Yes, Wellington is open for business
A year ago Prime Minister John Key said Wellington was "dying". The Wellington Report, a week-long series in The Dominion Post, showed the capital was far from dying but it did face serious challenges. Have things got better or worse in the year since? Anthony Hubbard reports.
Wellington is "definitely better off than it was a year ago", says Wellington Employers' Chamber of Commerce boss Raewyn Bleakley.
There is, she says, "a huge amount to be optimistic about".
Certainly there are signs of real progress.
The economic tide has lifted and raised Wellington with it. But the capital has also made some big moves of its own.
Wellington Mayor Celia Wade- Brown points to the Hilton Hotel and convention centre proposal as a major source of money and jobs.
A year ago the seemingly interminable debate over the need for a convention centre was drifting on.
Now there is a concrete project almost certain to go ahead.
Wellington City Council CEO Kevin Lavery likens it to a snowball "that gains size and pace as it goes", lifting economic confidence with it.
Then there is the proposed Wellington film museum on the waterfront, a joint venture between the council and film tycoons Peter Jackson and Richard Taylor.
The museum would be a major national and international attraction, says Wade-Brown. "It would really put Wellington on the map."
Serious discussions are going on, somewhat slowed by Jackson's urgent work completing the third part of The Hobbit trilogy.
And then there is the extension of the runway at Wellington international airport, the proposal that received the most widespread backing in last year's Wellington Report.
Serious work is going into the proposal, which is now focusing on an extension to the south.
However, the Government remains cool, especially to the idea that taxpayers should pay some of the cost.
"I think you could still describe me as being somewhat sceptical," says Economic Development minister Steven Joyce.
And in any case, while much work has gone into the film museum and the airport projects in the past year, they remain just proposals.
A year ago there was also criticism of Wellington's leadership. Critics said the city council was fractious and divided and unable to make a decision over vital issues - especially the Basin Reserve flyover.
A year on, the flyover is still stuck in limbo after a board of inquiry this week made its surprise decision turning it down.
This has exasperated the Government, which a year ago criticised the council's approach to the project.
Transport Minister Gerry Brownlee said this week that the Government had no intention of abandoning Wellington. "But the city does need to start backing itself at some point."
There have been signs of an improving relationship between Wellington and the Government - but there is clearly a way to go.
And most people agree that the council itself is less divided than it was a year ago - if only because 2014 is not an election year.
So the report card is mixed.
There is clear progress in some areas. In others, such as the airport, progress has been made but is invisible to the public. And the flyover is still a major problem.
ROLLING THE SNOWBALL
Wellington has been talking for years about getting a new convention centre. Now it seems likely to get one.
The proposed Hilton Hotel and convention centre, led by city developer Mark Dunajtschik, is "an excellent development", says Wade-Brown.
The council believes that in return for $2 million a year from ratepayers, the city will gain about $24m a year.
The way the mayor tells it, everyone wins.
A $100m five-star hotel and convention centre will be built on a bit of wasteland presently used as a car park.
The site "is halfway between Te Papa and Courtenay Place - eminently walkable", she says.
It will make the city look better and bring in money and jobs.
She doesn't buy the critics' argument that if the project doesn't succeed it could cost the council as much as $4.6m a year.
"That would be so only if we had no events there," she says. That wouldn't happen.
The convention industry was growing globally, and Wellington would market its hot new facility.
It also fitted with the Government's strategy to sell New Zealand as an international convention destination.
The city can't afford to do nothing, she says, because Auckland and Queenstown are building their own new convention centres.
"If we do nothing, I can guarantee we will lose business to our competitors," she says.
Lavery says the business case is very good and has been closely scrutinised by firms such as PriceWaterhouseCoopers.
"For goodness' sake, we've assured this to death."
It is vital that the council now get some major projects under way to boost revenue to the city and the council - and to increase business confidence.
But it is also a good time to launch such projects, as the council starts to design its long- term plan and make sure there is finance to back its vision of a Smart Capital.
It also had to quit its habit of underspending the capital expenditure budget.
"Last year we underspent by about $45m - so there's a lot of capacity in the existing spend to do a lot more."
The Chamber of Commerce's Raewyn Bleakley calls the convention project "very exciting".
It has the potential to bring new opportunities to the city and the region and appears to be a good return on investment. Done properly, the project has the potential to be a drawcard for high-value visitors.
"Having a local developer, along with the Hilton brand, shows a lot of great work has been done to bring it to the public consultation point," she says.
"But the business case has to stand up."
LORD OF THE FILM MUSEUMS
The proposal for a Peter Jackson/ Richard Taylor-backed film museum on the Wellington waterfront has obvious appeal not just in New Zealand but internationally.
The twin geniuses of The Lord of the Rings films have a global following. If Hobbiton in Matamata can still draw big crowds, what could a Jackson- Taylor film museum in the heart of Wellington do?
Wade-Brown, who is holidaying in Europe, says she has found many people are really excited about the idea of a film museum.
"Most places do know about the Lord of the Rings being made in Wellington and I think they'd love to come and see an interactive high-quality film museum here.
"This will really put us on the map."
There has been some "ups and downs" over designs and the project has not yet got a design proposal for resource consent yet, "but [we are] getting closer".
Jackson and Taylor are very busy with making the third part of The Hobbit as well as other projects. However, the museum "is an important project, we're all committed to it".
Critics say Te Papa is a bland building and a missed opportunity on the waterfront. If the renowned architect Frank Gehry had designed the building, they say, it could have been a world-class tourist drawcard such as his titanium-covered Guggenheim Museum in Bilbao, Spain.
Could the film museum be Wellington's new architectural opportunity?
"I think it's a question of not having an overwhelming size," says Wade-Brown. "I think it's the inside interactivity that's got to be exciting . . . You can make buildings incredibly exciting with projections on them. There are ways to make a building exciting without in any way interrupting people's view shafts and so on."
Wade-Brown refuses to say where the museum will be built but other sources confirmed it is destined for the waterfront - if it goes ahead. Everyone emphasises that nothing is finalised, although Wade-Brown says "there's a lot more progress than there was this time last year."
THE AIRPORT AND THE MONEY TREE
Wellington thinks lengthening the airport runway will bring in a lot of money. A longer runway would allow direct long-haul flights to Asia and the United States.
That means much easier access for foreign students, tourists and businesspeople. Infratil and the city council, the major shareholders, have spent a lot of time in the last year building the case.
They also think the Government should contribute a fair whack of the cost of about $300m. The Government is not so sure. Steven Joyce says he remains "somewhat sceptical" about the case for a longer runway.
There are "plenty of examples of airports which have enlarged themselves for economic development reasons but where the benefits have been significantly smaller [than expected] or non-existent".
The airport and the council argue that the longer runway would bring big benefits to the city and the region, and that therefore the Government should subsidise it.
"There's a lot of people that take the view that some free taxpayer money would be very worthwhile," Joyce says.
"This would not be the first time that I've heard this pitch."
Auckland and Christchurch airports "make their own investment decisions and they fund their investments from their balance sheets. It's hard to see why Wellington should be different".
Is he open to persuasion over the subsidy issue? His reply is not encouraging.
"What they have said is they are going to provide a more detailed business case, and it never hurts to read things.
"But you also don't want to give the wrong impression either. So I just wouldn't offer a view until such time as it arrives."
The question is, says Joyce, does the case stack up?
Clearly a lot hinges on this argument. A recent survey by the Wellington Employers' Chamber of Commerce "indicated that Wellington businesses see the extension as the one single project that could have the most significant effect on the region's economy", says Bleakley.
They also support central government making a contribution to this key piece of infrastructure.
But she too agrees that "the viability and business case need to stack up".
HOW TO WORK WITH THE GOVERNMENT
A year ago there was trouble between Wellington and the Government. Senior Cabinet ministers criticised Wellington's leadership, with Joyce even joking that his Labour opponent Annette King would "do a moderately better job as mayor" than Wade- Brown.
Joyce said then that he couldn't remember if he'd seen her in the past year, though he saw Auckland mayor Len Brown "very regularly".
Finance Minister Bill English said last year Auckland was "a bit more energetic about pushing their case" than Wellington.
Referring to the flyover, he said Auckland "are always trying to do transport projects, as opposed to not doing them."
Have things improved?
Joyce says they have as far as he's concerned.
"It's hard to say exactly why or how. But I've been working with Celia, I've seen her a bit recently and we get on reasonably well."
Council CEO, Kevin Lavery, appointed in April last year, "seems to be pretty positive and I think is making a positive difference as well".
But English is not quite so positive.
There are promising signs within the Wellington economy, he says, especially with newer start-up businesses growing in the city.
These are "providing a foundation for Wellington's economic success".
However, he says, "there are still some conflicting signs from the city council about whether Wellington is really open for business".
"On the one hand, we are seeing some more support for business, but on the other hand it doesn't seem keen on new development.
"It's disappointing to see consistent opposition to infrastructure development - for example, the Basin Flyover.
"So investors may be increasingly reluctant to consider investing in infrastructure for growth in Wellington, at a time when other regions are welcoming it."
Wade-Brown thinks relations with the Government have definitely improved.
HOW TO WORK TOGETHER
A year ago, the city council was criticised for being fractious, divided and frequently paralysed.
Here, too, the flashpoint was the flyover.
How many times had the council discussed the thing?
And how many times had it failed to make up its mind?
The Government was annoyed about this but also showed some irritation with the division among the different councils of the region.
John Key said last year it was up to the region whether it decided to amalgamate its councils.
However, he added, "I'm absolutely convinced the SkyCity convention centre would not have occurred if there hadn't been a single city and that's because government would have had to deal with seven mayors."
Bill English said something similar about the Government's agreement with the Auckland Council to speed up processing of resource consents for new housing.
"We couldn't have done a housing accord with eight councils."
Since then two applications to amalgamate Wellington local councils have been lodged with the Local Government Commission.
However, it seems unlikely there will be a Wellington super- city or super-region. The two Hutt councils oppose merging with non- Hutt councils. The Wairarapa councils want to merge with each other, but not with non-Wairarapa councils.
The Wellington convention centre proposal, however, is well advanced.
And Wellington City Council has done a housing accord with the Government. Wade-Brown cites it as one of the signs of improved co-operation between Wellington and the Beehive.
The legislation, she notes, does not allow a regional housing accord.
She also notes that the local councils have not waited for a decision on amalgamation before working more closely together.
Five councils have got together to form Water Wellington, a co- operative body to get cost savings and efficiencies with the water supply.
And the region's councils are working to merge all their economic development agencies into one.
The idea, says Lavery, is "if you're a global business that wants to locate here there's one person to ring".
These moves, he says, have "captured John Key's attention".
Joyce also approves, noting that "the subtleties of the constituent local authorities are a bit lost on outside investors".
Wellington is right to look for investors "and worry about where the boundaries are between Hutt City and Wellington later".
Wade-Brown says the city council is more harmonious and collegial than it was a year ago. Bleakley also detects some improvement on that front.
Councillor Jo Coughlan, who chairs the economic growth committee, says the claims about a divided council were exaggerated anyway.
"Last year was an election year," she notes, when political arguments always heat up.
In her six years as a city councillor, however, she has not found the council excessively fractious or paralysed.
"We can get things done," she notes, "though not roads, obviously".
NOT DYING . . . NOT FLYING, EITHER
Wellington can point to other gains over the past year. Prime Minister John Key, who last year said Wellington was "dying" (though he soon said he could have expressed himself better), now sees things differently.
"We are seeing good growth in the Wellington region as the national economy recovers - and that is great news," he said this week.
He also takes some of the credit.
"ICT and the creative industries are both growing strongly, and central government investments in big infrastructure projects are helping.
Projects such as the Kapiti Expressway, Transmission Gully, ultra-fast broadband, and completing the modernisation of the commuter train fleet are all helping the region see some real momentum."
However, he says, "any change to the leadership or structure of Wellington's governance is a matter for Wellingtonians".
Bleakley also points to the continuing boom in the smart companies investing in the Smart Capital.
"Software developers move here because they like the lifestyle and because there is an established industry here with great networking," she notes.
Business has shrugged off the effects of the global financial crisis and is much more positive.
Wellington has the highest concentration of web-based and digital technology companies per capita in New Zealand.
"New companies are coming here and we have some big projects in the wind," she says.
"There is a huge amount to be optimistic about."
There have been other positive signs for Wellington.
Victoria University has unveiled an ambitious 20-year $100m expansion programme. It hopes to double its student numbers in that time to 30,000 students.
The Government has announced an ICT graduate school for the city in a further bid to connect the academy with business. Two new business incubators have been approved to get more high-growth start-up companies going.
The city council also has longer-term plans to build on Wellington's strengths in film and high-tech by creating a Film Precinct and a Tech Precinct - though at present these are mainly "a gleam in the eye", says Lavery.
So there is some real progress and there are many, many plans.
But nobody is saying Wellington is a boomtown yet.
Its growth has been modest and typically its economic indicators are about the national average.
Berl economist Ganesh Nana says that of the country's cities only Auckland and Christchurch are set to exceed average growth figures.
Wellington has made good progress with hi-tech and digital investment, he says.
But it does not have a dairying hinterland to turbo-boost its earnings.
And he says the rise in business confidence indicators can quickly change, especially as interest rates rise.
Wellington is not dying - but it's not quite flying, either.
The Dominion Post