Thursday, 26 March 2015

CIT's future options

Picture from the Upper Hutt Leader.
The CIT is now on the market (Upper Hutt Leader, 26 March). The ongoing saga since the closure of CIT in 2001 may be drawing to a close. JLL has been appointed to sell the buildings and land which has a council valuation of $13 million.

With the Treaty of Waitangi claim now resolved, there seem to be a number of future options for CIT:
  • The site is cleared and turned into a housing development.
  • CIT returns to some form of tertiary institution. WelTec may have to spend millions on earthquake strengthening its Petone building, it would make sense for WelTec to instead purchase CIT.
  • A technology park, hosting high-tech companies and creating high value, well-paid jobs in Upper Hutt.
My personal preference (as you can probably guess) would be for CIT to become a technology park. There could be a mixture of both a tertiary institution and technology park (or an "incubator" for new high-tech ventures) which would get optimal use of the site.

Wednesday, 25 March 2015

Alan Bollard and the Smiling Curve

Last week I went to a presentation by former Reserve Bank Governor Alan Bollard hosted by the New Zealand Initiative. The key concept Dr Bollard used was the "smiling curve", a way of emphasising where value is created in a modern economy. In years past, the curve was flatter - it was the fabrication of products that created the lion's share of the value in the economy.

The relentless expansion of technology and growth of the service economy has changed all of that.

Keep on smilin'
Now, more value is created at the start of the production process - patents, technology, research and development - and at the end of the process - brand, service and marketing. Dr Bollard then related this to New Zealand's economy and specifically to the dairy industry, using figures from the FMG Institute. The numbers showed that the production of milk power had a return on capital of 9%, where as marketing had a 17% return, and 29% for research and development. Oliver Hartwich, Executive Director of the New Zealand Initiative, asks:
...what would it mean for a New Zealand dairy company that is seeking to do increase its business in Asian markets? They might be aware that the return on assets is only 7 percent for farming, 9 percent for powder plants whereas it is 17 percent for marketing and even 29 percent for R&D and processing.
Which is where it gets interesting. There seems to be agreement that increasing our R&D spend is a good thing, but we need to make sure we take advantage of it. On the other hand, there are also lots of people who seem to think New Zealand should focus on the middle of the curve.

Sunday, 22 March 2015

CentrePort's "Big Picture"

Carrying on my recent obsession with seaports and their future for New Zealand, last week I sent a letter to the editor of the Upper Hutt Leader on CentrePort's expansion. I was responding to an earlier letter raising environmental concerns about the expansion:
CentrePort's response in last week's Leader was intriguing in its lack of justification for the dredging of Wellington Harbour. As well as the environmental concerns, ratepayers - as owners of CentrePort - should be concerned.

A recent Ministry of Transport report on the future of New Zealand's ports put forward a scenario where larger and larger container ships soon to be calling on New Zealand ports lead to fewer, bigger ports. CentrePort features in not one of the reports potential options, instead being relegated to a "feeder" port to the others.

Meanwhile, two of the "hub" ports the report identifies are moving in on CentrePort's business. Ports of Auckland and Port of Napier are opening a new logistics hub in Longburn, south of Palmerston North. They plan to rail containers there to their own ports, in direct competition with CentrePort's services.

If the Ministry of Transport's report comes to pass, we could end up with an environmentally degraded harbour that is bypassed by the major shipping lines. CentrePort needs to make its case clearly for the dredging to ratepayers.

Regards,


Lewis Holden
CentrePort have a website explaining what they're planning on doing in Wellington's Harbour, appropriately called "The Big Picture". But there's nothing in The Big Picture that addresses the underlying message of the Ministry of Transport's future scenarios for container ports: there will be fewer ports visited by these mega ships, with smaller container ports relegated to "feeder" status. That includes CentrePort.

Tuesday, 17 March 2015

Surplus

Here's a media release that seemed to have sunk below the radar... a half-year surplus:
This is the first time the Government’s books have shown a part-year surplus since 2009.
Oddly most articles focused on the February on the lower than expected deficit. But nothing on this news...

Tuesday, 10 March 2015

Anglophiles will be the death of the Commonwealth

A Union Jack and a service in an Anglican Church... hardly the future of the Commonwealth (2011).
Today is Commonwealth Day, a day meant to celebrate the modern Commonwealth of Nations. Hardly anyone in New Zealand - or the rest of the Commonwealth - knows about it.

The day has passed with very little to celebrate it, apart from a few stereotypical events: a service to mark Commonwealth Day a Holy Trinity Cathedral in Auckland (Anglican only, of course, yet still billed as a "celebration of diversity"!), the Royal Commonwealth Society in Auckland raising the Commonwealth Flag (I suspect much to their disappointment, not the Union Jack), and another flag being raised at the Wellington waterfront.

This is all very frustrating to me. The Commonwealth is a very useful organisation for New Zealand to be a part of. As Don McKinnon pointed out in his book In The Ring (on his time as Secretary-General of the Commonwealth) the organisation provides New Zealand with a number of advantages in terms of international connections and opens doors for us. It is in our national interest to be a member. It does a lot of good work for democracy, education and human rights internationally as well - work which gets very little coverage in New Zealand.

I'm sure there will be some who think it is hypocritical of me to support the Commonwealth while being a republican. That's exactly the source of my frustration. The monarchy sits too close to the Commonwealth, to the point where many people associate the positives of the Commonwealth to the monarchy (the common argument I heard while campaign chair of New Zealand Republic was opposition to a republic on the basis that New Zealand couldn't then compete at the Commonwealth Games). This is of course deliberate on the monarchy's part, as part of a wider strategy to promote itself. But the reality is that apart from the Head of the Commonwealth, the monarchy has little to do with the organisation, of which the majority of members today don't have the Queen as their head of state.

Back in 2009, the Royal Commonwealth Society in the UK - ironically much more forward looking than other Royal Commonwealth societies across the globe - warned that the Commonwealth was fading from the public's consciousness, even in Great Britain, and that this is undermining the future of the Commonwealth in the long-term. In its 2010 report, following an extensive public consultation under the "Commonwealth Conversation" banner, the society pointed out that the Commonwealth:
"...risks appearing to be little more than an imperial relic."
The report recommended greater engagement with more people. Five years on, that hasn't happened. Instead, the same Anglophiles who dominate the monarchist scene also run the Commonwealth groupings. Commonwealth Day emphasised this fact again: the celebrations, such as they were, were heavily Anglo-Saxon and protestant in nature. This is a tragedy, because without broader support, the Commonwealth will eventually die an unlamented death. If it does go, it's clear that ironically at this stage it will be the fault of the Anglophiles.