The country's fourth biggest economic region has lost the agency launched to power up its economy. Will it get another?
It was determined not to fail as three others had before it, but Waikato economic development agency Te Waka starved to death on a thin gruel of “protection politics”, business apathy and splintered geographic interests.
At least that’s what some post-mortem commentators say.
Others would suggest it simply didn’t get enough money - including from its prime constituency, business.
Or because the 11 local councils Te Waka also needed for life support had to tighten belts in the economic Covid hangover, or were free-riders and parochial. Or that having Waikato Regional Council as its main funder in the end wasn’t strategically healthy and crushed freedom of debate and operation.
As that same regional council eyes the potential for a new economic growth entity for the country’s fourth-biggest regional economy, stakeholders and the business community are being asked how they might support - or not - another attempt.
Regional council chair Pamela Storey has confirmed to the Herald business community predictions that her council will have a crack at the job this time.
“The decision just made by council as part of our long-term plan deliberations was a direction to staff to continue to work with our key stakeholders to develop an appropriate structure... a report will be coming back to our council in September to provide councillors the opportunity to hear what stakeholders feel is an appropriate structure to serve this region,” she says.
When mulling its draft long-term plan, the council considered a targeted rate on business and industry to support economic development, as do some other regions, she says, but it didn’t proceed with the idea - at least for this planning round.
“But depending on what structure we collectively as a region decide is most appropriate, that maybe is something we consider in the future.”
The big question for those close to the failed Te Waka - founded by one of the region’s most driven and energetic businessmen, Dallas Fisher who’s since been forced to take a back seat for health reasons - is what’s to stop a new entity falling over too? After all, all the same players and scenarios will be at the table.
Ratepayers too will have questions about funding yet another agency that might fail to fire.
Te Waka, launched six years ago, will wind up at the end of this month, after announcing it is closing “due to a lack of regional commitment and inadequate funding”.
It has three full-time staff and had been running on an annual budget of around $1 million, $750,000 of which was from the regional council.
Chair Hamish Bell says the business-led and governed agency, launched as “the authority on how best to power up the Waikato economy for the benefit of its residents and Aotearoa more widely”, had reviewed its ability to continue to function, and found it it did not meet its own criteria.
This included a commitment to its mandate from local government, businesses, and iwi, for the “freedom to operate on a long-horizon workplan”, and sufficient funding.
Or as board member and independent economist Cameron Bagrie puts it more bluntly: “It was not fit for purpose and it did not look like there was a pathway to making it fit for purpose”.
Bell himself doesn’t mince words: “The brutal reality is the nature of the organisation and the way it is structured and funded isn’t fit for purpose.
“We felt the region needed to have a really honest conversation around what economic development looks like, and absent us provoking that conversation through a brave call, it was unlikely to happen.”
Bell says Te Waka “ran on the smell of an oily rag”. The newest, smallest and least-funded economic development agency (EDA) “by a considerable margin”, it needed $3m-$4m a year to effectively represent a huge and diverse region stretching from Taupo to the top of the Coromandel, he says.
Waikato accounts for around 10 per cent of New Zealand’s land area and population and around 8.5 per cent of gross domestic product (GDP). Several sectors are part of national value chains, such as food, forestry and wood product manufacturing, manufacturing and services. While it’s the heart of the $25 billion dairy export sector, it is also New Zealand’s most important minerals-producing region and the country’s premier electricity-generating region.
Its central location between Auckland, Bay of Plenty, Hawke’s Bay, Manawatu-Whanganui and Taranaki makes it a nationally significant corridor for infrastructure, such as road and rail transport, electricity and natural gas, telecommunications and data.
Complicating the picture, the region’s diversity and size long ago led to some of the 11 councils creating their own economic development and promotional entities.
While popular opinion is that Te Waka died through lack of funding, Bagrie says money was “down the list”.
“It’s like the European Union. You’ve got great aspirational goals but then you’ve got the Germans, the Italians, the Greeks, the French and the Spanish. They’ve all got different views as to how it’s going to get achieved.”
Bagrie isn’t a Waikato resident but accepted the director’s job in 2021 because he was enthusiastic about the region’s potential. At the time he said it was a “steady economic outperformer with silent not showy wealth that feels like it’s stuck in third gear”.
Te Waka, he says, wasn’t fit for purpose because it lacked key characteristics needed by EDAs.
“You need strong funding from the business sector, or a mechanism that allows you to be funded from business. It didn’t have that clearly.
“You need all parts (of the region) involved. You can’t have one for half your income because it gives that funder dominant power or influence. Good on the regional council for being prepared to step in with the money but it just gives them too much influence to dictate direction.
‘You need every party, every council to be contributing. You can’t have some contributing and others not - you get a free-rider problem.
“You need an operational budget. There are expectations of deliverables on the other side. You need a certain amount to keep the lights on. The dollar amount was just chicken feed in regards to what was needed.”
Waikato Mayoral Forum chair and Hauraki District Council mayor Toby Adams says there’s now “an opportunity to reset and get the Waikato on an even playing field...”
That implies Te Waka wasn’t an even field?
“I don’t know if every council felt the benefits... there’s a lot more we could be doing and looking at doing. Economic development means many things and tourism is certainly one of them.
“I think we could probably do better and get a better bang for our buck and some more efficiencies if we did things as a whole in the Waikato rather than be split,” says Adams.
Hauraki was a funder of Te Waka and “got some value, but at times our council didn’t feel they were getting value”, he says.
“It’s not a bad thing having 11 territorial authorities in an area, it’s a bad thing if we don’t all work together.”
Adams says whether it’s a perception or a reality, there was a view among some councils that Te Waka ”may have been more focused on Hamilton city, which is not the whole of the Waikato”.
He says “obviously”, Waikato Inc didn’t support Te Waka enough because most of its funding was coming from local councils. Te Waka’s website says its “business partners” were BNZ, KPMG, Montana Food and Events (of which Dallas Fisher is a co-owner and director) and Perry Group.
Adams says “there’s never a right time” to start a new EDA venture and in economic hard times “you should be (even) more focused and trying to grow businesses and capitalise on things like tourism”.
Bagrie, who doesn’t believe it’s a central government responsibility to fund EDAs, says he scratches his head at the amount of money thrown at tourism. “Tourism’s a big industry but there’s a whole lot of other big industries out there as well”.
He says Te Waka succumbed to “protection politics”.
“One of the lessons of game theory is when push comes to shove, self-interest dominates group thinking.”
Bagrie says it might very well be there’s enough money being spent in the Waikato on economic development, but it’s not well-targeted and the model of several small agencies is questionable.
Te Waka mastermind, inaugural chair and funder Dallas Fisher says he’s “disappointed” at its demise.
The region isn’t doing a good job at togetherness, he says.
“Territorial authorities and businesses need to speak with one voice. Otherwise, you’re at risk of splintering off into small groups and nothing gets achieved. It’s a large area and sometimes it’s like herding cats.”
Councils in the region all have their own constituencies he says, and politically operate under three-year terms.
“They’re all siloed. It’s about wanting to get together to drive for the greater good. That might seem like a utopian view but it’s doable. When we get it right, it makes a difference. We got it right with the Waikato Expressway. It happened because everyone understood the greater good and the risk is we lose that - and the focus of central government.”
On business support, Fisher says at times that’s been challenging “because business gets involved in its own little world”.
The regional council’s Storey says the Waikato has a complex assortment of local governments, representatives and communities of interest.
“If you’re not an organisation that’s adequately resourced, it can be very difficult to get across a region that’s as complex as ours.”
On claims the regional council wanted to control Te Waka, and would ensure it controlled any new entity, Storey said “that was certainly never a position WRC took... though we did include (as part of funding approval) some commentary around accountability frameworks and potentially, a governance review”.
“That was just to ensure the agency was able to deliver on expectations.”
Storey says she doesn’t have “any preconception” of the structure of any new entity.
How it would be funded depended on “what structure we collectively decide as a region is most appropriate”.
Until the end of last month, the council had a regional development fund. It was carved out from a wider “investment fund”, anchored by proceeds from the council’s sale of its shareholding in Port of Auckland many years ago.
When the Herald spoke to Storey, the council had just decided to cease that fund. It had financed the Te Waka contribution and three major development projects including the new Kopu marine precinct near Thames.
Now it was no longer funding Te Waka and was ceasing the development fund, the council has “identified the residual... funds available to fund regional economic development activities, subject to council approval,” she says.
These “previously accumulated and unallocated” funds totalled $3.9m.
They are to be redirected to “strategic priorities that have a greater impact on economic enablers.” Storey says.
The future of Waikato’s economic development was an agenda topic at the May meeting of the mayoral forum.
“There is certainly support and consensus agreement that economic development is important for this region and that one voice for the region, particularly to central government, is imperative in the success of the region,” Storey says.
Last word to Te Waka chair Hamish Bell.
‘We’re absolutely gutted we had to make that call. We’ve actually delivered significant outcomes for the level of budget we had and the team can hold its head high.
“I think it’s a significant loss and for something to continue, local government will need to do something fundamentally different to come together for the betterment of the region. And we need business and others to contribute. They’ve been strong supporters but we’re chalk and cheese where we need to be to do it properly.”
Andrea Fox joined the Herald as a senior business journalist in 2018 and specialises in writing about the dairy industry, agribusiness, exporting and the logistics sector and supply chains.
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