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Will a Dam Bring Them Back to the Bay?

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Stuart Nash07 November 2012

There is no doubt that a visionary economic development agenda is a must for Hawke’s Bay. Our high unemployment and social deprivation stats are a damning indictment of the province’s inability to attract new businesses and industries to replace those that have either significantly downsized or disappeared.

The Ruataniwha Water Storage scheme is being promoted by the HB Regional Council as the single biggest economic development project for decades. In terms of total spend, this is undoubtedly true. The question is, however, if given a choice as to how to spend $600 million driving economic development, is a dam the best use of scarce funds?

We all know the Hawke’s Bay economy is heavily dependent on primary industries. There is also no argument from me that controlling the ability to access water year round would improve economic output and financial viability of many of the farms located in the Tukituki catchment, especially in drought years.

The recent Prosperity Study noted that the region’s economy is heavily influenced by commodity prices, exchange rates and climate. It also noted that “across the HB economy there is a relatively large proportion of low-skilled and low-paid jobs. Many jobs are seasonal as they are related to the production cycle of the primary industries.”

In terms of jobs paying over $100,000, Napier, for example, is in the bottom 15% of all electorates while over 56% of people earn under $30,000. In fact, all the stats tell us that, by-and-large, Hawke’s Bay is a poor performing region in nearly every social and economic indicator.

We may have the sunshine, the wine, the Art Deco and the summer concerts, but for many, Hawke’s Bay is not the paradise marketed to outsiders in the glossy tourist brochures.

The Ruataniwha dam project will create employment, but it will largely be the type of jobs that are currently taken by seasonal labourers on the RSE scheme who come in to pick our fruit. As many will know, we have an immigrant workforce that comes into the Bay around November and leaves once the picking season is over. They are very efficient and the fruit growers love them due to their work ethic and reliability. While I don’t doubt their efficiency, the problem is that nearly every dollar these workers earn is sent back to the homeland. Very little is spent in the local economy.

The Minister of Immigration says it is wonderful for our foreign aid programme. That may be the case, but it is dreadful for our local economy and struggling communities.

The jobs created by the development of the dam may well be the same. Many of the agricultural labouring jobs across the country these days are taken by Filipino workers. Again, because their work ethic is tremendous and they are prepared to work long hours for very little.

Low-skilled, low-waged forever?

But this begs the question: what sort of regional economy do we want to build going forward? Do we really want to be a low-skilled, low-waged region wholly dependent on agriculture and horticulture? Is the economic reality such that we have no hope of attracting the type of businesses and industries that bring high-skilled and high-waged jobs? Are we really the epitome of what is happening in this country, where we train people in some of the best schools in NZ only for them to leave and never come back because ‘there aren’t the type of roles I do here’?

Stuart Nash

If I believed this I would pack up and leave, but I don’t buy into the argument that we are not in control of our own future and must remain reliant on commodity prices, the exchange rate and climate.

The Regional Council and the Government are about to spend $600 million of our money on improving what we have always done: farming and horticulture. We may become more efficient at doing the same, but we will still be reliant on the same variables that have seen our province’s performance nose-dive.

How to spend $600 million

What is the solution? I don’t have all the answers, but I do have a lot of ideas about how I would drive economic development if I had a budget of $600 million, so here are just a few:

  1. If I were Napier City Mayor I would use the city’s leasehold commercial land to attract businesses into the city. For example, there is a high-profile section of undeveloped commercial leasehold land on Meeanee Quay that has been for lease ever since I have been back in Hawke’s Bay. I would offer it at peppercorn rent to any developer who was prepared to build a five-story office block and tenant it with floors of professional people earning decent money.
  2. If I were Minister of Economic Development I would work very closely with my ministry, the Napier City Council, Ray McKimm and the ICEHOUSE Business Incubator CEO Andy Hamilton to see what we could all do to ensure that the ICEHOUSE’s proposed Napier business incubator satellite was a total success.
  3. If I were the Chair of the HB Regional Council I would commission a study to identify the expanding significant industry clusters and then ensure that we provided whatever it took to get them to locate to the Bay. If we had to provide the land for expansion or rating holidays or even build facilities that we could lease back, then it would be investigated with a view that we will do whatever it takes to secure the economic future of the Bay.
  4. Most importantly, no matter what position I held, I would seek the advice of industry leaders, both within and outside the Bay, and then come up with innovative strategies necessary to drive a different type of economic growth in this region. But first of all, I would ask Rod Drury what it would take to get the growing number of cloud-based companies to locate major operations in Napier, and then I would do whatever it took to get them here.

We do have fantastic schools, a great climate and a reasonably good infrastructure. Given $600 million to invest, this place could be a high-end manufacturing hub, a financial services location, a centre for innovation, research and development, a site for industry clusters as they collectively take on the world from the Bay. The future is only limited by our imagination and ability to be bold and work damn hard towards implementing a vision for how we want Hawke’s Bay to look in 20, 50, 100 years time.

Maybe damming the Tukituki is the best use of over half a billion dollars of economic development money, but I would like to think we could do better. If your kids plan to leave the Bay after finishing secondary school or are already at university or living elsewhere earning decent dollars, then the odds are that this Ruataniwha dam project isn’t going to bring them back to the Bay.

Give me $600 million to spend and I reckon in 10 years time I could get rid of the excuse: “I would absolutely love to bring the kids back to the Bay mum, but there just isn’t the type of job I do in Napier.”

Stuart Nash07 November 2012

2 responses to “Will a Dam Bring Them Back to the Bay?”

  1. Oliver Styles says:

    Over the last few years John Rentoul, a journalist with the UK’s Independent newspaper, has famously collated (and published) a series of headlines to which the answer is ‘no’. Having read Stuart Nash’s emphatic piece in your latest issue I feel compelled to point out that his ‘Will a Dam bring them back to Bay’ should join that august collection. Nonetheless, there are, I believe, several important issues that are contained within it, and that are raised from the Ruataniwha Water Storage scheme.

    The first issue that presents itself is that of working rights and pay. Nash’s piece – and many others (not least the ridiculous Prosperity Study document) – point out that the Hawke’s Bay is a poorly performing region on the Social and Economic scale. Nonetheless it appears that this doesn’t prevent primary industry here exploiting seasonal labour from overseas.

    I’m sure, as Mr. Nash states, our fruit growers ‘love them’. Perhaps if they were to extend that love to the unemployed of this region, who have the temerity to expect decent hours and a decent salary for even seasonal work, we might go some way to improving the region’s social and economic outlook.

    A simple glance around some of the nicer neighbourhoods in Hawke’s Bay would lead many people to the conclusion that there is, contrary to statistical assumptions, quite a large amount of wealth resident here.

    I believe the key to this region’s future lies in redistributing that wealth. How we do that can and should be debated but it will not come from a publically-financed scheme to maintain the current level of exploitation in, and dominance of, primary industry (which is what the dam project is essentially proposing).

    To assume that stimulating primary industry is going to somehow have a drip-down effect on the populace is about as constructive as proposing to sell our orchards to Chinese or Korean agricultural conglomerates.

    If the outcome of a dam is increased dairy farming (or any farming), in agreeing to it the Hawke’s Bay has surely rubber-stamped one the worst possible sectors for job creation relative to size. Indeed, if Mr. Nash wants high-skilled, high-waged jobs to be created in the Hawke’s Bay even he must know a dam is utterly the wrong direction to take (unless, perhaps, we refer to the architects and engineers that build it).

    Of note is that it appears the ecological parameters of this project are also gently being dropped from the debate. They should never have been seriously discussed.

    While many might view as cynical the approach of Te Taiwhenua o Heretaunga in opposing the dam but demanding a 10 cent levy on every cubic meter if it does go ahead, we should not feel that the Maori can be alone in demanding a return on this. All ratepayers are equally entitled to profit from the scheme – not least if they are asked to fund it.

    I suspect, however, that the project will be moved into the private sphere where its intended beneficiaries always lay. Even if one believes the Hawke’s Bay Prosperity Study (a document whose sole environmental concern for the region is – suspiciously enough – that of water supply) in which it has the gall to advocate diversification of business in the region, any sane person must ask themselves why it lauds so rhapsodically a scheme that is even more of the same – a further expansion of (and thus dependence on) primary industry.

    It is a consistent pattern (not just in Hawke’s Bay, or New Zealand) that fewer people are doing more work for less money. If the Hawke’s Bay is to prosper as we wish we have to start demanding to see more of the money that is coming from this region and our labour. And I am not referring to migrant Filipino workers sending a few hundred dollars back to their families.

    I can only conclude that for the people of the Bay, the best way to stimulate economic development here is to give all the inhabitants of the Heretaunga plains an equal share of the funds available for their benefit. At $600m, I calculate we’re talking of about $3,500 per person. Even at the cost of the dam (around $250m) that policy would give every adult about $1,500. I guarantee you greater prosperity in Hawke’s Bay as a consequence of that than I do of any dam.

    Sincerely,

    Oliver Styles

  2. Paul Paynter says:

    As a significant employer of RSE workers there are a couple of points to make.

    Firstly they make up about a third of our seasonal workforce. We work closely with WINZ and the quality of staff we’re getting from them now is better than it has been for years. With higher unemployment NZ people have been and will continue to be the biggest component of our staff. The RSE workers seem to dominate the workforce only because they are more conspicuous.

    Secondly, Mr Nash states that very little of their earnings are spent here in HB. That is not our experience. The RSE workers can only take home their savings. Most of their income is spent on costs of living. Beyond that they spend a great deal on goods to take home, rather than money. We’ve coordinated shipping containers for them, which they once filled with endless mod cons. Our staff come from Tsunami ravaged villages and in recent years their spending has been more focussed on tools and materials for reconstruction. These workers appear to take little money home, on the basis that there are few shops in their villages in which to spend it. I suspect 80% of the money stays right here in the bay.

    Finally the big drive in fruitgrowing in the western world is towards tree architecture that is suited to mechanisation. Labour costs here are very significant and future prosperity will be based on improvements in labour productivity.

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