland – and any other city and the country at large – must attract
far more and different inbound foreign direct investment to meet its goals
• Current stock of inbound FDI in NZ: 59% of GDP
• Auckland attracted 55% of the new investment 2003-09
• Of the money attracted to NZ 2003-09 (very typical of the long term pattern)
• 55% sought domestic market share (largely Australian investors)
• 40% sought cheap labour or other efficiencies (ditto Oz)
• 4% sought to capitalise on knowledge here
• 2% sought resources here
• Challenge:
• Auckland needs to attract triple the flow of FDI
• All FDI must capitalise on knowledge and resources here to build large
e port ind stries to benefit the in estors and the ider economexport industries to benefit the investors and the wider economy
• We can…if sustainability is our springboard