'Broken CBD' could turn off rebuild workers
A big risk to Canterbury's economic growth is any crisis of confidence in the central Christchurch rebuild, Canterbury Development Corporation chief executive Tom Hooper says.
The rebuild was driving parts of the province's economy, but that growth was backed by the "strong performance of the region's agri sector", he told a Christchurch audience as part of a CDC economic update.
Hooper said the biggest risks to the rebuild were labour constraints and reduced confidence in the core rebuild.
"Taking more time will in some ways smooth out the impacts of the earthquakes," he said.
"But if actually what we do is damage confidence in the economy, so if people . . . say it's not happening, you're not rebuilding, things are not where they need to be, then we lose our ability to attract a work force."
Christchurch was similar to most other Western cities in that it had an ageing demographic.
"So into the long term, unless we have population increase, we will not grow the working-age population in the city, so it has to come through migration," he said.
Young people from countries like Ireland, Canada, the Philippines and Australia who were potential workers for Christchurch had other choices, Hooper said.
While the quake had been a positive in making Christchurch a point of difference, these people would be evaluating it against other cities.
"Actually, if we've got a broken CBD, and if we don't recover well from the earthquake, we won't be on the list," he said.
While the central city remained broken, Hooper said, and while Christchurch's recovery was taking longer than many envisaged, the underlying and rebuild economies were "broadly where we would hope they would be, and internationally they would say they are ahead of perhaps where the normal [recovery] curve is".
He said the rebuild economy would peak at 8 to 10 per cent of the total Christchurch economy or gross domestic product within the next two to three years before easing back.
At present it made up only about 4 per cent of the Christchurch economy, he said.
There had been a drop in Christchurch's growth or GDP from about 9 per cent at a peak at the end of 2012-early 2013 to under 7 per cent now, Hooper said.
Part of this was because of labour constraints, particularly in the skilled sectors, he said.
This would need to be answered by migration, he said.
"We shouldn't be concerned about the slowing of our growth rate," he said.
"However, occurring so early on in the rebuild is a sign that our region's economy may be constrained in some way."
This was a reminder that with "high-growth" economies there were risks and challenges.
"So we actually have to have increased levels of migration to increase the size of the work force," he said.
"In an ideal world, that will be in two areas. It will be to help with the rebuild and make sure the rebuild is not a constraint, and it will be to help with our key underlying sectors and growing those sectors that have demand for workers as well."