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Perspectives

Auckland City Council and economic development

Launching an economic strategy for Auckland

By Karen Lyons, group manager, Economic Development

Auckland City Council has identified seven key strategies for working towards its vision of Auckland as First City of the Pacific.

One of these (for which my group is largely responsible) is the Economic Development Strategy. This strategy was presented in its final form in September to the City Development committee.

The council's Economic Development Strategy links different functional areas in the organisation to achieve improvement of Auckland's infrastructure, enhancement of human skills, increased business innovation and a strengthening of exports. The strategy aims to help raise productivity in Auckland and our international competitiveness.

Greg Clark, Chair of the OECD LEED Forum of Cities and Regions, peer reviewed the strategy and commented that it has an excellent conceptual foundation and an attractive directness and brevity. He went on to say that "success doesn't come by accident usually, and effective local economic strategy is essential to set the direction and the path to the future, build a common agenda amongst multiple players, identify priorities and agree responsibilities, and mobilise otherwise separate resources and efforts together for optimum impact."

The council is able to influence, regulate and invest. That is what we are doing in specific areas to action these strategies.

In our group, we contribute through initiatives such as business precinct plans. These plans help promote economic growth in key business areas. Grown from the businesses on the ground up in collaboration with council, the plans integrate all factors (transport, land use and infrastructure) to ensure future development in the area is optimised, strategic and considered. The council has implemented a plan for Rosebank, in close conjunction with business in the area. The next priority areas are Tamaki and Penrose.

Another way we are actioning the strategies is through the development of the Learning Quarter. This is a partnership between AUT, the University of Auckland and Auckland City Council. It is map to guide the future social, economic, cultural and physical development of the CBD around these universities. The centre of tertiary education in Auckland's heart provides unique economic benefits to the city. It is important that these are nurtured and grown for further generations.

Yet an additional example of Economic Development's direct fostering of business growth is in the proposed science and technology park at Tamaki. A multi-partnered syndicate of government, industry, universities, research institutions and ourselves is seeking to establish an internationally recognised science and technology park in the area adjacent to the University of Auckland's Tamaki campus. Once underway, this initiative will aim to catalyse the business area around the campus.

The strategy is long term. Progress will be monitored and evaluated as we go including through employment growth in key sectors and specific business areas.

Science parks: special places that buck the trend - says expert

Jane Davies.
Jane Davies.

The turmoil in international property markets is throwing up an interesting phenomenon, says Jane Davies CEO of Manchester Science Parks (msp) in the UK. 

Jane believes that where commercial property is under pressure in some parts of the UK and Europe, with vacancies climbing, science parks are bucking the trend.

"Science parks are one form of property development that appear to be resisting the downturn," said Jane. "That's because they spread their risk over a lot of tenants, plus many companies within science park developments are start-ups, using venture capital to get going.  As a result science parks don't have to worry so much about what the market is doing.  For that reason, a number of commercial property developers are now looking at science parks with interest."

Visiting New Zealand to support husband Wyn Davies (Director of Music for NBR New Zealand Opera) and to advise partners working on the development of an innovation precinct adjacent to the University of Auckland's Tamaki campus, Jane provided insights, at an open lecture on 23 September, into Manchester's successful science park.

Jane advised Auckland to focus on identifying what was missing in the local innovation scene, before committing to a science park.

"The British government announced an initiative nominating ‘science cities', and greater Manchester responded with a strategy called 'Manchester Knowledge Capital'," Jane explained.  "In reality this was an umbrella initiative that looked at Manchester as a whole, and tried to identify which elements might be missing in the local innovation system, that might constrain science parks and the knowledge economy from taking off.  The initiative wasn't just focused on the science parks."

Jane said local government and organisations asked themselves: did they have the funding, networks, people and skills necessary for innovation to make a significant difference to the economy? The science park could only contribute part of this mix. "What was important was that the whole innovation system needed to be locally present to make innovation take off in Manchester," she commented.

After looking strategically at these issues, the organisations involved then tried to augment what was missing.

Jane believes a key for Auckland, which she has visited several times, will be to identify a sense of place for the science park, and give it a special identity. 

"The special nature of a particular city and its location help people - including innovators - want to be there," she continued. "Turning science parks into copies of an American city development is not the answer.  New Zealand has such advantages with its native culture, environment and position, it should be exploiting these unique benefits in its science parks."

She also advised that Auckland should look to New Zealand's competitive advantages, and its current research and technology strengths, before deciding the sector focus of the science park.

"The Danes focus on pigs in research and industry. There's a long history of the bacon industry there, so they have developed innovative technology related to pig diseases and animal husbandry," she says. "In Iceland, they exploit technology developed from the bugs that live in hot springs. So what is special about New Zealand, and how can you add value to that through a science park?  Build on natural and historical advantages rather than trying to start a cluster from scratch."

Jane's presentation on 23 September attracted more than 50 people from a diversity of interests throughout Auckland.

Economy turns negative - hold on tight

By Karen Lyons

Weakness in Auckland city's housing market has spread to retail spending, employment, business and consumer confidence (read more in my last article). Add tight credit and the signs indicate tough times ahead for business.

Here's what Donna Purdue, Senior Economist, Westpac says:

"An ugly run of data in the past few months suggests the economy has experienced a serious crunch so far this year. In particular, housing data suggest the market is in a pronounced downturn, with the Auckland region under immense pressure as house sales slump 60 per cent relative to year ago levels. Moreover, labour market data revealed a sharp decline in employment in the March 2008 quarter, suggesting that one of the key pillars of consumer spending in recent years - job security - is perhaps not 100 per cent bullet proof after all. High and rising oil prices are only adding to the pain with petrol pump prices surpassing $2/litre in New Zealand for the first time in late May."

According to Connal Townsend, CEO of Property Council New Zealand:

"The fundamental demand that underscores commercial property continued pretty strongly up to and including March 2008. Latest figures available for the year ending March, however, still show excellent returns for commercial property of 18.3 per cent, down a little from 19.7 per cent in the previous year - but still well ahead of bonds. Continued demand from tenants and low vacancy numbers, particularly in the high performing CBD office sector, characterised the market. However New Zealand has been feeling the effects of a global credit crunch, and these robust 2007 - early 2008 data will almost certainly have dropped off in the last quarter. Capital returns will reduce, and demand is likely to ease - meaning vacancies will increase."

While right now there may seem little cause for optimism, businesses cycles do come and go. There are positives on the horizon.

Food is in demand at higher prices as never before, and New Zealand knows how to produce it.

Tax cuts are coming in October and infrastructure spending is in catch up. Our transport colleagues tell us there is more infrastructure in planning or underway in Auckland than for years - including the proposed electrification of rail, the Mt Roskill project, the Newmarket Viaduct and Eden Park for example.

A slowing economy will ultimately mean lower interest rates and the Reserve Bank has signalled that it is likely to be in a position to lower official interest rates later this year. In turn the currency can be expected to weaken, improving our export competitiveness, and in fact the NZ dollar has already fallen against the Australian dollar, a key cross rate for Auckland manufacturers.

Bruce Goldsworthy, of the Employers and Manufacturers Association, had this to say:

"The manufacturing sector has spent the last three months very subdued or contracting, as measured by the EMA's performance of manufacturing index. Notwithstanding the challenges, there are also windows of opportunity. Although the Australian economy is beginning to wobble, our dollar is falling in relation to our Trans Tasman neighbours. These exchange rate advantages should translate into a competitive edge for New Zealand exporters in the Australian market. Overall, manufacturers have reported a very quiet New Zealand market and forward orders globally are beginning cool."

Auckland City Council's job is to monitor economic changes in Auckland, and respond to them. We also stimulate positive economic growth over the long term by capitalising on what Auckland does well. This is not a 'quick fix'. However, our city is now of such a size that long term thinking is critical in ensuring we weather economic storms. The recent visit of Professor John Allen, who was sharing his experience on the development of 'science parks', which cluster science based businesses, was a case in point. He said "....the entrepreneurial lifestyle of the population, a city council that is prepared to be innovative, the need for New Zealand to be seen as a world player in the knowledge economy and the presence of a fine and willing university suggests that a science park should be very seriously and urgently pursued."

Attitude is the foundation of business character

Councillor Peseta Sam Lotu-Iiga.By Councillor Peseta Sam Lotu-Iiga

It's during times like these that attitudes which shaped New Zealand's character serve to strengthen our businesses, helping our economic resilience.

There is no doubt it's tough out there at the moment. A peculiar economic cocktail is being shaken worldwide. New Zealand is sampling it thus:

Globally, there is rising inflation; increasing interest rates (in New Zealand they're high); a tightening availability of credit; falling housing prices (which are the foundation of investments for many kiwi families); rising commodity prices - including fuel (which is a negative for isolated New Zealand) but also including rising food prices (which has a positive effect on the New Zealand economy, especially through the dairy industry); in some economies (including New Zealand) unemployment is rising.

More unique to New Zealand perhaps we have the first signs of softening in demand for commodities (including food) worldwide; tourism is softening; immigration has fallen off while migration to Australia is (apparently) booming; consumer confidence has plunged (which affects retailing); but countering this, the New Zealand dollar is dropping - meaning our exports are worth more.

What has this to do with business attitude and national character?

I believe success in business is driven by one's attitude. As attitude is entrenched, it becomes character - as Albert Einstein once famously noted. It is character that ultimately determines how competitive, and how robust we are in business.

New Zealand's business attitude is forged on strong kiwi values: rugged determination; number 8 wire mentality and inventiveness; a strong work ethic and a true sense of fair play. We are competitive and flexible; small enough to take knocks, and still get up again. We've done it for two centuries of economic cycles.

When times are tough we fight from the trenches. New Zealanders never give up. We look to our sports stars for a strong winning attitude as the driver of success; let's look to our business directors and leaders for the same. Attitude is the key to winning when times are tough, and rebounding as fast as possible out of any recession.

I urge Auckland business to hold to these values when times are tough. For every downturn, there is an upturn. But don't just wait. Get out there and push the economic wheel one cog further around.

Economic slowdown - but longer term resilience focus important

By Karen Lyons

In this edition we have updated a summary of Auckland city's economic facts. However, this is a retrospective analysis looking at the last quarter of 2007 and therefore omits any effects of rapid changes that occurred during the first three months of 2008.

Overall the economic picture mirrors national trends with a slowing housing market, strong labour market and growing uncertainty over the impact of higher credit costs internationally.

The market disposition has undoubtedly worsened, although the facts for the first quarter of 2008 are yet to be published.

Economist Donna Purdue of Westpac has been widely quoted recently on the economic conditions. We asked her to summarise: "At the end of the first quarter, it seems clear that growth will be much weaker than Westpac first anticipated. Consumer confidence, as measured by Westpac McDermott Miller, has slumped to a decade low, courtesy of the rising cost of living and higher interest rates, and business confidence has plummeted as the global credit crunch has intensified. Add to that much weaker population growth and falling house prices and the economic outlook appears fairly grim.

Unfortunately, Auckland is likely to bear a reasonable proportion of the pain. It is the region with the most exposure to falling net immigration (via its link with house prices and consumption), and will not directly benefit from the cash windfall coming to the dairy sector."

Members of the Economic Development group of Auckland City Council were privileged to recently attend an address by 2001 Nobel Prize winner in economics, Joseph Stiglitz, at University of Auckland School of Business, with media headlines the next day saying "It's going to get worse." While commenting essentially on the US financial markets, the takeout was that New Zealand is not, and will not be, immune.

While the economic outlook for the upcoming year is uncertain, Auckland City Council is keeping focused on initiatives that aim to provide a better environment for long-term economic growth. Ultimately these build greater resilience, enabling Auckland's economy to better withstand the types of downturns that we are currently experiencing.

Councillor Peseta Sam Lotu-Iiga, Chair of the City Development Committee comments on some of these projects in this edition as well as highlighting his views on future direction.

Auckland City - Playing our part in Auckland's growth

By Councillor Peseta Sam Lotu-Iiga

There's no doubt that Auckland City Council can and does play a significant role in shaping the economic environment in the city.

Some very effective initiatives undertaken by the city are underway. For instance the idea of developing an innovation precinct in Tamaki is visionary. These types of precincts can work extremely well. I experienced one in Cambridge (UK) and it created a highly productive cross-pollination between research development and the business sector.

Relationships in the biotech sector are critical for Auckland city. That's why we sponsor NZ Bio's Auckland branch. Biotechnology is an area in which New Zealand has shown aptitude, and Auckland is the hub of the industry. Research conducted in biotechnology can provide the high yielding industries of the future, and we need lots more of them.

Auckland City Council's initiatives to bring open space Wifi into the CBD and fringes are also laudable. Frankly, the council's undertaking closes a gap in the market that should have been filled before now by a provider. Where we can, it's appropriate the council acts.

Relationships with the education sector are recognised as critical. Again, Auckland City Council does these well. The creation of a Learning Quarter which defines a geographic area in the city, and is a partnership between Auckland City Council, AUT and the University of Auckland - should produce superb outcomes. The area will be enhanced and this unique core of the CBD which attracts 55,000 students and 10,000 staff today, will grow and develop for tomorrow's tertiary study and supporting businesses. The Covec study of our international relations including our sister city relationships showed we were truly harnessing international connections by supporting educational initiatives for foreign students.

So what more could we be doing?

Well - I see a future for council-led economic development where we engage more thoroughly with business leaders - small, medium and large - and ask them how we can make what they are doing already even more effective. By talking to business and truly understanding it, council can work to make Auckland City appropriately zoned, effectively developed, roaded, transported, fairly rated and accessible. We can also hold the government's feet to the fire when they are not shouldering their load, particularly on strategic infrastructure in transport.

Further, Auckland City Council has a role in helping attract new business (especially from offshore) so that there's a net gain for the country through Auckland. On my watch, you can be assured these areas will be the City Development Committee's focus. 

Auckland City Council and economic development in 2008

By Karen Lyons

In the Chinese calendar, 2008 is the year of the rat symbolising hard work, resourcefulness and energy. Auckland City Council's Economic Development group is taking these messages to heart with a full year of work ahead to move Auckland on its way to being a truly internationally competitive city.

In 2008, we're advancing with projects that will help catalyse economic growth in Auckland city. We will help to finally introduce an an 'open access' WiFi network in the CBD, finalise a plan to further develop the Learning Quarter (Auckland CBD's most important education precinct) in conjunction with the University of Auckland and AUT. We are also moving ahead with initiatives to support and foster growth in ICT, biotechnology and creative industries, and strengthening economic links through our international relations programme (a formal programme which proactively fosters business links with European, Asian and Pacific nations). The Mainstreets Associations, which function as local business associations fostering growth in their areas, will continue to grow and develop.

Auckland city's new council has begun to set their direction. Councillor Peseta Sam Lotu-Iiga is the Chairperson of the City Development Committee which makes decisions around the city's economic development work. This committee is an important democratic interface connecting us with the people of Auckland. Councillor Lotu-Iiga brings a wealth of commercial experience to this role, including positions at Macquarie Bank (Sydney), Bankers Trust (London) and Russell McVeagh (Auckland).

As always, we continue to value our working partnerships across Auckland businesses, community organisations and government agencies. We would like to thank you for your ongoing support and offer you our best wishes for 2008.

An Economic Catalyst

By Karen Lyons

A thriving, internationally competitive economy in Auckland will make our great city even better for everyone.

That's why Auckland City Council is focused on the city's long-term economic growth. We take the lead on economic development activities and projects that target and support our city's international competitiveness and productivity.

One example is the council's push to kickstart the construction of open access WiFi and Broadband because Auckland lags behind other international cities in this important infrastructure.

Auckland city's Mainstreets programme, initiated by the council years ago, provides for a special rate to be levied and then delivered back to key local business associations. In the past few years, these associations have used this money to improve safety and security, clean up graffiti, and develop destination marketing. Mainstreet Associations have flourished since their founding and we applaud their successes.

Auckland City Council supports high value economic sectors through our creative industries action plan and our support for NZBio, Connect New Zealand, Film Auckland, Study Auckland, Tourism Aucklandand The ICEhouse.

This is just a slice of the action. We recognise that transport infrastructure projects, events and regulatory processes have a huge impact on the city's businesses and economy. To ensure we are doing the right things to support the economy we conduct research and have a large repository of vital business information.

The goalposts

Our economic development programme aims to help Auckland

  • become globally and nationally connected
  • have a skilled adaptable, educated workforce
  • create productive dedicated business areas, linked to a strong CBD.

Updated September 2008
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