Rod Oram’s presentation to theAuckland Council’s Green Growth Symposium

Auckland, May 17th, 2012

R i ti P diReinventing Paradise

Auckland’s economic imperatives

© 20122, Rod Oram / Email oram@clear.net.nz / Phone +64 21 444 839

Slowth• No faster after recession than before recession (or before 2008 election)• …need 2x faster to close gap with Australia by 2025

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

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

Aucklanders navel gazeO 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

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

People, planetp , p• Vision 2050• A very challenging roadmap

for corporate development by p p yWorld Business Council for Sustainable Development

People, planetp , p• The sustainability challenge

w• q

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 pinnovation, we find that smart companies now treat sustainability as innovation’s new frontier.”

“The future redefined”• Further evidence of the same big drivers…

• …from PWC’s 2011 survey of APEC chief executives

Asia: sustainabilityy• Resource, energy and environmental pressures driving sustainability

Asia: renewable energygy• Asia aiming to be a leader in renewable energy

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 connectedVibrant and creative world city•Vibrant and creative world city

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?

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

Auckland…

…will be

…what we make it