Liam Dann: Make most of buzz because it may not last

Auckland will inherit more Rugby World Cup crowds and income because of Christchurch's earthquake disaster. Photo / Richard Robinson

New Zealand's path to economic recovery is going to be long and dark. We are being reminded of that, none too subtly, by the Government as it prepares the public for next month's tough Budget.

But it is unlikely that the economic load will be shared evenly across the country and it may be that Auckland's path is a bit shorter and lighter than elsewhere.

Obviously prospects are stronger than in Christchurch where economic growth has stalled - at least until the expected rebuilding boom starts.

But further north it is Wellington which looks set to bear the brunt of the Government's austerity regime as home to the largest proportion of the public-service sector.

Auckland looks poised to be a net beneficiary from the current maelstrom of economic influences.

With the largest population of mortgage holders - and many of the largest mortgages - emergency rate cuts made by the Reserve Bank last month will put more dollars into the Auckland economy than anywhere else in the country.

Meanwhile, unlike other regions, population growth and lack of new building is propping up demand. While the housing market has been sluggish, prices in most of Auckland's suburbs have continued to rise.

Then there is the Rugby World Cup on which high economic hopes already rested. It will now bring more people to Auckland and provide a bigger shot in the arm for hospitality and retail sectors which are in desperate need of a lift.

Although the city neither deserves, nor has asked for, any of these economic benefits there will be other earthquake effects giving Auckland business a boost.

Some national and international companies with branch offices in Christchurch have been forced to weigh up whether they can stay there. In many cases those that depart will compensate by either relocating staff to Auckland head offices or hiring more staff locally.

Already there are signs of commercial building activity picking up and more demand for office space.

Other sectors will see direct benefits while the Christchurch CBD is out of action forcing business customers to look elsewhere in the country.

A confident, thriving Auckland is probably a good thing for a nation that needs some bright spots in its economic outlook. But longer term it will do nobody any good if a micro-boom in the Auckland economy simply repeats patterns of the past.

Property development, thriving cafes and trendy retail stores might make the city a lively place to live and make people feel more wealthy but they don't generate the export dollars New Zealand needs.

So the risk of another Auckland bubble is a serious one.

There is some hope. From the Government through to the upper levels of the corporate world there is a feeling of optimism about the Super City's potential to restructure its economy.

The council's Auckland Unleashed discussion document and proposed 30-year plan offer some promising ideas for creating industry clusters to drive growth in sectors such as marine manufacturing and IT.

There are signs that the new council structure has brought some political peace which might allow Ports of Auckland to focus on expanding business.

With the right leadership the new council has the potential to finally get on with building the kind of infrastructure businesses need to thrive.

The goal should be to create an environment which is attractive to all business - from trendy fashion and web designers to less glamorous manufacturers and export-focused service industries.

That's the long-term focus and it is one which the city's leaders need to pursue vigorously for the good of the whole country.

But for now Aucklanders need to be conscious that any economic buzz they feel in the next 12 months is likely to be short-lived and superficial.

If it comes then let's make the most of it, but let's not forget those future goals - or the mistakes of the very recent past.

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