Economic diversification – at what cost?

Two events over the last few weeks have highlighted the risks of a region, or the country as a whole, becoming highly exposed to asingle industry, product type, employer, or trading partner.  Firstly,Fonterra’s botulism scare focused attention on the fact that the company’sdairy exports make up almost a quarter of New Zealand’s export earnings. China’s strong reaction to Fonterra’s food safety issues was also a sharpreminder that the country now takes about 25% of our dairy exports.

What will become of Tiwai’s workers?

The eventual closure of the Tiwai Point aluminium smelter is an inevitability that needs to be embraced. Although the smelter is said to produce some of the world’s purest aluminium, the reality is that aluminium buyers aren’t prepared to pay enough of a premium for Tiwai’s product to ensure the smelter’s long-term survival. With this harsh reality in mind, this article considers the plight of the 800 odd employees who will face the prospect of lower incomes and the cost of searching for new jobs when shutdown day eventually comes.

The bluff from Bluff

There has been a lot written recently about the interaction between the upcoming public share offer for Mighty River Power and the blackmail tactics of Rio Tinto to use this event as a means of extracting a further subsidy from our national government. I wish to focus here on a couple of the underlying economic issues involved here: the economic purpose of privatisation programmes and the economic impact of a closure of the Tiwai Point Smelter.

Local government for better or worse

The Government released this week its template for improving the performance of local government: Better Local Government. This document rightly recognises the importance of local government performance for overall economic performance, and in general offers a sound set of policy prescriptions that will have a positive influence on local government performance. However, the policy proposals are not uniformly positive. In particular the proposed new definition of the purpose of local government could potentially be too narrow and the so-called provisions to strengthen council governance look positively barmy.

Hollowing out of New Zealand not inevitable

The clustering of people and activities within large urban areas is a global trend that has substantial implications for New Zealand’s economic development. This clustering, which economists term agglomeration, is driven by the higher productivity businesses can attain from the easier flow of knowledge and ideas, reduced transport costs from being close to suppliers and customers, and having access to deeper and more diverse pools of labour.

Strong provinces, mediocre cities

A recent article in The Economist highlighted the wide gap between rich and poor regions in many developed countries. The gap is so wide in Britain, and is widening, it has encouraged the British government to introduce policies to support vulnerable regions. How does New Zealand compare and how concerned should we be about regional inequality?

Christchurch’s CBD challenge

It’s been over six weeks since the devastating earthquake in Christchurch, and one senses growing frustration from parts of the business community at the apparent lack of progress being made in returning life towards "normal". Most critically affected have been small firms with premises in the CBD cordon. Getting hold of essential files and documents to enable one’s business to keep going has not been straightforward.

Keeping tabs on Christchurch’s population

Much has been made of the likelihood that Christchurch willsuffer a significant hit to its population in the aftermath of the earthquakein February.  Good information on population movements within New Zealand isalmost non-existent, but Statistics NZ is currently monitoring re-enrolments ofschool students from Christchurch and surrounding areas following the quake. This article examines the initial trends, although it is too early to try anddraw conclusions about the implications for population growth in Christchurch.