Economic Recovery

Now this is how you ‘have a conversation’

Political heavyweights took the immediate headlines, but Auckland's economic summit was broad and deep with business and community leaders predicting the return of good things from some time between late 2021 and 2024. Tim Murphy reports

The call that 'we need to have a conversation' about almost anything in public life has become so devalued that it can mean next to nothing. It has become a thoughtless default, putting off until tomorrow issues that could do with leadership and expert input now.

Auckland's emergency economic summit, its focus sharpened by the gravest public health and financial crisis for generations, was a rare example of a 'conversation' that provoked debate, floated specific actions and confronted some home truths in the here and now.

In just over eight hours, 33 speakers and panellists and the 200 business, community and political leaders set out their short-term solutions to the Covid-19 downturn that stands to rip billions from the Auckland economy with the disappearance of international tourism and foreign students.

Organised by Auckland Tourism, Events and Economic Development, the event wasn't about cheerleading. But it was lively and well directed, surfacing references from thinkers as disparate as famed Austrian economist Joseph Schumpeter ("creative destruction") to Game of Thrones character Littlefinger ("chaos is a ladder").

The task was to identify opportunities for Auckland to somehow replace the $2.6 billion in foreign tourism and international education receipts now being denied the city and to offset what could be 50,000 job losses from the downturn.

Former Prime Minister John Key, a keynote speaker, called for the Government to make a suspensory loan to Auckland Council for infrastructure and border changes to bring in students and key workers, his predecessor Helen Clark, called for action on the "quarantine chokepoint" with private sector involvement and other speakers also advocated paid and private isolation facilities.

Prominent director Rob Campbell wanted the summit to avoid the "myths" of Kiwis being especially creative or ingenious - the No 8 wire thing - or that new jobs post-Covid would all be high-tech and highly remunerated. "The best contribution we could make is making the changes that are necessary within [companies] and making sure the destruction being caused is creative destruction ... and recognising government is not there primarily to respond to our demands but there to encapsulate the views of the whole community."

Nano girl science educator Michelle Dickinson urged a "do-fest" rather than a "talkfest". "New Zealand is not this room. We are not representative. We can't be decision makers making decisions for people we've never met." She had a specific recommendation - urging companies to help their competitors during crisis times. "I called all my competitors and said: 'How can I help you ... how can I use my profile to help you? Our business only grows if the ecosystem grows'."

Former Spark chief executive Simon Moutter, now an investor and director of small and mid-sized businesses, believed a commitment from large businesses to engage or work with emerging New Zealand firms rather than automatically favour international outfits was needed. Second, investors had to consider not just start-up ventures but "businesses that have had a start that could be accelerated".

"We're missing money in the middle," he said. Seed capital and angel investor groups were available for new ideas, private equity for the bigger bets, but those already with $1m or $2m in revenue struggled to find support. "We could organise ourselves to get scale-up funds to focus entirely on that sector and be happy with two to three times your money. If Covid doesn't make it happen, I'm giving up talking about it."

Ranjna Patel, of East Tamaki Healthcare, said: "We are in a great crisis but this is our moment in time. This is our reset button." The pandemic had revealed the equity gap in New Zealand for all to see and business and community leaders needed to change their outlook, calling out racism and, in the workforce, listening "to the lowest common denominator to get the answers". In her case that meant hearing from receptionists as much as doctors on how best the business should respond.

Speakers did not mask the likely onset of further economic hardship.

Economist John Ballingall, of Sense Partners, warned summiteers: "There will be a spike in job losses ... the sugar hit bounce-back we have had will fade off."

Company director Susan Peterson, who serves on the boards of ASB and Xero among others, worried that if a second wave of Covid-19 hit it would sink some small, medium-sized businesses. "We have done a really good job of dog paddling this one."

A business ethos of efficiency was now "pivoting to resilience".

Tania Pouwhare speaks at the summit. Photo: Supplied

Tania Pouwhare, from The Southern Initiative, said South Auckland "has been dealing with a slow-burning economic disaster for decades now. We are only at the start of the bite."

While immigration was halted, panellists saw possible upsides in the return of anything up to 100,000 New Zealanders by year's end. Auckland Mayor Phil Goff hoped the economic losses from the lack of migration could be replaced by the retournees. Ballingall said: "It expands the productive capacity of the economy. We don't know what their skills are or where they are going to live in New Zealand. But it is a positive overall and certainly welcome them back."

How long might it be before Auckland's economy recovers? Goff noted that 2021 with Apec, the America's Cup and other events was being anticipated as "a year like no other" but 2020 had given that a whole new meaning.

Graeme Stephens, chief executive of Sky City, said his company now planned for the Covid effects to be negative until at least the end of 2021. He predicted the city would be coming out of the downturn, through progressive steps until 2023-24, when the City Rail Link railway would be finished, roading and waterfront developments complete and Sky City's own convention centre open after its devastating 2019 fire.

"I'm worried about the next 12 to 18 months. I think we all should be and probably are."

But by 2024, the city would be back. 

Scott Pritchard, chief executive of Precinct Properties, which has opened the new Commercial Bay complex, said the central city would benefit from numerous projects coming to an end soon.

"Auckland is about to be unveiled. It has been under construction for a couple of years. Hats off to the council. It's got things done in the shortest amount of time and that has the maximum impact.

"But Auckland, New Zealand's gateway city ... we are about to open it. The domestic tourism market is there."

ATEED chief executive Nick Hill will now review the feedback and key themes from the day. "With input from a working group of business representatives, we will focus on a small number of key challenges where Auckland businesses can act and collaborate on, to help the region and country put concrete solutions in place.”

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