Hawke's Bay Economic
Performance Update
Prepared for the Local Government Commission
September 2014
Report Prepared by
Sean Bevin, Consulting Economic Analyst
Economic Solutions Ltd, Napier
Email: sean.bevin@economicsolutions.co.nz
Contents
Executive Summary ..............................................................................................................................i
1-
Introduction .................................................................................................................... 1
2-
Recent Trends ................................................................................................................. 1
3-
Significant Developments ............................................................................................... 4
4-
Industry Profile and Change ........................................................................................... 6
5-
Napier-Hastings Economy .............................................................................................. 8
6-
Economic Development Characteristics and Influences ................................................ 9
7-
Key Regional Development Issues and Strategies ........................................................ 11
8-
Role of Local Government ............................................................................................ 13
9-
Conclusion .................................................................................................................... 14
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Executive Summary

This report provides an update on the recent economic performance of the Hawkes Bay economy, its key
characteristics and influences, the main economic issues and challenges facing the region at the present
time, policies that are required to address them effectively and the current involvement of the Local
Government sector in regional economic development policy and service delivery on the ground.

The report has been requested by and prepared for the purposes of the Local Government Commission
which is currently investigating the structure of the Local Government sector in the Hawkes Bay region.
Given that the report is primarily intended to provide further and updated background contextual regional
economic information for the future deliberations of the Commission, it does not comment specifically about
links that may possibly exist between the region’s economic performance and the operations of Local
Government in Hawkes Bay. Rather, the report focuses on the policies that are required in Hawkes Bay to
enable the region to address the key economic issues and challenges it faces in an effective and efficient
manner. The policies include, as indicated in the detailed report , the application of a focused, integrated and
achieveable Regional Economic Plan, which has full ‘buy in’ from all key economic development parties and
actively coordinates their various activities with the objective of significantly improving and sustaining
Hawkes Bay’s economic performance.

It is considered that such a Plan will enable the Hawkes Bay region to take much better economic advantage
of the many positive ‘infrastructural’, business, service and other developments that have occurred in the
region in recent years (see Section 3 of the report) or are impending (e.g. the proposed Ruataniwha Water
Storage Project and Whakatu Arterial Road) and thereby significantly lift levels of economic and employment
growth.

Based on the information provided in the detailed report, the key economic issues/challenges facing the
Hawkes Bay region at the present time continue to include:
- The significant lack of ‘economic scale’ in many respects.
- A relatively small and slow-growing population and decline in the traditional working-age population.
- Relatively limited and fluctuating employment opportunities and high rate of unemployment overall.
- Relatively low earnings and income levels.
- Generally low productivity levels and limited degree of ‘added value’ production.
- Significant manufacturing sector decline.
- Vulnerability of the region to ‘external’ factors adversely impacting its agricultural sector especially.
- Transport deficiencies including the cost of air services to and from the region.
- Tertiary education and industry research limitations.
- Lack of real commercial investment opportunities in Hawke’s Bay.
- Significant regional economic development planning and policy uncertainty in the region.
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
The report comments that the above issues should provide the main focus for future regional development
strategies and policies in Hawkes Bay and the economic development work in relation to this of all relevant
agencies.

The report suggests that the strategies/policies include as follows:
- Aggressive external promotion of the region for population, investment and new industry attraction.
- Productivity enhancement initiatives across all sectors.
- Policies to increase the resilience of key agricultural sectors to significant adverse climatic, economic
and biosecurity events.
- Strengthening of tertiary level education, training, research and technology application.
- SME business growth facilitation.
- Youth employment initiatives.
- Further roading and transport developments in the region.

The Local Government sector continues to play important roles in most of these strategies and a number of
others that are implemented in Hawkes Bay. In addition, the sector has a fundamental economic
development responsibility concerning the conditions within which the productive and commercial service
sectors operate. This relates to, amongst other things, the broad activity of ‘environmental management’
and covers such matters as the impacts of climate change (e.g. sea level change and extreme weather
events), biosecurity threats and natural hazards such as earthquakes and tsunamis. Councils have a role in
responding to these factors via their planning and regulatory services, risk mitigation and providing
information to the community. The effectiveness of Council policies and activities to address these issues will
be enhanced significantly by greater coordination of the policies and activities.
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1- Introduction
For the purposes of its current Local Government structure investigatory work in Hawke’s Bay, the
Local Government Commission has requested the provision of this report generally updating the
recent economic performance and situation of the Hawke’s Bay region.
As part of this, the Commission is specifically interested in Hawke’s Bay’s overall economic
performance versus other parts of the country; significant new business, infrastructural and other
developments that have occurred or are impending in the region; the current regional
economic/industry profile including the respective Napier City and Hastings District economies; main
regional economic development characteristics and influences; key economic development issues
facing Hawke’s Bay at the present time and strategies required to address them; and the role and
work of the Local Government sector in contributing to the facilitation of economic and business
development in the region.
The time period adopted for this report’s analysis is the period from 2006. This incorporates the
latest Census period results (2006-2013), the time period covered by Statistics NZ’s updated regional
and industry GDP estimates (2007-2013) and the period since 2011 which was the end year for the
regional economic analysis contained in the McGredy Winder & Co August 2012 report entitled
‘Future Prosperity of the Hawke’s Bay Region’ prepared for the Hawke’s Bay Local Government
sector. It is also noted that the analysis period includes the impact of the major global financial and
economic crisis from 2008/09.
The main information sources for this updated economic report include Statistics New Zealand,
reports from national agencies (MBIE, NZIER and BERL) on regional economic development
performance in New Zealand, Hawke’s Bay local authority long-term and annual plans, local
economic monitoring reports prepared by Economic Solutions Ltd for the Hawke’s Bay region and
other sources.
2- Recent Trends
Population
The 2013 Census results indicate a total resident population for Hawke’s Bay of 151,179 or 3.6% of
the national population. Over 2006-2013, the region’s population grew by 3,396 or 2.3%, compared
to the New Zealand-wide change of 5.3%. Hawke’s Bay had a ranking of 12th out of the 16 regions in
the country for this indicator. Over the period, the region’s share of the national population fell
further; the 2001 figure was 3.8%. At the same time, the region recorded a total permanent/longterm net migration outflow of 3,780, comprising a net overseas migration outflow of 4,607 and a net
internal migration inflow of 827. The largest age-group categories for the net overseas migration
outflow over the latest Census period were the 15-19 and 20-24 groups. The 2013 Census results
indicate that over the preceding seven years, the region’s 65+ population increased by 24.2% whilst
the overall median age of the population rose from 37.5 years to 40.6 years.
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Economic Growth
Figure 1 indicates the longer-term economic growth track for Hawke’s Bay since 2005. The base data
for the graph is sourced from Statistics New Zealand’s updated regional/industry GDP estimates for
the country for the 2007-2013 period. The Department’s nominal or current dollar terms GDP
estimates have been converted to real inflation adjusted terms. As the graph shows, annual
economic growth in Hawke’s Bay was relatively strong during 2005-2006. Economic decline then
occurred over 2007-2008. Since then, positive growth rates have prevailed in the region other than
for the 2013 March year. The regional growth rate for the March 2014 year was an estimated 2.5%.
Figure 1
The Department’s estimates indicate that over 2007-2013, nominal GDP for Hawke’s Bay increased
overall by 12.9%, compared to the national gain of 24.5%. The region had the second lowest rate of
growth amongst the 15 measured regions in the country. Northland had the lowest growth rate at
10.2% and next after Hawke’s Bay was Manawatu-Wanganui with an 18.9% growth figure.
The ANZ Bank’s quarterly index of regional economic activity growth in New Zealand, which is a
different growth measure from the Department’s GDP indicator, indicates that over the same period
economic activity in Hawke’s Bay grew by 3.1%, compared to 6.3% nationally. The region was ranked
12th nationally out of 14 regional areas, for this growth indicator. Northland and ManawatuWanganui had lower growth rates than Hawke’s Bay. The Bank’s growth figure for Hawke’s Bay for
the latest March year was 3%, compared to 4.4% nationally.
Figure 2 below indicates Statistics New Zealand GDP per capita results for 2013 for the different
regions of the country. GDP per capita is a formal single measure of the overall economic standard of
living in an area. The Hawke’s Bay figure ($39,035) gives it a national ranking of 12th out of the 15
listed regions. The overall national figure was $47,532; the Hawke’s Bay figure is equivalent to 82%
of this level. Taranaki had the highest figure last year, at $74,341. GDP per capita in Hawke’s Bay has
increased by 11.1% overall in nominal terms since 2007, thus giving the region a national ranking of
14/15 for this growth indicator. The highest regional increases were for the Taranaki, Southland,
West Coast, Canterbury, Gisborne and Bay of Plenty areas, all except Canterbury being regional or
‘provincial’ areas similar to Hawke’s Bay.
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Figure 2
Labour-force
The 2013 Census results indicate that total employment in the Hawke’s Bay region fell by 4,566 or
6.2% over the 2006-2013 period. The national change was +0.8%. Only one region, ManawatuWanganui (-8%), had a greater employment decline for the period. Over the year ended March
2014, Statistics New Zealand Household Labour-Force Survey (HLFS) results indicate a 1.3% fall in
employment for the combined Hawke’s Bay-Gisborne area, compared to the national gain of 2.9%.
Taranaki, Manawatu-Wanganui and Southland also recorded employment falls over the year.
At the time of the 2013 Census, total unemployment in Hawke’s Bay stood at 5,148 or 7% of the
regional labour-force, slightly less than the national figure of 7.1%. Hawke’s Bay was placed 9th out
of the 16 regions in the country, for this indicator. Over the seven years prior to March 2013,
unemployment in the region increased overall by 46%, compared to 44% nationally. Unemployment
rose to a higher degree over the period than in Hawke’s Bay, for six other regions. Since March 2013,
unemployment for the combined Hawke’s Bay-Gisborne area has fallen by 300 or 3.3% compared to
-7.3% nationally; at the same time, the rate of unemployment for the former area has fallen from 8%
to 7.9% and from 6.8% to 6.1% nationally.
Business Performance
The economic indicators evaluated in the above analysis provide a higher-level picture of the overall
economic performance of the Hawke’s Bay region during the past seven years. However, they do not
necessarily fully capture the more ground-level economic trends that have been occurring in the area
which provide a more balanced picture of regional economic performance. These trends include the
matters covered in the next section of the report. They also include an assessment of general
business confidence and performance in the region. In this regard, both the Napier and Hastings
Councils have been running structured formal biannual surveys of 200 businesses (covering all
sectors) in their respective districts, for a number of years now. One of the survey questions
concerns the current state of business trading – Figure 3 indicates the overall results for this question
for the March survey this year. As shown, the leading response category is ‘good’ business trading,
followed by ‘average’ and then ‘very good’ trading. Whilst this response pattern has generally
prevailed during the period in which the surveys have been undertaken, prevailing regional economic
conditions have impacted the proportions of businesses in each of the four response categories.
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Figure 3
3- Significant Developments
There are a number of major new business/service and infrastructural developments that have
occurred in recent years in the Hawke’s Bay region. In addition, there are a number of impending
developments that have the potential to significantly and positively impact the regional economy
over the medium to longer-term. In brief, examples of both categories include as follows:

Consented new building – Statistics New Zealand figures indicate that over the period since
2010, new residential dwellings worth a combined value of $661.5 million have been
consented in Hawke’s Bay. Values for other sectors include visitor accommodation ($12.2
million), commercial ($91.5 million), industrial ($92.8 million), rural ($17.3 million) and
community facilities ($91.6 million).

New business developments such as additional grape-growing land and winery investments in
the Hastings District; further pipfruit sector investments/‘corporatisation’ and handling,
storage and distribution facilities; ABB electronics company now based at the new Hawke’s
Bay Airport business park, upgraded and new production/processing facilities at Pan Pac
Forest Products Ltd, establishment in the Hastings CBD area of a new Kiwibank back-up head
office and call centre, new packaging business in Hastings, specialist hotel/conference facility
in Ahuriri/Napier, a number of substantial retail business upgrades and roll out of broadband
across the region.

Ruataniwha Water Storage Project – whilst this project has been consented by the
Government’s Board of Inquiry, further progress on implementing the project is awaiting
both the outcome of two appeals to the Board’s decision (which are expected to be heard in
November 2014 and could potentially change the Board’s consent decisions) and the final
level of commercial uptake of the available water. An updated consultancy report provided
earlier this year to the Hawke’s Bay Regional Council indicates that the regional GDP impacts
of the project are currently estimated at the construction stage (covering 12 years) $410
million, existing farming activity and farm support multiplier/flow-on impacts $136 million
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per annum at full operation of the project and potential related processing and processing
support $120 million at full project operation. The Central Hawke’s Bay District is expected to
benefit significantly from both the construction and operation of the project.


Transport sector – since 2008, the total volume of international exports handled at the Port
of Napier have increased steadily and overall by 56% (compared to 54% nationally). During
the year ended June 2014, a total export tonnage of 3.1 million tonnes were handled by the
Port, up almost 22% for the latest year. Total import tonnages handled by the Port have
increased by 30% overall since 2008, although they slipped 11% over the latest year. Other
significant developments at the Port in recent years include finalisation of a long-term
infrastructural development master plan, achievement of the Port’s current status as the
largest international container and break-bulk port in the central and southern North Island,
the $21 million investment in the 2012/13 year in new property and plant/equipment
facilities at the Port and development of the important cruise ship sector. The Port Company
is anticipating a 69% increase in general cargo volumes that it will be required to handle over
the next decade and a doubling of log volumes, and is budgeting in excess of $150 million for
further infrastructural development over the period.
Hawke’s Bay Airport Company and Roading developments – recent establishment of the new
Hawke’s Bay Airport business park with ABB electronics business as the anchor tenant. The
park is being developed to attract a variety of clients covering R&D, education, high tech
industrial, distribution, tourism and air-side businesses. The Airport Company is planning to
implement a number of other significant service upgrades and developments at the main
airport, over time. The Hastings District Council’s proposed new arterial road through the
major Whakatu business area, which provides an important regional freight transport link
between the general Havelock North/Eastern side of Hastings and the HB
Expressway/Western side of Hastings/Port of Napier, will shortly be receiving formal
resource management consideration.

Community and Recreational Facilities – upgraded and new facilities such as the HB Museum
and Art Gallery in Napier, Marine Parade Napier recreational developments, Hastings
Regional Sports Park facility extensions, and facility upgrades and service/programme
initiatives at the Eastern Institute of Technology.
Whilst the Hawkes Bay economy has clearly been directly impacted by the major international
financial and economic downturn over the past five years or so and also the effects within New
Zealand of this, nevertheless, there has been a range of significant infrastructural developments in
the region which will strengthen the basis for future regional growth in the area and enable it to take
better advantage of more accommodating economic conditions and policies, in association with
more proactive and integrated internal regional economic initiatives.
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4- Industry Profile and Change
Figure 4 below indicates, firstly, individual industry or sector shares of total industry GDP in Hawke’s
Bay for the 2007 and 2013 years and, secondly, the nominal growth in industry GDP between 2007
and 2013. The base data for the graph is sourced from Statistics New Zealand’s updated regional GDP
estimates released last year. The main points to note from the graph are as follows:

The industries contributing most in 2013 to total regional industry GDP are, in order,
commercial/business services, primary production and utility services combined,
processing/manufacturing, wholesaling and retailing, health care and social assistance, and
construction services.

The industries which recorded noticeably increased shares of total regional industry GDP
over the 2007-2013 period were primary production and utility services, transport/storage,
business services, public administration, education and training, and health care and social
assistance services. The manufacturing sector’s GDP share fell sharply from 22.7% down to
16.9%; the share for wholesaling/retailing fell a little whilst the construction sector’s GDP
contribution was unchanged.

Total industry GDP growth was highest over the period for, in order, health care and social
assistance services, education and training services, public administration, visitor
accommodation and food services, and primary production/utility services. Manufacturing/
processing sector GDP fell by almost 26%.

Over the shorter time period of 2007-2011 (detailed Statistics New Zealand industry GDP
results are only available for this period and ESL has been required to calculate estimates for
years 2012/2013), Hawke’s Bay manufacturing/processing sector nominal GDP fell by 17.1%,
compared to the national fall of 2.5%. Other industries where Hawke’s Bay performed
significantly behind the national industry GDP growth situation were agriculture, other
primary production and utility services, construction, visitor accommodation and food
services, transport/storage and public administration. The region performed significantly
better than the country as a whole in relation to the business services and health care/social
assistance service industries.
Figure 4
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From an employment perspective, the 2013 Census results indicate that the largest employing
industries in Hawke’s Bay are, in order, business services, manufacturing/processing, primary
industries, health and social assistance services, retailing and education/training services. Of the
above industries, those that recorded noticeable employment gains over 2006-2013 were public
administration, education/training and health/social assistance services, with the latter recording a
gain of 20%. Industries recording significant employment losses over the period were primary
production (-11%), manufacturing (also -11%), construction (-14%) and retailing (-13%).
The tourism industry is an important part of the regional economy and currently accounts for
approximately 6-7% of total Hawke’s Bay GDP and employment. As shown by Figure 5, momentum
in the industry was building nicely in the region when the severe global financial and economic crisis
struck from around 2008. Visitor night-stays fell sharply in 2009 and further the following year.
However, since then, a gradual recovery has been underway and the visitor nights tally for the latest
year (YE April 2014) was 7% above the 2010 low-point. It is noted that the visitor-nights indicator
comprises both domestic and international visitors staying in commercial accommodation and also
those staying in private homes with relatives and friends (VFRs); the former figures are sourced from
Statistics New Zealand and the latter from HB Tourism surveys. It is also noted that MBIE figures
indicate that over the 2009-2013 period, total direct visitor spend in Hawke’s Bay has steadily
increased and overall by 18% in nominal terms, compared to the national gain of 7%.
Whilst the combined Napier-Hastings area accounted for approximately 92% of total visitor nightstays spent over the past year in surveyed commercial accommodation in Hawke’s Bay, it should
further be noted that significant visitor attractions, activities and amenities are not also confined
mainly to this area; there is a range of important tourism features contained in both the Central
Hawkes Bay and Wairoa districts in addition to Napier/Hastings.
Figure 5
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5- Napier-Hastings Economy
The 2013 Census recorded a total population figure for the combined Napier and Hastings local
authority districts of 130,485, up 4,287 or 3.4% on the 2006 Census level. The combined population
represents 86% of the total Hawke’s Bay population and compares with 85% in 2001 and also in
2006. Thus, there has been a small increase over time in the combined Napier-Hastings share of the
total regional population.
It is noted that over the 2006-2013 period, the population of Central Hawke’s Bay District fell by 1.8%
down to a figure of 12,720 or 8.4% of the total regional population, whilst the population of Wairoa
District fell by 7% down to a level of 7,890 or 5.6% of the total Hawke’s Bay population.
The latest available population estimates from Statistics New Zealand indicate a total Year 2013
population for the main Hawke’s Bay urban area (Napier-Hastings) of 125,300 or 81% (compared
with 80% in 2006) of the total regional population. Since 2006, the population of the urban area has
risen by 3,400 or 2.8%, compared to the region-wide increase of 1.9%.
Table 1 indicates the industry employment profile of the respective Napier City and Hastings District
areas, as shown by the 2013 Census results. The significant differences between the Napier and
Hastings profiles are in relation to the proportions of the workforce in primary production,
manufacturing, wholesaling/retailing, accommodation/food services and transport/storage. The
direct wealth-creating industries (primary production, manufacturing and construction-utility
services) account for 20% of total Napier employment and 36% of total Hastings employment. The
combined Napier-Hastings area accounts for 80% of total Hawke’s Bay industry employment. The
area’s proportion of total regional employment is lowest for the primary industries and highest for
accommodation/food services.
Table 1:
Total Employment March 2013
Industry
Primary Industries
Manufacturing
Construction/Utilities
Wholesaling/Retailing
Accomm/Food Services
Transport/Storage/Coms
Business Services
Public Administration
Education/Training
Healthcare & Welfare
Arts & Recreation
Other Services
TOTAL
Napier City
654
2,214
1,368
3,666
1,596
1,287
3,306
1,176
2,205
2,178
474
1,112
21,246
% of Total
3.1%
10.4%
6.4%
17.3%
7.5%
6.1%
15.6%
5.5%
10.4%
10.3%
2.2%
5.3%
Hastings
District
4,287
4,845
2,058
4,089
1,236
1,080
4,338
1,122
2,637
4,338
351
1,044
31,425
% of Total
13.6%
15.4%
6.5%
13.0%
3.9%
3.4%
13.8%
3.6%
8.4%
13.8%
1.1%
3.3%
Hawke's
Bay Region
8,298
8,784
4,950
8,931
3,213
3,108
8,880
2,718
5,673
7,566
951
2,523
65,595
Napier/Hastings
% of Hawke's
Bay
59.5%
80.4%
69.2%
86.8%
88.1%
76.2%
86.1%
84.5%
85.4%
86.1%
86.8%
85.9%
The 2013 Census results indicated a total unemployment level of 1,917 or 6.9% in Napier City and
2,463 and 6.9% for Hastings District. Ministry of Social Development figures indicate a total of 4,700
people in Hawke’s Bay in receipt of the Government’s jobseeker support benefit in June this year,
with the totals for Napier being 2,017 and Hastings 2,318.
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6- Economic Characteristics and Influences
Effective external and internal decisions on key regional matters such as Local Government
structures and processes, Central Government regional development policies and programmes in
New Zealand, and Local Government and private sector involvement within regions in economic
development facilitation work all require, amongst a number of things, consideration of the wider
regional economic context. This includes factors such as the main economic characteristics of areas
and the key influences on their economic performance.
In the Hawke’s Bay context, the region’s main economic characteristics are considered to include
those listed below. A number of the factors mentioned are also alluded to in previous sections of the
report:

A production or wealth-creating base that is heavily orientated towards the production and
processing of rural commodities, a manufacturing sector geared to the servicing of the
production and processing sectors, and a range of specialist commercial/business services
supporting the rural sector.

A rural production base that is centred around the general activities of pastoral farming,
horticulture, wine, forestry, food processing and the manufacturing of textile products and
forest/timber products.

Resulting national rural industry specialisations in the form of sheep/beef/wool farming, pipfruit growing (approximately 60% of the national industry is located within Hawke’s Bay),
certain vegetable commodities, grape-growing, forestry, meat and vegetable/fruit
processing, wine-making, tanning and a range of manufactured forest product items.

A major international export orientation and well-developed supply chains within these
specialisations, including the role of the Port of Napier.

The rural production specialisation of the region is accompanied by a significant seasonality
component. This impacts its overall economic performance and moreso its labour needs,
with the horticultural sector in particular requiring considerable additional labour during the
February-May peak harvesting period. This is partly met by external international migrant
labour sourced through Central Government’s RSE scheme. The region’s important tourism
sector is also highly seasonal and adds to short-term labour demands in the area.

Given Hawke’s Bay’s significant rural production base, the region’s economy is exposed
considerably to external and internal changes that result in a largely fluctuating overall
economic growth track over time. This, in turn, results in varying annual labour demands.

The rural production and processing specialisation of the region also significantly impacts its
labour-market requirements in terms of, for example, qualifications, skills and income levels.

The dominance within the region’s commercial and other sectors of the SME (small medium
enterprises) sector. Firms and other organisations employing under 20 staff account for 96%
of all enterprises and 37% of total industry employment, in Hawke’s Bay. The sector includes
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many firms working in the rural sector (e.g. farming, contractors, rural advisers, etc) in the
region.

A roading and transport infrastructure that is also increasingly orientated to servicing the
needs of the primary production, processing and exporting industries, in addition to the
residential sector.

The region’s positive physical and environmental characteristics provide the underpinning for
its status as one of the key North Island domestic tourism areas and

Demographic factors such as a significant Maori population and ongoing net migration
outflows of young people from the region for personal development, tertiary/university,
employment, travel and other reasons.
The key external and internal economic influences/‘drivers’ for the Hawke’s Bay region continue to
include as follows:

Location – in general terms, Hawke’s Bay is ‘off the beaten track’ in respect of the main
centres of population and economic activity in the North Island and in terms of the main
north to south transport and communications corridor between the Auckland and Wellington
areas. This situation is increasingly challenging the region’s economic performance.
However, it is noted that the Port of Napier is well located in respect of New Zealand’s main
east coast international shipping lane and also in respect of the related cruise ship industry.
Hawke’s Bay has a relatively limited and costly air transport service. From an economic
development and tourism perspective, these factors require the region to continue to invest
significantly in external market promotion (‘destination marketing’) of its assets and
opportunities.

The ongoing economic and business performance of the region given its rural production
specialisation is heavily influenced by a mix of climatic, biosecurity, international market/
commodity price and exchange rate factors. More recent examples of this include the major
2007 drought and its lingering pastoral farming impacts, other significant adverse climatic
events, diseases affecting the kiwifruit and honey industries, the global financial and
economic crisis (GFC) impacting from 2008 and significant Asian market growth. The
Government’s economic policy responses to the GFC (e.g. Government expenditure
constraints and Departmental restructuring) and its ongoing macro and micro economic
policies, also continue to significantly affect regional economies such as Hawkes Bay.

Availability of financial, physical, labour and infrastructural resources for business/industry
growth and expansion. These resources include, for example, FDI (foreign direct
investment), Government funding for primary industry research (e.g. Primary Growth
Partnership), irrigation water, horticultural sector harvesting labour and migrant seasonal
workers, skilled labour availability and roading/transport services. The Eastern Institute of
Technology continues to provide a key tertiary level education and training service for the
HB-Gisborne area; it is noted though that Central Government funding and other policies for
tertiary education have had and continue to have significant effects in regional areas such as
Hawke’s Bay.
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
Demographic changes – for example, relative population growth in other parts of New
Zealand, overall regional population size and growth, working-age population growth, net
migration trends and the ageing population. Reference has already been made earlier in the
report to a number of these aspects. In respect of working-age population growth, it is noted
that over the 2006-2013 Census period, the traditional working-age 15-64 population fell
slightly and is expected to continue to do so over the next decade.

Regional impacts of Central Government budgetary and economic policy changes (the latter
including the notable absence of a coherent balanced regional development policy for New
Zealand).

Income levels in the region relative to the larger centres. 2013 Census results indicate a
median personal income level for the Hawke’s Bay region of $26,100, compared to the
national figure of $28,500. The Wellington, Waikato and Auckland region figures were,
respectively, $32,700, $27,900 and $29,600. The median household income levels for the
above areas were Hawke’s Bay $53,200, Wellington $74,300, Waikato $59,600 and Auckland
$76,500. The national figure was $63,800. There is anecdotal evidence that the relatively low
income levels in Hawke’s Bay are a significant deterrent to working people wishing to
relocate to the area.

Future Maori Iwi and Hapu economic development initiatives in Hawke’s Bay via use of
funding resources from Treaty settlements.
7- Key Regional Economic Issues and Strategies
It is evident that the Hawke’s Bay economy has faced ‘difficult times’ since the mid 2000s, primarily
as a result of the continuing impacts of the major international financial and economic downturn,
significant intra-regional events (e.g. droughts, winter storms and frosts) adversely impacting the
rural sector, and stronger growth (and competition) in other parts of the country (e.g. the Auckland
region, the Auckland/Waikato/Bay of Plenty ‘economic triangle’ and the Christchurch rebuild). Some
of the adverse trends occurring in Hawke’s Bay have their origins though prior to the mid 2000s. At
the same time, as this report has already indicated, there have been a number of positive economic
and infrastructural developments in the region over the past five years or so that should assist it in
taking advantage of any significant upturn in growth that may occur over the medium-term.
Recognition of the fundamental economic issues that continue to ‘dog’ the region at the present
time and the active implementation of regional strategies to address them should also assist this
process.
On reviewing the preceding commentary in this report, the key economic development
issues/challenges facing the Hawke’s Bay region at the present time are as follows:

General lack of ‘economic scale’ in most respects.

Population issues- relatively small population, slow growing, continued net migration losses
particularly the younger age-groups, decline in the working-age population and an ageing
population.
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Employment issues – fluctuating employment and employment opportunities; limited
availability of skilled employment opportunities and significant orientation towards the rural,
trade/hospitality and community services sectors; relatively low earnings and income levels
(accompanied by significant levels of income inequality); and relatively high rates of
unemployment particularly amongst the younger age-groups.

Low productivity levels ‘across the board’ and an overall limited degree of ‘added value’
production.

Vulnerability of the rural based regional economy to a range of external and internal factors
adversely impacting its agricultural sector.

Manufacturing sector decline.

Transport deficiencies, for example, closure of the Napier-Gisborne railway line, use of the
Marine Parade, Napier roading route for freight transport to the Port of Napier, issues with
the Napier-Taupo road and cost of air services to and from the region.

Tertiary education sector and industry research limitations.

Lack of real commercial investment opportunities in Hawke’s Bay.

Significant regional development planning and policy uncertainty in the region regarding, for
example, the most appropriate policies for the region to lift its levels of economic growth,
employment and incomes; what should be the respective roles in this of the region itself and
of Central Government; the most appropriate roles in regional economic development
facilitation for the Local Government/private/community sectors; and the balance between
regional and local economic development facilitation.
The range of issues listed above of themselves suggest what needs to be achieved in broad terms to
significantly improve the economic performance of the Hawke’s Bay region over time. At the outset,
the economic goals for the region and the strategies/actions for addressing them need to be part of
an overall agreed long-term ‘regional economic plan’ for Hawke’s Bay. The Plan needs to be very
focused and achievable and have full ‘buy in’ from all sectors (including local and central
government) involved in the implementation of agreed actions ‘on the ground’. A suitable and wellresourced regional ‘vehicle’ will then subsequently be required to drive the implementation of the
proposed Plan.
The range of specific policies that are determined for driving the region’s economic performance in
the future should be a matter of considerable discussion, research and consultation. In the interim,
the foregoing commentary suggests that they could include the following:
 Aggressive promotion of the region for population, investment and new industry attraction.
 Productivity enhancement initiatives across all sectors.
 Policies to increase the resilience of key agricultural sectors to significant adverse climatic,
economic and biosecurity events.
 Strengthening of tertiary level education, training, research and technology application.
 SME business growth facilitation.
 Youth employment initiatives.
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 Further roading and transport developments in the region.
8- Role of Local Government
Currently, territorial local and regional councils in Hawke’s Bay continue to be proactively involved in
economic development facilitation work in their own ‘communities of interest’.
It is understood that the focus of the Central Hawke’s Bay District Council’s work at the present time
includes preparations for the construction stage of the RWSS (Ruataniwha Water Storage Scheme),
youth employment and training initiatives, and further tourism sector development and promotion.
The Napier City Council has had a longstanding involvement in local economic development
facilitation work on a number of different fronts. These include ongoing infrastructural maintenance,
upgrading and development in support of City economic and business needs; provision of direct
funding support for key local and regional organisations (e.g. Art Deco Trust, HB Tourism and Napier
Inner City Marketing); tourism sector involvement and support (e.g. operation of the Council’s own
tourism ‘businesses’, amenities and Tourism Business Unit , City Marketing Programme, local Events
sector support and development); development of local community and visitor product e.g. cycle
trails and new Marine Parade recreational facilities; small business growth and development
facilitation; Sister Cities programme; and the ongoing provision of local economic information.
The economic development work of the Hastings District Council is similar to that of the Napier City
Council. Specific activity sectors include new industry attraction (e.g. the new Kiwibank Call Centre),
active external marketing of the District’s zoned industrial land (‘wet’, ‘dry’ and mixed industrial land
portfolio), further growth of the important Whakatu business zone including advancement of the
proposed new arterial road development), youth employment initiatives/Youth Futures Trust,
international student attraction programme, further CBD enhancement and tourism sector support
and development.
In respect of the Wairoa District, the Council’s existing economic development strategy cites four
important Council ‘enablers’ for economic development in the district; these are regulation,
infrastructural provision, planning and community/social development policy and processes. The key
opportunities for future economic development in the District are seen as revolving around rural
land use and planning, tourism sector growth and business sector development. A key focus for the
Council’s local economic development work is arresting the significant population decline (overall
-21%) that has occurred since the mid 1990s.
The Hawkes Bay Regional Council is also actively involved in regional economic development in
Hawkes Bay via its ongoing environmental services delivery work and in other ways such as the work
of its specialist economic development staff and significant economic projects such as the RWSS.
The recommended ‘regional economic plan’ referred to in Section 7 should provide a key opportunity to
focus, coordinate and integrate the future economic development work of Local Government, the private
sector, Central Government and other parties in Hawkes Bay. The Local Government sector continues to
play important roles in most of the strategies highlighted in Section 7 and a number of others that are
implemented in Hawkes Bay.
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In addition, the sector has a fundamental economic development responsibility concerning the conditions
within which the productive and commercial service sectors operate. This relates to, amongst other things,
the broad activity of ‘environmental management’ and covers such matters as the impacts of climate
change (e.g. sea level change and extreme weather events), biosecurity threats and natural hazards such as
earthquakes and tsunamis. Councils have a role in responding to these factors via their planning and
regulatory services, risk mitigation and providing information to the community. The effectiveness of
Council policies and activities to address these issues will be enhanced significantly by greater coordination
of their various services.
9- Conclusion
The purpose of this report is to provide the Local Government Commission with an updated
assessment of the recent and current performance and profile of the Hawkes Bay economy, as a
further piece of background information to guide the Commission in its further deliberations on the
future structure and operations of Local Government in Hawkes Bay.
The analysis contained in the report indicates that the region has faced difficult economic times over
the past decade or so, partly as a result of longer-term economic trends but primarily as a result of
the impacts of the major international financial and economic downturn prevailing since around
2008/2009. Whilst a number of significant adverse climatic events have also impacted the rural
production sector in Hawkes Bay since that time, its comparative economic performance versus
other parts of the country and the nation as a whole suggests that some fundamental economic
problems continue to beset the region thus preventing it from making the necessary changes that
will allow it to move to a higher and more sustainable growth path with a greater number of higher
quality and better paid jobs.
The last decade has seen in the region a number of major infrastructural and other very positive
developments and further ones are impending. It is important that the region is able to take full
economic advantage of these developments.
Local Government in the region, in partnership with the private sector and Central Government, has
a key role to play in this process.
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