Development agency's record under scrutiny

JIM CHIPP

Five years after Grow Wellington was set up to galvanise Wellington's economy, regional council chairwoman Fran Wilde has acknowledged its performance has been unsatisfactory.

The capital's economic development agency costs ratepayers $4.5 million each year and many city and district councillors have said we're not getting value for money.

Wellington City councillor John Morrison is one who has serious doubts.

"The major problem is that you have is a whole bunch of councils trying to run a business-promotion business. They've all got different agendas and it ends up approaching Monty Python levels of chaos," he said.

"Money has to be accounted for and these outfits are anything but transparent. How anyone can conclude that they achieve what they say they achieve, I don't know."

Hutt City councillor Roger Styles agreed.

"I think the return [from the investment in Grow] is probably marginal or negative.

"Probably the money would be better left in ratepayers' pockets."

Economic development activity is notoriously difficult to measure and it is always difficult to discern whether a particular business activity would have happened anyway without the agency's intervention, he said.

The best things councils can do to encourage economic development are to establish permissive zoning practices, have very efficient and smooth consent processes, hold rates below inflation, establish well-run infrastructure and carry out their core tasks well, he said.

"The whole regional council foray into economic development was meant to be a five-year programme. I think it has been spectacularly unsuccessful and it's time to knock it on the head, in my view."

Porirua mayor Nicholas Leggett said Grow Wellington was overly-focused on business growth rather than trying to enhance particular sectors of the Wellington economy.

"I think we haven't had optimal output over the last few years, which is why there is a review of the regional strategy," he said.

"Having said that they have done that within the context of a recession."

Upper Hutt mayor Wayne Guppy said the agency was set up to grow the region's economy and economic base.

"That clearly hasn't happened. There is no question that the strategy lost its way."

Grow Wellington should be talking to the private sector to find out what things would make the difference when it come to choosing where they would establish business.

The should also be talking to businesses that have left the area, such as Griffins, South Pacific Tyres and Foodstuffs' distribution centre, to find out what would have enticed them to stay, he said.

Ms Wilde said the development agency struggled to find useful ways to measure its effectiveness but the criticisms are partly valid.

"It is correct that there has not been total satisfaction with the performance of Grow Wellington and last year a new chair was appointed, together with several new directors."

The new chairman is former PriceWaterhouseCoopers partner Paul Mersi.

"We wanted a hard-arse guy to chair it and Paul Mersi is that," Ms Wilde said.

The Wellington regional strategy committee also adopted new strategy focus areas in December. Grow Wellington's board is adapting its strategy to match.

The councils are all looking for more specific reporting and expect the new statement of intent that Grow Wellington was developing to provide it, Ms Wilde said.

How much does it cost?

Council contributions to Grow Wellington Council Contribution

Wellington $2,051,000

Lower Hutt $866,000

Upper Hutt $327,000

Porirua $348,000

Kapiti Coast $464,000

Masterton $234,000

Carterton  $84,000 S

South Wairarapa $126,000

Total $4,500,000

 

GROW record defended

Hutt News has made extensive efforts to assess the achievements of Grow Wellington but what we found was underwhelming.

When we visited Cleantech business centre in Otaki, we found no one home at any of its tenancies. A Grow Wellington manager had to travel from Wellington take us in and show off the unoccupied tenancies.

An energy-from-plastics recycling research company's laboratory was sparsely- equipped. There was no one at an electric vehicle development company or at a desk-top energy-conservation software developer's premises.

A joint venture health research facility set up by Capital and Coast District Health Board, and Victoria and Otago universities has featured in Grow Wellington's regular reports to the Wellington Regional Strategy Committee.

But when we asked the agency's biomedical centres of excellence manager for a look at it he declined, saying the clinicians were not ready to talk to us.

However, Capital and Coast readily agreed to show off the new facility and some of the senior medical staff it had attracted to the board, with one proviso - Grow Wellington was not to be involved, because it had no part in the centre's development.

So is the perception that Grow Wellington is ineffectual and accurate one? Partly, said regional council chairwoman Fran Wilde.

There had not been total satisfaction with its performance and a new chairman has been appointed - Paul Mersi - and several new board members.

Finding useful measures is a struggle because a variety of inputs contribute to the success of individual firms and regional economies, she said.

"You can measure bottom-line profits in a commercial firm; you cannot do that in an economic development agency.

"That doesn't mean to say that they shouldn't be rigorous but the important thing is that in the end the clients say 'yes, we couldn't have done it without you,' and you do have a growing economy, and your export sector is getting bigger," Ms Wilde said.

Grow Wellington chief executive Nigel Kirkpatrick said the plastic company's research ought to be done by GNS and IRL in Lower Hutt, and the rudimentary space at Cleantech was a just a workshop. It was inevitable that many tenants would not always be present at the Cleantech centre, he said.

"The aim was that it would be a genuine [business] park, with big businesses, small businesses, start-ups.

"But right now, it's just start- ups," he said.

Desk-top energy-saving company Greenkeeper Systems was a good example, he said.

It has got more value from working at Cleantech than anyone, not so much from working there but from being associated, attending meetings and help from the Grow Wellington business growth advisers.

The health research facility at Wellington Hospital was not a Grow Wellington initiative but it saw an opportunity to generate economic advantage from it, Mr Mersi said.

However, the centre did not take the direction Grow Wellington envisaged and it withdrew, creating some ill-feeling.

"At the end of the day economic growth comes from harnessing those opportunities."

- Hutt News