Rex Graham: Visiting economist off the mark?

House prices that are inflated against real incomes is not the only way to judge our economy, says Rex Graham.

Hawke's Bay Today's recent headline "The party's over" and the reference to our economy as a "One-hit wonder" is all a bit tragic and reminded me of a quote from one of their own. "An economist is an expert who knows tomorrow why the things he predicted yesterday didn't happen."

I'm sure that they mean well but it is sad that otherwise sensible blokes seem to believe that to become relevant and to be able to engage with the public they need to sensationalise the most negative part of their message.

Fortunately, with the exception of a few local "naysayers", nobody else in our region seems to agree with this assessment. The cafes and restaurants are full and tractor and car sales are in good heart. In fact, it been a very long time since our region has experienced such sustainable growth and prosperity.

The first thing that we need to tell our economist friends is that we don't judge our economy on house prices, which seems to be the current obsession of their profession.

This is an illusory monitor as it contributes to nothing except a perception that the current property owners are all well off.

In fact, many of us are disturbed that house prices are sadly inflated against real incomes, making it difficult for our young families to get their first home. The higher mortgages required to access these homes may help the bankers' numbers and gratify their shareholders but they are a destructive influence in our economy.

Perhaps our visiting economists should pause for a second and think about this and suggest ways to correct this imbalance.

For their reference we judge our economy of real things generated by the productive sector, creating jobs and wealth for our community.

This is influenced by innovation by our horticulturists, farmers, viticulturists and their service industries, who help drive this economy and have made us market leaders in many of their respective industries.

We do understand the realities of the international commodity markets as an important influencers in this matrix but for the moment at least they are mostly exceeding our expectations as the growing markets in India, China and the rest of Asia open their doors to us.

Many of our regional business leaders have been clever in hedging the effect of these global fluctuations with leading-edge innovation and production efficiencies.

To discover a simple example of this I would encourage both these visiting economists to take a drive up Te Mata Peak. They will look down on the most competitive and most profitable pipfruit industry in the world. Growers who have invested huge amounts of capital into their businesses and have driven up production per hectare by 20 per cent in the last five years.

They have also invested in developing some of the world's best apple varieties, which puts them in the front of the retail queue and hedges them against commodity shifts.

And they are just one example of world best standards which they will also find in other sectors of our economy.

In regard the next 12 months, there is not a local apple to be found in Europe and our growers can't get there quick enough. Venison prices are at record high levels, the beef market is strong and dairying is about to have a high payout.

We have at least another year of outstanding regional growth and I personally predict that it will go on a lot longer than that as we add another economic driver by building capability and capacity into our tree-nursery sector to enable the Kahutia Accord to proceed.

I agree that we need to keep our eye on the future as serious disruptive influencers are on the way and we will need to understand these threats and embrace the changes to make them work for us.

I have absolute confidence that our local business community and entrepreneurs will keep our region internationally competitive and vibrant for many years to come.

And may our party continue for some time yet.

• Rex Graham is chairman of Hawke's Bay Regional Council.