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Hubbard’s speech to the business community

24 November 2004

Mayor Dick Hubbard’s speech to the business community

Sixteen years ago I took a loan from a bank and started making breakfast cereal at a small factory in Onehunga.

I built that company from scratch. Today it produces 26 different cereals and has nearly 180 staff. Hubbards is the number three cereal manufacturer in New Zealand with a turnover of nearly $38 million - a quarter of that in exports to Australia.

I am a businessman and I understand business.

I support enterprise and innovation and coming from the business world I want to ensure that the business voice is heard at Auckland City Council

My role now as Mayor is of course a far cry from making muesli.

But leadership is the same whatever the organisation.

In 2001 I was elected Chair of the New Zealand Food and Grocery Industry. This represents the manufacturers and suppliers behind New Zealand's food, beverage and grocery brands.

Food processing is New Zealand’s largest and most competitive manufacturing sector. It also accounts for five per cent of gross domestic product (GDP) with 63,000 full time jobs. New Zealand supplies 2.4 per cent of the world trade in processed foods.

Eight years ago I set up Business for Social Responsibility and was appointed to the Executive Committee of the NZ Business Council for Sustainable Development.

Like you, I have run a business and chaired business associations.

Today, however, the business I am running is Auckland City.

I was elected leader of Auckland City on a non-political ticket based on the sound business principles of good governance, quality discussion and decision making which draws on the strengths of the whole team.

I will continue to apply these business principles to leading Auckland City – the commercial and economic centre of New Zealand.

As leader I have accountability to the people of this city and to be accountable means you have to be in charge.

Just as I did in those early days at the factory, I have rolled up my sleeves and got down to work.

This morning I’m going to talk about some of those initiatives we have already introduced as a team and what we have planned for the future.

Auckland City is the major player in the regional economy. We represent 50 percent of the region’s GDP. We are also home to some 400,000 people.

The City plays a unique role in the national and regional economies. We are home to: 60 – 70 per cent of the region’s jobs in professional services – providing a crucial link in the national economy’s value chain

70 per cent of the region’s jobs in ICT and 70 per cent of the region’s jobs in creative industries – sectors earmarked by central government as being crucial to lifting the country’s economic performance

In addition to the “new industries”, it is important to remember traditional strengths.

Auckland city plays a key role in regional manufacturing with the city accounting for 41 per cent of manufacturing employment in the region.

Auckland city’s economy has experienced extremely strong growth over the last two years of between and four and 5.5 per cent.

Our unemployment rate is below four per cent, the lowest it has been for nearly two decades and that now means that the labour market is stretched with firms having difficulty finding skilled and non-skilled labour.

Auckland City Council itself has had first hand experience of this and has needed to proactively recruit overseas in recent times.

Tourism too has been buoyant. Our international visitor numbers were up 10 per cent over the year to June 2004 with occupancy at 56 percent compared to the national rate of 30 per cent.

What we have now is a strong platform for achievement. If we benchmark ourselves against the major Australian cities, only in Perth did incomes per capita grow faster than Auckland City between 1990 and 2002.

However, this economic performance still needs to be put in context. Auckland city’s level of GDP per capita remains below that of key Australian cities.

We have to remember that today - cities compete with cities.

Auckland does not look to compete with Wellington and Christchurch but needs to be looking at Sydney and Brisbane and around the globe positioning ourselves to aggressively compete for investment and talented people.

We have been riding on the peak of an economic wave. But we must continue to progress and this in a climate where lower migration flows and rising interest rates will dampen economic activity in the short term.

Recent forecasts show the city’s economic growth will ease over the next couple of years to the 2.5 to three per cent mark.

While that is a slowdown on the recent past, it comes hot on the heels of a very strong period of growth.

We must move fast. And we have. Just six weeks into this new council, we have a new committee devoted to economic development.

Councillor Richard Northey chairs the committee with a team of councillors representing business interests. I will be working closely with this committee.

It is the first time we have had such a committee to focus on addressing the issues facing the business community.

Our message is that we are serious about business.

Fostering the health of our business community is a top priority.

Last week we presented some bold new policy directions as part of our annual planning process.

It outlined our commitment to providing an environment where business can flourish, higher value jobs increase and unemployment remain minimalised.

We will encourage business growth and investment. We will focus on attracting, retaining and expanding business and we will back it up by developing much-needed infrastructure.

Our role is to serve the people of Auckland in a way that is socially, environmentally and financially responsible.

To achieve this, we will work closely with regional and central government to promote economic development initiatives.

We are also working with the Committee for Auckland which is an independent alliance of corporate directors and chief executives, tertiary sector, not-for-profit leaders and Mayors set up to contribute to making Auckland one of the world's great places to live and work.

In particular we are working with the Committee for Auckland on building a better “Town-Gown” relationship in order to maximise the benefits of having two universities and a polytechnic in Auckland city.

Quality of life is at the centre of this. Auckland was ranked the fifth best place to live in the world after Zurich, Geneva Vancouver and Vienna on the annual Mercer Cities scale .

We must look beyond three year and five year cycles to the city of the future – a city of 50 years’ time.

Cities have to be built on the premise that they will last indefinitely.

The visionary cities of 50 years ago are now clearly reaping the benefits.

If we don’t plan now, our grandchildren will pay for this lack of foresight. Our city must be a sustainable one, environmentally and socially.

I want a vibrant city – rich in culture, arts, design and diversity. A vibrant city in turn attracts vibrant business. We will make Auckland City an attractive place for business. The people of Auckland can only benefit from this.

So what are we doing? Let me outline some of our programmes.

There are development programmes for the CBD, Newmarket, Tamaki and Sylvia Park that will be advanced.

Auckland’s CBD is New Zealand’s CBD – the international image projected by the CBD impacts upon the success of the nation.

Given this, the council is making a significant investment in the CBD to promote investment, deliver a high quality inner city environment and attract visitors and businesses.

The council is supporting the University of Auckland’s work at the Tamaki campus, working to help create an exciting new innovation park. Sylvia Park marks the biggest retail and commercial development in the city.

In addition there will be a focus on our industrial heartland starting with Rosebank but moving through to Onehunga, Penrose, Mt Wellington – looking to revitalise the city’s industrial edge.

We will welcome new business to the city by working closely with Tourism Auckland, Heart of the City, New Zealand Trade and Enterprise.

I will represent Auckland City on the Tourism Auckland Board.

We support the Auckland Regional Economic Development Strategy – a framework widely endorsed by the region and central government. I will be looking objectively at how implementation of the Auckland Regional Economic Development Strategy is best progressed.

We will work with New Zealand Trade and Enterprise and Investment New Zealand to build international networks to enhance trade and encourage international investment in strategic sectors such as hi-tech industries and the CBD.

We want to lift Auckland’s export capacity through our well-established links with cities and businesses in Japan, Korea and China. We will also be working closely with Ports of Auckland.

Auckland city will continue to support Film Auckland, the office charged with supporting and marketing Auckland’s film industry. Investauckland.com - designed to promote the value proposition for investing in Auckland - is up and running.

The new council is committed to continue reducing the differential between business and residential rates. We also continue to assess our regulatory processes to achieve best practice and excellence.

We will be working hard to foster links with advocacy groups through their Chief Executives: Alasdair Thompson at the EMA, Michael Barnett at the Chamber of Commerce, Peter Neilson at the NZ Business Council for Sustainable Development, Bob Walters at The Export Institute.

This morning is an important step in this direction.

When the economy is booming, there is inevitably pressure on infrastructure.

Traffic congestion is a major problem for people and for business.

From an economic perspective the best estimate of costs of congestion to Auckland now exceeds $1 billion a year. Road congestion is a huge burden on the city’s manufacturing, distribution and service businesses. However, the economic cost is compounded by the environmental and social costs of accidents, emissions and noise.

We will work with Transit New Zealand to help deliver the Auckland component of its 10- year state highway plan.

There are some immediate priorities: the State Highway 1 central motorway junction improvements and the State Highway 20 bypass from Manukau City through Onehunga and Mt Roskill to the North Western Motorway.

We will also find ways to improve the design of the planned harbour to city State Highway One planned development to address the environmental issues which have been identified relating to noise, air quality, and visual impact while preserving our heritage.

Risk management is a fundamental part of business and I believe that one of the biggest risks to Auckland and to the New Zealand economy is our absolute reliance on the Harbour Bridge.

Back in 1987 a study was commissioned to investigate the provision of additional capacity. Ten years later the ARC investigated a total of 14 corridors with 48 options and the sub committee concluded that the best option would take the form of either a bridge or a tunnel.

The Regional Land Transport Strategy recognises that it will take 13 to 16 years to plan, design and construct an alternative. We need to get on and do this.

The highway component of the Eastern Transport Corridor will go.

However, while the road disappears, the problem clearly doesn’t. This is on the agenda for the council and must be addressed as a priority.

Action will be taken to improve the rail system both for passengers and for freight, particularly from the Port to the inland port at Wiri.

Fundamental to our success will be developing a sustainable public sector transport system.

We are committed to working with ARTA to enhance and extend the 10-year rail plan.

We will give urgent attention to the extension of efficient, affordable and accessible bus transport around the city.

One of the reasons for London’s successful implementation of its road congestion charge was that they increased the number of buses. London is now running its highest volume of bus services since 1957 and bus use is up 11 per cent.

Aucklanders want our city to be a great place to live, work and do business; They want to feel proud of our city again.

If arts, culture, and the city’s heritage are the heart of Auckland, sustainable business is its lifeblood.

We are a team, a focused team and we will be working hard for business in Auckland.

I ask for your support today and look forward to an open exchange of ideas with all of you during the next three years so that we have the right urban design, the right infrastructure and the right business environment to meet the needs of today and for the next generation.

ENDS

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