Nailing Our Colours to the Mast

Photographs – Tim Whittaker

Hawke’s Bay now proudly owns a new regional economic strategy (REDS).

Formally titled MATARIKI: Hawke’s Bay Regional Economic Development Strategy and Action Plan 2016, the strategy was announced with ministerial fanfare on July 27.

Ministers Joyce, Guy and Flavell were on hand to bless the plan and bestow a few dollops of government funding (none of it new) to sweeten the occasion.

From those directly involved in its creation, enthusiasm abounds.

Says Lawrence Yule: “This can be a game-changer in how we operate if all the councils and other partners sign-up and participate in the Action Plan. It’s the first time all the parties in the region have agreement on what should happen, who should do what, over what time frames and what are the targets.”

For those still digesting the plan, initial impressions range from cautiously optimistic to ‘show me the beef’!

Texters to HB Today reacted …

“Takes me back 60 years, sitting in a treehut with mates planning great things to do without a clue how to do them.”

“Yea! A lollyscramble, 5,000 new jobs. There must be either local body or national elections coming up.”

“Sounds like a great idea to help this area go ahead as a joint initiative. Let’s hope the knockers that hold the area back look at the big picture and stay in their dark burrows.”

So, what does Matariki: REDS mean for Hawke’s Bay?

Jobs … try harder

It’s fair to say job creation is the heart of the proposed strategy. The aim is to accelerate job creation, creating 5,000 net jobs over the next five years. Complementing that goal are two others: increasing the region’s median income above the national median, and raising HB to the top quartile of NZ regions in terms of growth rate and sustaining that position.

Within the job goal, 1,000 jobs are targeted to come via Project 1000, a new initiative that will link local people on benefits to 1,000 new jobs over three years (Yule wants to see the first few hundred jobs flowing from this within a year). Says the plan:

“Government agencies will work closely with employers and training providers to support those people into employment opportunities in key growth areas such as horticulture, viticulture, manufacturing and improved alignment of local infrastructure projects.”

One aim is to grow the Bay’s cadre of local skilled full-time workers as our orchardists and veggie growers seek to expand and wean themselves off so much seasonal labour – 30% of which is currently filled by imported labour.

In the BayBuzz interviews, players involved in developing Matariki were quite modest about its actual content. No intellectual or policy breakthroughs were cited – “these ideas have been around a long time,” said one. And programmes already offered at EIT and others like Youth Futures – supported by local business, territorial councils and MSD – aim at providing viable ‘pathways to employment’.

The challenge of lifting a regional economy that is so seasonably based is longstanding, as is the challenge of better aligning training of locals to meet the skill requirements for jobs that are actually available.

As the strategy puts it, we “need to train people to be work-ready, who can then be matched with ‘employee-ready employers’. We’re also talking about creating a skilled and resilient population that is equipped to thrive in an uncertain future.”’

At this point, the plan is short on details about how the ‘new’ workforce goals will be met or existing programmes expanded, accelerated or improved. In a nutshell, the strategy is ‘try harder’.

So where does the positive buzz around Matariki come from?

Family/Whānau focus

One positive aspect everyone notes is the focus on lifting families and whānau now struggling in the lower reaches of the HB economy. Alasdair MacLeod praises the “much higher degree of social inclusion” in this plan as compared to previous efforts.

“This is not about economic development for the sake of economic development … or make a few individuals vastly more wealthy.”

As the strategy observes:

“We still have much to do particularly for our high-needs communities and our children: a third of our children are growing up in poverty and nearly half of Māori under five are living in households that depend on benefits. It is critical that opportunities and benefits of a thriving Hawke’s Bay economy be accessed equitably … Bridging the equality divide in the region must be central to all attempts to drive economic development.”

This is a focus that excites Ngahiwi Tomoana, chair of Ngāti Kahungunu, the region’s largest iwi.

He notes that the strategy process got off to a shaky start when minimal effort was made to confer with the region’s Māori community. Effectively the process was given a re-boot, and very extensive consultation was then undertaken, leading Tomoana to give the final process and product his strong endorsement.

“Economic development is about the people and the land, rather than just money and finance. Once we established that we got very engaged.”

Other key players in the process – like NCC’s chief executive Wayne Jack, who serves as chair of the Governance Group, and Stu McLauchlan, chair of Business Hawke’s Bay – are proud of the support the project has won from Māori leaders in the region and the ‘social conscience’ the strategy displays.

To Tomoana, the strategy is not just “jobs, jobs, jobs” as admirable as that is, it is also about how people’s lives must be improved, with all parties – councils, DHB, EIT, business, government – bought into that objective.

It is also about integrating Māori business aspirations – and the investment capital that will become available from Treaty settlements – into a common plan for the region. He points to the example of Wairoa, where there are 10,000 acres of undeveloped Māori land that could be developed into a horticultural hub – “a mini-oasis” as he terms it.

As Tomoana sees it, Māori are just beginning to be recognized as the equal partner they can be, including as co-investors, as “contributors to the solution” in achieving the region’s growth.

Partnership

Asked what excites him most about this project, Alasdair MacLeod (who guided the project team) responds emphatically, “the spirit of partnership”. More than anything, the enthusiasm of Matariki developers stems from the broad buy-in that has been achieved for the strategy from stakeholders in the region, plus government.

Stu McLauchlan, chair of Business HB, credits the process with “bringing a lot more diverse groups along the journey … there’s an expectation now and a buy-in where more stakeholders support the strategy and want to see it make a difference this time.”

Lawrence Yule, Ngahiwi Tomoana, and Wayne Jack, all emphasize this accomplishment. As do other leaders interviewed by Keith Newman in the article that follows.

The diverse range of participants include the region’s five councils, Business Hawke’s Bay, DHB, EIT, Ngāti Kahungunu as well as hāpu and treaty settlement representatives, HB Tourism, and government ministries like social development (MSD), primary industries (MPI), and business, innovation and employment (MBIE) and NZ Transport.

Partnership means more than friendly involvement. The acceptance by the partners of specific lead responsibilities is touted as a critical step toward future accountability.

MacLeod sees partner accountability for delivering on the Actions as a key difference with previous plans.

His “personal” view: “I would like to publish an annual plan of what we collectively agreed we’re going to achieve, and then be held collectively accountable for it.”

He continues: “I would like to see us nailing our colours to the mast and say this is what we’re going to deliver as a joined-up region, and here are the people who are going to deliver the various bits, and here’s how we will measure success.”

Amen! While there’s no doubt that impressive collaboration has gone into the strategy, and everyone involved is presently singing ‘kumbaya’, the test of collegiality that matters will come now as the strategy moves to its implementation phase.

Who’s in charge?

The first two steps toward ‘formalising’ the buy-in claimed to exist, and ensuring ongoing momentum, are political.

The very first Action item behind the strategy reads:

“Undertake a stocktake of the organisations involved in economic development in the region and recommend the regional economic development model to give effect to this strategy.”

Or more plainly put: Who’s going to be in charge?! And what will be the accountability mechanisms? Says Yule: “There must be transparency around how we’re doing at meeting the plan goals. If it’s not happening, why not?”

This task is assigned to the project’s Governance Group, consisting of the chief executives of the region’s councils, DHB, EIT, Business Hawke’s Bay, NKII and others.

No single entity can be responsible itself for implementing the full range of initiatives contemplated by the strategy, but there clearly needs to be a driver of the process … perhaps a regional economic development agency (EDA).

This entity would establish milestones, help coordinate multi-partner projects, monitor and report progress (or lack thereof), identify gaps and bottlenecks, help minimise duplication and competition, and in some cases directly implement projects of its own.

To some, the most logical organisation to fi ll this role is Business Hawke’s Bay (BHB), given that the central goal of Matariki is to drive job creation, with all other initiatives positioned as ‘enablers’ to facilitate that objective. Ultimately it is current and potential businesses that will need to grow and supply the jobs.

BHB has built some credibility through its strong board and its roles with the new Business Hub, helping land Jetstar, and its Callaghan (business innovation) and agri-business projects. It enjoys existing relationships with councils and government agencies.However, BHB would itself need a make-over to play such an expanded role.

Currently BHB operates on a shoestring budget of roughly $500,000 per year, with a director and two part-timers who deliver the programmes the organis ation is already committed to. BHB is simply not resourced to serve as the driver of Matariki’s multi-faceted economic development strategy.

Importantly, whether BHB or starting from scratch (yet again) with a new ‘delivery model’, funding will be a key matter that must be addressed. But it can’t be formally settled – assuming councils’ funding is involved – until the next fiscal year, beginning in July 2017. Meantime, it is expected that councils, and Government, will tap existing funds to keep the initial implementation planning moving.

As Wayne Jack emphasises, “We’ve got to get the governance right.”

There is a wide range of partners with significant responsibilities, healthily engaging with one another, who must be coordinated, occasionally prodded, and monitored. “But if we go too big, it becomes difficult to manage.”

So, if BHB were an option, its own governance, now limited to business heavy-hitters, would need to become more representative of the partners who have bought into the strategy.

Alternatively, a governance body needs to be created that BHB would be accountable to in its coordinating role.

More modestly, MacLeod would welcome “just a small group that looked at truly regional things” and clear “non-compete agreements” among local authorities.

“What drives me nuts is sub-sets of regions playing zero-sum games. It’s a waste of ratepayer and taxpayer dollars … it’s got to stop.”

Which raises the question of what happens to existing economic development units/staff already implanted at the various councils.

One can expect that delicate politics will be traversed as either a ‘regional EDA’ (which might re-absorb Tourism HB), or a more limited ‘coordinating secretariat’ not ‘owned’ by any partner (an EDA-lite), is constituted, given its mandate and jointly funded. A recommendation on this is due to councils in October.

Political involvement

Which brings up the second political issue – securing councils’ involvement and approval going forward.

Matariki has been driven largely by a team of executives and managers from councils and other key units like DHB and EIT. Moreover, at Government insistence, the process, until the 27 July unveiling, has been extraordinarily secretive.

Elected councillors have been totally in the dark, which some onlookers, including ratepayers, might find worrisome. So councillors are only now beginning to learn what responsibilities the strategy ‘assigns’ their councils, with much detail still to be worked out.

Consequently, for all the talk of buy-in and everyone being on the same page, ‘buy-in’ on the part of the region’s five councils is actually yet to occur … and could prove contentious.

The Government’s continuing participation must also be sorted. MacLeod calls the government support for the project a “game changer” and hopes that improved relationships built through this process will yield better future outcomes on infrastructure issues like roading and broadband expansion. He’s also a big fan of the Senior Regional Officer.

Throughout the development process, a government intermediary, Carl Crafar, was assigned to the project and sat on the Governance Group. Crafar, on loan from MSD, carried the title Senior Regional Officer.

His role, reporting monthly directly to the ministers concerned (chiefly Joyce, Guy, Flavell), was to serve as the interface between the local team and the government agencies that would also have roles in developing, implementing, and possibly funding (in part) the strategy.

Or as he puts it, “the conduit between the ground and Wellington” … a role our locals have found very valuable. Crafar is especially pleased with the Action items and the assignment of accountable lead partners for each.

He will continue as Senior Regional Officer, “making sure that we all deliver against the parts of the plan we publicly committed to.”

Importantly to Crafar, that means local representatives of lead agencies like MSD, not just Wellington, must own their partner responsibilities in the Action plan and be held accountable.

One other key Action initiative of Matariki should be mentioned for its political sensitivity. The strategy proposes that all major infrastructure projects in the region be consolidated into a master plan and schedule. This includes all the major capital expenditures of the five councils, DHB, the Port, and central government agencies. Presently on the books of these entities is an estimated one billion dollars for long-term infrastructure spend.

The concept is to attempt to better sequence and make public these projects, so that the required labour skills are trained and available.

Otherwise, demand for the relevant skills – from engineers to trades – will exceed supply, costs will be higher, and jobs will be filled by temporary workers from outside the region.

There is compelling logic to this scheme, but it will require the major players to adjust their own capital spending schedules (presumably each driven by real need) to each other – arguably, do we build a new wharf for the Port first, or a new wing for the hospital, or prison? Napier City Council has the lead in fleshing out this concept.

What next?

High expectations have been created. When will we see things happen? Key drivers of Matariki, Alasdair MacLeod and Wayne Jack, expect much more specificity to emerge by year’s end, accepting there will be some election season lull:

• Timelines for each of the Action items will be fleshed out;
• All parties will be clearer about their responsibilities;
• A monthly reporting system will be in place
• Interim funding to sustain the process will be identified; and,
• The recommended “economic development delivery model’ – a BHB-grounded EDA or something else – will be put to councils in October.

Accomplishing those steps is the short-term test of the Matariki strategy. Success with even these initial implementation tasks will require collaboration by councils and other partners on an unprecedented scale… going well beyond agreement on concepts (many familiar already) to willingness to yield turf, alter programmes, sort personnel, commit to funding.

Only then can we see whether Matariki might jolt the regional forward or quietly lose momentum.

Stu McLauchlan gets the last word:

“It’s a good start; now the real work begins. Execution is the key … There will be huge disappointment and consequences if we don’t get this right.”

Matariki Action Steps

Moving beyond its broad job and income goals, what concrete initiatives are embedded in the Matariki strategy at this point?

The strategy incorporates 45 ‘Actions’, with each assigned to a lead agency with key partners. Numerous Actions still lack specificity; others seem to be simply re-statements of activity already underway in the region. And there’s jargon galore.

Among the more specific Actions (should be easy to see if these progress):

• Project 1000 – as described above;
• A package of funded roading projects – SH2, Port access, SH38 (but already in the pipeline, merely brought forward);
• Decide what the ‘delivery model’ will be – who/what entity will drive the process going forward?;
• Establish a coordinated approach to major infrastructure projects;
• Expand National Aquarium into marine research;

Among the more vague (plenty of work here for consultants):

• Develop the business case that defi nes the region’s “sustainable competitive advantage”;
• Develop the “research and evidence base to support strategy implementation”;
• Establish Regional Research Facility “to help optimize regional assets through innovation-led productivity growth”;
• Support development of emerging Māori business leadership;
• Establish incubator for small businesses;
• Better digital connectivity outside urban centres;
• Adopt common approach to consenting and regulatory approval;
• Research the HB “productivity gap”.

Among the already happening (one would hope):

• Develop school-industry-tertiary partnerships to develop vocational pathways for HB students;
• Conduct feasibility studies for investment in Māori business growth;
• Identify promising start-ups and potential high-growth firms in the region;
• Identify land to support new business growth;
• Work with primary producers to ensure productivity gains deliver alongside improved environmental performance;
• Identify new food and beverage opportunities for HB businesses;
• Develop strategy to attract businesses, investment, migrants to HB;
• Improve collaboration among organisations tasked with tourism development – products, events, infrastructure.

One might find it disappointing that many of these ‘Actions’ – representing Regional Economic Growth 1.0 – aren’t already far along in Hawke’s Bay. In some cases, like tourism promotion, they are; the problem has been duplication and competition amongst the players.

In other cases, like offering education and training tailored to Hawke’s Bay actual job opportunities, appropriate initiatives exist but need to be expanded.

Accomplishing these Actions will indeed require buy-in from all the relevant parties in the region.

Wayne Jack calls it “an ambitious start” and “a living plan”, with the expectation that some projects might not prove out and be dropped, and other projects added as gaps or opportunities are identified.

Aspirational Buzz Words Need Detail

Keith Newman

Local influencers spoken to by BayBuzz applaud broader cross-sector involvement in the new Regional Development Strategy (Matariki: REDS).

However they wonder about the dearth of detail; the lack of ‘out of the box’ thinking; failure to include health, sport and social elements; and how to remove bureaucratic obstacles and keep the big picture from fragmenting.

The Matariki action plan is full of aspirational buzz words. Scratch deeper and there’s not yet a lot of substance to support bold promises like making Hawke’s Bay the most innovative region in New Zealand, the leading exporter of premium primary produce, and a hub for business growth.

Regional councillor Alan Dick and others remind us this is the latest in a long line of mostly short-lived attempts at boosting Hawke’s Bay, the most recent being Vision 2020 and Venture Hawke’s Bay, which largely failed because everyone continued to do their own thing.

While five councils, the Chamber of Commerce and Business Hawke’s Bay drove things, the focus remained on tourism and a relatively narrow view of business.

Dick says business mentoring, for example, stalled after two years when a review found weaknesses “when this thing emerged from the shadows”.

On the positive side, he says, Business HB and HB Tourism are now significantly better resourced than they were, and funding shouldn’t be an issue with other projects, including iwi and post-settlement entities, which have their own resources.

Dick’s hope is the final governance structure will provide greater delegation of responsibility rather than having one organisation at the centre.

Bigger thinking needed

Medical entrepreneur and Sileni Estate co-founder Graeme Avery believes REDS will need private sector leadership, with an independent chief executive skilled in “venture finance and innovation process management” to galvanise all the parties in a public-private partnership model.

He says “much bigger thinking,” and innovation than the region has so far demonstrated will be required to unleash undeveloped economic potential.

The sharp end, says Avery, will require strong cohesion to develop and deliver on all the 45 Action plans, with big gains coming from thinking about “what is best for the region, not its component parts”.

We’ll need to attract venture capital “for development and commercialisation of ideas and a multi-partner team to develop strategies for success,” says Avery.

Napier Labour MP Stuart Nash agrees “out of the box thinking” identifying our national competitive advantages and how we’re going to leverage these is missing from REDS.

He’s hopeful that beneath the “consultant speak” is detailed work setting out how goals and objectives will translate into reality with measurable outcomes.

“Moving away from a reliance on primary industries is a must. Relying on a sector that is dependent on variables we have no control over (weather, commodity prices and exchange rates) is a risky strategy.”

And Nash says the document “completely glosses over the real social challenges we have in the Bay despite the vision supposedly being about “every household and every whānau”.

Beyond seasonal economy

Jerf van Beek, who heads the seasonal labour effort for Horticulture New Zealand and PickHB, bringing in about 3,500 Recognised Seasonal Employee (RSE) workers, says REDS’ “common objectives are well meaning”.

However, the region needs to move on from a seasonal economy base to one that offers full-time employment for those living here which would “solve the majority of our social problems and raise the standard of living for those who need it most.”

One of the things Kevin Snee, the CEO of Hawke’s Bay District Health Board, is keen to see is an open dialogue on large building projects so the region can ramp up its capacity.

“Signifi cant building work needs to happen in a joined-up way so we can use local businesses with the right training and ensure EIT has the right number of skilled people coming through.”

The DHB, for example, expects in excess of $300 million in construction projects over the next decade; Snee believes that with other public agencies added, total construction will top a billion dollars.

Building at the same time could drive prices up with work going outside the region, whereas staggering large projects would ensure local construction firms, contractors and tradespeople had ongoing work.

Snee says jobs are needed in all sectors of the economy, not just seasonal work, but jobs that “upskill and take the community somewhere”.

Engaging with youth

For Hastings CEO Ross McLeod the buzz is about more youth training and matching young people to full-time employment through greater engagement between employers and agencies.

The stars seem to be aligning. There’s central government investment, the economy is in good shape, there’s competition for workers, and those near retirement are creating opportunities for young people.

McLeod says this fits well with Youth Futures efforts to equip and train those heading toward the welfare line, and a more engaged approach from iwi saying “we want our young people to succeed”.

Councils processes can be an impediment to business growth and efficiency. Holly Bacon CEO and entrepreneur Clair Vogtherr wants councils to become enablers rather than enforcers of compliance.

“It’s a truly staggering situation” that each council in the region has different rules and regulations.

Imagine, she says, the investment in homes, businesses, development, spending and employment that would be freed up if consents were fast tracked, or the first response to any reasonable interaction with council was, “How can I help you achieve that?”

Vogtherr applauds the recognition that many households are dependent on the success of small to medium businesses and the fact that Māori youth, with mentoring and investment of settlement money, have the potential to become some of our greatest business resources.

Fit for purpose

Graeme Avery is concerned that health and sport seem to be missing from the plan. “A healthier community is an integral component of a more prosperous and vibrant economy.”

He’d like to see intervention programmes – addressing physical inactivity from birth right through the education system – to reduce the large economic burden of a potential regional obesity epidemic.

Avery says hundreds of millions of dollars in productivity are lost throughout the country annually through physical inactivity, noting that “Hawke’s Bay has the highest regional rate of inactivity and obesity”.

Sport has a fundamental role to play in a thriving economy.

“Winning in sport has a major social benefit impact through enhanced self-esteem and development of leadership skills.”

Kevin Snee says there will always be gaps in any strategy and that’s why he views REDS as a living document, something dynamic that will change as we learn to do things better.

A “sister” social inclusion strategy is being prepared, targeting “underlying social problems that exclude people from the mainstream of society”.

Ross McLeod agrees REDS shouldn’t be seen in isolation but as part of a central government roadmap with further support, processes and projects ahead.

For the first time since he came to the Bay in 2009, Snee is witnessing a greater willingness to work together. Good Things Grow Here and the discussions arising from the amalgamation debate seem to have changed the tone of regional engagement.

Alan Dick thinks leadership could be an issue “keeping people on side and enthused”. Then there’s a risk of doing the same old thing again if we don’t learn from the past. “Most people’s memories are fairly short”.