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NZ presents some of the most alluring property in the Western World; particularly given the greater easy of residency, the low cost of property, and the liveability of the country. In addition, there is no capital gains tax, transfer taxes, VAT/GST or wealth taxes in NZ, so rest assured that NZ property is tax-effective! Learn more now!

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Saturday, December 20, 2008

Local governance in NZ

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It has been a long time since I've heard anyone pitching for an Aussie to run local govt in NZ, though having lived here two weeks I think I could do a better job. In recent times the Wanganui City Council has held a referendum to solicit public feedback on which of 5 projects they should fund in the current term of government. The options were: A playground, a library extension, an events centre, and two others. Unsurprisingly the public made a good choice from a bad lot. They selected the events centre, presumably because it meant jobs and better facilities. Now the local mayor Michael Law has suggested the events centre is a bad option because it’s too expensive. So he wants to run another Yes/No referendum. The other councillors think the local government would look stupid if they did that. On that issue a referendum would be a sure result. The problem as I see it is partly philosophical, partly just poor judgement and leadership.

A referendum should never have been held in the first place. Democracy is a croc by any measure, but once elected a councillor has to make their own judgement, not run around asking what voters think. If an elected official is doing that, then they are not fit for a leadership role. Leaders lead, not follow disinterested, uninformed voters. The local government looks really stupid because there does not even appear to be any pre-feasibility study into the various options. It would only be on that basis that anyone can make any kind of decision.

Given the lack of initiative displayed by the local government, I have decided to prepared my own pre-feasibility study for the development which I think local government should canvas. I want to see local government do more to support an improvement in local broadband services, and here is why.

1. Broadband in the modern era is core infrastructure

2. Telecom NZ represents its shareholders, not the interests of the local community

3. Broadband creates jobs because it attracts businesses and makes local business more efficient, and reduces telecommunication costs

4. Kids and families also want access to broadband for entertainment, news, school projects, as well as home-spun business and shopping.

5. Broadband would offer a few jobs in actually laying cable but that is a minor element.

More importantly, broadband should be part of a broader push to make NZ a more competitive country, and by doing so, to expand its share of global economic activity. NZ is one of the most remote corners of the world, 2nd only to Easter Island. Nothing reduces isolation more than broadband services. Existing without good infrastructure is KEY for NZ. The Closer Economic Relationship with Australia was a wise move for expanding NZ trade. The next bigger opportunity is to lift the country’s internet infrastructure so that Kiwis can trade with the world. The next considerations (in order of importance) are:

1. Cost of shipping

2. Cost of travel

3. Market regulation issues

I am actually suggesting that Wanganui turn its greatest weakness – poor quality internet – into its greatest strength. It’s important because we are talking about a fundamental weakness. Business and families in the modern era need good quality internet. I don’t make that point lightly. Commerce is increasing online these days, and whether you are condemning you population to low incomes by producing low value produce or not, you still need low cost telecommunications because everyone else has it. More importantly it’s so easy to fall behind in online commerce, and educating young people in how to use the internet is critical. If they don’t learn when they are young they will be left behind.

I believe Wanganui local council should abandon the referendum, and redeem whatever lost credibility they have. Voters select councillors to make the hard, yet informed decisions; not to have important, complex issues thrown back at them. I think any venue with a beach and a rural market like Wanganui could benefit from an events centre, but it’s premature. The local community has to create something distinctive about this place first. There has to be a reason for people to come here. At the moment, the population of Wanganui is barely stable. People are voting with their feet. The council needs to come up with a reason for people to live here, and to support that vision. In the following paragraphs I will outline my vision of where Wanganui should move based on just 2 weeks experience living in NZ and Wanganui.

The council needs a strategy for boosting jobs in the local area that recognises 3 sources of possible revenue growth:

1. Local value added and product branding – I have a strategy for farmers to target Asian markets (I lived in Japan and the Philippines for 5 years)

2. Regional market support – The regional market I would consider to be the North Island of NZ and East Coast Australia, though the focus should first be Wellington, then Auckland and East Coast.

3. International market support – These are measures I would canvas to boost Wanganui’s international exposure. The target should be Australia, Asia and even Latin America.

All of these activities presuppose an economic hub (Wanganui) that is capable of offering some distinct value to the market, wherever it is defined, whether its fresh farm produce, building materials & services, creative online content, or higher value products based on world-leading technologies.

The council needs to develop a detailed feasibility study that considers all those issues. In the following section I will identify specific projects the government should support:

1. Telecommunication backbone – Already Vodafone offers business a very attractive telecommunications package. You can make unlimited calls to Asia for just $40/month, and you could always use Voice-Over-Internet-Protocol (VOIP) for other countries, after all that’s what Vodafone uses. But data bandwidth is terrible. Rather than relying on Telecom NZ to connect Wanganui, I recommend council solicit expressions of interest from private contractors to build-operate-transfer (BOT) fibre to node links around Wanganui, so that businesses and households can self-fund a wireless or fibre to base option themselves based on the value of the proposition. The council should connect the schools, council, hospital, etc in this funding.

2. Educational backbone – Wanganui should develop its college facility to provide an education to both mature aged adults (existing & new businesses) as well as youth (employees & future CEOs). The college should provide English teaching so that Asian youth can come to Wanganui to learn English & creative online ecommerce cheaply. Low NZD, safe, clean, low cost of living, friendly people, nice environment, close to major city, reasonably good facilities for young people. Importantly job creation would help reduce the incidence of crime, and demand for housing would mean landlords would not have to rely on addicts, but Asian students for rental income. The drug addicts would be driven out, so Wanganui no longer attracts the country’s hopeless, but can give them hope. A high speed fibre optic network is critical to NZ to grow its global share of economic activity. It’s a strategy that fits its green image, its lifestyle, its technical capabilities, as well as addressing its weakness of isolation from markets. NZ could be a leader is pushing for internet conferencing with customers, to turn a weakness into a selling point. NZ is the most isolated place in the world, only outed by a few statues on Easter Island. The internet travels at the speed of light, but not our congested network. By bringing us into the 21 century we can compete with the rest of the world, whether its importing product (trade jobs), outsourcing jobs (allowing us to do higher value jobs), creative jobs (at the higher end).

3. Computers for schools: Fund the addition of more computers into schools and integrate it into the school curriculum. Even if education is not a local government concern, there is no reason why local government cannot engage in value-add. Its a case of doing whatever it takes. The intent of course is to get people using these services in the family, to lift the internet penetration in the city so we can also do commerce with other parts of NZ and the world. We want to be leaders not followers.

4. Business service centres: Wanganui is a little remote from Wellington, and transport conduits are not good enough yet to make this market very accessible. I suggest (until a very fast train service is established) that the council buy a house or build a dormitory in Wellington for the benefit of Wanganui business people. The intent is a place where they can stay for $20/night, and have access to the internet, fax, email, photocopier, presentation/meeting rooms, and accommodation on a booking basis, with the cost reflecting demand. This will ensure businesses offering high value jobs are rewarded first. Make those services available to registered Wanganui district biz owners and registered employees, with priority for executives who create new business opportunities. If the idea works, the scheme can be duplicated in Auckland (perhaps based around flights) and maybe even Eastern Australia (perhaps in JV with other local governments). Secondary priority could be given to Asian biz executives sponsored by local companies. Wanganui builders could build the facility and look for new contracts at the same time in Wellington.

5. Food marketing assistance: Assistance to NZ farmers to identify new food export opportunities to Asia and NZ and Aust restaurants. Let’s make use of our only proximal partner by selling food to high-end Australian restaurants. Maybe we will be able to justify charter flights from Wanganui to East Coast Australia (say Canberra, Dubbo, Newcastle, Bankstown, Port Macquarie) for produce and executives. Maybe this might be a model for future aviation deregulation, where people are able to leave the country from smaller regional centres based on a one-stop shop for small volume airports. There is no reason why Wanganui cannot be a gateway to NZ from regional Australia.

6. Create regional farm brand: Promote ourselves under a number of local fresh food brands in Asia, plus for outsourcing services in Asia, creative design jobs. To take that role we want to train local design people in how to be business people as well as design people. I don’t believe Westerners know there value when it comes to dealing in the developing world.

7. Improved transport: Increase bus services to Palmerstown North and time them to get buses or trains to Wellington or Auckland.

The suggestion of an events centre is not a bad one, it’s just premature. You are not going to convince others to hold events in Wanganui when you cannot even hold your local population. When Wanganui can stand up and proudly say we are growing, and have a successful .....etc, then you build such a centre. Also we are just about to enter a 4-5 year global recession of higher taxes and inflation, so the timing is wrong. We need to preserve our capital for the best possible uses. Councillors appear to have simply said – Let’s develop what all the other big cities have (an events centre), without asking who is going to use it.

A broadband roll-out is a relatively low cost, incremental strategy; there is an opportunity to recover the cost from users and Telecom NZ when it finally embraces Wanganui as part of its fibre network. The council needs only to seek agreement from Telecom to buy back its network at some point in the future at an agreed price – before they build it. It’s a staged scheme, which means expenditures can be matched against results. More importantly it’s the right strategy for the times, it addresses current weaknesses in NZ and Wanganui (no good internet), it adds diversity, it attracts people to the town, it helps Wanganui create jobs, it raises incomes & tax receipts, and it gives the city a reason to build an events centre in future, when the town has reason to grow.

If NZ is going to offer competitive services against other Western nations it needs to offer services which overcome its impediment of isolation. World class broadband services do that. It is incumbent government to facilitate those opportunities so NZ can outgrow its small local market. If you recognise those opportunities, people can prosper without having to emigrate. Each of us has to find your own personal strengths in that community context as well. The high cost of travel to NZ is an impediment. Maybe Air NZ needs to think about ending its lucrative duopoly on travel and actually encourage tourism and business travel to NZ because nothing scares off people than price fixing at your international gates. Placing tourist information in a location suited for public toilets is another turn-off.

'Buying NZ Property – Download the free sample readings!

NZ presents some of the most alluring property in the Western World; particularly given the greater easy of residency, the low cost of property, and the liveability of the country. In addition, there is no capital gains tax, transfer taxes, VAT/GST or wealth taxes in NZ, so rest assured that NZ property is tax-effective! Learn more now!

New Zealand Property Report 2010 - Download the table of contents or buy this 180-page report at our online store for just $US19.95.

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