Room to improve on bounce back

By Dave Burnett

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Tourism will give the Bay a new economic boost.
Tourism will give the Bay a new economic boost.

The Bay economy is rebounding nicely at the moment - but there is still work to do.

According to the latest ANZ Regional Trends report, economic activity in the Bay increased 1.8 per cent for the quarter ending March 2014 - the second highest rise in the country behind Northland, at 3.4 per cent.

It was the ninth consecutive quarterly increase for the Bay - led by strong activity in the forestry, transport, agriculture and horticultural sectors. Dairying had a late season and record milk production is matched by a record milk price.

Optimism has returned to the kiwifruit industry, the crop is looking good, and orchards are selling at pre-Psa levels.

The stand-out in the March quarter was a 14.4 per cent rise in the volume of dwelling approvals, hitting a three-and-a-half year high. There were 808 approvals as more and more cashed-up Aucklanders shifted to the Bay.

But the number of commercial building permits issued increased only 2 per cent in the March quarter and fell 44 per cent by value to $36.8 million.

Retail sales were $1.2 billion, up 1.3 per cent; employment number 124,300, up 6.2 per cent (a record high), internet job ads 2807, down 6.2 per cent; new car registrations 2486, up 8.9 per cent, and guest nights totalled 965,000, up 0.5 per cent.

Let's hope the economic pace can continue. Over a 12-month period, the Bay has lagged behind other regions.

For the year ending March 2014, the Bay experienced economic growth of 3.6 per cent - along with Nelson-Marlborough - and finished seventh equal amongst the 14 regions surveyed. Northland led the way on 7.4 per cent.

Consumer, household and business confidence have slipped a little because of the rise in interest rates, and the latest Chamber of Commerce survey showed 57 per cent of firms believed the general situation would improve over the next six months compared with a record 69 per cent in February.

The Bay, total population 277,000, has a regional gross domestic product (GDP) of $11.2 billion and contributes 5.3 per cent of the national GDP. The Bay's GDP has grown 25 per cent between 2007-2013 and represents $40,236 per capita compared with neighbouring Waikato's $42,968 GDP per capita.

So the Bay has room to improve its economic performance. In Tauranga's case, the city has relied heavily on property development, professional and support services, and light manufacturing.

It has, unfortunately, developed a reputation for low wages and lack of opportunity in highly-skilled jobs. More well-educated and lively 30-somethings are moving to Tauranga, especially to the Mount.

They love the lifestyle, and the creative vibe has increased over the past two years. But they do complain that it's hard to get a decent full-time job and they can't understand why wages are so low when they finish up doing the same high-level work as they would in a bigger city.

The time is right for a new economic boost - or GDP contributor - in Tauranga. We can expand tourism by getting coach tours to come down the Pacific Coast highway and through Tauranga. We can grow the major events sector (what about a Fast Five netball extravaganza for the ANZ transtasman teams at the Baypark ASB arena?), or we can hope that Tauranga suddenly exports quality, high-value products made out of titanium alloy powder.

But the more immediate prospect of an economic boost is establishing the custom-built downtown tertiary campus to be used by Waikato University, Bay of Plenty Polytechnic and Te Whare Wananga o Awanuiarangi.

They have the Durham St site, thanks to Tauranga City Council, and the $15 million pledge from Bay of Plenty Regional Council.

It's time to get the curricular finalised (let's have some health and wellbeing, and marine and coastal science courses), and for Tauranga Energy Consumer Trust (TECT) to come to the party and match the regional council's funding.

Building designs have been drawn, but we've been waiting a while now for the first sod to be turned. Auckland, and other tertiary education centres, are making a new push for international students, especially from China.

We don't want Tauranga to miss out on this opportunity. The recent Tauranga delegation established strong education links in its Sister City Yantai in China, and in Ansan, South Korea. These relationships can attract a flow of hard-working students into Tauranga.

Just imagine, 500 international students studying at the new downtown campus would represent some $20 million extra spending in the city each year (based on annual course fees of $25,000 and living expenses of $15,000 per person).

These students would live, work and play in the downtown - spending money in the cafes, bars and shops and bringing the CBD alive. Now wouldn't that be an economic boost.

Tauranga MP Simon Bridges, Mayor Stuart Crosby and Carrus Corporation managing director Paul Adams will speak at the Chamber's City Leaders Lunch about the future of the city. The event is this Friday at the Trinity Wharf Hotel.

Dave Burnett is chief executive of the Tauranga Chamber of Commerce.

- BAY OF PLENTY TIMES

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