Tourism investment needed

Timber has been a good performer for Northland's economy. Photo / Michael Cunningham

Businessnz has released its Planning Forecast which is positive for the country's future growth but also warns of potential risks, mainly associated with migration.

BusinessNZ chief executive Kirk Hope says nearly all economic indicators are favourable.

"Sectoral data including manufacturing, construction, and tourism are strong, and the agricultural sector is proving resilient in the face of current low prices.

"Net migration is still driving demand and is good for growth, but also brings risks that must be managed," Mr Hope said.

"It is therefore pleasing to see the Government seeking to address regulatory issues that are holding back growth, such as land supply for housing and business development."

Mr Hope said a key risk factor in the economy was high levels of household and farm debt, creating some vulnerability to a correction in asset prices or rise in interest rates.

Northland Chamber of Commerce chief executive Tony Collins said there were no surprises in the forecast.

"It just reflects all the other data available at the moment," he said. "Growth and confidence levels are still very high."

While he acknowledges migration is driving growth to a large extent, he has concerns about what that is going to mean to the housing market.

"Rising property prices may be a two-edged sword, potentially driving down affordability for locals.

"We need to learn from the mistakes of Auckland and not repeat them. We need to have a regulatory environment that will meet our housing needs and encourage investment in the region."

Mr Collins said one of the positives for the region was there had not been an obvious downturn because of the low dairy prices. But he warned the impact could be felt more in the new production season.

"However, people I've talked to who went to the Fieldays indicate there's still a degree of confidence in the industry."

He said tourism was working well for the North but suggested the industry needed greater investment, especially in hotels and motels, to meet the need of foreign and domestic travellers.

"If we don't have somewhere for people to stay in Northland we cannot capitalise on tourism. We need to be able to take advantage of the shortfall of accommodation in Auckland."

He said timber had also been a good performer for the Northland economy but warned that was expected to slow down.

"But we still need to add value to the raw product before it leaves the country," he said.

Mr Collins said overall the economy appeared to be doing well, leading to more money in the local economy as people worked more and pay packets grew.

- A Westpac McDermott Miller Regional Economic Confidence survey for June found economic confidence only slightly improved in Northland.

A net 12 per cent of households believe the region's economic fortunes will deteriorate during the coming year, down from a net 15.8 per cent who thought the regional economy would weaken in the next 12 months in the March survey.

This makes Northland the most pessimistic region in the country, with confidence down to 88.2 from 110.2 since March (a score below 100 implying more pessimists than optimists) and substantially below the national average of 106.0.

Westpac industry economist David Norman said the survey reflected Northland's concerns regarding the region's economy during the next five years, mainly centring around rising household debt levels over the longer term.

- If you have any business news, tips or ideas contact me at biz@northernadvocate.co.nz or (09) 470 2838.