Powerhouse that needs a plug

By JIM EAGLES business editor

Auckland needs an economic shakeup.

That message has come through loud and clear from assorted conferences, reports, forums and economic surveys in recent months.

The sickness has been diagnosed; now it's time for decisions and action to find a cure.

Research has confirmed that Auckland is still the economic powerhouse of New Zealand, but more by virtue of its sheer size and growth in population than any increase in productivity.

That is not good enough if Auckland is to keep up with other major world cities.

It also represents a national problem because, much as the rest of the country may like to ignore it, New Zealand needs a thriving and successful Auckland.

As a result, much effort - nationally as well as locally - has focused on studying how to get Auckland booming again.

The sense of emergency has even succeeded in getting the region's eight regional, city and district councils to join forces to draw up the first ever regional economic development strategy (AREDS), aided by a $500,000 grant from Industry New Zealand.

That process is proving fairly longwinded because of the decision to involve not only central and local government agencies but also business, Maori and community representatives in a series of forums.

But it is likely that within the next week or two the first draft of a business plan for the region will emerge.

The focus of any effort to revitalise Auckland's economy is likely to be the creation of a regional economic development agency.

Such an agency is almost certain to form a part of the embryonic regional development strategy.

Competitive Auckland strongly supports the concept and it is the key recommendation of the latest report on the region prepared for Competitive Auckland by the Boston Consulting Group.

The consultants looked at how other major cities - in particular Melbourne, Brisbane, Silicon Valley, Glasgow and Toronto - successfully boosted their economies.

All of them have national development strategies in place, mostly along similar lines to what the Labour-Alliance Government is developing, and all of them have active local economic development agencies (EDAs), much like Enterprise Manukau or Enterprise Waitakere.

But the big difference, says Boston Consulting Group manager Dave Tapper, is that each of those areas also has an effective, well-funded regional organisation serving as the focal point of economic development.

"That is what we lack," he says. "At national level we've got Trade NZ and Industry NZ. At local level there are some very active EDAs. There are also some very effective specific industry organisations.

"But there is a gaping hole in terms of a regional organisation that first and foremost champions economic development in the Greater Auckland area."

The lack of any such organisation was apparent when Motorola sought an Australasian site for a 200-job software engineering centre.

Several cities in New Zealand and Australia pursued the opportunity vigorously - Perth won with the aid of a $25 million assistance package - but when the company eyed Auckland no one was home.

That situation is exacerbated by the fact that Auckland City, likely to be the first name on the lips of a foreign company contemplating investment in New Zealand, is the only one of the region's cities not to have an EDA.

Not only is no one out in the international marketplace putting Auckland's case, there is no one working to keep the business that is already here.

"Our big competitor is Brisbane," says Competitive Auckland executive director Alistair Helm, "because not only are they gobbling up a lot of the investment we could be getting, they're also over here every day of the week and as soon as a business gets legs they're offering incentives for it to go over there. Boy, they're aggressive."

The lack of a regional economic body was further emphasised when Competitive Auckland acted as a catalyst in the development of industry clusters - in areas such as marine and biotech - as a way of helping New Zealand industries to achieve critical mass in a big world.

Once the clusters were established it quickly became clear there was no organisation able to fill the on-going co-ordination role which elsewhere would be done by the regional economic development agency.

"As a result," says Helm, "Competitive Auckland fell into the role of implementation, the role of an EDA, because there was no one else to do it."

The same issue will arise when the business plan for the region is finally agreed on.

Says Tapper: "No one can know yet what the AREDS process will come up with but you still end up facing the issue of finding an implementation vehicle.

"That's really why we decided to do this research into development strategies and the role of EDAs in other countries."

The Boston study certainly indicates that regional EDAs achieve results.

The Brisbane Office of Economic Development is credited with attracting $600 million in new investment and creating more than 3000 jobs. The Greater Toronto Marketing Alliance claims responsibility for 21 businesses relocating into the area and creating more than 1000 jobs.

The Boston group's report suggests the basic structure for a successful Auckland model is clear:

* It should be independent of local councils and politically neutral.

* It must have a highly respected business leader as chair, a small executive committee with strong business representation to make day-to-day decisions, and a larger board made of leaders from business, local government, education and the community to set the overall direction.

* It would require a budget of $3-5 million - mostly from local or regional government - which could be augmented from central Government or business for specific projects.

* Its main roles would be to act as the voice of economic development in the region, to pursue investment and to work with industry clusters. It would also co-operate with Trade NZ on export promotion, could lead regional trade missions and would work with Industry NZ and local EDAs to co-ordinate delivering assistance to small and medium businesses.

Although the need for such a body seems clear, there are still questions over whether it will become a reality.

Will Auckland's notoriously fractious local bodies really agree to work together on - and provide funding for - a regional economic development body? And will central Government for once come to an Auckland party?

Competitive Auckland's view is that it simply has to happen.

Tapper, who is on the Competitive Auckland board, says it is very hopeful the Auckland regional development strategy process will lead to the creation of a regional agency.

And if it doesn't? "This is too important to let slide."

* In Forum tomorrow, Alistair Helm, executive director of Competitive Auckland, and Joanne Keestra, partner with LEK Consulting, offer their visions for securing Auckland's future.