Frank Greenall: City fails baffled economist Cameron Bagrie

Economist Cameron Bagrie could have helped our GDP a bit by smashing some windows before he left town. Photo / Stuart Munro

Sadly, Whanganui's reputation as a caring and hospitable city has been dented. Last week we hosted a wandering economist, Cameron Bagrie - latterly chief economist for ANZ.

Straying from his home base, Mr Bagrie, found himself in the River City speaking - as economists are wont to do - on matters economic. His thinking was similarly economic.

Plainly, the richly oxygenated river air had affected Mr Bagrie's synapses, and he struggled to maintain coherency. But rather than offer the pastoral care so sorely required, we allowed him to depart without succour.

As reported in last week's Chronicle, Mr Bagrie said he'd spent time looking at the property market in Whanganui, and it had "given him a good appreciation of what's happening locally".

Throughout the country, there are "massive valuation differences. Auckland valuations are nine times incomes ... Whanganui and Manawatu are in the fours. The cheaper regions are attracting more people, attracting more capital". In other words, more demand for existing houses is driving prices up.

Mr Bagrie went on to say that for "Whanganui's wellbeing, the priority needed to be getting more money into people's pockets ... "

Now for existing home-owners whose house values increase through greater demand, the only way this will put money in their pockets will be if they downgrade or move somewhere cheaper still - options not necessarily conducive to boosting wellbeing. Of course, higher valuations can leverage credit, but more credit simply means more debt, and doomsday if prices then fall.

And for locals wanting their first home, increased prices will not only not put money in their pocket, but the bigger mortgages now required would remove even more money from their pocket.

In fact, it's probably fair to say the only capital being generated will be that accruing to the banks now in receipt of increased interest being paid on heftier mortgages.

Mr Bagrie had more to say on driving economic expansion for Whanganui. "It's a question of getting a lot of little things done well that will make a difference collectively. Think about what things will work and fix it up. It's not hard."

However, having made the point how not hard making economic progress is, Mr Bagrie had to admit that - funnily - he himself did actually find it a bit hard. Despite researching, he was unable to find a plan for Whanganui's economic growth, "but maybe I was looking in the wrong place".

Maybe the place Mr Bagrie was looking at was somewhere like Auckland. According to him, Whanganui's share of GDP is only 40 per cent of national average.

This suggests that if only we could be more like Auckland and Wellington and waste heaps more fuel stuck in traffic jams breathing diesel fumes, cough up mega-dollars on mortgage payments for obscene house prices, and shell out big-time for therapists to treat the health issues engendered by crippling debt, we could be GDP winners too.

Churlishly, before he left, Mr Bagrie failed to rove up the Avenue, smashing shop windows. The extra business this would have created for local glaziers would have boosted our GDP no end.

Mr Bagri might also have lamented the absence of another flood of 2015 magnitude: having to again restore all those houses along Anzac Parade would be a huge economic plus for the city, GDP-wise. By such metrics are GDP measured.

Mr Bagrie did manage to observe "that it's a nice-looking town, which is a big advantage when it comes to bringing people in". However, he was unable to join the dots indicating that maybe it was a nice-looking town because it didn't have manic traffic problems, nor congested footpaths, nor crass developers who'd obliterated the city's heritage heart in pursuit of the inedible dollar.

Perhaps the one sound observation Mr Bagrie managed to make was that "standing still was not an option". Luckily, heeding his own advice returned the economist from whence he came.