2- The Study Areas
Whanganui5/Eastern Bay of Plenty
It was considered important when planning Grassroots II to be able to view the grassroots initiatives, around which the study was to be focused, in the wider economic context from which they had emerged. To this end, a selection of key individuals, including local business people, local authority decision-makers and central government officials in each of the two study regions were interviewed. The interviews covered the following major areas:
- Major industries
- Major "shut-downs"
- Major "start-ups"
- Barriers to economic growth
- Local advantages
- Growth opportunities.
This chapter summarises the results from the interviews for the two study regions.
Whanganui
Major industries
The major industries in Whanganui, in terms of numbers of employees, were identified as.
- freezing works
- Whanganui Woollen Mills
- Cavalier Carpet Spinners
- Whanganui Trawlers
- abattoirs
"Shut-downs"
Major business shut-downs in recent years have included the closure of the Railway Workshops, Kempthorne Prosser Fertiliser Works and Ravensdown Fertiliser Co-operative Ltd.
Whanganui has also felt the effects during the last five years of the increasing shift of government departments to Palmerston North. While the city benefited from the regional development policies of the early 1970s which encouraged government departments to decentralise to the regions, recent centralisation of economic activities has had an adverse impact on Whanganui.
The study areas
The impact of adverse economic conditions on the area, and the quest for greater efficiency among existing businesses is also reflected in the down-sizing of a number of larger businesses a the collapse of many small businesses, including several retail establishments.
"Start-ups"
Apart from the logging of Lismore Forest and the establishment of Humes New Zealand Limited, Whanganui has not experienced any significant industrial growth over the last five years. However there have been small pockets of growth, examples of which include:
- the establishment of a cluster of small electronic projects;
- increased productivity of Whanganui Woollen Mills;
- the formation of a new educational company, (Premier Education Whanganui Ltd) which plans market its services to overseas students;
- development of Backhouse and Company (an outdoor clothing company);
- increased development of sport and recreation facilities, eg., the Splash Centre and tenpin bowling.
The opening of the K-Mart and Foodtown shopping complex in November 1989 was consider to have had both positive and negative impacts on the local economy. On the positive side it h provided approximately 250 frill-time equivalent jobs in Whanganui. Although the complex is though to have attracted a few more people to the district, it has subtracted from the turnover of other businesses in the region. Thus, the net effect on the local economy is likely to have been small. For example, it is estimated that the turnover in local retail outlets fell by 8 percent in the first year after the complex was opened, and by 7 percent in the second year.
Barriers to economic growth
There was general consensus amongst the respondents that lack of confidence and uncertain created by the lack of consistency in government policies were major barriers to economic growth the Whanganui region. Over the past six to eight years, there have been significant and ongoing changes to taxation law and other legislation. Because of uncertainty, people have become unsettled and reluctant to invest, particularly on a medium-term and long-term basis.
"People in Whanganui are doing nothing because they're not sure of what's going to happen. The success of the economy is absolutely dependent upon being able to make long-term plans and go to and achieve them without having the rules changed two or three times. I think it's a weakness of all the political parties over the last 30 years. They haven't looked far enough ahead, and aimed far enough ahead, and kept sailing on the right path."
There was also a strong feeling that regional centres like Whanganui had been disadvantage firstly by regulation, and more recently by deregulation of the economy As a result, it was considered that government had a responsibility to assist such centres, to enable them to compete on equal basis with the major metropolitan centres.
"Areas like Whanganui, Masterton and Gisborne need regional development to enable them to remain on a level playing field. During the regulated term, the major metropolitan centres were able to develop infrastructures of roading, communication, transport, etc. Because rural regional cities were not encouraged to develop these infrastructures, they are now disadvantaged by the deregulated economy... The only real way to get us on an even playing field now is to provide some sort of regional development policy which enables us to get at least 'half way' on a level playing field."
Local advantages
Whanganui's central location and its skilled and stable workforce were seen as major advantages for economic development. The area was also seen as a favourable environment in which to live, with exceptional community facilities, and offering a lifestyle which is attractive to people who do not like big cities.
"It's a small community. People have a lot more time to pursue hobbies and recreational activities because they're not spending two or three hours a day driving to and from work. We're on the coast; the weather is quite good; the cultural and sporting facilities in the city are excellent; the educational facilities are excellent, right through from primary school, good secondary schools to tertiary institutions. People here in Whanganui, when you compare their life styles with city dwellers, do a lot more with their lives. They're out fishing, they're playing sports, they're going away for the weekend, they're going to look at something, or they're going for a Sunday drive. It's because they have more time of their own."
Other local advantages noted by the respondents include the availability of large tracts of land that could be developed for industrial or agricultural use; a climate favourable to horticulture; and the natural beauty of the region which has potential for the development of recreation and tourism.
Growth opportunities
Forestry is considered to be a major potential growth area for the Whanganui region. The forestry resources from Lismore are currently around 60,000-70,000 tonnes and are forecast to increase to 100,000 tonnes by the year 2013. This resource, in combination with existing surrounding forests, is expected to provide a sustainable yield of 300,000 tonnes by 2015. In addition, there is an estimated 100,000 hectares of marginal farmland in the region which is considered suitable for forestry development.
Another important potential area identified for development is horticulture. The region has a favourable climate and good growing conditions. Despite this, there has been an apparent reluctance to invest in horticulture, partly because the returns are not satisfactory, but also because there have been few incentives for investment. Becoming established in horticulture is costly and requires long-term investment.
Whanganui also has potential as a sport and recreation centre. The city's sporting facilities attract national competitions. Whanganui has hosted the Masters Games twice and is planning to hold the games in the city in alternate years in the future. Sport and recreation is now seen by the city council as an important avenue for economic development. The council has backed a company to develop a sport and recreation concept for the city and employed a recreation adviser.
The other main potential area for economic development identified by our respondents is tourism. It was felt that Whanganui has great potential in the river, the countryside and the Whanganui National Park. However, it was noted that a substantial injection of capital would be needed to develop and create specific tourist attractions, and market the region nationally
"At the moment, I don't think we have enough tourist attractions to get people to come here for four or five days. The other thing is, I don't think that our tourism industry is well organised. There have been lots of small groups of one or two people. I think we need to spend $50 million right now to develop and create some of the tourist attractions that people want to go and see, and then market the city People don't come unless there is something to see."
Eastern Bay of Plenty
Major industries
The economy of the Eastern Bay of Plenty is heavily dependent on forestry; horticulture and dairy farming. The main economic activities in the region are:
- Tasman Pulp and Paper
- Caxton Paper Mill
- Whakatane Board Mills
- Bay Milk Products
- Opak (Opotiki Cold Storage and Packing) - kiwifruit processing
- Zealpak - asparagus processing
- heavy engineering contracting
"Shut-downs"
The only major business closure in the region in recent years has been Volko Engineering, which involved the loss of 53 jobs. The announcement by Spinners of its intention to shift its Whakatanebased operation to Wainuiomata will mean the loss of a further 60 jobs to the region.
The regional economy has also been affected by retrenchments in Whakatane Board Mills and Tasman Pulp and Paper, both of which have seen the workforce halve over the last five years. Reductions in employment have also occurred in some seasonal work, such as asparagus processing. There have been associated losses in employment in affiliated industries) such as engineering and retailing. The impact has been particularly marked in smaller towns, like Kawerau.
"Because of the dominance of the mill in the town, if anything occurs in the mill it starts filtering through the community. If there are layoffs in the mill, then you also start to see them in the industries that are affiliated to it, like light engineering. It also affects rigging and scaffolding-type firms and in turn, flows on to retailing industries."
"Start-ups"
There have been no major business "start-ups" in the Eastern Bay of Plenty region over the past five years. Most employment creation has been associated with small business development. Unable to find work in existing businesses, an increasing number of individuals have been investigating self-employment as an option.
"They've got ideas and they want to set themselves up. I think that probably, that awareness has come from the Enterprise Agency which has run two Business Skills for Enterprise Courses. They take 10-12 people on each course. And so therefore, people's awareness has been heightened. Also, they know that government has funding available to assist people who have ideas about trying to help themselves set up in business."
Barriers to economic growth
The negative impact of recent government policies on business confidence was considered by our respondents to be a major barrier to economic growth and development. It was noted, for example, that the most recent cuts to social welfare benefits would take an estimated $12 million annually cut of the local economy, adding to the loss of revenue from the closure of Volko Engineering and the impending relocation of Spinners out of the region. The flow-on effects would permeate through the local economy, resulting in losses of employment and a further loss of business confidence.
The rigidity of the criteria attached to government job creation schemes was also seen as an important impediment to economic development. It was noted, for example, that several schemes initiated by the Whakatane District Council had failed because they did not meet government criteria. A further criticism of government training programmes for the unemployed was the poor link with employment. Many people moved from one training programme to another, rather than into paid jobs.
There was also criticism of the local government administration for their inactivity in the areas of employment creation and business development. Our respondents considered that the local council could, and should, play an important role through offering incentives, such as rates holidays or special power rates, to attract businesses to the region. These incentives had been tried and been successful in other regions. However, while acknowledging the gravity of the local unemployment problem, the Whakatane District Council continues to see its first priority as the maintenance of a regional infrastructure.
We were told that the council had no policies or goals relating to economic development and job creation, and that no financial resources have been allocated to these areas.
The apathy of many local business people and their lack of entrepreneurial skills were also seen as a barrier to employment and enterprise development.
"We've got a lot of ideas here and we've got a lot of people with the basic working skills, but we're missing the entrepreneurial management type people who can come in and tie it together"
It was noted that in some communities, the poor quality of customer services offered by local retailers was having an adverse impact on the local economy. For example, in Kawerau many people were choosing to shop in Tauranga and Rotorua, in preference to patronising the local retail outlets, resulting in a loss of locally generated wealth.
"They (the local retailers) need to learn the skills of marketing and promoting their products, as well as customer service and satisfaction."
There was strong consensus among our respondents that central government intervention, in the form of regional development, was needed to help promote growth and development in the region.
"We need a shot in the arm. I think we need some sort of regional finance to encourage people to come here."
Local advantages
The following major local advantages for economic development in the Eastern Bay of Plenty were identified as:
- a good climate which is ideally suited to horticulture;
- a central location in close proximity to a major port;
- an abundance of natural resources;
- a ready pool of labour; and
- affordable housing.
Growth opportunities
Horticulture is seen as a major potential growth area within the regional economy. Although it is already well established, our respondents felt that there is still plenty of scope for further growth and development. In particular, there is potential for further exploitation of opportunities to supply major metropolitan markets with produce during the off-season and for diversification into new types of crops.
"We need to be looking at diversifying into other types of crops, rather than just basing cropping on kiwifruit, asparagus and berries. We need to look at the country nationally, and see what crops are harvested and what regions are similar to our region in climate and type of land base."
The location of the region within easy reach of a major export port at Tauranga was considered by our respondents to make it ideally suited to export-based industries. It was noted, for example, that paper and wood manufacturing and associated by-products, have potential as export industries.
Tourism was recently identified as an important potential growth area by a Development Initiatives Agency set up under the sponsorship of the Whakatane District Council to investigate and promote development opportunities in the region.
Currently, one of the difficulties of attracting major tour companies is the absence of any unique tourist attractions, similar to those in Rotorua. A further deterrent is the lack of top quality accommodation in the region.
Finally, there was agreement amongst our respondents that much of the future employment growth in the Eastern Bay of Plenty region would derive from self-employment and small-enterprise development. A growing share of employment would be of a casual, seasonal, or part-time basis.
5 Local people interviewed in Wanganui preferred their city's name to be spelt Whanganui, which is the correct Maori spelling. This, therefore, has been the spelling adopted in this report.
| © MAF 1994 | ||
| MAFnet Help | Important Disclaimer |
Contact for Enquiries
Rural Affairs Coordinator
Sector Performance Policy
MAF Policy
Ministry of Agriculture and Forestry
PO Box 2526
Wellington
NEW ZEALAND
Phone: +64 4 894 0675
Fax: +64 4 4 894 0745
Contact this person
