Economic Assessment
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TAUPO URBAN COMMERCIAL AND INDUSTRIAL STRUCTURE PLAN : ECONOMIC ASSESSMENT 2 Dr Brent Wheeler NOVEMBER 08 ECONOMIC ASSESSMENT – SUMMARY Present performance, likely future trend changes and performance are discussed in detail on a chapter by chapter basis in the Assessment Report. The following highlights major points. SECTOR ISSUE QUANTITATIVE TRENDS COMMENT Economic Structure The key components and organsiation of the local Key leaders in the economy economy has the following form: look set to continue to be the agricultural sector and the tourist sector. Most significantly both sectors have strong links to the service sector – in retail and business services respectively. The economy is and looks as if it will continue to be an The local economy – like the rest of N.Z. has recently importer of more goods and enjoyed some 5 – 7 years of strong growth. services than the economy It is unlikely that TDC will outperform the N.Z. viewed as a whole – there is economy as a whole in terms of volume of trade or some dependence on strong “turnover”. What does seem likely is that there will be links with external markets qualitative change: and suppliers. More focus on margin than volume in In simple terms qualitative traditional productive sectors, change rather than quantitative growth is likely to Heavy focus on improving “experience and characterise Taupo’s economic process” (as opposed to simple product future. As that change unfolds focus) in retail, tourism and servicing. it is likely that “per unit value” will increase across a wide Trends which move the local economy toward high range of goods and services. quality and margin based business are likely to favour Such change leads to new TDC since its size means that competing on volume opportunity and increased based business models is difficult. value for consumers looking for more than quantity. A final important point is that the district economy is not one where there is a single “clear leader” but rather a set of integrated and overlapping activities 3 SECTOR ISSUE QUANTITATIVE TRENDS COMMENT which provide both opportunity and afford diversification. Current Status The Taupo economy has a strong record of growth across the majority of sectors even 20 Yr Growth Rates when viewed on a 20 year Economy time scale. Services In line with the rest of N.Z. Tourism (and the OECD more generally) Energy 20 Yr Growth Rates only conventional manufacturing has grown Secondary slowly as different, less costly Primary ways are found to source 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% manufactured inputs. Each of the sectors main The spinoffs created by the major sectors are activities generates multiplier significant – as shown below. effects throughout the economy as shown for local Value Added Multipliers GDP and FTE employment. Type II Multipl The activity of primary Broad Sector of Activity ier production in particular tends Primary production 1.45 to create demand and thus Secondary production 1.32 spinoffs in secondary sectors. Energy production and transmission 1.48 The size of those effects is Tourism activity (all types) 1.42 apparent in the multiplier Servicing (of households and businesses) 1.43 estimates. FTE Employment Multipliers Type II Multipl Broad Sector of Activity ier Primary production 2.46 Secondary production 3.21 Energy production and transmission 3.14 Tourism activity (all types) 1.91 Servicing (of households and businesses) 3.18 4 SECTOR ISSUE QUANTITATIVE TRENDS COMMENT Demography Expectation of growth to between 33,000 – 38,000 as Growth by natural increase a medium range. minimal, migration significant with aging structure. Care is needed in interpreting “raw” population projections – not so much because they may be Household formation more “wrong” as because their meaning is limited. important than raw growth. Household formation is likely to be of more relevance Trend to increased rate of or to generate demand “as if” population growth was formation, smaller more stronger than simple figures suggest. numerous households. Demand driven by households. Primary Sector Expectation of local GDP growth in: Significant issues for both primary segments in Forestry 3.5% environmental area – Agriculture 6.5% discharge for agriculture and Energy 2.0% climate change policy for forestry. Both agriculture and forestry are heavily affected by the performance of the global economy (in respect of Additional importance in this prices and to a lesser extent costs) as well as macro sector arises from the demand economic variables such as exchange rates, interest it generates for local servicing rates and fiscal conditions. and manufactured inputs. The local economy like its national level counterpart is New generation initiatives a price taker in this area. This places a premium on offer scope for growth. As with efficient treatment of such factors as can be agriculture and forestry, even influenced locally – for example management of modest growth generates environmental effects and impacts. strong services demand. Secondary Growth characterised by: The importance of manufacturing has diminished Rates in line with the other sectors supported over time as imported (primary sector) manufactures grow, as production technologies alter The N.Z. economy as a whole on an optimistic and as the export mix for N.Z. basis founded on servicing the broader local goods changes. economy The prognosis for In this sense the secondary sector – and manufacturing and associated especially distribution, storage and activity in Taupo is driven communication are best looked at as part of largely by the out turns for the service component of the economy. other sectors. Growth expectation 2.5% - 3.5%. 5 SECTOR ISSUE QUANTITATIVE TRENDS COMMENT Tourism This sector is showing strong growth potential in the international area even though the base numbers it is building from are lower than domestic. Spend by international visitors is also greater “per unit”. The key trends are toward “experience” based tourism, Again simple growth figures are less meaningful than demand for “sustainable” trends and changes. Raw growth appears likely to be tourism and an emphasis on fairly flat but spend may increase. active rather than passive experiences. Domestic spend growth 2.8% International spend growth 6.7% Retail Retail is a crucial component not just of the domestic The retail sector in Taupo economy in the TDC area but also as a lynch pin in the along with the rest of N.Z. and tourist sector. the wider world is experiencing significant The expectation is for: changes in the character of consumer demand. Trends Growth of around $4.2m in direct output can be expected with over $6.0m in total; and, include: A significant number of new FTE positions are More emphasis on created most of which remain in the district. experience; Loss of the “mid” price It seems likely that there will be demand for offering; establishment of large format retail in the district. Offering of “cross Savings to consumers – which favour those on low and products” in same outlets; fixed incomes – after total costs are considered are Consumer buying at both likely to be worth an annual amount of at least 3.0% - top and bottom end of the 5.0%. market. There would seem to be ample land provided for in The development of retail the town centre area with scope for consolidation and strategy and the treatment of a more dense pattern. There is evidence of this public open space, and urban happening already with frequent “make over” and design features are significant renovation activity exceeding green field keys to future growth in the development. sector. The impending state highway 1 diversion and associated network changes offers a unique opportunity to enhance the quality and value adding 6 SECTOR ISSUE QUANTITATIVE TRENDS COMMENT capacity of the TDC retail sector. The key driver of land supply is likely to be activity in Land Supply other sectors which, summarised is expected to be in The key trend in commercial the order of: and industrial land use is the decrease in the relative Agriculture 6.5% importance of land as a factor Forestry 3.5% input relative to other factors Energy 2.0% such as human capital (skilled Tourism 4.0% Retail 5.0% and experienced personnel) and IT. While remains Specific demand might reasonably be expected, over important the part it plays in two decades, to be of the following orders of overall decisions is likely to magnitude: diminish. Estimates of land required are: Industrial Low 81 ha Mid 92 ha High 129 Non CBD commercial Low 14 ha Mid 15 ha High 22 7 CONTE NTS Summary The Economy of the Taupo District The Size and Shape of the Future Roles and Functions in the Economy The Retail Sector Commercial and Industrial Land Supply SWOT Analysis SWOT Summary Annex I: Full Forecasting Results Annex II: Projected energy workforce Annex III: Large Format Retail Discussion 8 THE ECONOMY OF THE TAUPO DISTRICT INTRODUCTION This report provides an economic assessment of the Taupo District as defined by the local government jurisdiction know as the Taupo District which falls under the purview of the Taupo District Council (TDC). The assessment is provided as one of several inputs to the development of the Taupo Urban Commercial and Industrial Structure Plan (the Structure Plan) . PURPOSE The objectives of the economic assessment as expressed by the TDC are: 1. To provide a vision for the future economic purpose and function of Taupo urban area. 2. To provide direction on improving the look, feel, safety and functionality of the Taupo town centre. 3. To form a view about the location and form of future commercial and industrial growth within the Taupo township that is consistent with the strategic objectives outlined in Taupo District 2050 and taking into account the Taupo Urban Structure Plan 2004 and Taupo Town Centre Structure Plan (2004).