Thankfully the 2009 economic roller coaster is behind us. 2010 is still going to be challenging, although with  the credit crunch is well behind us and business confidence levels rising, we  have a  more stable – if not positive – outlook. Sadly in Hawke’s Bay, we are still suffering some residual outcomes of 2009 both in the property market, employment  and some export businesses who are still very fragile.

For Hawke’s Bay, the Chamber of Commerce has made some tentative forecasts based on consensus material from the pundits.

  1. Residential property sales will increase, but be limited by listings.
  2. House prices will gradually edge up.
  3. New residential building  consent numbers will increase, with substantial lift towards middle/end 2010.
  4. The New Zealand big picture recovery will be gradual at best.
  5. Fiscal pressure may result in  tightening government spending.
  6. Inflation will be within the Reserve Bank’s target  band over the next 18  months, and this is exacerbated by strengthening currency.
  7. The NZ dollar will persist at a higher-than-wanted level, despite going against the domestic fundamentals, with downside effects on exports.
  8. And the Official Cash Rate will go up no later than mid-year, affecting all borrowing costs.

Growth will be slow and gradual, but it will be growth. The government stimulus package of major works will finally have some effect in Hawke’s Bay, with the major roading projects underway and some commercial construction. And our export markets – particularly China, SE Asia  and Australia – will be positively active.

We must recall NZRB’s Dr Bollard’s urging that we do not go back to the boom and bust thinking of unrestrained consumption of other years. Some rebalancing must go on to push sustained productivity and export growth. Not easy, but Hawke’s Bay retains the fundamentals in its export orientated economy and the strong entrepreneurial energy of its businesses.

So what locally do we need to move towards more sustained growth and employment? I think we have to take some positive steps to learn from the problems of 2009.

Firstly owners and managers have to pay more attention to business fundamentals — cash flow, real profitability, marketing and productivity. Nothing new in this, but in the last few years when money was easy some of these base matters were overlooked or taken for granted.

Secondly, again for the private sector — active and up-to-date business planning must be a priority. Banks and other lenders are looking more to this than ever before … and besides, it is simply good business practice.

Thirdly, in Hawke’s Bay and the national economy generally we still must get rid of the regulatory overhead cost. The National Government has an active process here, although apart from some initial changes to the RMA we are yet to see much of this.

Locally, however, we need to get more efficiencies and customer responsiveness in our Councils.

Amalgamation is essential and will help remove some of the obvious difficulties of dealing with different approaches. Every day we hear of examples of inconsistent methods which all place cost on business and the public generally. And the Hawke’s Bay Councils collectively seem hell bent on doing nothing about this prior to the local government elections. This is a lost opportunity to get an informed public, as opposed to the vociferous heat of xenophobia that occurs when these matters are on the agenda.

However, it is attitude that we need to look at. Cultural change is not just in the structure, but in the very process of government. While there are staff who go out of their way to be helpful, for the most part the bureaucracy is (still) ponderous, narrow and costly.

In 2010, efforts must be made to get:

  1. The Council “shared services” approach actively working so that Hawke’s Bay is literally a one–stop shop with uniform, Hawke’s Bay wide  and least effort regulation.
  2. A “can do” approach from whomever one approaches in a Council, rather than the opposite.
  3. Rates and charges that are no more than inflation. And over the long term, with Councils “sticking to their knitting” rather than having adventures. Included in this would be looking after what exists now before building new things.
  4. Councils doing things right the first time,on time and on budget. (I should add it should be  Councils also doing the “right” things.)

Above all, for the economic well being of the region, we need a coherent economic strategy, rather than each Council overlapping with the real risk of gaps appearing. And the delivery of such economic approaches should be by partnership or contract rather than bureaucracies. We have plenty of competent business organisations and consultancies who can deliver. It is pleasing to see that Wine Country Tourism Association, our Hawke’s Bay tourism membership organisation, is now going to take a stronger line on this aspect.

Planning economic futures in 2010 is a challenge for Hawke’s Bay, but actually easy to do if there is leadership and vision. The question is: does it exist or will parochialism and egos continue to dominate and we go ahead without learning from our recent economic history.

We have to have change our approach, as the world is a vastly different from 2008, and if we are to have an economic ( and social ) future, we need to go forward with a changed and more learning paradigm.

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