David Schnauer. Photo / Supplied, File
OPINION
I have just returned to Auckland after visiting Gisborne to see the autumn colours at Eastwoodhill, a 300-hectare tree plantation nearby. Unfortunately, it was not only autumn colours that were on display.
Clear signs of poverty and economic distress were also regrettably apparent. Less than prosperous-looking shops; many poorly maintained houses and a rundown motel.
Don't get me wrong - Gisborne has wonderful geography, an attractive boat harbour and restaurants, and a wonderfully fertile hinterland. It is not all downbeat, and I would love to see it do better. But the visit left me with an overall impression of a town experiencing the downstream consequences of poor economic policies pursued by New Zealand for the past 50 years.
New Zealand could and should have done so much better over that period. It is the more disadvantaged parts of New Zealand society, particularly our more remote provincial towns, which are paying the price for these economic policy inadequacies.
Let's start with the failure to add value to our exports. The Gisborne port was piled high with logs. Perhaps 2 per cent of these were green coloured - indicating they had been treated. The rest appeared to have been felled, de-barked and delivered for shipping offshore.
How many local jobs would be created, if these logs were further processed? They could in theory be more generally treated and dried; turned into sawn timber; into ply and laminated timber; into packing cases, pallets, or even into kitset buildings like Lockwood homes.
Developing these opportunities would not be easy; but sending all our logs offshore unprocessed means shipping hundreds of jobs offshore, from a city which clearly needs every job possible.
Wooden buildings should be coming into vogue. Steel and concrete are energy-intensive. Wooden buildings sequester carbon, and are climate-friendly. The Tuhoe building in Taneatua, and the Scion Building in Rotorua, are both wonderful examples of what can be done with timber buildings. But there is no evidence thus far, that such forward-thinking is reducing the number of unprocessed logs passing across the Gisborne wharves.
Then there has been New Zealand's willingness to sell its business assets into offshore ownership. Much of our forests are overseas-owned, as a result of policies over the last 50 years.
If New Zealand now wishes to embark on a drive to add value in the forestry sector, we face forestry owners seeking to maximise returns from their logs, irrespective of consequences for the domestic economy. While logs are piled high on the Gisborne wharves, the New Zealand building industry struggles to obtain timber to build houses.
Extensive overseas ownership of many sectors of the New Zealand economy (including forests) follows significantly from a lack of domestic capital because we have had inadequate institutional saving over the last 50 years.
It also follows from New Zealand's open-door policy towards foreign ownership of our business sector. Yes, some foreign ownership in some sectors is very valuable and should be encouraged, But, arguably, New Zealand has gone far past the point of optimal foreign ownership, making it doubly difficult to reverse the massive export of unprocessed logs, as just one downstream consequence.
We went up Kaiti Hill - a Gisborne landmark. There was no signposting of the road to the summit and a neglected display at the top. A poorly presented lookout, notwithstanding the magnificent view. Like many other parts of NZ, it suffers an inadequate investment in tourism.
Unfortunately, New Zealand has still not provided local bodies with a revenue stream to build tourism infrastructure in their areas - public toilets, car parks, lookouts, signboards, picnic areas.
Our motel was run down, showing the effects of Covid's impact on tourism. New Zealand's vitally important tourism sector needs a fundamental restructure after Covid. New impetus was not apparent: at least not in Gisborne.
What makes Gisborne struggle more? Matamata, Cambridge, and similar provincial towns have had people moving there to escape overly high Auckland house prices.
Our Reserve Bank zero interest policies have, unfortunately, driven up house prices, thereby masking structural economic policy failings. But Gisborne is too remote for Aucklanders to move there - meaning its fundamental economic pain is more obvious to see.
Will provincial distress be changed by the recently announced Budget? Will National's tax cuts or a revived Provincial Growth Fund help? Highly unlikely.
Concentrated focus on New Zealand's long-term structural economic growth is required, not short-term economic boosts aimed at the electorate.
Until that occurs, the economic pain in the provinces will likely only intensify.
• David Schnauer is an economist, retired lawyer and the author of Covid, Catalyst for Change.