In decline

Categories: Politics business and economics.

Generally the Wellington economy is performing below the national average.” That’s the verdict from Grow Wellington’s latest report on the regional economy. It reveals that Wellington is lagging behind in job growth, immigration and visitor numbers.

On most measures, Wellington is at, or a bit below, the national average, but quite well behind the roaring engines of the Auckland and Christchurch economies. On job growth it says, the “region’s outlook is fragile.”

Talk about being the “coolest little capital” why Wellington is a place where talent wants to live, and how we combine opportunity and innovation with the freedom of the hills and the harbour are familiar refrains from those in charge of the city. The reality is a bit different. Wellington is simply not performing.

On employment, while the number of people in the region employed went up 2% in the past year, at 275,570 the total number employed is still below the 279,000 recorded five years ago.

Construction is driving job growth, 81 % of the 5,400 new jobs created in the past year are in construction.

Construction jobs come from state highway roading projects, earthquake strengthening and the Christchurch rebuild, the GROW report says. In other words they will wither when the building boom slows. There’s little growth coming from the much talked about sectors: tourism, education, hospitality, creative and IT.

New Zealand is currently experiencing a period of nett inward migration, 41043 more people arrived than left in the 12 months to July. Wellington’s nett gain is just 872 people, 2% of the national total.

“Returning and New Zealanders are opting for other centres;’ the Grow Wellington report says. While this is “something of a concern.” the report offers no explanations

but suggests this is “an area for closer investigation,” and should be part of a “focus on talent attraction activity and efforts to promote Wellington as a destination for potential migrants and returning expats.”

At a panel discussion about “Brand Wellington” hosted by the local chapter of the Public Relations Institute, David Perks from Positively Wellington Tourism and Jim Quinn from Grow Wellington spoke enthusiastically about the appeal of the Wellington brand and of their agencies’ efforts.

Awards, accolades and brand jargon aside, the hard data on jobs, spending and investment shows Wellington’s economy is falling behind the rest of the country.

Put like that they had to agree. David Perks: “I take on board the point about growth. We need to find reasons and tell the story and reinvigorate our brand.”

Jim Quinn: “The brand reflects initiatives underway to reinvigorate the economy in the region. We have many specialisations and we will get growth.”

Kevin Lavery, the chief executive of the Wellington City Council reinforced the point. “We need to do a lot better. I favour a genuinely joined up approach. Brand is important, but we have a long way to go to get significant growth.”

Dr Lavery urged the region’s councils and other agencies to “get the economic plan right and deliver on it.” As CEO he has backed projects like a hotel and conference centre, a technology quarter, and a Lord of the Rings museum.

Getting the right economic plan, and the right agency to deliver on it has been a battlefield for the last 20 years. The Capital Development Agency, which was an arm of the Wellington City Council, morphed into the first regional development agency in 1995, and there have been many changes in direction, structure and leadershipsince then.

Grow Wellington, the most recent version of a regional development agency, is now faced with yet another restructure.

The Wellington Regional and Wellington City Councils have agreed to fold Grow Wellington into a new mega -agency along with POSitively Wellington Tourism, Destination Wellington, Positively Wellington Venues, plus the Major Events operation and to put the Westpac Stadium in there too.

The model is Auckland’s regional development agency, ATEED, which has been very active since that regions cities were merged under one council.

One council in Wellington is a long way off, if it ever happens at all. The Local Government Commission is due to issue a proposal on reorganisation very soon.

There are other dark clouds. Auckland has the money and the organisational form to outspend every other region. And it is competing vigorously in events and theatre, spaces where we like to think we were strong.

Wellington’s icon events are tired and in danger of declining. WOW is still strong, but the New Zealand Festival of the Arts is acknowledged as needing a revamp.

Te Papa is attracting fewer visitors, and the promotions of both the City Council backed Aussie Rules and the Aussie League games have failed recently.

Even the iconic Rugby Sevens tournament has had to cut its prices and the behaviour of its fans will be more tightly controlled. Is this an event on its way out of favour? So how will we get growth? Not by pursuing the current policies it seems. They have delivered a less than stellar performance over the last five years.

Wellington lacks an inbound investment strategy. Growth is not about the appeal of the brand, or slogans, or even tourists (domestic or international). It is about the jobs brought to or created in the city.

However much marketers talk up the value of their special area of expertise, it is not the appearance or the performance of the brand that counts.

Getting a call centre set up creates new jobs; opening yet another restaurant doesn’t – unless more people eat out more often.

Setting up new ventures widens the appeal of the city as a business or educational destination as well as creating new jobs.

One example is the WELTEC/Whitireia initiative to set up a Centre for Creative Technologies and Arts in the old Deka building, on the corner of Cuba and Dixon Streets, in the heart of downtown Wellington.

It will involve up to a thousand students. It is to open in 2018 and expands the work of the Cordon Bleu cooking school also located downtown. As well as local students it aims to attract the very best international talent from the Asia Pacific region.

What counts for ratepayers and residents is paying jobs, and new businesses successfully established, because these translate into reasons to stay in the area. In the past five years, Wellington, and its development and promotional agencies, have not done that very well. Perhaps the new Wellington Regional Development Agency – when it is up and running – will be able to do better.