By ROD ORAM
This year's brisk growth of the Auckland regional economy presents us all with a big choice.
Do we simply enjoy one of the strongest growth rates in the OECD group of developed countries and take profits while we can, knowing New Zealand's volatile economy will deliver a downturn all too soon?
Or do we use the best growth in years as a springboard for developing the regional economy into one which can generate more and better jobs, higher-value goods and services and greater stability?
Clearly the second choice is the better, and we would be very negligent if we passed it up. Thanks to three powerful factors, we have the best opportunity in decades to help Auckland's economy make a change. The factors are:
* The beneficial economic reforms of the past 15 years
* Strong current economic performance
* Revolutions such as e-commerce, which give New Zealand companies unparalleled access to world markets Many factors will determine whether Auckland can capitalise on these trends. Three key ones, which go right to the heart of our economic development, are infrastructure, regional policy coordination and the nurturing of entrepreneurial companies.
First is infrastructure. We all know that parts of the region's infrastructure are inadequate - ranging from the harbour crossing to roads, public transport and stormwater treatment.
Many in the regional council have been frustrated for years by a lack of progress on these issues.
Perhaps some believe the change of government will produce more help for the region from Wellington, especially as we now have an Auckland advocate in a cabinet headed by a Prime Minister from Auckland.
But there's a downside to that. We don't have nearly enough public money for all the investments New Zealand needs to make. So we have to find innovative ways to pay for some of the projects.
Take roading reform. The proposals the previous Government was pushing contained many problems and unresolved issues, but at least it was pushing. The new Government clearly has no such appetite. It will fall back on traditional financing methods, which will be inadequate.
So the challenge for all involved in infrastructure is to have another go at finding alternative, innovative financing, rather than relying on Wellington.
The second issue is regional policy coordination. The Auckland region works well by the standards of large urban areas divided up among a collection of city and district councils.
Progress has been made, for example, on regional plans, through the growth forum.
But now comes the far harder work of implementing them. This will require a unity of purpose and coordination that we have not seen here yet and for which there are few precedents abroad.
It is clear from last year's attempts to persuade Motorola to build a research facility here that foreign sources have projects on offer for which we should compete, and that a coordinated effort is needed to secure them.
Policy coordination is also becoming more complicated because the new Government sees regional development as a key economic policy tool. Not only will each region need to speak with a unified voice, but Auckland, as the most prosperous region in the country, could draw the short straw.
In this environment, local body politicians are under more pressure than ever to deliver effective regional policy. Any failure over the next year or so will strengthen the case for a single regional government.
The third issue is how we as a region cope with the shifts which are reshaping the economy.
We might feel smug about another investment bank moving to Auckland from Wellington. But we must never ignore the pull from across the Tasman.
Every high-profile move, such as those of Fernz' head office and the HQ of Carter Holt's packaging division to Melbourne, is accompanied by many other less public emigrations.
And a number of large companies are losing their autonomy. Clear Communications has become a subsidiary of British Telecom and DB Group is likely to become a subsidiary of Asia Pacific Breweries.
With such changes come the loss of local boards and directors, stock market listings in the case of DB and work for professionals such as accountants and lawyers.
In many ways this is a natural trend as globalisation triggers great agglomerations of companies. And we can do little to resist it.
Instead, we should use globalisation as a way to use our strengths. Ours is an economy of small businesses - 95 per cent of companies employ 25 or fewer people.
And it was those small companies that accounted for all employment growth in the 1990s.
The best is yet to come for those small companies. Thanks to e-commerce, small enterprises are gaining the power to reach out to the world.
New Zealand, and particularly Auckland, should be a good low-cost place for them to be based. But many factors have to develop further before that can happen in a big way. A few key ones are:
* Abundant finance, ranging from venture capital to banking and financial services.
* Top-rate professional services. Large law firms, for example, have to work out how they can earn a living from small clients with big demands in, say, intellectual property.
* Excellent education from primary to tertiary, with continuing education for people in the workforce.
* Access to high technology and research, not only to drive new industries but to make existing industries and companies world-class.
* A society which appreciates entrepreneurial skills and success.
* An efficient, robust and capable infrastructure.
* A supportive and cost-effective local government The list is much longer than that, but I would urge us all to play a role in turning Auckland into a highly dynamic, entrepreneurial, high-tech regional economy.
Let's not treat this year's surge in economic activity as the upswing of a bungy jump -- to be savoured in the moment while fearing the coming down-swing.
Let's use it as a catapult to launch us into a higher economic orbit.
* This is an edited version of an address Rod Oram gave yesterday to the Auckland Regional Council's economic outlook conference.
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