New Economic Directions for Queenstown - U3A R. Hanan Ph.D. 14 November 2011

New Economic Directions
             for
         Queenstown

U3A

R. Hanan Ph.D.
14 November 2011

Structure of Presentation
   Why Shaping our Future? – Problems, Causes

   Our Community Values

   Sustainability

   Growth – Population Growth and Economic Growth

   Engendering Stronger Economic Growth

++++++++++++++++++++++++++++++++++++++++

   Future Vision

   Conclusion

New Economic Directions
               – Why Shaping our Future?
 Why are we pursuing this exercise?

 We live in the most beautiful physical environment in the world

                                         Fantastic
                                         World Class Scenery

So, Why Shaping our Future?
 What is the Council’s motivation?

 Is Council seeking inputs for the next 10‐year plan?

 Our community has concerns ‐ many derive from threats
  to our lifestyle and how we interrelate with our
  environment in an economically and socially sustainable
  manner.

 Queenstown appears to be at a crossroads.

 A sense that we’re having growth pains.

Some of the Problems
   Physical infrastructure ‐‐ inadequacy and congestion
    (roads, water, sewerage, power), insufficient parking in
    CBD

   Social dynamics ‐‐ increasing crime in CBD, domestic
    violence, overcrowded schools, inadequate medical
    facilities, esp. for the elderly and mothers‐to‐be

   Physical environment ‐‐ challenges (wilding pines,
    periodic temperature inversions and trapping of
    pollutants over Lake Wakatipu)

   Average incomes ‐‐ increasing slowly (if at all),
    complaints about high costs, unaffordable housing.

Probable Causes

   Rapid increase in resident population and increasing
    numbers of tourists – more people “congested” into our
    constrained geography and infrastructure.

   Tourists consume infrastructure capital for which our
    community is not fully compensated – not by the tourists,
    our narrow rates base, or the central government.

   Largely uncontrolled scattershot development, rather than
    interconnected spatial planning. RMA constrains a more
    integrated approach to long‐term planning.

                                                       Contd.

Probable Causes contd.
 Traditionally, Council has been more responsive to
  commercial interests, including advocacy through Chamber
  of Commerce and Destination Queenstown.

 Non‐inclusion/non‐participation of senior population ‐
  retirees ‐ in the community's development priorities.

 Complacency. Rather than self‐determination and self‐
  reliance, community’s mindset tends to be that central
  government will provide. Centralized model is not attuned
  to the unique needs of our tourism‐based economy – use of
  funding formulas based on local population has resulted in
  insufficient resources for major infrastructure, public health
  facilities, and social services.

Generic Concerns
 Quality of life. Above symptoms and causes are impacting
  negatively on the character of the Wakatipu, concerns that
  our lifestyle and wellbeing – the reasons we chose to come
  here ‐ are being compromised.

 A general perception that quantity overrides quality, that
  mediocrity is OK.

 We’re at a crossroads. Somehow we’re on the wrong track.

Bottom Line

   Council and community have little vision of where we
    should be going. Council is mostly reactive to scattershot
    development instead of proactive in support of
    comprehensive, collaborative, and mutually supportive
    planning of our space.

   A pervasive sense that we know we can, and must, do
    better.

   And fundamentally, non‐compliance with our core
    community values.

Our Values
 Community Values – our core values (in Council’s CCP) ‐ what
 is important to us and the basis for everything we do:

 Sustainable growth management (a misnomer),

 A safe and healthy community that is diverse and inclusive
  for people of all age groups and incomes,

 Quality landscapes and natural environment, and enhanced
  public access to them,

 Infrastructure and services that are cost‐effective in
  meeting the needs of diversity and growth,
                                                           Contd.

Our Values       Contd.

 High quality urban environments that are respectful of the
  character of individual communities,

 A strong and diverse economy, and

 Preservation and celebration of the district’s local cultural
    heritage.
++++++++++++++++++++++++++++++++++++++++++++++++++
+
  Shaping Our Future Press Release 24 June, 2011
   (from Shaping our Future website)
    “The Lakes District community wants a diverse economy in
    a vibrant, safe community, and a natural environment
    increasing not decreasing in quality.” (reinventing the wheel !!)

Sustainability
   These community values are anchored in notions of
    sustainability.

   In principle, all our economic and social activities, new
    pubic initiatives, and the effectiveness of our local
    government should be assessed against these values.

   As a community in the Wakatipu, we should define clearly
    what we mean by “sustainability” or “sustainable
    development.” It should reflect our values.

What does Sustainability mean?

   All definitions are based on maintaining our natural
    resources and social harmony over the long term without
    compromising our wellbeing.

   Multiple expressions of economic, environmental, and
    social principles.

   Simple definitions of “sustainability” or “sustainable
    development” – one or two sentences or longer
    expositions.

United Nations Bruntdland Commission
                     (1983)
   Commission was created to address growing concern
    about the accelerating deterioration of the human
    environment and natural resources, and the
    consequences of that deterioration for economic and
    social development.

   Brundtland Report (1987): the most frequently quoted
    definition of sustainable development: “development
    that meets the needs of the present without
    compromising the ability of future generations to meet
    their own needs.”

Government of Minnesota
Sustainable development: “Development that maintains or
enhances economic opportunity and community well‐being
while protecting and restoring the natural environment upon
which people and economies depend. Sustainable development
meets the needs of the present without compromising the
ability of future generations to meet their own needs.”
City of Oslo
"Oslo has a vision that Oslo shall be a capital city in sustainable
development, characterized by economic, social and cultural
growth according to nature's ability to sustain that growth
ecologically.
We shall pass on the city to the next generation in a better
environmental condition than we ourselves inherited it. Oslo
shall be one of the world's most environmentally friendly and
sustainable capital cities.”

City of Boulder
“Sustainability means meeting the needs of our community now, without
compromising the ability to meet the needs of future Boulderites. The
process integrates economic vitality, social health and environmental quality
goals, prioritized to reflect the values of the community.”
World Bank
“Sustainable development and poverty reduction can only be
achieved by urgently addressing climate change. This complex
challenge requires additional financing to help developing
countries work toward low carbon and carbon resilient
development. Sustainable development can be conceptually
broken into three constituent parts: environmental sustainability,
economic sustainability, and sociopolitical sustainability.
Whistler 2020 (2004)
Renewed “our values, vision for the future, priorities and directions,
and includes the strategies and actions for moving forward.
Extending to 2020, it sets a 15‐year vision and emphasizes the need
for a sustainable future.”

U.N. Millennium Development Goals (8)
#7 Ensure environmental sustainability.

Progressive interpretations
More progressive notions of sustainability, especially in the
Netherlands and Scandinavia, are evolving from sustainable
development (which involves economic development) to
sustainable consumption where society opts for values of de‐
materialization.

Conservative Agenda
Sustainable development is no less than the centralized control over
planet earth.

Some Challenging Questions
 If we (and our tourists) were to be charged for the
  embedded carbon content and emissions from living in the
  Wakatipu, what would be the impact on our cost of living?

 Should the Wakatipu aim to become self‐sufficient in energy
  production. If so, how?

 Globally, is sustainability compatible with the world’s
  population growth and climate change? How about
  biomedical advances towards human immortality?

Other Interesting Questions
   Do we want to revert to buying milk in milk bottles so
    they can be recycled – cleaned, sterilized, and reused?

 Should QLDC ban throw‐away nappies and plastic bottles
  for water and soft drinks? What about the use of
  chemical fertilizers and pesticides throughout the
  district?
  ………………………………………….
 To repeat: QLDC should define clearly what sustainable
  development means, as applied to our Wakatipu
  community, and it should reflect our values.

GROWTH
         [population growth and economic growth]
Population Growth
Around two years ago QLDC projected that by 2026 Queenstown’s
average day population, including tourists, will double to 70,000 ‐‐
an increase of 3.5% per year.
These numbers, if correct, would necessitate a substantial
expansion of our public infrastructure and services, imposing
major financial obligations on ratepayers.
They will also place increasing strains on our social fabric ‐‐ our way
of life ‐‐ as culturally and spatially the character of our community
adjusts to greater density and social intensity within our limited
geography. Think high‐rise housing, parking, traffic congestion,
frustration, exclusion, conflict, domestic violence, gangs, drugs,
violent crime.

Responses to Population Growth
Whistler, British Columbia: In the early 1990s, Whistler’s leaders
recognized that continued rapid population growth would ultimately
destroy the community’s social fabric and the area’s natural ecology, the
very things that attracted people in the first place. As a result, a “cap” on
development within the municipality was set in 1993 at 55,500 beds,
including both visitor accommodation and resident housing.

Noosa, Queensland: Similarly, in 1997 Noosa Shire imposed a population
“cap” of 56,500, consistent with the community’s values to ensure
sustainability of the shire’s environment and character. It provides also for
certainty in the provision of infrastructure and services. The shire’s
economic strategy is not based on population growth.

Queenstown: There was a broad consensus at the first Shaping our
Future forum that somehow we must constrain the rapid growth of
population in the Wakatipu.

ECONOMIC GROWTH
 Taking QLDC’s projection for the district of 3.5% population growth,
  we’d have to grow our local economy by 3.5% a year in real terms just
  to maintain our real income per capita, to stand still.

 To grow our real income per capita at 3% a year, we’d have to grow our
  economy by 6.5% in real terms. And if we factored in inflation at 3% a
  year, we’d have to grow our economy nominally at 9.5% a year.
  Really, is this possible? How?

 Recall that the Prime Minister would like NZ’s real GDP per capita to
  catch up with Australia’s by 2025. This means NZ would have to double
  its real rate of growth from around 2% a year in recent times to 4% or
  more. That challenge is already fraught with political mine fields.
 Can Queenstown lead the charge nationally on economic growth?
  And if so how?

Ways to Faster Economic Growth
       There are basically just two ways we can grow our economy:
‐ by increasing our working age population and number of tourists, or
 ‐ by increasing our productivity

    Thus:    ∆ GDP = ∆ Population + ∆ Productivity
 Technically, productivity is the rate at which inputs of labour and
 capital are transformed into outputs. Economically, productivity
 is measured as real GDP per unit of labour and per unit of
 capital. We should be aiming for more efficient combinations of
 both labour and capital through economic diversification, new
 technologies, and innovation.
 We’ve already discussed the impacts of increasing our population.
 It implies that faster economic growth must come from an
 economic environment that encourages increasing productivity.

How to Get There
 The Wakatipu should diversify its economy – really diversify it –
  towards a model of higher‐value enterprise, generating higher returns
  to our labour and capital, increasing our value‐added per capita.

 Such fundamental change is not likely to take place if we continue with
  business as usual. We must think and act outside the box.

 QLDC should define and embrace policy that provides new directions,
  incentives, and spatial planning for economic growth based on
  increasing productivity while constraining increases in our resident
  population and numbers of tourists. Increased revenues from longer
  tourist stays and higher expenditures per night should be encouraged.

 Most marginal investment dollars should be expended in new, low‐
  carbon enterprise. Meanwhile, tourism willremain the lynchpin of our
  local economy for many years to come.

Back to Basic Principles
 However we approach the future, we must comply with
        our values, and
        our sustainability principles

 Remember: Sustainable development is development that
  meets our present needs without detracting from future
  generations’ ability to meet their own needs.

 What I have tried to do is establish a basis for thinking
  about a new approach – a new economic model – for how
  the Wakatipu may evolve over the next 20 years, consistent
  with our values. We’re going to have to have an open mind
  and think outside the box.

A Vision for Future Growth
                    and our Lifestyle
 Diversification of commercial services based on
   • the environment, particularly consultancies on
     environmental practices and management
   • Information technology and a knowledge economy
   • Film

 Expansion of educational services
   • Branch of a university with faculty of Environmental and
       Sustainability Sciences and Management.
   • Further tertiary education like the Resource College and
      Southern Institute of Technology

 Expanding our cultural opportunities and offerings in the arts
  and humanities

Spatial Planning
 Gives physical expression to our use of land, the location of our
  main public amenities together with more intensive zoning for
  ancillary facilities and related infrastructure.
 The amenities and facilities should be suitably located
  geographically, functionally integrated to provide mutually
  supportive synergy, so that the whole is greater than the sum
  of its parts. This, as opposed to disconnected scatter‐shot
  development.
 QLDC should display at its chambers a physical relief model of
  the Wakatipu with proposed locations of future community
  assets like an expanded industrial area, new primary school,
  new hospital, new show grounds, a retirement village or
  villages, the proposed Technology Park, and other key facilities
  and infrastructure.

University                      High
 Faculty                       School

              Innovation
              Centre for
             Environment
                  and
             Sustainability

Convention                      Sports
 /Cultural                    Fields and
  Centre                      Facilities

Innovation Complex
 Would include five integrated facilities on a contiguous area of
  20+ hectares.

 Would provide a knowledge and development hub to promote
  academic study and research, information technology, ,
  innovation, environmental commerce, the arts and humanities,
  and related high‐end tourism.

 High School students and staff would benefit considerably from
  the education and cultural ambiance of the park and would avail
  of the various facilities.

 The Wakatipu should aim to become the center of environmental
  and sustainable development studies and commerce, and related
  services, in New Zealand and possibly Australasia.

Planning and Oversight
• Primary responsibility should rest with the QLDC ‐ it should be
  equipped to oversee the sophisticated planning required.

• Expert advice should be sought from communities with
  experience in these types of integrated educational,
  innovative, cultural, commercial, and convention facilities
  (likely to be overseas).

• The RMA should not be a constraint. QLDC may consider
  approaching the Government to designate the Wakatipu as a
  “special economic zone”, thereby circumventing impediments
  of the RMA.

• The costs of land and capital improvements should not fall on
  the ratepayers.

•

Sources of Funding
 Recall that tourists “consume” substantial community capital
  through their use of our public infrastructure, and medical
  and social services.

 QLDC should raise revenues from levies on tourism services in
  the Wakatipu – on hotel/motel room charges, ski passes,
  adventure sports, tours, and the like.

 QLDC should issue Decade of Progress bonds to cover some
  of the costs of the innovation complex. The bonds would be
  serviced in part from the tourism levies. Other capital and
  operating costs to be covered by users of the facilities.

 The bonds would demonstrate the full faith and credit of the
  Wakatipu community, facilitating bond financing on favorable
  terms for other community development projects.

Vision Queenstown
 Queenstown has evolved without a clearly enunciated vision.
  The Council and community have taken a generally reactive
  response to tourism development.

 Unfettered growth of tourist numbers and resident population
  is placing us on a collision course with sustaining our
  environment, our social cohesion, and lifestyle.

 QLDC must take a bold approach to diversify the Wakatipu’s
  commerce base and enhance the Queenstown experience.

 Going forward, the bulk of new investment should be in high
  value‐added, low‐carbon, eco‐efficient enterprise.

 Destination Queenstown should become Vision Queenstown,
  refocused to serve the interests of all of us and not just the
  business sector. Bigger is not necessarily better!

Conclusion
 QLDC must pay much more attention to ensuring and monitoring
  compliance with our community’s values.
 Our tourists are becoming more discerning about global
  warming. We must recognize that increasing scarcity of fossil
  fuels will impact on the costs of our Queenstown experience.
  We must plan for a lower carbon footprint, including energy
  efficiency and locally generated energy.
 QLDC must plan for and implement a strategy towards a more
  productive and mature approach to the Wakatipu’s long‐term
  economic, social, and environmental wellbeing – more
  diversified, higher‐value, spatially integrated, and sustainable.
 Without careful planning, controlled development, and requisite
  leadership from QLDC, these transformations simply will not take
  place.

Post Script

Three fundamental changes will be essential if our Council is to
bring about such an economic, social, and cultural
transformation:

      More control over our destiny by devolution of responsibility by
       central Government to our community, through the Council.
       Collaborative spatial planning will facilitate our self‐determination.

      Generation of additional sources of funding – tourism levies,
       charitable and statutory grants, public/private partnerships, and
       municipal bonds.

      Leadership – visionary, really proactive leadership that doesn’t take
       “No” for an answer.