Hamilton is having a commercial construction boom. Photo / Supplied
Steady economic outperformer Waikato is a region with "silent not showy wealth" that feels like it's stuck in third gear, says economist Cameron Bagrie, new director on Waikato's fledgling economic development agency.
The former ANZ chief economist, now an independent consultant, is not a Waikato resident but says he accepted the role because he's enthusiastic about the region's potential at a time the national economy "needs to go through one hell of a transformation".
Known as Te Waka, the agency is the Waikato's fourth attempt to create a strong regional economic development voice.
Formed three years ago and limited by Covid restrictions for a chunk of that time, it covers one of the country's biggest regions yet is the smallest regional agency and probably the lowest funded, says board chair Hamish Bell.
Te Waka's been without a chief executive for more than a year with Bell acting as executive chairman recently while it rethinks its strategy and takes on new directors and management. Bell says a search for a new chief executive will likely start before Christmas.
Bagrie is part of the new drive along with independent director appointees, Leesah Murray, chief executive of of the Independent Māori Statutory Board, and scientist and entrepreneur Andrew West.
"They wanted someone to put a different lens over what they are seeing and what they want to do," says Bagrie.
"A lot of my brand is built around independence and I'm not exactly shy about expressing a view.
"There's a whole lot of opportunities in the Waikato. It's part of the golden triangle so has logistics and distribution potential, education is a material employer, the innovation sector is growing, construction's a big one with population growth, and there's health and manufacturing, renewables and sustainability.
"As a region Waikato has outperformed the national average for the past 20 years but it still feels like a region stuck in third gear that could offer a lot more."
Waikato represents 8 per cent of New Zealand GDP. Last year it recorded 3.4 per cent GDP growth compared to the national 3 per cent, and is 38 per cent of export GDP compared to the national 27 per cent.
It is home to some of the country's most successful, wealthiest - and publicity-shy - companies and exporters. Many are family-owned.
While most associated with dairying (25 per cent of national milk production), the region's second-biggest earner is manufacturing, with food production contributing 60 per cent of regional exports. It's a national science and research stronghold, and was the country's fastest growing tech region in 2017 and 2018.
But the region's productivity growth (0.9 per cent compared to the national 1.1 per cent) and mean household income growth need work. The latter, a measurement of standard of living, was 2.9 per cent last year compared to 7.5 per cent for New Zealand.
Bagrie said there's no magic bullet for realising Waikato's potential. "It's going to take a whole lot of little things that when accumulated will add up to something very powerful".
"New Zealand needs to unlock some alternative sources of growth. Covid is going to hit the productive capacity of parts of New Zealand, climate change is a responsibility we need to own up to.
"We can't have an economy with house prices rising 7-7.5 per cent on average a year. You need to fix the housing market to fix education. Supply chains globally are a mess, I think that's going to stick around for a while. Does that mean manufacturing opportunities for the Waikato and New Zealand? Yes.
"What do we need to be doing to strengthen the networks between education and the business community to unlock some of those manufacturing opportunities."
Bell, a former PwC partner and banker and experienced director, says the benefit of having Bagrie on board is that he's in regular contact with all levels of NZ Inc and Government and has unique perspectives on the economy.
"He can talk to a wide range of people about what's important to the economy. He has a real independent focus and brings that authority into a regional focus."
Bell says the recipe for Te Waka's survival is making an impact, "picking areas where we can achieve things".
Logistics and distribution is one.
"We are seeing a massive move of companies for manufacturing and distribution centres in the Waikato. How can we support that?"
Waikato-Tanui's huge inland port and freight hub now underway at Ruakura is an obvious example of how Te Waka can help add value to that platform for growth, he said.
Te Waka's not about talkfests, Bell says. Earlier this year it brought freight and logistics sector leaders together and commissioned Ernst Young to report on the economic impacts and opportunities in the role of central North Island distribution.
That report will be released before Christmas and is "not another long-winded piece of research, but focused on what is needed for action."
One of the Waikato's biggest economic growth constraints is people, especially in the construction sector, he says. But the challenge is getting skills right now.
Te Waka's launching a campaign soon targeting Aucklanders with construction skills for migration to the Waikato. Also targeted will be Aucklanders wanting to retrain and who can skill up fast.
"This ties in well with migration data. There's been massive migration out of metro areas and we're seeing a significant trend of Aucklanders looking to relocate here for jobs, the schools, lifestyle and quality of life," Bell says.
While Te Waka and the failed agencies before it see the potential, the task of unlocking it can seem herculean.
Te Waka's trying to unite and be the voice of a huge geographic and economically diverse area - Thames and Taupo have little in common for example - with 10 districts and 11 local authorities, some with their own economic growth agencies.
Money is tight.
Te Waka is dependent on local councils and a handful of loyal business sponsors for funds. Its annual base funding for the next 2.5 years is just $1.1m - "enough to keep the lights on" - and that's only thanks to the Waikato Regional Council doubling its contribution.
If it adds in Government contract earnings and business donations the total annual budget could nudge $2m for the next 2.5 years, says Bell.
The agency has four full-time staff and five people doing full-time business support under MBIE and Callaghan Institute-funded programmes.
"If we were funded at the national (agency) average, our operating budget would be closer to $15m to $16m," Bell said.
It's received $250,000 a year from local businesses and will be revisiting them and some new faces soon for a funding commitment for the next three years.
A request for Government funding this year fell on deaf ears.
With local councils facing major central government reform challenges - RMA, local government and water reforms - Bell is concerned about the security of that line of funding too.
"We don't want to be big. We know we have to work within our means. We want to be small and focused on making an impact. We probably need about $3m to $4m a year if we are going to create meaningful impact for an important region."
The challenge is to achieve collaboration across a very diverse region so that Te Waka can be an effective voice for the whole Waikato. It doesn't want to "own" the region's economic development, just be an effective coordinator of it and a voice investors and funding sources can hear, Bell says.
"Look at what happened with the PGF (provincial growth fund). Parts of the region chased what was important to them but a coordinated approach with clear regional priorities and a supportive partnership approach to the PGF would have probably made for a stronger (request) position.
"But the region wasn't there. It hasn't traditionally worked well together.
"It's had three failed attempts to create economic development agencies but I think we've stuck our heels in there now for the greater good. But we have to work together, that's really important.
"If we can get business on side and seeing us make a difference then I think local government will hear that message.
"Scoring boundaries is nice but a single here and a single there gets runs on the board. We have to make sure those runs are relevant and not boiling the ocean."
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