WAIKATO MEANS BUSINESS.

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1 WAIKATO MEANS BUSINESS. Annual Report

2 FOREWORD Whāia e koe te iti kahurangi: ki te tuohu koe, me he maunga teitei. Seek the treasure you value most dearly: if you bow your head, let it be to a lofty mountain. In December 2016 I was honoured to be invited to chair Waikato Means Business. I took on the role because I believe passionately in the Waikato, its businesses, people and communities. I also strongly believe that the region is yet to fully realise its potential, and it s not only up to our councils and central government to try and make a difference on their own. It s up to everybody whether in business, education, government, Māori/iwi or the community to step up and help improve the levels of wellbeing and prosperity for everybody who calls the mighty Waikato home. Waikato Means Business has been working since 2014 to establish an all of region approach to economic growth facilitation in the Waikato. The Waikato Regional Council, along with the New Zealand government, councils and the WEL Energy Trust, have Government significant resource to develop a strategy and initial regional economic growth programme for our region. An at-scale and well-funded regional growth programme operates in most other regions in New Zealand, but until recently has not been seen in the Waikato, to our cost. These partnerships mean that we are now able to apply a far greater level of resource to economic development projects in the Waikato than ever before. With the support of our partners, we have made major progress in areas as diverse as developing and launching the Waikato Story, reviewing and proposing improvements to the region s innovation system, expanding the Secondary School- Employer Partnerships (SSEP) programme to reach over 2200 Waikato students and, with Waikato Tainui and Te Puni Kōkiri, completing a Waikato Māori Economic Development Action Plan and Agenda. We ve worked with the Future Proof partnership in the northern Waikato, ensuring there is enough business and industrial land to meet current and future demand which is spilling down from Auckland. We ve partnered with all councils to ensure there is a more coordinated approach towards inward investment promotion for the Waikato. And we re working with the councils in the southern Waikato subregion to address some of the concerning trends around population, employment and business investment by starting to develop a Southern Waikato Economic Development Action Plan. We ve also lent our support to the region s voice to support funding for major regional projects such as the extension of the Waikato Expressway, Southern Links and the Waikato Graduate Medical School to name a few. And we ve been a key partner in the development and completion of the Waikato Plan through which the Waikato region now speaks with one voice. The Waikato Plan has fully adopted the Waikato Means Business strategic framework as the foundation for its economic development section, ensuing full alignment between the two initiatives. Despite all of this, the Waikato still performs moderately on economic indicators (see this report) compared to other regions in New Zealand. This seems paradoxical given our people, natural and location advantages. There are many reasons for this, but we are clear that we need to grow on our strengths and address our vulnerabilities if we are to all be better off. We also need to acknowledge that our businesses, local councils and community organisations have always done a fantastic job, but their impacts have sometimes been localised and limited. In 2016 we commissioned MartinJenkins Ltd to review the region s economic development capacity and capability. The conclusion of MartinJenkins, supported by the WMB Steering Group and the Waikato Mayoral Forum, was that a new independent business-led regional economic development agency (REDA), built off the functions of the very successful Waikato Innovation Park, is the best and most cost-effective model. Current regional tourism and destination marketing 2

3 would remain with RTOs but with clear linkages and alignment to the new regional EDA. To address concerns about any model being able to deliver value outside of the Hamilton urban area, a hub and spoke model should be developed to recognise different local ED factors, but with strong leadership from the centre. This would see services delivered locally through service centres in the northeast southeast and southwest of the region. We are now undertaking the detailed planning and design work for the Waikato REDA and expect to see the entity open for business, based at the Waikato Innovation Park at Ruakura, from 1 July Waikato Means Business will, at that date, be folded into the new REDA and will cease operating. As well as retaining the expert services of MartinJenkins, this project is being directed by a fantastic group of Waikato business, local government and community leaders, who have given their time and expertise to ensure the new way of working creates significant additional value for the Waikato and takes us with greater momentum towards our vision of significantly improving standards of living in the Waikato region, where all people, communities and businesses reach their potential. Lastly, I want to pay tribute to Michael Spaans who passed away late in Michael was instrumental in the establishment of a regional economic development programme for the Waikato, being on the original strategy leadership group and more recently on the Waikato Means Business Steering Group. Michael brought his skills as a farmer, businessperson and strategic governor to Waikato Means Business and was always generous with his time, expertise and wisdom. Michael had a great passion for the Waikato and its future, and his loss is a loss for not only his family but also the region. We dedicate this second annual report to Michael in memory of the massive contribution he has made to the region. Dallas Fisher Chair, Waikato Means Business 3

4 CONTENTS FOREWORD 2 CONTENTS 4 EXECUTIVE SUMMARY 6 INTRODUCTION 8 Strategic framework 8 The Waikato Means Business Steering Group 10 COMMENTARY: THE WAIKATO ECONOMY IN Exports 12 Productivity 13 REPORTING ON PROGRESS 15 Long-term outcomes 15 Short and medium-term outcomes and key actions 17 Strategic Priority 1: Maintaining and building our location advantage 18 Strategic priority 2: Growing global industries 24 Strategic priority 3: Making business easier 34 Strategic Priority 4: Building, attracting and retaining skills and talent 36 Strategic priority 5: Telling the Waikato Story 46 CROSS-CUTTING PROJECT 1: TOWARDS GREATER REGIONAL ECONOMIC DEVELOPMENT CAPACITY 52 Short-term outcomes 53 CROSS-CUTTING PROJECT 2: IMPLEMENTING THE MĀORI ECONOMIC DEVELOPMENT AGENDA AND ACTION PLAN 54 Short-term outcomes 55 PERFORMANCE OF KEY ECONOMIC INDICATORS IN THE REGION 56 References 66 4

5 LIST OF FIGURES Figure 1: Waikato Economic Development Strategy Outcome and Evaluation Framework 9 Figure 2: Waikato regional population and GDP growth rates 12 Figure 3: Waikato region GDP per person Figure 4: Waikato sector export performance Figure 5: Productivity in NZ versus other comparator nations Figure 6: Productivity Waikato versus rest of NZ 14 Figure 7: Waikato Means Business overall summary of performance 16 Figure 8: Waikato Plan strategic framework 19 Figure 9: Continued growth in value of infrastructure assets 22 Figure 10: Value of infrastructure assets per district, Waikato region 22 Figure 11: Waikato roads in better condition than average 23 Figure 12: Waikato innovation system 30 Figure 13: NZTE vouchers lower than other regions 31 Figure 14: Waikato gets around 8% of NZTE vouchers 31 Figure 15: R&D grants lower than NZ average 32 Figure 16: Percentage of resource consent applications processed on time (2014/15) 35 Figure 17: Waikato labour market strategy map 36 Figure 18: Summary of the Waikato labour market 37 Figure 19: Employment by sector Figure 20: Projected sector labour demand growth 39 Figure 21: SSEP key performance indicators 41 Figure 22: Teacher and employer feedback SSEP 42 Figure 23: Proportion enrolled in school below average and not growing 44 Figure 24: Declining proportion of industry trainees 44 Figure 25: Levelling out of number of trainees 45 Figure 26: Study participation rate slightly less than average 45 Figure 27: The Mighty Waikato brand displayed at the Hamilton Airport 46 Figure 28: Regional welcome signage 47 Figure 29: Aerial shot, Hamilton City 48 Figure 36: High growth in incomes recently 57 Figure 37: Gap widens between Waikato and NZ s per capita GDP 57 Figure 38: Growth in per capita GDP fluctuates 57 Figure 39: Productivity growth less than NZ average since Figure 40: Fewer qualified people than NZ average but on par with Bay of Plenty 58 Figure 41: Knowledge industry employees consistently 4-5% less in Waikato 58 Figure 42: Key industry share of regional GDP steady for several years 59 Figure 43: Value of exports fall again this year 59 Figure 44: Export growth rates fluctuate 59 Figure 45: Sustained growth in key export employment 60 Figure 46: Waikato employment in exports growing similar to NZ 60 Figure 47: Stable traffic congestion 60 Figure 48: Highest fatal accidents since Figure 49: Most ever employed in key industries 61 Figure 50: Employment in key industries growing since Figure 51: Enterprise entry and exit trends mirror NZ s 61 Figure 52: Entry rate of firms remains below average 61 Figure 53: Fewer highly skilled people than average 62 Figure 54: Youth NEET higher than average but only just 62 Figure 55: Skilled migrants on the rise 62 Figure 56: Greater growth in skilled migrants compared to NZ average 62 Figure 57: Growth in tourism value drops but still positive 63 Figure 58: Domestic tourists continue to spend more 63 Figure 59: Waikato and Bay of Plenty get similar international tourist dollars 63 Figure 60: More money from domestic but international tourist spend is growing 63 Figure 61: International students growing at half the NZ rate 63 Figure 62: International student numbers growing slightly 64 Figure 63: Steady growth in international students more recently 64 Figure 30: Proposed Waikato Regional Theatre 48 Figure 31: Website hits increase from all countries 50 Figure 32: Value of investment prospects (2015) 50 Figure 33: Angel investments fluctuate 51 LIST OF TABLES Table 1: Progress of key actions Figure 34: Angel investment per business is low 51 Figure 35: Waikato incomes are lower than NZ 57 5

6 EXECUTIVE SUMMARY Waikato Means Business is the overarching regional economic development strategy for the Waikato region. It sets out the issues, challenges and broad opportunities for our region, and identifies strategic priorities and areas of focus to transform the economy. The strategy s high-level aims include an increase in median household incomes and increases in gross domestic product (GDP) per capita. The strategy is overseen by an independent steering group comprised of leaders from business, local government and iwi Māori. This report provides an annual summary of economic development in the Waikato in three main areas. A commentary on the overall state of the Waikato economy A summary of key actions, projects and initiatives which have been undertaken over the past 12 months in the Waikato, against the priority areas of the economic development strategy More detailed key performance measures and metrics which provide the foundation data for assessing the health and performance of the Waikato economy. Our regional economic development strategy has two main goals and four subsidiary goals: Increase median household incomes to above the New Zealand average Grow value added (GDP) per capita by 2.8% per annum Increase productivity by 1% per annum Increase the proportion of working-age population with high level qualifications to above the New Zealand average Lift value added in key sectors by 80%; and Lift the value of international exports by 1.5% pa. Waikato Means Business identifies five major strategic priorities and strong progress has been made in all these areas in relation to the priority actions identified in the Implementation Plan. The progress of the priority actions are summarised in the table, followed by a more detailed report on the results of actions taken in the past year. Overall it has been a strong year for Waikato Means Business, with all the major projects it has scheduled and funded being completed on time and within budget. The one exception to this was project 1 Modelling the Economic Costs and Benefits of Different Land Use Scenarios in the Cambridge-Auckland Growth Corridor. Originally conceived by Waikato Means Business, this project was taken up by local government (principally the Future Proof Consortium) because of the requirements of the National Policy Statement on Urban Development Capacity. The role of Waikato Means Business is to provide a regional level roadmap to help guide these and other investments in the Waikato. The strategy and the steering group see success as being a combination of their wider leadership influence and investment in specific projects, complementing and supporting the actions of those business, education, Māori, government and non-government agencies who are increasingly investing in the future success of the Waikato. STRATEGIC PRIORITY Maintaining and building our location advantage Growing global industries Building, attracting and retaining skills and talent Telling the Waikato Story Cross-cutting projects PRIORITY ACTIONS 1. Modelling the Economic Costs and Benefits of Different Land Use Scenarios in the Cambridge-Auckland Growth Corridor 2. Understanding the Waikato Innovation Ecosystem 3. Complete Mapping Future Workforce Needs 4. Secondary Schools Employer Partnership 5. The Waikato Story Implementation Programme 6. Towards Greater Regional Economic Development Capacity 7. Implementing the Māori Economic Development Agenda and Action Plan Waikato Means Business Annual Report Data Collection Fully on track or completed STATUS Not fully complete and/or experiencing minor delays Significantly delayed or cancelled 6

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8 INTRODUCTION STRATEGIC FRAMEWORK Waikato Means Business, the Waikato economic development strategy, was released in February It sets out the issues, challenges and broad opportunities that face our region, and identifies strategic priorities and areas of focus to transform the economy. The strategy aims to guide regional economic development policy, investment and activities across our region. The second annual implementation plan of Waikato Means Business was released in September 2016 following additional work and consultation to identify and develop the actions that would contribute the most to the strategy s priorities and goals. The implementation plan provides: clarity to partners involved about what is to be delivered, by when and what resources are required clarity to industry and the wider public about who is responsible for implementation and when they can expect to see progress a base against which to measure progress and to determine whether changes in course are required. The implementation plan is a living document circumstances change and it is important the actions and implementation are reviewed regularly. The plan also noted the approach to the monitoring and evaluation of the implementation of Waikato Means Business. Figure 1 depicts the outcome and evaluation framework. The diagram illustrates the links between the actions that are proposed and the intended impacts and outcomes of those actions, including: short-term changes in awareness and access to resources (first 1-2 years) these will be most directly attributable to the actions of the strategy medium-term changes in behaviours, practices and investments (2-7 years) long-term changes in industry and economic performance (7 years plus). It is important to note that there will be multiple pathways between actions and outcomes, although the more direct bottom-up logic between actions and short and long-term outcomes is emphasised in the diagram. An action may impact on a range of outcomes and there will be linkages between different outcomes. In addition, changes in longterm and economic outcomes will not simply be attributable to actions because they will be influenced by a range of other initiatives and external factors, such as macroeconomic changes in major economies and national economic policy and regulatory changes. 8

9 VISION We want to improve standards of living in the Waikato region, where all people, communities and businesses reach their potential ECONOMIC OUTCOMES Improvements in goals from 10 years plus FOCUS GOAL 1: Increase median household income to above the New Zealand average Median annual and weekly household income (HLFS) relative to New Zealand average FOCUS GOAL 2: Value added per capita will grow by 2.8% per annum Estimated GDP per capita (estimates) SUBSIDIARY GOALS Productivity growth is at least 1% pa Compound annual growth in GDP per FTE (estimates) Proportion of working age population with high level qualifications increases to greater than the NZ average Proportion of the working-age population (15-65 years) with New Zealand Qualifications Framework Level 4 and above qualifications (Census/MBIE) Lift value added in key sectors by 80% Key industry contribution to regional GDP and compound growth in industry GDP (estimates) Lift the value of international exports by 1.5% pa Compound growth in regional exports (estimates) Growth in employment in export related industries (MBIE) OBJECTIVES Leverage value from our location and connections to the upper North Island Provide a quality education offering which encourages high levels of participation and life-long learning Be New Zealand s premier manufacturing and engineering hub Be known for excellence in sustainable food production and agri-business LONG-TERM OUTCOMES Changes in performance from 7 years plus STRATEGIC PRIORITY 1: Maintaining and building our location advantage Reduced traffic congestion, particularly within smaller communities Reduced road travel times on key routes Significantly reduced number of fatal and serious injury crashes Growth in the number of commuters between Waikato, BOP and Auckland Increase in inter-regional freight flows Reduced road freight intensity in the region (freight tonne kilometre relative to GDP) STRATEGIC PRIORITY 2: Growing global industries Growth in employment and estimated GDP in key industries Increased proportion of high growth businesses in the population Growth in employment in R&D intensive industries Increased estimated innovation and R&D in the region STRATEGIC PRIORITY 3: Making business easier Increased enterprise start-up rate Improved business rating of ease of doing business in the region Improved resident satisfaction with infrastructure and customer services STRATEGIC PRIORITY 4: Building, attracting and retaining skills and talent Increasing proportion of population with high (skills level 4 and 5) and low (skills level 1) literacy and numeracy attainment Increasing percentage of people aged 15 years or over who attain at least NCEA Level 2 Declining proportion of youth (aged years) who are not in employment, education or training Businesses in the region have improved access to skills STRATEGIC PRIORITY 5: Telling the Waikato Story Growth in estimated domestic and international visitor nights and visitor expenditure Growth in: out-of-region students studying in the region international student numbers and tuition Growth in employment in businesses with 50% or more foreign ownership Growth in high quality foreign investment in the region Improved resident and business perceptions of the quality of infrastructure in the region Increasing proportion of skilled migrants attracted to the region MEDIUM-TERM OUTCOMES Changes in perceptions, behaviours, investments and services over 2-7 years, resulting from changes in the short-term outcomes Residents, businesses and developers have improved information about proposed land use and infrastructure investment Lower cost and time requirements to invest in and develop infrastructure Increased investment in infrastructure by the private sector, local and central government Improved quality of roads Increased investment by business, local and central government in key industries Increased investment in R&D and innovation by businesses in key industries Increased knowledge exchange between businesses in key industries and local and central government agencies Increased capability and capacity in the regional innovation system Increased quality of regulatory and customer services Improved consistency of regulatory practices and customer services across councils Reduction in the costs of providing regulatory and customer services across councils Reduction in business compliance costs associated with establishing businesses and interacting with councils Reduction in lead times in providing regulatory and customer services Increased investment in education and training offerings for key industries in the region Increased participation by children and adults in education and training Increased investment by businesses in training and education of employees Improved knowledge transfer between industry and education and training providers Improvement in the quality and relevance of education and training offerings in the region Increased awareness of the Waikato as a visitor, education, and investment destination Increased number of visitor enquiries, international and national domestic student enquiries, investment enquiries Increased number of investment deals/prospects identified in the region Investors consider that it is easier to invest in the region SHORT-TERM OUTCOMES Changes in the availability of information and resources in the first 1-2 years, directly attributable to the actions Note: As the three key initiatives will take several years to develop, it should not be expected that there will be major short-term outcomes milestones will be completed such as: Completion of required planning and consenting for the Ruakura Hub Completion of the spatial plan Completion of early stages of the Hamilton section of the Waikato Expressway Industry, local and central government have better information about major investment and industry development opportunities and how they might be progressed Increased collaboration between industry, local and central government on investment and industry development initiatives Businesses in key industries have improved access to expertise for growth and investment Reduced costs and risks associated with undertaking investment and industry development opportunities Councils have better information about the quality of their regulatory practices and customer services and opportunities for improvement Increased collaboration between councils in the resourcing and application of regulatory and customer services Children and adults have better information about: training and employment opportunities in the region the opportunities and benefits associated with different careers in the region changing skill requirements Education and training providers have better information about demands for skills and future employment opportunities in the region Businesses in the region have better information about the benefits associated with investing in training and education Students, potential trainees and potential employees from outside the region have better information about education and training opportunities in the region and the advantages of undertaking education and training in the region Potential domestic and international visitors have better information about visitor attractions and amenities in the region and how to access those Potential investors have better information about investment opportunities in the region and the advantages of investing in the region Increased collaboration between education and training providers and key industries KEY ACTIONS Development of a regional spatial plan Development of the Ruakura Hub Completion of the Waikato Expressway Regional growth study to identify major investment and industry development opportunities Review of council activities against business friendly principles and implementation of improvements to ensure alignment and consistency Development of a regional labour market strategy Development of the Waikato visitor, education and investment value proposition Figure 1: Waikato Economic Development Strategy Outcome and Evaluation Framework 9

10 THE WAIKATO MEANS BUSINESS STEERING GROUP The Waikato Means Business Steering Group represents a new way of leading regional economic development outcomes in the Waikato region. The group is an independent leadership group, composed of representatives from business (6), iwi Māori (2) and local government (2). The group was initially selected by the Waikato Mayoral Forum, and all subsequent appointments to the group are made as recommendations by the steering group to the chair of the mayoral forum. This reflects the considerable public interest and public good that comes from effective regional economic development. The members of the Waikato Means Business Steering Group are: Dallas Fisher (chair) Parekawhia McLean Gray Baldwin Tom Findlay Donna Flavell Mark Flowers Traci Houpapa Mike Pohio Don Scarlet Bob Simcock The group is supported by an independent programme manager, who works with local government, business and non-government organisations to advance and promote the goals, objectives and priority projects of the strategy and the steering group. Funding for the steering group is provided primarily through returns on Waikato Regional Council s investment fund. Because the economy is a complex collection of different actors and agencies (from individual firms to local, regional and national level policies and regulations), the steering group acts as a leadership forum for economic development in the region. The group recognises that achievement of the goals of the strategy will require a large number of stakeholders and partners to play their part. The steering group undertakes many functions including: monitoring and reviewing regional economic data and performance leading the conversation and debate on key regional economic development issues and opportunities through research and investigation projects which aim to better understand the way the regional economy works, and what actions are required acting as an advocate and supporter for key regional issues and initiatives, including where appropriate acting as a supporter for key projects seeking resources from other agencies collaborating and coordinating with other key actors to make progress in key strategic areas funding strategic projects which will advance the objectives of Waikato Means Business. Also, many of the projects prioritised in the implementation plan are funded and delivered by other partners. In these cases, the steering group acts as an advocate and supporter for these projects. With an annual allocation of $250,000 for project seed funding, from returns on Waikato Regional Council s investment fund, the steering group decides upon and provides support for key regional economic development implementation projects. Project support is based on the following considerations: Regional impact, significance and reach The extent to which the project is aligned with the vision, goals and objectives of Waikato Means Business The potential impact of the project in delivering on Waikato Means Business priorities relative to other proposals The financial contributions or in-kind services being provided by the organisation(s) delivering the project The extent to which the organisation(s) demonstrate the capacity and capability to undertake the project What financial contributions or in-kind services are being provided by other relevant stakeholder organisations Whether the project will proceed, be delayed or its impact reduced without Waikato Means Business support. In the 2016/17 financial year, the steering group decided to support the following key projects: 1. Modelling the Economic Costs and Benefits of Different Land Use Scenarios in the Cambridge-Auckland Growth Corridor 2. Understanding the Waikato Innovation Ecosystem 3. Complete Mapping Future Workforce Needs 4. Secondary Schools Employer Partnership 5. The Waikato Story Implementation Programme 6. Towards Greater Regional Economic Development Capacity 7. Implementing the Māori Economic Development Agenda and Action Plan Waikato Means Business Annual Report Data Collection Several of these projects were co-funded with other funding partners, notably the Ministry of Business, Innovation and Employment, WEL Energy Trust, Te Puni Kōkiri and Waikato iwi. Opposite: Waikato Means Business Steering Group member Parekawhia McLean (bottom left) presents the WMB sponsored Global Operator Award to Mark Flowers, CEO of Wintec (and also WMB Steering Group member) at the Waikato Westpac Business Awards, November

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12 COMMENTARY: THE WAIKATO ECONOMY IN 2017 BLAIR KEENAN, PRINCIPAL ECONOMIST, WAIKATO REGIONAL COUNCIL Although we are now two years into implementing Waikato Means Business, it is still too soon to say, with any confidence, whether we re on track to achieve the overarching goals not least because regional accounts are published with a long lag. Our latest data shows that, in the year to March 2016, Waikato regional gross domestic product (GDP) grew by 2.1% not too far from the 2.5% increase recorded for New Zealand. This represents some consolidation after the previous increase of 3.4% (which itself was something of a bounce back from 0.3% in 2014). Growth across of a range of services and manufacturing sectors were the key drivers of this performance. But, of course, Waikato Means Business does not blindly seek to grow gross domestic product for the sake of it. The intent behind its goals is to make people better off. So, at the very least, we need to think about GDP per person, which, while still a rather limited indicator, is a much better measure of how well off people are on average. But in the last 10 years regional GDP has barely kept up with population growth; Waikato GDP per person in 2016 was slightly lower than in Of course, this period includes the global financial crisis but despite some recovery we effectively stalled around 2012, whereas New Zealand has continued to grow by about 1% per year. There is no escaping the fact that this slow period of growth will make it more difficult to achieve the ambitious goals of Waikato Means Business. One of those goals is to increase GDP per person by 2.8% per year over a 20-year horizon. We ve come out of the blocks rather slowly; since its launch in 2014, the actual figures were 1.4% in 2015 and -0.2% in 2016, explained in part by a combination of a rapid increase in population and lower overall economic performance due to commodity prices. Nevertheless, if we want to achieve the same level of GDP per capita that we originally envisaged in the strategy, we would now have to grow by just over 3% per annum for the remaining 18 years. Figure 2: Waikato regional population and GDP growth rates EXPORTS WAIKATO REGION - POPULATION AND GDP 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% -1.00% 2001 Source: Infometrics Population Gross domestic product Figure 3: Waikato region GDP per person WAIKATO REGION GDP PER PERSON ,000 45,000 40,000 35,000 30, % 95% 90% 85% Population NZ Waikato as proportion of NZ (Right hand axis) In the development of Waikato Means Business, exports, investment and productivity were assumed to be the core drivers that would be required to achieve its focus goals. An estimated three-quarters of exports from the Waikato region are from the primary sector or manufacture of meat, dairy and forest products. Exports have fallen over the past couple of years, but the volatility of exports from these sectors can make performance hard to judge over a short period. Over the last five years, the value of exports is estimated, on average, to have increased by 2.1% per year. The strongest increase in value over that period was from the manufacture of meat and meat products (averaging 6.4% per year), while the weakest was dairy product manufacturing (averaging just 0.1% per year, although this disguises some very large ups and downs). 12 Source: Infometrics

13 Figure 4: Waikato sector export performance EXPORTS FROM THE WAIKATO REGION ($MILLIONS) 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, Primary sector Meat products Dairy Products Forest Products Source: Infometrics Other Manufactures Other PRODUCTIVITY In any case, exports can only drive economic growth if we can produce the stuff that people want to buy (at the right price). In this sense, productivity how much we can produce with a given amount of inputs is a more fundamental driver of potential economic activity. On the other hand, export-orientation can speed up diffusion of new technologies, broaden markets and create new opportunities for investment, so can become a driver of productivity. Exports, productivity and investment are all interrelated in complex ways. Productivity also measures how well we use our resources, which, in a situation where we are running up against constraints on our natural resources, is an increasingly important consideration. But much of the growth in New Zealand s GDP in recent times has been driven by people working harder and for longer, whereas our productivity growth has been relatively lacklustre. Figure 5: Productivity in NZ versus other comparator nations GDP PER HOUR WORKED (US$, CONSTANT PRICES) PRODUCTIVITY Australia Denmark Finland New Zealand United Kingdom Overall, the Waikato region has typically been relatively productive compared with the rest of New Zealand, but the gap appears to have closed somewhat in recent years. 13

14 Figure 6: Productivity Waikato versus rest of NZ $(2010) 98,000 96,000 94,000 92,000 90,000 88,000 86,000 84,000 82,000 80,000 78, % 8% 6% 4% 2% 0% -2% -4% YEAR Waikato Region % change Waikato Region (Left hand scale) New Zealand % change New Zealand (Left hand scale) Paul Conway of New Zealand s Productivity Commission has tried to identify some of the main reasons why our productivity performance, as a country, has been so poor. In a 2016 report, Achieving New Zealand s Productivity Potential, 1 he points to four factors: Weak international connections strengthening these can improve the diffusion of more productive new technologies and capital; Small and insular markets these tend to be less competitive, and modestly performing firms remain in operation with the result that resources become stuck rather than flowing to more productive firms; Capital shallowness capital investment per worker is thought to be relatively low in New Zealand; circumstances here mean firms tend to invest relatively little in capital, opting instead for labour-intensive production methods; and Weak investment in knowledge based capital this is a variant of weak capital investment, but focused on knowledge-based capital. Conway suggests that getting innovation right is a major managerial challenge, and that capability is relatively weak amongst New Zealand firms. Waikato Means Business has placed an emphasis on innovation in the past 12 months, and implementing the findings of its research will be important in this regard. While these areas for improvement relate to New Zealand and may apply in slightly different ways in a Waikato context, they still provide food for thought for the future of Waikato Means Business. If these are indeed key elements of productivity, and if it is correct that improving productivity is central to improving economic outcomes, then, as Waikato Means Business evolves, it will be useful to evaluate its potential actions against these factors. As noted above, these areas of improvement may apply slightly differently in the Waikato. But while the region s performance has been solid, Waikato Means Business has set itself a lofty mountain to climb with its focus goals. Given the performance of our economy to date, and the constraints that resource limits imply, without a major improvement in productivity in the region we will struggle to achieve those goals. 1 See: 14

15 REPORTING ON PROGRESS This second annual report focuses on benchmarking regional economic performance indicators, reporting how actions are being progressed against the milestones identified in the plan and the short-term outcomes that are being achieved. Waikato Regional Council oversaw the monitoring of progress against the plan and commissioned the preparation of this annual report, in consultation with the steering group and the lead organisations for each action. This report is the second to measure progress against the Waikato regional economic development strategy, Waikato Means Business. It focuses on monitoring information and reporting how actions are being progressed against the milestones identified in the first annual implementation plan and the short-term outcomes that are being achieved. It also identifies the benchmark measures for key economic performance indicators of the region. Some new indicators have been introduced and both short and medium-term outcome indicators will be refined in future to support robust assessment of Waikato Means Business. The scope of the annual report will expand over time to cover reporting on the medium and long-term outcomes, goals and related indicators. LONG-TERM OUTCOMES Waikato Means Business identifies a series of headline goals and indicators, relating to measures such as household income, GDP growth and education and export earnings. These were selected based on a review of a list of potential measures against several criteria (e.g. validity, reliability, timeliness, relevance, comparability, efficiency, coverage). From a measurement point of view, the following three elements are the major indicators of medium long-term economic performance for the region. The report shows that the Waikato economy has continued to perform steadily compared to the rest of New Zealand against these measures. Household income has shown a decrease of 4.9% in the past 12 months, from $93,720 in 2015 to $89,112 in This compares to an increase across New Zealand of 1.2% to $97,142. Low commodity export prices in 2014 and 2015 have translated into lower overall incomes in 2016 as reduced spending power has affected industry and the wider region. Better prices in the last two seasons should see the region recover this lost ground, although this trend also points to the need for industry and the region to continue to diversify and reduce reliance on a relatively narrow range of international commodities. Per capita gross domestic product (GDP) is $47,119, growing at 1.8% per annum. This compares to a New Zealand-wide average of $54,178, growing at 1.9%. The main contribution to GDP growth in the last year comes from the manufacturing sector. In contrast, the mining sector had a negative contribution to growth. The growth of the agriculture, forestry and fishing sector is less than most others in the last year. Value add in key sectors is a measure of our economy s composition and the performance of those sectors. The biggest contributors to the Waikato region, in terms of GDP in 2015, were as follows (percentage of regional GDP in 2015 and annual percentage growth in brackets). Manufacturing: $2.76b (13.7, 28.7) Forestry, fishing, mining, electricity, gas, water and waste services: $2.17b (10.7, 2.4) Rental, hiring and real estate services: $1.42b (7.0, 4.7) Agriculture: $1.38b (6.8, -49.2) Owner-occupied property operation: $1.32b (6.5, 2.6) Healthcare: $1.38b (6.4, 5.1) Construction: $1.2b (6.0, 11.0) Professional, scientific and technical services: $1.1b (5.5, 5.6) Education & training: $1.0b (5.0, 2.6) Information media, telecommunications: $0.9b (4.5, 6.6) Retail: $0.85b (4.2, 4.4) The above data points to some interesting structural changes in the regional economy: The Waikato economy is diverse with many different industries present and growing. Excluding agriculture, the average annual growth rate of the sectors mentioned above was 7.3% in Contrary to popular belief, manufacturing is both the largest sector in the Waikato economy and is also the fastest growing (+28.7% in 2015). Agriculture remains a significant contributor to the regional economy; however it is exposed to dramatic shifts in commodity prices, which can affect its contribution (-49.2% in 2015). Knowledge-based sectors are significant contributors to the regional economy. As well as being integral to the main industrial sectors, knowledge-based skills are essential to key examples such as healthcare, construction, professional services, education and ICT. Export performance in the Waikato region has historically done better than the rest of New Zealand because of its reliance on agricultural commodities, the majority of which are exported to international markets. In 2014, 45% of the region s GDP came from exports, compared to 30% for New Zealand overall. Infometrics data 2 shows the region s export growth reducing from a growth rate of +15% per annum in 2014 to -7.2% the next year and -2.5% in This see-saw pattern has been consistent for as long as the data has been collected and shows a very close correlation to international commodity prices

16 While the region can do little to affect international markets, we can support sectors and industries to further diversify so that the region is less exposed to price fluctuations associated with a focus on a narrow range of products. There are good signs that this is already starting to happen. Productivity. As detailed in Blair Keenan s article in Section 2, and like the rest of New Zealand, the Waikato s productivity remains low. Keenan concludes that while, overall, the Waikato region has been relatively productive compared with the rest of New Zealand, without a major improvement in productivity in the region we will struggle to achieve our strategic goals. This points to the need to improve our levels of R&D, innovation and commercialisation of new ideas. Employment growth in the region was 2.6% in the last year, on par with the New Zealand average. Median weekly income has increased markedly in the last two years (6.6% in 2015 and 10.9% in 2016). However, the Waikato median income (NZ$1486) remains below the New Zealand median (NZ$1534). Employment growth primary sectors show decline, with the most growth occurring in the administration and support services sector and in construction. Employment in the knowledge-intensive service sector (32%) is also around 4% below the New Zealand average. Qualification levels. The proportion of secondary school students reaching NCEA Level 2 level qualifications (government target is 85%) has continued to rise from 71.6% in 2012 to 78.6% in 2016 (67.3% Māori and 76.2% Pasifika). The proportion of 18 year olds with NCEA Level 2 or equivalent (government target is 85%) has continued to rise from 75.7% in 2012 to 83.9% in 2016 (73.5% Māori and 78.6% Pasifika). MBIE data also shows that the Waikato has 227 tertiary enrolments for every 10,000 people, lower than the New Zealand average of 319, with 37.3% of tertiary enrolments in Waikato at level 7-8. Employment data shows the proportion of people in the year age group not in employment, education or training in the Waikato was 13.2% in the year to June This is a percentage point higher than the New Zealand average of 12.2%. Waikato Means Business sets out a medium long-term roadmap for the region. As is the case with any social system, the interplay between strategy, actions and results is complex and precise attribution between actions and results is challenging. The cause and effect relationship between certain interventions and changes in the performance of the system is often hard to predict and can sometimes only be explained with hindsight. While no direct relationship is expected in the short term between these indicators and the key actions of the strategy, these data are useful for benchmarking and trend analysis and can act to inform future decisions around priority and resource allocation. Figure 7: Waikato Means Business overall summary of performance VISION We want to improve standards of living in the Waikato region, where all people, communities and businesses reach their potential FOCUS GOAL 1 Increase median household income to above the New Zealand average FOCUS GOAL 2 Value added per capita will grow by 2.8% per annum L Median annual and weekly household income (HLFS) relative to New Zealand average L Estimated GDP per capita (estimates) SUBSIDIARY GOALS L Productivity growth is at least 1% pa Annual growth in GDP per FTE Proportion of working age population with high level qualifications increases to greater than the NZ average Proportion of the working-age population (15-65 years) with New Zealand Qualifications Framework Level 4 and above qualifications L H Lift value added in key sectors by 80% Key industry contribution to regional GDP and growth in industry GDP H H Lift value of international exports by 1.5% pa Growth in regional exports Growth in employment in export related industries OBJECTIVES Leverage value from our location and connections to the upper North Island Provide a quality education offering which encourages high levels of participation and life-long learning Be New Zealand's premier manufacturing and engineering hub Be known for excellence in sustainable food production and agri-business STRATEGIC PRIORITY 1 Maintaining and building our location advantage STRATEGIC PRIORITY 2 Growing global industries STRATEGIC PRIORITY 3 Making business easier STRATEGIC PRIORITY 4 Building, attracting and retaining skills and talent STRATEGIC PRIORITY 5 Telling the Waikato Story N N N N N N N Traffic congestion, particularly within smaller communities Road travel times on key routes Number of fatal and serious injury crashes Growth in the number of commuters between Waikato, BOP and Auckland Inter-regional freight flows Freight intensity in the region (freight tonne kilometre relative to GDP) Improved resident and business perceptions of the quality of infrastructure in the region Growth in employment and estimated GDP in key industries H H N H (GDP) (Employment) Increased proportion of high growth businesses in the population Growth in employment in R&D intensive industries Increased estimated innovation and R&D in the region L N N Increased enterprise start-up rate Improved business rating of ease of doing business in the region Improved resident satisfaction with infrastructure and customer services Proportion of population with high (skills level 4 and 5) and low L (skills level 1) literacy and numeracy attainment L H N L Percentage of people aged 15 years or over who attain at least NCEA Level 2 Proportion of youth (aged years) who are not in employment, education or training Businesses in the region have improved access to skills Proportion of skilled migrants attracted to the region L L N H N N Growth in estimated Domestic and international visitor nights and visitor expenditure Growth in Out-of-region students studying in the region international student numbers and tuition Employment in businesses with 50% or more foreign ownership High quality foreign investment in the region 16 Waikato region s ranking L = Low = Data not/ compared to NZ average N currently available H = High Waikato region s trend Increasing Decreasing No change Improving trend Deteriorating trend

17 SHORT AND MEDIUM-TERM OUTCOMES AND KEY ACTIONS Waikato Means Business captures the region s agreed economic development goals and strategic priorities. It is accompanied by an annual implementation plan, which sets out a short list of priority projects that the steering group considers will make the greatest short to medium-term contribution towards the achievement of the strategy s goals. Short and medium-term outcomes were selected based on the action planning done to date and the intended impacts of key actions. The progress of the key actions for is summarised in Table 1 below. Table 1: Progress of key actions STRATEGIC PRIORITY Maintaining and building our location advantage PRIORITY ACTIONS 1. Modelling the Economic Costs and Benefits of Different Land Use Scenarios in the Cambridge-Auckland Growth Corridor STATUS Growing global industries 2. Understanding the Waikato Innovation Ecosystem Building, attracting and retaining skills and talent 3. Complete Mapping Future Workforce Needs 4. Secondary Schools Employer Partnership Telling the Waikato Story 5. The Waikato Story Implementation Programme Cross-cutting projects 6. Towards Greater Regional Economic Development Capacity 7. Implementing the Māori Economic Development Agenda and Action Plan Waikato Means Business Annual Report Data Collection Fully on track or completed Not fully complete and/or experiencing minor delays Significantly delayed or cancelled 17

18 STRATEGIC PRIORITY 1: MAINTAINING AND BUILDING OUR LOCATION ADVANTAGE Our region is a nationally significant juncture for freight and transport and has good connections to the large and growing populations in Auckland and Tauranga, as well as to the central North Island. The flow of freight presents opportunities to boost economic growth through the valueadded process of transport and logistics (for example, through warehousing and distribution). One of the major objectives of Waikato Means Business is to leverage value from the Waikato s location and connections as the key servicing hub of the North Island. More specifically the strategy focuses on: continuing to maintain good international connections through Auckland and Tauranga, and broader connections to the rest of the North Island continuing to improve the quality of our local transport and broadband networks building links between industries across the region, traversing territorial boundaries recognising the importance of transport and freight between the primary and processing industries within the region recognising the role of the region as an interregional service hub. The implementation plan prioritised Modelling the Economic Costs and Benefits of Different Land Use Scenarios in the Cambridge-Auckland Growth Corridor. Selected examples of other projects underway in the region that contribute to this priority include: Waikato Plan (Waikato councils) The Waikato Plan is the first time all the councils and agencies in the Waikato have worked together to create one plan that gives them one collective voice about important issues that affect them now and will affect them over the next 30 years. The plan will help guide investment in the region from both the public and private sectors. It will help ensure appropriate funding goes to agreed priority areas in a timely way. It clearly identifies how much money is needed and where funding might come from and details how priorities will be addressed. The Waikato Plan does not override statutory documents or the functions of statutory bodies/ committees. It is a multi-agency agreement that provides strategic guidance and advocacy and has been prepared within the framework provided by the Local Government Act Figure 8 shows how Waikato Means Business contributes and aligns with the Waikato Plan. The implementation of the plan will take place through several documents. The plan does not duplicate regional or local initiatives already planned or underway but supports a number of those initiatives. The Waikato Plan was signed off in June Further information on the Waikato Plan can be found at waikatoplan.co.nz. Waikato Expressway The completion of the Waikato Expressway was one of the first advocacy priorities of Waikato Means Business in When complete, the Waikato Expressway will be the key strategic transport corridor for the Waikato region, connecting Auckland to the agricultural and business centres of Waikato and Bay of Plenty. The expressway will improve economic growth and productivity through more efficient movement of people and freight. Designated as a road of national significance in 2009, the expressway project saw a commitment by the Government to its completion as a full expressway between Auckland and Cambridge by Key upcoming milestones include: Rangiriri section opening event in December Longswamp section completion in early 2019 Huntly section completion in 2020 Hamilton section completion in 2020 Route selection for the extension to SH1/SH29 intersection scheduled late 2017/early The completion of the road is closely related to strategic planning decisions by the Future Proof group of councils on land use and development in the northern Waikato, and has had a major influence on major business development decisions such as the Ruakura freight hub (below). Work is now underway to extend the expressway another 16km south-east to Piarere where it will join State Highway 29 heading east to the Bay of Plenty. 18

19 Ruakura freight hub The Ruakura freight hub has the potential to significantly change and enhance the performance of the upper North Island freight and supply chain systems, and in doing so improve the economic performance and productivity of the Waikato region. It is one of many inland port developments underway in the region, including the POAL Northgate development, the existing Fonterra logistics hub in Crawford Street and the RJ Lincoln hub in Tokoroa. Stage 1 of the Ruakura development will see a 31-hectare inland port developed, with the capacity to handle around 1 million TEUs (20-foot container equivalents) per year when fully built. Developers Tainui Group Holdings (TGH), along with joint venture partner LINX Cargo Care Group Ltd, expects to commence initial operations at the inland port in the first half of More recently, TGH has secured resource consents to subdivide and develop the 48-hectare industrial site adjacent to stage one of the development. These industrial resource consents mean TGH can provide potential industrial tenants with time certainty about relocating their operations. Being adjacent to the inland port, these early movers will be best placed to get the full benefits of the wider 480-hectare precinct. With direct connection to the future Waikato Expressway, the industrial zoning opens opportunities for a wide range of development options. Figure 8: Waikato Plan strategic framework Priority 5 - Advancing regional economic development Waikato Means Business (WMB) WAIKATO PLAN ECONOMY Waikato Plan Leadership Group (WPLG) ENVIRONMENT PEOPLE Priority 1 - Planning for population change 10.Assist in implementing the Waikato Economic Development Strategy Addressing water allocation and quality Priority 4-9.Develop the Waikato as a Waters Centre of Excellence Waikato Regional Council (WRC) 1.Collaborate on a Regional Development Strategy 2.Identify how central goverment services can be provided to match community needs 3.Identify the regional priorities for service and technical infrastructure 10 Key actions 4.Advocate on behalf of regional transport priorities 5.Integrate Waikato and Auckland transport networks 6.Encourage cycleways and walkways CONNECTIONS 7.Establish a freight and logistics action group 8.Work collaboratively to develop and encourage enduring partnerships that enable Iwi/Māori aspirations to be achieved IWI 4.WPLG Priority 2 - Connecting our communiti es through targeted investment Priority 3 - Partnering with Iwi Māori Waikato councils, Iwi trust boards, Central Government NZTA 5.WRC & & WPLG 6.WRC 7.WMB STRATEGIC PRIORITY 1: MAINTAINING AND BUILDING OUR LOCATION ADVANTAGE 19

20 Ultrafast broadband regional deployment The Government s ultra-fast broadband (UFB) programme aims to connect 75% of New Zealanders with fibre to the premise by the end of Fibre will be capable of peak speeds of at least 100 Mbps. The Government s programme provides UFB to urban areas, with priority given to schools, health facilities and businesses. These premises have been given priority in the build-out process, with rollout to them guaranteed by the end of Where these pass residential areas they will generally be connected, otherwise all other residences in the UFB candidate areas will be connected by Providing greater access to ultrafast internet connections is a key priority in allowing businesses, education and health to provide services and create value in a twenty-first century economy. The government s broadband programme has seen ultra-fast broadband rollout out in the main urban centres of Hamilton, Cambridge, Tokoroa, Te Awamutu and Taupō. In addition to UFB, the Government has developed a Rural Broadband Initiative (RBI) which aims to connect homes and businesses outside UFB areas to broadband at peak speeds of at least 5 Mbps. This is through fixed wireless and improved copper services (some rural homes and businesses will be able to choose between the two services). The RBI is also extending mobile coverage to rural areas across New Zealand. In 2016 MBIE reported that the RBI tower programme is 89% completed. Most Waikato local authorities have developed digital enablement plans, which set out how they will support fibre companies to deploy broadband as quickly as possible (for example, via efficient consenting processes and one-dig policies) and how they will facilitate and support the update of broadband by residents, businesses, schools and health organisations. While important, these plans were also an important prerequisite for Crown Fibre Holdings when considering extensions to the UFB and RBI programmes (UFB2, RBI2). Digital technology and especially fast broadband has been identified as one of the most significant ways to reduce the disbenefits of distance and reduce isolation. This is important in the Waikato as many businesses are not located in areas which are currently UFB 1 or 2 candidate areas, which limits broadband speeds and reduces the attractiveness of the Waikato as a place for businesses to locate. In parts of the region currently experiencing depopulation and low growth, a priority will be to leverage the Government s investment in urban and rural broadband as a key infrastructure tool to reduce the impact of distance and mitigate depopulation. In January 2017 the Government announced that ultrafast broadband (UFB and RBI) was being extended to 25 more towns in the Waikato. This $67.9m investment in the UFB extension programme for the Waikato reflects the Government s broader focus on growing and diversifying regional economies. Once the UFB extension is completed, over 90,000 people in small towns across Waikato will be able to experience the same world-class broadband as Kiwis living in larger centres and tap into the benefits. Once the full UFB programme is complete, more than 335,000 people in the Waikato will be able to access UFB. KEY ACTIONS There was one key 2016 action associated with this priority: ACTION: MODELLING THE ECONOMIC COSTS AND BENEFITS OF DIFFERENT LAND USE SCENARIOS IN THE CAMBRIDGE-AUCKLAND GROWTH CORRIDOR Description Agencies involved Main outputs This project seeks to better understand how the growth goals of Waikato Means Business could be achieved through different development scenarios in the Cambridge-Auckland growth corridor. As this area is expected to be where the majority of the Waikato s economic opportunity and population growth will occur, it was considered important to better understand what scenarios of change especially in terms of land use would achieve those goals. This work was an important contribution to work on the Waikato Plan and the review of Future Proof. Its importance was further recognised considering the 2016 National Policy Statement on Urban Development Capacity (NPS: UDC), which required all local authorities to provide enough development capacity to meet aggregate demand for business land and the demand for different types, sizes and locations. Future Proof partners (Waikato District Council, Hamilton City Council, Waipa District Council, Waikato Regional Council, NZTA) Hindcasting the land use, labour and infrastructure (to name a few) decisions, locations and forms required in the corridor if different economic scenarios were to be achieved (e.g. current levels of economic growth, the Waikato Means Business growth goals, 1-2 intermediate scenarios between these) Production of several spatial, infrastructure and population scenarios that on the balance of probabilities are more likely to achieve the growth goals of Waikato Means Business Final outputs prepared and presented to Waikato Means Business Steering Group 20

21 SHORT-TERM OUTCOMES ACTION: MODELLING THE ECONOMIC COSTS AND BENEFITS OF DIFFERENT LAND USE SCENARIOS IN THE CAMBRIDGE-AUCKLAND GROWTH CORRIDOR Short-term outcomes Status Commentary To develop a better understanding of how the growth goals of Waikato Means Business could be achieved through different development scenarios in the Cambridge-Auckland growth corridor, and to identify the economic growth trade-offs that arise with different development scenarios. Because of the National Policy Statement on Urban Development Capacity (NPS: UDC), Future Proof and Waikato Means Business agreed that this project was best undertaken by the Future Proof programme as part of the review of their strategy. This work has been commissioned by Hamilton City Council from Market Economics Ltd, and is being undertaken in parallel with their development contribution modelling. As at late 2017, Market Economics have completed the macro-economic model and non-residential demand modelling for this project. A report by Property Economics Ltd 3 updated the economic foundations of Future Proof. It concluded that there is an important balance to be maintained between protecting community benefits and potentially stifling positive market growth in all Future Proof Partner long-term planning documents and strategies. The report noted the risk of oversupplying land for development when there was already existing capacity. The potential economic impacts of over supply included: Disjointed industrial development High marginal development and servicing costs Underutilised infrastructure Failure to capture agglomeration benefits Inappropriate land prices Reduction in the level of productive land Investment uncertainty through low relative demand and price fluctuations Reduced redevelopment (reduction in redevelopment of existing floor space to new uses Attraction of transitory business (price driven industry that is likely to prioritise land price for a small period) Low amenity through decreased densities Duplication of infrastructure; and Low economies of scale for infrastructure leading to poor quality. STRATEGIC PRIORITY 1: MAINTAINING AND BUILDING OUR LOCATION ADVANTAGE The report concluded that the economic principles on which the original Future Proof Strategy is based remain valid and appropriate for the current environment, and potentially more so. The principles place the subregion in a stronger position to create competitive business and residential environments, which can then tap into the heightened demands of Auckland. The report also noted that the strategy needed to continue to be implemented and shape land use development, growth and settlement patterns over the next 20 years. 3 Future Proof Economic Evaluation Update, May 2017 ( 21

22 MEDIUM-TERM OUTCOMES Review and update of Future Proof In 2009 the Future Proof partnership adopted the Future Proof Growth Strategy and Implementation Plan. Since adoption the strategy has been in a period of implementation, with the partnership working with others to embed the strategic direction in other key documents and processes. Increase in investment in infrastructure by local governments Infrastructure investment in the region by local government has increased since 2010 (Figure 9). There was an increase of over $300m in investment in infrastructure from 2015 to The infrastructure asset value per head in the region is around $21,000, which is higher than New Zealand average ($18,000). Figure 9: Continued growth in value of infrastructure assets Since 2009 there have been several important changes in the Future Proof subregion of Hamilton, Waipa District, Waikato District and Morrinsville. The Waikato District has expanded its geographic area, the subregion is more strongly influenced by interactions with Auckland and the Bay of Plenty, populations continue to grow and there is new policy direction from central government (to name but a few examples). The partnership has produced a draft updated strategy (May 2017). The draft strategy sets out a vision and principles for managing growth in the subregion, and the preferred settlement pattern for growth. It also identifies the further work that is needed to implement the strategy. WAIKATO INFRASTRUCTURE ASSETS ($MILLION) Key features of the draft strategy include: A continuation of the existing Future Proof Strategy approach of achieving urban development within defined urban limits, and managing and restraining ongoing rural-residential subdivision pressures adjacent to major settlements, particularly around Hamilton. A continuation of the key principles of the settlement pattern, including a commercial hierarchy, identified strategic industrial nodes and residential density targets. Inclusion of the northern Waikato areas of Pokeno and Tuakau, which became part of the Waikato District following the boundary adjustment in An adjustment of the future land use demand and residential allocations arising from the 2013 Census, and the 2015 Future Proof Monitoring Report. Consideration of the implications of the significant new and planned infrastructure projects, including the Southern Links project and the Waikato Expressway, on urban form and the timing of urban growth. Source: Statistics New Zealand Figure 10: Value of infrastructure assets per district, Waikato region 40,000 VALUE OF INFRASTRUCTURE ASSETS PER CAPITA 30,000 20,000 10,000 0 Total NZ Total Waikato Region Waitomo District Council Waipa District Council Waikato District Council Thames-Coromandel District Council Taupo District Council South Waikato District Council Otorohanga District Council Matamata-Piako District Council Hauraki District Council Hamilton City Council Source: Statistics New Zealand 22

23 Road quality Quality of the roads in the region was assessed using three indicators. Condition Index (CI) A combined index, a weighted sum, of the surface faults in sealed road surfaces. Condition index combines alligator cracking, scabbing, potholes, pothole patches and flushing. The higher the number, the better the condition. Pavement Integrity Index (PII) A combined index of the pavement faults in sealed road surfaces. It is a weighted sum of the pavement defects divided by total lane length. PII combines surface faults (condition index) with rutting and shoving. The higher the integrity index, the greater the pavement integrity. Smooth Travel Exposure (STE) Measures the proportion (percentage) of vehicle kilometres travelled in a year that occurs on smooth sealed roads and indicates the ride quality experienced by motorists. A smooth road is one smoother than a predetermined National Association of Australia State Road Authorities roughness threshold. The thresholds used vary with traffic density and road location. Roads with high traffic volumes have a lower (smoother) threshold. High volume urban roads have lower roughness thresholds than low volume rural roads. The quality of urban and rural roads in the Waikato region is slightly better than the New Zealand average (Figure 11). Figure 11: Waikato roads in better condition than average Rural Pavement Integrity Index Rural Condition Index Rural Smooth Travel Exposure Urban Pavement Integrity Index Urban Condition Index STRATEGIC PRIORITY 1: MAINTAINING AND BUILDING OUR LOCATION ADVANTAGE Urban Smooth Travel Exposure SCORE Waikato NZ Source: New Zealand Transport Agency road condition data 23

24 STRATEGIC PRIORITY 2: GROWING GLOBAL INDUSTRIES Growing global industries that extract greater value from our natural resources and draw on the Waikato s strong base of science and research in the primary and manufacturing sectors will provide the foundation of improved economic outcomes for the region. We need to understand where the best opportunities for value add and investment are, and what constraints exist to realising those opportunities whether they relate to the availability or quality of skills, natural resources, infrastructure, capital or export markets. We also know that research, education and support organisations in the region could assist more businesses to help solve their technical and innovation problems. Waikato Means Business recognises Waikato s comparative advantages in natural resources, major businesses involved in primary production and related processing, and a strong base of science and research in the primary sectors. A great deal of new industry and expansions occur continuously across the region and it is not possible to capture them all in this report but the examples below from local media and councils showcase the sort of positive activity the Waikato is experiencing. COBB-VANTRESS LTD (WAIKATO DISTRICT) A multi-million dollar poultry farm and hatchery is set for Huntly, signalling a new industrial era for the area. USbased Cobb Vantress Inc has Overseas Investment Office approval to buy 149 hectares in the rural North Waikato settlement of Rotongaro, just outside of Huntly, for its $58 million investment. The approval was welcomed by Waikato mayor Allan Sanson, who said it was just the beginning for new industry in the area with other companies also looking in Huntly s direction. News of the chicken venture has come just in time for Huntly. The town was hit with the closure of the Huntly East Mine in 2015, which came with more than 60 job losses. Latest figures from the 2013 census show the unemployment rate for Huntly West was 23 per cent and 11.5 per cent for Huntly East. Cobb New Zealand general manager Duncan Granshaw said the chicks bred at the site would meet a growing demand in the Asia-Pacific region. Granshaw said locals would reap the benefits of the new development. We re really pleased to go into an area where there is high unemployment and where there has been redundancies, he said. Granshaw said the business hoped to integrate into the community and local companies would be sourced for its upkeep. Discussions have been in place with social sectors and high schools and would continue leading up to the start of recruitment in October when the construction phase will also begin. Source: Waikato Times 24

25 GINSENG PRODUCTION (SOUTH WAIKATO DISTRICT) A South Waikato ginseng producer is ready to approach potential investors to increase its production and exports with the help of funding of up to $40,000 from the Ministry for Primary Industries (MPI). Maraeroa has 20 hectares of high-value, wild-simulated Asian panax ginseng growing on the forest floor of its 5,550 hectare pine plantation. The group is looking to double the size of its ginseng plantation by raising capital and having a purpose designed processing factory built at Pureora. Maraeroa C Incorporation is using its MPI funding to complete an investment information memorandum and business plan for potential investors. The economic return from ginseng will contribute to Waikato s economic, social and cultural growth. Growing ginseng under their existing pine tree canopy has the potential to optimise Maraeroa s return from the land for its 1,200 shareholders, says Ben Dalton, Deputy Director General, Sector Partnerships and Programmes at MPI. This has been a long-term investment for Maraeroa. Growing ginseng started out as a trial for them in 2006 and they had their first commercial harvest in The growing conditions turned out to be right for them, which is exciting as ginseng is valued at more than $400,000 per hectare, he said. Maraeroa s funding comes from MPI s Māori Agribusiness fund and contributes to regional economic growth. The incorporation has started looking for potential investors with existing distribution channels to China. The company currently works with a small number of Chinese distributors and retailers who sell their products around New Zealand and in Hong Kong. Maraeroa Chief Executive Glen Katu said increased exporting would require additional local staff to be hired for ginseng production, processing and distribution. STRATEGIC PRIORITY 2: GROWING GLOBAL INDUSTRIES Source: Ministry for Primary Industries SPRING SHEEP MILK (TAUPŌ DISTRICT) The Ministry for Primary Industries has partnered with the Spring Sheep Milk company based near Taupō in a Primary Growth Partnership (PGP) programme. MPI will invest $12.56m (40 percent), with Spring Sheep Milk investing $18.83m over the six-year life of the programme. Spring Sheep Milk is a partnership between Landcorp and a number of New Zealand investors through SLC Ventures LP. Spring Sheep Milk chief executive Scottie Chapman said the programme aimed to develop an end-to-end value chain on farm, through processing and then into marketing. The returns would be generated and retained in New Zealand. To achieve a sheep milk industry delivering domestic and export returns at the upper range of $700m, New Zealand will need up to 55 farms managed by farmers with specific sheep milking expertise. The current farming model in New Zealand won t achieve this, which is why this joint investment between ourselves and MPI is so critical, Chapman said. Source: NZ Farmer 25

26 VISY BOARD (WAIPA DISTRICT) Seventy-five high-tech jobs will be created in the Waikato with the construction of a corrugated packaging plant at Hamilton Airport. Visy Board New Zealand is behind the $100 million factory, which is to be established on an 8.5-hectare site at the airport. It s a state-of-the-art facility that will use the world s best technology, Visy Board NZ general manager Andrew Gleason said. Robots is the wrong thing to say, but everything is computer-controlled and very technically advanced, Gleason said. We re creating 75 jobs that will require a skilled workforce, which we expect to recruit from the local area and train ourselves. Gleason said the airport location is ideal and has a better reach to the hinterland of the North Island. Hamilton is a large city in its own right, with its own industry, but it is also on the transport routes it s a transportation hub. Waipa District Mayor Jim Mylchreest is thrilled to welcome Visy Board to the district. The Visy development will fit in perfectly with the existing technology hub at the airport and joins a variety of other international organisations that are making the most of this location, Mylchreest said. Source: Waikato Times (abridged) TE RAPA GATEWAY INDUSTRIAL PARK (HAMILTON CITY) Te Rapa Gateway Industrial Park is shaping up to become a major hub of heavier transport. A significant number of transport-related companies are gathering in the 120-hectare park s northern section, which is gaining a heavy industrial focus. NAI Harcourts industrial sales and leasing consultant Sean Stephens said industrial land demand was such that development would continue to surge over the next 12 months. And it s far exceeded expectations. It s only in the last two to three years that it s taken off, partly due to the worldwide economic cycle, but also because Hamilton is enjoying a good economic cycle. The 180ha of land for industrial that was opened up and included Te Rapa Gateway was supposed to take care of 20 years demand. After five years, approximately 40ha only is left. It shows the extent of the demand. The northern section is dominated by the 22ha Porter Group development, which is believed to be the biggest Hyundai heavy-machinery franchise in the southern hemisphere. It is book-ended by Mainfreight to the north and NZ Post to the south. Source: Waikato Times TE AWA CYCLE TRAIL PERRY BRIDGE (WAIKATO DISTRICT) The Perry Bridge, south of Ngāruawāhia, is part of the Te Awa Great River Ride and will allow pedestrians to access a 70 kilometre cycleway which stretches alongside the river all the way to Horahora. Its name comes from the Brian Perry Charitable Trust, which contributed $500,000 towards it. The 130m long and 3m wide bridge features a flax weaving inspired design with the colour blue to signify the Waikato River and green to link in with its natural surroundings. Trust general manager Jennifer Palmer said the bridge was about bringing the community together through its design and contribution from residents. We try to get the local community to see it as their bridge, she said. Students from Horotiu School and Ngāruawāhia High School came up with designs which have been turned into mosaics by Waikato glass artist Tracy Osborne. Source: Waikato Times (abridged) 26

27 HAMPTON DOWNS DEVELOPMENTS (WAIKATO DISTRICT) Speed is synonymous with Hampton Downs but since Tony Quinn and his team moved in more than a year ago, the pace of development seems to have gathered a whole new momentum. Apart from the $30 million investment it took to deliver the motorsport park and events centre, its status as one of the best motorsport facility in the southern hemisphere is on the ascendancy, says Hampton Downs commercial manager Mike Marsden. And there is now an opportunity to establish a tourism business at the new concept mall soon to open at the venue, he adds. For anyone who came in late, the racing and tourism complex 45 minutes south of Auckland International Airport has gained traction with car manufacturers and corporates who have embraced the modern facilities and the added tarmac. And latest developments have Hampton Downs poised to become a hot destination for tourists and Kiwis alike, says Marsden. A 68-room four-star hotel is at the final stages of planning, with a projected opening date in Source: The New Zealand Herald PAEROA RACECOURSE REDEVELOPMENT (HAURAKI DISTRICT) STRATEGIC PRIORITY 2: GROWING GLOBAL INDUSTRIES Resource consent to create 43 residential lots on part of the former Paeroa Racecourse has been granted. Hauraki District Mayor John Tregidga says the subdivision is timely given recent growth in the district and a shortage of housing in Paeroa. Statistics for the period ending 31 March 2017 show that our GDP growth is tracking at 5.5 per cent and the number of residential building consents in Hauraki has increased by 68 per cent compared with the same period a year ago, he said. That compares with national GDP growth of 2.9 per cent and a 10 per cent national increase in residential building consents, so we re experiencing some significant growth. Source: Waihi Leader (abridged) NOVOTEL TAINUI HOTEL EXTENSION (HAMILTON CITY) A tourism boom has prompted a 40-room expansion in one of Hamilton s top riverside hotels. Work on a $13m, four-level extension to the Novotel Tainui Hamilton hotel is expected to start mid The four-and-a-half-star hotel is owned by Waikato-Tainui through its investment arm Tainui Group Holdings (TGH). The expansion shows confidence in the economic future of Hamilton, Waikato and the iwi, said Rukumoana Schaafhausen, who is chair of the executive committee of Waikato-Tainui, Te Arataura. With the recent growth of tourism to become New Zealand s number one export earner, Waikato-Tainui is well placed with this 40-room expansion and other recent hotel investments to be part of this growth story and for our tribal members to take advantage of the new work opportunities which come with it, she said in a statement. The $13m project will help with central city vitality, TGH chief executive Chris Joblin said along with the recent opening of the Puurua TGH Partner Centre in Hamilton s Victoria St. This is an exciting time for the iwi, Hamilton and the Waikato region, with a lot of development under way combined with the continued benefits of the ongoing tourism boom, he said in a statement. Source: Waikato Times (abridged) 27

28 Waikato Means Business also stresses the need to continue to innovate and support firms and industries that develop and export more refined and elaborate goods and services that are less sensitive to fluctuations in price and demand and that attract a higher premium from international buyers. The strategy states that more value could be extracted from the forestry, meat, dairy, aquaculture and materials sectors through further processing and innovation. It states that the following significant business and innovation support organisations all reside in the region. ORGANISATION FOCUS Tertiary institutes University of Waikato Waikato Institute of Technology (Wintec) The university s specialities in engineering, environmental management (the Environmental Research Institute was launched in 2012) and Māori culture/tikanga (Te Kotahi Research Institute) are nationally important. Three campuses in Hamilton (City, Rotokauri and Hamilton Gardens) as well as campuses in Thames, Te Kuiti and at the Ōtorohanga Trade Training Centre. Comprises the following schools: Business, Education, Centre for Health and Social Practice, Media Arts, Sport and Exercise Science, Information Technology, International Tourism/Hospitality and Events, Trades, Engineering/Science and Primary Industries, Centre for Foundation Studies and Centre for Languages. Commercialisation organisations WaikatoLink The University of Waikato s commercialisation arm is actively engaged with local companies to commercialise locally developed intellectual property and get leading-edge science to a marketready stage. This has resulted in numerous licensing deals, start-up companies and joint ventures. Crown research institutes AgResearch The National Institute of Water and Atmospheric Research (NIWA) Landcare Research Plant and Food Research GNS Science AgResearch s head office is currently in the Waikato (Ruakura, in Hamilton). It has been the largest of AgResearch s campuses (almost 40% of AgResearch s staff). Because of planned consolidation at two large campuses, one in Palmerston North and one in Lincoln, Ruakura will reduce to around 90 roles and be focused on environmental and farm system needs. Freshwater research is the focus at NIWA s Hamilton campus, particularly the maintenance and rehabilitation of degraded waterways and management and mitigation of contaminants. Located at the University of Waikato, Landcare Research is focused on projects to restore wetland ecosystem functioning and improve participation by Māori in local government decision making. Located at Ruakura, with a focus on horticulture. Research areas include geothermal energy, volcanology, groundwater processes and quality, mineral and geo-microbiological resources. Parks and incubators Waikato Innovation Park SODA Inc. Australasia s only technology park solely focused on growing agri-technology businesses. The park currently houses 33 companies with about 480 staff based there. Tenants range from biotechnology start-up ventures to multinational companies. The New Zealand Food Innovation Network Waikato spray dryer facility is also located there. SODA Inc. is a destination incubator for business founders from across New Zealand. SODA Inc. offers start-up businesses start-up workshops, a pre-incubation programme and a full-incubation programme, including a graduation event. It also offers established businesses professional serviced offices for successful established small businesses, and a short-term flexible serviced office in a professional environment. SODA Inc. also offers an internship service, and hosts a monthly coaching club and annual start-up and innovation competitions. SODA Inc. is owned by Wintec. Central government organisations New Zealand Trade and Enterprise (NZTE) Callaghan Innovation Waikato Innovation Park Ltd is NZTE s Regional Business Partner. It provides firms with information, advice and networks, access to mentors from Business Mentors NZ and capability development vouchers. Waikato Innovation Park Ltd is Callaghan Innovation s Regional Business Partner and provides access to research and development funding. 28

29 Many of these organisations are located within Hamilton s Knowledge Zone. This is an initiative of Hamilton City Council and encompasses existing land use activities which provide significant opportunities for tertiary education, innovation and research, including the University of Waikato, Waikato Innovation Park and the AgResearch Centre campus. The Knowledge Zone reflects the importance of these existing physical resources by providing further opportunities for a wide range of education, research and development activities with supporting retail and mixed-use activities. The Knowledge Zone enables Hamilton and the wider catchment to meet its social, cultural and economic needs and provides an opportunity through development to achieve connectivity between all three existing land uses. The connections among these organisations, however, are not as strong as they could be. Waikato Means Business suggests that bringing these strengths together could secure the region s reputation as New Zealand s centre of production, engineering and manufacturing. KEY ACTIONS There was one key action associated with this priority: ACTION: UNDERSTANDING THE WAIKATO INNOVATION ECOSYSTEM Description The project stemmed from the 2015/16 proposal to undertake a regional growth study in partnership with MBIE. Since that idea was proposed further analysis has shown that a standard regional growth study (as per Northland for example) is not necessary in the Waikato, as the Waikato Means Business strategy and implementation programme has achieved the same general aims, at least at a regional level. However, some of the fundamental underlying economic competitiveness and performance processes in the Waikato are still poorly understood, especially those around R&D, innovation and commercialisation. This project will review and seek to better understand the current systems, actors, incentives and interventions. From this it will identify strengths, weaknesses and opportunities for systematic improvement, which can then be incorporated into the Waikato Means Business implementation programme. STRATEGIC PRIORITY 2: GROWING GLOBAL INDUSTRIES Agencies involved Subject to central government involvement, the project would be co-funded by Waikato Means Business and the Ministry of Business, Innovation and Employment. A steering group involving industry, iwi, education and research providers, Waikato Means Business and government representatives would be formed. Main outputs A report by June 2017 that would include: An outline of the key actors in the Waikato innovation system and their capabilities and the functions operating in the Waikato innovation system currently. An evaluation of how well these functions are being performed and the reasons for this; the strengths and weaknesses of the actors and functions in the Waikato innovation system; the connections of the key actors and functions regionally, nationally and internationally and opportunities for enhancement. Identification of opportunities to strengthen the Waikato innovation system further, informed by selected regions internationally with a similar population, population density and industry structure and focus. Recommendations for actions to further strengthen the Waikato innovation system and how the performance of the Waikato innovation system should be measured. 29

30 SHORT-TERM OUTCOMES ACTION: UNDERSTANDING THE WAIKATO INNOVATION ECOSYSTEM Short-term outcomes A greater understanding of the overarching structure, performance and opportunities for systemic improvements in the Waikato innovation system. Status Commentary The review was completed on time and found that the Waikato region has much of the elements one would expect from a successful regional innovation system: strong tertiary organisations, almost all the crown research institutes, innovation infrastructure and support, research and industrial capability in diverse and connected sectors. While the Waikato region appears to be good at knowledge creation, it struggles with knowledge exchange and, to a lesser extent, the commercialisation of that knowledge. The diagram below illustrates the complex network of innovation, R&D and commercialisation entities in the Waikato who all have an influence on these process, although not necessarily in a coordinated and integrated way. The report concluded that the way forward could be through an innovation strategy or plan. There is a lack of relevant regional innovation data and this hinders determining the actions or initiatives needed to address the region s challenges, and tracking success. The review recommended activation of the Waikato innovation system through a place/space that has a facilitation, coordination and promotion role; leadership of the Waikato innovation system; and tracking the Waikato innovation system. The recommendations and implementation actions arising from this review are being designed and sequenced to align with the results of the regional economic development capacity and capability review. Figure 12: Waikato innovation system Source: Martin Jenkins,

31 MEDIUM-TERM OUTCOMES Increased investment by businesses and local and central government in key industries The value per business unit of New Zealand Trade and Enterprise (NZTE) capability development vouchers in the region decreased from $9.68 in 2014/15 to $7.97 in 2015/16 (Figure 13). While not as high as in 2013, the value per business unit of Callaghan Innovation business-led research and development grants has increased since 2014 (Figure 15). The investment value per business of NZTE and Callaghan Innovation grants remained below the New Zealand average of $10 and $352 respectively. Where the Waikato used to get a much higher proportion of the total NZTE capability vouchers (15% in 2011), it now sits at closer to 8% (Figure 14). Figure 13: NZTE vouchers lower than other regions NZTE CAPABILITY DEVELOPMENT VOUCHERS $ PER BUSINESS UNIT / / / / /16 STRATEGIC PRIORITY 2: GROWING GLOBAL INDUSTRIES Auckland Bay of Plenty Northland Waikato New Zealand Source: NZTE Figure 14: Waikato gets around 8% of NZTE vouchers 16 WAIKATO % OF TOTAL NZTE CAPABILITY VOUCHERS / / / / / / 17 Source: NZTE 31

32 Figure 15: R&D grants lower than NZ average 700 $ PER BUSINESS UNIT OF CALLAGHAN INNOVATION R&D GRANTS YEAR Auckland Bay of Plenty Northland Waikato New Zealand Source: Callaghan Innovation 32

33 CAPABILITY AND CAPACITY IN THE REGIONAL INNOVATION SYSTEM Despite the downturn in the dairy industry, businesses based at Waikato Innovation Park have reported strong growth and financial results. In the park s 2016 tenant survey, the gross turnover of all tenants in 2016 was more than $427 million, up 42% from $300m in This reflects an upward annual trend with $188m reported in 2014 and $155m in Businesses based at Waikato Innovation Park make a significant contribution to the regional and national economy, and that contribution is growing year-on-year, said Waikato Innovation Park CEO Stuart Gordon. Waikato Innovation Park is a hub for innovation and our tenants work in agricultural, environmental and information technology as well as food processing, research and development, communications, human resources and food science, to name but a few areas, said Mr Gordon. It s a great place to do business. Compared to the national average, park companies are significantly more likely to be exporting their products or services overseas and to be engaged in research and development. Some 68% of park tenants were actively exporting their products or services overseas in 2016, compared to 30% nationally. Some 61% of park tenants were engaged in research and development last year, compared to 14% nationally. Some 20% of park tenants reported job growth in 2016, compared to just 2% of companies nationally. Last year Waikato Innovation Park was home to 46 tenants. There were 562 people working at the park, a growth of 17% since A further 1049 staff were employed by park businesses, based elsewhere in New Zealand or overseas. Many of the businesses at the park are small more than half of those surveyed (54%) said they had less than 10 employees. Mr Gordon said Waikato Innovation Park was a collaborative environment, and more than one-third of park businesses reported collaborating for work. There is an amazing synergy and buzz about working at Waikato Innovation Park, said Mr Gordon. People enjoy being here. They can catch up over coffee at our on-site cafe, or bump into each other while walking across the campus between buildings. Ideas and collaboration happens everywhere. The Waikato Innovation Park site is earmarked for further growth, with a masterplan that includes expansion of the campus innovation and research precinct and its food and technical development centre. Source: Waikato Innovation Park Ltd 33

34 STRATEGIC PRIORITY 3: MAKING BUSINESS EASIER Businesses in our region have asked for greater consistency in council engagement with industry, consent processing and the assessment of investment proposals. Councils are undertaking several initiatives that will assist in creating a more consistent and business-friendly environment, but we know there is more to be done. This priority primarily focuses on the business-facing performance of the local government organisations in the Waikato, and seeks to ensure that businesses can get on and do things with a minimum of cost and bureaucracy. The strategy describes this as being about: ensuring business support is well targeted and value for money providing a consistent approach to local government regulation and relationship management with businesses across the region. Selected examples of initiatives underway in the region to make business easier include: Waikato District Council digital consent handling systems To meet growing demand for consents, Waikato District Council has built new digital back-of-house systems for improving its efficiency in handling consent applications. The plan is to augment the system with an online portal which will allow all consents to be lodged via the internet in the future. Hamilton City Council online services Hamilton City Council s online services can be used to register a business or renew an existing registration quickly and simply if a business is in one the following categories: A food premises A business holding or requiring a public place permit A regulated business (hairdresser, camping ground, funeral director, or an offensive trade such as rubbish disposal) An IQP (independent qualified person). The council securely stores all details online and each year it is a simple process to complete your application and pay the fees online. Online services can also be used to pay water rates and accounts receivable online, using a credit or debit card or via POLi internet banking. It will soon be possible to pay rates accounts through online services as well. If customers regularly make other online payments to the council such as requesting Land Information Memorandums (LIM) online, they can register for online services and request these through their login. This saves them having to enter their contact details every time they request a LIM. 34

35 MEDIUM-TERM OUTCOMES Lead times in providing regulatory and customer services Time taken in provision of regulatory and customer services varies among districts in the region. For example, six districts show on-time response processing of consent applications. Some districts lagged in on-time processing; however all process at least 96% of applications on time (Figure 16). Figure 16: Percentage of resource consent applications processed on time (2014/15) COUNCIL Waitomo DC Waikato RC Matamata Piako DC South Waikato DC Rotorua Lakes DC Waikato DC Hamilton CC Hauraki DC STRATEGIC PRIORITY 3: MAKING BUSINESS EASIER Otorohanga DC Taupō DC Thames Coromandel DC Waipa DC 94% 95% 96% 97% 98% 99% 100% Source: MfE National Monitoring System 35

36 STRATEGIC PRIORITY 4: BUILDING, ATTRACTING AND RETAINING SKILLS AND TALENT This strategic priority has two key components the development of greater understanding of the labour market needs within the region and the promotion of the Secondary Schools Employer Partnerships (SSEP) model. The Waikato Regional Labour Market Strategy The primary mechanism for achieving Strategic Priority 4 is the development and implementation of the Waikato Regional Labour Market Strategy (Figure 17). This strategy, which was first formulated back in the 2014/15 year, sets out a plan for building, attracting and retaining skill talents through six key strategic principles. These are: Strengthen and focus communications and connections: employers, educators, adults, students. Map future workforce needs by sector. Collate and distribute labour market information. Focus on core educational achievement. Especially in maths and science across the region. Target education and training through strong employer/ provider links. Focus on core, technical and specialist skills. Optimise transitions: school to training, school/training to work, sector to sector. The Waikato Regional Labour Market Strategy is a living process, which is being continually developed and improved by the strategy s steering group. The aim of this crosssectoral leadership group is to provide better quality regional data on the future employment demand trends for the Waikato s key employment sectors, while helping educators and training organisations to make sure they are providing the necessary training and skills to meet that demand. The steering group, which is chaired by a representative from Immigration NZ, comprises leaders from the building and construction, health, ICT, manufacturing, primary and services sectors, along with staff of the University of Waikato, Wintec, Smart Waikato Trust, Te Puni Kōkiri, Waikato Chamber of Commerce, Ministry of Business, Innovation and Employment, Ministry of Education, Waikato Innovation Park, the Ministry of Social Development, Waikato-Tainui and economic development managers from a range of territorial authorities. The role of the industrysourced members of the group is especially important as they act as sector group leaders, ensuring the voice of labour demand is clearly represented in the process. Review of the strategy Given that the strategy was first formulated back in 2014, a review process led by the steering group s chairman was undertaken in February The review concluded that significant progress has already been made in developing a clearer picture of the region s labour market capabilities and future needs. This work included: Mapping of future workforce needs by sector In August 2016, an NZIER report, Regional Labour Market Indicators, was completed which provided a detailed analysis of the Waikato labour market including GDP, employment, education and income indicators, along with generalised predictions of future skill shortages and labour demands over the coming three years. The NZIER data was summarised into the following infographic and conclusions: Regional value proposition. Attract skills to the region by defining and marketing regional value proposition. Strengthen and focus communications and connections: employers, educators, adults, students Map future workforce needs by sector. Collate and distribute labour market information Focus on core educational achievement especially in maths and science across the region Evaluation and review. Data based. HLFS, MBIE, TEC, MOE Optimise transitions school to training, school/training to work, sector to sector Attract skills to region, city and regional economy sectors by defining and marketing regional value proposition Target education and training through strong employer/ provider links. Focus on core, technical and specialist skills Figure 17: Waikato labour market strategy map Source: Waikato Means Business 36

37 Figure 18: Summary of the Waikato labour market STRATEGIC PRIORITY 4: BUILDING, ATTRACTING AND RETAINING SKILLS AND TALENT Source: NZIER 37

38 Waikato regional economy key indicators Waikato s economic growth is close to the national rate. Waikato makes up 8% of the New Zealand economy. Waikato benefits from a strong construction pipeline. Unemployment is falling in the Waikato. Waikato s cost of living is lower than the national average. Gross domestic product (GDP) Waikato s primary sector is particularly important to the national economy, but its share of services is lower than the New Zealand average. About a quarter of New Zealand s dairy industry is in the Waikato. Services and primary industries together make up 50% of employment in the region. Health and services are the fastest growing sectors. Employment The services sector is by far the largest employer. Services and health are making strong contributions to employment growth. Waikato s health sector employs almost as many people as Waikato s manufacturing sector. Annual job turnover by industry typically sits between 10% and 20% (relatively stable); the only exception is the primary sector, at 25% (more unstable). More than 20,000 workers in total are hired each quarter (in key industries); 10,000 in services and 5,000 in primary. Study and qualifications The primary, manufacturing and construction sectors seek largely managers, technician and trade workers and labourers. The services, health and ICT sectors seek largely professionals, sales and community and personal services workers. Most sectors require all types of qualifications, but the services, health and ICT sectors seek a greater proportion of tertiary qualifications. Income The majority of labourers, operators, drivers, sales, clerical and personal services worker s earnings fall within the $1 $50,000 bracket. The majority of technician and trade professionals and managers earn $50,000 or more. Manufacturing, construction and ICT offer the highest wages in Waikato. The primary and manufacturing sectors in Waikato offer higher wages than the New Zealand average for these sectors; other sectors offer equivalent or lower wages. The NZIER data shows that within the Waikato region it is the services sector which is largest employer, while health employs almost as many as manufacturing. 38

39 Figure 19: Employment by sector ,000 60,000 50,000 40,000 30,000 20,000 10,000 - Primary Manufacturing Construction Information, Media Services Health Care and and Telecommunication Social Assistance Source: NZIER The NZIER report also makes predictions of the key growth sectors over the next three years. Figure 20: Projected sector labour demand growth 5% 4.3% 4.0% 4% 2.2% 1.9% 2% 2% 1.7% 1% 1% STRATEGIC PRIORITY 4: BUILDING, ATTRACTING AND RETAINING SKILLS AND TALENT - Primary Manufacturing Construction Information, Media Services Health and and Telecommunication Social Assistance Waikato New Zealand Source: NZIER Looking to the future, the NZIER data estimated that: Construction, services and health are likely to be the sectors with the fastest employment growth in next 3 years. Services sector is predicted to create 1,500 jobs per year, largely professional and managerial sectors. Primary industry job growth is predicted to be strongest in support services for arable, horticulture and forestry, and for factory, management and drivers. This labour force planning work is also supported by the MartinJenkins Ltd s Upper North Island Strategic Alliance study Upper North Island Key Sector Trends to 2015, and Labour Market Demands to 2020, which was completed in June

40 Attracting and retaining skills Work on this attraction process is ongoing, but the development of the Waikato Story with its potential to instil pride in welcoming talent to the Mighty Waikato is a key step. One of the ways of attracting the required labour supply to the Waikato region (in preference over other regions in which workers, both New Zealanders and skilled migrants, could choose to locate) is to ensure that the Waikato Story attraction message gets out to the business sector. This can be achieved through focused communication and networking, so that information about gaps in the labour market and resources to resolve issues are often already available in businesses and central/local government agencies across the region. One of the first steps in this provision of readily available information is the production of a one-page summary of the Waikato s economic and social statistics as derived from the NZIER report. Next steps for the Labour Market Strategy In the year, the work on the Waikato Regional Labour Market Strategy will continue, and one of the key aims of the steering group is to ensure greater coordination across the agencies and economic development managers within the region, so that improved sharing of knowledge and resources can occur. Following on from the NZIER overview, the next stage will also work at a sector level to identify specific skills gaps, and find ways to fill them. For example, the launch of the Cultivate IT network provides a direct, Waikato-specific voice for the growth of the IT sector in the region, which could also potentially identify job vacancies. Similarly, the Waikato Engineering Careers Association (WECA) can play a key role in assisting with identifying and helping to collaboratively fill job vacancies in the manufacturing sector. In looking forward towards the more detailed sector-level analysis, there are three key market segments which need to be addressed by the developing strategy. These are: 1. Immediate skills shortages: To be met by those already in workforce, or by immigration to fill skills gaps. Meeting these skills shortages requires communication of vacancies and skills matching both internally within the region, and externally within New Zealand and overseas. 2. Future jobs for school/tertiary leavers/career transitions: Planning is required to ensure students have the requisite skills to meet looming industry/job demand. Similarly training needs to be available for those in the workforce wishing to make career transitions. 3. Long-term demographic trends: It is important to plan for emerging trends such as the rapid ageing of population, the demand for increased medical needs in relation to the health sector, and the arrival of artificial intelligence and the greater automation of jobs. These are trends which need to be considered in the further development of the labour market strategy. Parallel with this process, there is a need to provide a higher profile for labour market issues across the region, which can be linked to better communication about the Waikato Story and use of the website as a key tool for attracting and retaining skilled talent. Youth not in employment, education or training Employment data for Waikato shows the proportion of people in the year age group not in employment, education or training in the Waikato was 13.2% in the year to June This is a percentage point higher than the New Zealand average of 12.2%. Census data shows Waikato also has a higher proportion of residents with no qualification at all (21.9%), compared to the New Zealand average (18.6%). Also, the proportion of employees qualified at degree level (14.1%) is lower than the national average (17.8%). Developing employer partnerships The region has been successful in fostering greater engagement between youth and employers with programmes such as the Secondary School Employer Partnerships, trades academies and the Māori and Pasifika Trades Training. The tertiary sector, which is strong in the Waikato, has been actively involved in this process, along with the Ministry of Education s drive for core educational achievement, especially in maths and science across the region. In the year, the Secondary School Employer Partnerships programme has been a key focus of funding and resources from Waikato Means Business and its partners such as WEL Energy Trust, Mercury Energy and Federated Farmers. Secondary Schools Employer Partnerships In 2015, the Waikato Means Business Steering Group agreed to co-fund, with WEL Energy Trust, a series of five pilots for the Secondary Schools Employer Partnerships (SSEP). SSEP is a high-profile legacy project developed to strengthen vocational pathways between school and employers. The goal of SSEP, supported by Waikato Means Business, the Ministry of Education and WEL Energy Trust, is to improve student retention, achievement and educationto-employment transitions, beginning with Year 9 and 10 students and progressing to senior students. This will ultimately contribute to addressing future workforce gaps and skills issues in Waikato. Key industries identified as being important to the local economy are business, ICT, trades, infrastructure, engineering, health and primary industries. In 2017 SSEP is now operating in 12 Waikato schools including Hamilton Boys High School, Fairfield College, Morrinsville College, Thames High School, Hauraki Plains College, Cambridge High School, Fraser High School, Ngāruawāhia High School, Te Kauwhata College, Waikato Diocesan School for Girls, Rototuna Junior High School and Huntly College. The key benefits of the SSEP programme include: bridging the gap between schools and the real world alleviating skills shortages and youth unemployment lifting capabilities of school academic staff and their awareness of industry needs assisting with achievement, retention and transition in schools building work-ready youth and youth-ready employers schools are aware of the need to better engage with industry and require support. 40

41 A 2016 evaluation report enabled Smart Waikato and its funders (including Waikato Means Business), schools and employers to measure the value generated by SSEP and set benchmarks for its future performance. The results of the evaluation can be read in full at smartwaikato.co.nz. A summary of some of the key results includes the following: Across all factors measured (refer Figure 21 below), on average 79% of students indicated positive impact on at least one factor, with the highest rating in response to the value of SSEP in helping them to understand why they study certain subjects The impact is lower across the board for Year 9s. This can be partially explained by the fact that them at this level are further from making subject choice/career decisions than Year 10s. The lower impact with respect to school subject choice is probably because many did SSEP in compulsory core subjects (e.g. English, Science and Maths) and so may not have any influence over school subjects in the next year particularly Year 9s. Figure 21: SSEP key performance indicators YES 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Year 9 Percentage of pilot students that answered yes to the post-pilot survey question: Has the experience of having business people in the classroom and going out to workplaces... Made you more interested in the (subject area)? Influenced your school subjects for net year? Helped you understand why you are studying (the subject) at school? Changed the way you feel about what you could achieve? Helped you when thinking about your future career? STRATEGIC PRIORITY 4: BUILDING, ATTRACTING AND RETAINING SKILLS AND TALENT Year 10 All students Source: Smart Waikato The value of SSEP, however, is not limited to the students who participate. Prior to SSEP, the teachers surveyed had only limited engagement with industry. Following their experience of SSEP, 92% of teachers surveyed said the real-life context offered by the employers supported their professional development. Furthermore, 77% of teacher respondents said SSEP had changed the way they plan their curriculum. Forth-eight different employers across key Waikato industries partnered with 26 teachers in 2016 to create contextualised learning opportunities for students. Each employer partner committed to connecting face-to-face with the same group of students on three separate occasions during the year either in the classroom, in the workplace or in the field. Like teachers, the participating businesses reported positive impacts for them from being part of the programme. Some 65% of employer partners had had no previous contact with the school they had partnered with but, following participation, 80% of employers said they would consider doing SSEP in an additional school. 41

42 Figure 22: Teacher and employer feedback SSEP Source: Smart Waikato Has SSEP had an impact on your professional development (teachers)? 92% Yes 8% No EXAMPLES OF OTHER KEY EMPLOYMENT INITIATIVES Youth Guarantee Programme Would you consider extending your involvement in SSEP to included an additional scholl(employers)? 80% Yes Several programmes have been undertaken across the Waikato region as part of the Government s Youth Guarantee programme, which supports a wide range of initiatives aimed at improving the transition from school to work, by providing a wider range of learning opportunities, making better use of the education network, and creating clear pathways from school to work and study. Examples of Youth Guarantee programmes in Waikato include: Fees-free Youth Guarantee programmes The Fees-free programme is designed to provide year olds with an opportunity to study towards NCEA Level 2, aligned with the vocational pathways, or equivalent, at tertiary providers free of charge. Students take part in full-time study in programmes that are usually vocationally focused. In 2017, around 1,000 fees-free places for young people were offered in the Waikato region across a range of disciplines including hospitality, construction, agriculture, early childhood education, tourism, automotive engineering, mechanical engineering and performing arts. Programmes were provided by a plethora of institutes of technology, wānanga and private training establishments, including Wintec, Te Wānanga o Aotearoa, NZMA, ATC, Fairview Educational Services, K2 Corporation, Responsive Trades, Ngāti Maniapoto Marae Pact Trust, Valley Education & Training Ltd, Waikato School of Hairdressing, SPI Institute and NZ School of Tourism. Youth Guarantee Waikato Trades Academy 2016/2017 A secondary tertiary partnership between Wintec and more than 30 Waikato schools (not including the four South Waikato schools that participate in trades academy programmes with Waiariki Institute of Technology in Tokoroa and Rotorua). Students achieve: No 20% a Vocational Pathways Award at Level 2 for the relevant sector working towards a national certificate for a specific sector. This will enable pathway progression to further study, industry training and/or employment. In 2017, 570 students participated in the Wintec Trades Academy. Youth Guarantee Waikato Primary Industries Trades Academy 2016/2017 A secondary tertiary partnership between Taratahi Agricultural Training and eight schools. Students achieve NCEA Level 2 (depending on what level(s) they are studying), a Vocational Pathways Award at Level 2 in Primary Industries, and depending on the programme will be working towards a national certificate aligned to primary industries. This will enable pathway progression to further study, industry training and/or employment. In 2016, 270 students will participated. Young people in this programme gain valuable workplace experience on farms in the region and a significant number will gain fulltime employment through this partnership. Secondary-Tertiary Programmes Secondary-Tertiary Programmes are a partnership between schools, tertiary providers, local communities, and employers to provide young people with better education and employment opportunities. In addition to the Waikato Trades Academy, there are many other secondary-tertiary partnerships operating in the region including: Partnership between Te Wānanga o Aotearoa and Te Wharekura o Te Rau Aroha in Waitoa to provide carpentry training at Level 2. Students from the Wharekura receive 1 day per week of instruction provided by a TWOA tutor utilising a mobile workshop. Partnership between Te Wananga o Aotearoa and Huntly College to provide tourism training (at Level 2). As with the carpentry initiative this involves students receiving instruction from TWOA tutors 1 day each week. Māori and Pasifika Trades Training (provided by Wintec) The Waikato Māori and Pasifika Trades Training consortium is made up of iwi, community groups, local employers, ITOs and Wintec and provides fees-free training to Māori and Pasifika students between the ages of 16 and 40. A wide range of programmes are offered in subjects including construction, mechanical engineering, electrical engineering, culinary arts, hairdressing, automotive, plumbing and health (pre-nursing/ midwifery). Participants are supported to find employment after their training with a hope that many will be signed into apprenticeships. Over 2016/17 approximately 340 students have been through the scheme. The programme is currently delivering around 60% employment with many participants also moving on to further study. NCEA Level 2 (depending on what level(s) they are studying) 42

43 KEY ACTIONS There were two key actions associated with this priority. ACTION: COMPLETE MAPPING FUTURE WORKFORCE NEEDS Description The project arose from the Waikato Regional Labour Market Strategy, which was developed in 2015 by a cross-sectoral leadership group chaired by John Cook. This aims to provide better quality regional data on the future employment demand trends for the Waikato s key employment sectors. The data will help profile opportunities to people via the Waikato Story, and also help educators and training organisations provide the necessary training and skills to meet demand. Agencies Convened by Ministry of Business Innovation and Employment-Immigration Services involved A project group comprising staff from the University of Waikato, Wintec, Smart Waikato Trust, Te Puni Kōkiri, Waikato Chamber of Commerce, Ministry of Business, Innovation and Employment, Ministry of Education, Ministry of Social Development, Waikato-Tainui, and the building and construction, health, ICT, manufacturing, primary and services sectors. Main outputs A detailed report on the future workforce needs of selected sectors, which includes a description of the quantum of jobs and identifies the skills pathways required. The development of better communication between all participants in the labour market (particularly employers, agencies and education providers) to understand the skill requirements of different industries and jobs over time. ACTION: SECONDARY SCHOOL EMPLOYER PARTNERSHIPS Description The project continues the Steering Group s support of the Secondary School Employer Partnerships (SSEP) programme run by Smart Waikato. Agencies Led by Smart Waikato, in close collaboration with school boards, teachers, local businesses and the involved Ministry of Education. Smart Waikato has partnered with key funders including Waikato Means Business, WEL Energy Trust, MBIE, Mercury/Waikato-Tainui Partnership, Federated Farmers. Main outputs The continued expansion of SSEP to a further cohort of secondary schools across the Waikato Further evolution and development of the SSEP model to ensure that the programme reaches 100% of Waikato secondary schools within the foreseeable future Exploration via a SSEP business plan of options for SSEP to become self-funding within the next 1-3 years. STRATEGIC PRIORITY 4: BUILDING, ATTRACTING AND RETAINING SKILLS AND TALENT SHORT-TERM OUTCOMES ACTION: REGIONAL LABOUR MARKET STRATEGY Short-term outcomes Better information is available on the demands of the labour market and prospects, including training opportunities in the region and various career options. Status Commentary The NZIER workforce mapping project has provided updated and accurate information about the labour market in the region, as well as presenting outputs by sector in infographic format with a series of snapshot narratives. This work is included in the Work Waikato chapter of the Waikato Story website ( ACTION: REGIONAL LABOUR MARKET STRATEGY Short-term outcomes Employers and potential employees have better information about demands for skills and future employment opportunities in the region. Status Commentary The updated NZIER information about current and future workforce needs is presented in the Work Waikato chapter of the Waikato Story website. 43

44 MEDIUM-TERM OUTCOMES Increased participation of children and adults in education and training The percentage of 5-19 year olds enrolled in school has been static in the Waikato for the last decade and lower than New Zealand overall (Figure 23). Only about 2.8% of the population have registered as industry trainees in 2016 (Figure 24) and there is a declining trend since 2009 (Figure 25). Study participation by people aged 15 and over in the region is under 13%, which is slightly less than the New Zealand average participation (Figure 26). Figure 23: Proportion enrolled in school below average and not growing % OF PEOPLE AGED 5-19 YEARS THAT ARE ENROLLED IN SCHOOL 88% 86% 84% 82% 80% 78% 76% Northland Region Auckland Region Waikato Region Canterbury Region NZ Bay of Plenty Region Source: Derived from Ministry of Education and Statistics New Zealand data Figure 24: Declining proportion of industry trainees INDUSTRY TRAINEES AS A % OF THE POPULATION 4.0% 3.5% 3.0% 2.5% 2.0% Auckland Region Bay of Plenty Region Northland Region Waikato Region New Zealand Source: Derived from Ministry of Education and Statistics New Zealand data 44

45 Figure 25: Levelling out of number of trainees NUMBER OF INDUSTRY TRAINEES IN WAIKATO 25,000 20,000 15,000 10, YEAR Source: Ministry of Education Figure 26: Study participation rate slightly less than average Otago Auckland New Zealand Waikato Canterbury STRATEGIC PRIORITY 4: BUILDING, ATTRACTING AND RETAINING SKILLS AND TALENT Bay of Plenty Northland 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% STUDY PARTICIPATION RATE % BY AGE 15+ (2013) Source: Census

46 STRATEGIC PRIORITY 5: TELLING THE WAIKATO STORY Welcome to the Mighty Waikato reads the sign that now greets visitors entering the Waikato region through key road routes or by air. This major revamp of the region s branding follows on from the successful launch of the Waikato Story in December The Waikato Story defines what s unique about the Waikato and provides a framework to help better communicate the region s value to potential business investors, workers, visitors, students and families both in New Zealand and around the world. While local businesses and residents have a positive image of Waikato, the region has sometimes struggled to project this nationally and internationally. Even though the region sits at the heart of the Golden Triangle, and has excellent infrastructure, affordable housing and a good range of education options, the Waikato s advantages are not as well known as they could be. The outcome is that investment, visitor numbers and spending, and international students are not growing to the extent we would like. The Waikato Story aims to tell a more accurate and consistent story about the region, with the aim of fostering local pride in the Waikato and generating positive awareness and perceptions of it. The Waikato Story has been created with direct input from approximately 600 people representing the business, farming, education, government, community, arts and cultural sectors. The outputs of this collaborative process have been tested through ongoing consultation and qualitative and quantitative research. Helping to develop and successfully launch the Waikato Story is seen as a key priority of the Waikato Means Business Strategic Priority 5, which aims to help lift regional performance. The Mighty Waikato region has a really great story to tell, says Parekawhia McLean, who was interim chair of the Waikato Means Business Steering Group at the time of the December launch. We have one of New Zealand s largest and most diverse regional economies, location advantage, a stunning natural environment, relatively affordable housing, high quality education and strong community networks that are good for business, said Ms McLean. Those who live here know we have a great quality of life some 84 per cent of us rate our quality of life as good or extremely good. But we know we could be louder and prouder about the distinct and unique attributes of the place we call home and that s where the Waikato Story fits in. The Waikato Story was developed with the help of hundreds of Waikato people who shared their ideas, feedback and pride in the region. Funded and coordinated by Waikato Regional Council with support from WEL Energy Trust, the Waikato Story builds on the success of the New Zealand Story, launched in The Waikato Story highlights the region s competitive advantage and supports the region s growth aspirations by making available free marketing resources. The images, videos, data and stories can be used by people to promote their businesses to potential investors, workers, visitors, students and families, within New Zealand and around the world. Figure 27: The Mighty Waikato brand displayed at the Hamilton Airport 46

47 Adoption of the brand Since the November 2016 launch, many key institutions have already adopted the Mighty Waikato brand. These include the Hamilton Airport, which services the entire Waikato region and uses the Waikato Story as a key marketing tool. This initiative is helping to showcase some of the Waikato s great environmental, tourism and community assets in an airport building which in the 2016/17 year had 124,000 aircraft movements and 317,000 passengers. 4 Across the entire airport, from the time that a visitor enters the building and stands in front of the Air New Zealand counter right through to when they head out the departure gates, passengers are reminded that they are in the Mighty Waikato with a series of striking mega-sized banners that show inspiring images of the region. The brand images, which come from the Waikato Story toolkit, speak about the natural beauty of the region, its sporting prowess, family-friendliness, agricultural heritage, cultural diversity, and scenic attractions such as the Hamilton Garden and Hobbiton. The Waikato Story also has a special regard for the Māori values of the region, as well as the region s education excellence as a place to study. The aim of telling the story of the Mighty Waikato is to get people thinking about the wider range of factors behind the region s prosperity. Alongside the traditional images of the local dairy sector, the Waikato Story also talks about sectors such as manufacturing, health, ICT and construction, which are key elements of the region s future growth potential. Educational institutions are a key strength in the Waikato, and are also highlighted in the Waikato Story. In addition, the story of the Mighty Waikato also speaks about the importance of international education, which is one of the top 10 industries in the Waikato with an economic impact over $150 million a year to the local economy. STRATEGIC PRIORITY 5: TELLING THE WAIKATO STORY Tourism is another key factor in telling the Waikato Story as the region extends all the way from Pokeno in the north down to Lake Taupō in the south, as well as incorporating the surfing lure of Raglan in the west, and the iconic beauty of Coromandel Peninsula in the east. Visitor numbers are growing in the region, which has a host of scenic attractions ranging from Hobbiton, the Waitomo Caves, Cathedral Cove and Hot Water Beach. Another strong backer of the Mighty Waikato concept has been Waikato Regional Council. As part of its commitment to the brand, the council has installed promotional billboards at each of the 10 major entrance points of the region. These billboard signs, which are located at Bombay, Waihi, on top of the Kaimais, on the Mamakus, at Horahora, Rainbow Mountain, on the Napier-Taupō Road, Desert Road, at Taumarunui and Mokau. Figure 28: Regional welcome signage The next phase The phrase The Mighty Waikato has already gained currency with politicians and business leaders, and has begun to be used in conversations, interviews and even the occasional advertising campaigns. Moving into the next phase of development has involved a competitive tender process which has seen a contract awarded to a consortium led by the Waikato Chamber of Commerce, Dugmore Jones Ltd and Dynamic Media Ltd to produce the Waikato Story s foundational creative assets, including reviewing and updating the digital platform, the Waikato Story video and a how-to guide to using the Waikato Story

48 OTHER ELEMENTS IN TELLING THE WAIKATO STORY The Waikato is a vibrant and growing region, and the digital platform for the Waikato Story is far from the only means of promoting the region s success. Other selected examples of important initiatives underway in the region that contribute to Strategic Priority 5 have been highlighted in recent media. Hamilton City tells its growth story A new website provides a hub for economic information, resources and investment opportunities in Hamilton and surrounding areas. Acting General Manager City Growth Luke O Dwyer says the Hamilton Invest website pulls together the most recent Council information and the great work partner organisations do to support economic development in the city. The format was kept simple so it s easy for people to use, Mr O Dwyer says. The website will be continuously updated with significant investment news from around the city and to make sure it s relevant and has the information people are looking for and find useful. Figure 29: Aerial shot, Hamilton City Waikato theatre a step closer Momentum Waikato Community Foundation have proposed a 1,100-seat theatre, shared public spaces with a lifestyle art hotel and a public art gallery, to be located at the old Hamilton Hotel site on Victoria Street. The new theatre will serve two purposes: firstly, to fill the gap left in Waikato s creative community by the closure of Founders Theatre and, secondly, to build the best theatre possible for the Waikato region. The concept will see a world-class theatre that will attract promoters and producers of international standard across a wide array of genres, attracting the calibre of performing arts events that the city and region deserves. Founders Theatre was closed for safety reasons in March The absence of an equivalent venue has been strongly felt within the community. Momentum Waikato approached Hamilton City Council in July 2016 and offered to manage a robust process on behalf of donors and the community to find the best outcome for a new regional theatre. Figure 30: Proposed Waikato Regional Theatre Source: Waikato Story Focusing on Hamilton s strongest economic activity areas including the health, freight and logistics, information technology, and research and development sectors allows the Council and city to put energy and effort into building on what s already strong and part of the city s competitive advantages. Hamilton City Council is talking up the potential to attract people and business to the city. Coordination is a big part of the success of economic investment and we continually work closely with our neighbouring districts to make sure we make the most of any opportunity coming into the region. This includes getting the right people in the room, which we did recently for a Chinese delegation, says Mr O Dwyer. When any leads come through from the website, the Council will make sure it s connected with the right people in the city to be able to make the most of the opportunity. That s the best way the Council can act as a coordinator and make the best of the resources available in the absence of a dedicated economic development resource or agency in Hamilton. Source: Hamilton City Council Source: Momentum Waikato Foundation The process was managed by the independently appointed Governance Panel, and the Feasibility Report was compiled by international theatre consultants Charcoalblue. The Charcoalblue team have worked on a vast array of theatres worldwide, including the UK s Royal Shakespeare Company, Royal National Theatre and Royal Opera House, among many others. The Charcoalblue report estimates that design processes and resource consent for the new theatre would take place in 2018, with final detailed designs ready in The theatre would be expected to open in Funding of $30 million for the theatre is planned to come from local councils, a further $30 million from generous families and organisations in the Waikato region, and $10 million from central government. Source: Momentum Waikato 48

49 CYCLING AND CYCLE TRAIL DEVELOPMENTS ACROSS THE WAIKATO REGION Hauraki Rail Trail The latest section of the Hauraki Rail Trail opened in November 2017, covering 43km from Kopu (near Thames) to Kaiaua and the Seabird Coast. The trail follows the historic railway corridor, from Te Aroha up to Thames and then along the coast, with one of the rides along the trail taking cyclists through the Karangahake Gorge to Waihi. The railway corridor is one of New Zealand s oldest, dating back to 1898, and the area has great scenic, historic and environmental significance. Work is underway on extending the Hauraki Rail Trail south to Matamata, with plans to eventually link up with the neighbouring Waikato River Trail. Waikato River Trails The cycle trails cover approximately 103km of Southern Waikato land and are attracting an increasing number of sporting and community events as well as thousands of regular local users and tourists. Events include The Generator, a multi-sport event that offers four options for individuals and teams. The most gruelling is the Generator Full, which features a 6km kayak, 6km trail run, 32km road cycle, 12km mountain bike and concludes with a 5km run. The Taniwha is another multisport event that offers mountain bikers, runners and walkers a choice of courses covering trails around Lake Karapiro and Lake Arapuni. Participants wend their way through native bush, across wetlands, past historic landmarks and through forests and geological formations. Hamilton s Western Rail Trail The 2.7km trail runs along the rail corridor to connect the city s southwestern suburbs with the central city. Since the trail opened in April 2017, it has been used by over 38,000 people. The Western Rail Trail won the Big Bike Bling category in the 2017 NZ Transport Agency Bike to the Future Awards. The award recognises initiatives that significantly encourage an increase in cycling and strongly contribute to a bike-friendly future. STRATEGIC PRIORITY 5: TELLING THE WAIKATO STORY KEY ACTIONS There was one key action associated with this priority. ACTION: THE WAIKATO STORY IMPLEMENTATION PROGRAMME Description This project continues Waikato Means Business commitment to the further development of the Waikato Story. Activities for 2016/2017 can be summarised in three main areas of activity: Completion of content for digital platform Launch and roll-out programmes; and Ongoing management Within the Waikato Story programme, Waikato Means Business has a particular interest in invest Waikato, work Waikato and learn Waikato (and the development of a Waikato International Education Strategy led by Education New Zealand). Visit Waikato is also an important element although this is implemented more via the regional tourism organisations (RTOs) and not so much Waikato Means Business. As greater regional economic development capacity is developed for the Waikato region, any eventual regional economic entity/function which might arise would take over the administration and management of the Waikato Story website. Agencies involved Main outputs Funded by Waikato Means Business Steering Group and WEL Energy Trust Overseen by Waikato Regional Council The Waikato Story, including the tourism proposition, education proposition and investment proposition. Development of collateral to support the story including print, web, presentation, images etc. Action plan for marketing of collateral and story to potential students, visitor markets and investors. Identification of investment prospects for the region. 49

50 SHORT-TERM OUTCOMES ACTION: THE WAIKATO STORY IMPLEMENTATION PROGRAMME Short-term outcomes Students, potential trainees and potential employees from outside the region have better information about education and training opportunities in the region and the advantage of undertaking education and training in the region. Potential domestic and international investors have better information about investment opportunities in the region and the advantages of investing in the region. Potential domestic and international visitors have better information about visitor attractions and amenities in the region and how to access those. Status Commentary The Waikato Story was successfully launched on 2 December 2016 at Te Awa by (then) Economic Development Minister Steven Joyce and Parekawhia McLean from Waikato Means Business. Some 400 regional partners and stakeholders attended the event and there was positive media coverage. The Waikato Story website is now live ( and work is ongoing to further populate the site with relevant and useful material in relation to the five main themes of live, work, learn, visit and invest. MEDIUM-TERM OUTCOMES Number of visitor inquiries, international and national student inquiries Figure 31: Website hits increase from all countries 120,0000 The Hamilton & Waikato Tourism, Destination Great Lake Taupō and Destination Coromandel websites achieved a minimum of 600,000 total visits each. The Destination Great Lake Taupō website recorded over 1.1 million visits. The majority of these inquiries are from New Zealanders followed by people from Australia, the USA, and the UK (Figure 31). NUMBER OF WEBSITE HITS 100, , , , , Great Lake Taupō 2015 Great Lake Taupō 2017 Coromandel 2015 Coromandel 2017 Hamilton & Waikato 2015 Hamilton & Waikato 2017 YEAR END 30 JUNE New Zealand Australia United States United Kingdom Singapore All other countries Source: Hamilton & Waikato Tourism, Destination Great Lake Taupō, Destination Coromandel The number of investment deals/ prospects identified in the region There is no time series data to indicate the trend of high quality foreign investment deals in the region. However, a recently conducted customised survey shows that around $2.4 billion worth of high quality foreign investment prospects were identified by organisations in the region in The highest value prospects were in infrastructure followed by wood processing and forestry (Figure 32). Figure 32: Value of investment prospects (2015) NZ$ (MILLION) 1,200 1, Infrastructure Wood processing Forestry Electricity and gas Food and beverage processing Agriculture Tourism Land development Manufacturing (other) Source: Customised survey by Martin Jenkins (2015) 50

51 Investors consider it is easier to invest in the region Investment in the region by angel investors and other groups has been fluctuating over time and is generally lower than other regions in New Zealand used for comparison. There was a slight increase in investment from (Figures 33 and 34). Figure 33: Angel investments fluctuate YEAR 2010/ / / / / / /17 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 $NZ (THOUSANDS) INVESTMENTS BY ANGEL INVESTORS AND OTHER GROUPS Waikato Bay of Plenty Canterbury Auckland STRATEGIC PRIORITY 5: TELLING THE WAIKATO STORY Source: New Zealand Venture Investment Fund Figure 34: Angel investment per business is low 250 $ ANGEL INVESTMENT PER BUSINESS UNIT YEAR Auckland Canterbury Bay of Plenty Waikato Source: Derived from New Zealand Venture Investment Fund and Statistics New Zealand 51

52 CROSS-CUTTING PROJECT 1: TOWARDS GREATER REGIONAL ECONOMIC DEVELOPMENT CAPACITY This project acknowledges that greater regional economic development capacity and capability are most probably required to not only convene the various stakeholders involved in regional economic development, but also to keep things moving. The absence of this capacity has become apparent in some of the Waikato Means Business work streams, where progress cannot be made because of limited in-house capacity and the limited ability of partners to do work over and above their day-to-day roles. The sheer scale of the Waikato region and its dispersed governance (10 territorial local authorities and a regional council) means that an off the shelf/plug-in economic development agency model is probably not appropriate. This project will develop options for greater regional economic development capacity and capability. Once developed these would be evaluated and reported by a project steering group to the Waikato Means Business Steering Group and the Waikato Mayoral Forum. ACTION: REVIEW OF REGIONAL ECONOMIC DEVELOPMENT CAPACITY AND CAPABILITY IN THE WAIKATO REGION Description Since mid-2016 Waikato Means Business has been investigating whether the Waikato has the right arrangements in place to fully support the growth goals of the Waikato Economic Development Strategy (2014). A major project commenced in December 2016 to formally review the current arrangements and assess what changes might be required. That project, completed with the release of a report in September 2017, confirmed that compared to other regions in New Zealand, the Waikato: Does not yet have sufficient levels of regional economic development capacity and capability to support its growth goals Has an uncoordinated range of economic development strategies and frameworks across the region, with limited alignment and buy-in Has fragmented and uneven economic development, with limited and variable reach Has a large volume of unmet demand for improved investment attraction and facilitation services Has disjointed and uncoordinated innovation and industry development services Has inadequate levels of monitoring and reporting of economic impacts from current services; and Has a business community who are ambitious and looking for action. Importantly, the report found that local government in the Waikato, when measured on a per capita basis, invests about half of that invested by other regions in economic development. This also has flow-on effects in terms of central government funding, which is also very low compared to other regions in New Zealand. Given the new government s support for provincial economic development, we need to make sure that the Waikato has the leadership and operational frameworks and systems in place to identify the critical investment opportunities in the Waikato, and to seek investment support from the Government, local partners and businesses to make things happen. Based on the findings of the review, the WMB Steering Group has concluded that a new regional economic development entity focused on business development, innovation, industry development, and investment attraction services, built off Waikato Innovation Park s business development services, should be established. The Waikato REDA would provide enhanced regional ED leadership through an improved partnership between business, Māori/iwi, local government central government, and help fill some of the significant funding, service and business development gaps in the Waikato. Agencies involved Main outputs Waikato Means Business, MBIE, local authorities, Waikato Innovation Park A review document which analysed the current arrangements in the Waikato region and compared them with all other regions in New Zealand. The review then made a series of recommendations on how regional economic development governance, funding and service delivery could be improved. 52

53 SHORT-TERM OUTCOMES ACTION: IMPROVE WAIKATO S REGIONAL ECONOMIC DEVELOPMENT CAPACITY AND CAPABILITY IN THE WAIKATO REGION Short-term outcomes In partnership with local and central government, Waikato business, Māori and community leaders, agree on a model for regional economic development governance, funding and service delivery and, via the Waikato Mayoral Forum, agree on how it should be implemented. Status 53

54 CROSS-CUTTING PROJECT 2: IMPLEMENTING THE MĀORI ECONOMIC DEVELOPMENT AGENDA AND ACTION PLAN Waikato Means Business notes that leveraging Māori development is one of the key opportunities facing the region through Māori participation in the labour market, as well as Māori having a significant asset base. The release of the 2014 Māori Economy in the Waikato Region report by the Federation of Māori Authorities, Te Puni Kōkiri and Waikato Regional Council highlighted how Māori economic development is important not only for Māori, but for the overall economic performance of the Waikato region and New Zealand. The Māori asset base in Waikato region in 2012 was estimated at $6.2 billion, accounting for 15% of total Māori assets in New Zealand. The collectively owned asset base in the Waikato is expected to grow over the coming years as a result of further Treaty of Waitangi claim settlements. The extent is likely to be strongly influenced by the ability of Māori ahu whenua trusts, incorporations and trusts to diversify their activities and the ability of Māori to gain a greater share of employment in more skilled and productive industries. In 2013, 21.9% of the resident population in the Waikato identified as Māori compared to 14.9% nationally. Between 2006 and 2013 the usual Māori resident population in the Waikato region grew by 9.6%, compared to 5.2% for the region. In 2013, 58% of the resident Māori population in the Waikato were under 30 years of age, compared to 41% for the region. Māori are therefore critical to the future workforce. A large proportion of Māori are employed in low paid, low productivity industries and average weekly income is lower for Māori when compared to non-māori in the Waikato and to Māori nationally. The young Māori population in the Waikato, combined with the significant proportion of Māori employed in lower paid and low productive industries, represents a challenge to iwi and the region to both retain, upskill and create employment opportunities for these young people. Following the release of the report, a focus group of key stakeholders came together via a series of workshops to discuss the issues the report raised. The focus group agreed there is a need to work more collaboratively to achieve successful Māori economic development outcomes in the Waikato. A Māori economic working group comprised of representatives of iwi and Māori business in the Waikato was appointed to take forward the existing work and complete the development of a Māori Economic Action Plan and Agenda for the Waikato region. The Waikato Means Business Steering Group, in partnership with Te Puni Kōkiri and iwi, allocated resources to this project, which has the potential to make a positive contribution to Strategic Priorities 1, 2, 4 and 5. 54

55 ACTION: IMPLEMENTING THE MĀORI ECONOMIC DEVELOPMENT AGENDA AND ACTION PLAN Description Hui were held throughout the Waikato with people who represented Māori land trusts and incorporations; whanau, hapū, iwi and rūnanga; education providers and research organisations; charitable trusts and social enterprise; employers associations and industry bodies; the public sector, investors and business. A broad range of ideas and suggested activities were put forward to formulate a short-term action list. Key amongst this was a view that economic development needs to cross the broader dimensions of social, cultural, whānau and hapū wellbeing. It should not just be focused on the economy, employment and household income. This was most clearly articulated in the recurring theme to protect, maintain, and enhance the status and use of Te Reo. Similarly, the matter of land holdings and the constraints on unleashing their potential was a common thread throughout the discussions. The outputs that emerged from hui were distilled into four key themes. These themes are not rigid or mutually exclusive, there are many crossovers and the order that they are shown does not indicate any ranked order or priority. The themes are skills and resources, education, business support and communications. The action plan tabulates a selection of actions under each of these four themes. Four scenarios have been modelled to illustrate changes in labour demand and supply in the Waikato over the short (2021) and longer term (2028). Accompanying each employment scenario is matching labour supply participation assumptions. Agencies involved Main outputs Funded by Waikato Means Business Steering Group, Te Puni Kōkiri and iwi Overseen by a Māori economic working group comprised of representatives of iwi and Māori business in the Waikato A document by March 2017 consisting of: A short-term action plan to include actions, milestones, implementation accountabilities, outcome indicators and monitoring and evaluation plan for these indicators, for the next one to three years. A long-term economic agenda including goals, outcome indicators and a monitoring and evaluation plan for these indicators, for the next 10-plus years. SHORT-TERM OUTCOMES ACTION: IMPLEMENTING THE MĀORI ECONOMIC DEVELOPMENT AGENDA AND ACTION PLAN Short term outcomes Iwi, Māori businesses, investors, government agencies, education and research providers and business support organisations have better information about actions that could be taken in the next one to three years to lift Māori economic development and four alternative long-term outcome scenarios for Māori, the Waikato and New Zealand economies, depending on the actions taken. Status 55

56 PERFORMANCE OF KEY ECONOMIC INDICATORS IN THE REGION This assessment of the key regional economic performance indicators has been carried out using the latest available data, which in most cases is from The long-term trends were estimated using compound annual growth rates. The purpose of this assessment is to identify baseline measures for economic performance indicators in the region. The Waikato Means Business strategy was initiated in Therefore, we would not expect any direct relationships between these measures and the activities initiated under the strategy, at least in the short term. This is because economic activities in a small economy such as New Zealand can be affected by macroeconomic changes in other large economies such as the USA and China. However, we will be able to use these baseline measures as a guideline to monitor the macro-level economic changes in the region in the future. As expected, all key economic variables were affected by the financial crisis in the year This impact was obvious during the period. Since 2012, the economy has begun to recover from the shock of the global financial crisis. However, more recent developments such as the dairy price shock and the uncertainties in the Chinese macro-economic performance have started to be felt and will impact both the New Zealand economy and regional economy in the future. The current assessment shows that the gross domestic product (GDP) in the Waikato region continues to grow, both in total and per-capita terms, but growth rates are below the New Zealand average. The main contribution to GDP growth in the last year came from the manufacturing sector. In contrast, the mining sector had a negative contribution to growth, and the growth of the agriculture, forestry and fishing sectors is less than most others at 1.1% in the last year. Export sector growth has historically been considerable but consistent with the New Zealand average. However, the more recent declines in the value of dairy product manufacturing have resulted in a drop in the value of Waikato s exports since The forestry and logging sector also suffered losses in export earnings since In contrast, the tourism sector and the meat and meat product manufacturing sector have grown strongly in the region. The employment growth rate in the region in the last year is consistent with the New Zealand average. Median weekly income has increased markedly in the last two years. However, the average medium income remains below the New Zealand average. Employment growth in primary sectors show decline, with the most growth occurring in the administration and support services sector and in construction. Employment in the knowledge intensive service sector is also around 4% below the New Zealand average. The following section shows a detailed assessment of key economic variables. It also indicates the trends of supportive variables such as education and transport in the region. 56

57 Focus goal 1: Increase median household income to above the New Zealand average Weekly median income in the region is $1486, which is around $48 lower than the New Zealand average ($1534). While median income has been increasing at a compound rate of 1% per annum 5 since 1998, there has been good annual growth more recently (compounding at 8.7% since 2014) (Figures 35 and 36). Figure 35: Waikato incomes are lower than NZ Focus goal 2: Value added per capita will grow by 2.8% per annum Real GDP per capita in Waikato is estimated to be $43,212 6 (Figure 37). The annual growth in real GDP per capita since 2000 is 0.9% but has been lower in more recent years (since 2014 the growth has been 0.6% per annum). The level of real GDP per capita remains below the New Zealand average ($47,621), and so does the growth rate, meaning the gap is widening (Figure 38). Figure 37: Gap widens between Waikato and NZ s per capita GDP 50, $ (2016) $NZ (2010 PRICES) 45,000 40,000 35,000 YEAR NZ Median Weekly Income Waikato Median Weekly Income Source: derived from Statistics New Zealand data 30, YEAR Waikato per capita GDP NZ per capita GDP Figure 36: High growth in incomes recently MEDIAN REAL WEEKLY INCOME ANNUAL % GROWTH IN WAIKATO Source: Statistics New Zealand YEAR Source: Infometrics online database Figure 38: Growth in per capita GDP fluctuates % YEAR Waikato per capita GDP annual growth rate NZ per capita GDP annual growth rate Source: Waikato Regional Council estimates based on Infometrics data 5 Adjusting for inflation, using 2016 prices. 6 Measured in 2010 prices 57

58 Subsidiary goal 1: Productivity growth is at least 1% per annum Estimates of productivity, as measured by the compound annual growth in GDP per full time equivalent (FTE), indicate a positive trend (0.4% per annum, compounding, since 2000), which is lower than the New Zealand average (0.7% per annum). The change in regional productivity since 2014 is negligible (Figure 39). Figure 39: Productivity growth less than NZ average since 2013 ANNUAL PRODUCTIVITY GROWTH % Subsidiary goal 2: Proportion of working age population with high level qualifications increases to greater than the New Zealand average The proportion of the working age population (15-65 years) with New Zealand framework level 4 and above qualifications has shown a positive trend. However, the proportion in the Waikato (36%) remains below the New Zealand average (39%). Similarly, the proportion employed in the services industry (32%) remains below the New Zealand average (36%) (Figure 41). Figure 40: Fewer qualified people than NZ average but on par with Bay of Plenty Waikato New Zealand Northland Auckland Bay of Plenty Canterbury % qualified level 4 certificate and above Waikato Region YEAR Source: Infometrics online database New Zealand Otago Source: Statistics New Zealand (Census data) Figure 41: Knowledge industry employees consistently 4-5% less in Waikato 38 % EMPLOYED BY KNOWLEDGE INTENSIVE SERVICE INDUSTRIES YEAR Waikato Region New Zealand Source: Infometrics online database 58

59 Subsidiary goal 3: Lift value added in key sectors by 80% Key industry 7 contribution to regional GDP is around 27%. This share is greater than the New Zealand average of 13% (Figure 42). Key industry GDP growth in the region is also occurring at a higher rate (3.5% compounding annually since 2014) than the New Zealand average (2.5%). Figure 42: Key industry share of regional GDP steady for several years 25,000 20,000 Subsidiary goal 4: Lift value of international exports by 1.5% per annum The real value of export earnings in the region grew at a compounding annual rate of 1.6% from , similar to the average New Zealand growth rate. However, since 2014 the value of exports has decreased by a compounding 5.6% per year (Figure 44), resulting in an average export value of $7577m in the region (Figure 43). Around 43% of this total export value consists of dairy-related exports, indicating the importance of the sector in the region. Figure 43: Value of exports fall again this year $ MILLION 15,000 10,000 5, YEAR Key industry regional GDP Total Waikato regional GDP Source: Waikato Regional Council estimates based on Infometrics data VALUE OF REGIONAL EXPORTS ($MILLION) (2016 PRICES) 9,000 8,500 8,000 7,500 7,000 6,500 6,000 5,500 5, YEAR Source: Infometrics online database Figure 44: Export growth rates fluctuate 20 EXPORTS ANNUAL GROWTH RATE % YEAR Source: Waikato Regional Council estimates based on Infometrics data 7 Key industries identified by the Waikato economic profile are dairy cattle farming, dairy product manufacturing, sheep, beef cattle and grain farming, poultry, deer and other livestock farming, meat and meat product manufacturing, forestry and logging, pulp and paper product manufacturing, primary metal and metal product manufacturing, transport and equipment manufacturing, fabricated metal product manufacturing, machinery and other equipment manufacturing, and tourism. 59

60 Employment in the top 10 export industries 8 in 2016 was nearly 54,000 (Figure 45). Employment in these industries grew at a compounding rate of 2.1% since 2000, which is on par with the New Zealand average (Figure 46). Figure 45: Sustained growth in key export employment NUMBER EMPLOYED IN KEY EXPORT INDUSTRIES IN WAIKATO Source: Infometrics online database YEAR Figure 46: Waikato employment in exports growing similar to NZ ANNUAL % GROWTH RATE IN EMPLOYMENT IN KEY EXPORT INDUSTRIES Waikato YEAR Source: Waikato Regional Council estimates based on Infometrics data NZ Strategic priority 1: Maintaining and building our location advantage As indicated in Figure 47, Hamilton has relatively high congestion compared to other cities. This is influenced by the fact that much of the commuter traffic in other cities is on a defined motorway/expressway network and with network coverage much wider than the network surveyed in Hamilton. Hamilton has a higher proportion of central city routes within the monitored network, and this has an influence of raising average congestion values. Also, each city has a unique network hierarchy within their survey network (i.e. each survey network consists of different proportions of motorways, highways, urban and rural roads). Other factors that may have influenced the survey results include a significant number of ongoing capital project roadworks over the period, including the Waikato Expressway (e.g. most recently work on the Hamilton section near Ruakura and Tamahere). Traffic congestion (measured as minutes delayed per kilometre travelled) was stable in the region s major city of Hamilton from (Figure 47). Serious and fatal crashes in the region have been fluctuating. The year 2015 recorded the highest number of fatal crashes since 2010 (Figure 48). Figure 47: Stable traffic congestion CONGESTION INDEX - ALL DAY (MINUTES DELAY/KM) Source: Ministry of Transport YEAR Hamilton Tauranga Auckland Wellington Figure 48: Highest fatal accidents since WAIKATO CRASHES The top 10 export industries according to Infometrics online data (2015) are dairy product manufacturing, meat and meat product manufacturing, forestry and logging, wood product manufacturing, machinery and other equipment manufacturing, accommodation and food services, horticulture and fruit growing, pulp and paper product manufacturing, professional, scientific and tech services, and other services YEAR Fatal Serious Source: New Zealand Transport Agency 60

61 Strategic priority 2: Growing global industries Employment in the key industries has shown a compounding growth rate of 0.9% during the period 2000 to 2016 (Figures 49, 50). Figure 49: Most ever employed in key industries Strategic priority 3: Making business easier After increasing since 2012, New Zealand and the regions all saw a decline in 2016 in the enterprise entry rate as measured by the percentage of new firms to existing geographic units (Figures 51, 52). Waikato figures have remained below the Bay of Plenty and the New Zealand average since NUMBER EMPLOYED IN KEY INDUSTRIES IN WAIKATO Source: Infometrics online database YEAR Figure 50: Employment in key industries growing since 2012 % ANNUAL EMPLOYMENT GROWTH RATE IN KEY INDUSTRIES Figure 51: Enterprise entry and exit trends mirror NZ s GEOGRAPHIC UNITS (WAIKATO) YEAR Entry (Waikato) Entry (NZ) Source: Statistics New Zealand Exit (Waikato) Exit (NZ) Figure 52: Entry rate of firms remains below average ENTRY RATE (% OF NEW FIRMS TO EXISTING) GEOGRAPHIC UNITS (NZ) YEAR Source: Waikato Regional Council estimates based on Infometrics data YEAR NZ Auckland Waikato Bay of Plenty Source: Statistics New Zealand 61

62 Strategic priority 4: Building, attracting and retaining skills and talent Although improving over time, the proportion of the population with high skills (level 4 certificate or higher) in Waikato is lower than the New Zealand average (Figure 53). Figure 53: Fewer highly skilled people than average Otago Canterbury Bay of Plenty Waikato Auckland Northland Figure 55: Skilled migrants on the rise NUMBER OF SKILLED MIGRANT CATEGORY PRINCIPAL APPLICANTS 12,000 10,000 8,000 6,000 4,000 2, / / / / / / /16 YEAR Auckland Canterbury Waikato All other regions New Zealand Source: Ministry of Business, Innovation and Employment % OF POPULATION WITH LEVEL 4 OR HIGHER SKILLS Source: Statistics New Zealand, Census data The percentage of youth not in employment, education, or training (NEET) has been fluctuating over time and the reported percentage in the year 2017 is 13.2% (Figure 54). This number is higher than the New Zealand average (12.1%). Figure 54: Youth NEET higher than average but only just % OF YOUTH NOT IN EMPLOYMENT, EDUCATION OR TRAINING YEAR Figure 56: Greater growth in skilled migrants compared to NZ average ANNUAL % CHANGE IN SKILLED MIGRANT RESIDENT VISA AND PERMIT APPROVALS / / / / / /16 YEAR Waikato Source: Ministry of Business, Innovation and Employment NZ Northland Auckland Waikato Bay of Plenty Canterbury Otago New Zealand Source: Statistics New Zealand After a period of decline in the number of skilled migrant category applicants being employed in the Waikato, the numbers have increased over the last couple of years. This means more skilled migrants have been attracted to the Waikato region (Figures 55, 56). 62

63 Strategic priority 5: Telling the Waikato Story Tourism GDP in Waikato has grown by a compounding 2.4% from This growth rate is only slightly higher than the New Zealand average of 2.3% (Figure 57). Domestic visitor expenditure in the region is third highest in New Zealand, behind Auckland and Canterbury (Figure 58). However, international visitor expenditure in the region sits below more regions, and is on par with Bay of Plenty (Figure 59). While most of tourism GDP comes from domestic visitors, the stronger growth from international tourists means this is increasingly important. Figure 57: Growth in tourism value drops but still positive ANNUAL % CHANGE IN TOURISM GDP Waikato YEAR Source: Waikato Regional Council estimates based on Infometrics data Figure 58: Domestic tourists continue to spend more 2500 NZ Figure 59: Waikato and Bay of Plenty get similar international tourist dollars EXPENDITURE BY INTERNATIONAL TOURISTS $(MILLION) YEAR Northland Waikato Bay of Plenty Canterbury Otago Source: Ministry of Business, Innovation and Employment Figure 60: More money from domestic but international tourist spend is growing EXPENDITURE BY TOURISTS IN WAIKATO $(MILLION) DOMESTIC VISTOR SPEND $M YEAR YEAR International Domestic Source: Ministry of Business, Innovation and Employment The growth in the number of international students in the region fluctuated but grew at a compounding rate of 3% per annum from 2011 to 2016 and this rate is about half the New Zealand growth rate (Figure 61). Figure 61: International students growing at half the NZ rate Northland Waikato Bay of Plenty Canterbury Otago Northland Source: Ministry of Business, Innovation and Employment Auckland Waikato REGION Bay of Plenty Canterbury Otago NZ total % GROWTH RATE Source: Education New Zealand 63

64 Figure 62: International student numbers growing slightly Northland Region Waikato Region Bay of Plenty Region Canterbury Region Otago Region Source: Ministry of Education Figure 63: Steady growth in international students more recently 8 ANNUAL % CHANGE IN WAIKATO YEAR Source: Ministry of Education 64

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