Download East Coast Study Stage 1 - Ministry of Business, Innovation and

East Coast regional economic
potential
April 2014
Final Report
Stage 1 Research Review
Richard Paling Consulting
Preface
This report has been prepared for the Ministry of Business, Innovation and Employment by Nick
Hill, Stephen Knuckey and EeMun Chen from MartinJenkins (Martin, Jenkins & Associates
Limited), John Williamson from Ascari Partners, Richard Paling from Richard Paling Consulting
and Heta Hudson from Crowe Horwath International.
Territorial authority and industry GDP estimates were provided by Infometrics.
The study was initially completed in July 2013 but has been updated this year to include the
most recent Census and regional GDP data and additional industry research.
Contents
Executive summary
1
Introduction and background
17
Purpose and background
17
Steering Group
17
Research review framework
18
Economic trends and context
22
The East Coast study area
22
East Coast economic context, by the numbers
23
Indicators of prosperity
28
Gross domestic product
28
GDP per capita
31
Household incomes
33
Quality of life
33
Drivers of growth and prosperity
34
Labour participation and employment
34
Productivity
37
Population – distribution and growth
39
Underlying determinants: Industrial mix and performance
Industrial structure
50
50
Industry contribution to GDP in the broader Gisborne/Hawke’s Bay region
based on official statistics
50
Industry performance
52
Forestry and related processing
68
Livestock farming and meat processing
74
Horticulture, fruit, food and beverage processing
78
Underlying determinants: Skills and talent
85
Educational attainment
85
Youth employment
87
Literacy and numeracy
89
Occupations
90
Seasonal workforce
90
Educational institutions
91
Skill shortages and future demand for skills
93
Migrants
95
Recent and skilled migrants
98
Initiatives to improve skills and talent
99
Underlying determinants: The natural resource base
102
Land and water
102
Oil and gas
105
Underlying determinants: Destination attributes
108
Image and identity
108
Visitor attraction
109
International students
120
Amenities
121
Analysis of the strengths, weaknesses, opportunities and threats (SWOT) of the
region’s destination attributes
124
Initiatives to improve destination attributes
126
Underlying determinants: Connectivity and infrastructure
Transport connectivity
Overview of freight and passenger movements
Preliminary comments on transport demands
130
131
131
147
Freight movements
147
Passenger movements
148
The role of rail
148
Other infrastructure and connectivity issues and opportunities
149
Broadband
149
Electricity
150
Major initiatives to improve infrastructure and connectivity issues
Underlying determinants: Innovation and entrepreneurship
152
156
Business capability to undertake innovation
156
Internationalisation
157
Foreign direct investment
159
Linkages between researchers and business
161
A pool of technical and knowledge-based skills
162
Support for business development and innovation
163
Access to capital for innovation and growth
168
Iwi investment and economic development projects
Entrepreneurship
169
173
References
176
Appendix 1: Method
184
Tables
Table 1. Core components of the framework and literature review ............................................ 19
Table 2. Top line indicators of the East Coast’s economic performance and growth ................. 24
Table 3. Estimated GDP and GDP growth, East Coast territorial authorities ............................. 30
Table 4. Key labour market data for broader Gisborne/Hawke’s Bay region ............................. 35
Table 5. Key labour market data, territorial authorities, year to March 2013 .............................. 36
Table 6. Selection of Gisborne’s industries by productivity (GDP per employee), 2012 ............ 39
Table 7. Census usually resident population count and change ................................................ 40
Table 8. Industries in the East Coast study area ........................................................................ 53
Table 9. Territorial authority areas and key industries ................................................................ 64
Table 10. Key sub-sectors across a range of criteria ................................................................. 66
Table 11. Sector segments: Forestry and wood product manufacturing ................................... 69
Table 12. Key forestry industry businesses in the East Coast .................................................... 70
Table 13. Sector segments: Meat and meat processing ........................................................... 75
Table 14. Key livestock and meat processing industry businesses in the East Coast ............... 76
Table 15. Sector segments: Horticulture, viticulture and fruit, vegetable and wine
processing .................................................................................................................. 80
Table 16. Sector segment: Packaging and labelling services .................................................... 80
Table 17. Key horticulture, fruit, food and beverage businesses in the East Coast ................... 80
Table 18. Key educational attainment indicators ........................................................................ 85
Table 19. Specific labour needs in Hastings and Napier, 2013 .................................................. 94
Table 20. Specific future skills needs in Hastings and Napier, 2013 .......................................... 94
Table 21. Potential impacts and issues associated with petroleum development .................... 106
Table 22. Regional tourism organisations on the East Coast ................................................... 109
Table 23. Sample of events on the East Coast......................................................................... 118
Table 24.
Table 25.
Table 26.
Table 27.
Table 28.
Table 29.
Table 30.
Table 31.
Table 32.
Table 33.
Table 34.
Table 35.
Table 36.
Table 37.
Table 38.
Table 39.
Table 40.
Table 41.
Table 42.
Māori culture and cultural experiences in Gisborne and Hawke’s Bay .................... 122
Amenity developments ............................................................................................. 123
Road travel distances and times to key destinations ............................................... 130
Travel time and frequency of flights from Gisborne Airport ...................................... 130
Traffic flows on the main State Highway network .................................................... 132
Patterns of commuting, 2006, Gisborne, Wairoa, Napier and Hastings .................. 139
Closures on SH2 and SH35 over the period 2003-2012: Causes of closure ........... 140
Closures on SH2 and SH35: Duration of closures ................................................... 140
SH2 Gisborne-Napier road closures over 10 year period, May 2002-May 2012 ..... 141
Breakdown of export traffic through Eastland Port, 2012 ........................................ 142
Overseas trade through Port of Napier, 2012 (000 tonnes gross weight) ............... 143
Current flights through Gisborne Airport .................................................................. 144
Current flights through Napier Airport....................................................................... 145
Rail freight flows by commodity 2004 to 2012 .......................................................... 146
Percentage of households who have access to the internet .................................... 149
Council international relationships............................................................................ 159
Regional FDI performance, January 2003 – May 2009 ........................................... 160
Significant business and innovation support organisations on the East Coast ........ 163
Territorial authority areas and key industries ........................................................... 184
Figures
Figure 1. Framework of drivers of regional competitiveness and economic growth, as
applied to this study ................................................................................................... 18
Figure 2. The East Coast study area .......................................................................................... 22
Figure 3. The broader Gisborne/Hawke’s Bay region ................................................................ 22
Figure 4. Regional GDP 2013 ($000) ......................................................................................... 28
Figure 5. The East Coast’s and New Zealand’s GDP 2007-2013 ($000, current prices) .......... 28
Figure 6. Gisborne and Hawke’s Bay GDP 2007-2013 ($000, current prices) .......................... 29
Figure 7. Regional GDP (nominal) growth 2007-2013 (CAGR) ................................................. 29
Figure 8. Estimated real GDP growth 2002-2012 ($1995/96) .................................................... 29
Figure 9. Estimated East Coast GDP by territorial authority contribution, 2012 ........................ 30
Figure 10. Estimated real GDP compound annual growth rate across regions, 2002-2012 ...... 30
Figure 11. Regional GDP per capita, 2013 ................................................................................ 31
Figure 12. Regional GDP per capita (nominal) growth, 2007-2013 ........................................... 31
Figure 13. Estimated GDP per capita across regions, 2012 ...................................................... 31
Figure 14. Estimated real GDP per capita, East Coast and New Zealand, 2002-2012
($1995/96) ................................................................................................................. 32
Figure 15. Growth in estimated real GDP per capita across regions, 2002-2012
($1995/96) ................................................................................................................. 32
Figure 16. Median weekly household income, Gisborne/ Hawke’s Bay compared with
New Zealand.............................................................................................................. 33
Figure 17. Median weekly household income, 2013 .................................................................. 33
Figure 18. Do you think the Gisborne District is better, about the same or worse, as a
place to live, than it was three years ago? ................................................................. 34
Figure 19. Growth in employment 2002-2012............................................................................. 35
Figure 20. Growth in employment 2007-2012............................................................................. 35
Figure 21. Unemployment rate, by regional council area, March 2013 ..................................... 36
Figure 22. Working aged Unemployment Benefit recipients (aged 18-64) as a proportion
of the working age population, March 2013 quarter................................................... 36
Figure 23. Regional GDP per FTE 2013 ($000) ......................................................................... 37
Figure 24. Regional GDP per FTE (nominal) growth 2007-2013 (CAGR) .................................. 37
Figure 25. Estimated GDP per employee, 2012 ......................................................................... 38
Figure 26. Estimated growth in real GDP per employee, 2002-2012 ($1995/96)....................... 38
Figure 27. Estimated growth in real GDP per employee, 2007-2012 ($1995/96)....................... 38
Figure 28. East Coast territorial authority population projections to 2031 .................................. 40
Figure 29. The East Coast study area’s age and sex profile, 2006 ............................................ 41
Figure 30. The East Coast study area’s age and sex profile, 2013 ............................................ 41
Figure 31. New Zealand’s age and sex profile, 2013 ................................................................. 41
Figure 32. Gisborne district, 2013 ............................................................................................... 42
Figure 33. Wairoa district, 2013 .................................................................................................. 42
Figure 34. Hastings district, 2013 ............................................................................................... 42
Figure 35. Napier city, 2013 ........................................................................................................ 42
Figure 36. East Coast’s ethnic population, 2013 ........................................................................ 43
Figure 37. New Zealand’s ethnic population, 2013 ..................................................................... 43
Figure 38. Iwi grouping affiliation in Gisborne/Hawke’s Bay regions, 2013 ................................ 44
Figure 39. Territorial authority for the .......................................................................................... 45
Figure 40. Labour force status, by iwi, 2006 ............................................................................... 46
Figure 41. Personal income, by iwi, 2006 ................................................................................... 46
Figure 42. Occupation, by iwi, 2006 ............................................................................................ 46
Figure 43. Industry employment, by iwi, 2006 ............................................................................ 47
Figure 44. Industry contribution to Gisborne/Hawke’s Bay GDP, 2011 ...................................... 51
Figure 45. Industry contribution to Gisborne and Hawke’s Bay GDP, 2011 ............................... 51
Figure 46. Industry contribution to East Coast’s GDP, 2012 (current prices) ............................. 52
Figure 47. Industry sectors on the East Coast, employment location quotients over one,
2012 ........................................................................................................................... 56
Figure 48. Employment, employment growth and employment location quotients, 20022012, primary sectors ................................................................................................. 57
Figure 49. Employment, employment growth and employment location quotients, 20022012, manufacturing sectors ...................................................................................... 58
Figure 50. Employment, employment growth and employment location quotients, 20022012, Electricity, gas, construction, wholesaling, retailing,
accommodation/food, and transport services ............................................................ 59
Figure 51. Employment, employment growth and employment location quotients, 20082012, all other services .............................................................................................. 60
Figure 52. GDP, GDP growth and GDP location quotient, 2002 – 2012, primary sectors ......... 61
Figure 53. GDP, GDP growth and GDP location quotients, 2002-2012, manufacturing
sectors ....................................................................................................................... 62
Figure 54. GDP, GDP growth and GDP location quotients, 2002-2012, services sectors ........ 63
Figure 55. Industry specialisation on the East Coast ................................................................. 64
Figure 56. Forest area, by region, 2013 (hectares) .................................................................... 68
Figure 57. Employees – 1,967 (2012) ........................................................................................ 69
Figure 58. Employees by segment, 2012 ................................................................................... 69
Figure 59. Forestry and wood processing – GDP, employees and business units.................... 69
Figure 60. Livestock numbers (000), by region, 2012 ................................................................ 74
Figure 61. Volume of livestock slaughtered (weight, kilograms), by region, 2012 ..................... 74
Figure 62. Employees – 5,404 (2012) ........................................................................................ 75
Figure 63. Employees by territorial authority, 2012 .................................................................... 75
Figure 64. Meat and meat processing – GDP, employees and business units ......................... 75
Figure 65. Harvested area of outdoor vegetables, 2012, hectares ............................................ 78
Figure 66. Area planted in outdoor fruit, 2012 (hectares) .......................................................... 78
Figure 67. Employees – 7,405 (2012) ........................................................................................ 79
Figure 68. Employees by territorial authority, 2012 .................................................................... 79
Figure 69. Horticulture and fruit and vegetable processing – GDP, employees and
business units ............................................................................................................ 79
Figure 70. Achievement levels among all school leavers, 2012 (percentage of all
students) .................................................................................................................... 86
Figure 71. Achievement levels of Māori school leavers, 2012 (percentage of all Māori
school leavers)........................................................................................................... 87
Figure 72. Achievement levels of European/Pākehā school leavers, 2012 (percentage of
all European/Pākehā school leavers) ........................................................................ 87
Figure 73. Gisborne-Hawke’s Bay youth NEET rate compared to New Zealand, 20052013 ........................................................................................................................... 88
Figure 74. East Coast NEET rates compared, 2006 .................................................................. 88
Figure 75. Percentage of people aged 25-65 with higher literacy/numeracy, by region ............ 89
Figure 76. Employment by occupation, 2013 ............................................................................. 90
Figure 77. Employment by occupation, 2013, territorial authority areas .................................... 90
Figure 78. EIT enrolments, 2007 – 2012 .................................................................................... 91
Figure 79. EIT equivalent full time students, 2007 – 2012 ......................................................... 91
Figure 80. Industry trainees (excluding Modern Apprentices) employed in the Eastern
Coast TEC region, December 2012 .......................................................................... 92
Figure 81. Modern Apprentices employed in the Eastern Coast TEC region, by ITO,
December 2012 ......................................................................................................... 92
Figure 82. Migrants on the East Coast, by territorial authority, 2013 ......................................... 96
Figure 83. Birthplace of migrants, New Zealand, East Coast and East Coast districts and
cities, 2013................................................................................................................. 96
Figure 84. Work and labour force status, by country of birth, 2006, East Coast ........................ 97
Figure 85. Occupation, by country of birth, 2006, East Coast.................................................... 97
Figure 86. Highest educational qualification, by country of birth (2006), East Coast................. 97
Figure 87. Personal income, by country of birth (2006), East Coast .......................................... 97
Figure 88. Essential Skills workers by region, year ending March 2011, March 2012, per
1,000 population ......................................................................................................... 98
Figure 89. East Coast commercial accommodation guest nights 2003-2013 .......................... 109
Figure 90. CAGR in commercial accommodation annual guest nights 2002-2012 .................. 110
Figure 91. Commercial accommodation guest nights by territorial authority, 2003-2013 ........ 110
Figure 92. RTO visitor nights, 2006-2011 ................................................................................. 110
Figure 93. CAGR in visitor nights, sample of RTOs, 2006-2011 .............................................. 111
Figure 94. Average visitor days, commercial accommodation, 2013 ....................................... 111
Figure 95. Average visitor nights compared, sample of RTOs, 2011 ....................................... 111
Figure 96. Visitor expenditure in the East Coast 2009-2013 ($m) ............................................ 112
Figure 97. Estimated visitor expenditure in the East Coast study area by category, 20092013 ......................................................................................................................... 112
Figure 98. CAGR in visitor expenditure by selected regions, 2009-2013 ................................. 113
Figure 99. CAGR in visitor expenditure by selected territorial authorities, 2009-2013 ............. 113
Figure 100. Domestic and international visitors, commercial accommodation 2009-2013 ...... 114
Figure 101. Domestic and international visitors, all accommodation, 2006 and 2011 ............. 114
Figure 102. Proportion of international and domestic visitor expenditure in selected
RTOs, 2013 ........................................................................................................... 115
Figure 103. CAGR in international and domestic visitor expenditure over 2009-2013 ............. 115
Figure 104. Growth in international expenditure by origin of visitor, 2009-2013 ($m) .............. 116
Figure 105. Proportion of international visitor expenditure by origin of visitor, 2009-2013 ....... 117
Figure 106. Growth in domestic expenditure by origin of visitor, 2009-2013 ($m) ................... 117
Figure 107. Number of events, by region, 2009........................................................................ 119
Figure 108. Events per 100,000 population, by region, 2009 ................................................... 119
Figure 109. International student numbers in the Hawke’s Bay and Gisborne, 2007-2012 ..... 120
Figure 110. Growth in international student numbers, 2007-2012 (CAGR) .............................. 120
Figure 111. Registered historical places and areas, as at June 2013 ...................................... 121
Figure 112. Māori Pa locations, 2007 ....................................................................................... 122
Figure 113. State Highways in the Gisborne-Hawke’s Bay Region .......................................... 131
Figure 114. Traffic flows on SH2, 2012, HCVs ......................................................................... 134
Figure 115. Traffic flows on SH2, 2012, total vehicles .............................................................. 134
Figure 116. Traffic flows on SH35, 2012, HCVs ....................................................................... 134
Figure 117. Traffic flows on SH35, 2012, total vehicles ............................................................ 134
Figure 118. Current restrictions on HPMV use ......................................................................... 136
Figure 119. NZTA Proposed Investment in HPMV Routes 2012-2015 .................................... 137
Figure 120. Growth of export traffic through Eastland Port (tonnes), 2004–2013 .................... 141
Figure 121. Traffic through Napier Port, Cargo gross weight (m tonnes) ................................. 143
Figure 122. Air passengers through Gisborne Airport .............................................................. 145
Figure 123. Estimated share of freight traffic between Gisborne/Wairoa and Hawke’s Bay
by road and rail ...................................................................................................... 146
Figure 124. Percentage of households with broadband internet access, 2006, 2009 and
2012 ....................................................................................................................... 150
Figure 125.
Figure 126.
Figure 127.
Figure 128.
Figure 129.
Figure 130.
Figure 131.
Figure 132.
Figure 133.
Figure 134.
Figure 135.
Electricity transmission in the study area .............................................................. 151
Patent applications (per million population), 2009 ................................................ 157
Business expenditure on R&D, as a proportion of GDP, 2002 ............................. 157
Government and higher education expenditure in R&D, as a proportion of
GDP, 2002 ............................................................................................................ 161
Core human resources in science and technology, 2001 and 2006 ..................... 162
MBIE Science and Innovation/Callaghan Innovation funding, contract start
dates 2010-2013 ................................................................................................... 167
MBIE Science and Innovation/Callaghan Innovation funding, as a proportion
of businesses, 2010-2013 ..................................................................................... 167
Value of NZTE Capability development vouchers issued, as a proportion of
number of businesses, 2012-13............................................................................ 167
Investment by stage and by region, 2006 - 2010 .................................................. 169
Entry Rate (Percentage of New Firms to Existing Firms), February 2013 ............ 173
High-growth firms (per 1,000 firms), 2011 ............................................................ 173
Executive summary
Introduction
The Mayors of Gisborne, Wairoa, Napier and Hastings, the Chair of the Hawke’s Bay Regional
Council (the East Coast Mayors and Chair), iwi leaders representing Te Rūnanga o Ngāti
Porou, Te Rūnanga o Tūranganui a Kiwa, and Ngāti Kahungunu, and the Ministries of Business
Innovation and Employment (MBIE) and Transport (MoT) have entered into a partnership in
order to deliver “a broad and deep study of the East Coast region’s economic potential over the
next 30 years and the requisite infrastructure across all transport modes (road, rail, air freight,
1
ports) to support that” .
The geographic boundaries for the study are defined as the Gisborne, Wairoa and Hastings
District Council Local Authority boundaries and the Napier City Council boundary. However,
data at this level can be difficult to obtain or is often unavailable. In several cases, the Gisborne
and Hawke’s Bay regions have been used as alternatives and, where used, are referred to as
the broader Gisborne/Hawke’s Bay region. The study area is referred to as the “East Coast” or
“the study area”.
This report is the output from Stage 1 of the study. Stage 1 involved a review of the economic
performance of, and the economic development issues and opportunities facing, the East Coast
area.
It is important to emphasise that the report provides an overview of economic issues and
opportunities on the East Coast. The scope of the work commissioned for the first stage did not
cover in-depth analysis of specific industries or key themes. We were asked to assess the East
Coast as a whole and hence aggregate the findings, rather than focus in on specific territorial
authorities, although we do note differences that have emerged across territorial authorities.
This report is thus based primarily on a desk-based review of available research and analysis of
economic data. Some industry, iwi and stakeholder interviews were undertaken, but these were
not exhaustive, nor representative, of the broader East Coast economy.
The key findings of this Stage 1 literature review fed into Stage 2, which focused on modelling
the economic potential of the area over 30 years, and the transport infrastructure required to
support that potential.
Main findings
The East Coast contributes about 3.6 percent of New Zealand’s gross domestic product (GDP)
and 4.5 percent of its employment. GDP in the study area has been growing at about the same
1
Terms of Reference for the Study.
1
rate as the national average over the last decade. However, GDP per capita and median
household income are both well below the national average, and the unemployment rate is well
above the national rate.
Based on the research review, the following represent the major existing industry opportunities
for the East Coast to generate jobs and to raise living standards:
a)
The potential for growth and higher value processing in primary based sectors that the East
Coast already has a comparative advantage in and which are competing internationally,
particularly:

Forestry and related manufacturing and services (including wood processing and pulp
and paper processing)

Livestock farming and meat product manufacturing

Horticulture, viticulture and food and beverage manufacturing.
Identifying, facilitating and investing in opportunities to increase the value added from these
industries is and will continue to be important for the area. This is clearly possible as there
are good examples of innovation in primary industries in the region (such as the production
of mānuka honey and tea tree oil on steep hill country or grass-fed wagyu beef) and
several high performing businesses have developed off the study area’s track record and
knowledge in primary industries.
b)
The potential for the visitor economy to play a greater role and for growth in
accommodation and food services industries, building on the East Coast’s natural and
cultural amenities.
c)
The potential for derived growth in domestically focused services sectors, particularly
education and training, healthcare and social services, and professional and technical
services.
These areas are expanded on in the section on Industrial mix and performance below.
Growth across these industries could be further supported by involving and working with
iwi/Māori as a strong partner and investor in economic development in the study area. Iwi/Māori
in the study area have demonstrated a strong commitment to respond to challenges, such as
skills development, and to invest in opportunities in several industries, such as forestry and
tourism, and will make an even greater contribution to the East Coast in future.
The success of several high technology manufacturing firms suggests that the study area also
has capabilities in machinery and equipment and materials fields, built off experience in primary
industries. Whether, and how, the East Coast might be able to capitalise on this capability is
not yet known and better information and engagement with relevant firms is required.
Another, more speculative, opportunity is the development of an entirely new industry – oil and
gas. The East Coast Oil and Gas Development Study (Ministry of Business, Innovation and
Employment, 2013a; NZIER, 2012) estimated the potential impacts of small and large oil and
2
gas production on the broader Gisborne/Hawke’s Bay region if discoveries in the East Coast
Basin proved commercially viable. If activity proceeds, there is the potential for the economy to
be transformed. Stage 2 of this study uses the MBIE scenarios to forecast the potential impact
that oil and gas developments may have on the region.
The ability of the East Coast to take up existing and future opportunities will be assisted by
addressing the following issues (based on the research and stakeholder discussions, these are
in the order of our assessment of their relative importance to the study area’s economic
development):

Improving the relatively low-levels of educational attainment and the limited availability,
attraction and retention of skills in the study area. Based on the research and discussions
with stakeholders, this appears to be the most important economic development issue
currently facing the East Coast.

Managing natural resource demands across industries, particularly land and water use
(including irrigation and water storage), and the impact of droughts and floods.

Lifting the image of the East Coast (from those outside) as a place to visit, live, work and
invest.

Continuing to improve the quality and reliability of the road network (see below).

Growing the availability of research and development capability for business growth and
innovation.
Most of these issues and opportunities have been identified through previous strategies and
projects in the study area and there are a range of local and national initiatives underway to
address them (e.g., through iwi initiatives, resulting from local economic development strategies
and action plans, and as a result of the Government’s Business Growth Agenda).
Based on the literature review and our current understanding of industry growth potential, the
key transport issue for the study area is the need to continue to improve the quality and
reliability of the road network, particularly SH2 and to a lesser extent SH35. The two ports in
the study area appear to be able to support increases in traffic resulting from industry growth
and each has a reasonably distinctive role. Rail comprises a very small proportion of freight
traffic and although there is greater potential for rail freight in future (e.g., from forestry and
wood processing), it is not apparent that this will be of sufficient scale or economic under the
current operating model.
The above issues and opportunities form the basis of the more in-depth review and modelling in
stage 2. For example, in addition to focusing on the transport infrastructure required to support
growth, the research review suggests that a better understanding of skill requirements to
support growth will be of value.
The following summarises the basis for highlighting these issues and opportunities, which are
detailed in the body of the report.
3
Economic trends and context
Based on official figures, the broader Gisborne/Hawke’s Bay region contributes about 3.6
percent of New Zealand’s GDP and 4.5 percent of employment. In 2013, the Gisborne/Hawke’s
Bay region’s GDP was $7,663 million and employment was 101,700.
In nominal terms, and based on official figures, GDP growth for the Gisborne/Hawke’s Bay
region was relatively low at 2.47 percent per annum over 2007-2013 compared to 3.72 percent
2
nationally. Real GDP in the study area is estimated to have been growing at 2.10 percent per
annum in real terms over the last decade, close to the national average, although growth has
been relatively static over the last five years. Estimated real GDP per capita for the study area
has followed a similar trend – growing strongly over 2002-2012 at 1.68 percent per annum on
average (compared to 1.14 percent nationally), but declining slightly over the last five years
following the global financial crisis.
There are differences across territorial authorities in the study area, with Hastings growing at
the fastest rate over the last ten years, Gisborne and Napier achieving real GDP growth rates
slightly below the national average, and Wairoa slightly declining.
On several indicators of prosperity and drivers of growth, the broader Gisborne/Hawke’s Bay
region has not performed as well as the rest of New Zealand. GDP per capita in the broader
region in 2013 was well below the New Zealand average ($37,973 compared to the national
level of $47,532). Based on official figures, growth in GDP per capita in the Gisborne/Hawke’s
Bay region over 2007-2013 was also below compound growth nationally. Median household
income has increased over time, but is also well below the national average ($1,155 compared
to $1,358 in June 2013). Perceptions of the quality of life in the Gisborne region have declined,
although a high proportion of Hawke’s Bay residents are satisfied with their quality of life.
Employment in the study area grew at a lower compound rate than nationally over the last
decade (1.02 percent per annum compared to 1.61 percent per annum). The broader
Gisborne/Hawke’s Bay region’s labour force participation rate declined over the last year (from
68 percent to 65.8 percent), and the employment rate has also fallen slightly (a decline from
62.5 percent to 60.6 percent), and both are below New Zealand levels (68.4 percent and 64.1
percent respectively). The unemployment rate is well above the national rate (8.0 percent in the
year to December 2013 compared to 6.2 percent nationally). As of March 2013, Wairoa, as a
very small district, had higher rates of labour participation and employment than other territorial
authorities in the region, with Gisborne’s rates well below other areas. Napier had the highest
unemployment rate in the region (8.4 percent).
The broader Gisborne/Hawke’s Bay region’s estimated labour productivity is also well below
New Zealand’s ($82,407 compared to $109,304 in 2013). However, estimated productivity in
the study area is estimated to have grown relatively strongly in real terms over the last decade
(1.39 percent real growth on average), at levels near the top end of New Zealand’s regions.
2
4
Note that when estimates are used for the study area, they are based on Infometrics territorial authority estimates.
Population growth in the study area has been around a third of the national rate over the last
seven years. The population of both Gisborne and Wairoa declined between 2006 and 2013.
All districts in the region are expected to achieve lower population growth over the next 20 years
(no more than 0.5 percent per annum) relative to New Zealand as a whole (0.9 percent).
Wairoa’s population is expected to continue to decline in the long-term. Low population growth
will limit the study area’s growth potential.
The study area has a significant Māori population. In the 2013 Census, 28 percent of people
identified themselves as Māori compared with 14 percent nationally (and in Gisborne the
proportion was 45 percent). The principle iwi groups in the region are Ngāti Porou, Ngāti
Kahungunu and Tūranganui a Kiwa (representing Rongowhakaata, Te Aitanga a Mahaki and
Ngai Tamanuhiri). Members of the three main iwi in the Gisborne/Hawke’s Bay region do not
perform as well on key indicators compared to iwi members across New Zealand. There are
higher proportions in lower income brackets, with corresponding higher unemployment and high
representation in labouring occupations.
Industrial mix and performance
The broader Gisborne/Hawke’s Bay region’s economy is moderately diverse but is dominated
by manufacturing, agriculture, forestry and fishing and health care and social assistance
(together comprising 40 percent of the broader region’s GDP). In the study area, agriculture,
forestry and fishing has experienced a decline in employment and business numbers since
2002 and manufacturing employment has declined, while locally-oriented service industries,
such as health care and electricity, gas and water, have typically grown. However, forestry and
logging, sheep, beef cattle and grain farming, pulp and paper manufacturing, and meat and
meat product manufacturing have achieved relatively high GDP growth since 2002 despite
reducing employment.
Not surprisingly, the study area has concentrations, and likely comparative advantages, in a
range of primary and related processing and service industries, including:

Primary sector activities such as fruit growing, forestry and logging, forestry support
services and sheep and beef cattle farming.

Manufacturing activities leveraged off these primary sector advantages, such as fruit and
vegetable processing, packaging, pulp and paper manufacturing, textile and fabric
manufacturing and beverage manufacturing.
There are, of course, spatial differences in the concentrations of industries across the study
area, with cattle farming and meat processing concentrated in Wairoa, forestry and related
products concentrated in Gisborne, fruit and vegetable growing and processing concentrated in
Hastings and support services concentrated in Napier.
An analysis of industry performance, using a combination of employment, GDP and
concentration measures, suggests that the following industry value chains are likely to be
particularly important for driving economic growth in the study area:
5

Forestry and related pulp, paper and wood product manufacturing – is estimated to
contribute close to $400 million in GDP and 2,000 jobs in the study area, and has achieved
5 percent annual growth in GDP and 0.75 percent growth in employment over 2002-2012.
Future growth will come off the back of the increasing regional harvest in Gisborne and the
Hawke’s Bay in the medium term and strong demand for logs and wood products
domestically and offshore (e.g., China). Low levels of local processing and harvesting
access issues represent significant untapped potential. Investment in, and development of,
at least one additional processing plant in the region would make a major difference.
Innovations should also make it more efficient and easier to harvest in the region (for
example new technology to improve steepland harvesting productivity and reduce costs), or
to generate value from areas with traditionally limited harvest potential (e.g., establishment
of mānuka forests on this land to generate high value honey).

Livestock farming and meat processing and related services – is estimated to contribute
around $730 million in GDP and 5,400 jobs, and has achieved almost 3 percent annual
growth in GDP over 2002-2012, although employment has declined over the period.
Planned developments for water storage and increased irrigation in the broader region may
help drive further growth in productivity in this industry, although topography and erosion
and conversion of land to dairy and forestry may limit expansion opportunities.
Programmes of investment in R&D and innovation focused on adding value to red meat
production are likely to have long-term benefits for the region. This includes programmes
that aim to: add value to the livestock supply chain; support farmers to adopt best practice
behind the farm gate and between the farm and the processor; develop new niche products;
and to generate more value from the red meat carcass.

Horticulture, viticulture, and food and beverage manufacturing – is estimated to contribute
around $630 million in GDP and 7,400 jobs, although the sector’s GDP and employment
has fallen slightly over 2002-2012. Recent efforts to improve branding and marketing of the
wine industry (for example, to promote Hawke’s Bay reds and varietals specific to Gisborne)
and investments in beverage production (e.g., new wineries) in the region will support
growth.

Education and training – is estimated to contribute around $370 million in GDP and 7,650
employees. The sector’s GDP and employment was estimated to increase slightly by
around 0.5 percent and 0.7 percent per annum respectively. There is potential to build on
growing numbers of international students that have been attracted to the Hawke’s Bay over
the last few years
In addition, as noted, there are also some high performing businesses in machinery and
equipment and materials related sectors in the study area, built off experience in the primary
industries and natural resources (e.g., ABB, Pultron Composites, Ican Engineering, Fisher
Aluminium, Haden & Custance). The contribution of machinery and equipment is growing in the
region (GDP of $154 million in 2012, with real GDP growing at 3.74 percent over 2002-2012,
and employing almost 890 people), although it is not currently concentrated in the study area.
Improving the quality of (currently relatively limited) information about the capabilities of and
opportunities facing high technology manufacturing enterprises in the study area could be a
useful first step towards advancing the potential of the sector.
6
Tourism-related service industries did not emerge from the data analysis as they are not
particularly concentrated in the study area, but our initial discussions with stakeholders and a
review of economic development strategies and reports on the region emphasise that the
tourism sector has untapped potential. This potential is assessed in the analysis of the study
area’s destination attributes (see Destination attributes below). Better articulating and
packaging the area’s distinctive cultural and natural amenities and events to domestic and
international visitors may support visitor growth. A pan-regional approach to elements of
branding, promotion and investment in tourism assets could also be considered.
Health and community services (estimated $590 million GDP, 10,500 employees), real estate
and property services (estimated $300 million GDP, 1,300 employees) and professional and
technical services (estimated $410 million GDP, 5,100 employees) are also large and growing
and important to the study area. However, some of these industries are not particularly
concentrated in the study area and hence are unlikely to be based on comparative advantages.
In addition, rather than reflecting national and international market demands, these sectors will
largely reflect population growth/changes and growth in other industries in the study area.
Oil and gas has been mooted as potentially offering significant economic potential for the
broader Gisborne/Hawke’s Bay region and New Zealand. The growth scenarios and potential
environmental impacts outlined in a recent MBIE study are reasonably speculative at this stage
and public and iwi concerns are still to be addressed. If drilling proceeds, and if it proves that
the formations are productive at commercially viable rates, and if subsequent exploration shows
that this is true over a large area, the economy could be transformed. The study estimated
potential employment gains of between around 200 and 2,440 jobs in the region depending on
the scale of developments. Stage 2 of the study considers the potential impact of oil and gas
developments in more detail.
Skills and talent
Skills and talent, both formal qualifications and foundation skills, are critical to a region’s
productivity and income potential. The study area and broader region under-performs on all key
indicators of skills and improving educational attainment and skills would appear to be the most
significant opportunity for the East Coast’s growth potential:

The East Coast study area has a low proportion of the resident population (aged 15 years
and over) with tertiary qualifications (13.7 percent compared to the New Zealand average of
20 percent in 2013).

The East Coast study area has a high proportion of people aged 15 years and over who do
not have a qualification (26.8 percent compared to the New Zealand average of 20.9
percent, in 2013). In Wairoa, the proportion is more than 37 percent. Similarly, the
combined Gisborne and Hawke’s Bay region has a higher proportion of school leavers
without at least NCEA Level 2 (28.2 percent compared to the national average of 25.7
percent in 2012).
7

The broader Gisborne/Hawke’s Bay region has lower proportions of the adult population
with higher literacy or numeracy than nationally, although sits about mid-table in a ranking
of New Zealand regions on literacy and numeracy rates.

In 2013, the broader Gisborne and Hawke’s Bay region had a high proportion of youth not in
employment, education or training (NEET), at 20.7 percent compared to the national level of
around 12.5 percent, although the difference between the regional and national rate
appears to be closing. In 2006, Wairoa had a NEET rate of 23.5 percent, followed by
Gisborne at 20.5 percent. Based on local surveys, although some employers have had
poor experiences with youth employees, there is interest from businesses in increasing
levels of youth employment if they were supported to do so.

A higher proportion of Māori school leavers in the study area have no or lower levels of
qualifications. However, Māori school leavers in the study area tend to have higher
educational achievement than Māori school leavers nationally. Given the relatively large
Māori population, which is projected to continue to grow at a faster rate than other ethnic
groups, there is a need to continue to focus on lifting the skills of Māori in the study area.
Although there have been positive trends on indicators of education levels in the study area –
for example, the proportion of people aged 15 years or over with a degree or higher increased
from 10 percent to 13.7 percent between 2006 and 2013, and the proportion of people aged 15
years or over without a qualification fell from 32 percent to 27 percent over the same period –
they reflect improvements nationally, so that the study area’s measures of educational
attainment have remained below New Zealand’s. Clearly, increasing the participation and
attainment levels of the local labour force will need to be addressed if the East Coast is to
achieve its potential.
Stakeholders and previous research confirm that labour and skills shortages are considered to
be a significant barrier to the growth and prosperity of the study area. Skill shortages occur
across the spectrum from entry level work to technical skills to management levels. For
example, in Napier and Hastings, areas of skill needs identified in one survey included
construction, machine operation, metal work, food manufacturing, IT, engineering, marketing
and accounting. Research also suggests that there will be increasing demands for IT and
computing, engineering, electrical and electronics, management and marketing skills in future.
Unique factors of the study area already noted, such as the high Māori population, the reliance
on primary industries and a high proportion of residents in remote rural areas need to be taken
into account to deliver fit-for-purpose education and training solutions to overcome these
issues. Positively, there appear to be several initiatives in the study area that are based on
unique local solutions. For example, Ngāti Porou is working with skills providers in the region to
develop programmes and initiatives to improve Māori access and achievement. The Youth
Futures Trust (with Ngāti Kahungunu and EIT) and Te Rūnanga o Turanganui a Kiwa (with
Turanga Ararau) have recently been selected to deliver Māori and Pasifika Trades Training in
the broader Gisborne/Hawke’s Bay region.
EIT Tairāwhiti is the main education provider on the East Coast and appears to have good
relationships with industry and schools in order to address some of the issues and demands
8
already noted. It has strengthened its qualifications and trades delivery, including offering
certificates for core industries such as wine-making, farming and forestry. The number of
equivalent full-time students increased over 2007-2012 as did the number of completions at
EIT. Industry trainee enrolment in the broader Gisborne/Hawke’s Bay region also appears to be
broadly aligned with the greatest area of industry need.
Migrants can fill skill gaps in the domestic labour pool. Gisborne and Wairoa’s population fell
between 2006 and 2013, while the population in Hastings and Napier increased. However, the
East Coast experienced net losses of people in the 5-19 and 25-49 age brackets, likely a result
of people seeking other tertiary training and job opportunities from outside the study area. The
East Coast also captures a relatively small proportion of migrants, with 13 percent of the total
population born overseas in 2013, compared to 24 percent nationally. However, in recent years
the number of migrants approved for a work visa under Essential Skills has been increasing in
both the Gisborne and Hawke’s Bay regions.
Natural resource demands
Many of the study area’s growth industries (and broader value chains) are clearly based on
natural resources. It is already well recognised by the study area that continued growth in these
industries will depend on the ability to manage land and water changes/demands and the
environmental impacts of extraction across land-based industries. In particular:

the frequency and severity of droughts and floods is expected to increase, potentially
resulting in damage to properties, increased disruptions to the transport network and
potentially having a significant economic impact on primary resource-reliant industries.

the study area possesses large areas of fragile hill country soils and erosion prone land.
Erosion can damage roads and bridges, the quality of water and productivity of rural land.
A significant initiative aimed at reducing erosion with further potential is the East Coast
Forestry Project scheme. The scheme has been operating for over 20 years and provides
funding to landowners to establish effective tree cover through planting or to encourage
natural reversion to native bush. Over 42,000 hectares of land have been treated to date.
Reviews have found that the scheme is not meetings its full potential and that uptake could
be improved through more efficient and effective implementation. Consultation is currently
underway on operational improvements to the scheme.

without water augmentation, current one year in five water restrictions are likely to increase
in frequency. Water storage and irrigation is considered to potentially provide the region,
particularly the Hawke’s Bay, with a significant opportunity to increase economic growth.
However, there are complex issues related to environmental impacts, the perspectives of
iwi/Māori, and the cost of developing water storage to still be assessed in relation to
proposed irrigation projects in the study area.
9
Destination attributes
The East Coast’s image and ability to attract visitors and workers will play an important part in
the future growth of the study area.
The East Coast struggles with a dichotomous image. On the one hand, previous studies and
stakeholders interviewed emphasise a high quality of life, based on natural and cultural
amenities. On the other hand, perception studies have found that some parts of the study area
are perceived by some as ‘socio-economically deprived’ and some locations are perceived as
having crime and safety issues. For visitors, the remoteness of the location can be a deterrent
but is also an attractor for those who want to “get away from it all”. Several strategies and
action plans have emphasised the need to improve the image and branding of the region.
The study area has had mixed performance on measures of visitor attraction over the last
decade. Commercial accommodation guest nights have fluctuated, initially growing strongly
over the first half of the decade before declining steadily from 2007-2013. Overall, the study
area has achieved relatively limited growth in commercial accommodation nights (0.33 percent
per annum over 2003-2013) and a large decline over the last five years (-2.03 percent per
annum). Most commercial accommodation guest nights in the study area, around 75 percent,
are in Napier and Hastings.
Across all accommodation types, however, estimated visitor nights in the Gisborne and Hawke’s
Bay RTO areas grew slightly over 2006-2011, with Hawke’s Bay achieving growth close to the
national average (almost 1 percent per annum), although Gisborne’s was near the lower end of
other RTO areas. Both RTO areas also have relatively high average length of visitor stays, with
a higher than average length of stay for commercial accommodation nights and overall visitor
nights.
Visitor expenditure in the East Coast study area was estimated to be over $600 million in 2013,
around 3.5 percent of expenditure in New Zealand. Growth in visitor expenditure in the study
area over recent years (3.4 percent per annum over 2009-2013) has been higher than growth in
New Zealand (nationally, visitor expenditure grew by 1.70 percent per annum over the period).
However, almost all of this is due to expenditure growth in the Hastings district (8.9 percent per
annum growth) rather than Napier (-1.1 percent per annum), Wairoa (0.6 percent per annum) or
Gisborne (-3.0 percent per annum). While growth in visitor expenditure in Hastings was higher
than other territorial authorities in New Zealand, Gisborne experienced one of the largest
declines in expenditure over the period.
The majority of visitor nights in the broader region, as with most other regions in New Zealand,
are domestic, although the proportions are considerably higher than the national average (77
percent in Gisborne and 64 percent in the Hawke’s Bay relative to 53 percent nationally).
Similarly, a much higher proportion of visitor expenditure in the study area comes from domestic
visitors (83 percent for the Gisborne RTO area and 86 percent for the Hawke’s Bay RTO area)
rather than international tourists, compared to the national average (64 percent). This suggests
that it may be important for the study area to consider how it can attract and leverage more
international visitors.
10
International and domestic visitors nights in commercial accommodation in the study area have
declined over 2009-2013 at rates faster than has occurred across New Zealand. The study
area achieved relatively low growth in international visitor expenditure over the period (0.4
percent per annum compared to 1.3 percent per annum nationally), but relatively high growth in
domestic visitor expenditure (4 percent per annum, compared to 1.9 percent nationally). All of
the growth in international expenditure occurred in Gisborne, while all the growth in domestic
expenditure occurred in the Hawke’s Bay.
Australians are estimated to make up over a third of international visitors in both RTO areas,
with UK visitors accounting for slightly less than 20 percent. Australian visitors also account for
the greatest proportion of international visitor expenditure (over 40 percent) and spending by
Australian visitors has grown strongly over 2009-2013 (9.6 percent per annum growth).
Relatively few international visitors to the area are from Asia (around three percent of all
visitors), although they account for over 10 percent of international expenditure. Spending by
visitors from the UK and US declined relatively sharply over the period (although this is a
national trend). Almost 60 percent of international visitor nights were the result of travellers to
Gisborne who were visiting friends and family (40 percent in the Hawke’s Bay) and another 30
percent were from visitors travelling for a holiday (40 percent in the Hawke’s Bay).
People from Auckland, the Bay of Plenty, Waikato and Gisborne itself account for the majority of
domestic visitors in Gisborne. A different profile of visitors travel to and through the Hawke’s
Bay, with most from within the Hawke’s Bay region itself, followed by Auckland, Wellington and
Manawatu-Wanganui. Visitors travelling within the East Coast are responsible for the greatest
proportion of domestic expenditure in the area (around 25 percent), followed by visitors from the
Waikato, Wellington, Auckland and Bay of Plenty. Spending by visitors from the Waikato has
grown most strongly over 2009-2013 (18 percent per annum), followed by visitors from the Bay
of Plenty (15 percent per annum). The trends suggest that the study area needs to attract a
greater proportion of domestic travellers from outside the broader region itself.
The broader Gisborne/Hawke’s Bay region captures a reasonable proportion of events in New
Zealand and on a population basis, but these are largely regional and community events rather
than major events. Several existing regional events do, however, attract high numbers of
visitors (e.g., Rhythm and Vines, Mission Concert), many of whom are first time visitors and are
likely to re-visit/tell others. The Hawke’s Bay Regional Council has identified a need to establish
a regional events strategy to establish and/or attract new events and to improve the
coordination of events activities across the region.
Not unexpectedly, given the size and remoteness of the broader region, it captures only 4.1
percent of international fee-paying students. Virtually all of these are in the Hawke’s Bay.
Positively, the Hawke’s Bay achieved significantly better than average growth in student
numbers over 2007-2012 (1.8 percent compound compared to -0.3 percent nationally).
The study area has a large range of natural and cultural amenities that can be further leveraged
to attract visitors and workers and which are perceived positively by residents and visitors.
Apart from the obvious variety of coastal areas, beaches, wetlands and peaks and Napier’s art
deco experience, this includes a reasonable number of registered historic places in Gisborne
11
and a range of Māori cultural experiences and sites of significance. Councils in the study area
have also been active in investing in developing a range of retail and recreational amenities.
Overall, the study area and broader region has a good base of destination assets and the
Hawke’s Bay in particular has experienced growth in visitor activity on which to build. However,
Gisborne needs to turnaround the long-term decline in visitor expenditure. The research
suggests that attracting more international visitors (through segmentation and targeting) and
creating a compelling proposition by distinguishing the broader region’s natural, cultural and
event offering from other New Zealand regions could be areas of focus for future investment
and efforts.
Connectivity and infrastructure
Given the East Coast study area’s remoteness and difficult terrain, and the export orientation of
much of its economic activity, physical and virtual connectivity is highly important to access
labour, supplies and domestic and international markets.
For primary processing industries, the key transport modes for the movement of goods are road
(both within the region, and to and from other parts of New Zealand) and sea for the onward
movement of products for export. The forestry industry, which as noted has a large and
growing role in the economy, relies on both Eastland Port and the Port of Napier for the export
of logs and for the movement of logs domestically for processing. Other major agricultural
products freighted by the area include meat, which is typically moved to the north, wine, which
again is typically transported north for bottling, and agricultural produce, which is exported
mainly through Napier but is also transported to domestic markets. The volumes of other
agricultural product freight have been stable or reducing.
To support these major freight generating activities, the main road links into the study area are
SH2 between Gisborne and Opotiki and the upper North Island to the north, and SH2 between
Gisborne, Wairoa and Napier, which provides access to the Hawke’s Bay and the lower North
Island. SH35 provides access between Gisborne and the settlements and forests along the
East Coast and is particularly used by the logging industry. While these provide a reasonable
level of service, there are some issues with network resilience. However, route security
between Gisborne and Napier does not appear to be a major issue (with just over two closures
per year). For SH2 to the north the number of closures has been smaller but their severity has
been greater, and for SH35 to the north both the number and severity of closures has been
greater. Addressing these would improve the study area’s connectivity.
Traffic flows on the state highways in the study area are generally small, in the order of 3,000
vehicles per day or less. Heavy Commercial Vehicles account for a relatively high proportion of
traffic (about 10-20 percent of total traffic on SH2 and SH35). These flows have been growing
strongly since 2008 on SH2 south of Gisborne and SH35 to the north, reflecting growth in the
forestry industry. Total inter-regional freight flows on the main routes have been estimated to
be about 2 million tonnes per annum.
With the high flows of logs, there is an increasing demand for the use of High Productivity Motor
Vehicles (HPMVs), road vehicles capable of carrying higher payloads. There are plans to
12
upgrade substantial sections of SH35 to allow the use of HPMVs. The possibility of developing
Gisborne-Napier as an HPMV route is being considered but the feasibility of this is affected by
the costs of upgrading the structures and the impact that the heavier vehicles might have on the
costs of maintenance for the route. Because of the importance of the connections between
Gisborne and the north via SH2, the feasibility of developing this route for HPMVs should also
be investigated.
Even with the full development of the forested area, the number of heavy vehicles on the road
will typically be low in absolute numbers, although there are concerns about flows through
central Gisborne.
The ports in the study area (Eastland Port and the Port of Napier) seem well positioned to
handle the increases in traffic resulting from the expansion of the forestry industry and also
growth in food and processing industries. Both ports have handled relatively rapid growth in
export traffic over 2009-2013. Each has a reasonably distinctive role, with Eastland Port largely
focused on the export of logs via bulk carriers and the Port of Napier handling dairy, fruit and
vegetables, pulp and paper and meat in addition to logs and timber products, and also handling
a reasonable quantity of imports.
There are relatively small passenger movements on the roads, with inter-regional movement of
passengers estimated to be about 1.1 million in 2012. SH2 to the north and south west
provides the main inter-regional linkages for passengers, which again are affected to an extent
by network resilience issues. There does not appear to be significant intra-regional movement
of people, except between Napier and Hastings. Gisborne is largely self-contained as an
employment area, with 97 percent of residents living and working in the district when last
measured.
One issue is the interaction between cars and heavy freight vehicles, particularly those carrying
logs. Although flows are low, freight vehicles can result in a reduced travel experience and
concerns about safety which may be a factor influencing tourist traffic. This issue has been
recognised with the construction of a number of passing opportunities facilitating overtaking on
the route between Gisborne and Napier.
Passenger movements by road are supplemented to a reasonable extent by the numbers flying
to and from the study area via Gisborne Airport and Hawke’s Bay Regional Airport. This is an
important factor in reducing the remoteness of the area, and allows a degree of long distance
commuting and business travel to and from Auckland and to a lesser extent Wellington. There
do not appear to be any capacity constraints at the airports, with both airports having the facility
to sustain likely passenger flows, although the price of air travel has been mentioned as a
constraint.
Looking at the transport needs for the study area as a whole, the potential role for rail in the
study area appears to be limited in the medium term and potentially in the long-term. When
operational, rail only accounted for about 2-3 per cent of freight traffic on the Gisborne-WairoaNapier corridor and, following its closure, there is no clear evidence of significant economic
impacts although several businesses have publicly commented that they have been
detrimentally affected. Currently there may be some untapped potential for increases in traffic
13
over and above those experienced over the last decade, but there is no clear evidence that
these would be of a scale to provide for an adequate commercial (or economic) return under the
existing model.
In general, while the area is affected by remoteness, the transport network seems able to cope
with the demands on it and plans have been developed to help address future challenges,
particularly those associated with increased forestry movements. In our view, the key to
connectivity is the road network, particularly SH2 which handles almost all the longer distance
flows of passengers and freight. As noted, there are some network resilience issues and there
is a need to ensure that this route can provide reliable connections to the major centres to the
north and south west. SH35, which handles more local movements into Gisborne, also
deserves consideration.
Internet connectivity is also important for small, distant regions like the East Coast but access in
the study area is below national averages. In 2013, 69 percent of households in the study area
had internet access compared to 77 percent nationally (and only 55 percent in Wairoa). This
low connectivity may constrain the ability of residents to transact business nationally and
internationally. However, as with New Zealand generally, there was a large increase over 20062013 in internet access, with the proportion of households with access increasing from 53
percent in 2006.
Electricity reliability and capacity has been noted by local stakeholders as an issue that may
constrain opportunities in the region. The Gisborne region, with no local generating capacity
and one electricity transmission line linking to the main grid, is perceived by some to be overexposed to supply interruptions and stakeholders noted that current capacity would only be able
to service no more than one additional wood processing plant. Eastland Group has forecast
that, in the worst case, the current capacity at Gisborne would not meet maximum demands
after 2022.
However, several options for addressing capacity constraints are being considered, for
example, new biomass generation in the form of CHP (combined heat and power) plants to
accompany additional forestry mills, renewable energy sources, embedded and distributed
generation, line upgrading and possibly duplication, and Eastland Group taking over the
connection from the main grid from Transpower where the constraint lies to improve the
operation and control of the connection. As such, it appears that the relevant stakeholders are
prepared for potential growth in demand.
Innovation and entrepreneurship
There is limited data about innovation at the regional level and the available information
provides a mixed picture of innovation and entrepreneurship on the East Coast. The number of
patent applications in the Hawke’s Bay and Gisborne is very low compared to other regions (in
2009, for every one million people, 20 patent applications were filed in the Hawke’s Bay while
none were filed in Gisborne, compared to the New Zealand average of 74). When last
measured in 2002, business investment in R&D as a proportion of GDP in the broader region
was also well below the New Zealand average. Gisborne has a lower than average proportion
14
of high growth enterprises. However, Hawke’s Bay has the second highest per cent of “high
growth enterprise” operating locations in 2011 of all regions. In addition, the Hawke’s Bay has a
high proportion of large businesses relative to other regions.
Innovation may be constrained by a lack of publicly funded research in the study area and a
limited pool of science and technology professionals. There is no university and only a small
presence of Crown research institutes in the region. Gisborne’s and Hawke’s Bay’s level of
core human resources in science and technology is also relatively low (7 percent in both areas
compared to the New Zealand average of 12 percent) and the broader Gisborne/Hawke’s Bay
region has low employment in knowledge intensive sectors (25.5 percent compared to 33.2
percent nationally).
There are, however, some good examples of industry-research collaborations in the region. For
example, the Pipfruit Research Consortium in the region was funded by the Ministry of
Business, Innovation and Employment (MBIE) to develop new apple and pear cultivates for the
industry and involves Plant and Food Research. MBIE has also supported Te Runanganui o
Ngāti Porou to develop their science and innovation strategy and has also helped fund research
staff to improve their commercial operations (e.g., Ngāti Porou Seafood). Companies in the
forestry sector have also joined industry-wide research co-operatives (e.g., Hikurangi Forest
Farms involvement with research in conjunction with Scion) and companies in the red meat
sector are involved in Primary Growth Partnership initiatives to improve levels of innovation and
added value in meat production (for example, Firstlight Foods is a key partner in a project to
develop grass-fed wagyu beef).
The study area is also improving its access to such research and expertise by building its
connections with other regions. For example, the Hawke’s Bay Regional Council recently
established a Memorandum of Understanding with Massey University to build stronger
relationships between the University and the agri-food sector in the region. Food Hawke’s Bay
has also been established to better link local businesses with the capability in the New Zealand
Food Innovation Network and local firms are participating in currently active projects using the
Foodbowl in Auckland and food pilot facilities in Palmerston North.
While there is no data on the value of exports from businesses in the East Coast study area
(other than freight from the ports) and limited data on foreign direct investment, economic
activity on the East Coast is strongly export oriented. It is estimated that about 33 percent of
3
employment in the area is in export oriented sectors, higher than most other regions . Councils
in the area, and Business Hawke’s Bay, have identified China as a key growth market for local
companies and there are several initiatives in the study area to build stronger relationships with
China. There are also, of course, several international businesses in the study area, largely in
the forestry, wood and food processing industries. It is possible that greater economic benefits
could be captured from the international linkages that these businesses provide.
For a ‘non-main centre’, the East Coast study area does have a good range of organisations
and infrastructure available that support innovation and business development. Hawke’s Bay
3
Ministry of Business, Innovation and Employment (2013b). Regional economic activity report.
15
businesses capture a relatively high proportion of national innovation funding and a majority are
satisfied with business development initiatives in their area. However, stakeholders in Gisborne
have raised concerns about the difficulty in accessing funding and additional assistance has
been provided to support the Regional Partner Network in that region. The recent decision by
the Gisborne District Council to co-fund an economic development capability for the region
should, over time, help to bolster access to support.
Iwi/Māori are a significant existing and potential partner and investor in economic development
in the study area and broader region, with the Māori commercial asset base in the Hawke’s Bay
and Gisborne previously estimated at over $400 million and $315 million respectively (excluding
recent settlements). Previous research has identified that key drivers of Māori business and
investment in the study area include land use, involvement in primary industries, employment in
infrastructure and service industries and increased tertiary education participation. Research
suggests that potential barriers to the full economic potential of Māori being achieved in the
region include the fragmentation of Māori land, a historical lack of Māori participation in higher
value occupations and businesses, and the skills challenges already noted.
Iwi in the region are responding to these challenges and most of the economic development
issues and opportunities identified in this study through initiatives focused on improving
productivity from primary production, tourism, electricity generation, skills and innovation. The
commitment and ability of iwi to tackle these issues and the long-term investment focus of iwi
provides significant potential for the study area.
16
Introduction and background
Purpose and background
On the 14 February 2013, Transport Minister Gerry Brownlee and Economic Development
Minister Steven Joyce met with the local authorities of the Tairāwhiti/Hawke’s Bay Regions –
Gisborne, Wairoa, Napier and Hastings – to discuss the closure of the rail connection between
Napier and Gisborne. At that meeting, it was agreed that it would be useful to undertake a
broad and deep study of the area’s economic potential over the next 30 years to identify the
appropriate transport infrastructure for the area.
Subsequently, the Mayors of Gisborne, Wairoa, Napier and Hastings, the Chair of the Hawke’s
Bay Regional Council (the East Coast Mayors and Chair) and the Ministries of Business
Innovation and Employment (MBIE) and Transport (MoT) entered into a partnership in order to
deliver a broad and deep study of the East Coast region’s economic potential over the next 30
years and the requisite infrastructure across all transport modes (road, rail, air freight, ports) to
support that.
This report is Stage 1 of the study. This stage of the study involved a review of over 80 reports
on economic development issues and opportunities facing the East Coast area, including
economic research reports, economic strategy documents, local authority planning documents,
infrastructure reports and industry studies. In some areas there has been limited research
available, for example on the issues facing and prospects of some industries in the region. The
research review was supplemented with a selection of stakeholder interviews, including local
authority, industry group, business and iwi representatives. More information on the review
method and the organisations interviewed is attached in Appendix 1.
Steering Group
A Steering Group was formed to oversee the study. The Steering Group includes:

Meng Foon, Mayor of Gisborne (or their delegated representative)

Barbara Arnott, Mayor of Napier (or their delegated representative). Following the 2013
local government elections Bill Dalton has become the Mayor of Napier.

Lawrence Yule, Mayor of Hastings (or their delegated representative)

Les Probert, Mayor of Wairoa (or their delegated representative). Following the 2013 local
government elections Craig Little has become the Mayor of Wairoa.

Fenton Wilson, Chair of the Hawke’s Bay Regional Council (or their delegated
representative)

Dr Apirana Mahuika, Chair of Te Rūnanga o Ngāti Porou (or their delegated
representative)
17

Dr Hope Tupara, Chair of Te Rūnanga o Turanganui a Kiwa (Represents Rongowhakaata,
Te Aitanga a Mahaki and Ngai Tamanuhiri) (or their delegated representative)

Ngahiwi Tomoana, Chair of Ngāti Kahungunu Iwi Incorporated (or their delegated
representative)

Lisa Barrett (General Manager, Tourism, Sectors, Regions and Cities, MBIE) (Steering
Group Chair)

Jami Williams (Acting Manager, Regions and Cities Team, MBIE)

Tamati Olsen (Chief Advisor Māori Development, Science Skills and Innovation Group,
MBIE)

Gayelene Wright (Principal Advisor, MoT).
Research review framework
The use of a framework for thinking about regional economic development and growth is helpful
to structure and focus the research review. Our review of national and international research on
the various ways to think about economic growth and urban and regional competitiveness led
us to develop a framework of the foundations and drivers of city and regional growth. This
framework underpinned the Auckland Policy Office’s research programme, and has been
updated over time and has formed the basis for the Waikato regional economic profile, the
MED/LGNZ core cities project, as well as economic development strategies in Auckland,
Wellington City, Dunedin, New Plymouth and the Waikato.
A stylised and updated version of this framework, adapted specifically for this study, is
illustrated in Figure 1.
Figure 1. Framework of drivers of regional competitiveness and economic growth, as
applied to this study
Prosperity
Economic
trends and
context
GDP, incomes,
quality of life
Drivers of growth & prosperity
Employment, productivity, population
Underlying determinants
Industrial mix and
performance
Destination
attributes
18
Skills and talent
Innovation and
entrepreneurship
Connectivity and
infrastructure
This framework highlights that an understanding of the strengths and weaknesses in the
determinants of regional economic growth can identify ways to improve the performance of
businesses and industries in a city or region (and hence drivers of growth and prosperity) to
improve the incomes and quality of life of residents.
This literature review focuses on specific determinants of growth. Usually a comprehensive
review includes consideration of further determinants of growth, such as the built environment
and the business environment, as well as “foundations” or productive inputs. This literature
review focuses on major components that will be most relevant to Stage 2 of the study, that is,
information and data that will provide the most useful input into modelling and scenario analysis,
and hence provide a baseline of current state transport infrastructure quality, demand and
bottlenecks.
However, other determinants and foundations of growth have been considered when relevant
and appear in this literature review to the extent they impact on the core components.
Table 1 provides further detail on the core literature review components for the purposes of this
report.
Table 1. Core components of the framework and literature review
Component
Importance of the component
Discussion and focus
Drivers and
indicators of
prosperity and
growth economic trends
and context
An understanding of the East Coast study area
and economies of each district/city
A review of key economic data for the region and
how it compares to other regions and nationally,
including GDP, GDP per capita, household
incomes, productivity, employment and
population. Broader measures, such as quality of
life, are also important and considered.
Industrial mix and
growth
A region’s economic performance is underpinned
by the performance of highly concentrated key
sectors, while maintaining some industrial diversity.
Includes an overview of the industrial mix of the
region, including industry contributions to GDP
and changes over time, location quotients,
employment and exports. Also includes a
general profile of industries in the economy,
internationalisation performance and analyses
where growth is being generated or has the
potential to be generated. Specific natural
resource issues that impact on industrial growth
are also considered.
Connectivity and
infrastructure
Connectivity refers to the physical and virtual
connectivity of goods, services, people and
information within the region and between the
region, other regions and offshore markets.
This part of the analysis covers connectivity at
both a national and regional level through road,
rail and air links and at an international level
through sea and air ports.
Quality infrastructure needs to be available to
facilitate physical and virtual connectivity. High
performing regions tend to have fast and efficient
links within the region, as well as to other regions,
by road, rail and air. This supports business
internationalisation, investment and visitor
attraction.
Infrastructure of relevance includes transport,
energy, broadband and sector specific facilities.
19
Component
Importance of the component
Discussion and focus
Skills and talent
The formal skills and qualifications of people in the
region and capabilities such as language and
problem solving abilities underpin innovation and
productivity improvements.
Assesses the educational attainment levels of the
working age population, business access to
employees and skills and migration trends. Also
includes an overview of the training and
education sector.
International experience suggest that regions with a
more highly skilled workforce (i.e., tertiary qualified
workers, able to transform and grow high value
goods and services), as opposed to those with a
higher proportion of low skilled workers, perform
better economically.
Destination
attributes
Destination attributes relate to a region’s value
proposition and image, its ability to attract visitors
and the steps taken to leverage amenities and
events and build up the reputation of the region as
a place to live, work and do business.
Attributes of interest as part of the analysis
include perceptions of the region, trends in visitor
numbers and expenditure, an assessment of the
quantity and quality of events, an assessment of
natural, cultural and retail amenities and facilities,
and international student numbers and
expenditure.
Innovation and
entrepreneurship
The capability of organisations in the region to
develop new and innovative products, services,
processes and markets, underpinned by strong
networks and connections between business,
research and support organisations, adequate
supplies of capital and the availability of technical
and knowledge-based skills.
The region’s innovation performance and
potential are reviewed on factors such as patent
applications, an assessment of linkages between
key industries and research expertise, an
overview of innovation support institutions
available to businesses in the region, the
availability of capital, business entry rates and the
proportion of high growth businesses.
This also represents a fairly typical ‘growth’ framework, in which changes in levels of wealth and
income are underpinned by changes in labour utilisation and productivity, which depend on the
combination of resources and other factors in the environment and how businesses and
individuals can access and respond to these. As such, the underlying determinants of the
framework closely align with several themes of the national Business Growth Agenda (BGA):
Underlying determinant of regional growth
Business Growth Agenda themes
Innovation & Entrepreneurship
Innovation, Capital Markets
Skills & Talent
Skilled and Safe Workplaces
Connectivity & Infrastructure
Infrastructure; Export Markets (Improving Access to
International Markets and Helping Businesses
Internationalise elements)
Destination attributes
Export Markets (Increasing Value from Tourism and the
Growing International Education elements)
Industrial mix and performance (including the natural
resource base underpinning some industries)
Natural Resources
BGA actions that are relevant to an issue or opportunity identified under each of the
determinants of regional growth are highlighted in the report.
20
It is important to emphasise that the report provides an overview of economic issues and
opportunities on the East Coast. The scope of the work commissioned for the first stage did not
cover in-depth analysis of specific industries or key themes. We were asked to assess the East
Coast as a whole and hence aggregate the findings, rather than focus in on specific territorial
authorities, although we do note differences that have emerged across territorial authorities.
21
Economic trends and context
The East Coast study area
The geographic boundaries for this study are defined as the Gisborne, Wairoa and Hastings
District Council Local Authority boundaries and the Napier City Council boundary. However,
data at the territorial level can be difficult to obtain or is often unavailable. In several cases, the
Gisborne and Hawke’s Bay regions have had to be used as alternatives in this report. The
Hawke’s Bay Regional Council boundary includes Central Hawke’s Bay which was not included
in the study area, as well as part of the Taupo and Rangitikei Districts (Figure 3). The Gisborne
region boundary is identical to the Gisborne District Council boundary. Where the two regions
are used, they are referred to in this study as the broader “Gisborne/Hawke’s Bay region”.
This study area lies across regional council boundaries and boundaries used for other studies
and strategies. For example, Gisborne is a unitary authority, but Wairoa, Napier and Hastings
form part of the Hawke’s Bay Regional Council area. This area will be referred to as the “East
Coast study area”, “the East Coast”, “the East Coast region” or “the study area” throughout this
report.
Figure 2. The East Coast study area
22
Figure 3. The broader Gisborne/Hawke’s
Bay region
East Coast economic context, by the numbers
As per the framework for analysis, the following provides an overview of the East Coast’s
performance on top line indicators of economic growth and prosperity and the drivers of that
growth (Table 2).
In 2013, the East Coast study area contributed about 3.6 percent of New Zealand’s GDP, 4.3
percent of the population and 4.5 percent of employment. Compared with other New Zealand
regions, the East Coast sits broadly in the middle of all regions but is only about a tenth of the
highest GDP producing region (Auckland). On most key economic indicators, the study area
does not perform as well as the rest of New Zealand (Table 2).
23
Table 2. Top line indicators of the East Coast’s economic performance and growth
East Coast
Trend at a glance
New
Zealand
Rank in New Zealand
Comment
Source and
Date
Official GDP for
broader Gisborne/
Hawke’s Bay region:
$7,633 million (2013)
Estimated for study area:
Official GDP for
2013: $211,639
million
Estimated growth for study area:
Between 2002 and 2012, real GDP in the
study area was estimated to grow at a
compound rate of 2.10 percent. This was
around the New Zealand average of 2.31
percent.
Official source for
2013: Statistics
New Zealand
regional GDP series
(March years)
Estimated GDP for
the study area:
$7,858 million (2012)
2007-2012:
Over 2007-2012, real GDP was
estimated to grow by 0.23 percent on
average, compared to New Zealand
average growth of 1.10 percent.
Source for 2012
estimates and
trends: Infometrics
regional database
Official GDP per
capita for broader
Gisborne/Hawke’s
Bay region: $37,973
(2013)
Estimated for study area:

Estimated real growth 2002-2012:
Between 2002 and 2012, real GDP per
capita in the study area was estimated to
increase by 1.68 percent per annum on
average, higher than the New Zealand
average of 1.14 percent.
Official source for
2013: Statistics
New Zealand
regional GDP series
(March years)
Estimated for study
area: $41,750 (2012)
2007-2012:
H
Based on official figures, GDP per capita
in the broader region grew at a
compound rate of 2.18 percent over
2007-2013. Nationally GDP per capita
grew by 2.76 percent per annum over the
period.
Source for 2012
estimates and
trends: Infometrics
regional database
Prosperity
Gross
domestic
product
GDP per capita
24
2002-2012:

M
2007-2012:
~
2002-2012:

2002-2012:
L
Official GDP per
capita for 2013:
$47,532
Overall level:
L
Estimated nominal growth 20072013:
L
East Coast
Median weekly
household
income
Quality of life
Trend at a glance
$1,155
(Gisborne/Hawke’s
Bay)
88 percent

New
Zealand
Rank in New Zealand
$1,358
(Gisborne)

N/A
95 percent
(no data)
N/A
Comment
Source and
Date
L
Gisborne/Hawke’s Bay’s weekly
household income has increased
overtime (1.51 percent on average in real
terms over 2002-2012), but is below the
national average.
June quarter
N/A
In 2012, 34 percent of residents thought
Gisborne was a better place to live than it
was three years ago. This was a fall from
58 percent in 2007.
Source: Key
Research (2012)
N/A
In 2009, 95 percent of Hawke’s Bay
residents were satisfied with their overall
quality of life in the region, with a further 4
percent describing it as fair.
Source: Hawke’s
Bay Community
outcomes regional
monitoring report
(Bevin, 2009)
Employment in the study area increased
from 80,508 in 2002 to 89,090 in 2012.
Employment grew by 1.02 percent per
annum over the period, lower than the
national rate of 1.61 percent per annum.
Employment in the study area contracted
by 1750 people over 2007-2012.
Statistics New
Zealand business
demography data
(2013) and
Infometrics regional
database
The proportion of people in the labour
force has reduced over 2012-2013 from
68.0 percent to 65.8 percent and is below
the New Zealand average.
Year to December
2013
(Hawke’s Bay)
Source: Statistics
New Zealand, New
Zealand Income
Survey (2013)
Immediate drivers
Employment
86,730 (2012)
89,090 including selfemployed (2012)
Participation
rate
65.8 percent
(Gisborne/ Hawke’s
Bay)
2002-2012:


2,161,283
(2012)
Employment growth 2002-2012:
L
68.4 percent
M
Source: Statistics
New Zealand and
MBIE (2013)
25
East Coast
Employment
rate
Unemployment
rate
Trend at a glance
60.6 percent
(Gisborne/Hawke’s
Bay)
8.0 percent
(Gisborne/Hawke’s
Bay)
New
Zealand
~
63.4 percent

6.2 percent
Rank in New Zealand
L
L
Comment
Source and
Date
The proportion of the working age
population who are employed decreased
slightly from 62.5 percent in 2012 to 60.6
percent in 2013. The number of people
employed in the broader region was
101,700 in the year to December 2013.
Year to December
2013
The unemployment rate for
Gisborne/Hawke’s Bay reduced very
slightly from 8.1 percent in the year to
December 2012, to 8.0 percent in the
year to December 2013. This compares
to a larger reduction in New Zealand from
6.9 percent to 6.2 percent.
Year to December
2013
Source: Statistics
New Zealand and
MBIE (2013)
Source: Statistics
New Zealand
The number of unemployed people in the
broader Gisborne/Hawke’s Bay region is
estimated at 8,800 for the year to
December 2013.
Unemployment
benefits
working aged
recipients
2,281
(Gisborne/Hawke’s
Bay)

48,756
M
Since March 2012, the proportion of the
working aged receiving unemployment
benefits decreased by 12.6 percent.
Across New Zealand, this decreased by
8.8 percent.
Approximately 1.66 percent of New
Zealand’s working age population
received unemployment benefits
compared with 1.38 percent of
Gisborne/Hawke’s Bay’s working age
population.
26
Year to March 2013
Source: MSD and
MBIE (2013)
East Coast
Productivity
GDP per
employee
GDP/FTE for broader
Gisborne-Hawke’s
Bay region based on
official GDP for 2013:
$82,407
Estimate for study
area for 2012:
$90,612
Trend at a glance
Estimated for 2002-2012:

New
Zealand
GDP/FTE
based on official
GDP for 2013:
$109,304
Rank in New Zealand
Overall:
L
Estimated for 2007-2012:
Estimated real growth 2002-2012:

H
Estimated real growth 2007-2012
H
Population
182,028 (2013)
~
4,242,048
L
Comment
Source and
Date
East Coast’s labour productivity is below
New Zealand’s and below other regions.
Official source for
2013: Statistics
New Zealand
regional GDP series
Over 2002-2012, labour productivity is
estimated to have increased by 1.39
percent (real CAGR), which exceeded the
national average.
Productivity growth is estimated to have
remained relatively strong over 20072012 at an average rate of 1.45 percent
(real CAGR).
Between 2006 and 2013, the East
Coast’s population only rose by 0.2
percent (annual average growth). New
Zealand’s grew by 0.7 percent.
Source for 2012
estimates and
trends: Infometrics
regional database
Source: Statistics
New Zealand
Census usually
resident population
count (2013)
27
Indicators of prosperity
Gross domestic product
Gross domestic product (GDP), or the total value of output or income earned from goods and
services produced in the region, is arguably the most important indicator of standards of living in
4
a locality, particularly real GDP per capita.
Official statistics for the broader Gisborne/Hawke’s Bay region
Official regional GDP figures from Statistics New Zealand are not available at the territorial
authority level. The latest regional GDP statistics indicate that in 2013 the broader
Gisborne/Hawke’s Bay region’s GDP was $7.663 billion or 3.6 percent of New Zealand’s total
GDP.
The combined region ranks in
the middle of regions across
New Zealand on GDP
contribution, although Gisborne
is the second smallest region on
its own (Figure 4).
Figure 4. Regional GDP 2013 ($000)
Source: Statistics New Zealand regional GDP series
Statistics New Zealand currently
only provides regional GDP
figures for 2007-2013, which
includes the period after the
global financial crisis (20082011) and was a period of
relatively low growth for New
Zealand.
Figure 5. The East Coast’s and New Zealand’s GDP 2007-2013
($000, current prices)
Source: Statistics New Zealand regional GDP series
4
28
A real value is a value that has been adjusted from a nominal value to remove the effects of general price level price
changes over time (inflation). Nominal value is an economic value expressed in monetary terms (that is, in units of
a currency).
As shown in Figure 6, GDP in
nominal terms increased over
2008-2012, before declining
slightly over 2012-2013. It is
also clear that the Hawke’s
Bay contributes close to 80
percent of the combined
Gisborne/Hawke’s Bay
region’s GDP.
Figure 6. Gisborne and Hawke’s Bay GDP 2007-2013 ($000,
current prices)
Source: Statistics New Zealand regional GDP series
Over the 2007 to 2013 period,
the Gisborne/Hawke’s Bay
region’s average GDP growth
rate (2.47 percent per annum)
was the second lowest of all
New Zealand regions (Figure
7). Gisborne’s growth was
relatively strong at 4.15
percent per annum, while the
Hawke’s Bay grew by 2.05
percent per annum.
Figure 7. Regional GDP (nominal) growth 2007-2013 (CAGR)
Source: Statistics New Zealand regional GDP series
Estimates for the study area
The official statistics provide a relatively limited picture of GDP growth in Gisborne and Hawke’s
Bay regions (a limited time period and nominal growth) and cover a wider region than the study
area. We have supplemented these with GDP estimates from Infometrics. While not official
statistics, these are currently the best estimates available for the study area over the long-term.
Over the last 10 years, the
study area’s estimated real
GDP has grown at a similar,
but slightly lower rate than
New Zealand’s at 2.10 percent
on average compared to 2.31
percent (Figure 8). GDP grew
over 2002-2006, but fell in
2007 before remaining
relatively static over 20072012, as the economic
downturn was felt.
Figure 8. Estimated real GDP growth 2002-2012 ($1995/96)
Source: Infometrics regional database
29
There are differences in the value of
output at the territorial authority level.
Napier and Hastings are estimated to
make the most significant contributions
to the study area, at an estimated 48
percent and 28 percent respectively,
Wairoa is estimated to contribute 4
percent of the East Coast study area’s
GDP (Figure 9). These shares align
closely with the respective shares of the
study area’s population.
Figure 9. Estimated East Coast GDP by territorial
authority contribution, 2012
Source: Infometrics regional database
Hastings’s economy is estimated to have grown at the fastest rate in real terms over the last 5
and 10 years, followed by Gisborne. Wairoa’s real GDP has declined over the last 5 and 10
years, and Napier also contracted slightly over 2007-2012, following the global financial crisis
(Table 3).
Table 3. Estimated GDP and GDP growth, East Coast territorial authorities
Estimated GDP, 2012
(current prices)
Real GDP growth,
2002–2012 (CAGR)
Real GDP growth,
2007–2012 (CAGR)
Hastings
$3,709.7
2.57%
0.61%
Napier
$2,174.2
1.79%
-0.10%
Gisborne
$1,650.9
1.97%
0.42%
$324.0
-0.34%
-2.74%
$7,858.8
2.10%
0.23%
Wairoa
East Coast study area
Source: Infometrics regional database
The East Coast study area’s
estimated real GDP growth
performance over 2002-2012
puts it in the middle of New
Zealand’s regions, although
growth was lower than the New
Zealand average. At a territorial
authority level, Hastings
outperformed the New Zealand
average, with Gisborne, Napier
and Wairoa achieving real
growth rates below average
(Figure 10).
30
Figure 10. Estimated real GDP compound annual growth rate
across regions, 2002-2012
Source: Infometrics regional database
GDP per capita
Official statistics for the broader Gisborne/Hawke’s Bay region
Based on the official statistics,
the Gisborne/Hawke’s Bay’s
GDP per capita was $37,973 in
2013, well below the New
Zealand average of $47,532.
Indeed, the combined region
had the third-lowest GDP per
capita of all regions in 2013
(Figure 11), with Gisborne
having the lowest GDP per
capita at $34,472.
Over 2007 to 2013, the
Gisborne/Hawke’s Bay region
experienced growth in GDP per
capita at 2.18 percent per
annum, compared to the
national average of 2.76 percent
per annum. Again, the region’s
growth performance was well
below most other regions
(Figure 12). However, Gisborne
achieved relatively fast growth
in GDP per capita at 3.85
percent per annum.
Figure 11. Regional GDP per capita, 2013
Source: Statistics New Zealand regional GDP series
Figure 12. Regional GDP per capita (nominal) growth, 20072013
Source: Statistics New Zealand regional GDP series
Estimates for the study area
Turning to estimates for the
study area over a longer period,
the East Coast’s nominal GDP
in 2012 was estimated to be
below the New Zealand average
although, unlike the official
figures, this puts it slightly
higher up in the ranking of New
Zealand regions (Figure 13).
Figure 13. Estimated GDP per capita across regions, 2012
Source: Infometrics regional database and Statistics New Zealand population
estimates
31
GDP per capita in Hastings in 2012 ($49,135) was estimated to be above the New Zealand
average ($46,477) whereas Wairoa ($39,803), Napier ($37,616) and Gisborne ($35,275) were
well below the New Zealand average.
The study area’s real GDP per
capita is estimated to have grown
by 1.68 percent on average over
the last decade, which is higher
than New Zealand’s annual
compound growth rate (1.14
percent). However, the study
area’s real GDP is estimated to
have declined slightly since 2007
(-0.12 percent), whereas New
Zealand’s has slightly grown
(0.15 percent).
The East Coast’s estimated real
GDP per capita growth
performance over 2002-2012 is at
the upper end of New Zealand’s
regions (Figure 15), although the
region was starting from a lower
base. Hastings (1.86 percent per
annum growth), Gisborne (1.68
percent) and Napier (1.38
percent) outperformed the New
Zealand average.
Figure 14. Estimated real GDP per capita, East Coast and
New Zealand, 2002-2012 ($1995/96)
Source: Infometrics regional database and Statistics New Zealand population
estimates
Figure 15. Growth in estimated real GDP per capita across
regions, 2002-2012 ($1995/96)
Source: Infometrics regional database and Statistics New Zealand
population estimates
32
Household incomes
Household income is a good measure of prosperity because it provides a measure of what
people actually receive and is an important factor in overall wellbeing. The median level of
household income is a better indicator than the average as it is not skewed by extremes.
The Gisborne/Hawke’s Bay
region median weekly
household income has
increased over time, as has
New Zealand’s (Figure 16).
However, there is a relatively
large gap between household
income in the area and New
Zealand’s ($1,155 compared to
$1,358 in the June 2013
quarter).
Compared with other New
Zealand regions,
Gisborne/Hawke’s Bay’s weekly
household income is below the
national average, and is
towards the lower end of New
Zealand regions (Figure 17).
Median weekly household
income is not available at the
territorial authority level.
Figure 16. Median weekly household income, Gisborne/
Hawke’s Bay compared with New Zealand
Source: Statistics New Zealand, New Zealand Income Survey
Figure 17. Median weekly household income, 2013
Source: Statistics New Zealand – New Zealand Income Survey
Quality of life
Quality of life is a broader measure of prosperity than GDP and incomes, and is about the
general well-being of individuals and the liveability of the city. It has been identified in research
as a key driver of regional competitiveness, and is associated with attracting talent and
investment.
There is little comparative information available on a regional basis in relation to quality of life
perceptions. In 2012, 400 Gisborne residents responded to a Community Satisfaction Survey,
largely in relation to perceptions of the performance of, and engagement with, Gisborne District
Council. That survey asked the extent to which residents thought the district was a better, same
or worse place to live than it was three years ago. This question is quite different to that asked
about quality of life perceptions in most other “quality of life” surveys.
33
Nevertheless, 88 percent of
residents considered that the
district was better or about the
same as three years ago (Key
Research, 2012) (Figure 18). This
is a fall from 91 percent of
residents in 2005 and in 2006. Of
concern is that the proportion of
people who considered the district
was ‘better’ fell substantially from
58 percent in 2007 to 34 percent
in 2012. It is posited that the
economic downturn may have
impacted on results. Most quality
of life perceptions have decreased
across New Zealand regions and
cities over the last few years
(Nielsen, 2013).
Figure 18. Do you think the Gisborne District is better,
about the same or worse, as a place to live,
than it was three years ago?
Source: Key Research (2012)
In the Hawke’s Bay, 95 percent of residents responding to a resident satisfaction survey
indicated that they were satisfied with their overall quality of life in the region (Bevin, 2009).
Four percent described it as fair. There is no comparable data over time.
Overall, it is apparent that the study area and broader region falls below the New Zealand
average on indicators of prosperity, and Hastings tends to outperform the other territorial
authority areas.
Drivers of growth and prosperity
Labour participation and employment
Changes in material standards of living can be attributed to increases in labour utilisation or
labour productivity. Under-employment and unemployment will limit the overall performance of
the region, and undermine the quality of life of its residents.
The study area’s employment was 86,730 in 2012. The number of employees in the study area
has increased by only 0.7 percent per annum over 2002-2012, lower than growth in employee
counts in New Zealand as a whole (1.43 percent per annum).
Taking a broader view of employment to include the self-employed, there were 89,090 people
employed in the study area in 2012.
34
On this broader measure,
employment in the study area
grew only slowly over 20022012, at 1.02 percent per
annum, lower than growth in
employment across New
Zealand as a whole (1.61
percent per annum).
Employment in Wairoa declined
over the period and employment
in Gisborne remained relatively
stable.
Figure 19. Growth in employment 2002-2012
Employment in the study area
contracted over 2007-2012 by
around 1750 people. Only
Hastings achieved employment
growth over the period and only
by 0.18 percent per annum.
Figure 20. Growth in employment 2007-2012
Source: Infometrics regional database
Source: Infometrics regional database
The Gisborne/Hawke’s Bay’s labour force participation rate has declined over the last year, and
the employment rate has also declined slightly. Both are below the New Zealand averages
(Table 4). The region’s unemployment rate has reduced very slightly over the year, but is well
above national levels. The region’s unemployment rate has continued to exceed New
Zealand’s over time and the participation rate has generally been close to, but below, New
Zealand’s over time (although in 2013 was well below New Zealand’s).
Table 4. Key labour market data for broader Gisborne/Hawke’s Bay region
Gisborne/Hawke’s Bay
New Zealand
Indicator
2006
2012
2013
2006
2012
Persons employed
101,700
102,000
101,700
2,134,700
2,216,100
2,262,300
Participation rate, annual average
67.6%
68.0%
65.8%
68.3%
68.2%
68.4%
Employment rate, annual average
64.7%
62.5%
60.6%
65.6%
63.5%
64.1%
4.3%
8.1%
8.0%
3.8%
6.9%
6.2%
Unemployment rate, annual average
2013
Source: Statistics New Zealand Business Demography Statistics for persons employed; Household Labour Force
Survey for participation rates, employment rate and unemployment rate, which are for December quarters.
35
The Gisborne/Hawke’s Bay
region has one of the highest
unemployment rates in New
Zealand (Figure 21). There are
differences between the territorial
authority areas. Wairoa has
relatively high labour force
participation and employment
relative to other areas, while
Gisborne’s is low but had the
lowest unemployment rate in the
year ending March 2013 (Table
5).
Figure 21. Unemployment rate, by regional council area,
March 2013
Source: Statistics New Zealand, Household Labour Force Survey
Table 5. Key labour market data, territorial authorities, year to March 2013
Participation rate
Employment rate
Unemployment rate
New Zealand
68.0%
63.4%
6.8%
Gisborne/Hawke’s Bay
67.3%
61.9%
8.0%
Gisborne
62.8%
58.1%
7.6%
Wairoa
74.1%
66.8%
S
Napier
66.6%
61.0%
8.4%
Hastings
69.9%
64.5%
7.7%
Source: Ministry of Business, Innovation and Employment customised dataset. Notes: S = suppressed
In the March 2013 quarter, 2,281
people in the Hawke’s Bay and
Gisborne regions received the
unemployment benefit. As a
proportion of the working age
population, Gisborne/Hawke’s
Bay is just below the national
average, while Northland region
has the highest proportion of
unemployment beneficiaries (as a
proportion of the working age
population) (Figure 22).
36
Figure 22. Working aged Unemployment Benefit
recipients (aged 18-64) as a proportion of the
working age population, March 2013 quarter
Source: Ministry of Social Development benefit fact sheets and
Statistics New Zealand population estimates
Compared to the New Zealand average, a significantly higher proportion were Māori (80.3
percent of unemployment beneficiaries in Gisborne were Māori and 56.8 percent in Hawke’s
Bay), compared to 38.7 percent across New Zealand.
Productivity
Labour productivity is a direct contributor to economic growth and measures how effectively
labour is being used as a production input in the economy. Improvements in productivity mean
that a region is getting more value from its labour force.
Official statistics for the broader Gisborne-Hawke’s Bay region
GDP per employee is a proxy for labour productivity (it is typically measured as the value of
output per hour of work). It is a rough measure and tends to bias labour productivity upwards
as GDP includes the rental value of owner-occupied dwellings.
Figure 23. Regional GDP per FTE 2013 ($000)
Based on the official GDP
statistics, the broader
Gisborne/Hawke’s Bay’s labour
productivity was $82,407 in 2013,
again much lower than the
national average ($109,304) and
below all other regions (Figure
23).
Source: Statistics New Zealand regional GDP series and Statistics New
Zealand employee counts
Nominal productivity growth over
2007-2013 in the
Gisborne/Hawke’s Bay region
was around the New Zealand
average (3.41 percent CAGR
compared to 3.64 percent
nationally), although Gisborne
itself achieved relatively high
growth in productivity over the
period (4.97 percent CAGR)
(Figure 24).
Figure 24. Regional GDP per FTE (nominal) growth 20072013 (CAGR)
Source: Statistics New Zealand regional GDP series and Statistics New
Zealand, Labour force status
37
Estimates for the study area
Compared to other regions, the
study area’s estimated labour
productivity in 2012 sat at the
lower end of comparable regions,
and was well below the New
Zealand average (Figure 25).
This is consistent with the official
figures. All territorial authorities
in the region have lower than
average estimated labour
productivity, with Gisborne’s
particularly low.
The East Coast study area’s
estimated real productivity growth
performance over 2002-2012 was
near the top of New Zealand’s
regions (at 1.39 percent CAGR),
and higher than the New Zealand
average (0.87 percent) (Figure
26). Again, this likely because
the study area was starting from
a low base.
Figure 25. Estimated GDP per employee, 2012
Source: Infometrics regional database and Statistics New Zealand’ s
Business Demography statistics
Figure 26. Estimated growth in real GDP per employee,
2002-2012 ($1995/96)
Source: Infometrics regional database and Statistics New Zealand’ s
Business Demography statistics
Real productivity growth in the
region is estimated to have
remained relatively strong over
2007-2012 (1.45 percent CAGR),
although Wairoa’s productivity
declined over the period (Figure
27).
Figure 27. Estimated growth in real GDP per employee,
2007-2012 ($1995/96)
Source: Infometrics regional database and Statistics New Zealand’ s
Business Demography statistics
38
There has been some analysis of productivity at the local industry level. Infometrics (2013)
ranked broad industries within the Gisborne economy and found that mining was the most
productive with relatively high capital intensity in New Zealand, followed by electricity, gas water
and waste services, real estate services, ICT, financial services and manufacturing (Table 6).
Table 6. Selection of Gisborne’s industries by productivity (GDP per employee), 2012
Industry
Gisborne
New Zealand
Mining
259,607
190,460
Electricity, gas, water and waste services
139,013
233,508
Rental, hiring and real estate services
125,634
163,045
Information media and telecommunications
109,317
208,267
Financial and insurance services
82,435
116,508
Manufacturing
77,885
86,522
Professional, scientific and technical services
62,148
46,785
Transport, postal and warehousing
45,042
80,769
Agriculture, forestry and fishing
44,151
63,148
Wholesale trade
43,679
70,877
Health care and social assistance
38,225
35,370
Retail trade
31,222
35,893
Education and training
24,911
26,052
Construction
21,987
35,886
Arts and recreation services
21,503
41,455
Accommodation and food services
14,923
16,297
TOTAL
53,367
67,029
Source: Infometrics (2013)
Population – distribution and growth
An important factor impacting on the quantity of labour for productive activity in an economy is
the size and growth of the population and its age distribution.
Like other non-main centres, the East Coast faces a number of demographic challenges. This
includes a limited and slow growing total population base, increasing population concentration
in the urban areas of Napier, Hastings and Gisborne, significant growth in the 65+ population,
considerable population loss in the Wairoa District, and significant net international migration
loss of families and young adults. While there has been an increase in the working-age
population, this is projected to fall in the long term.
39
Population and projected growth
The East Coast’s Census usually resident population was counted at 182,082 in 2013. Over
the last seven years, the study area’s population grew by 0.2 percent per annum, while New
Zealand’s population grew by 0.7 percent (Table 7). There are variations within the study area,
with Hastings and Napier experiencing slight growth (but not as much as New Zealand as a
whole), while Wairoa’s and Gisborne’s population has declined.
Population growth over recent years has been driven by natural increase (excess births over
deaths) rather than migration (international or internal migration).
Table 7. Census usually resident population count and change
2001
2006
2013
3,737,280
4,027,947
4,242,048
173,970
179,145
43,971
Wairoa
district
New
Zealand
Change 2001-2006
Change 2006-2013
Number
Number
CAGR
CAGR
290,667
1.5
214,101
0.7
182,028
5,175
0.6
2,883
0.2
44,463
43,653
492
0.2
-810
-0.3
8,913
8,484
7,890
-429
-1.0
-594
-1.0
Hastings
district
67,428
70,839
73,245
3,411
1.0
2,406
0.5
Napier city
53,658
55,359
57,240
1,701
0.6
1,881
0.5
East Coast
study area
Gisborne
district
Source: Statistics New Zealand, Census 2013.
Statistics New Zealand
population projections suggest
continued moderate growth in
Hastings (0.5 percent), slow
growth in Napier (0.2 percent)
and Gisborne (0.1 percent), but a
decline in Wairoa (Figure 28).
Statistics New Zealand’s Wairoa
medium term projections suggest
that the district’s population will
decline 0.9 percent per annum
between 2006 and 2031.
Figure 28. East Coast territorial authority population
projections to 2031
Source: Statistics New Zealand (2012). Note: Medium population
projections
Wairoa is one of about 15 territorial authorities in New Zealand that experienced zero growth or
absolute decline between 2006 and 2010 (Jackson, 2012b). Population decline impacts on
business growth, through shrinking of the labour force as well as the market for goods and
40
services. In Wairoa, businesses identified the declining population as the biggest barrier to
operating a successful business in Wairoa (Loomis, 2012).
Age profile
There are a number of demographic factors that need to be considered to understand the future
labour force potential. These include aging populations, life expectancy and labour force
participation. The East Coast’s population, like elsewhere, is aging (Figure 29 and Figure 30).
It is aging numerically, as more people survive to older ages, and structurally, as falling birth
rates and reducing numbers at the key productive ages deliver relatively fewer children in the
base of the age structure.
Figure 29. The East Coast study area’s age
and sex profile, 2006
Figure 30. The East Coast study area’s age
and sex profile, 2013
Source: Statistics New Zealand, Census 2013
Source: Statistics New Zealand, Census 2013
Figure 31. New Zealand’s age and sex profile,
2013
However, compared with New Zealand’s age
structure (Figure 31), the East Coast has
greater proportions of younger age groups (see
also Hawke’s Bay/ East Coast Forum, 2011a,
2011b, 2012), and lower proportions of the 25–
39 year age bracket, which comprises those of
prime working and childbearing age. It has a
more defined ‘hour glass’ structure than New
Zealand.
Source: Statistics New Zealand, Census 2013
This has labour market implications, with higher proportions likely to leave the labour market as
they reach retirement age and what appears to be a hollowing out of the working age population
as youth leave the region. Succession and future skills planning will be required to tackle this
predicted labour shortage (Jackson, 2011, 2012a).
There are some territorial authority differences (Figure 32, Figure 33, Figure 34 and Figure 35).
41
Figure 32. Gisborne district, 2013
Figure 33. Wairoa district, 2013
Figure 34. Hastings district, 2013
Figure 35. Napier city, 2013
Sources: Statistics New Zealand, Census 2013
Wairoa district’s hourglass is particularly pronounced, with hollowing out occurring in the 15 –
49 year age bracket. Gisborne’s population is more youthful than other territorial authorities
within the East Coast study area.
Cultural diversity
Pacific and Asian ethnic groups are under-represented on the East Coast compared with the
national population; however, the study area has a higher proportion of residents who identify
themselves as Māori (Figure 36 and Figure 37). A high proportion of Māori could be an
important source of distinctiveness for the East Coast study area, such as a source of cultural
difference between other New Zealand regions and internationally for business and tourism.
The Māori and Pacific populations on the East Coast are also relatively young, compared with
European/New Zealand/Other and the Asian population (Jackson, 2011, 2012a).
42
Figure 36. East Coast’s ethnic population,
2013
Figure 37. New Zealand’s ethnic
population, 2013
Source: Statistics New Zealand, Census 2013. Notes: Other includes “New Zealander”.
The East Coast has a significant Māori population. In the 2013 Census, 51,618 people
identified as being Māori on the East Coast. This was 27 percent of the population compared
with 13 percent nationally.
The principle iwi groupings in the Gisborne and Hawke’s Bay regions are Ngāti Kahungunu,
Ngāti Porou and Turanganui a Kiwa (representing Rongowhakaata, Te Aitanga a Mahaki and
Ngai Tamanuhiri) (Figure 38).
Ngāti Porou is the second largest iwi in New Zealand, and their rohe is the East Coast. The
traditional tribal boundary extends from Pōtikirua in the north to Te Toka-a-Taiau (a rock that
used to sit in the mouth of Gisborne harbour) in the south. Within the Ngāti Porou-Gisborne
rohe there are 47 marae and 58 hapu spread across four rohe. Te Rūnanga o Ngāti Porou,
established in 1987, is the tribal authority for the iwi.
Ngāti Kahungunu has the second largest tribal rohe (district) in the country which extends from
the Wharerata ranges in the Wairoa District to Cape Palliser in South Wairarapa. Ngāti
Kahungunu Iwi Incorporated (NKII) holds the mandate to represent the people of Ngāti
Kahungunu and is the governing body for all aspects of iwi development. It is comprised of six
Taiwhenua Trusts that collectively form the Ngāti Kahungunu iwi structure. There are other
governance entities for Ngāti Kahungunu. The Crown has recognised a number of groupings of
hapu which have settled or are in negotiations with the Crown. These groups have their own
post-settlement governance entities. Settlement agreements with the Crown include direct
relationship agreements relating to a range of natural resource, economic and social issues.
43
Figure 38. Iwi grouping affiliation in
Gisborne/Hawke’s Bay regions,
2013
Source: Statistics New Zealand, Census 2013. Notes: Individuals can report more than one iwi.
5. Consists of Te Aupōuri, Ngāti Kurī, Ngāti Takoto
6. Consists of Ngāti Hako, Ngāti Hei, Ngāti Maru (Hauraki), Ngāti Paoa, Patukirikiri, Ngāti Porou ki Harataunga ki
Mataora, Ngāti Pūkenga ki Waiau, Ngāti Rāhiri Tumutumu, Ngāi Tai (Hauraki), Ngāti Tamaterā, Ngāti Tara Tokanui,
Ngāti Whanaunga, Hauraki / Pare Hauraki, and Hauraki (Coromandel) Region, not further defined.
7. Consists of Kāti Māmoe, Ngāti Tahu / Kāi Tahu, and Waitaha (Te Waipounamu / South Island)
8. Consists of Ngāti Kahungunu ki Te Wairoa, Ngāti Kahungunu ki Heretaunga, Ngāti Kahungunu ki Wairarapa, Ngāti
Kahungunu region unspecified, Ngāti Kahungunu ki Whanganui-a-Orotu, Ngāti Kahungunu ki Tamatea, Ngāti
Kahungunu ki Tamakinui a Rua, Ngāti Pāhauwera, and Ngāti Rākaipaaka.
9. Consists of Ngāti Raukawa (Waikato), Ngāti Raukawa (Horowhenua/Manawatū), and Ngāti Raukawa, region
unspecified.
10. Consists of Ngāti Tama (Taranaki), Ngāti Tama ki Te Upoko o Te Ika (Te Whanganui-a-Tara / Wellington), Ngāti
Tama (Te Waipounamu / South Island), and Ngāti Tama, region unspecified.
11. Consists of Ngāti Pikiao (Te Arawa), Ngāti Rangiteaorere (Te Arawa), Ngāti Rangitihi (Te Arawa), Ngāti
Rangiwewehi (Te Arawa), Tapuika (Te Arawa), Tarāwhai (Te Arawa), Tūhourangi (Te Arawa), Uenuku-Kōpako (Te
Arawa), Waitaha (Te Arawa), Ngāti Whakaue (Te Arawa), Ngāti Tahu-Ngāti Whaoa (Te Arawa), and Te Arawa.
12. Consists of Te Atiawa (Taranaki), Te Atiawa (Te Whanganui-a-Tara / Wellington), Te Atiawa ki Whakarongotai,
Te Atiawa (Te Waipounamu / South Island), and Te Atiawa, region unspecified.
13. Consists of Te Aitanga-a-Māhaki, Rongowhakaata, Ngāi Tāmanuhiri, and Tūranganui a Kiwa.
14. Consists of Waikato, Ngāti Haua (Waikato), and Tainui
15. Consists of Ngāti Toarangatira (Te Whanganui-a-Tara/Wellington), Ngāti Toarangatira (Te Waipounamu / South
Island), and Ngāti Toa, region unspecified.
16. Consists of Rangitāne (Te Matau-a-Māui/Hawke's Bay / Wairarapa), Rangitāne (Manawatū), Rangitāne (Te
Waipounamu / South Island), and Rangitāne, region unspecified.
17. Consists of iwi not included in the twelve named iwi groupings.
Turanganui a Kiwa represents Rongowhakaata, Te Aitanga a Mahaki and Ngai Tamanuhiri, and
originate from the Poverty Bay area. Their people descend from the voyagers of the Te Ikaroaa-Rauru, Horouta and Tākitimu canoes. The Rūnanga was established in 1986 and promotes,
pursues and advances the cultural, economic, spiritual, social well-being and prosperity of iwi.
Rongowhakaata, Te Aitanga a Mahaki and Ngai Tamanuhiri also have separate governance
entities for some purposes and separate relationship agreements with a number of Crown
agencies. However, they do seek to work together through the Rūnanga.
44
Figure 39. Territorial authority for the
Māori ethnic group, 2013
In 2013, most Māori resided in
Gisborne and Hastings (Figure
39).
Source: Statistics New Zealand, Census 2013
Iwi profiles
The following outlines how members of the three main iwi in the Gisborne/Hawke’s Bay region
performed on key indicators, compared with iwi members across New Zealand. The data is
from the 2006 Census. Updated data from the 2013 Census on iwi profiles is not expected to
be released by Statistics New Zealand until August 2014.
Employment status is broadly similar across iwi and across New Zealand, but those who identify
with Ngāti Porou, Ngāti Kahungunu and Turanganui a Kiwa were slightly more likely to be
unemployed or not in the labour force, compared with iwi across New Zealand or those who
identified with other iwi in Gisborne/Hawke’s Bay (Figure 40).
On income levels, members of iwi in Gisborne/Hawke’s Bay, other than the three main iwi, were
most similar to iwi members across New Zealand. Members of Ngāti Porou, Ngāti Kahungunu
and Turanganui a Kiwa were more likely to have higher proportions in lower income brackets
(Figure 41). Income levels are highly linked with other factors – employment status, education
level and occupation. Taking these into account, there is a consistent thread across the three
main iwi in Gisborne/Hawke’s Bay. There is a tendency for higher unemployment, high
representation in labouring occupations (Figure 42), and higher proportions of no or lower levels
of qualifications in all three iwi (although members of Turanganui a Kiwa appear to be more
highly qualified), compared with members of other iwi who reside in Gisborne/Hawke’s Bay and
all iwi members across New Zealand.
45
Figure 40. Labour force status, by iwi,
2006
100%
Figure 41. Personal income, by iwi, 2006
100%
90%
90%
Employed Parttime
40%
Employed Fulltime
30%
20%
50%
Not Stated
40%
$50,001 or More
30%
$30,001 - $50,000
20%
$20,001 - $30,000
10%
$10,001 - $20,000
0%
10%
0%
All iwi
Ngāti
Porou
New
Zealand
Turanganui
Ngāti All other iwi
a Kiwa Kahungunu
Gisborne/Hawke's Bay
New
Zealand
Figure 42. Occupation, by iwi, 2006
100%
90%
Not Elsewhere Included
80%
70%
Labourers
60%
Machinery Operators and
Drivers
50%
40%
Sales Workers
30%
Clerical and Administrative
Workers
20%
10%
All other iwi
Ngāti Kahungunu
Turanganui a Kiwa
All iwi
New
Zealand
Ngāti Porou
Community and Personal
Service Workers
0%
Gisborne/Hawke's Bay
Sources: Statistics New Zealand 2006 Census
46
Technicians and Trades
Workers
Professionals
Managers
Gisborne/Hawke's Bay
All other iwi
50%
60%
Ngāti Kahungunu
60%
70%
Turanganui a Kiwa
Unemployed
80%
Ngāti Porou
70%
All iwi
Not in the
Labour Force
80%
$5,001 - $10,000
$5,000 or Less
Figure 43. Industry employment, by iwi, 2006
100%
Not Elsewhere Included
Other Services
90%
Arts and Recreation Services
Health Care and Social Assistance
80%
Education and Training
Public Administration and Safety
70%
Administrative and Support Services
Professional, Scientific and Technical
Services
60%
Rental, Hiring and Real Estate Services
Financial and Insurance Services
50%
Information Media and Telecommunications
Transport, Postal and Warehousing
40%
Accommodation and Food Services
30%
Retail Trade
Wholesale Trade
20%
Construction
Electricity, Gas, Water and Waste Services
10%
Manufacturing
Mining
0%
All iwi
New Zealand
Ngāti Porou Turanganui a
Ngāti
Kiwa
Kahungunu
All other iwi
Agriculture, Forestry and Fishing
Gisborne/Hawke's Bay
Source: Statistics New Zealand 2006 Census.
Unsurprisingly, given the industry structure of Gisborne/Hawke’s Bay, most iwi members are
employed in the agriculture, forestry and fishing industry (Figure 43).
Given the high proportion of Māori on the East Coast, and the performance of iwi members to
date, it is important to understand skills and talent issues and opportunities for iwi. This is
further discussed in the Skills and talent section as well as some of the initiatives developed by
iwi in conjunction with skills providers.
47
Summary: Measures of prosperity and drivers of prosperity
Based on official figures, the broader Gisborne/Hawke’s Bay region contributes about 3.6
percent of New Zealand’s GDP and 4.5 percent of employment. In 2013, the Gisborne/Hawke’s
Bay region’s GDP was $7,663 million and employment was 101,700.
In nominal terms, and based on official figures, GDP growth for the Gisborne/Hawke’s Bay
region was relatively low at 2.47 percent per annum over 2007-2012 compared to 3.72 percent
nationally. Real GDP in the study area is estimated to have been growing at 2.10 percent per
annum in real terms over the last decade, close to the national average, although growth has
been relatively static over the last five years. Real GDP per capita for the study area has
followed a similar trend – growing strongly over 2002-2012 at 1.68 percent per annum on
average (compared to 1.14 percent nationally), but declining slightly over the last five years
following the global financial crisis.
There are differences across territorial authorities in the study area, with Hastings growing at
the fastest rate over the last ten years, Gisborne and Napier achieving real GDP growth rates
slightly below the national average, and Wairoa slightly declining.
On several indicators of prosperity and drivers of growth, the broader Gisborne/Hawke’s Bay
region has not performed as well as the rest of New Zealand. GDP per capita in the broader
region in 2013 was well below the New Zealand average ($37,973 compared to the national
level of $47,532). Based on official figures, growth in GDP per capita in the Gisborne/Hawke’s
Bay region over 2007-2013 was also below compound growth nationally. Median household
income has increased over time, but is also well below the national average ($1,155 compared
to $1,358 in June 2013). Perceptions of the quality of life in the Gisborne region have declined,
although a high proportion of Hawke’s Bay residents are satisfied with their quality of life.
Employment in the study area grew at a lower compound rate than nationally over the last
decade (1.02 percent per annum compared to 1.61 percent per annum). The broader
Gisborne/Hawke’s Bay region’s labour force participation rate declined over the last year (from
68 percent to 65.8 percent), and the employment rate has also fallen slightly (a decline from
62.5 percent to 60.6 percent), and both are below New Zealand levels (68.4 percent and 64.1
percent respectively). The unemployment rate is well above the national rate (8.0 percent in the
year to December 2013 compared to 6.2 percent nationally). As of March 2013, Wairoa, as a
very small district, had higher rates of labour participation and employment than other territorial
authorities in the region, with Gisborne’s rates well below other areas. Napier had the highest
unemployment rate in the region (8.4 percent).
The broader Gisborne/Hawke’s Bay region’s estimated labour productivity is also well below
New Zealand’s ($82,407 compared to $109,304 in 2013). However, estimated productivity in
the study area is estimated to have grown relatively strongly in real terms over the last decade
(1.39 percent real growth on average), at levels near the top end of New Zealand’s regions.
Population growth in the study area has been around a third of the national rate over the last
seven years. The population of both Gisborne and Wairoa declined between 2006 and 2013.
All districts in the region are expected to achieve lower population growth over the next 20 years
48
(no more than 0.5 percent per annum) relative to New Zealand as a whole (0.9 percent).
Wairoa’s population is expected to continue to decline in the long-term. Low population growth
will limit the study area’s growth potential.
The study area has a significant Māori population. In the 2013 Census, 28 percent of people
identified themselves as Māori compared with 14 percent nationally (and in Gisborne the
proportion was 45 percent). The principle iwi groups in the region are Ngāti Porou, Ngāti
Kahungunu and Tūranganui a Kiwa (representing Rongowhakaata, Te Aitanga a Mahaki and
Ngai Tamanuhiri). Members of the three main iwi in the Gisborne/Hawke’s Bay region do not
perform as well on key indicators compared to iwi members across New Zealand. There are
higher proportions in lower income brackets, with corresponding higher unemployment and high
representation in labouring occupations.
49
Underlying determinants: Industrial mix and
performance
A region’s economic performance is underpinned by the performance of highly concentrated
key sectors, while maintaining some industrial diversity. On the one hand, the more diverse the
region’s economy, the more scope for varied interactions between firms and the more likely
innovation will occur. Diversity also provides a broader economic base to protect against
economic shocks. On the other hand, productivity performance is linked to concentrations of
high-tech manufacturing and advanced services sectors, which share knowledge and innovation
and pools of specialist labour. These specialist areas help to attract further investment and
labour.
Industrial structure
5
The Gisborne-Hawke’s Bay area is mid-ranked in diversity (Infometrics, 2012). In 2010, it had
6
a Tress index of 75.3 which ranked it number 8 amongst 15 catchments ranked from most to
least diverse. Since 2000, the Gisborne-Hawke’s Bay’s index has increased suggesting a
reduction in diversity.
Industry contribution to GDP in the broader Gisborne/Hawke’s
Bay region based on official statistics
Manufacturing made the largest contribution (15 percent) to GDP in the broader Gisborne/
Hawke’s Bay region in 2011, based on Statistics New Zealand’s regional GDP series.
Agriculture (11 percent), health care and social assistance (8 percent), rental, hiring and real
estate services (8 percent) and forestry, fishing, mining, electricity, gas, water and waste
services (8 percent) also made proportionately large contributions (Figure 44).
5
This is based on the Tertiary Education Commission catchment and includes the following territorial authorities:
Gisborne, Wairoa, Napier, Hastings and Central Hawke’s Bay.
6
The Tress index measures the degree of concentration of a city’s economy on a sector basis.
50
Figure 44. Industry contribution to Gisborne/Hawke’s Bay GDP, 2011
Source: Statistics New Zealand regional GDP series
The forestry, fishing and infrastructure service industries comprised a larger proportion of the
Gisborne economy than in the Hawke’s Bay in 2010. The manufacturing industry makes up a
much larger proportion of the Hawke’s Bay economy than in Gisborne (Figure 45).
Figure 45. Industry contribution to Gisborne and Hawke’s Bay GDP, 2011
Source: Statistics New Zealand regional GDP series
51
Estimated industry contribution to GDP for the study area
Based on Infometrics estimates, manufacturing makes the largest contribution to the economy
of the study area, contributing $1,433.1 million in GDP (18 percent of the study area’s GDP),
with agriculture, forestry and fishing the next largest contribution ($1,086.6 million, 14.0 percent
of the study area’s GDP) (Figure 46).
Figure 46. Industry contribution to East Coast’s GDP, 2012 (current prices)
Source: Infometrics regional database
Industry performance
Table 8 provides an overview of broad industries in the East Coast study area based on
Infometrics estimates.
Growth across industries has been mixed. Although the agriculture, forestry and fishing
industry is large on the East Coast, it has recorded negative employment and business growth
over the last five years. Employment growth has been experienced in small (employment)
industries like mining and electricity/gas/water and waste water services, or in larger, typically
7
domestic-oriented, services industries – administrative and support services , health care and
social assistance, and arts and recreation services.
7
52
Administrative and support services include employment services, travel agency and tour arrangement services,
other administrative services, building cleaning services, and packaging services.
Table 8. Industries in the East Coast study area
Industry
Agriculture, Forestry
and Fishing
Growth
in real
GDP
(20022012)
Number of
businesses
(2012)
Growth in
businesses
(2002-2012)
Employment
(2012)
Employment
growth
(20022012)
1,086.55
2.23%
4,222
-2.06%
12,028
-0.83%
57.88
-2.20%
18
1.84%
70
5.53%
1,433.15
1.11%
922
0.91%
10,360
-0.78%
Electricity, Gas,
Water and Waste
Services
155.49
1.65%
66
2.61%
550
5.79%
Construction
277.41
1.50%
1,826
2.98%
6,805
2.73%
Wholesale Trade
227.51
0.55%
647
0.74%
2,971
-0.36%
Retail Trade
344.80
3.05%
1,259
0.31%
8,531
0.58%
Accommodation and
Food Services
132.37
2.14%
768
1.90%
4,890
1.12%
Transport, Postal
and Warehousing
269.57
1.15%
658
0.91%
3,317
0.05%
Information Media
and
Telecommunications
35.93
0.05%
96
2.10%
640
-1.26%
Financial and
Insurance Services
162.33
4.55%
1,219
11.90%
1,440
2.74%
Rental, Hiring and
Real Estate
Services
372.67
3.73%
4,152
4.65%
1,837
0.44%
Professional,
Scientific and
Technical Services
413.25
2.29%
1,356
3.73%
5,135
3.04%
Administrative and
Support Services
167.97
3.97%
536
4.69%
4,279
3.47%
Public
Administration and
Safety
287.26
4.69%
216
-0.41%
3,478
2.45%
Education and
Training
373.70
0.54%
560
1.36%
7,650
0.71%
Health Care and
Social Assistance
586.30
3.97%
834
2.18%
10,510
3.00%
Mining
Manufacturing
8
GDP (2012,
current
prices)
8
GDP is from publicly available information from Infometrics (2012) and includes GDP generated by Central Hawke’s
Bay. Business and employment data refers to the East Coast study area – Gisborne, Wairoa, Napier and Hastings.
53
Industry
GDP (2012,
current
prices)
Arts and Recreation
Services
Growth
in real
GDP
(20022012)
Number of
businesses
(2012)
Growth in
businesses
(2002-2012)
Employment
(2012)
Employment
growth
(20022012)
55.17
3.52%
331
1.02%
1,410
3.84%
Other Services
156.35
2.18%
880
1.27%
3,191
1.34%
Owner-Occupied
Property Operation
490.06
1.22%
Unallocated
773.08
2.76%
7,858.82
2.10%
20,566
1.70%
89,090
1.02%
TOTAL
Source: Infometrics regional database. Notes: Green cells represent growth higher than the regional average. Red
cells represent lower growth than the regional average.
Employment location quotients (LQ) provide indicators of a region’s industrial concentrations
and potential comparative advantages. They measure industry employment within a specified
location relative to industry employment nationally. An LQ over one means that the industry or
segment is ‘over-represented’ relative to the rest of New Zealand, which suggests some
comparative advantages exist.
The following sectors are particularly over-represented in the study area (with LQs greater than
two), relative to New Zealand (Figure 47):

Fruit and vegetable processing

Fruit and tree nut growing

Packaging and labelling services

Leather tanning and fur dressing

Pulp, paper and paperboard manufacturing

Forestry support services

Agriculture and fishing support services

Sheep, beef cattle and grain farming

Forestry and logging

Textile fibre, yarn and woven fabric manufacturing

Mushroom and vegetable growing

Knitted product manufacturing

Beverage manufacturing
At a greater level of detail, Figure 48, Figure 49, Figure 50 and Figure 51 show how sectors
rank according to employment and employment growth (and employment LQ’s), and Figure 52,
54
9
Figure 53 and Figure 54 on GDP, GDP growth (and GDP LQs ). Sectors of particular interest
are those with an LQ greater than one and that achieve higher than average employment or
GDP growth (those in the top right hand quadrants of the diagrams).
In terms of employment, the star primary sector performers over 2002-2012 have been forestry
and logging, and agriculture, forestry and fishing support services and hunting. In
manufacturing, pulp, paper and paperboard manufacturing performed well. Amongst service
sectors, water, sewerage and drainage services, healthcare and social assistance and local
government services rate highly.
In terms of contribution to GDP, the primary and manufacturing based industries that have
performed well are forestry and logging, sheep, beef cattle and grain farming, wood product
manufacturing, meat and meat product manufacturing and pulp and paper manufacturing.
Administrative and support services, local government, healthcare and social assistance,
supermarket, grocery and specialised food retailing also achieved higher than average GDP
growth.
9
GDP LQ’s are calculated by industry GDP on the East Coast relative to industry GDP nationally.
55
56
0
Source: Statistics New Zealand, Business demography statistics and MartinJenkins analysis
Fuel Retailing
Supermarket and Grocery Stores
Building Completion Services
Hospitals
Specialised Food Retailing
Hardware, Building and Garden Supplies Retailing
Other Social Assistance Services
Poultry Farming
Land Development and Site Preparation Services
Building Structure Services
Residential Building Construction
Funeral, Crematorium and Cemetery Services
Nursery and Floriculture Production
Waste Collection Services
Other Livestock Farming
Warehousing and Storage Services
School Education
Motor Vehicle Parts Retailing
Waste Treatment, Disposal and Remediation Services
Machinery and Equipment Repair and Maintenance
Child Care Services
Local Government Administration
Employment Services
Converted Paper Product Manuf acturing
Residential Care Services
Medical Services
Clubs (Hospitality)
Non-Financial Intangible Assets (Except Copyrights) Leasing
Preschool Education
Property Operators
Agricultural Product Wholesaling
Other Manuf acturing
Horse and Dog Racing Activities
Electricity Distribution
Other Wood Product Manuf acturing
Fertiliser and Pesticide Manuf acturing
Meat and Meat Product Manuf acturing
Water Transport Support Services
Farm Animal and Bloodstock Leasing
Pipeline and Other Transport
Metal Container Manuf acturing
Beverage Manuf acturing
Knitted Product Manuf acturing
Mushroom and Vegetable Growing
Textile Fibre, Yarn and Woven Fabric Manuf acturing
Forestry and Logging
Sheep, Beef Cattle and Grain Farming
Agriculture and Fishing Support Services
Forestry Support Services
Pulp, Paper and Paperboard Manuf acturing
Leather Tanning and Fur Dressing
Packaging and Labelling Services
Fruit and Tree Nut Growing
Fruit and Vegetable Processing
Figure 47. Industry sectors on the East Coast, employment location quotients over one, 2012
12
10
8
6
4
2
Figure 48. Employment, employment growth and employment location quotients, 2002-2012, primary sectors
Source: Infometrics regional database and MartinJenkins analysis. X axis: Employment CAGR (2002-2012); Y axis: Location quotient; Vertical red line: regional average CAGR; Horizontal red line: LQ=1.
57
Figure 49. Employment, employment growth and employment location quotients, 2002-2012, manufacturing sectors
Source: Infometrics regional database and MartinJenkins analysis. X axis: Employment CAGR (2002-2012); Y axis: Location quotient; Vertical red line: regional average CAGR; Horizontal red line: LQ=1.
58
Figure 50. Employment, employment growth and employment location quotients, 2002-2012, Electricity, gas, construction, wholesaling, retailing,
accommodation/food, and transport services
Source: Infometrics regional database and MartinJenkins analysis. X axis: Employment CAGR (2002-2012); Y axis: Location quotient; Vertical red line: regional average CAGR; Horizontal red line: LQ=1.
59
Figure 51. Employment, employment growth and employment location quotients, 2008-2012, all other services
Source: Infometrics regional database and MartinJenkins analysis. X axis: Employment CAGR (2002-2012); Y axis: Location quotient; Vertical red line: regional average CAGR; Horizontal red line: LQ=1
60
Figure 52. GDP, GDP growth and GDP location quotient, 2002 – 2012, primary sectors
Source: Infometrics regional database and MartinJenkins analysis. X axis: GDP CAGR (2002-2012); Y axis: Location quotient; Vertical red line: regional average CAGR; Horizontal red line: LQ=1.
61
Figure 53. GDP, GDP growth and GDP location quotients, 2002-2012, manufacturing sectors
Source: Infometrics regional database and MartinJenkins analysis. X axis: GDP CAGR (2002-2012); Y axis: Location quotient; Vertical red line: regional average CAGR; Horizontal red line: LQ=1.
62
Figure 54. GDP, GDP growth and GDP location quotients, 2002-2012, services sectors
Source: Infometrics regional database and MartinJenkins analysis. X axis: GDP CAGR (2002-2012); Y axis: Location quotient; Vertical red line: regional average CAGR; Horizontal red line: LQ=1.
63
Not surprisingly, there are spatial differences in the representation of different sectors across
the territorial authority areas of the East Coast. Figure 55 shows the top ten ranked industries
by location quotient across the district and city areas. Wairoa is an important cattle farming and
meat and meat processing area, Gisborne has a large forestry and related products industry,
while Hastings has a high representation of fruit and vegetable growing and processing. Napier
appears to provide support services to the surrounding areas, and also has a significant
presence in the tanning and wool sectors.
Table 9 provides an overview of key employment sectors in the different areas, and the types of
anchor companies for those areas.
Figure 55. Industry specialisation on the East Coast
Sheep, Beef Cattle and Grain Farming
Meat and Meat Product Manufacturing
Horse and Dog Racing Activities
Deer Farming
Forestry Support Services
Other Health Care Services
Medical Services
Parks and Gardens Operations
Other Livestock Farming
Adult, Community and Other Education
Fruit and Vegetable Processing
Fruit and Tree Nut Growing
Pulp, Paper and Paperboard Manufacturing
Packaging and Labelling Services
Leather Tanning and Fur Dressing
Agriculture and Fishing Support Services
Metal Container Manufacturing
Mushroom and Vegetable Growing
Electricity Distribution
Beverage Manufacturing
Knitted Product Manufacturing
Forestry Support Services
Sheep, Beef Cattle and Grain Farming
Fruit and Vegetable Processing
Forestry and Logging
Packaging and Labelling Services
Mushroom and Vegetable Growing
Fruit and Tree Nut Growing
Agriculture and Fishing Support Services
Other Wood Product Manufacturing
Leather Tanning and Fur Dressing
Textile Fibre, Yarn and Woven Fabric
Manufacturing
Farm Animal and Bloodstock Leasing
Fertiliser and Pesticide Manufacturing
Water Transport Support Services
Forestry Support Services
Other Manufacturing
Forestry and Logging
Non-Financial Intangible Assets (Except
Copyrights) Leasing
Retail Commission-Based Buying and/or
Selling
Table 9. Territorial authority areas and key industries
Area
Comment on key employment industries
Examples of
companies/organisations
Gisborne
Key employers are sheep, beef cattle and grain farming,
education, fruit and tree nut growing, hospitals, agriculture
and fishing support, cafes and restaurants, and heavy and
civil engineering construction.
Agriculture and horticulture also drives high employment in
fruit and vegetable processing, road freight transport and
packaging and labelling services.
Forestry and logging and wood product manufacturing also
feature.
Eastland Group
Eastern Institute of Technology Tairāwhiti
Cedenco Foods
First Fresh NZ
Ice Solutions
Integrated Foods Marketing
Juken
Leaderbrand Produce
Pakihiroa Farms
Pultron Composites
Riversun Nursery
64
Area
Comment on key employment industries
Examples of
companies/organisations
Waimata Cheese
Columbine Industries
Corson Grain
Gisborne Engineering
Rock Products
Wairoa
Major employers are the sheep, beef cattle and grain
farming sectors, and meat and meat products
manufacturing. Education, retail, heavy and civil
engineering construction and medical services are also
significant employers.
Affco
Frasertown Meat Company/Silver
Fern Farms
Napier
Napier’s major employers highlights that the city provides
urban services to its residents and surrounds. Major
employers are education (school and tertiary), retail and
restaurants, allied health, residential care, accommodation,
local government and legal and accounting services.
Eastern Institute of Technology
Future Products Group
ABB Electronics
Mission Estate
Pan Pac Forest Products
Hastings
Hastings’ most significant employer is fruit and tree nut
growing. Other major employers are hospitals, agriculture
and fishing support, education, fruit and vegetable
processing, residential care, packaging and labelling
services, cafes and restaurants and meat and meat product
manufacturing.
David Trubridge
Furnware
Sileni Estates
Brownrigg Agriculture
CSI Processors
ENZA Foods
First Light Foods
Haden & Custance
Heinz Wattie’s
Lean Meats
Lowe Corporation
McCain Foods
Mr Apple New Zealand
Progressive Meats
Silver Fern Farms
Source: Statistics New Zealand, business demography tables
High performing sub-sectors across the study area
The preceding analysis considered industry sectors on different indicators of growth and
performance. Table 10 outlines key sub-sectors in the study area across the range of available
performance measures.
In order to identify high performing sectors, employment growth, GDP, GDP growth and location
quotients were used to provide an assessment of the scale, growth and contribution of various
sectors. Typically, we would examine estimates of exports and export growth in order to gauge
sectors’ international potential. However, data on export performance specific to the East Coast
is unavailable, so we had to rely on an assessment of exports based on related research and
port flows. More detailed export analysis could be an important extension to the analysis in this
report and would need to be separately commissioned.
65
The indicators were indexed to 100 (the top segment on each criterion was scored 100 and all
remaining segments scored relative to that) to allow the different sets of data to be integrated.
Then sectors were further filtered based on the following:

Location quotients above 1 (indicating that the East Coast has a reasonable comparative
advantage)

GDP contribution over $100 million and an employment count of 250 or more (indicating a
sector of reasonable scale)

Current and potential export performance, as assessed by a review of related research.
Table 10 lists sectors that met these criteria in order of their overall score across the
performance criteria.
Table 10. Key sub-sectors across a range of criteria
Sector
GDP,
2012
(current
prices)
GDP
compound
average
growth rate
(2002-2012)
GDP
location
quotient
Employment,
2012
Employment
compound
average
growth rate
(2002-2012)
Employment
location
quotient
Horticulture and fruit
growing
172.72
-0.72%
6.75
4,422
-0.88%
4.21
Pulp and paper
processing
158.85
5.71%
4.21
518
1.54%
2.92
Forestry and logging
166.81
5.72%
3.44
650
3.48%
2.70
Livestock farming
463.34
3.38%
3.15
3,259
-2.51%
2.44
Agriculture, forestry
and fishing support
services
185.07
0.06%
4.35
3,008
1.13%
3.03
Meat and meat product
manufacturing
244.13
2.62%
3.08
1,856
0.58%
1.92
Fruit and food product
manufacturing
238.68
-0.84%
2.19
2,397
-1.56%
2.29
Beverage product
manufacturing
216.80
-1.49%
3.35
587
-0.92%
2.32
Education and training
373.70
0.54%
1.11
7,650
-0.22%
1.06
Source: Infometrics regional database.
This is not about ‘selecting’ sectors – it is merely identifying those sectors that, based on the
data, and our understanding of the underlying segments within them and related to them,
appear to be driving growth in the study area and which have underlying advantages on which
to build. Combining these sectors with their broader value chains, suggests that the following
industries are particularly important to the East Coast:

66
Forestry and related processing and services (including logging, pulp, paper and wood
products)

Livestock farming and meat processing and services (including sheep, beef cattle and
grain growing, meat packing and freezing, cured meats and small goods manufacturing)

Horticulture, fruit and food and beverage processing (including grape growing, berry fruit
growing, appeal and pear growing, vegetable and olive oil manufacturing, food flavouring
manufacturing, cereal manufacturing, pre-packaged foods)

Education and training (including pre-school, primary, secondary, tertiary, adult, trades and
community education).
Additional, high-level, analysis of the three primary-related industries is provided in the following
section. Education and training, including international education, is discussed further in the
section on Skills and Talent.
As can be seen in the earlier Table 8, some service industries also perform well on employment
and GDP measures, such as health and community services (including hospitals, medical
services, residential care services, social assistance services etc.), real estate and property
services (including house and apartment renting and leasing, commercial property renting and
leasing, agricultural land leasing and warehouse renting and leasing) and professional and
technical services (including architecture, engineering, consulting, legal, accounting, advertising
and market research services), but our assessment is that these will generally have relatively
limited export value to the region. Exports are important because they allow businesses in the
region to achieve scale economies which would not be possible in the domestic market,
international competition incentivises innovation and exporting businesses tend to be the most
productive (Stevens, 2010). This is not to say that these sectors are not important contributors
to growth in the study area – just that it is unlikely these sectors are driving growth, but will be
reflecting growth in other industries and in population changes.
Retail trade sectors (contribute about $345 million in GDP, in current prices, and employs about
8,500 people) and accommodation, restaurants and bars (contributes about $132 million in
GDP and employs almost 4,900 people), which contribute to the tourism sector, did not emerge
on the ranking of sectors, as they are not concentrated in the study area (segments of the retail
trade have location quotients just under and around 1 and accommodation, restaurant and bars
had a location quotient of 0.87). Our initial discussions with stakeholders and a review of
economic development strategies and reports in the region emphasise that the tourism sector
has untapped potential. We have separately considered this industry in the section on
Destination attributes.
There are also some high performing businesses in machinery and equipment and materials
related sectors in the region, built off the study area’s track record and knowledge in the primary
industries and natural resources. Examples include ABB and their new power electronics
engineering facility at Hawke’s Bay Airport (Economic Solutions Limited, 2013c), Pultron
Composites, Sonic Ocean Style, New Wave, Ican Engineering, Fisher Aluminium and Lomas
Aluminium. Havelock North based high-tech engineering firm Haden and Custance is
strengthening its status as a world leader in the design and manufacture of automated
technology-based solutions for the food and dairy sectors. The contribution of machinery and
equipment is growing in the study area (GDP of $154 million in 2012, with real GDP growing at
3.74 percent over 2002-2012, and employing almost 890 people), although it is not currently
concentrated in the study area (has an employment location quotient of 0.87). There is little
research available about the sector as a whole in the study area.
67
Key primary-related industries
Forestry and related processing
For the purposes of this report, forestry and related processing includes forestry and logging,
pulp, paper and paper product manufacturing and wood product manufacturing.
Overview of the sector
The East Coast region is a key forestry area in New Zealand, second only to the Central North
Island.
Figure 56. Forest area, by region, 2013 (hectares)
In 2013 the combined
Gisborne/Hawke’s Bay region
represented 16.7 percent of New
Zealand’s forest area or 287,871
hectares of forest (Figure 56).
Source: National Exotic Forest Description as at 1 April 2013 (New
Zealand Farm Forest Association, New Zealand Forest Owners
Association, & Ministry for Primary Industries, 2013).
Gisborne has by far the most significant forestry resource in the study area, with over 156,000
hectares (54 million cubic metres), followed by Hastings (around 60,000 ha or 14 million cubic
metres) and Wairoa (around 55,000 ha or 13 million cubic metres) (New Zealand Farm Forest
Association et al., 2013).
There were 3,900 hectares of new area of exotic forest planted in Gisborne and Hawke’s Bay in
2012 and the area of exotic forest replanted was estimated at 5,900 hectares – both being
significant increases on forest planted five years earlier (Statistics New Zealand, 2013). The
East Coast Forestry Project has partially contributed to the increase in the previous two years
(discussed later in the section on the Natural resource base). During the year ending 31 March
2012, there were 7,000 hectares of timber harvested, a 54 percent increase on the amount
harvested five years earlier (Statistics New Zealand, 2013).
In 2012, there were almost 2,000 people employed in the forestry and wood processing sector
on the East Coast (Figure 57). By employment, wood product manufacturing (which includes
log sawmilling and timber dressing) is the biggest segment, followed by forestry and logging
(Figure 58). Not surprisingly, most of the forestry and logging employment in the industry is in
Gisborne with Hastings the only location for pulp and paper product manufacturing.
68
Figure 57. Employees – 1,967 (2012)
Figure 58. Employees by segment, 2012
Source: Statistics New Zealand and Ministry of Primary
Industries
Source: Statistics New Zealand and Ministry of Primary
Industries
As shown in Figure 59 and Table 11,
the industry’s contribution to GDP was
estimated at $399 million in 2012
(current prices), and the industry’s real
GDP grew at 5.29 percent over the
last 10 years (compound average
growth rate). Employment and the
number of businesses units have
grown over the last 10 years too (by
0.74 percent and 0.61 percent
respectively).
Figure 59. Forestry and wood processing – GDP,
employees and business units
Source: Infometrics regional database, and Statistics New Zealand,
Business demography tables. Notes: Employment figures differ from the
above pie charts as data is from the Infometrics regional database which
has a longer time frame back to 2002 and is modified employment counts.
Not all segments of the industry are performing equally well. Forestry and logging was the
highest performing segment (Table 11), while wood product manufacturing was not considered
a high performing segment (with negative employment growth over 2002-2012 and relatively
low GDP output).
Table 11. Sector segments: Forestry and wood product manufacturing
GDP (2012,
current
prices)
Real GDP
growth
(CAGR 20022012)
Employment
(2012)
Employment
growth
(CAGR
2002-2012)
Location
quotient
Forestry and logging
$ 166.81
5.72%
650
3.48%
2.70
Wood product
Manufacturing
$
72.84
3.52%
800
-1.40%
1.14
Pulp and paper
processing
$ 158.85
5.71%
518
1.54%
2.92
Total industry
$ 398.50
5.29%
1,967
0.74%
1.75
Source: Infometrics regional database, Statistics New Zealand, Business demography tables.
69
According to official estimates, the East Coast regional harvest has the potential to significantly
increase (from around 2 million cubic metres per annum currently) to around 3.4 million cubic
metres per annum after 2020 (Ministry of Agriculture and Forestry, 2008a). The Hawke’s Bay
regional harvest also has the potential to increase from about 2 million cubic metres to over 3
million cubic metres per annum after 2020 (Ministry of Agriculture and Forestry, 2008b). Most
of the potential increase in wood availability during this period on both the East Coast and
Hawke’s Bay is from the small-scale forest growers.
After 2034 the total harvest is projected to decline (MAF, 2008). The timing of the decrease will
depend on the rate at which the region’s post-1990 forests are harvested, the extent to which
they are replanted, and also the level of new land planting.
A sample of key businesses in this industry in the study area are highlighted in Table 12.
Table 12. Key forestry industry businesses in the East Coast
Segment
Business
Forestry and logging
Pan Pacific Forest Products (Pan Pac), Hikurangi Farm Forests Limited, Aborgen
Australasia Puha Nursery, Ernslaw One
Forest Enterprises, Roger Dickie, New Forests Asset Management/Ngāti Porou
Hansol Forestry Joint Venture, Ngāti Porou Whanui Forests, Mangatu
Incorporation, Matariki Forests
Crown Forestry, Trustwood Forests (Kiteroa), Permanent Forests, Tauwhareparae
Wood product manufacturing
Juken
A Nolan Richardson, Clyde Lumber Wairoa, East Coast Lumber/Wairoa Timber
Processors
Pulp and paper processing
Pan Pac
Analysis of strengths, weaknesses, opportunities and threats (SWOT)
The following SWOT analysis is based on desk-based literature and stakeholder interviews.
The key points are:

The sector has enjoyed strong export performance and export growth, and has benefited
from long term foreign investment

Skills and labour shortages continue to be a handbrake. Safety perceptions and wages
have contributed to the shortages.

Adding value to raw product could potentially accelerate the sector. However, skills and
labour shortages and industry concerns about constrained and unreliable electricity would
need to be addressed before this becomes viable.
Strengths
 Strong exports and export growth: It is estimated that around 8 percent of production from the East Coast is
exported as logs, while 16 percent is processed timber products (Ministry of Agriculture and Forestry, 2008a).
As of March 2010, 11.4 percent of all logs exported in New Zealand went out of the Eastland Port. Forestry
exports were a key driver of national economic growth in New Zealand over the last quarter of 2012; these
exports rose by 9 percent (McBeth, 2013). New Zealand was the only country to lift log exports to China for the
full 2012 year (Stulen, 2013) and the first quarter of 2013 provided a strong start to the year with solid export
70
returns and increases across the Pacific Rim region in log exports. Export returns are being assisted by
relatively low freight rates, higher log prices and market growth in both the USA and China (Bevin, 2012a).
 Science and research investment into wood processing opportunities: WoodScape, an economic
evaluation of wood processing opportunities has recently been completed by Scion and Canadian firm FP
Innovations (NZ Forest Owners Association, 2013; Scion & FP Innovations, 2013a). The study is a financial
analysis and market review of 39 traditional and emerging wood processing technologies. It identifies pathways
the wood processing sector could take toward achieving its strategic goal of doubling the value of forest sector
exports to around $12 billion by 2022.
 Processing capacity: The Hawke’s Bay has five saw mills in the region producing 5,000 cubic metres or more
of sawn timber, produces about 8.4 percent of New Zealand’s forestry and logging GDP, and has 8 percent of
the nation’s plantation forestry area. There are a range of large international companies and local companies in
Gisborne, but Gisborne – of major wood supply regions – has the lowest proportion of its log harvest being
processed locally (21 percent, compared to 72 percent in the Central North Island) (Scion & FP Innovations,
2013b)
 Strong support services network: Developed a comprehensive range of financial, accounting and legal
facilities for the sector.
 Well represented through industry councils and associations: Eastland Wood Council, Wood Council of
New Zealand, New Zealand Forest Owners Association, etc.
 Funding for roads to support the forestry industry: Government funded through Regional Development
Roading funding. Over $43 million in Tairāwhiti (McDermott Miller Strategies, 2009b). Upgrading of SH2
between Wairoa and Napier to facilitate transport of logs to Whirinaki and Port of Napier.
 Foreign investment: Long term, committed investment from Asia and the United States has provided stability
to the industry.
Weaknesses
 Capital constraints and cost competitiveness: Shifting from unprocessed log to manufactured wood product
production and export is capital intensive.
 Skills and capability: Skills and labour shortages have been identified. EIT have been offering courses to fill
gaps. However, the potential worker shortage will grow with the increased log harvest, which may require an
additional 650 workers. Logging is hard work and perceived to be dangerous. Low margins limit wages.
Higher margin wood product manufacture will demand further development of skills.
 Hard to harvest forests, inaccessible land and environmental impacts: There are higher costs involved in
felling less easily accessible forestry. 85 percent of land in Wairoa is classed 6e, 7e and 8 meaning that it is
steep and erodible (Wairoa District Council, 2012). Forestry in the study area was predominantly planted in the
1990s, post-cyclone Bola, to prevent erosion. Forestry harvesting activities may create some erosion. If there
are heavy rainstorms after old root systems decay and, before being replaced through new plantings, this can
result in significant amounts of sediment released to rivers (at levels similar to the original pasture land).
Switching to permanent non-harvest, much longer-rotation or coppicing forests for the most erodible land may
assist to further reduce the opportunity for erosion. Forests based on indigenous species (manuka, kauri) or
long-rotation exotics (e.g., redwood) should have advantages.
 Rail service: Even if rail is restored the service would be constrained by the limited loading and the limited
number of units or containers that can be shifted at one time, resulting in high operating costs. The track is
generally perceived as steep and weak. Service is also not in the right locations for a great deal of forestry,
with the majority of forestry in the north and west and thus not serviceable by rail.
 Community response: Conversion of pastoral land to plantation forestry, and forestry generally, is of concern
to the East Coast community (Langer & Barnard, 2003; Wairoa District Council, 2012; Wall & Cocklin, 1996)
 Transport requirements and maintenance: Roading requirements in the north of the East Coast,
transporting of logs to Gisborne, and log storage and loading space at Gisborne (only one ship at a time) have
previously been identified as issues. On-going road maintenance (for slips) and bridge upgrades required
(McDermott Miller Strategies, 2009a). Double-handling of product from trucks can increase costs.
71
Threats
 Noise and resident acceptability: There are issues with bringing large logging trucks into Gisborne because
these are concentrated on just three main routes. Logging traffic takes place on a 24/7 basis.
 High exchange rate and labour cost competitiveness of other markets: Development of value-added
activities is constrained by the high dollar and cheaper wage rates in other economies.
 Electricity security and capacity: May be constraints for any additional wood processing (McDermott Miller
Strategies, 2009a; Scion & FP Innovations, 2013b).
Opportunities
 New wood product-based businesses and adding value to raw product: A new timber packaging
business, the Pallet Company, has opened a bin, pallet and crate manufacturing plant in Pandora and has
secured key contracts in the pip and stone-fruit sectors (Economic Solutions Limited, 2013c). However, the
potential for large investment in vertical integration in the sector is cost, exchange rate and labour dependent.
Hikurangi Mill is consented, but currently on hold.
 Distributed wood processing close to resource (Scion & FP Innovations, 2013b)
 Logistics and space: There are proposals to develop an inland port for logs at Tolaga Bay, development at
Matawhero combined with a weigh station, and increasing port space at Gisborne.
 Greater use of HPMVs to move logs north (discussed later under Infrastructure and connectivity)
 Emissions Trade Scheme (ETS): The ETS will influence land-owners decisions regarding when and if to
harvest their plantations, and when and if they will replant them (McDermott Miller Strategies, 2009, and
stakeholder interviews). There will be costs associated with compliance (weakness), but also some interest in
investigating converting erosion prone land into continuing cash streams through the ETS (McDermott Miller
Strategies, 2009b). Opportunity to earn New Zealand units under the ETS. The Permanent Forests Sinks
Initiative (PFSI) provides similar opportunities, and is better suited to long-term protection of highly erodible
land.
 Permanent Forest Sink Initiative (PFSI). Particularly as a mechanism for encouraging sustainable land
management and increasing economic value from marginal/eroding land. Like the ETS, the PFSI will enable
participants to earn New Zealand Units. The PFSI is currently under review with key objectives of improving the
value of the scheme and facilitating access for Māori land – thereby increasing participation.
 East Coast Forestry Project (ECFP): Forest planting targeted to erodible land under the ECFP incentive
scheme, in conjunction with the ETS or PFSI, is an attractive option for developing “carbon farming” under the
ETS or PFSI if carbon prices increase, while also reaping environmental co-benefits.
 Restoring the Waiapu catchment is implementing commitments given by the Crown to Ngāti Porou in the
2010 Deed of Settlement and subsequent Relationship Accord. The programme involves three partners – Ngāti
Porou (TRONPNui), Gisborne District Council, and Ministry for Primary Industries. While the mechanics of this
programme focus specifically on erosion control, it aims to achieve wider benefits – sustainable land
management, economic profitability, cultural revitalisation and social prosperity.
 Diversification to multiple benefit forests: For areas with limited traditional harvest potential, establishment
of permanent or long-rotation forests based, for example, on mānuka and mānuka/kauri mixes will further
enhance environmental benefits while delivering high value honey and carbon revenue – and later, high-value
timber for aerial extraction. Long-rotation exotics (e.g., redwoods) and non-harvest eucalypt forests as a key
food source to support mānuka honey production are other opportunities.
 New Zealand Drylands Forestry Initiative: Establishes high value durable eucalyptus species. They also
complement the mānuka industry by supplying bees with a high protein feed source.
 Biofuel alternatives: A number of small scale pilot operations. Success of these initiatives will depend on the
costs of transporting feed stock to the energy production plans and relative cost of traditional fuels (McDermott
Miller Strategies, 2009b). Opportunities include co-generation of electricity and heat from wood wastes to
72
energy, and conversion of wood wastes to charcoal for export to international markets. Opportunity to partner
with Callaghan Innovation and Scion to investigate technologies for co-generation models.
 Intensify land use: By developing complementary products from forest land. Examples include harvesting
and marketing mushrooms grown under the forest canopy (McDermott Miller Strategies, 2009b).
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Livestock farming and meat processing
For the purpose of this report, livestock farming and meat processing includes sheep, beef
cattle and grain farming, deer farming, poultry farming, meat and meat product manufacturing.
Overview of the sector
Gisborne and Hawke’s Bay
regions are predominately sheep
farming (around 4.8m sheep in
2012), with relatively little dairy
cattle (Figure 44). There is some
dairying in Wairoa and Gisborne
and along the western ranges
from Takapau to North of Napier,
but low rainfall in the study area
restricts the development of dairy
farming. The combined region
comprised around 15.4 percent of
New Zealand’s sheep numbers
and 19.8 percent of beef cattle in
2012, compared to 8 percent of
deer and 1.7 percent of dairy
cattle.
Figure 60. Livestock numbers (000), by region, 2012
Between 2007 and 2012, all
regions had reductions in sheep
numbers. Total beef livestock
also fell in all regions over the five
years, except in the Hawke’s Bay
which saw numbers increase by
7.4 percent (Statistics New
Zealand, 2013). The GisborneHawke’s Bay region is one of the
smaller processing regions for
meat exports (Figure 61), as
stock is often sent out of the
region for finishing (to the
Waikato, Manawatu, etc.).
Figure 61. Volume of livestock slaughtered (weight,
kilograms), by region, 2012
Source: Statistics New Zealand, Agricultural production census, June 2012
final
Source: Statistics New Zealand and Ministry for Primary Industries (MPI).
Based on a MPI survey of all meat processing plants in New Zealand.
In 2012, there were 5,404 people employed on the East Coast in the broader livestock farming
and meat processing sector. By employment, sheep and beef cattle farming is the largest
segment, comprising 60 percent of employment in the industry, followed by meat and meat
product manufacturing (Figure 62). Thirty-six percent of employment in the industry is located in
Gisborne, with 37 percent in Hastings (Figure 63). There is also some employment in segments
which are derived from these sectors, such as leather and tanning (360 employees) and textile
manufacturing (389 employees).
74
Figure 62. Employees – 5,404 (2012)
Figure 63. Employees by territorial
authority, 2012
Source: Infometrics regional database
Source: Infometrics regional database
The industry’s GDP contribution
on the East Coast was estimated
at $731 million in 2012 (current
prices), increasing from about
$475 million in 2002 (2.94
percent real GDP growth per
annum). However, employment
levels and the number of
businesses in the industry have
fallen in the last 10 years (Figure
64).
Figure 64. Meat and meat processing – GDP, employees
and business units
Source: Infometrics regional database, Statistics New Zealand, Business
demography tables.
The performance of different segments in the industry has varied. GDP from sheep and beef
cattle farming has increased the most over 2002-2012, while meat processing is on the only
segment which has had employment growth (Table 13).
Table 13. Sector segments: Meat and meat processing
GDP (2012,
current
prices)
Real GDP
growth
(CAGR
2002-2012)
Employment
(2012)
Employment
growth
(CAGR
2002-2012)
Location
quotient
Sheep, beef cattle and
grain farming
$ 463.34
3.38%
3,259
-2.51%
2.44
Meat and meat product
manufacturing
$ 244.13
2.62%
1,856
0.58%
1.92
Poultry, deer and other
livestock farming
$ 23.48
1.20%
289
-3.36%
1.00
Total industry
$ 730.95
2.94%
5,404
-1.62%
2.09
Source: Infometrics regional database, Statistics New Zealand, Business demography tables.
75
A sample of key businesses in this industry in the region are highlighted in Table 14.
Table 14. Key livestock and meat processing industry businesses in the East Coast
Segment
Company
Sheep, beef cattle and grain farming
Silver Fern Farms
Meat and meat product manufacturing
Silver Fern Farms, Progressive Meats, Ovation, Fresh Meats, Affco;
Lean Meats, First Light Foods, Agri-Labs Co Products, Brownrigg
Agriculture; Hawke’s Bay Protein; Bernard Matthews Gisborne,
Progressive Gisborne
Poultry, deer and other livestock farming
White Rose Organics, Keighleys Poultry Farm, Hawke’s Bay Eggs,
Driller’s Poultry Farm
Analysis of strengths, weaknesses, opportunities and threats (SWOT)
The following SWOT analysis is based on desk-based literature and stakeholder interviews.
The key points are:
The sector has a strong export focus and farming and production R&D has had good
support from central government. However, revenues are forecast to fall.
Attraction and retention of skills and labour are one of the biggest issues articulated by
businesses in the sector. Absenteeism, migration barriers, seasonality of labour, lack of
skilled labour, unmet education needs and high demand for meat inspectors are some of
the underlying factors.
High use of the road network and need for flexible transport options due to time criticality of
product.



Strengths
 Investments into improving productivity: Affco has invested heavily into improving efficiencies within the
business, having moved to a single chain killing line.
 Sector strategy: The Meat Industry Association of New Zealand and Beef + Lamb New Zealand initiated the
development of this sector strategy to identify ways in which the profitability of the red meat sector can be
increased, sustainably, and re-investment in the industry can be promoted. The strategy was developed in
conjunction with Deloitte, with funding from the Ministry for Primary Industries and New Zealand Trade and
Enterprise.
 High export focus: For example, Affco continues to process chilled and frozen lamb product for export (85%)
and domestic (15%) markets, with beef considered a growth opportunity for the business. Investigating the
business case for further beef processing.
 Government funding to improve farmer capability and production systems: Major Regional Initiative
funding for the Tapuaeroa Project lamb finishing project (joint venture with Bernard Matthews) and Te Taumata
Monitor farm programme, involving multiple farms in Wairoa (McDermott Miller Strategies, 2009b)
 Land quality, climate and disease-free status. La Nina weather patterns and improved prices for sheep
meat, wool and beef have lifted production and income for most farms in 2011 and 2012.
Weaknesses
 Single firm economy: Wairoa is highly dependent on Affco for employment
 Low growth forecasts: North Island East Coast gross farm revenue is forecast to fall by 21 percent this year,
76
due to a combination of lower prices and the dry summer climatic conditions (Beef + Lamb New Zealand, 2013).
Wool revenue is also forecast to fall by 21%, with cattle revenue falling by 17% due to lower prices and stock
numbers. Total on-farm expenditure is forecast to fall by around 6%. Farm profit before tax is forecast to fall by
some 54%.
 Industry competitiveness and seasonality: Boom bust cycles. Meat works exacerbating normal business
cycles. Industry feedback suggests that when volumes are low, businesses compete for stock to keep chains
going.
 Skills and labour: Seen as biggest issues for businesses in this sector. Attracting and retaining the right
levels of skills and experiences is one of the biggest challenges. Need for career and training schemes to
attract younger employees and upgrade their competencies. Absenteeism, migration barriers, seasonality of
labour, lack of skilled labour, unmet education needs and social issues are some of the underlying issues
(McDermott Miller Strategies, 2009a).
 Time criticality and seasonality: Time critical product, particularly for chilled product. A 90-day window to get
product to European export markets. They can only meet this timeframe by trucking product to port (as opposed
to rail). Managing seasonality – of product and workforce – can be an issue.
 Transport network: Need for flexible and consistent transport. Most product is trucked to Tauranga and the
remainder to Auckland ports. Rail is not used due to inflexible scheduling and no linkages to Tauranga. Rail to
Auckland requires extra time and handling, with product moved to Palmerston North before heading to
Auckland. Containers were not guaranteed to be chilled appropriately. Transport needs may conflict with other
sectors – Federated Farmers’ submission on the Gisborne District Long Term plan indicated that they believed
that the forestry sector should contribute to road and bridge upgrades within Gisborne city and in and around
the port as they use and benefit from them the most (Federated Farmers of New Zealand, 2012).
 Electricity: Capacity, reliability, accessibility, cost have been identified as concerns in the past (McDermott
Miller Strategies, 2009a)
Threats
 Environmental issues: related to flooding, erosion and drought. Not a significant dairying area, so
environmental issues related to dairying are relatively low. Rivers have high sediment levels.
Opportunities
 Intensify land use: Multi-use land management
 Increase output of higher value added product: Encourage and support value added products such as
processed and pre-cut chilled meat products.
 Expand on-farm capabilities and capacities of farmers, farm managers, contractors and workers:
Maintaining and extending Māori Land Development programme.
 Biofuels: Biodiesel and ethanol (McDermott Miller Strategies, 2009a)
 Primary Growth Partnership: There are four ongoing Primary Growth Partnership funded initiatives in the red
meat sector (FarmIQ, marbled grass-fed beef, FoodPlus and Red Meat Profit Partnership). Government and
industry are making considerable investment into the sector via these initiatives which bring benefits to the
study area.
77
Horticulture, fruit, food and beverage processing
For the purpose of this report, the sector includes vegetable growing, fruit growing, fruit and
vegetable processing, cereal product manufacturing, bakery product manufacturing and
beverage manufacturing.
Overview of the sector
The Gisborne/Hawke’s Bay
region is the largest producing
region of export apples and
buttercup squash, and of sweet
corn and tomatoes grown for
processing (Figure 65) (grown
under contract for processing by
McCain Foods, Cedenco Foods
or Heinz Wattie’s).
Figure 65. Harvested area of outdoor vegetables, 2012,
hectares
Source: Statistics New Zealand, Agricultural production census, June 2012
(final)
The largest apple grower in New
Zealand, Mr Apple New Zealand,
is based in Hastings and
accounts for around 20 percent of
New Zealand’s total pipfruit
exports. Examination of area
planted in outdoor fruit, by region,
clearly shows the Hawke’s Bay’s
dominance in apples, and as a
significant wine grape growing
area (Figure 66).
Figure 66. Area planted in outdoor fruit, 2012 (hectares)
Source: Statistics New Zealand, Agricultural production census, June 2012
(final)
Summer fruit production is largely for local sales with peaches and plums also being grown for
processing by Heinz Wattie’s. Both McCain Foods and Heinz Wattie’s rationalised their
vegetable processing facilities in Australia, and transferred production, with increased
production capacity, to their Hawke’s Bay plants in 2011.
The wine industry in the study area has expanded over the last decade. The Hawke’s Bay is
New Zealand’s second largest grape growing region, with red grape varieties accounting for 40
percent of the producing area and the region accounts for over 80 percent of New Zealand’s
plantings of Merlot, Cabernet Sauvignon and Syrah. Gisborne is New Zealand’s third largest
grape growing region and is known for its white varietals – Chardonnay, Gewurztraminer,
Viognier and Pinot Gris – as well as Merlot and Malbec.
78
In 2012, there were 7,405 people employed across the horticulture and food processing sector
(Figure 67). By employment, horticulture and fruit growing is the largest segment, followed by
fruit and other food processing. There is some employment in the beverage-related processing
segment.
Hastings is the locational centre of the industry (Figure 68), with Gisborne also a significant fruit
growing location.
Figure 67. Employees – 7,405 (2012)
Figure 68. Employees by territorial
authority, 2012
Source: Infometrics regional database
Source: Infometrics regional database
Figure 69. Horticulture and fruit and vegetable
processing – GDP, employees and business
units
Between 2002 and 2012, the
sector‘s performance on all
indicators – GDP, employment
and business units – fell (Figure
69).
Source: Infometrics regional database, Statistics New Zealand, Business
demography tables.
The three segments within the industry did not perform as well (relative to other sectors in the
East Coast economy) (Table 15). Horticulture and fruit growing has a very high employment
location quotient, but GDP contribution and employment has declined over the last ten years.
While the beverage sector is a smaller employer, it generates a higher proportion of GDP.
79
Table 15. Sector segments: Horticulture, viticulture and fruit, vegetable and wine
processing
GDP (2012,
current
prices)
Real GDP
growth
(CAGR
2002-2012)
Employment
(2012)
Employment
growth
(CAGR
2002-2012)
Location
quotient
Horticulture and fruit
growing
$ 172.72
-0.72%
4,422
-0.88%
4.21
Beverage product
manufacturing
$ 216.80
-1.49%
587
-0.92%
2.32
Fruit and food product
Manufacturing
$ 238.68
-0.84%
2,397
-1.56%
2.29
Total industry
$ 628.20
-1.03%
7,405
-1.11%
3.15
Source: Infometrics regional database, Statistics New Zealand, Business demography tables.
The sector is also supported by a substantial packaging and labelling services segment.
Packaging and labelling services includes bottling or rebottling wine or spirits, contract packing
or filling, crating, packing fresh fruit and vegetables and shrink wrapping services. The segment
is highly concentrated on the East Coast and employed 1,660 people in 2012, although
employment grew only slightly over the last 10 years (Table 16).
Table 16. Sector segment: Packaging and labelling services
Employment (2012)
Packaging and labelling
services
Employment growth
CAGR (2002-2012)
1,660
Location quotient
0.37%
6.78
Source: Statistics New Zealand, Business demography tables
Key companies
A sample of key businesses in this industry in the region are highlighted in Table 17.
Table 17. Key horticulture, fruit, food and beverage businesses in the East Coast
Segment
Company
Horticulture and fruit growing
Mr Apple New Zealand, Crasborn Group; Riversun Nurseries; Pioneer Genetics,
Indevin Partners
Fruit and food product
manufacturing
Heinz Wattie’s, Cedenco Foods, McCain Foods
Beverage product
manufacturing
Mission Estate, Sileni, Craggy Range, Ngatarawa, Te Mata, Paratua, Simply
Squeezed
80
Leaderbrand, First Fresh/NZ Fruits, Manuka Harvesting, Corson Grain
Analysis of strengths, weaknesses, opportunities and threats (SWOT)
The following SWOT analysis is based on desk-based literature and stakeholder interviews.
The key points are:

The sector gains strong locational advantages from the study area – positive climatic
conditions and earlier harvesting compared to other regions in New Zealand.

Opportunities for the sector include water irrigation, added value product and better
commercialisation of research.
Strengths
 Climate and production: Very positive climatic and growing conditions in the 2013/14 summer. The Hawke’s
Bay share of the national pipfruit harvest is currently forecast to increase by about 5% from the 2012 level of
293,000 tonnes to some 307,000 tonnes in 2013. This represents about 60% of the national crop. Over the
January/February 2013 period, the ANZ Bank’s $NZ based international commodity price index for pip and kiwi
fruit combined was up close to 10% on the same period last year (Economic Solutions Limited, 2013b). The
regional grape harvest is forecast to rise from the level of 32,800 tonnes last year to in the range 34,000-40,000
tonnes this year (Economic Solutions Limited, 2013b).
 Scale: Heinz-Wattie’s in Hastings currently employs 1,900 people in New Zealand and exports about 60 percent
of production. The King Street site employs more than 500 permanent employees and up to 800 seasonal
workers. This site produces a range of canned fruit and vegetables, frozen vegetables, baked beans, spaghetti,
soups, sauces and organic vegetables for distribution throughout New Zealand and the world. The Tomoana
factory has several different production facilities and employs around 230 permanent employees and up to 140
seasonal workers. It produces pet foods, jams, food dressings, soups, sauces and burgers.
 Some consolidation and scaling up: New Zealand’s largest apple exporter Mr Apple has recently purchased a
50 percent share in local apple exporter Fern Ridge Produce. Mr Apple employs 180 permanent staff in New
Zealand and also employs a seasonal workforce of up to 1,700 people (Economic Solutions Limited, 2013b).
 Government funding to improve land development and alternative produce: Previous major Regional
Initiative funding for the Cedenco Horticultural Land Development joint venture for sweetcorn, and monitoring of
atmospheric and soil conditions at Raupanga to evaluate suitability for conversion to kiwifruit (McDermott Miller
Strategies, 2009b)
 Education and training for viticulture and wine: Labour supply is not regarded as a serious concern for this
segment. EIT and other providers cater well for wine growing and field work courses and qualifications
(McDermott Miller Strategies, 2009a), and has attracted international students.
Weaknesses
 Low vineyard profitability: Leading issue for contract grape growers in the study area. While the previous
three years have been unfavourable (due to climatic conditions and low grape prices), the outlook for 2013 is
positive with indications of higher prices being offered as wine grape demand begins to outstrip supply.
Vineyards aim for $1,800 per tonne but this has recently been down to $1,100 per tonne. Likely to be little
growth in the study area related to wine growing,
 Skills and labour: Apple exporter Crasborn Group has partnered with Work and Income New Zealand to
prepare young job-seekers for future work. Labour for grape harvesting generally not an issue, with the ability to
transfer pickers to other horticulture in offseason (for example, kiwifruit), although have been shortages noted.
Increasing current skills and R&D capability, and attracting and retaining high skilled people will be important for
improving industry growth.
 Competing land use: Viticulture has competition from citrus growers, maize and kiwifruit for land use
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Threats
 More intense weather events which affect productivity, harvesting and value-added production.
 Availability of water
 Biosecurity incursions: With industries so reliant on the land, there is a need to keep out animal threats, plant
threats and unwanted salt and freshwater organisms.
Opportunities
 Marketing and availability of produce: Produce in the East Coast study area is harvested and enters the
market two weeks earlier than other regions and areas across New Zealand. Stakeholders raised the potential to
capitalise on this.
 Location-based marketing for wine: There have been recent efforts to promote Hawke’s Bay reds and
varietals specific to Gisborne. But is constrained by large contract wine making companies who acquire about
two-thirds of the crop and pool and produce wine.
 Water irrigation has the potential ability to raise the cap on primary sector production and trigger productivity
improvement outcomes (Hawke’s Bay Regional Council, 2013)
 Intensify land use: expand land used in production of crops. For example, Cedenco is investing in developing
and increasing crop growing lands at Ruatoria
 Develop and market high value-added niche products: Examples include honey manufacture under a
regional brand and marketed internationally.
 Biofuel production from crops
 Logistics/transport hubs: The proposed Whakatu logistics hub – a logistics centre for Port of Napier at the
Whakatu road and rail hub – may provide addiitional warehousing and logistical support ot Heinz Wattie’s and
other food processing businesses.
 Recent investments in the wine industry in the Hawke’s Bay: Three multi-million dollar investments have
recently been made. Delegat’s Group and Villa Maria are planning new wineries and an American investor has
been named as a partner in Trinity Hill (Moroney & O’Sullivan, 2014; Shanks, 2014). Many wineries are also reinvesting in their business after deferring in recent years.
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Summary: Industrial mix and performance
The broader Gisborne/Hawke’s Bay region’s economy is moderately diverse but is dominated
by manufacturing, agriculture, forestry and fishing and health care and social assistance
(together comprising 40 percent of the broader region’s GDP). In the study area, agriculture,
forestry and fishing has experienced a decline in employment and business numbers since
2002 and manufacturing employment has declined, while locally-oriented service industries,
such as health care and electricity, gas and water, have typically grown. However, forestry and
logging, sheep, beef cattle and grain farming, pulp and paper manufacturing, and meat and
meat product manufacturing have achieved relatively high GDP growth since 2002 despite
reducing employment.
Not surprisingly, the study area has concentrations, and likely comparative advantages, in a
range of primary and related processing and service industries, including:

Primary sector activities such as fruit growing, forestry and logging, forestry support
services and sheep and beef cattle farming.

Manufacturing activities leveraged off these primary sector advantages, such as fruit and
vegetable processing, packaging, pulp and paper manufacturing, textile and fabric
manufacturing and beverage manufacturing.
There are, of course, spatial differences in the concentrations of industries across the study
area, with cattle farming and meat processing concentrated in Wairoa, forestry and related
products concentrated in Gisborne, fruit and vegetable growing and processing concentrated in
Hastings and support services concentrated in Napier.
An analysis of industry performance, using a combination of employment, GDP and
concentration measures, suggests that the following industry value chains are likely to be
particularly important for driving economic growth in the study area:

Forestry and related pulp, paper and wood product manufacturing – is estimated to
contribute close to $400 million in GDP and 2,000 jobs in the study area, and has achieved
5 percent annual growth in GDP and 0.75 percent growth in employment over 2002-2012.
Future growth will come off the back of the increasing regional harvest in Gisborne and the
Hawke’s Bay in the medium term and strong demand for logs and wood products
domestically and offshore (e.g., China). Low levels of local processing and harvesting
access issues represent significant untapped potential. Investment in, and development of,
at least one additional processing plant in the region would make a major difference.
Innovations should also make it more efficient and easier to harvest in the region (for
example new technology to improve steepland harvesting productivity and reduce costs), or
to generate value from areas with traditionally limited harvest potential (e.g., establishment
of mānuka forests on this land to generate high value honey).

Livestock farming and meat processing and related services – is estimated to contribute
around $730 million in GDP and 5,400 jobs, and has achieved almost 3 percent annual
growth in GDP over 2002-2012, although employment has declined over the period.
Planned developments for water storage and increased irrigation in the broader region may
83
help drive further growth in productivity in this industry, although topography and erosion
and conversion of land to dairy and forestry may limit expansion opportunities.
Programmes of investment in R&D and innovation focused on adding value to red meat
production are likely to have long-term benefits for the region. This includes programmes
that aim to: add value to the livestock supply chain; support farmers to adopt best practice
behind the farm gate and between the farm and the processor; develop new niche products;
and to generate more value from the red meat carcass.

Horticulture, viticulture, and food and beverage manufacturing – is estimated to contribute
around $630 million in GDP and 7,400 jobs, although the sector’s GDP and employment
has fallen slightly over 2002-2012. Recent efforts to improve branding and marketing of the
wine industry (for example, to promote Hawke’s Bay reds and varietals specific to Gisborne)
and investments in beverage production (e.g., new wineries) in the region will support
growth.

Education and training – is estimated to contribute around $370 million in GDP and 7,650
employees. The sector’s GDP and employment was estimated to increase slightly by
around 0.5 percent and 0.7 percent per annum respectively. There is potential to build on
growing numbers of international students that have been attracted to the Hawke’s Bay over
the last few years.
In addition, as noted, there are also some high performing businesses in machinery and
equipment and materials related sectors in the study area, built off experience in the primary
industries and natural resources (e.g., Pultron Composites, Ican Engineering, Fisher Aluminium,
Haden & Custance). The contribution of machinery and equipment is growing in the region
(GDP of $154 million in 2012, with real GDP growing at 3.74 percent over 2002-2012, and
employing almost 890 people), although it is not currently concentrated in the study area.
Improving the quality of (currently relatively limited) information about the capabilities of and
opportunities facing high technology manufacturing enterprises in the study area could be a
useful first step towards advancing the potential of this sector.
Tourism-related service industries did not emerge from the data analysis as they are not
particularly concentrated in the study area, but our initial discussions with stakeholders and a
review of economic development strategies and reports on the region emphasise that the
tourism sector has untapped potential. This potential is assessed in the analysis of the study
area’s destination attributes (see Destination attributes below). Better articulating and
packaging the area’s distinctive cultural and natural amenities and events to domestic and
international visitors may support visitor growth. A pan-regional approach to elements of
branding, promotion and investment in tourism assets could also be considered.
Health and community services (estimated $590 million GDP, 10,500 employees), real estate
and property services (estimated $300 million GDP, 1,300 employees) and professional and
technical services (estimated $410 million GDP, 5,100 employees) are also large and growing
and important to the study area. However, some of these industries are not particularly
concentrated in the study area and hence are unlikely to be based on comparative advantages.
In addition, rather than reflecting national and international market demands, these sectors will
largely reflect population growth/changes and growth in other industries in the study area.
84
Underlying determinants: Skills and talent
Skills and talent are critical to improving productivity and incomes. This includes the formal skills
and qualifications of people in the region, but also broader capabilities such as language and
problem solving abilities. The quality of the labour force also depends on the decisions people
make about where they get the best return for their efforts and whether the region is suited to
their lifestyle aspirations.
Hence the proportion of the labour force with higher education qualifications, the level of
numeracy and literacy in the population, and the nature and level of skilled migration (and
efforts to attract migrants), and are all important. An effective education, training and
immigration system will distribute these skills effectively to where they are needed.
Educational attainment
There are strong interdependencies between the attainment of formal education and
opportunities in the labour market. Formal education encourages the on-going development of
skills that can be applied in the economy, contributing to a productive and competitive
workforce.
East Coast residents perform below the national average on all key indicators of educational
attainment (including the proportion of the population with a bachelor’s degree and above
(around 14 percent compared to the national average of 20 percent), higher levels of literacy
and numeracy, and the proportion of school leavers without a formal qualification or at least
NCEA Level 2 (28.2 percent compared to the national level of 25.7 percent in 2012) (Table 18).
There are positive trends on indicators of education levels in the study area, with the proportion
of people aged 15 years or over with a bachelor degree or higher increasing from 10.16 percent
to 13.72 percent between 2006 and 2013, and the proportion of people aged 15 years and over
without a qualification falling from 31.51 percent to 26.81 percent over the same period.
However, while these trends are positive, they reflect improvements nationally so that the study
area’s measures of educational attainment have remained below New Zealand’s.
There are sub-regional differences. While all territorial authority areas perform below the
national average, Napier and Hastings consistently perform better than the study area average.
Table 18. Key educational attainment indicators
Indicator
Proportion of people
aged 15 years or over
who has a bachelor’s
degree or higher
Percentage of people
aged 15 years of over
East
Coast
earlier
East Coast
latest
New
Zealand
earlier
10.16%
(2006)
13.72%
(2013)
15.81%
(2006)
31.51%
(2006)
26.81%
(2013)
25.01%
(2006)
New
Zealand
latest
20.04%
(2013)
20.94%
(2013)
Territorial
authority area
differences
2006
2013
Gisborne
9.17%
12.71%
Wairoa
5.03%
7.27%
Hastings
10.67%
14.51%
Napier
10.95%
14.27%
Gisborne
33.77%
28.35%
Wairoa
41.03%
37.34%
85
Indicator
East
Coast
earlier
East Coast
latest
New
Zealand
earlier
New
Zealand
latest
who do not have a
qualification
Percentage of school
leavers who do not
attain at least NCEA
Level 2
28.2%
(2012)
Gisborne/
Hawke’s Bay
25.7%
(2012)
Territorial
authority area
differences
2006
2013
Hastings
30.80%
26.24%
Napier
29.45%
25.12%
Gisborne
32.7%
(2012)
Hawke’s Bay
26.8%
(2012)
Percentage of people
aged 25-65 with
higher literacy (2006)
NA
56.2%
Gisborne/
Hawke’s Bay
NA
57.9%
NA
NA
NA
Percentage of people
aged 25-65 with
higher numeracy
(2006)
NA
47.5%
Gisborne/
Hawke’s Bay
NA
51.0%
NA
NA
NA
16.7%
(2006)
20.7% (2013)
Gisborne/Haw
ke’s Bay
11.0%
(2006)
12.5 %
(2013)
Gisborne
20.5%
NA
Wairoa
23.1%
NA
Hastings
15.3%
NA
Napier
13.6%
NA
NA
NA
Youth not in
employment,
education or training
Employment in lowskilled occupations
(2010)
NA
21.4%
NA
17.9%
NA
Source: Statistics New Zealand and other publications (Infometrics, 2012; Lane, 2010). Green cells are better than the
national average; red cells are below the national average. Notes: Low-skilled occupations figures are from Infometrics’
labour market profile which defines the East Coast/Hawke’s Bay TEC catchment which includes the following territorial
authorities: Gisborne, Wairoa, Napier, Hastings and Central Hawke’s Bay.
Educational attainment levels of
Hastings and Napier school
leavers are most similar to
national levels (Figure 70).
Attainment levels of school
leavers in Hastings are highest,
with high proportions achieving
University Entrance, and Napier
has the lowest proportions with
no qualifications. However,
Wairoa has a relatively low
proportion of University Entrance
qualified school leavers, and a
higher proportion with no
qualifications.
Figure 70. Achievement levels among all school leavers,
2012 (percentage of all students)
Source: Ministry of Education, Education Counts
The Government has a target that by 2017 85 percent of 18 year olds will have achieved NCEA
level 2 or equivalent. Currently 71.6 percent of all school leavers in the East Coast study area
have achieved NCEA level 2 or higher (similar to New Zealand as a whole – 71.8 percent).
86
There are differences between ethnic groups. In 2012, school leavers who identified
themselves as Māori were more likely to leave with lower levels of qualifications than
European/Pākehā school leavers (compare Figure 71 and Figure 72).
Figure 71. Achievement levels of Māori
school leavers, 2012 (percentage
of all Māori school leavers)
Figure 72. Achievement levels of
European/Pākehā school
leavers, 2012 (percentage of all
European/Pākehā school
leavers)
Sources: Ministry of Education, Education Counts
With a relatively large Māori population, which is projected to continue to grow at a faster rate
than other ethnic groups, it is important to develop skills and talent amongst young Māori and to
secure pathways for future employment. Despite the relatively low ratings on skill indicators
within the study area, Māori in the study area are doing relatively well compared to national
achievement rates for Māori (Figure 71).
According to the recent Mayors Taskforce for Jobs report for the Hawke’s Bay region, there has
been increased Māori participation in tertiary education and Māori are showing good levels of
participation in the Modern Apprenticeships Programme (Ministry of Business, Innovation and
Employment & Mayors Taskforce for Jobs, 2013).
Youth employment
The skills of the East Coast’s future workforce will depend on the skills of new entrants. The
youth not in employment, education and training rate (NEET) is commonly used internationally
to measure non-utilised youth labour potential and young people who are at risk of becoming
disadvantaged or marginalised in the future. Youth is defined as being between 15 and 24
years old. NEET youth tend to live in clusters, often in geographically specific areas, and may
come from households where there are NEET adults (Cox & Black, 2011).
87
In 2013, Gisborne/Hawke’s Bay’s
youth NEET rate (20.7 percent)
was higher than the national rate
(12.5 percent). The combined
Gisborne/Hawke’s Bay region’s
youth NEET rate rose over 20052010, before falling in 2011.
However, the most recent figures
suggest it has climbed again
(Figure 73).
Figure 73. Gisborne-Hawke’s Bay youth NEET rate
compared to New Zealand, 2005-2013
Source: Statistics New Zealand, Household Labour Force Survey and
customised dataset from MBIE
When last measured at the
district level (2006), Wairoa had
the highest NEET rate in the
region at 23.5 percent, followed
by Gisborne at 20.5 percent.
This was significantly higher than
the New Zealand average (Figure
74).
Figure 74. East Coast NEET rates compared, 2006
Source: Department of Labour (2008). Annual In-depth Regional Report –
Gisborne and Hawke’s Bay
Youth are vulnerable in the current labour market. They have been the hardest hit in the
economic downturn. Employers often demand skilled and experienced workers, so lack of work
experience and work skills are a barrier to employment for young people. Youth in the Hawke’s
Bay, as part of the Human Rights Commission ‘National Conversations about Work’ project,
mentioned that it was very hard for them to get part time work (Human Rights Commission,
2009b).
Attitudes toward youth employees are mixed. Some employers have had bad experiences with
youth, which is barrier to further recruitment, and some mention that secondary education is not
equipping youth with basic skills, while others comment that youth employees add many
positive skills and ideas to the workplace (Human Rights Commission, 2009a).
For example, a recent survey in Hastings found that, on average, about three youth are
employed per business (Bevin, 2013a). Of those surveyed, 23 percent indicated that they
would likely increase their levels of youth employment, while 76 percent indicated that their
youth employment levels were likely to remain unchanged – as discussed above, this was due
to perceptions of poor work ethic and attitude, low skills levels, lack of experience, training
costs, work aptitudes not suited to business, lack of qualifications, concern over turnover and
literacy issues.
88
However, Hastings businesses also mentioned a number of initiatives that would encourage
them to employ younger staff, such as:

education and training of young people about appropriate work attitudes and
responsibilities

work, training and apprenticeship subsidies/financial assistance in relation to the
employment of young people

financial assistance in relation to the costs faced by young people in being fully licensed for
their work

more appropriate local training programmes

training in appropriate IT skills.
Literacy and numeracy
Foundation skills (literacy and numeracy) and the ability to participate by communicating and
interpreting information is essential and a fundamental basis of labour productivity and hence
growth.
The Gisborne/Hawke’s Bay region sits mid-table on a ranking of New Zealand regions on the
10
proportion of the population who have high prose literacy and numeracy (Figure 75).
Gisborne/Hawke’s Bay’s higher literacy rate when last measured was 56.2 percent compared to
the national proportion of 57.9 percent, and the higher numeracy rate was 47.5 percent
compared to 51.0 percent.
Employers in the broader region have commented that low levels of language, literacy and
numeracy have led to skills shortages for their businesses (Human Rights Commission, 2009a,
2009b), and are a barrier to youth employment (Bevin, 2013a).
Figure 75. Percentage of people aged 25-65 with higher literacy/numeracy, by region
Source: Ministry of Education (Lane, 2010)
10
High prose literacy and numeracy is measured through the Adult Literacy and Life Skills (ALLS) survey, last
administered in 2006. High literacy or numeracy is the highest quartile of literacy or numeracy scores.
89
Occupations
The study area has a higher
proportion of the population in
lower-skilled occupations.
Proportionately more of the study
area’s workers are labourers,
compared with New Zealand
(17.9 percent compared with 11.1
percent). Individuals are also
less likely to be employed as
professionals (Figure 76).
Figure 76. Employment by occupation, 2013
Source: Statistics New Zealand, Census 2013. Notes: Excludes response
unidentifiable, response outside scope, and not stated.
Figure 77. Employment by occupation, 2013, territorial
authority areas
There are differences between
territorial authority areas, with
labourers a high proportion of
Wairoa’s workforce (Figure 77)
and there are proportionately
more sales workers in Napier
compared with other territorial
authority areas.
Source: Statistics New Zealand, Census 2013. Notes: Excludes response
unidentifiable, response outside scope, and not stated.
Seasonal workforce
There appears to be high use of the seasonal workforce on the East Coast, which likely
contributes to the proportionately high levels of low-skilled labour. Surveys of about 400
businesses across Napier and Hastings found that the seasonal workforce was used by 21
businesses in Napier and 22 in Hastings (Bevin, 2013a, 2013b). Industries that used a
seasonal workforce included horticultural harvesting and processing, agricultural contracting,
vehicle washing, fabrication/welding work, vineyard and winery work, retailing, cleaning, driving
work, engineering assitance, general labouring, installation work, lifeguards, furniture removal
and sales work.
90
Horticulture and viticulture businesses in the region are very supportive of the Recognised
Seasonal Employer (RSE) scheme, where migrant workers complement New Zealanders,
providing a secure supply of seasonal labour. About 15 percent of the seasonal labour
requirements of the region are met through international seasonal work migrants including RSE
workers.
Anecdotal feedback suggests that, in some primary sectors, the lack of willing and suitable
employers that can offer cadetships is more of a hurdle than finding suitable candidates for
training. The Ministry for Primary Industries is developing a strategy to support the primary
sector to increase the capability of employers and employees.
Educational institutions
EIT Tairāwhiti is the main education provider in the study area. It was formed through the
merger of Eastern Institute of Technology and Tairāwhiti Polytechnic. While enrolments have
declined between 2012 and 2007, the number of equivalent fulltime students (EFTS) has
increased (Figure 78 and Figure 79). This indicates that EIT is attracting a greater number of
fulltime students over time. International student numbers have fluctuated over time and
represent a very small number of students. In 2012, 344 international EFTS were enrolled,
falling from 392 in 2007.
Encouragingly, the number of completions has also increased. In 2012, 2,769 EFTS completed
their studies (in 2007, 1,724 EFTS completed).
Figure 78. EIT enrolments, 2007 – 2012
Figure 79. EIT equivalent full time
students, 2007 – 2012
Source: Ministry of Education
Source: Ministry of Education
In 2011, EIT delivered 2,656 Student Achievement Component (SAC) funded EFTS, largely
from its Taradale campus in Napier. The profile of EIT's 2011 delivery included 582 EFTS in
health including nursing, 438 EFTS in management and commerce, 323 EFTS in society and
culture, 244 EFTS in creative arts and 186 EFTS in engineering and related technologies. It
also delivered 89 SAC EFTS in agriculture with 51 of those in viticulture or horticulture. Many of
these areas are relevant to the sectors of scale in the broader region.
91
EIT has good relationships with industry and works with industry partners on specific
programmes and has strengthened its qualifications and trades delivery, including offering
certificates for core industries such as wine-making, farming and forestry. In 2011, Unison, a
utility infrastructure company and one of Hasting’s largest employers, opened its Centre of
Excellence training facility at EIT. EIT also has good relationships with schools enrolling 142
students in its new Trades Academy in 2012 and 123 Youth Guarantee students. In 2011, a
relatively high 812 (31 percent) of total SAC EFTS were Māori with 551 of those (68 percent)
studying at level 4 and above.
Most industry training organisation (ITO) trainees and Modern Apprentices on the East Coast
were enrolled at the Forestry Industry Training Organisation (FITEC) and relatively high levels
were enrolled in agriculture (Figure 80 and Figure 81). This suggests that ITO and Modern
Apprentices enrolments are broadly aligned with the greatest industry needs.
Figure 80. Industry trainees (excluding
Modern Apprentices) employed in
the Eastern Coast TEC region,
December 2012
Figure 81. Modern Apprentices employed in
the Eastern Coast TEC region, by
ITO, December 2012
Source: Ministry of Education. Notes: The TEC
catchment includes the following territorial authorities:
Gisborne, Wairoa, Napier, Hastings and Central
Hawke’s Bay
Source: Ministry of Education
In the 2013 Budget, the Government announced a new Māori and Pasifika Trades Training
Initiative. This aims to ensure more Māori and Pasifika learners obtain meaningful trades
qualifications and apprenticeships. On the East Coast, Youth Futures Trust (with Ngāti
Kahungunu and EIT) and Te Rūnanga o Turanganui a Kiwa (with Turanga Ararau) have been
selected to deliver this initiative. All consortia include employers, Māori and/or Pasifika
organisations and tertiary education organisations. The initiatives are expected to include:

developing and delivering new and innovative training and skill development to
employment pathway models

form and maintain partnerships, and involve employers in the model from the beginning
and match applicants to employers’ needs

offer fees-free places at tertiary providers

provide a grant to participants once in employment to help with the cost of tools
92

provide skills brokerage services to match participants with learning options and
employers.
A number of factors in the study area make the environment for tertiary delivery and the labour
market unique. These include (EIT, 2011):

a high Māori population, which means that providers must work with Māori communities
and offer options that reflect Māori aspirations. Ngāti Porou is working in partnership with
EIT to develop training programmes and training that are more accessible to iwi members.
The iwi is working on a deliberate strategy to upskill local residents and create jobs for local
residents wherever possible.

a lower qualification profile, which means that tertiary providers need to also consider
developing learners’ foundation and social skills

an aging population, which means that providers need to consider education and training
options appropriate for older participants

an economy reliant agriculture, horticulture and forestry, which means that providers need
to offer a portfolio of education and training opportunities relevant to these sectors,
requiring close consultation with industry

a high proportion of residents in remote rural areas, which means that providers may need
to find ways to take tertiary education to learners.
Schooling is also obviously important for creating skill pathways and channelling the future
workforce. Some stakeholders interviewed perceived that a lack of good secondary schools in
the study area was potentially discouraging families and skilled people from relocating to the
area. However, three highly regarded private secondary schools are based in the Hastings
area (Ministry of Business, Innovation and Employment and Mayors Taskforce for Jobs, 2013)
Skill shortages and future demand for skills
Labour and skill shortages are very much linked to the economy and business confidence.
Stakeholders and previous research reports indicate that labour and skills shortages are a
significant barrier to the East Coast’s prosperity (McDermott Miller Strategies, 2009a). These
shortages appear to be right across the skill spectrum. For example, the Tairāwhiti regional
economic development strategy action plan notes that the region needs to address industry skill
requirements at the entry/work ready level and at the management level skills to lift business
peformance and enable business growth (BDO, 2009).
‘Basic skills’ are a particular concern in Gisborne:
“Our biggest issue is getting basic skills. There are plenty of people; they just don’t have the
right skills”
“Someone we interviewed turned up in their pyjamas. Another had no communication skills and
texted the entire time they were being interviewed”
-
Employers in the Gisborne region (Human Rights Commission, 2009a)
93
Low rates of pay and high cost of travel were identified as contributing issues in the Gisborne
region (Human Rights Commission, 2009a).
Recent telephone surveys of 200 businesses in Napier city and 195 businesses in Hastings
district idenfied a number of specific areas where employers are facing skill shortages (Bevin,
2013a, 2013b). In Napier, 18 percent of those surveyed indicated that they had difficulty
recruiting skilled labour. In Hastings, this was almost 25 percent. Areas of need are indicated
in Table 19.
Table 19. Specific labour needs in Hastings and Napier, 2013
Similar labour needs
Different labour needs
Napier
Hastings

building sector trades

construction skills

engineering skills

engineering skills

refrigeration skills

refrigeration skills

accounting skills

Computer controlled machinery

administration skills

Computer/IT skills

architectural draughtsman

Counselling skills

automotive technicians/engineers

Distribution

boat building fabrication

Electrical and electronic skills

car grooming

Floriculture skills

laminators

Food manufacturing

mechanics

Healthcare certificate level skills

metal work trade skills

Health and safety compliance skills

insurance industry skills

Internet-based sales skills

registered nurses

Machine operators

Marketing skills

New product knowledge

Solar/hot water skills

Technical skills
Source: Bevin (2013a, 2013b)
It is also important to identify the types of skills that might be required in the future for planning
for education and training. A third of Napier businesses and a third of Hastings businesses
surveyed indicated that there would be different or new work skills required from their
employees over the next three years. These skills are shown in Table 20.
Table 20. Specific future skills needs in Hastings and Napier, 2013
Similar future skill
needs
94
Napier
Hastings

computer skills

Computer/ IT use skills

general IT skills

Up-skilling in design and screen printing

up-skilling in design and screen
printing

Construction industry skills


electronics
Electrical and electronic/ industrial control
skills

advanced structural engineering skills

Engineering and joinery workshop skills

use of new data software packages

More technical and analytical skills
Different future skill
needs
Napier
Hastings

operating new machinery

New product knowledge

use of new software and related
service programmes

Use of new software programmes

technology applications and skill
upgrading

Understanding of new technology trends

Multi-skilling

upskilling of product knowledge


Importance of general employment upskilling.
multi-skilling

management and administration skills
in addition to ‘doing’ skills

additional skills in distribution and food
manufacturing

business growth and development
focus

Operation of new automated equipment


Beverage manufacturing and packing
compliance and technical skills


Counselling skills
new CAD applications


Marketing skills
vehicle diagnostic skills

Health and safety skills relating to use of
new technology

Solar hot water skills

Automotive air conditioning
Source: Bevin (2013a, 2013b)
These skills are broadly consistent with the skill shortage areas identified by stakeholder forums
as part of the recent Mayors Taskforce for Jobs report. Skills shortage sectors highlighted in
those forums were engineering, IT and computing (Ministry of Business, Innovation and
Employment & Mayors Taskforce for Jobs, 2013).
While management skills were identified as an area of shortage, there appears to be an
appetite by managers and business owners to take part in continual learning. Two thirds of
respondents to a business survey in Wairoa indicated that they were likely to benefit from
additional education or training for themselves or their staff, and most did their own in-house
training (Loomis, 2012). Training in marketing and advertising, and utilising new communication
technologies, were the most identified types of training needed.
Migrants
Migrants contribute to the transfer of knowledge and ideas, as well as expanding a region’s
international networks. Migrant skills are likely to be an increasingly important part of the study
area’s labour market given the small domestic talent pool. As previously mentioned, parts of
the economy also rely on seasonal and migrant labour to support the tourism and horticulture
industries.
Between 2006 and 2013 there was a net loss of over 800 people from Gisborne and a net loss
of almost 600 people from Wairoa. Both Napier and Hastings recorded increases in population.
Across the East Coast, population loss occurred in the 5–19 year age bracket (similar to New
Zealand as a while), but also in the 25–49 year age bracket, probably reflecting a demand for
options further afield for jobs.
95
The East Coast captures a small proportion of New Zealand’s international migrants. In 2013,
12.8 percent of the total population was born overseas compared to 23.6 percent nationally.
Not surprisingly, given their relative
population bases, most migrants
settle in Hastings and Napier, with
very few in Wairoa (Figure 82).
However, Wairoa and Gisborne also
have a relatively small proportion of
migrants. In 2013, migrants made
up less than 6 percent of the
Wairoa’s population and less than 9
percent of Gisborne’s population,
compared to around 15 percent for
both Hastings and Napier.
Figure 82. Migrants on the East Coast, by territorial
authority, 2013
Source: Statistics New Zealand 2013 Census
Figure 83. Birthplace of migrants, New Zealand, East
Coast and East Coast districts and cities, 2013
Migrants to the East Coast have a
different profile to New Zealand.
They are more likely to be from
Australia and the United Kingdom
and Ireland, and less likely to be
from Asia (Figure 83).
Source: Statistics New Zealand 2013 Census
Further detail on the employment status, occupation, educational qualifications and income of
migrants on the East are shown in the following figures (Figure 84, Figure 85, Figure 86 and
11
Figure 87).
11
96
The latest release of Census data at the sub-national level unfortunately does not included data that enables
analysis of the migrant population to be updated to 2013. The Census 2013 release schedule suggests that the
data might be available mid-2014. The following section is based on Census 2006 data.
Figure 84. Work and labour force status, by
country of birth, 2006, East Coast
Figure 85. Occupation, by country of birth, 2006,
East Coast
Source: Statistics New Zealand 2006 Census
Source: Statistics New Zealand 2006 Census
Figure 86. Highest educational qualification, by
country of birth (2006), East Coast
Figure 87. Personal income, by country of birth
(2006), East Coast
Source: Statistics New Zealand 2006 Census
Source: Statistics New Zealand 2006 Census
Some differences are evident. The Pacific Island born population is over-represented in the
labourer occupation category and tends to have lower income levels and no qualifications.
This pattern is relatively consistent across other regions in New Zealand, but the seasonal
workforce and RSE scheme may make this more pronounced on the East Coast. Migrants from
the UK, Europe and Asia tend to have lower employment and labour force rates. The North
American born population tends to be more highly qualified, have higher income levels and be
in professional occupations. Again, these trends are seen in other regions across New
Zealand.
In 2006, the labour force participation of migrants who had been in the country for less than 10
years was higher in Gisborne and Hawke’s Bay Regions, compared to New Zealand as a whole
(Department of Labour, 2008). This suggests that a higher proportion of migrants to the
broader region have an offer of work.
97
Recent and skilled migrants
Of the East Coast’s population, 2
percent are recent migrants (defined
as those who arrived in New Zealand
in the last two years). The East Coast
study area also captures a relatively
small proportion of New Zealand’s
skilled migrants, and as a proportion of
its population (Figure 88). In 2012, for
every thousand people, the Otago
region had about 11 Essential Skills
workers, while the Gisborne region
had 3 and the Hawke’s Bay region had
2.
Figure 88. Essential Skills workers by region, year
ending March 2011, March 2012, per 1,000
population
Source: Ministry of Business, Innovation and Employment
customised dataset and Statistics New Zealand sub-national
population estimates
Across New Zealand, there were 22,017 people approved for a work visa under the Essential
Skills category in the year ending March 2013. This compares with 21,929 in the year ending
March 2012 and 22,382 in the year ending March 2011.
12
In the year ending March 2013 :

169 people were approved for a work visa under Essential Skills in the Gisborne region, up
from 143 in the year ending March 2012, and 97 in the year ending March 2011

304 people were approved for a work visa under Essential Skills in the Hawke’s Bay
region, up from 282 in the year ending March 2012 and 299 in the year ending March
2011.
13
In Gisborne, the top occupational groups were Labourers, followed by Professionals and
Technicians and Trades Workers. Most Labourers were Farm, Forestry and Garden Workers,
Professionals were mostly Health Professionals, and in the Technicians and Trade Workers,
half were Food Trade Workers.
In the Hawke’s Bay, Professionals were the top occupational group, followed by Technicians
and Trades Workers and Managers. Like Gisborne, Professionals were mostly Health
Professionals, Technicians and Trades Workers were predominantly Food Trade Workers. Of
Managers, 45 percent were Farmers and Farm Managers and 41 percent were Hospitality,
Retail and Service Managers.
This highlights areas where the domestic workforce may not well cater for industry need and
adds an industry dimension to the earlier discussion on reported skills shortages. These are
12
In the year ending March 2013, 7% of approved Essential Skills workers had an unknown region. Those with an
unknown region are excluded from this analysis.
13
Occupation is classified using the Australian and New Zealand Standard Classification of Occupations (ANZSCO)
98
areas where further investment in education and training and succession planning may be
required. The Human Rights Commission’s ‘National Conversation about Work’ project found
that employers were concerned about the long lead time to recruit and place migrant workers
(about six months) (Human Rights Commission, 2009b).
The Hawke’s Bay economic development framework/strategy recognises that there has been a
fragmented and uncoordinated approach to business and migrant attraction. Many agencies,
including Port of Napier, have historically been involved in this function (Hawke’s Bay Regional
Council, 2013). The framework includes “a planned, systematic approach to business
relocation and attraction activity” as a key initiative.
Initiatives to improve skills and talent
It is apparent from the review that there are a range of existing and potential initiatives that
support the region in addressing skills and talent issues. For example:

EIT’s Trades Academy, which provides practical skills training for senior high school
students while allowing them to study for NCEA credits and industry-based tertiary
qualifications

Ngāti Porou’s partnership with EIT to provide marae based opportunities for trade training
and scholarships for local carpentry students

The Ministry of Education and Te Runanganui o Ngāti Porou & Te Rūnanga a Runanganui
a Kiwa Tairāwhiti School Attendance Service to tackle absenteeism from school

Te Taiwhenua o Wanganui a Orotu’s partnership with WINZ and EIT to run a trade training
programme for unemployed youth

Māori and Pasifika Trades Training, delivered by two consortia, Youth Futures Trust in
Hawke’s Bay and Te Rūnanga o Turanganui a Kiwa in Gisborne

Several Business Growth Agenda actions, including the reboot of New Zealand
apprenticeships, a focus on lifting Māori school leaver achievement, increasing youth
guarantee places, and expanding trades and services academies’ flexible school-based
provision.
The question is whether available initiatives are sufficient to meet the extent of the skills issues
facing the study area and/or whether they will enable the East Coast to meet future demands for
skills that are likely to be generated by growth industries.
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Summary: Skills and talent
Skills and talent, both formal qualifications and foundation skills, are critical to a region’s
productivity and income potential. The study area and broader region under-performs on all key
indicators of skills and improving educational attainment and skills would appear to be the most
significant opportunity for the East Coast’s growth potential:

The East Coast study area has a low proportion of the resident population (aged 15 years
and over) with tertiary qualifications (13.7 percent compared to the New Zealand average
of 20 percent in 2013).

The East Coast study area has a high proportion of people aged 15 years and over who do
not have a qualification (26.8 percent compared to the New Zealand average of 20.9
percent, in 2013). In Wairoa, the proportion is more than 37 percent. Similarly, the
combined Gisborne and Hawke’s Bay region has a higher proportion of school leavers
without at least NCEA Level 2 (28.2 percent compared to the national average of 25.7
percent in 2012).

The broader Gisborne/Hawke’s Bay region has lower proportions of the adult population
with higher literacy or numeracy than nationally, although sits about mid-table in a ranking
of New Zealand regions on literacy and numeracy rates.

In 2013, the broader Gisborne and Hawke’s Bay region had a high proportion of youth not
in employment, education or training (NEET), at 20.7 percent compared to the national
level of around 12.5 percent, although the difference between the regional and national
rate appears to be closing. In 2006, Wairoa had a NEET rate of 23.5 percent, followed by
Gisborne at 20.5 percent. Based on local surveys, although some employers have had
poor experiences with youth employees, there is interest from businesses in increasing
levels of youth employment if they were supported to do so.

A higher proportion of Māori school leavers in the study area have no or lower levels of
qualifications. However, Māori school leavers in the study area tend to have higher
educational achievement than Māori school leavers nationally. Given the relatively large
Māori population, which is projected to continue to grow at a faster rate than other ethnic
groups, there is a need to continue to focus on lifting the skills of Māori in the study area.
Although there have been positive trends on indicators of education levels in the study area –
for example, the proportion of people aged 15 years or over with a degree or higher increased
from 10 percent to 13.7 percent between 2006 and 2013, and the proportion of people aged 15
years or over without a qualification fell from 32 percent to 27 percent over the same period –
they reflect improvements nationally, so that the study area’s measures of educational
attainment have remained below New Zealand’s. Clearly, increasing the participation and
attainment levels of the local labour force will need to be addressed if the East Coast is to
achieve its potential.
Stakeholders and previous research confirm that labour and skills shortages are considered to
be a significant barrier to the growth and prosperity of the study area. Skill shortages occur
across the spectrum from entry level work to technical skills to management levels. For
example, in Napier and Hastings, areas of skill needs identified in one survey included
construction, machine operation, metal work, food manufacturing, IT, engineering, marketing
100
and accounting. Research also suggests that there will be increasing demands for IT and
computing, engineering, electrical and electronics, management and marketing skills in future.
Unique factors of the study area already noted, such as the high Māori population, the reliance
on primary industries and a high proportion of residents in remote rural areas need to be taken
into account to deliver fit-for-purpose education and training solutions to overcome these
issues. Positively, there appear to be several initiatives in the study area that are based on
unique local solutions. For example, Ngāti Porou is working with skills providers in the region to
develop programmes and initiatives to improve Māori access and achievement. The Youth
Futures Trust (with Ngāti Kahungunu and EIT) and Te Rūnanga o Turanganui a Kiwa (with
Turanga Ararau) have recently been selected to deliver Māori and Pasifika Trades Training in
the broader Gisborne/Hawke’s Bay region.
EIT Tairāwhiti is the main education provider on the East Coast and appears to have good
relationships with industry and schools in order to address some of the issues and demands
already noted. It has strengthened its qualifications and trades delivery, including offering
certificates for core industries such as wine-making, farming and forestry. The number of
equivalent full-time students increased over 2007-2012 as did the number of completions at
EIT. Industry trainee enrolment in the broader Gisborne/Hawke’s Bay region also appears to be
broadly aligned with the greatest area of industry need.
Migrants can fill skill gaps in the domestic labour pool. Gisborne and Wairoa’s population fell
between 2006 and 2013, while the population in Hastings and Napier increased. However, the
East Coast experienced net losses of people in the 5-19 and 25-49 age brackets, likely a result
of people seeking other tertiary training and job opportunities from outside the study area. The
East Coast also captures a relatively small proportion of migrants, with 13 percent of the total
population born overseas in 2013, compared to 24 percent nationally. However, in recent years
the number of migrants approved for a work visa under Essential Skills has been increasing in
both the Gisborne and Hawke’s Bay regions.
101
Underlying determinants: The natural
resource base
As noted, several key industries contributing significantly to the study area’s growth are based
on natural resources. While the study area gains significant advantage from its natural
resources, there is the potential for these resources to be stretched and the environmental
impacts of resource use need to be managed. Key features relevant to this study are the land
and water resource and the potential oil and gas resource.
Land and water
The East Coast’s dry and temperate climate is punctuated by reasonably frequent periods of
drought and high rainfall. Climate change is expected to increase the frequency and severity of
extreme weather. Between now and 2030/40, NIWA estimate that average temperatures in the
0
region will rise by around 1 C, rainfall will decrease by around 5 per cent and wind will increase,
thereby increasing soil moisture loss (Winder, Dunbar, & Bevin, 2012). The combined effect of
this is that, by 2080, what is currently a 1 in 20 year drought is predicted to be twice as frequent
and while rainfall is likely to be more intermittent, it is likely to be more extreme. By 2040, what
is currently a 50 or 100 year storm and flood event is predicted to be 7 per cent more likely and
16-17 per cent more likely by 2090 (Hastings District Council, Napier City Council, & Hawke’s
Bay Regional Council, 2010).
Extreme wet weather events such as cyclones can result in significant damage to the productive
base of the economy (for example, Cyclone Bola resulted in $120 million of damage to
properties) (Institute for Business Research, 2013). Given the area’s reliance on irrigationdependent primary production, the reasonably frequent droughts can also have a significant
economic impact. Estimates of the impact of the 2007 drought on Hawke’s Bay’s GDP indicate
that the region suffered a total region-wide GDP loss of $326 million (15 per cent) over three
years. It is notable that the drought caused a $161 million reduction in GDP produced by the
sheep and beef sector alone (20 percent reduction) over the same time period (Winder et al.,
2012).
The study area possesses large areas of fragile hill country soils and erosion prone land,
particularly in the north where efforts to replant hill country has been frustrated by a depressed
economy and resultant lack of investment capital (Hawke’s Bay Regional Council, 2011). It has
been estimated that around a quarter of Gisborne’s land is susceptible to severe erosion (MAF,
2006 cited in Institute for Business Research, 2013). Erosion and slips can damage roads and
bridges, the quality of water and the productivity of rural land.
In 1992 the Government established the East Coast Forestry Project (ECFP) to aid in
addressing erosion problems in the area. ECFP grants can be used to control erosion on the
worst eroding or erosion-prone land through planting a range of forest species or encouraging
natural reversion to native bush. So far approximately 42,000 hectares have been established in
erosion control treatments. The Project, while achieving reforestation and afforestation on
vulnerable land, has not until recent years made significant progress in addressing the large
area of target land; and planting is well short of the annual target of 6,000 hectares (Bayfield &
Meister, 2005). There has been a high drop-out rate of plantings after application – for
102
example, in 2007 over 2,000 hectares were approved for planting, but over 2007-2009 only 900
hectares were planted. The Ministry of Agriculture and Forestry (2011) suggested that this may
be due to the need for bridging finance, complications in achieving sign-off in multiple-owned
Māori land, and a lack of commitment to land use change. However, they note that this may
change if the scheme operates together with the Emissions Trading Scheme or the Permanent
Forest Sinks Initiative (Independent Review Panel, 2011). There is currently a consultation
process in place on changing the scheme.
The modest rate of progress is similar to that experienced by the Regional Landcare Scheme,
which has delivered only 10,000 hectares of tree cover since 1995. The Hawke’s Bay Regional
Council is investigating whether a more integrated mix of land uses within the severely erosion
prone hill country can deliver environmental benefits in a way that is more economically
attractive to landowners (Hawke’s Bay Regional Council, 2011).
Large amounts of previously cleared land in the north have also reverted to native bush
(mānuka and kanuka). Efforts to protect this bush to contribute to ecological and erosionprotection objectives has divided opinion. Some consider that the economic cost of mānuka and
kanuka far outweigh any ecological or soil-reservation benefits that accrue from their protection
(Tomlinson, Fairweather, & Swaffield, 2000).
The study area’s local authorities have long been aware of the risk of coastal erosion and
inundation due to the combined effect of coastal storms and sea-level rise and have planned
and managed land use accordingly. The effect of these hazards will be largely confined to a
narrow band of land within 75 metres of the coast and is not expected to increase appreciably
over the next 50 years (Gisborne District Council, 2012).
Water availability
The ability to access irrigation water from the study area’s rivers and large aquifers underlying
the Heretaunga and Ruataniwha plains have supported the development of the economy and
the productivity capacity of the area through supporting high value crops, horticulture and value
added processing. Expansion of these higher value land uses is generally limited by water
availability. Supply restrictions apply one in every five years (Winder et al., 2012) and irrigation
is a crucial feature of the rural economy. Approximately 80 percent of water allocated for
abstractive uses in Hawke’s Bay is for irrigation purposes with the remaining 20 percent
allocated to industrial and urban domestic use. A number of catchments in the region are at or
approaching full allocation, including the Ngaruroro and Tukitiki, but these catchments often
also offer the best opportunities for irrigation expansion (Hawke’s Bay Regional Council, 2011).
Without water augmentation (storage and conveyance) the opportunity for expansion cannot be
realised. The current one year in five restrictions are likely to increase in frequency to one year
in every three (Winder et al., 2012). Unless water security is improved, the economic growth
potential in key productive areas of the study area will be greatly hindered (Hawke’s Bay
Regional Council, 2011).
Previous studies of the area have concluded that the potential to increase production through
water storage and irrigation potentially provides the single biggest opportunity for economic
growth (Hawke’s Bay Regional Council, 2011; Winder et al., 2012). Some estimates indicate
that the area of irrigated land in the East Coast could double in the next decade – the challenge
103
will be to ensure that intensive land use is managed in a way that avoids degrading water
quality.
There is evidence that irrigation schemes have direct and indirect adverse effects on the
environment through altered flow regimes and adverse effects on water quality due to land use
intensification. The effects of each scheme will need to be evaluated and weighed against the
objectives of the local communities. In some cases there might be the potential to increase the
area of irrigated land and facilitate an intensification of land use, but practical limits, such as the
susceptibility and the sensitivity of receiving environments to nitrogen and phosphate leaching,
might act as a practical constraint unless new generation technologies are employed.
Iwi have a particularly strong connection to freshwater, which they view as a taonga (treasure)
and in some cases as an ancestor. Iwi take their responsibility as tiaki (guardian) of freshwater
very seriously and have expressed deep misgivings about any movement towards the
privatisation of water or the establishment of tradable rights to discharge waste into water. Iwi
have also been opposed to proposals to transfer water between catchments. All these matters
are important considerations for water augmentation, storage and conveyance schemes and will
need to be worked through very carefully with iwi.
The process of identifying potential water augmentation schemes, evaluating their feasibility and
gaining the necessary development approvals is technically challenging, time-consuming,
costly, and socially and politically complex. Once these matters have been addressed, the
capital costs of developing water storage and distribution systems can also be high as the
economics of storage scheme viability tend to be more favourable at larger scales. It is
estimated that the Ruataniwha scheme will cost in the order of $230 million.
Although it is out of the scope of the study area, the proposed Ruataniwha scheme provides a
useful illustration of the potential cost and benefit of large-scale water augmentation schemes.
The Ruataniwha scheme still needs to work its way through the resource consent process but
on the basis of feasibility studies undertaken to date (RWSP Core Project Team, 2012), it has
the potential to:

increase the area of irrigation by up to 20,000 hectares (Hawke’s Bay Regional Council,
2011) or 30,000 hectares (Winder et al., 2012) – who note that the upper figure depends
on the water-intensity of land uses that are adopted within the potentially irrigable area

improve summer low flows by approximately 30 percent

increase security of supply so that restrictions that happen 1 in every 5 years now, will
occur only 1 in every 20 years

deliver economic returns in the order of $250 million per annum (Winder et al., 2012).
Preliminary investigations have been undertaken in the Ngaruroro/Karamu catchment which
indicate the potential to irrigate up to an additional 6,000 hectares (Hawke’s Bay Regional
Council, 2011). Work is also underway investigating options available to improve the reliability
of irrigation on the Poverty Bay Flats, co-funded through the MBIE Envirolink scheme and MPI
Community Irrigation Fund – this work is also at an early stage.
104
Oil and gas
There is interest in exploring the onshore East Coast Basin and a prospect that this could lead
to some form of petroleum development. The geology of the East Coast of the North Island has
two extensive geological formations, Waipawa and Whangai, which have generated petroleum.
However, there is limited knowledge of the productive potential of these formations and no oil or
gas has ever been produced directly from them. Until exploratory wells are drilled to directly
access these formations there is a wide range of uncertainty about whether recovery would be
economic and about what the potential impacts would be.
A study was recently commissioned by central and local government (with support from
Business Hawke’s Bay) to examine the potential of the oil and gas industry for the East Coast
(Ministry of Business, Innovation and Employment, 2013b). Because of the uncertainty about
the potential of the formations, the study considered a range of scenarios. These scenarios
were intended to illustrate the range of outcomes that might result from petroleum exploration
and possible subsequent development. The scenarios ranged from abandoned exploration, to
small-scale production, to large scale, high volume production. The estimated impacts ranged
from an additional $164 million to $3.6 billion to the wider Gisborne/Hawke’s Bay region over
and above the baseline and employment gains of between 199 to 2,347 jobs – very large
ranges. The estimates from this study have informed the modelling and scenarios in Stage 2 of
this study.
The oil and gas study did not aim to provide any recommendations or forecasts. It simply
explained the significant choices that may need to be made and the existing mechanisms for
the people of the East Coast to provide input into any decisions. As such, the scenarios and the
potential impacts are quite speculative. However, if initial drilling proves that the formations are
productive at commercially viable rates, and if subsequent exploration shows that this is true
over a large area, there is a potential for a significant oil boom. Such a boom could transform
the economy of the entire study area – and in the larger scenarios could even be game
changing for New Zealand as a whole (Ministry of Business, Innovation and Employment,
2013b).
As the report noted, any such development will bring with it a range of environmental impacts
that will need to be managed. Public concerns have been raised about fracking (hydraulic
fracturing) and the potential impact on aquifers. In addition, as natural resources are taonga for
Māori, any proposals to develop the oil and gas resources will require the participation of iwi.
Gisborne District Council recently commissioned a review of the research into the economic,
environmental, social and cultural impacts associated with petroleum exploration and extraction
(Greer, Marquet, & Saunders, 2013). The review identified a number of key impacts and issues
and applied them to Gisborne (Table 17). The review suggests that in order to maximise the
benefits and minimise adverse impacts the following should be undertaken:

the region should be proactive in determining what it wants from development

establish a robust regulatory framework

develop inclusive consultation processes with appropriate resourcing

undertake baseline data collection and establish on-going monitoring processes.
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Table 21. Potential impacts and issues associated with petroleum development
Economic impacts
Environmental impacts
 Almost all oil exploration becomes a significant
contribution to regional GDP. Depends on scale
and relates to development and then on-going
operations.
 Risks of a major oil spill which can be reduced by
careful consenting processes and monitoring.
 Makes a relatively smaller direct contribution to
regional employment, especially after development
phase.
 Careful labour market planning needed to up-skill
workers to match demand and ensure opportunities
in the on-going phase.
 Major opportunity to develop supporting businesses
and specialist skills that can be transferred to other
sectors. Early consultation with companies, and
other areas like Taranaki needed.
 Positive impacts on local infrastructure and through
rates.
 Likely to impact on local property prices, which can
cause displacement of existing businesses and
negative social issues.
 Does seem common for minor oil spills to occur
which can have cumulative impacts and careful
monitoring is required.
 Most impacts are on the marine and coastal
environment – one of Gisborne’s environmental
assets.
 Risk for Gisborne is soil erosion from on shore
development and development of supporting
infrastructure from offshore development.
 Fracking has raised concerns about seismic impacts
of which Gisborne is vulnerable. Potential soil
contamination.
 Localised evidence of reduction in air quality in
Taranaki, which has the potential to be the case for
Gisborne.
 Impacts on wildlife habitat and migratory passages,
but little research in a New Zealand context.
Technologies such as red lights on offshore rigs can
mitigate impacts.
Social impacts
Cultural impacts
 Depends on the size of the development relative to
the local economy. Depends on management of
development and engagement of the local
population in the opportunities.
 Physical damage to cultural and spiritual sites,
 Large in-migration for development phases can
increase social disruption. Potential increases in
alcohol and drug use and anti-social behaviour.
Can extend police and social services resources.
Could further exacerbate relatively high rates of
crime in the region.
 Difficulties in participation in processes because of
different in approach and lack of resources.
 Loss of ability to undertake cultural responsibilities
associate with guardianship of the land.
 Can be divisions in the community and increases in
uneven income distribution. Inflation in local house
prices can increase this trend.
 Positive social impacts include increased
investment in facilities and social infrastructure.
 Increases in psychological stress as a result of the
development and change.
Source: Agribusiness and Economics Research Unit study (Greer et al., 2013)
It is important to note that any significant oil and gas development would take place over a very
long timeframe, so there is considerable opportunity to consider these concerns and potential
impacts in more detail and to consult with affected communities.
106
Summary: The natural resource base
Many of the study area’s growth industries (and broader value chains) are clearly based on
natural resources. It is already well recognised by the study area that continued growth in these
industries will depend on the ability to manage land and water changes/demands and the
environmental impacts of extraction across land-based industries. In particular:

the frequency and severity of droughts and floods is expected to increase, potentially
resulting in damage to properties, increased disruptions to the transport network and
potentially having a significant economic impact on primary resource-reliant industries.

the study area possesses large areas of fragile hill country soils and erosion prone land.
Erosion can damage roads and bridges, the quality of water and productivity of rural land.
A significant initiative aimed at reducing erosion with further potential is the East Coast
Forestry Project scheme. The scheme has been operating for over 20 years and provides
funding to landowners to establish effective tree cover through planting or to encourage
natural reversion to native bush. Over 42,000 hectares of land have been treated to date.
Reviews have found that the scheme is not meetings its full potential and that uptake could
be improved through more efficient and effective implementation. Consultation is currently
underway on operational improvements to the scheme.

without water augmentation, current one year in five water restrictions are likely to increase
in frequency. Water storage and irrigation is considered to potentially provide the region,
particularly the Hawke’s Bay, with a significant opportunity to increase economic growth.
However, there are complex issues related to environmental impacts, the perspectives of
iwi/Māori, and the cost of developing water storage to still be assessed in relation to
proposed irrigation projects in the study area.
Oil and gas has been mooted as potentially offering significant economic potential for the
broader Gisborne/Hawke’s Bay region and New Zealand. The growth scenarios and potential
environmental impacts outlined in a recent MBIE study are reasonably speculative at this stage
and public and iwi concerns are still to be addressed. If drilling proceeds, and if it proves that
the formations are productive at commercially viable rates, and if subsequent exploration shows
that this is true over a large area, the economy could be transformed. The study estimated
potential employment gains of between 199 and 2,437 jobs in the broader Gisborne/Hawke’s
Bay region depending on the scale of developments. Stage 2 of this study considers the
potential impact of oil and gas developments in more detail.
107
Underlying determinants: Destination
attributes
Destination attributes relate to a region’s value proposition and image, its ability to attract
visitors and the steps taken to leverage amenities and maintain a high quality of life. Visitors to
a region allow it to maintain a broader range of recreational, cultural and business activities than
it could support based on the local population. Beyond the direct economic impacts, initiatives
to attract visitors can also help a region to develop business relationships, attract migrants and
investment, share knowledge and stimulate export education.
Image and identity
The East Coast is known for its environmental resources – its surf beaches and coastal and
marine environment. It is also known for its high proportion of Māori residents, strong ties to iwi
and marae, and many sites of cultural and spiritual significance to Māori (Greer et al., 2013).
Stakeholders interviewed as part of this study regularly commented on the high quality of life
and the superior lifestyle that the study area offers. This is supported by previous studies in the
area which draw on resident and stakeholder perceptions (Winder et al., 2012) – natural
amenity and lifestyle are major draw-cards and retainers.
However, the study area is also perceived as “socio-economically deprived”, with lower than
average levels of education, lower levels of income, higher than average crime rates and a
higher health burden (Greer et al., 2013; Hawke’s Bay/ East Coast Forum, 2011a, 2011b,
2012). Stakeholders interviewed as parts of other studies and strategies have commented on
the many challenges facing East communities (Winder et al., 2012).
Perceptions of safety contribute to the attraction of residents, businesses and visitors. The
proportion of people who felt safe or very safe walking in the Gisborne city centre at night has
declined from 27 percent in 2011, to 19 percent in 2012 (Key Research, 2012). In a 2012
business survey in Wairoa, 77 percent of respondents identified issues related to crime and
safety in the town centre including youth, alcohol and drug problems, poor lighting and lack of a
police presence. 14.5 percent identified crime and safety and 7 percent identified vandalism as
reasons for a lack of pride in the town (Loomis, 2012). In both cases these appear to be
concerns about the town centres rather than the broader districts. In addition, several
community initiatives have been put in place to reduce crime and improve safety in the districts.
A number of strategies and action plans have included the need to improve branding of the East
Coast area. Examples include the Tairāwhiti Development Partnership: Regional Economic
Development Strategy 2009 (McDermott Miller Strategies, 2009b) and Regional Economic
Development Strategy Action Plan 2009-2011 for Tairāwhiti area (BDO, 2009) which included a
“strategy to develop regional identity and associated values that will reflect the value of
investing in, migrating to or visiting Tairāwhiti”. Both documents recognised that there were a
number of uncoordinated branding efforts in Tairāwhiti and the need to develop a single
regional brand to channel efforts.
At the same time, the Hawke’s Bay Regional Economic Development Framework 2012/13 (City
of Napier et al., 2011, p. 18; Hawke’s Bay Regional Council, 2013) also included as an action
108
“create a unified brand for the region and create a communication platform to drive visits to the
region”.
Visitor attraction
Tourism was often mentioned by stakeholders as a sector with under-estimated potential. A
survey of 84 businesses in Wairoa identified tourism as the most promising economic growth
area (Loomis, 2012).
Two regional tourism organisations (RTOs) promote the East Coast study area, Tourism
Eastland and Hawke’s Bay Tourism (Table 22). In 2012, councils invested more than $1.2
million on tourism promotion through the RTOs.
Table 22. Regional tourism organisations on the East Coast
Regional tourism
organisation
Focus, attractions and
tourism organisations
Visitor nights
(domestic),
2011
Visitor nights
(international),
2011
Tourism Eastland
(contracted by Gisborne
District Council to operate the
Gisborne i-SITE Visitor
Information Centre)
Represents Gisborne and
Opotiki (Bay of Plenty)
Half of the region’s visitors come to visit
whānau and friends (Tourism Eastland,
2012)
Pacific Coast Highway partner
Cycling, Māori in tourism, wine, fishing
and hunting, arts, culture and heritage,
outdoor pursuits, cruise ships
1,088,426
324,485
Hawke’s Bay Tourism
Represents Wairoa, Hastings
and Central Hawke’s Bay
districts, and Napier city.
Food and wine, architecture, beaches
and wildlife (world’s largest gannet
colony).
Art deco at Napier
2,323,379
1,289,912
Source: 2006 to 2011 New Zealand Regional Tourism Estimates, Ministry of Business, Innovation and Employment
The East Coast study area’s
commercial accommodation
guest nights have fluctuated over
the last decade, initially growing
strongly in the first half of the
decade to be above 1.31 million
nights in 2007, before declining
steadily from 2007 to 1.16 million
nights in 2013. This represents
3.6 percent of New Zealand’s
commercial accommodation
guest nights.
Figure 89. East Coast commercial accommodation
guest nights 2003-2013
Source: Commercial Accommodation Monitor, June years.
This represents relatively limited growth in guest nights over 2003-2013 (0.33 percent per
annum) and a relatively large decline over 2008-2013 (-2.03 percent per annum) compared to
other regions and the New Zealand average (1.04 percent per annum and -0.53 percent per
annum respectively).
109
Figure 90. CAGR in commercial accommodation annual guest nights 2002-2012
Source: Commercial Accommodation Monitor, June years.
Separating out the study area’s commercial guest nights by territorial authority area, it is clear
that most guest nights are in Napier City area compared to the other districts (522,000
compared to 349,000 in Hastings, 232,000 in Gisborne and 57,000 in Wairoa in the year ended
June 2013).
Commercial guest nights have
grown moderately in Hastings (by
1.5 percent per annum), and only
to a limited extent in Gisborne (0.6
percent per annum), but have
declined slightly in Napier (-0.6
percent per annum) and more
significantly in Wairoa (-2.9 percent
per annum). However, since 2008,
there has been a reasonably
significant decline in guest nights in
Wairoa (-4.3 percent per annum)
and Napier (-3.0 percent per
annum), with smaller declines
recorded in the other districts.
However, a broader measure of
visitor nights (staying in any
accommodation), suggests that
visitor nights in the Gisborne and
Hawke’s Bay RTO areas have
grown slightly over 2006-2011
(Figure 92). Visitor nights grew in
Gisborne from 1.356 million in
2006 to 1.413 million in 2011; and
in the Hawke’s Bay from 3.443
million to 3.613 million,
This trend and the level suggest
110
Figure 91. Commercial accommodation guest nights
by territorial authority, 2003-2013
Source: Commercial Accommodation Monitor, June years
Figure 92. RTO visitor nights, 2006-2011
Source: 2006 to 2011 New Zealand Regional Tourism Estimates, Ministry
of Business, Innovation and Employment
that a significant proportion of
visitor nights in the broader
Gisborne/Hawke’s Bay region are
non-commercial. On this broader
measure of estimated visitor nights,
Hawke’s Bay’s growth has been
close to the national average (0.97
percent in Hawke’s Bay, compared
to 1.01 percent nationally), but
Gisborne’s performance has been
near the lower end of other RTO
areas (Figure 93). Combined, the
RTOs represented 4.8 percent of
all of New Zealand’s visitor nights
in 2011 (a higher proportion than
commercial nights).
Both Gisborne and Hawke’s Bay
RTO areas have relatively high
average length of visitor stays. In
terms of commercial
accommodation, the average
length of stay (days) for the
Hawke’s Bay (2.15) and Gisborne
(1.97) is higher than the national
average (1.95).
Similarly, the average number of
visitor nights across all
accommodation for both Gisborne
(3.23 visitor nights) and Hawke’s
Bay (3.16 nights) RTO areas is
slightly above the national average
(3.14 nights) (Figure 95).
Figure 93. CAGR in visitor nights, sample of RTOs,
2006-2011
Source: 2006 to 2011 New Zealand Regional Tourism Estimates, Ministry
of Business, Innovation and Employment
Figure 94. Average visitor days, commercial
accommodation, 2013
Source: Regional Tourism Estimates, 2006-2011, Ministry of Business,
Innovation and Employment. RTO areas.
Figure 95. Average visitor nights compared, sample of
RTOs, 2011
Source: 2006 to 2011 New Zealand Regional Tourism Estimates, Ministry
of Business, Innovation and Employment
111
Visitor expenditure in the East
Coast study area has grown over
2009-2013 from $537 million to
$614 million (3.4 percent per
annum average growth) (Figure
96). This represents around 3.5
percent of total visitor expenditure
in New Zealand. All of this growth
has come from increased visitor
expenditure in Hastings district,
where visitor expenditure has
increased by around 8.9 percent
per annum over the period,
compared to 0.6 percent per
annum growth in expenditure in
Wairoa and a decline in
expenditure in Gisborne (-3.0
percent per annum) and Napier (1.1 percent per annum).
As shown in Figure 97, a high
proportion of visitor spending is on
retail sales (other) and fuel.
Spending on other tourism
products has increased sharply
over 2009-2013 (26.5 percent per
annum growth), while spending in
other categories has declined or
remained static, with the most
significant fall in spending on other
passenger transport (a decline of
5.5 percent per annum).
Figure 96. Visitor expenditure in the East Coast
2009-2013 ($m)
Source: Regional Tourism Estimates, 2009-2013, Ministry of Business,
Innovation and Employment, March years
Figure 97. Estimated visitor expenditure in the East
Coast study area by category, 2009-2013
Source: Regional Tourism Estimates, 2009-2013, Ministry of Business,
Innovation and Employment, March years
The compound annual growth rate (CAGR) in visitor expenditure over 2009-2013 (in nominal
terms) has been relatively high on the East Coast at 3.4 percent, compared to the New Zealand
average of 1.70 percent (Figure 98). As noted above, this is due to strong growth in visitor
expenditure in the Hawke’s Bay (4.2 percent per annum), as expenditure in the Gisborne region
declined over the period.
112
Figure 98. CAGR in visitor expenditure by selected regions, 2009-2013
Source: Regional Tourism Estimates, 2009-2013, Ministry of Business, Innovation and Employment, March years
Growth in visitor expenditure in Hastings has outperformed other territorial authorities in New
Zealand over 2009-2013, with Gisborne experiencing one of the largest declines in expenditure
over the period.
Figure 99. CAGR in visitor expenditure by selected territorial authorities, 2009-2013
Source: Regional Tourism Estimates, 2009-2013, Ministry of Business, Innovation and Employment, March years
International and domestic visitors
The East Coast secures a large proportion of domestic visitor nights relative to international
visitor nights. In 2011, around 77 percent of Gisborne’s and 64 percent of the Hawke’s Bay’s
visitor nights were from domestic travellers, compared to 53 percent nationally. In the year
ended June 2013, 19 percent of all commercial accommodation visitor nights in the Gisborne
RTO area and 27 percent in the Hawke’s Bay RTO area were from international visitors. This
compares to the New Zealand average of 40 percent. This suggests that it may be important
for the study area to consider how it can attract more international visitors.
113
In terms of commercial accommodation in the East Coast study area, international visitor nights
have decreased from 332,000 to 315,000 over 2009-2013, a compound rate of -1.28 percent.
This is a greater decline than occurred across New Zealand on average, where international
visitor commercial accommodation nights declined by 0.7 percent per annum over the same
period.
Both the Gisborne and Hawke’s
Bay RTO areas experienced a
decline in international visitor
commercial accommodation nights
by 2.71 percent and 0.92 per
annum over 2009-2013. Domestic
commercial visitor nights declined
even more significantly, at 3.73
percent and 3.32 percent per
annum respectively, compared to
national growth of 0.8 percent per
annum.
Figure 100. Domestic and international visitors,
commercial accommodation 2009-2013
Source: Regional Tourism Estimates, 2009-2012, Ministry of Business,
Innovation and Employment
These figures are consistent with the findings of other studies. For example, according to the
recent Future Prosperity of the Hawke’s Bay Study, market share in the Hawke’s Bay region has
been lost in commercial accommodation and direct employment in the sector has declined since
2005 (Winder et al., 2012).
On broader estimates of visitor
nights (to all types of
accommodation), international
visitor nights in the East Coast
region increased over 2006-2011
by 1.43 percent per annum, with
stronger growth in the Hawke’s Bay
RTO area (1.52 percent per
annum) than in Gisborne (1.05
percent per annum).
Figure 101. Domestic and international visitors, all
accommodation, 2006 and 2011
Source: Regional Tourism Estimates, 2006-2011, Ministry of Business,
Innovation and Employment.
There was limited growth in domestic visitor nights (to all accommodation) in the study area,
with growth of 0.77 percent per annum in Gisborne and 0.67 percent per annum in Wanaka
over 2006-2011.
Not surprisingly, the vast majority of visitor expenditure is also domestic. In 2013, 83 percent of
visitor expenditure in the Gisborne RTO area was domestic and 86 percent of expenditure in the
Hawke’s Bay was domestic. Both RTOs have relatively high proportions of domestic
expenditure compared to other RTOs, and higher than the New Zealand average of 64 percent.
114
Figure 102. Proportion of international and domestic visitor expenditure in selected
RTOs, 2013
Source: Regional Tourism Estimates, 2009-2013, Ministry of Business, Innovation and Employment.
The East Coast area achieved relatively low growth in international visitor expenditure over
2009-2013 (0.41 percent per annum compared to 1.28 percent per annum nationally), but
relatively high growth in domestic visitor expenditure (4.03 percent per annum), which was
much higher than the New Zealand average of 1.94 percent per annum. All the growth in
international expenditure occurred in Gisborne (1.90 percent compound annual growth
compared to no growth in the Hawke’s Bay), while all the growth in domestic visitor expenditure
occurred in the Hawke’s Bay (5.07 percent compound annual growth, compared to a decline in
domestic expenditure in Gisborne of 4.03 percent per annum).
Figure 103. CAGR in international and domestic visitor expenditure over 2009-2013
Source: Regional Tourism Estimates, 2009-2013, Ministry of Business, Innovation and Employment.
115
Origin of visitors and purpose of visit
When last estimated (Ministry of Economic Development, 2010a), the majority of domestic
visitors to the Gisborne RTO area were from the Auckland region (23 percent of all visits), Bay
of Plenty (20 percent), Gisborne itself (20 percent) and Waikato (11 percent) (Tourism Eastland,
2012). There was a different profile of visitors to the Hawke’s Bay RTO area, with most
domestic visitors coming from the Hawke’s Bay itself (29 percent), followed by Auckland (close
to 14 percent) and Wellington and Manawatu-Wanganui (around 15 percent each).
International visitors to both RTO areas tend to be from Australia (around 37-40 percent of
visits) and the United Kingdom (17-19 percent), with relatively few international visitors from
Asia (around 2.5-3 percent of all visitors).
Most domestic visitor nights to the Gisborne RTO area were from travellers coming for holidays
(50 percent), although a significant proportion also came to visit friends and family (40 percent),
with around 9 percent business travellers (Ministry of Economic Development, 2010a). Most
international visitor nights were the result of travellers who were visiting friends and family (57
percent) and taking a holiday (30 percent). In contrast, a relatively equal proportion of domestic
visitor nights to the Hawke’s Bay RTO area were from those on holiday (41 percent) and visiting
friends and family (42 percent), with a higher proportion of business travellers (14 percent)
(Ministry of Economic Development, 2010b). Most international visitor nights to the Hawke’s
Bay were from travellers on holiday (49 percent) and visiting friends and family (31 percent).
Australian visitors are responsible for the greatest proportion of international expenditure in the
East Coast, representing 43.2 percent of all international expenditure in 2013, followed by
visitors from the UK at 15.6 percent, Asia (10.7 percent), Europe (13.1 percent) and the USA
(7.3 percent). Spending by visitors from Australia has grown strongly over 2009-2013 from
$29.2 million to $45.1 million at a compound rate of 9.6 percent per annum, as has spending by
visitors from Asia (at 10.0 percent per annum, but from a low base). Spending by visitors from
the UK and US declined relatively sharply over the period (by 11.7 percent and 8.5 percent per
annum respectively).
Figure 104. Growth in international expenditure by origin of visitor, 2009-2013 ($m)
Source: Regional Tourism Estimates, 2009-2013, Ministry of Business, Innovation and Employment, March years.
116
As a result, the composition of international visitor expenditure by origin of visitor has changed
over the period, with expenditure from UK and US visitors falling from 26 percent and 11
percent of the total respectively in 2009, and visitor expenditure from Australian and Asian
visitors increasing from 30 percent and 7 percent of the total respectively.
Figure 105. Proportion of international visitor expenditure by origin of visitor, 2009-2013
Source: Regional Tourism Estimates, 2009-2013, Ministry of Business, Innovation and Employment, March years.
Visitors from the East Coast itself are responsible for the greatest proportion of domestic
expenditure in the study area, representing 24.8 percent of all domestic expenditure in 2013,
followed by visitors from Waikato (17.1 percent), Wellington (13.4 percent), Auckland (13
percent), and Bay of Plenty (12.4 percent). The highest compound growth rate in domestic
expenditure over 2009-2013 has been via visitors from the Waikato (17.9 percent per annum),
Bay of Plenty (14.7 percent per annum), Northland (18.9 percent per annum, although from a
low base), and Taranaki (14.1 percent per annum)). Expenditure by visitors from the South
Island regions and Auckland and Wellington declined over the period.
Figure 106. Growth in domestic expenditure by origin of visitor, 2009-2013 ($m)
Source: Regional Tourism Estimates, 2009-2012, Ministry of Business, Innovation and Employment, March years.
117
The major change in the composition of domestic visitor expenditure by origin of visitor is the
greater proportion of expenditure accounted for by visitors from the Waikato and Bay of Plenty
regions.
Given the types of visitors that tend to be attracted to the area (independent travellers from UK
and Europe, particularly Germany, and domestic visitors visiting friends and family), the
challenge for the area will be to continue to attract and extract further value from these visitors.
Major events
Major or signature events are a way of promoting a region and raising its national and
international profile. The East Coast hosts a range of events (Table 23).
Table 23. Sample of events on the East Coast
One-off major
events
Major national events
Major regional events
Community events
 New Zealand Horse of the
Year Show
 Rhythm & Vines

 Mission Concert

 Cape Kidnappers
International Golf Event
 Harvest Hawke’s Bay

 Spring Racing Carnival

 Rabobank National
Cycling Race

 Tour of Hawke’s Bay
Cycling

 Takitimu Festival

 Olive Festival
 Blues, Brews and
Barbecues
 Wairoa Lake to
Lighthouse
 Art Deco Weekend



Matariki
Blossom Festival
A&P Show
National Motorhome
Convention
Fiesta of Lights
Flaxmere Family
Festival
Gisborne
International Music
Competition
First Day First Light
Christchurch in the
Park
B&W Camping
Festival
 Iron Māori
 Wine and Food Festival
 Te Unga Mai
Rhythm & Vines is a significant event for the East Coast study area. Rhythm & Vines is an
annual, three day, new-year music festival that has been hosted in the Gisborne region since
2003. In 2010, 25,000 people attended, 83 percent from outside the Gisborne region and 4
percent from overseas (Vuletich, 2011). Of those that attended, 43 percent had never been to
Gisborne before. As a result of visitors’ Rhythm & Vines experience, 69 percent of survey
respondents were likely to recommend Gisborne as a place to visit, and 58 percent indicated
that they were more likely to visit in the future (Vuletich, 2011). It was estimated that the event
contributed $6.5 million to the local economy.
Another significant event, the annual New Zealand Horse of the Year Show, was held in March
2013 in Hastings at the Hastings A&P Showgrounds It attracted an estimated audience of over
70,000 in the course of the six-day programme (Economic Solutions Limited, 2013b).
118
Within New Zealand, the Gisborne/Hawke’s Bay region captured a reasonable proportion of
events when last measured, but was behind regions like Auckland and Canterbury (Figure 107).
Figure 107. Number of events, by region, 2009
0
5
10
15
20
25
30
Northland
Auckland
Waikato
Bay of Plenty
Gisborne / Hawke’s Bay
Taranaki
Manawatu-Wanganui
Wellington
Nelson / Tasman / Marlborough / West Coast
Canterbury
Otago
Southland
One-of f major events
Major national events
Major regional events
Community events
Source: Inter Agency Events Group, Survey of key industry stakeholders (cities/councils, event organisers and
corporate sponsors) 2009/10. Notes: This was a one-off survey and relies on information provided by stakeholders and
may not capture all events.
When this is examined as a proportion of the population, Gisborne/Hawke’s Bay performed very
well in hosting regional and community events but did not rate well in terms of capturing major
events or major national events (Figure 108).
Figure 108. Events per 100,000 population, by region, 2009
0
10
20
30
40
50
60
70
Northland
Auckland
Waikato
Bay of Plenty
Gisborne / Hawke’s Bay
Taranaki
Manawatu-Wanganui
Wellington
Nelson / Tasman / Marlborough / West Coast
Canterbury
Otago
Southland
One-of f major events
Major national events
Major regional events
Community events
Source: Inter Agency Events Group, Survey of key industry stakeholders (cities/councils, event organisers and
corporate sponsors) 2009/10. Notes: This was a one-off survey and relies on information provided by stakeholders and
may not capture all events.
In the Hawke’s Bay there has been marketing and promotional activity undertaken to attract
major regional and national events to the area, and agreement amongst local authorities to
119
develop a website to profile the sports and recreational facilities and opportunities (Bevin,
2009). Major national sports events that have been attracted to the region include one-day and
test cricket, age-group soccer, hockey competitions, the Horse of the Year event and interprovincial rugby.
The Hawke’s Bay economic development framework includes an action to establish a regional
events strategy and coordination framework to establish and/or attract new events (Hawke’s
Bay Regional Council, 2013). It recognised that visitor and events activities at the regional level
were uncoordinated.
International students
Another indicator of the attractiveness of a destination is the level of international students.
International students not only provide direct financial benefits to a region, but also a range of
broader benefits, including tourism spend, a potential workforce, and providing international
connections for businesses.
In 2012, the Gisborne-Hawke’s Bay
region captured 4.1 percent (1,307
of 92,955) of New Zealand’s feepaying international students
(schooling and tertiary). Virtually all
of these students were in the
Hawke’s Bay. Over 2007-2012,
international student numbers in the
Hawke’s Bay have fluctuated
between 990 and 1,270, with a
steady increase in numbers since
2009 (Figure 109). International
student numbers in Gisborne had
their peak in 2007 at 137, and in
recent years maintains about 30.
Figure 109. International student numbers in the Hawke’s
Bay and Gisborne, 2007-2012
Source: Ministry of Education Export education levy statistics
Figure 110. Growth in international student numbers,
2007-2012 (CAGR)
Student numbers increased by 1.8
percent per annum over the period,
a higher rate than the national
average (-0.3 percent), and about
the middle of all regions. Gisborne’s
fell over the period, but this was from
a very low base (less than 150
international students) (Figure 110).
Source: Ministry of Education Export education levy statistics
120
Amenities
The East Coast region has a significant range of natural and cultural amenities which can be
(and are being) leveraged to attract visitors, workers and businesses.
Natural amenities
The 600 kilometre long eastern coastline of the study area possesses a range of physical
features, including coastal lagoons, peninsulas and bluffs, and boasts beaches and surf breaks
that contribute to the area’s popularity as a tourist destination.
The region possesses a number of river systems, wetlands (including the nationally significant
Ahuriri Estuary and wetlands) and coastal lagoons that provide important habitat for fish and
birdlife. The area borders Te Urewera National Park in the west, and includes the iconic natural
features of Lake Waikaremoana, and the Mohaka and Wairoa Rivers. Other major natural
amenities include Mount Hikurangi, the first point on mainland New Zealand to see the sunrise
and of great spiritual and cultural significance to Ngāti Porou, Mahia Peninsula, Te Mata Peak,
Waikanae and Midway beaches and Wainui beach (Gisborne District Council, 2012; Hastings
District Council et al., 2010; Napier City Council, 2011; Wairoa District Council, 2005).
In 2009, 90 percent of Hawke’s Bay residents indicated that they were satisfied with the quality
of the natural features around their local communities (Bevin, 2009).
Cultural and retail amenity
Museums and galleries can play important role in attracting visitors and contributing to the
quality of life for residents. This contributes to economic development, but often these
amenities contribute in their own right.
Positively, the Gisborne and
Hawke’s Bay regions sit at about
the middle of New Zealand
regions in relation to registered
historic places and areas.
Gisborne has 260 registered
places and areas and the
Hawke’s Bay has 271 (Figure
111). A small majority of the
historic places on the East Coast
are situated in the Gisborne
District (57 percent).
Figure 111. Registered historical places and areas, as
at June 2013
Source: Rarangi Taonga: the Register of Historic Places, Historic Areas,
Wahi Tapu and Wahi Tapu Areas
Heritage forms much of the East Coast’s tourism offer. For example, Napier’s art deco heritage
development (Exhibit 1) and the Hastings area heritage works attract visitors and play a part in
attracting and retaining skilled employees.
121
Exhibit 1. Art deco and Napier
 There are 140 Art Deco-era listed Art Deco buildings in the Napier CBD area and 120 Art Deco buildings elsewhere in the
Hawke’s Bay. Many of the buildings in Napier have been upgraded over time, with some financial assistance from the
Napier City Council’s grant scheme.
 Since 1992/93, the Art Deco Trust’s turnover has growth from $208,000 to $1.6 million for the 2006/07 financial year.
 Since 1994/95, Napier City Council has provided annual grant funding to the Art Deco Trust, with additional support for the
annual Art Deco Weekend.
 Since 2003, the number of registrations for the annual Napier Art Deco Weekend celebration has risen from 715 to about
1,200 between 2007 and 2009.
 In 2004/05, the local economic impact of the Art Deco industry in Napier (such as the Art Deco Weekend and Deco
Decanted celebration, the Art Deco Trust organisation and its various commercial activities, and the annual walks and tours
programme) was estimated at $10 million.
 Protection of the Napier CBD special Art Deco heritage is specifically provided for in the operative Napier City District Plan.
Source: Bevin (2009) and Art Deco Trust & Napier City Council (2004)
Māori culture and Māori cultural
experiences are also a feature of the study
area. A number of Māori pa sites are in the
area (Figure 112), including Opou
Covenant and Te Kuri a Paoa (Young
Nicks Head Historic Reserve) which are
actively managed by the Department of
Conservation.
Figure 112. Māori Pa locations, 2007
Source: Land and Information New Zealand and
koordinates.com
Table 24 provides an overview of the Māori cultural experiences and operators in Gisborne and
the Hawke’s Bay.
Table 24. Māori culture and cultural experiences in Gisborne and Hawke’s Bay
Gisborne
Hawke’s Bay
 Waka Toa Tours
 Te Mata Peak Tours
 Te Aio O Nukutaimemeha (The Peace Of
Nukutaimemeha) - Traditional Waka Taua (War Canoe)
 Maui and Māori mythology – Hook of the fish of Maui
 Ngāti Porou Tourism (custodian of Hikurangi Hut)
 The longest place name
 Mt Hikurangi and the Maui Whakairo (carved sculptures).
The nine carved Whakairo depict Maui-Tikitiki-a-Taranga
and his whanau. The Whakairo are a legacy for the
future generations and a tribute to the cultural heritage
and artistry that has evolved within Ngāti Porou.
 Pania of the Reef
 Waimarama Māori Tours
 Hakikino - The mighty fortress, sits atop a rocky spur that
rises up from the Te Apiti valley in Waimarama, Hawke’s
Bay. It was one of several battlements along this coastline
that was originally part of the greater Rangitane area.
 Otatara Pa
122
There have also been recent heritage and retail amenity developments in Napier city (Economic
Solutions Limited, 2013c):

redevelopment of the Hawke’s Bay Museum and Art Gallery complex

new Farmers retail development in Hastings Street

a new split-level retail complex to replace the old Commercial Building and plans for a
major redevelopment of the PaknSave Tamatea supermarket and shopping centre.
Facilities which attract and retain visitors and skills
Local governments have made significant investments in local amenities in the East Coast
study area (Table 25).
Table 25. Amenity developments
Territorial authority
Amenity developments
Wairoa
 Redevelopment of the Tarapatiki Reserve on State Highway 38, near Tuai
 Flood repairs, resealing work and some stretches of new seal
 Wairoa free wifi in business area
Napier
 Opening of the Ocean Spa heated pools and Marine Parade children’s playground
 Additional car-parking spaces in Napier’s CBD area
 Opening of the Pettigrew Green indoor sports arena and further upgrading of the
Centennial Hall
 McLean Park redevelopment
 Further upgrading of the West Quay and Ahuriri recreational, hospitality and
residential area, including the old wharf
 Development of and extensions to City cycle/walkway
 Municipal Theatre/Museum-Art Gallery/Art Deco buildings
Hastings
 Initial developmental work on the construction of the new regional sports park
 Completion of the major upgrading of the HB Opera House
 Havelock North CBD upgrade
Gisborne
 Widening and strengthening of Harpers Road Bridge
 Te Araroa stormwater improvements
 War Memorial Theatre redevelopment and upgrade
 Cenotaph restoration
 Extensions of cycleways and walkways
 Upgrading of the HB Williams Memorial Library
 Redevelopment of the Olympic Pool complex
 Motu Trails cycleway and Rere Falls Trail
Hawke’s Bay Regional
Council
 Grants for the upgrade of McLean Park sports facility in Napier and the Pettigrew
Green indoor sports complex in Taradale
Source: Bevin (2009); Economic Solutions Limited (2013a); Council websites
Recreation facilities contribute to the study area’s amenity. Councils in the East Coast area
hold ownership stakes in most of these facilities, and increasing utilisation levels of these
facilities is positive (Bevin, 2009). In Napier, there is a relatively high and stable level of
123
community satisfaction with council provision of parks and sports fields (range and quality)
(Bevin, 2009).
Analysis of the strengths, weaknesses, opportunities
and threats (SWOT) of the region’s destination
attributes
The following SWOT analysis of the destination attributes of the area is based on the above
analysis and desk-based literature and stakeholder interviews. The key points are:

The study area has distinctive cultural and natural amenities, but these are not well
articulated or packaged to domestic or international visitors.

Existing events attract high numbers of visitors to the study area, many who are first time
visitors and indicate they are likely to re-visit or tell others as a result.

The remoteness of the study area is both a positive and negative aspect of the tourism
landscape. Transport connections, whether by road or by air, are a limiting factor.
Strengths
 Event tourism: Mission Concert, sports events and Rhythm and Vines
 Wine-related tourism
 Attractions and facilities: A range of attractions and facilities available, for example: Gisborne City Vintage
Railway, MV Takitimu, Gisborne Museum or the Tairāwhiti Museum and Art Gallery, Gisborne Wine Centre,
Eastwoodhill Arboretum, the National Arboretum of New Zealand, Rere Rockslide, Morere Hot Springs, Kaiti Hill,
Showground’s Park Event Centre – multipurpose 1,200m2 auditorium for conferences, displays and exhibitions
 Weather: Hospitality sector confidence was largely related to better weather over the 2013 summer, compared
with 2012 (Tourism Eastland, 2013)
 Use of ICT (which helps reduce the impact of distance): 78 percent of hospitality businesses responding to a
Tourism Eastland survey indicated that they used their own website for promotion. There was also high use of
Facebook, Trip Advisor and gisbornenz.com (Tourism Eastland, 2013)
 High engagement with business and tourism organisations: 75 percent of survey respondents indicated
they were members of Tourism Eastland, 30 percent were members of Heart of Gisborne and 39 percent were
members of Gisborne Chamber of Commerce (Tourism Eastland, 2013). While the survey originated from
Tourism Eastland, the high levels of participation of other organisations suggest there is generally high
engagement amongst hospitality businesses with membership organisations generally and coordination of
efforts.
 Accommodation infrastructure: Accommodation capacity is not constrained. But potential for larger luxury
hotels which may be used for the conference market.
 Expansion of air capacity: Eastland Community Trust and Gisborne Chamber of Commerce have worked
together to secure more than 35,000 additional aircraft seats a year between Auckland and Gisborne. They
negotiated with Air New Zealand to bring its 50 seat Q300 planes to Gisborne. Under the agreement, partners
fund $3.20 per additional seat flying to and from Gisborne for a three year period ($100,000 per annum)
(McDermott Miller Strategies, 2009a).
 Māori-based and heritage tourism product: Navigational traditions, arts and culture
124
Weaknesses
 Business capability: Many small and constrained operators. As with the sector generally in New Zealand,
likely to be management capability and product quality issues.
 Adding value to existing tourism product: Most of the study area’s tourism advantages are free (for example,
beaches), and the area attracts mostly “free and independent travellers” whose willingness to pay thresholds are
lower.
 Branding: Lack of coordinated branding and marketing of the Hawke’s Bay region, and Gisborne region – either
together or separately (BDO, 2009; Hawke’s Bay Regional Council, 2013; McDermott Miller Strategies, 2009b).
Consultation in the Gisborne area suggests that the Gisborne brand should combine: the first to see the sun,
Māori culture is unique and authentic, beaches, coastline and family friendly, and temperate climate (BDO,
2009).
Threats
 Remoteness of location: Is a deterrent for travellers, but also one of the attractions for those who want to “get
away from it all”. No direct international connections and only two flights into Gisborne a day.
 Road connectivity: Due to lack of air connections, most tourism arrives by road. Resilience of SH35 and SH2
is perceived as an issue for road users (although as per the earlier discussion, this does not appear to be such
an issue in reality).
 Competition from other regions and ability to offer a differentiated product: The region faces competition
from other “lifestyle” areas such as Nelson-Marlborough and Bay of Plenty, which both perform better
economically and are a visitor location preference (Hawke’s Bay Regional Council, 2013). The extent to which
the East Coast can differentiate its cultural tourism offer from other centres like Rotorua and Northland is unclear.
 Value extracted from visitor accommodation: Private accommodation – staying in holiday homes and staying
with friends and family is on the increase and reduces visitor expenditure (Hawke’s Bay Regional Council, 2013;
Tourism Eastland & APR Consultants, 2013).
Opportunities
 Cultural heritage offer: The Tairāwhiti Development Partnership has been leading a project to develop a
cultural heritage product based on voyaging and navigational themes. The project aims to bring together the
tourism offer in the Tairāwhiti area (Gisborne, Wairoa and Opotiki) and to leverage the area’s heritage
advantages, including the landing place of Cook’s Endeavour, the first meeting of British and Māori cultures and
the first hongi, and landing place of Paoa and Kiwa’s Horouta waka. A pre-feasibility study concluded that the
project should focus on the coordination of light infrastructure and story development at key sites in the region to
acknowledge heritage, generate business opportunities and affirm the appeal of Tairāwhiti as a great place to live
and visit (Tourism Resource Consultants & Stimpson & Co, 2010).
 Product development: The Government has provided $2.6 million for the Hawke’s Bay Trails as part of the
New Zealand Cycle Trail project. Hawke’s Bay Trails is made up of three distinct sections: water, wineries and
landscapes, and is one of the trail’s “Great Rides”. As noted, the mothballed Napier to Gisborne rail line is
considered by some stakeholders as another potential cycle trail. The Te Urewera RainForest Route has
developed into an integrated strategy and package.
 Cruise ship tourism: Cruise ship-related day visits have grown rapidly. 62 cruise ship visits are scheduled for
2012/13 to the Hawke’s Bay area.
 Building on existing products and events: For example, Rhythm and Vines and Lake to Lighthouse race.
Tourism Eastland are focussing on attracting and developing large events, and has a strategy to target the
conventions market.
 Amenity development: Urban waterfront development and streetscape upgrades at Gisborne; CBD upgrades
in Napier.
125
Although the tourism industry is a relatively low productivity sector in New Zealand, the impacts
of visitors extend beyond tourism businesses to a range of services businesses. Initiatives to
attract visitors can also help the study area to develop business relationships, attract migrants
and investment, share knowledge, and stimulate export education.
Initiatives to improve destination attributes
Clearly there are a range of current and proposed initiatives underway to improve the study
area’s destination attributes. These include:

Promotional efforts of Tourism Eastland, Hawke’s Bay Tourism and the councils in the study
area

Events attraction and support and the proposed Hawke’s Bay regional events strategy

The Navigational Traditions Project in Tairāwhiti to develop the Gisborne Inner Harbour
Precinct and leverage the area’s heritage and cultural advantages

Business Growth Agenda actions related to investing in the national cycle trail and
leveraging Māori cultural assets for growth. For example, $5.5 million has been provided by
a combination of the Hawke’s Bay Regional Council, Napier City Council, Hastings District
Council, Napier and Hasting Rotary Pathway Trust and the government for the Hawke’s Bay
Trails as part of the national cycle trail project.
Again, there is a question about whether a pan-regional approach to elements of branding,
promotion and investment in tourism assets would result in greater economic impacts than are
currently being achieved.
126
Summary: Destination attributes
The East Coast’s image and ability to attract visitors and workers will play an important part in
the future growth of the study area.
The East Coast struggles with a dichotomous image. On the one hand, previous studies and
stakeholders interviewed emphasise a high quality of life, based on natural and cultural
amenities. On the other hand, perception studies have found that some parts of the study area
are perceived by some as ‘socio-economically deprived’ and some locations are perceived as
having crime and safety issues. For visitors, the remoteness of the location can be a deterrent
but is also an attractor for those who want to “get away from it all”. Several strategies and
action plans have emphasised the need to improve the image and branding of the region.
The study area has had mixed performance on measures of visitor attraction over the last
decade. Commercial accommodation guest nights have fluctuated, initially growing strongly
over the first half of the decade before declining steadily from 2007-2013. Overall, the study
area has achieved relatively limited growth in commercial accommodation nights (0.33 percent
per annum over 2003-2013) and a large decline over the last five years (-2.03 percent per
annum). Most commercial accommodation guest nights in the study area, around 75 percent,
are in Napier and Hastings.
Across all accommodation types, however, estimated visitor nights in the Gisborne and Hawke’s
Bay RTO areas grew slightly over 2006-2011, with Hawke’s Bay achieving growth close to the
national average (almost 1 percent per annum), although Gisborne’s was near the lower end of
other RTO areas. Both RTO areas also have relatively high average length of visitor stays, with
a higher than average length of stay for commercial accommodation nights and overall visitor
nights.
Visitor expenditure in the East Coast study area was estimated to be over $600 million in 2013,
around 3.5 percent of expenditure in New Zealand. Growth in visitor expenditure in the study
area over recent years (3.4 percent per annum over 2009-2013) has been higher than growth in
New Zealand (nationally, visitor expenditure grew by 1.70 percent per annum over the period).
However, almost all of this is due to expenditure growth in the Hastings district (8.9 percent per
annum growth) rather than Napier (-1.1 percent per annum), Wairoa (0.6 percent per annum) or
Gisborne (-3.0 percent per annum). While growth in visitor expenditure in Hastings was higher
than other territorial authorities in New Zealand, Gisborne experienced one of the largest
declines in expenditure over the period.
The majority of visitor nights in the broader region, as with most other regions in New Zealand,
are domestic, although the proportions are considerably higher than the national average (77
percent in Gisborne and 64 percent in the Hawke’s Bay relative to 53 percent nationally).
Similarly, a much higher proportion of visitor expenditure in the study area comes from domestic
visitors (83 percent for the Gisborne RTO area and 86 percent for the Hawke’s Bay RTO area)
rather than international tourists, compared to the national average (64 percent). This suggests
that it may be important for the study area to consider how it can attract and leverage more
international visitors.
127
International and domestic visitors nights in commercial accommodation in the study area have
declined over 2009-2013 at rates faster than has occurred across New Zealand. The study
area achieved relatively low growth in international visitor expenditure over the period (0.4
percent per annum compared to 1.3 percent per annum nationally), but relatively high growth in
domestic visitor expenditure (4 percent per annum, compared to 1.9 percent nationally). All of
the growth in international expenditure occurred in Gisborne, while all the growth in domestic
expenditure occurred in the Hawke’s Bay.
Australians are estimated to make up over a third of international visitors in both RTO areas,
with UK visitors accounting for slightly less than 20 percent. Australian visitors also account for
the greatest proportion of international visitor expenditure (over 40 percent) and spending by
Australian visitors has grown strongly over 2009-2013 (9.6 percent per annum growth).
Relatively few international visitors to the area are from Asia (around three percent of all
visitors), although they account for over 10 percent of international expenditure. Spending by
visitors from the UK and US declined relatively sharply over the period (although this is a
national trend). Almost 60 percent of international visitor nights were the result of travellers to
Gisborne who were visiting friends and family (40 percent in the Hawke’s Bay) and another 30
percent were from visitors travelling for a holiday (40 percent in the Hawke’s Bay).
People from Auckland, the Bay of Plenty, Waikato and Gisborne itself account for the majority of
domestic visitors in Gisborne. A different profile of visitors travel to and through the Hawke’s
Bay, with most from within the Hawke’s Bay region itself, followed by Auckland, Wellington and
Manawatu-Wanganui. Visitors travelling within the East Coast are responsible for the greatest
proportion of domestic expenditure in the area (around 25 percent), followed by visitors from the
Waikato, Wellington, Auckland and Bay of Plenty. Spending by visitors from the Waikato has
grown most strongly over 2009-2013 (18 percent per annum), followed by visitors from the Bay
of Plenty (15 percent per annum). The trends suggest that the study area needs to attract a
greater proportion of domestic travellers from outside the broader region itself.
The broader Gisborne/Hawke’s Bay region captures a reasonable proportion of events in New
Zealand and on a population basis, but these are largely regional and community events rather
than major events. Several existing regional events do, however, attract high numbers of
visitors (e.g., Rhythm and Vines, Mission Concert), many of whom are first time visitors and are
likely to re-visit/tell others. The Hawke’s Bay Regional Council has identified a need to establish
a regional events strategy to establish and/or attract new events and to improve the
coordination of events activities across the region.
Not unexpectedly, given the size and remoteness of the broader region, it captures only 4.1
percent of international fee-paying students. Virtually all of these are in the Hawke’s Bay.
Positively, the Hawke’s Bay has achieved significantly better than average growth in student
numbers over 2007-2012 (1.8 percent compound compared to -0.3 percent nationally).
The study area has a large range of natural and cultural amenities that can be further leveraged
to attract visitors and workers and which are perceived well by residents and visitors. Apart
from the obvious variety of coastal areas, beaches, wetlands and peaks and Napier’s art deco
experience, this includes a reasonable number of registered historic places in Gisborne and a
range of Māori cultural experiences and sites of significance. Councils in the study area have
also been active in investing in developing a range of retail and recreational amenities.
128
Overall, the study area and broader region has a good base of destination assets and the
Hawke’s Bay in particular has experienced growth in visitor activity on which to build. However,
Gisborne needs to turnaround the long-term decline in visitor expenditure. The research
suggests that attracting more international visitors (through segmentation and targeting) and
creating a compelling proposition by distinguishing the broader region’s natural, cultural and
event offering from other New Zealand regions could be areas of focus for future investment
and efforts.
129
Underlying determinants: Connectivity and
infrastructure
The strength of a region’s connections is a key influence on economic performance. The quality
of connections can influence business investment and location decisions, reduce costs for firms,
workers and the public, and facilitate knowledge about new market opportunities, new
technologies and new products and processes.
Quality infrastructure needs to be available to facilitate physical and virtual connectivity. High
performing regions tend to have fast and efficient links within the region, as well as to other
regions, by road, rail, air and broadband.
Because of its geographic position, the East Coast area is physically remote from the rest of
New Zealand and some features of this are illustrated in Table 26 and Table 27.
Table 26. Road travel distances and times to key destinations
Travel Time
From Gisborne to
Opotiki
Travel
Distance
Average
speed (km-h)
1 hr 42 min
142 km
84
Tauranga
3 hrs 35 min
287 km
80
Hamilton
4 hrs 43 min
378 km
80
Auckland
6hrs 00 min
500 km
83
Wairoa
1hr 14 min
98 km
77
Napier
2 hrs 39 min
214 km
81
Palmerston North
4 hrs 43 min
389 km
82
Wellington
6hrs 24 min
526 km
82
Source: Google Maps
Table 27. Travel time and frequency of flights from Gisborne Airport
Travel Time
Flights per day in both
directions
Gisborne-Auckland
1 hr 00 min
4
Gisborne-Wellington
1 hr 10min
3-4
Source: www.airnz.co.nz
Connections with the rest of New Zealand are either long or relatively infrequent. This serves to
emphasise the importance of virtual and physical networks in mitigating the impact of distance
on productivity and the levels of economic activity in the area.
130
Transport connectivity
Overview of freight and passenger movements
The key interregional freight routes for the study area comprise (Figure 113):

SH2 to the north linking Gisborne with Opotiki, the rest of the Bay of Plenty including
Tauranga and the Upper North Island in general

SH2 to the southwest linking Gisborne and Wairoa to Napier, Hastings and the rest of the
lower North Island.
Figure 113. State Highways in the Gisborne-Hawke’s Bay Region
Source: KiwiRAP (2010)
131
Within the study area, these are supported by SH35. Although this provides an alternative link
between Gisborne and Opotiki to the north along the coast, it mainly has a local function
connecting the East Coast areas with Gisborne. Its use by longer distance through traffic is
very limited. SH38 north of Wairoa also provides a route between Wairoa and the Te Urewera
National Park and Rotorua but much of this is unsealed and its use for the movement of freight
is very limited.
SH2 via Opotiki is used as the main route for bringing goods into the study area, primarily for
the movement of agricultural products to the markets in the Upper North Island and for the
movement of meat products for export via the Port of Tauranga. SH2 to the south west is used
for agricultural and some forestry related exports through Napier, the movement of products to
domestic markets in the Lower North Island and as a secondary supply route to Gisborne.
Within the study area, both SH2 routes and SH35 are used to move logs to the Port of
Gisborne, which handles most of the export logs harvested in the area.
The volumes of passenger movements on the longer distance road network are relatively small.
Commuting in Gisborne and Wairoa is mainly focussed on the districts themselves and the
extent of longer distance commuting between them and other areas by road is very limited.
There is, however, some evidence from the 2006 Census, supported by discussions with
stakeholders, of longer distance commuting particularly to and from Auckland where air services
play a more important role.
Within the Gisborne urban area a small public transport network provides services for
movements of commuters and other travellers to the town centre.
Road transport
The annual average daily traffic (AADT) and heavy commercial vehicle (HCV) flows on the
strategic State Highway network are detailed in Table 28, Figure 114, Figure 115, Figure 116
and Figure 117.
HCV Growth
2008- 2012
HCV CAGR
(2008-2012)
-9.10%
-2.36%
14.8
164
143
-12.60%
-3.37%
2
Te Karaka
1186
1114
-6.10%
-1.55%
17.5
193
195
0.80%
0.26%
2
ORMOND
2381
2244
-5.80%
-1.47%
10.8
250
242
-3.10%
-0.81%
2
Gisborne
5414
5222
-3.50%
-0.90%
9.2
531
480
-9.50%
-2.49%
2
50 m Nth of
Whatatuna
Bridge
3306
3221
-2.60%
-0.65%
13.1
331
422
27.60%
6.26%
SH
HCVs 2012
% Heavy
2012
968
HCVs 2008
AADT CAGR
(2008-2012)
1065
AADT (2012)
Gisborne/BOP
Boundary
AADT (2008)
2
Description
Total AADT
Growth to
2012
Table 28. Traffic flows on the main State Highway network
Gisborne
132
Wairoa/
Gisborne
District
Council
boundary
-
1128
19.8
HCV CAGR
(2008-2012)
HCV Growth
2008- 2012
HCVs 2012
HCVs 2008
% Heavy
2012
AADT CAGR
(2008-2012)
Total AADT
Growth to
2012
AADT (2012)
AADT (2008)
Description
SH
2
223
Hawke’s Bay
2
Wairoa River
Bridge
8285
7843
-5.30%
-1.36%
5.3
365
416
14.00%
3.32%
2
300 m Sth of
Wairoa
District
Boundary
2018
1920
-4.90%
-1.24%
18.8
256
361
40.80%
8.97%
2
TANGOIO
2017
2030
0.60%
0.16%
19.3
361
392
8.50%
2.08%
Gisborne
35
450 m Sth of
Poroporo
Bridge
410
376
-8.30%
-2.14%
19.9
61
75
22.50%
5.30%
35
Tokomaru
Bay
928
998
7.50%
1.83%
15.5
132
155
17.40%
4.10%
35
60 m Sth of
Dosli BM GF
82
1158
1212
4.70%
1.15%
19.9
153
241
57.80%
12.03%
35
Tolaga Bay
2192
2176
-0.70%
-0.18%
11
182
239
31.60%
7.05%
35
Mangakuri
Bridge
1376
1672
21.50%
4.99%
21.6
169
361
113.40
%
20.89%
35
Gisborne City
Boundary
6035
6248
3.50%
0.87%
7.4
332
462
39.30%
8.61%
35
Gisborne
Central
17138
16849
-1.70%
-0.42%
4.5
480
758
58.00%
12.10%
35
Gisborne
Airport
3489
3508
0.50%
0.14%
13.6
387
477
23.20%
5.37%
133
Figure 114. Traffic flows on SH2, 2012, HCVs
Figure 115. Traffic flows on SH2, 2012, total
vehicles
Figure 116. Traffic flows on SH35, 2012, HCVs
Figure 117. Traffic flows on SH35, 2012, total
vehicles
Source: New Zealand Transport Agency (2013a)
Traffic flows on the state highways in the area are generally small, in the order of 3,000 vehicles
per day or less away from the main urban areas of Gisborne and Wairoa. As shown in the
column on the annual growth of AADT flows, between 2008 and 2012 overall total traffic flows
have generally been stable or have declined (although there has been year to year variation).
The traffic flows using SH2 to link with the Bay of Plenty to the north are generally smaller than
those using the route to the south; although for Gisborne itself the differences are small. For
heavy vehicles, the SH2 to the north is the main route for supplying the Gisborne area although,
as this is not heavily used by logging traffic, the flows are lower than those to the south where
larger numbers of logging trucks combine with a range of more general freight traffic.
HCVs account for a relatively high proportion of traffic and typically represent about 10-20 per
cent of total traffic on SH2 and SH35. In contrast to the total traffic volumes, these flows have
been growing strongly since 2008 on SH2 south of Gisborne and SH35 to the north but have
remained broadly stable on SH2 to the north. In part this reflects the expansion of the forestry
industry where there has been strong growth with the maturing of forests in the east and south
of the East Coast area. The traffic flow patterns indicate the importance of the link to Napier and
134
Hawke’s Bay with traffic levels both for all vehicles and HCVs being about twice as high as
those to Bay of Plenty to the north.
On the basis of an average payload of 12 tonnes per heavy vehicle, the total inter-regional
freight flows on these routes would amount to about 1.5 million tonnes per annum, with about
0.9 million tonnes crossing the Hawke’s Bay/Gisborne boundary and about 0.6 million crossing
the boundary between Gisborne and Bay of Plenty. The first figure includes the substantial
volumes of logging traffic into Gisborne as well as other movements to and from Gisborne. At
the regional boundary to the north there is little logging traffic.
Adding in the additional traffic from Wairoa to Napier would bring the total freight volumes to an
excess of 2 million tonnes per annum. This does not take into account shorter distance
movements on SH2 within the Gisborne region or any freight flows on SH35. Flows on the
latter are about 1 million tonnes per year or more, with a high proportion of this traffic
representing log traffic into Gisborne Port.
With the high flows of logs, there is an increasing demand for the use of high productivity motor
vehicles (HPMVs), road vehicles capable of carrying higher payloads than the standard gross
vehicle weight of 44 tonnes but limited to specific predetermined routes. These allow more
efficient use to be made of vehicles and drivers and may result in reduced transport costs on a
per tonne-kilometre basis. In addition, by potentially increasing the average vehicle payload
their use could result in decreases in the number of heavy vehicles along a route. The use of
HPMVs is particularly important for SH35 as there are plans to establish a remote storage area
or inland port for logs at Tolaga Bay to reduce the pressure on the operational land in the port
and on storage areas in its vicinity.
However, the use of HPMVs is limited to specific routes reflecting constrained weight limits. At
present the state highway network in the study area contains a number of structures which,
while possibly allowing operation up to “Limited” HPMV standards, do not currently allow full
HPMV operation and so do not allow the full benefits to be achieved. As Figure 118 shows, this
affects both SH2 and SH35.
In response to the growing needs for heavy freight transport in the area, New Zealand Transport
Agency (NZTA) have developed proposals for the period 2012-2015 to invest in the upgrading
of the structures along SH35 north of Gisborne almost as far as Tokomaru Bay. This is set out
in Figure 119.
This would allow the route to be used throughout by Limited HPMVs, mainly to support the
logging industry. This would also support the development of the inland port for logs at Tolaga
Bay, and this is being progressed (New Zealand Transport Agency, 2013b). The possibility of
developing SH2 between Gisborne and Napier as a full HPMV route is being investigated as
one of the second tranche of HPMV routes across the country, but the viability of this is
constrained by the numbers of structures that would need upgrading and the possible increase
in the costs associated with managing pavement deterioration. This, however, could potentially
be progressed using “R” (regionally distributed) funds to support the investment in the route.
135
Figure 118. Current restrictions on HPMV use
Source: New Zealand Transport Agency (2012)
136
Figure 119. NZTA Proposed Investment in HPMV Routes 2012-2015
Source: New Zealand Transport Agency (2011)
Passenger movements
There is no comparable data on inter-regional passenger movements on the road network
although traffic flows provide some indication. Using the traffic flows set out in Table 28 and
assuming an average occupancy per light vehicle of 1.7 (derived from the NZTA economic
evaluation model), the inter-regional movement of passengers would total about 1.1 million in
2012, split broadly equally between SH2 to the north and SH2 to the south west.
137
14
Broader information on commuting flows at a district level is available from the 2006 Census.
Although the information predates the global financial crisis and therefore will not reflect any
changes that have taken place since then, it does provide a useful snapshot of the position in
2006 (Table 29).
The key messages which emerge from this are:

Gisborne is largely self-contained as an employment area with 97 per cent of residents
living and working in the district. The level of commuting to neighbouring areas Wairoa and
Bay of Plenty is small reflecting the distance to the main employment locations in these
areas and the limited range of opportunities.

For Wairoa there is more commuting to and from neighbouring areas.

For Napier and Hastings there is a degree of interaction between the two areas with 15 per
cent of the workers resident in Napier employed in Hastings and 23 per cent of workers
resident in Hastings employed in Napier.
As another source of data on travel patterns, the National Travel Survey provides information on
Gisborne residents. Compared to the rest of the country, residents of the Gisborne district
travelled relatively low distances as drivers (72 per cent of the national average) and as bus
passengers (34 per cent of the national average). The low figure for the distance travelled by
passengers probably reflects the concentration of population in the main centre and also the
long distances to alternative destinations.
Given the small passenger movements on the roads, there is scope for increases in these
movements without reaching any limits. However, one issue is the interaction between cars
and heavy freight vehicles, particularly those carrying logs. Although flows are low, freight
vehicles can result in a reduced travel experience and concerns about safety which may be a
factor influencing tourist traffic. This issue has been recognised with the construction of a
number of passing opportunities facilitating overtaking and so helping to reduce driver
frustration and improve the level of service on the route between Gisborne and Napier.
14
138
Data on commuting patterns from the 2013 Census are not due to be released until January-March 2015.
Table 29. Patterns of commuting, 2006, Gisborne, Wairoa, Napier and Hastings
Location of employment
Residence of workers
Northland
Auckland
Waikato
BOP
Gisborne
Wairoa
Napier
Hastings
Central
HB
Wellington
Northland
30
0
27
3
12
Auckland
114
15
117
48
15
Waikato
63
12
66
39
27
BOP
72
18
45
39
24
Other NI
SI
TOTAL
Gisborne
21
72
36
42
15,147
45
30
18
3
42
27
54
15,537
Wairoa
18
9
9
6
51
2,844
36
24
21
0
9
27
3,054
Napier
21
129
72
45
27
36
24,183
3,855
384
93
90
81
29,016
Hastings
9
129
48
36
24
45
5,253
17,229
126
87
78
84
23,148
Central HB
9
18
21
9
6
0
516
117
4,965
21
69
21
5,772
Wellington
42
0
84
51
33
Other North
Island
57
15
105
57
159
South Island
63
6
93
102
21
15,696
3,036
30,555
21,582
5,790
TOTAL
Source: 2006 Census Statistics New Zealand
139
Road network resilience
Road network resilience issues have recently been reviewed by NZTA. Table 30 and Table 31
set out the number of closures by duration and reason for SH2 (both between Opotiki and
Gisborne and Gisborne and Napier) and on SH35 (from the regional boundary to Gisborne)
between 2003 and 2012.
Table 30. Closures on SH2 and SH35 over the period 2003-2012: Causes of closure
Reasons
for closure
Route
SH2 Opotiki-Gisborne
SH2 Gisborne-Napier
SH35 Gisborne-Boundary
Washout
1
Subsidence
2
Tree down
5
3
Bridge
2
Slip
7
8
11
Flooding
5
9
6
Dropout
Total
2
12
23
27
SH2 Gisborne-Napier
SH35 Gisborne-Boundary
Source: New Zealand Transport Agency (2013)
Table 31. Closures on SH2 and SH35: Duration of closures
SH2 Opotiki-Gisborne
< 12 hours
4
13
18
12-48 hours
6
10
6
> 48 hours
2
Nil
3
12
23
27
Total
Source: New Zealand Transport Agency (2013)
For SH2 between Gisborne and Napier, there has been an average of just over two closures
per year, with the road out of action for about 30-35 hours per year or about 0.4 per cent of the
time. For SH2 to the north the number of closures has been smaller but their severity has been
greater, and for SH35 to the north both the number and severity of closures has been greater.
On the basis of these figures, although there are some difficulties, route security between
Gisborne and Napier does not appear to be a major issue, with a small number of closures per
year and with only a limited duration.
There have been more major issues with SH2 between Gisborne and Opotiki, with slips in the
Waioeka Gorge affecting traffic over an extended period in 2012/2013. However, following
substantial works this is now fully open to traffic and the upgrades to the road should result in
improved route resilience. More detailed Information on SH2 road closures between Gisborne
and Napier is set out in Table 32.
140
% closed
% winter
closures
June-Sept
# >4 hours
with no
route
alternatives
>10 hours
23
14
6
3
0
43%
22%
Wairoa to Napier ex
Matahoura Gorge
265
31
13
9
9
14
55%
45%
Source: KiwiRail (2012)
This appears to support the conclusion that SH2 route security between Napier and Gisborne is
in practice not a major issue. The route has been totally closed for a period of 10 hours or more
about once per year. However, the data again suggests that security has been more of an issue
on SH2 to the north which forms the main route for goods into the Gisborne region. For this
route the only alternatives are the route south via Napier or along SH35 to Opotiki both of which
involve very considerable diversions. Measures to improve route security would help to
maintain connectivity, especially if they can be achieved at moderate cost.
Port transport
The study area contains two major ports: Eastland Port in Gisborne, mainly serving the forestry
industry, and Port of Napier in Hawke’s Bay with a wider range of traffic including international
container movements.
Eastland Port
Eastland Port has grown rapidly in
recent years and the volumes
handled are set out in Figure 120.
Export volumes have increased
from around 420,000 tonnes in
2004 to 2.07 million tonnes in
2013, representing an compound
annual increase of 19.5 percent.
Figure 120. Growth of export traffic through Eastland
Port (tonnes), 2004–2013
Source: Statistics New Zealand, Overseas cargo statistics
15
These records cover 61 road closure events over the 10 year period from May 2002 to May 2012. This comprises
single lane closures, complete closures and complete closures for part of the stated duration. Seven of the closure
events on the Wairoa to Napier section will not reoccur, as the Matahoura gorge has now been bypassed by a new
alignment. These events are not included in this analysis
141
06:00
132
18:00
Gisborne to Wairoa
4 to 10
hours
Total
closures
< 4 hours
Total
closure
hours
SH2 Route
Table 32. SH2 Gisborne-Napier road closures over 10 year period, May 2002-May 201215
Growth in export volumes has been particularly rapid over 2009-2013 with the volumes handled
more than doubling (26.7 percent compound annual growth). Import traffic is very small
amounting to around 70,000 tonnes in 2013. A detailed breakdown of the volumes handled in
2012 by type of traffic is set out in Table 33.
Table 33. Breakdown of export traffic through Eastland Port, 2012
Volume (000
tonnes)
Vegetables
Fruit
Other agricultural
Export Logs
Sawn Timber
Plywood and panels
Other Timber
Total
Percentage
Value per
tonne
Percentage
Value ($m)
27.3
1.42%
20.9
7.39%
770
6.3
0.33%
21.4
7.57%
3,390
0
0.00%
0.1
0.04%
2,820
1,875.00
97.34%
213.4
75.49%
110
1.4
0.07%
1.9
0.67%
1,300
15.3
0.79%
22.2
7.85%
1,430
0.6
0.03%
2.9
1.03%
4,480
1,926.30
100.00%
282.7
100.00%
146.8
Source: Statistics New Zealand, customised data request
This demonstrates the overwhelming dominance of the movement of logs for export, accounting
for over 97 per cent of exports by volume and over 75 per cent by value. Other key exports
through the port include fruit and vegetables. The volumes of these are comparatively small but
they do make a larger contribution to the value of exports accounting for about 15 per cent of
the total.
The trade through Eastland Port is primarily conducted in chartered bulk carriers and the port is
not served by regular general cargo shipping services. For movements requiring these, the
study area is dependent on Napier or Tauranga. The distances to either of these ports are fairly
substantial, impacting on the costs of transport and the returns which can be achieved by
Gisborne producers. Although the possibility of operating a coastal container service linking
with international ports has been examined, this in practice has not been found to be
commercially attractive (Warwick Walbran Consulting & Pacific Marine Management, 2010).
Port of Napier
Port of Napier (PONL) is the fifth largest port in New Zealand by overseas export volumes, and
currently accounts for 8 percent of total national export tonnages and 7 percent of export value
(Ministry of Business, Innovation and Employment, 2012). PONL is 100 percent owned by the
Hawke’s Bay Regional Council (through its investment company Hawke’s Bay Regional
Investment Company, HBRIC).
142
The pattern of growth of traffic
through Napier Port is set out in
Figure 121. Export traffic has
increased by 3.30 percent per
annum over 2004-2013, with the
Port handling 2.63 million tonnes
in 2013. Import volumes have
fluctuated over the period and in
2013 were 0.53 million tonnes.
Again, there has been stronger
growth in exports over 2009-2013
(despite a small fall in 2011-2012)
at around 7 percent per annum.
Figure 121. Traffic through Napier Port, Cargo gross
weight (m tonnes)
Source: Statistics New Zealand. Overseas cargo statistics
A significant part of the traffic is containerised. For container movements the port is heavily
focussed on export movements, handling 50,000 full containers outbound compared with just
10,000 inbound.
PONL primarily services the central New Zealand market and is dominated by the movement of
forest products in the form of logs, woodchip, sawmill products and pulp and paper which
together account for almost two-thirds of exports by weight. Other major exports include meat
and dairy products, fruit and vegetables particularly apples, and manufactured food products.
The main imports are chemicals and fertiliser. The detailed breakdown of traffic through Napier
in 2012 is set out in Table 34.
Table 34. Overseas trade through Port of Napier, 2012 (000 tonnes gross weight)
Exports
Proportion
Weight
Meat
123.9
4.92%
Dairy
181.2
7.20%
Fruit and vegetables
261.7
10.40%
Manufactured food products
104.7
4.16%
Other agricultural products
178.9
7.11%
1,430.7
56.85%
Pulp and paper
182.5
7.25%
Other products
53.1
2.11%
Logs and timber products
Total
Imports
Sulphur; earths, stone; plastering materials, lime and cement (mainly
fertiliser inputs)
Fertiliser
2,516.7
225.4
50.70%
45.2
10.17%
Food products
58.3
13.11%
Other products
115.7
26.02%
Total
444.6
Source: Statistics New Zealand, customised data request
143
It should be noted that the figures in Figure 121 relate to the calendar year 2012 whereas the
figures in Table 34 relate to the year ending in June so there are minor differences between the
totals.
39 percent of the value of New Zealand’s cereal exports, 39 percent of rawhide, 36 percent of
wool, 25 percent of prepared fruit and vegetables, 23 percent of vegetables and 22 percent of
meat exit through PONL. The continued growth of the Port will be largely dependent on the
expansion of food and fibre businesses within Hawke’s Bay and the extension of the Port’s
catchment (through improving operating arrangements with other ports).
Air transport
Gisborne Airport
Gisborne Airport is owned by the Gisborne District Council but is leased to the Eastland Group.
It currently offers a limited range of services to Auckland and Wellington operated by Air New
Zealand and a range of regional air services to Hamilton, Napier, Rotorua, and Tauranga
operated by Sunair. The frequency of flights on these routes and the standard ticket prices are
set out in Table 35.
Table 35. Current flights through Gisborne Airport
Flights per weekday
Flight Duration
Published Ticket
Cost
Air New Zealand
One-Way
Gisborne-Auckland
Gisborne-Wellington
4
1hr
$161-$343
3 Mon-Wed 4 Thu-Fri
1hr 10 mins
$240-$459
Sun Air
Single/Return
Gisborne-Hamilton
3
1hr 15 mins
390/560
Gisborne-Napier
2
45 mins
290/460
Gisborne-Rotorua
2
45 mins
290/460
Gisborne-Tauranga
3
45 mins
290/460
Source: www.airnz.co.nz and www.sunair.co.nz
Compared to flights on the main trunk route, these flights are relatively expensive and are
operated using smaller planes, increasing the likelihood that seats will not be available when
required. The services offered by Sunair have a lower maximum baggage allowance.
Air New Zealand also operates a scheduled freight service between Napier, Wairoa and
Gisborne. There are limited seats available on these flights for passengers.
144
Figure 122. Air passengers through Gisborne Airport
The numbers of passengers
through Gisborne Airport have
increased over the last seven
years, from 118,000 in 2005 to
133,000 in 2013, although have
remained relatively stable in the last
three years (Figure 122).
Source: Eastland Group
From discussions with stakeholders it is understood that although the number of passengers to
Wellington has fallen with the finalisation of the Treaty of Waitangi settlements, this has been
counterbalanced by increases in flows to Auckland. Of the total numbers flying, 52 per cent of
passengers in a recent survey indicated that they were travelling for business reasons
(Gisborne District Council, 2011).
Comparing these with the estimated numbers of passengers travelling by car would give air
services about a 10 per cent share of total inter-regional passenger movements.
Hawke’s Bay Regional Airport
Hawke’s Bay (Napier) Airport is similarly served by Air New Zealand and Sunair, with an
additional direct connection to Christchurch. The current pattern of flights is set out in Table 36.
Table 36. Current flights through Napier Airport
Flights per weekday
Flight Duration
Air New Zealand
Napier-Auckland
Published Ticket Cost
One-Way
9-10
1hr
$109-319
Napier-Wellington
5
55 mins
$99-$292
Napier-Christchurch
2
1 hr 30mins
$99-$269
Sun Air
Single/Return
Napier-Hamilton
2
1hr
150/560
Napier-Gisborne
2
45 mins
290/460
Napier-Rotorua
2
1hr 45 mins
390/560
Napier-Tauranga
2
1hr 45 mins
390/560
Source: www.airnz.co.nz and www.sunair.co.nz
The numbers of passengers are reported by Hawke’s Bay Airport as 447,000 (year unstated).
Compared to the regional population this gives a similar number of flights per person as
Gisborne Airport (2.9 flights per person compared to 2.8 flights per person for Gisborne). The
question of connectivity by air was also discussed with stakeholders in Gisborne and
Napier/Hastings. In general the level of service was considered to be acceptable and the main
145
issues were with the fares charged which, in the case of Hawke’s Bay at least, were regarded
as sufficiently high to be an impediment to economic development. It should be noted,
however, that these are less than charged for flights out of Gisborne, where this was not
reported to be such an issue.
Rail transport
Although the railway is currently not operational, the freight movements along it before services
ceased were typically of the order of 20,000-50,000 tonnes per year as set out in Table 37.
Table 37. Rail freight flows by commodity 2004 to 2012
2004
2005
2006
2007
2008
2009
2010
2011
2012 at
annualised rate
Dairy
0
0
0
0
0
0
53
0
0
Empties
0
0
0
0
0
0
0
309
3
Fertiliser
35,095
40,639
26,314
22,033
10,012
4,660
15,224
18,250
17,490
240
60
0
15
0
0
151
0
79
0
0
0
0
0
0
0
0
6,876
Other
10,064
11,764
7,477
9,700
8,920
8,092
8,173
6,181
9,264
Timber
4,073
3,691
6175
7,623
2,154
12
0
315
10,619
Total
49,472
56,154
39,966
39,371
21,086
12,764
23,601
25,055
44331
Meat
Vegetables
Source: KiwiRail (2012)
The main product that was carried on the line over the period was fertiliser, carried into the
Gisborne region from the Ravensdown factory in Hawke’s Bay, with varying volumes of timber
and vegetables carried in the reverse direction and “Other“ products which have all tended to
fluctuate from year to year. These flows are relatively small when compared with the road
freight volumes between Gisborne, Wairoa, and Napier which, as noted, are estimated at about
2 million tonnes per year.
On the basis of rail flows of 50,000
tonnes per year (representing the upper
end of the range of flows set out in
(Table 37) rail freight between
Gisborne/Wairoa and Hawke’s Bay
represented about 2-3 per cent of the
total freight movements (Figure 123)..
Figure 123. Estimated share of freight traffic
between Gisborne/Wairoa and Hawke’s Bay
by road and rail
Source: Eastland Group
146
For the Gisborne/Wairoa area as a whole, taking into account the flows on SH2 to the north, the
share was even smaller.
Preliminary comments on transport demands
Although the future transport needs of the region are assessed in detail in Stage 2 of this study,
some initial comments are noted below based on the information obtained to date.
Freight movements
The major known factor affecting freight transport demands in the study area is the continued
growth in logging traffic, which is expected to grow strongly over the next decade. As noted in
the discussion on the forestry sector, within the Gisborne region the volume of logs harvested is
likely to increase from about 1.6 million tonnes currently to a sustained harvest of 3-3.5 million
tonnes, much of which is likely to be focussed on Gisborne and its Port. Eastland Port also
serves the log harvest of eastern Wairoa and these flows are likely to increase as the forest
matures.
With economic growth there is also likely to be some increase in demands for the movement of
general consumer goods, although for Gisborne these are likely to be sourced from the north.
Any increases in production of meat and horticultural products for the domestic markets are also
likely to be largely routed to the north. For international markets these flows are split between
the ports of Tauranga and to a lesser extent Auckland, and the south via Napier.
The growth in the volume of logging traffic will put pressure on the ports in the area. Eastland
Port has recognised the need to expand capacity to handle the traffic from their hinterland, and
is taking steps to increase the volume of storage in and round the port and also at more remote
locations to the north where the Tolaga Bay inland port might be developed. Similar steps are
being investigated in the Bay of Plenty to help manage log traffic through Port of Tauranga and
the possibility of developing an inland port at Kawerau has been investigated.
Napier has similarly been expanding its capacity to handle increasing cargo flows, which are
likely to get a boost with the expansion of the irrigated area at Ruataniwha and the growth in
horticultural and, possibly over the longer term, dairy products.
In general the ports appear to have plans in place to support the likely growth in traffic to and
from their hinterlands.
The upgrading of the main routes to allow HPMVs will help to reduce the volumes of road traffic.
Even with the full development of the forested area and freight via road, the number of heavy
vehicles on the road will typically be low in absolute numbers (for example, 50,000 tonnes of rail
freight per annum equates to an average of five trucks per day), although possibly represent a
relatively high proportion of the total traffic flows.
147
Passenger movements
The passenger movements for the area comprise a combination of shorter distance flows for
commuters and those using services within Gisborne and Wairoa, and longer distance
movements for some commuters to and from locations such as Auckland and Wellington. From
our discussions with stakeholders it was indicated that the town of Gisborne is considered
substantially self-sufficient. However, depending on growth across industries (e.g., tourism), the
importance of longer distance linkages and the demands on the road network and air travel may
grow. Any industry developments in Gisborne will also lead to higher levels of shorter distance
commuting, and hence quality attractive public transport and maintaining a reasonably level of
service on the local road network may be important.
The role of rail
As indicated above, rail services serve only a very small part of the freight market between
Gisborne and Napier and have no provision for the large scale movement of passengers. On
the initial analysis we have undertaken, the line is unlikely to achieve an acceptable commercial
performance based on the current patterns of freight in the area. Although there can be broader
economic benefits associated with using rail (e.g., reduced environmental effects, improved
safety on roads) that should be taken into account when assessing the benefits and costs of
different transport options, these may be limited given the capacity of the rail line.
The potential role of rail in the local economy seems relatively limited. The rail line’s closure
seems to have had relatively little overall impact based on our initial discussions with a range of
stakeholders, although we have seen the comments from several businesses that they have
16
been detrimentally impacted . This, coupled with rail’s low overall share of transport when it
was operational, suggests that there is not likely to be a case for its reinstatement without a
major change in the pattern of economic activity.
However, a possible role for rail might exist over the longer term if it was used to support major
new project/s providing a level of traffic and generating overall revenues that would give an
acceptable commercial return (and overall economic return) – with estimates of required freight
ranging from 150,000 tonnes per annum to over 400,000 tonnes per annum. 150,000 tonnes of
rail freight would also only remove 16 trucks per day from the state highway.
Other specific opportunities for large scale traffic flows may emerge in the longer term, such as
the movement of logs from Mohaka to Napier (which is reported to generate log movements of
750,000 tonnes per annum) (Sanderson, Nana, & Generosa, 2012). However, it is doubtful
that the movement by rail would be financially feasible given the relatively short distance to be
transported and the need to double handle the logs, which could potentially double the cost by
rail. In addition, according to the KiwiRail (2012) report “…the forest companies have made it
clear that rail is simply not an option for them at Mohaka. The total distance from the Willowflat
16
Keep the Rail website: http://logjam.wordpress.com/business/
148
Road/SH2 intersection to the Port of Napier is a mere 71 kilometres. Double handling onto rail
wagons for this kind of cartage distance is not considered feasible.”
The possibility of using the rail corridor for tourism either with its conversion to an amenity like
the Otago Rail Trail or for using the rail lines directly through some sort of passenger rail has
some interest and could form an element of expanding tourism in the area. As a consequence,
the rail line or at least parts of it do have an opportunity cost in supporting alternative uses.
Stage 2 of the study considers scenarios for the economic growth of the East Coast and the
resulting estimated transport demands. This provides an indication of whether rail could be a
feasible option over the long-term.
Other infrastructure and connectivity issues and
opportunities
Broadband
Broadband facilitates the transfer of goods, services, people and investment. It reduces the
impact of distance on growth and hence can enhance productivity. Broadband is particularly
important for people in remote and rural areas to help them maintain connectivity with other
regions and countries, and can also be a key enabler of innovation for some industries. A
stakeholder commented that high speed broadband could be particularly significant for
international market development from the study area.
In the 2013 Census, 69 percent of households in the study area had internet access (not
specific to broadband) while nationally 77 percent of households had internet access (Table 38).
Access in Wairoa was the lowest in the study area, at 55 percent. There has been an increase
over 2006-2013 in the proportion of households with internet access with the proportion
increasing from 53 percent in 2006.
Table 38. Percentage of households who have access to the internet
Year
East Coast
New
Zealand
Gisborne
Wairoa
Hastings
Napier
2013
69.2%
76.8%
63.3%
54.8%
71.4%
72.4%
2006
53.0%
60.5%
46.6%
38.9%
55.7%
56.5%
Source: Statistics New Zealand, 2013 Census
Compared with other New Zealand regions, broadband uptake in the Gisborne/Hawke’s Bay
region has been low, with 68 percent of households having broadband access, compared to the
New Zealand average of 75 percent (Figure 124). Like all New Zealand regions, uptake has
increased overtime, but Gisborne/Hawke’s Bay is the third lowest rate of all regions and is of
concern given the remoteness of the area.
149
Figure 124. Percentage of households with broadband internet access, 2006, 2009 and
2012
Source: Statistics New Zealand, Household use of ICT survey
These results are more surprising given that, in 2009, Telecom completed a three year, 150
kilometres plus fibre project connecting Napier and Gisborne and providing the Gisborne region
with access to high speed data services. However, some stakeholders indicated that the price
of broadband can be a barrier, particularly given the lower level of incomes in the area.
However, Napier and Hastings were part of the first tranche of national deployment of ultra-fast
broadband (UFB) over 2011-2012 and there may be lag between deployment and uptake.
Chorus and Crown Fibre Holdings have recently announced a programme of UFB deployment
across the central and eastern areas of Gisborne over the next 10 months, before they extend
this further into the remaining urban areas. It will put about 12,000 residents in reach of UFB
service and connect 21 local schools by July 2014.
Electricity
Eastland Group distributes electricity in Gisborne and Wairoa, which is supplied by the
Transpower electricity transmission network. There is no renewable generation from the
Gisborne region that feeds into the grid.
Electricity in the Hawke’s Bay region is distributed by three networks: Eastland Networks,
Unison Networks and Centralines. Electricity is transmitted into the region by Transpower from
further afield, but the region also has a generation capacity of approximately 325 MW.
Transmission within the region is predominantly at 110 kV (Transpower, 2013).
150
Figure 125. Electricity transmission in the study area
Source: Transpower (2013).
This includes:

The Tuai, Kaitawa, and Piripaua hydro generation stations (collectively referred to as The
Waikaremoana Power Scheme) located between the Te Urewera National Park and
Wairoa, along the Waikaretaheke River. The scheme is owned by Genesis Energy and
uses water from Lake Waikaremoana, Waikaretaheke River, Mangaone Stream and
Kahuitangaroa Stream to generate 138 MW of electricity (Genesis Energy, 2013).

Whirinaki Power Station – near Napier, the station was sold by the Crown to Contact
Energy in December 2011. It is a 155MW diesel fuelled, open cycle gas turbine power
station, built as a generator of last resort during electricity supply shortages.

Two 2.5 MW generators embedded within the Wairoa distribution system, which is able to
export up to 1MW into the regional 110 kV transmission network during periods of low load.
In addition, there are several potential renewable energy projects in the study area that are
either under study, awaiting investment or under construction:

Meridian Energy has consent to build and operate a 270MW wind farm at Maungaharuru.
The earliest commission date being between 2016 and 2020 (Electricity Authority, 2013).

Contact Energy has consent to build a 156MW wind farm project in Waitahora, which is
expected to be commissioned in 2014 (Electricity Authority, 2013).

Trustpower is constructing a new 3.8 MW hydro generator in the Esk Valley with
commissioning due in June 2013 (Transpower, 2013).
151

Ngāti Porou has an interest in geothermal electricity generation at Te Puia (North of
Tokomaru Bay), and is undertaking a feasibility study. They are also assessing the
potential of biomass electricity generation.
Some stakeholders and interviewees involved in the development of the Tairāwhiti regional
economic development strategy 2009 suggested that electricity was an impediment to
development (McDermott Miller Strategies, 2009b). The Gisborne region, with one electricity
line, is perceived by some to be over-exposed to supply interruptions. Forestry industry
stakeholders interviewed for this study indicated that frequent power cuts pointed to a lack of
reliability, and noted that energy constraints may limit the ability to add value to current wood
and food processing. It was considered that current capacity would only be able to service one
additional wood processing plant. Iwi stakeholders were also concerned about electricity
capacity and quality. They noted that, in more remote areas, generation is supplemented by
diesel generation, which is expensive and inefficient.
Eastland Group has considered the energy demand impact of the forecast increase in forest
harvesting in the region. It has estimated that, in the worst case, the capacity at Gisborne may
not meet maximum demands after 2022. However, it has also identified a range of options for
addressing capacity constraints. These include new biomass generation in the form of CHP
(combined heat and power) plants to accompany any additional forestry mills, the development
of new renewable energy sources, embedded and distributed generation, line upgrading and
possibly duplication, and Eastland Group taking over the connection from the main grid from
Transpower where the constraint lies to improve the operation and control of the connection.
Major storms and flooding can obviously affect the reliability of the electricity supply in the
region due to slips. Eastland Group notes that given the remote nature of the network, the
small demand base and the cost of maintaining some redundancy in the system that the risks of
such interruptions will continue to be a feature in the area (Eastland Group, 2013).
Major initiatives to improve infrastructure and
connectivity issues
As noted, there is already a range of investments being made to improve connectivity in the
study area and beyond. These include the Business Growth Agenda actions related to:

Improving the resilience of SH2 between Gisborne and Napier and broader roading
improvements in Gisborne and Hawke’s Bay. Approximately $105 million will be invested in
the Gisborne region over 2012-2015 on state highways and local roads, including improving
the capability of SH35 from Tolaga Bay to the Port to support High Productivity Motor
Vehicles. Approximately $190 million is being spent over the same period in the Hawke’s
Bay. A key focus of the investment in that region is to improve resilience on strategic routes
and links to the Port of Napier.

Rolling out ultra-fast broadband in Gisborne, Napier and Hastings and rural broadband
across the region.
152
Summary: Connectivity and infrastructure
Given the East Coast study area’s remoteness and difficult terrain, and the export orientation of
much of its economic activity, physical and virtual connectivity is highly important to access
labour, supplies and domestic and international markets.
For primary processing industries, the key transport modes for the movement of goods are road
(both within the region, and to and from other parts of New Zealand) and sea for the onward
movement of products for export. The forestry industry, which as noted has a large and
growing role in the economy, relies on both Eastland Port and the Port of Napier for the export
of logs and for the movement of logs domestically for processing. Other major agricultural
products freighted by the area include meat, which is typically moved to the north, wine, which
again is typically transported north for bottling, and agricultural produce, which is exported
mainly through Napier but is also transported to domestic markets. The volumes of other
agricultural product freight have been stable or reducing.
To support these major freight generating activities, the main road links into the study area are
SH2 between Gisborne and Opotiki and the upper North Island to the north, and SH2 between
Gisborne, Wairoa and Napier, which provides access to the Hawke’s Bay and the lower North
Island. SH35 provides access between Gisborne and the settlements and forests along the
East Coast and is particularly used by the logging industry. While these provide a reasonable
level of service, there are some issues with network resilience. However, route security
between Gisborne and Napier does not appear to be a major issue (with just over two closures
per year). For SH2 to the north the number of closures has been smaller but their severity has
been greater, and for SH35 to the north both the number and severity of closures has been
greater. Addressing these would improve the study area’s connectivity.
Traffic flows on the state highways in the study area are generally small, in the order of 3,000
vehicles per day or less. Heavy Commercial Vehicles account for a relatively high proportion of
traffic (about 10-20 percent of total traffic on SH2 and SH35). These flows have been growing
strongly since 2008 on SH2 south of Gisborne and SH35 to the north, reflecting growth in the
forestry industry. Total inter-regional freight flows on the main routes have been estimated to
be about 2 million tonnes per annum.
With the high flows of logs, there is an increasing demand for the use of High Productivity Motor
Vehicles (HPMVs), road vehicles capable of carrying higher payloads. There are plans to
upgrade substantial sections of SH35 to allow the use of HPMVs. The possibility of developing
Gisborne-Napier as an HPMV route is being considered but the feasibility of this is affected by
the costs of upgrading the structures and the impact that the heavier vehicles might have on the
costs of maintenance for the route. Because of the importance of the connections between
Gisborne and the north via SH2, the feasibility of developing this route for HPMVs should also
be investigated.
Even with the full development of the forested area, the number of heavy vehicles on the road
will typically be low in absolute numbers, although there are concerns about flows through
central Gisborne.
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The ports in the study area (Eastland Port and the Port of Napier) seem well positioned to
handle the increases in traffic resulting from the expansion of the forestry industry and also
growth in food and processing industries. Both ports have handled relatively rapid growth in
export traffic over 2009-2013. Each has a reasonably distinctive role, with Eastland Port largely
focused on the export of logs via bulk carriers and the Port of Napier handling dairy, fruit and
vegetables, pulp and paper and meat in addition to logs and timber products, and also handling
a reasonable quantity of imports.
There are relatively small passenger movements on the roads, with inter-regional movement of
passengers estimated to be about 1.1 million in 2012. SH2 to the north and south west
provides the main inter-regional linkages for passengers, which again are affected to an extent
by network resilience issues. There does not appear to be significant intra-regional movement
of people, except between Napier and Hastings. Gisborne is largely self-contained as an
employment area, with 97 percent of residents living and working in the district when last
measured.
One issue is the interaction between cars and heavy freight vehicles, particularly those carrying
logs. Although flows are low, freight vehicles can result in a reduced travel experience and
concerns about safety which may be a factor influencing tourist traffic. This issue has been
recognised with the construction of a number of passing opportunities facilitating overtaking on
the route between Gisborne and Napier.
Passenger movements by road are supplemented to a reasonable extent by the numbers flying
to and from the study area via Gisborne Airport and Hawke’s Bay Regional Airport. This is an
important factor in reducing the remoteness of the area, and allows a degree of long distance
commuting and business travel to and from Auckland and to a lesser extent Wellington. There
do not appear to be any capacity constraints at the airports, with both airports having the facility
to sustain likely passenger flows, although the price of air travel has been mentioned as a
constraint.
Looking at the transport needs for the study area as a whole, the potential role for rail in the
study area appears to be limited in the medium term and potentially in the long-term. When
operational, rail only accounted for about 2-3 per cent of freight traffic on the Gisborne-WairoaNapier corridor and, following its closure, there is no clear evidence of significant economic
impacts although several businesses have publicly commented that they have been
detrimentally affected. Currently there may be some untapped potential for increases in traffic
over and above those experienced over the last decade, but there is no clear evidence that
these would be of a scale to provide for an adequate commercial (or economic) return under the
existing model.
In general, while the area is affected by remoteness, the transport network seems able to cope
with the demands on it and plans have been developed to help address future challenges,
particularly those associated with increased forestry movements. In our view, the key to
connectivity is the road network, particularly SH2 which handles almost all the longer distance
flows of passengers and freight. As noted, there are some network resilience issues and there
is a need to ensure that this route can provide reliable connections to the major centres to the
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north and south west. SH35, which handles more local movements into Gisborne, also
deserves consideration.
Internet connectivity is also important for small, distant regions like the East Coast but access in
the study area is below national averages. In 2013, 69 percent of households in the study area
had internet access compared to 77 percent nationally (and only 55 percent in Wairoa). This
low connectivity may constrain the ability of residents to transact business nationally and
internationally. However, as with New Zealand generally, there was a large increase over 20062013 in internet access, with the proportion of households with access increasing from 53
percent in 2006.
Electricity reliability and capacity has been noted by local stakeholders as an issue that may
constrain opportunities in the region. The Gisborne region, with no local generating capacity
and one electricity transmission line linking to the main grid, is perceived by some to be overexposed to supply interruptions and stakeholders noted that current capacity would only be able
to service no more than one additional wood processing plant. Eastland Group has forecast
that, in the worst case, the current capacity at Gisborne would not meet maximum demands
after 2022.
However, several options for addressing capacity constraints are being considered, for
example, new biomass generation in the form of CHP (combined heat and power) plants to
accompany additional forestry mills, renewable energy sources, embedded and distributed
generation, line upgrading and possibly duplication, and Eastland Group taking over the
connection from the main grid from Transpower where the constraint lies to improve the
operation and control of the connection. As such, it appears that the relevant stakeholders are
prepared for potential growth in demand.
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Underlying determinants: Innovation and
entrepreneurship
Innovation and entrepreneurship – developing and applying new ideas and new ways of doing
things in a commercial environment – are key building blocks of the economic success of any
region. Innovation and entrepreneurship stimulate competition and employment, attract skilled
and talented people and ultimately generate profits for businesses and incomes for workers.
Innovation also has broader positive impacts on the economy as new methods, products and
services can be adopted and enhanced by others. Many studies show that while labour and
capital contribute to economic growth, it is innovation and technological change that explain the
differences between the performance of different regions.
To understand the East Coast’s innovation and entrepreneurship performance and what can be
best done to improve it, it is useful to focus on key elements of the local innovation system,
which relate to (Chen, 2012):

Business capability to undertake innovation and to internationalise

Strong linkages between researchers and businesses

A pool of technical and knowledge-based skills

Effective support for innovation

Access to capital for innovation and growth

Opportunities for new businesses and for business growth.
Business capability to undertake innovation
A region’s innovation performance relies on businesses that can develop and coordinate a
range of competencies, including market research, design, scaling up of production, and the
ability to coordinate appropriately skilled staff.
In 2011, 46 percent of New Zealand businesses reported innovation activity, broadly similar to
other OECD countries and the same as in 2009 (Statistics New Zealand, 2011). There is limited
information or official statistics about the level of capability at the level of the study area, but it is
likely to be similar to what has been found in New Zealand generally, that is, most business
innovations are likely to be informal, incremental and domestically focused. However, patenting
data, business expenditure on research and development, and an understanding of the general
innovation support system and industrial structure of the East Coast suggests that East Coast
businesses probably undertake a lower level of innovation activity compared with businesses in
other New Zealand regions.
156
Patent application data suggests that
organisations in the East Coast
generally do not engage in formal
protection of intellectual property
(Figure 126). Hawke’s Bay and
Gisborne appear at the lower end of
rankings (in 2009, for every one
million people, 20 patent applications
were filed in the Hawke’s Bay while
none were filed in Gisborne,
compared to the New Zealand
average of 74) (Ministry of Business,
Innovation and Employment, 2013c).
Figure 126. Patent applications (per million
population), 2009
Source: Regional economic activity report (Ministry of Business,
Innovation and Employment, 2013c). Line is New Zealand average.
While filing a patent application is no guarantee that an invention will be commercially exploited,
it is an internationally recognised indicator of innovation, as patents cover products and
processes that are original and are expected to have commercial value.
Another key element of innovation is
research and development (R&D).
This involves acquiring knowledge
from research or practical
experience and using it to produce
new or improved materials, products,
devices, processes, systems and
services. The last time that business
R&D as a proportion of GDP was
measured at a regional level
suggested that Hawke’s Bay and
Gisborne were below the national
average of 0.42 percent at 0.31
percent (Figure 127).
Figure 127. Business expenditure on R&D, as a
proportion of GDP, 2002
Source: Statistics New Zealand (Tuya, 2007)
Internationalisation
There is no data on the value of international exports from the East Coast study area. While
data from the Ports of Napier and Gisborne can be used and has already been detailed, this
does not capture goods and services that exit through other sea and air ports.
As with New Zealand more generally, the international performance of local East Coast
businesses will likely be constrained by scale, distance and a lack of depth of skills and
capability to internationalise (MartinJenkins, 2013):

Local firms do not have a significant market in which to build scale and are often at a
relatively early stage of development when they seek out offshore markets (compared to
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offshore counterparts that can scale up on the basis of the domestic market alone). As a
result, when they internationalise, they will have to gear up production substantially and reorganise very rapidly across a challenging range of dimensions. This represents a
significant risk and cost for most firms.

Businesses need to bear the time and resource costs to identify potential customers
(including what customers want and need), potential competitors, and assess potential
partners and/or distributors in overseas markets. The East Coast’s remoteness
undoubtedly inhibits access to ideas, information about foreign markets and business
opportunities, overseas customers, networks and technology, and hampers development
and maintenance of relationships. This raises the costs of internationalisation.

It is likely that local firms lack international management and governance expertise both
because they need to internationalise at an earlier stage in their lifecycle and because
there is a limited supply of such capability in the study area. Smaller firms have limited
management time, so there are real constraints in gathering the skills and expertise
required and in running the new logistical requirements of an international operation.
There is also no information available about the key destinations for the study area’s
international exports, although port data does provide some signals. In 2011, half of the value
of all Port of Napier exports were to the Asia-Pacific, and Asia accounted for 63 percent of total
Port export/import volume (Economic Solutions Limited, n.d.). The strongest growth markets for
total exports were China, Sri Lanka, Taiwan, Philippines, Thailand, India and Indonesia.
Business Hawke's Bay has identified China as a key market for local companies. A Hawke’s
Bay exporters’ trade mission to China was undertaken in November 2012 to coincide with the
Shanghai Wine Fair but also included other traders and products. The group also followed up
trade opportunities in Hong Kong, Xuzhou and Beijing.
There are a number of activities occurring in the study area to broaden and deepen existing
internationalisation activity. A selection of examples includes:

Ngāti Porou Whanui Forests’ negotiations for a forestry planting partnership with the
publicly funded Korea Green Promotion Agency

Cedenco’s approach by the largest crisp company in Japan, as a potential supplier of preprocessed squash for a new health food snack. If Cedenco proves itself a viable supplier,
a new dedicated plant is likely to be built in New Zealand with a throughput of $50-$100
million per annum.

The proposed Tairāwhiti Māori agri-business network is set to offer scale through
collaboration across Māori farmers, provide an information-sharing forum and improve the
organisation of supply chains to build market opportunities offshore (Robertson, 2013).
International relationships through councils
Councils in the East Coast study area have international links with cities and towns around the
world (Table 39). While many were established to encourage cultural, sporting and education
links, better trade and business linkages could be fostered.
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Table 39. Council international relationships
Council
Sister-cities and other international relationships
Gisborne District Council
Mahina, Tahiti, France
Macedon Ranges Shire, Victoria, Australia
Gamagori-ko, Honshu, Japan
Nonoichi-machi, Honshu, Japan
Rizhao, Shandong, China
Palm Desert, California, US
Napier City Council
Lianyungang, China (Jiangsu Province)
Victoria, British Columbia, Canada
Tomakomai-shi, Hokkaido, Japan
Mianyang, Sichuan, China
Hastings District Council
Guilin, China
Mianyang, Sichuan, China
Wairoa District Council
Clydebank, Scotland, UK
Kitaibaragi-shi, Honshu, Japan
Hawke’s Bay Regional Council
Xuzhou, China (Jiangsu Province)
Source: Various council websites and www.sistercities.org.nz
It is unclear how much economic value is being obtained from these relationships and whether
rationalisation and a coordinated approach across territorial authority areas could result in
greater benefits.
The Hastings District Council has an international economic development strategy. This
strategy (in the short term) focuses on leveraging and developing its economic relations with
China based on its sister city relationship with Guilin. The strategy also has four goals
(Hastings District Council, 2009b):

Hawke’s Bay region is a preferred immigrant destination

Overseas equity investment to expand the Hawke’s Bay region’s business base increases

Local industry grow their export markets

The number of international students studying in the Hawke’s Bay region increases.
The district has been working with Business Hawke’s Bay, the Mayor, Export Hawke’s Bay,
Ministry of Foreign Affairs and Trade, Tourism Hawke’s Bay and businesses to deliver its China
Action Plan in support of these goals.
Foreign direct investment
Important international connections and improvements in productivity can be forged through
inward foreign direct investment (FDI). FDI is associated with a range of potential broad
159
economic benefits, including the transfer and diffusion of technology, information, skills, and
management practices.
Auckland receives the majority of FDI that enters into New Zealand, and the East Coast does
not specifically feature in the limited evidence that is available but may be in “all other regions”
(Table 40).
Table 40. Regional FDI performance, January 2003 – May 2009
New Zealand
Region
Projects
% Projects
Companies
% Companies
Auckland
90
55.6%
84
60.0%
Wellington
22
13.6%
20
14.9%
Canterbury
14
8.6%
14
10.0%
Otago
8
4.9%
8
7.7%
Taranaki
5
3.8%
5
3.6%
Waikato
4
2.5%
4
2.9%
19
11%
19
14.1%
All other regions
Source: FDi markets, from Knowledge Matrix Asia Pacific, BERL, IMSED and PricewaterhouseCoopers (2009). Notes:
Companies and percent of companies figures vary as the same companies invested in more than one region.
High quality foreign investment (i.e., investment that brings international connections for
domestic firms, productivity and innovation benefits) will come to the East Coast if the study
area can offer investors the potential to improve their productivity, technology, skills or products
and/or lower their production costs (i.e., through cheaper or more productive skilled labour).
There are several international businesses operating in the East Coast, such as Vactek
Electronics, Pultron Composites, Juken New Zealand, Cedenco Foods, Hikurangi Forest Farms,
Ernslaw One, Hansol, Brancott Estate, Selaks, Kim Crawford and Monkey Bay, which suggests
there are resource and other advantages of international value. It may be important to consider
how the East Coast can ensure these investments bring wider economic benefits and to
understand the growth intentions of foreign investors in the study area.
Hastings District Council’s (2009a) business investment strategy recognises that the council has
a number of levers to attract and retain business investment. This includes making industrial
land available, making consenting and other services more responsive (including key account
management services to assist key business clients and development projects), marketing to
business investors and facilitating and encouraging inwards business relocation. On the last
point, investor analysis, targeting marketing activity and marketing collateral were identified as
key actions (see investhastingsnz.co.nz).
New Zealand Trade and Enterprise (NZTE) have recently embarked on a new initiative working
with regions to assist them in attracting investment into their regions. The project will pull
together better regional information for potential investors which will help identify investment
opportunities. In addition, they will be supporting and upskilling regions to improve their
capability in attracting investment. NZTE are working with Economic Development Agencies of
160
New Zealand (EDANZ) and economic development agencies like Business Hawke’s Bay and
Gisborne’s Economic Development Unit to role this out over the next six months.
Linkages between researchers and business
Tertiary and research institutions are often the providers of scientific knowledge and
commercialisation capability for innovation through their research and related activities. In
addition, they create the skilled workforce for innovation.
The government and higher
education sector appears to invest
proportionately little on R&D in the
region. When last estimated, the
government and higher education
sector spent less than the New
Zealand average on R&D as a
proportion of GDP ($9.9 million of
investment or 0.19 percent of GDP
compared to the national average of
0.7 percent (Figure 128).
Figure 128. Government and higher education
expenditure in R&D, as a proportion of
GDP, 2002
Source: Statistics New Zealand (Tuya, 2007)
Interestingly, the Hawke’s Bay/Gisborne region is the only region in New Zealand where private
sector investment is higher than public sector investment. This suggests that the government
and higher education sector might be under-represented in the study area (there is no university
and only a small presence of several Crown research institutes, CRIs), and the private sector
has had to invest relatively more in R&D.
There are some good examples of industry-research collaborations in the region. For example,
the Pipfruit Research Consortium in the region was granted $12 million over 2010-2017 by the
MBIE to develop new apple and pear cultivates for the industry and involves Plant and Food
Research. MBIE has also supported Te Runanganui o Ngāti Porou to develop their science
and innovation strategy and has also helped fund research staff to improve their commercial
operations (e.g., Ngāti Porou Seafood). Companies in the forestry sector have also joined
industry-wide research co-operatives (e.g., Hikurangi Forest Farms involvement with research in
conjunction with Scion) and companies in the red meat sector are involved in Primary Growth
Partnership initiatives to improve levels of innovation and added value in meat production (for
example, Firstlight Foods is a key partner in a project to develop grass-fed wagyu beef).
However, as there are few public sector-funded researchers on the East Coast, there is little
research on the broader relationships between research and industry. Recognising the limited
level of research capability locally and the limited links between research expertise and industry,
the Hawke’s Bay Regional Council recently established a Memorandum of Understanding with
Massey University to encourage relationships between the university and the agri-food sector in
161
the region. Similarly, Food Hawke’s Bay has also recently been established to better link
businesses with the New Zealand Food Innovation Network.
The Hawke’s Bay Prosperity Study also noted that, compared with other regions, the Hawke’s
Bay does not have a major CRI presence, and suggests that the region could benefit from more
applied research through establishing a new partnership with one, or more, of the CRIs to build
a centre of excellence, or specific research capability (Winder et al., 2012).
A pool of technical and knowledge-based skills
Innovation is also dependent on the availability of appropriate skills and different types of skills
have important roles at different stages of the innovation process. Key types of skills for
innovation include the numbers of scientists and engineers and the proportion of ‘knowledge’
workers in a region.
Hawke’s Bay/Gisborne’s core human
resources in science and technology
activities (defined as individuals who
have successfully completed a
university education and who are
employed in a science and
technology occupation as a
professional, technician or associate
professional), is low internationally
and within New Zealand (Hawke’s
Bay and Gisborne’s were both 7
percent compared to the New
Zealand level of 12 percent) (Figure
129).
Figure 129. Core human resources in science and
technology, 2001 and 2006
Source: Statistics New Zealand and then-Ministry of Research
Science and Technology customised data request
17
More recent analysis of knowledge intensive employment suggests that the study area also
has low employment in knowledge intensive sectors. In 2010, the East Coast-Hawke’s Bay
area had 25.5 percent employment in knowledge intensive sectors compared with the national
rate of 33.2 percent (Infometrics, 2012). Growth in these sectors is also slow, with 0.2 percent
growth between 2009 and 2010 and 2.2 percent between 2000 and 2010, against national
growth of 0.9 percent between 2009 and 2010 and 2.6 percent between 2000 and 2010.
17
Infometrics (2012) consider an industry to be knowledge intensive if it meets two criteria: at least 25 percent of the
workforce is qualified to at least degree level and at least 30 percent of the workforce is in professional, managerial
and scientific and technical occupations.
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Support for business development and innovation
Support agencies can play a key role in building the capability of firms to undertake innovation,
for example, through the provision of information and networking opportunities. These include
technology brokers, research organisations, innovation centres and incubators, advisors and
consultants, economic development agencies and industry associations.
For a “non-main centre”, the East Coast has a reasonable range of innovation support available.
Examples include the small presence of a number of CRIs (e.g., Plant and Food Research and
NIWA, and Landcare Research in Gisborne and subsidiary Sirtrack Ltd in Havelock North – but
all have a relatively small presence), Hawke’s Bay Regional Council’s collaborative research
relationship with Massey University, on-going engagement with the New Zealand Food
Innovation Network, and the recent launch of the ICEHOUSE Hawke’s Bay. There is also the
presence of government agencies (MBIE and NZTE), membership-based businesses
organisations (such as the Chambers of Commerce, Employers’ and Manufacturers’
Association) as well as many sector-based associations which provide support to businesses.
The Tairāwhiti Development Partnership suggested in its strategy in 2009 that a biannual
regional business forum and an incubator programme would be valuable additions to business
support and economic development in the area (McDermott Miller Strategies, 2009b).
There is no single economic development agency which works right across the East Coast
study area. The major economic development entity in the region is Business Hawke’s Bay,
which naturally focuses on the Hawke’s Bay region. Last year, the Gisborne Chamber of
Commerce proposed the establishment of a business-led economic development agency for
Gisborne, which was also supported by the Eastland Community Trust. The Gisborne District
Council has recently agreed to co-fund an economic development capability entity for the
region. A working party will appoint a working board and establish the arrangements for
managing delivery of economic development activity.
All district councils also have dedicated economic development officers or units and/or funding
relationships with economic development delivery agencies. Each area also has a local
economic development strategy.
Table 41 describes the large range of innovation and economic development support
organisations and initiatives operating in the study area and broader region.
Table 41. Significant business and innovation support organisations on the East Coast
Organisation
Focus
Tertiary institutes
Eastern Institute of
Technology (EIT)
Its main foci are health (including nursing), management and commerce, education, society and
culture, creative arts and engineering and related technologies, and some training in agriculture
(including viticulture and horticulture).
Teaching is delivered largely through its Taradale campus in Napier.
Has applied research capability and is a national provider in viticulture and wine science.
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Organisation
Focus
Massey University
Memorandum of Understanding with Hawke’s Bay Regional Council to formally partner on projects
with industry and local government to develop the region, as well as on initiatives involving schools.
Focuses on agri-food research and training.
Four research projects are underway centred on improving farm productivity (while decreasing
environmental impacts), communicating new farming systems, building resilience within farming
communities and sustainable community practices. The research alliance is also expected to
provide a way for businesses and students in the community to engage with Massey University.
Crown research institutes
The National Institute of
Water and Atmospheric
Research (NIWA)
Two FTEs in Napier that focus on coastal ecology research.
Scion
No presence on the East Coast but conducts forestry trials in the study area.
Landcare Research
One FTE in Gisborne. Subsidiary, Sirtrack, in Havelock North, was sold in December 2011 to
Canadian firm Lotek Wireless. Sirtrack designs and builds wildlife tracking solutions.
Plant and Food Research
58 FTEs at a facility in Havelock North. The areas of research include bio-protection, breeding and
genomics, food innovation and sustainable production.
Councils
Hawke’s Bay Regional
Council
Supports primary sector science, commercialisation and government partnerships
Is a regional partner for the National Business Partner Network for Callaghan Innovation and NZTE.
Funds Hawke’s Bay Tourism
Sponsors Business Hawke’s Bay; Sponsors the Hawke’s Bay Business Awards.
Gisborne District Council
Has recently agreed to support an economic development entity for the region
Supports Tourism Eastland, Heart of Gisborne and Tairāwhiti Development Partnership
Napier City Council
Administers an annual marketing programme
Supports Business Hawke’s Bay and a range of business development initiatives
Implements the Council’s sister city programme
Hastings District Council
Supports business support and attraction, inward investment, tourism and migrant attraction,
significant tourism/events infrastructure
Supports Business Hawke’s Bay
Wairoa District Council
Supports district promotion and visitor information services
Council-funded/controlled organisations
Tairāwhiti Development
Partnership
Previous NZTE Regional Strategy Fund recipient. A partnership between Gisborne District Council,
Wairoa District Council, Te Rūnanga o Turanganui a Kiwa and Kahungunu ki te Wairoa
Was responsible for the promotion, development and implementation of a regional economic
development strategy for the Tairāwhiti region.
No longer meeting but work on some partnership projects are continuing, e.g., the Navigational
Tourism project.
Tourism Eastland
Two functions: a) To effectively and efficiently manage the Gisborne visitor information centre; b) To
be the Regional Tourism Organisation representing the Gisborne, Opotiki, Wairoa Districts and to
promote and market the Eastland region with the aim of attracting more visitors.
Heart of Gisborne
Aims to increase the vitality and vibrancy of the Gisborne centre through CBD and business
improvement initiatives. Funded through a rate levied on central city property owners and collected
by the Gisborne District Council through the annual rates charge.
164
Organisation
Focus
Business Hawke’s Bay
Regional economic development agency. An autonomous, arms-length business unit of the
Hawke’s Bay Chamber of Commerce with a separately appointed Board.
Funded by the Chamber, Hawke’s Bay Tourism and the regional and local councils. It was launched
in August 2011.18 Provides a range of business development support, such as access to Callaghan
Innovation and NZTE programmes, business mentoring, the High Performance Work Initiative;
business attraction and relocation support; events and training.
Upstream Wairoa
Business action group charged with improving business and promoting community events in the
CBD
Plans to stage networking occasions with guest speaker events and training opportunities
Facilitated by Wairoa District Council
Hawke’s Bay Tourism
Jointly funded by the Hawke’s Bay Regional Council and the local tourism industry through the
Hawke’s Bay Tourism Industry Association.
The regional tourism organisation is responsible for Napier, Hastings, Wairoa and Central Hawke’s
Bay.
Tourism/events, conferences, Rugby World Cup, cruise ships
Industry and employer organisations/associations, and business support organisations
Hawke’s Bay Chamber of
Commerce
Is a regional partner for the National Business Partner Network for Callaghan Innovation and NZTE.
Supports Export Hawke’s Bay, a joint venture with Export NZ.
Provides business training, access to business mentoring, business advisory services.
Gisborne Chamber of
Commerce
Delivers NZTE and Callaghan Innovation services with support from Te Rūnanga o Ngāti Porou, Te
Rūnanga o Turanganui a Kiwa and the Employers and Manufacturers’ Association (Central).
Gisborne District Council holds the Regional Business Partner contract.
National Export Academy
Export New Zealand
Regional office in Hawke’s Bay. ExportNZ Hawke’s Bay conducts activities in the region in
conjunction with the Hawke’s Bay Chamber of Commerce.
ICEHOUSE Hawke’s Bay
Offers expertise, networks and access to funding for SMEs and start-ups. BNZ’s Partner Centre
premises are used to run programmes and operations. Operated by one regional manager.
Food Hawke’s Bay
Part of the New Zealand Food Innovation Network. 1 Business Development Manager (local food
technologist) facilitating networking, collaboration and regional business development and to help
the region’s firms access the NZFIN.
Eastland Wood Council
A trade association formed by the major commercial forestry, wood processing and distribution
interests operating within the Gisborne Tairāwhiti District. Provides a collective voice of the
plantation forestry and wood industry and a forum for members to jointly develop strategies on
matters of common interest.
Hawke’s Bay
Winegrowers
Undertakes regional, national and international promotion and marketing of the Hawke’s Bay wine
industry, research on industry issues and education initiatives.
Other organisations/institutions
Eastland Community
Trust
Owns major infrastructure investments in the Gisborne area and is publicly owned. It is the sole
shareholder of Eastland Group.
Their 2012/2013 Statement of Intent notes that the Eastland Development Fund has been in
abeyance since 2009, but is planned to be settled this year. The direction of the fund is likely to be
(Eastland Community Trust, 2012):
 A commercial vehicle for the Trust to have direct investments outside the Eastland Group
18
The region’s previous EDA, Venture Hawke’s Bay, was disbanded 2 years prior.
165
Organisation
Focus
 Coordinate economic development support services to the region
 Administrative and project service to the Trust or on behalf of the Trust.
It has a project portfolio and prefers to support projects which encourage or sustain economic
growth.
Te Rūnanga o Ngāti
Porou
In economic development, the runanga has restricted itself to three specific roles. These are to:
 incubate Ngāti Porou businesses and support them to become viable commercial operations
 invest in developing the business and entrepreneurial capacity and capability of Ngāti Porou
people
 invest – in its role as shareholder for and on behalf of Ngāti Porou – in businesses that are
managing and utilising collective assets e.g., Ngāti Porou Seafoods Group and Pakihiroa Farms
Ltd.
Has a number of subsidiaries and affiliate organisations including Porou Ariki Trust (fisheries), Ngāti
Porou Hauora (health and social services including Te Puia Hospital’s facilities and buildings), Radio
Ngāti Porou (radio license holder), Ngāti Porou Seafoods, Ngāti Porou Tourism (Hikurangi Mountain
Guided Tours), Ngāti Porou Whanui Forests Limited, Pakihiroa Farms Limited, Ngāti Porou
Landowners Forum and Ngāti Porou East Coast Rugby.
Te Rūnanga o
Turanganui a Kiwa
Established in 1986 and represents the interest of Rongowhakata, Ngai Tamanuhiri and Te Aitanga
a Mahaki.
The strategic plan (2011-2016) states “The Runanga owns a number of important assets. The
Strategic Plan provides for a review of the asset base and financial performance of the Runanga as
part of its overall approach to consolidating and determining its distinct role in the future” (Te
Rūnanga o Turanganui-a-Kiwa, 2011, p. 14)
Its subsidiaries manage education and training, social and health services.
Ngāti Kahungunu
In the early stages of developing and building an “Innovation Centre” in Napier to deliver economic,
social and cultural outcomes. The concept includes a physical hub for iwi members and businesses,
a cultural centre and retail and exhibition space, a tourism base and a research centre/business
incubator.
Central government organisations
Te Puni Kōkiri – Māori
Business Facilitation
Service
There is one TPK regional account manager for Te Tairāwhiti.
NZTE and Callaghan
Innovation
Have funded personnel to support the regional partner network in the region
Ministry for Primary
Industries
Has funded the Hawke’s Bay Regional Council and industry associations though the Sustainable
Farming Fund, Community Irrigation Fund and Irrigation Acceleration Fund for projects related to
irrigation and land management.
Has funded two businesses through the Primary Growth Partnership programme.
The Hawke’s Bay is broadly in the middle of New Zealand’s regions in its ability to capture MBIE
innovation investments, while Gisborne has less success (Figure 130). Measured as a
19
proportion of businesses, Hawke’s Bay and Gisborne are in the middle-lower end of regional
rankings (Figure 131).
19
166
The Hawke’s Bay consists of Napier, Hastings, Wairoa, and Central Hawke’s Bay. Only a very small proportion of
innovation funding was granted to businesses in Central Hawke’s Bay.
Figure 130. MBIE Science and
Innovation/Callaghan Innovation funding,
contract start dates 2010-2013
Figure 131. MBIE Science and
Innovation/Callaghan Innovation funding, as
a proportion of businesses, 2010-2013
Source: Customised dataset from Callaghan
Innovation
Source: Customised dataset from Callaghan Innovation
and Statistics New Zealand, business demography
NZTE has active business
engagements (either as a
Foundation or Focus 500 client) with
businesses in Napier, but none in
Wairoa, Hastings or Gisborne.
There is also relatively low uptake of
NZTE capability development
vouchers, as a proportion of the total
number of businesses in the region.
In 2012/13, each business in
Gisborne received approximately
$7.90 in voucher funding and each
business in the Hawke’s Bay
received $8.30 (Figure 132).
Figure 132. Value of NZTE Capability development
vouchers issued, as a proportion of number of
businesses, 2012-13
Source: Customised dataset from NZTE and Statistics New
Zealand, business demography
MBIE has also supported Business Hawke’s Bay and Hastings District Council to deliver the
High Performance Working initiative (productivity, culture and business process improvement
training for businesses) in the Hawke’s Bay.
Stakeholders suggest that the relatively low take-up of MBIE and NZTE funding in Gisborne is
due to difficulties owners/operators have in taking time off to attend management training, and
due to the large number of smaller “lifestyle” businesses with little desire to expand.
Stakeholders have also raised concerns about the difficulty in accessing science and innovation
funding (particularly for Māori, and making research outcomes more relevant to Māori). The
allocation of science and innovation funding to Gisborne/Hawke’s Bay may also reflect the
relatively lower levels of research and development that is being undertaken in the regions.
167
Both NZTE and MBIE have provided additional assistance to support the Regional Partner
Network in Gisborne. This has included:

Funding for a Gisborne-based Business Growth Manager to assist businesses

$600,000 in funding to Ngāti Porou, since 2003, to support a range of R&D activities and
asset development strategies

0.5 FTE at Gisborne District Council to support greater uptake of MBIE/Callaghan
Innovation funding.
Companies in the forestry sector have also joined industry-wide research co-operatives (e.g.,
Hikurangi Forest Farms’ involvement with research in conjunction with Scion).
Te Puni Kōkiri’s Māori Business Facilitation Service is also active on the East Coast. About 40
businesses a year, mostly in agriculture and forestry, engage with the services in the Hawke’s
Bay. The Hawke’s Bay Chamber of Commerce is also piloting an iwi trustee training
programme.
In January 2009, 60 percent of Napier businesses indicated that they were satisfied with the
initiatives of the public and private sectors in the region to facilitate more business development
in the area (Bevin, 2009). Additionally, 35 percent indicated that they were satisfied with the
level of working collaboration between different organisations and agencies in the region (not
specifically economic development-related organisations). 24 percent were neutral on the
matter and 25 percent were dissatisfied.
Access to capital for innovation and growth
The pool of available capital sources within a region may serve to limit or facilitate the ability of
local firms and industries to develop.
There are no formal Angel investment groups in the study area. Like most regional economies
it is the informal networks that fill the void, with an informal network of generally high net worth
individuals in Napier, Hastings and Gisborne who are already investing in the study area, but
are also looking at outside opportunities (McDermott Miller Strategies, 2009b). There is also a
culture of inter-generational family investment with family business representatives seeking
skills and experience in other New Zealand regions and offshore, and then expanding or
building new businesses when they return (McDermott Miller Strategies, 2009b). NZTE’s
previous Escalator service was well-received in the Hawke’s Bay, so there is an understanding
of early-stage investment and being “investment-ready” amongst participating firms.
The East Coast captures a very small proportion of private equity/venture capital deals.
However, it is likely that some investment/deals in the study area may not be captured by deal
statistics (which are based on publicly notified deals). In 2012, the region captured 1 percent of
the value and 1 percent of the deals/projects nationally (NZVIF, 2013) (Figure 133), although
the region has around 4.5 percent of New Zealand’s businesses. Between 2006 and 2010, only
one deal was recorded in the study area for a start-up.
168
Figure 133. Investment by stage and by region, 2006 - 2010
Source: New Zealand Venture Investment Fund customised data. Notes: Where the information is sensitive, the
source data provided an investment dollar range. For the purpose of this graph, the highest dollar value of the range
was used.
Iwi investment and economic development projects
The Māori commercial asset base in the Hawke’s Bay has been estimated at $405 million (4.4
percent of the national Māori asset base), and the Gisborne region’s asset base was estimated
at $316.4 million (3.4 percent of the national asset base) (NZIER, 2005). In both regions, the
agriculture, forestry and fishing and property and business sectors were significant sectors of
asset investment, and sources of Māori-earned operating surplus.
The study area also has some of the highest concentrations of Māori freehold land in New
Zealand. There is considerable opportunity to grow the productive base associated with this
land through coordination, partnerships or consolidation of land holdings combined with
common farm development plans; ongoing investment and development of post farm-gate value
added; and the further development and intensification of land use (Ministry of Agriculture and
Forestry, 2011). Achieving this potential will require continued commitment from landowners
and stakeholders to initiatives to improve farm management, such as those that have already
been delivered in the region through the Tairāwhiti Land Development Trust.
A strategy for Māori economic development was developed in 2011 called Te Ha (the breath)
for Heretaunga and Ahuriri (the wider Hastings and Napier area). The strategy aimed to grow
the Māori asset base, Māori household income and Māori enterprise with a focus on small to
medium enterprise. The strategy identified the following foci:

primary sector growth through increasing use and productivity of Māori land and aligned
innovation investment

value-add strategies for the primary sector such as brand, market and value chain
development

yield increases in tourism
169

investment in resource and infrastructure partnerships

cluster development and collaborative partnerships.
There is apparently strong support from central/local government, but the strategy has been
deferred until key Māori entities are available and committed.
Previous reports and projects have identified the following main drivers of Māori business and
economic development in the study area (Bevin, 2012b; Te Ahu Ohanga, 2009):

land use and sea/water resource

opportunities to lease land for agricultural activities

involvement in the primary industries sector

employment opportunities in the infrastructural/service industries

labour upskilling and increased tertiary education participation

the settlement of Māori land and fisheries claims

the desire to improve the living standards of Māori.
Issues and barriers to Māori investment and economic development in the study area include
(Te Ahu Ohanga, 2009):

fragmentation and dispersal of Māori land throughout the region, cultural requirements in
relation to the use of Māori land and difficulties in raising sufficient finance for development
of Māori land

on-going tension between an individual versus collective approach to Māori economic and
business development

the historical lack of Māori participation in higher-value occupations and businesses

the adverse impacts for Māori of on-going economic restructuring

governance, leadership and accountability within the Māori community and commercial
organisations.
The opportunities identified include more effective utilisation of the Māori asset base (land and
sea) and the enhancement of the Māori entrepreneurial culture.
There will be other economic opportunities for Māori in addition to the use of the region’s natural
resources, such as in processing and a range of service industries (including education, health,
welfare services, events and tourism) (Te Ahu Ohanga, 2009). Reports have also identified a
need for capacity building within the Māori business sector and labour-market so that the
economic returns flowing from settlement assets are maximised.
Ngāti Porou
Ngāti Porou’s rohe is the East Coast, and Te Rūnanga o Ngāti Porou employs around 300
people across their forestry, fishing, tourism, farming and health operations. Ngāti Porou
received $110 million as part of their Treaty settlement at the end of 2012, including Crown
170
forest land. They already manage an asset base in excess of $170 million. They are currently
seeking to consolidate their assets and develop appropriate economic, social, cultural and
environmental strategies to support future growth.
Fisheries, farming and forestry are the main current areas of asset ownership and investment:

Porou Ariki Trust: Approximately $40 million in fishing assets – quota, processing and
retail. Predominately export oriented (about 70 percent of the business)

Own and control four large sheep and beef farms, and are looking to consolidate
operations. Supplies major processors and in a joint venture with First Light Foods

Own 25,000 hectares of forests and a further 10,000 hectares as part of collective Ngāti
Porou Whanui Forests.
Social housing and property development are also a high priority area for Ngāti Porou and they
are working on a number of projects to improve residential housing and rejuvenation of marae.
Ngāti Kahungunu
Ngāti Kahungunu Iwi Incorporated’s (NKII) Kahungunu 2026 Vision – Economically Strong for
iwi development focuses on traditional areas of fisheries and farming whilst embracing
technology and business opportunities. NKII’s economic board is focused on the following key
areas:

jobs – transition from school to work and creating jobs in priority sectors

business development – support existing business and grow new business and creating
financial security through maximising returns, increasing savings and financial
management along with building international relationships.
NKII have launched an initiative called Corporate leaders in Kahungunu. The target is to get 400
unemployed rangatahi into employment by the end of 2013. Partners include Hawke’s Bay
Seafood and Genesis.
NKII has a desire to build an Innovation Centre that is economically self-sustaining and delivers
social and cultural outcomes for whanau, hapu and iwi. Wide consultation with iwi has taken
place and the concept has been approved with the next stages to secure a site, source funding
and fund a project manager to undertake the building process. The concept includes:

being a “hub” for Kahungunu people and businesses to operate

being a cultural centre to host events and iwi activity

supporting arts through a retail and exhibition space

supporting tourism as a base for arts, cultural and seafood activities

being a research centre/SME incubator.
171
Te Rūnanga o Turanganui a Kiwa
Te Rūnanga o Turanganui a Kiwa (TROTAK) was established in 1986 and represents the
interest of Rongowhakata, Ngai Tamanuhiri and Te Aitanga a Mahaki. It exists to “promote,
pursue and advance the Cultural, Economic, Spiritual, Social well-being and Prosperity of Iwi"
Predominant interests of TROTAK in the East Coast area are currently in fisheries, forestry,
agriculture, horticulture and the delivery of health and social services, with tourism highlighted
as a potential area of future interest. Iwi within TROTAK are currently working together to
consolidate interests and develop joint investment opportunities.
While oil and gas exploration is considered to offer the iwi significant opportunities, interviewees
spoke of concerns regarding the business/revenue model with the Crown and environmental
impacts.
Turanganui iwi Rongowhakaata and Ngāi Tamanuhiri have settled for $22 million and $11
million respectively. Both settlements include the undertaking to establish a central leadership
group to provide a forum for all the Turanganui a Kiwa iwi to engage with central government.
Te Aitanga a Mahaki and affiliates have yet to settle, but this iwi represents some of the
wealthier Māori land blocks in Gisborne.
In the short term, TROTAK seeks to increase returns and improve productivity from primary
production (cropping, horticulture, sheep and beef). Sheep and beef farming are major
contributors to combined iwi interests. Formal relationships are in place with key processors in
the study area – Affco, Silverfern Farms and Ovation. The iwi commented that the Mangatu
Incorporated and Integrated Foods Limited model is working well and could be a useful model
to be adopted for future iwi investment.
Other hapū
Two hapū groups in the study area (Ngāti Pahuwera and Maungaharuru-Tangitu) have signed
Deeds of Settlement for $20 million and $23 million respectively, including land and forest
assets. Four other groups are in negotiations with the Crown and could reach similar
settlements.
172
Entrepreneurship
Based on the Hawke’s Bay and
Gisborne’s “entry rate” or
proportion of new firms to existing
firms, the study area has a slightly
smaller proportion of business
entries than the national average
(6.8 percent in Hawke’s Bay and
6.2 percent in Gisborne compared
to 8.7 percent nationally) (Figure
134). Business entry gives an
indication of the availability and
uptake of business opportunities.
Figure 134. Entry Rate (Percentage of New Firms to
Existing Firms), February 2013
Source: Statistics New Zealand, Business demography tables
Another measure of entrepreneurial endeavours is the proportion of high growth businesses.
20
High growth businesses are not only important because they grow themselves but because
they contribute to competition and productive churn in the economy, i.e., they replace less
efficient businesses or stimulate existing businesses to innovate and improve their performance.
This measure highlights the twosided nature of the East Coast
economy. The Hawke’s Bay’s
proportion of high-growth firms is
higher than the national average –
second highest in New Zealand
behind Wellington – while
Gisborne’s is below the national
average (Figure 135). Hawke’s
Bay had 24 high-growth firms for
every 1,000 firms and Gisborne
had 17. The national average was
20.
Figure 135. High-growth firms (per 1,000 firms), 2011
Source: Ministry of Business, Innovation and Employment (2013c)
The data suggests that individuals and businesses in Gisborne are taking up fewer business
opportunities (or that that perceive fewer opportunities) than the Hawke’s Bay and other New
Zealand regions, which may constrain growth.
20
A standard definition for a high-growth firm has been agreed between the OECD and Eurostat. High-growth
enterprises can be defined both by employment (number of employees) and by sales turnover. In order to study highgrowth enterprises, both criteria may be used. The standard definition is: All enterprises with 10 or more employees at
the beginning of a three-year period that record average annualised growth (in employment or turnover) greater than 20
percent per annum over the three-year period.”
173
Summary: Innovation and entrepreneurship
There is limited data about innovation at the regional level and the available information
provides a mixed picture of innovation and entrepreneurship on the East Coast. The number of
patent applications in the Hawke’s Bay and Gisborne is very low compared to other regions (in
2009, for every one million people, 20 patent applications were filed in the Hawke’s Bay while
none were filed in Gisborne, compared to the New Zealand average of 74). When last
measured in 2002, business investment in R&D as a proportion of GDP in the broader region
was also well below the New Zealand average. Gisborne has a lower than average proportion
of high growth enterprises. However, Hawke’s Bay has the second highest per cent of “high
growth enterprise” operating locations in 2011 of all regions. In addition, the Hawke’s Bay has a
high proportion of large businesses relative to other regions.
Innovation may be constrained by a lack of publicly funded research in the study area and a
limited pool of science and technology professionals. There is no university and only a small
presence of Crown research institutes in the region. Gisborne’s and Hawke’s Bay’s level of
core human resources in science and technology is also relatively low (7 percent in both areas
compared to the New Zealand average of 12 percent) and the broader Gisborne/Hawke’s Bay
region has low employment in knowledge intensive sectors (25.5 percent compared to 33.2
percent nationally).
There are, however, some good examples of industry-research collaborations in the region. For
example, the Pipfruit Research Consortium in the region was funded by the Ministry of
Business, Innovation and Employment (MBIE) to develop new apple and pear cultivates for the
industry and involves Plant and Food Research. MBIE has also supported Te Runanganui o
Ngāti Porou to develop their science and innovation strategy and has also helped fund research
staff to improve their commercial operations (e.g., Ngāti Porou Seafood). Companies in the
forestry sector have also joined industry-wide research co-operatives (e.g., Hikurangi Forest
Farms involvement with research in conjunction with Scion) and companies in the red meat
sector are involved in Primary Growth Partnership initiatives to improve levels of innovation and
added value in meat production (for example, Firstlight Foods is a key partner in a project to
develop grass-fed wagyu beef).
The study area is also improving its access to such research and expertise by building its
connections with other regions. For example, the Hawke’s Bay Regional Council recently
established a Memorandum of Understanding with Massey University to build stronger
relationships between the University and the agri-food sector in the region. Food Hawke’s Bay
has also been established to better link local businesses with the capability in the New Zealand
Food Innovation Network and local firms are participating in currently active projects using the
Foodbowl in Auckland and food pilot facilities in Palmerston North.
While there is no data on the value of exports from businesses in the East Coast study area
(other than freight from the ports) and limited data on foreign direct investment, economic
174
activity on the East Coast is strongly export oriented. It is estimated that about 33 percent of
21
employment in the area is in export oriented sectors, higher than most other regions . Councils
in the area, and Business Hawke’s Bay, have identified China as a key growth market for local
companies and there are several initiatives in the study area to build stronger relationships with
China. There are also, of course, several international businesses in the study area, largely in
the forestry, wood and food processing industries. It is possible that greater economic benefits
could be captured from the international linkages that these businesses provide.
For a ‘non-main centre’, the East Coast study area does have a good range of organisations
and infrastructure available that support innovation and business development. Hawke’s Bay
businesses capture a relatively high proportion of national innovation funding and a majority are
satisfied with business development initiatives in their area. However, stakeholders in Gisborne
have raised concerns about the difficulty in accessing funding and additional assistance has
been provided to support the Regional Partner Network in that region. The recent decision by
the Gisborne District Council to co-fund an economic development capability for the region
should, over time, help to bolster access to support.
Iwi/Māori are a significant existing and potential partner and investor in economic development
in the study area and broader region, with the Māori commercial asset base in the Hawke’s Bay
and Gisborne previously estimated at over $400 million and $315 million respectively (excluding
recent settlements). Previous research has identified that key drivers of Māori business and
investment in the study area include land use, involvement in primary industries, employment in
infrastructure and service industries and increased tertiary education participation. Research
suggests that potential barriers to the full economic potential of Māori being achieved in the
region include the fragmentation of Māori land, a historical lack of Māori participation in higher
value occupations and businesses, and the skills challenges already noted.
Iwi in the region are responding to these challenges and most of the economic development
issues and opportunities identified in this study through initiatives focused on improving
productivity from primary production, tourism, electricity generation, skills and innovation. The
commitment and ability of iwi to tackle these issues and the long-term investment focus of iwi
provides significant potential for the study area.
21
Ministry of Business, Innovation and Employment (2013b). Regional economic activity report.
175
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Appendix 1: Method
Literature review
The literature review draws on official statistics and our own regional database, academic
databases and “grey literature”.
There is a significant range of grey literature or reports which are difficult to find via academic
databases because they are not published commercially or are generally inaccessible.
However, they tend to be original and recent, and are therefore an important source of
information. Examples include technical reports and policy papers from government agencies,
working papers and studies from research groups or committees and reports commissioned by
local and central government agencies and the not-for-profit sector. Representative
organisations from the Steering Group have provided us with access to these.
A range of relevant economic data is drawn upon, including from Statistics New Zealand,
Infometrics, BERL and other economic consulting companies. Through our work in the Statistic
New Zealand’s data lab and a working knowledge of the Longitudinal Business Database,
Business Operations Survey and Integrated Data Infrastructure and Prototype (IDI) we have
extracted data on business expenditure in research and development, innovation, and export
growth.
Sources of information for transport and connectivity issues include information on freight
movements sourced from the 2008 and 2012 National Freight Demand Studies. NZTA’s State
Highway monitoring data has also been used for assessing current and historical traffic volumes
on key links. Data on port and shipping movements and travel by air have been provided by
sea and air port companies.
Comments and suggestions on drafts were received from government departments and
incorporated into the report.
Interviews
Interviews were undertaken with a number of stakeholders in the study area to gather current
perspectives on the economic performance of the study area, industries, and constraints to, and
opportunities for, growth. Interviews were undertaken face-to-face over June in Gisborne,
Wairoa, Napier and Hastings. The interviews were guided by an interview schedule. In some
cases interviews were undertaken over the phone. Table 42 lists the organisations interviewed.
Table 42. Territorial authority areas and key industries
Sector
Organisation
Local government
Gisborne District Council
Wairoa District Council
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Sector
Organisation
Napier City Council
Hastings District Council
Hawke’s Bay Regional Council
Industry organisations
Federated Farmers
Gisborne Chamber of Commerce
Gisborne Winegrowers
Eastland Wood Council
Tourism Eastland
Hawke’s Bay Tourism
Iwi organisations
Ngai Tamanuhiri Iwi Incorporated
Ngāti Kahungunu
Ngāti Porou
Te Rūnanga o Turanganui a Kiwa
Rongowhakaata
Infrastructure providers
Eastland Group
Companies and
organisations
AFFCO-Wairoa
Eastland Community Trust
Further interviews were held with industry organisations and business representatives for Stage
2 of the study.
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