BEFORE A BOARD OF INQUIRY EAST WEST LINK PROJECT IN THE MATTER of the Resource Management Act 1991 (“the RMA”) AND IN THE MATTER of a submission by AUCKLAND HELIPORT LIMITED PARTNERSHIP (#126324) under section 149E of the RMA in respect of applications for resource consent and notices of requirement by the NEW ZEALAND TRANSPORT AGENCY in relation to the EAST WEST LINK PROJECT in Auckland STATEMENT OF EVIDENCE OF PHILIP BRENT WHEELER FOR AUCKLAND HELIPORT LIMITED PARTNERSHIP Economics Dated: 22 May 2017 BERRY SIMONS S J Berry Telephone: (09) 969 2300 Facsimile: (09) 969 2304 Email: [email protected] Postal: PO Box 3144 Shortland Street AUCKLAND 1140 1. INTRODUCTION ............................................................................................... 3 2. EXECUTIVE SUMMARY ....................................................................................... 5 3. PROPOSAL SUMMARY ........................................................................................ 8 4. AHLP - THE BUSINESS ENTERPRISE .................................................................... 8 5. ECONOMIC FUNCTIONS ................................................................................... 11 6. ALTERNATIVE SITES ....................................................................................... 13 7. MARKET ........................................................................................................ 16 8. ECONOMIC IMPACTS – CONCEPTS SUMMARISED ................................................ 19 9. TYPES OF EFFECT ........................................................................................... 20 10. TYPES OF MULTIPLIER..................................................................................... 21 11. METHODS AND DATA ...................................................................................... 24 12. CONCLUSION: ESTIMATED IMPACTS ................................................................. 28 13. NZTA ECONOMIC EVIDENCE ............................................................................ 30 2 1. INTRODUCTION Qualifications and experience 1.1 My name is Philip Brent Wheeler. I hold a Ph.D. from the University of Otago (1980). I am a specialist in economics, notably financial economics and the economics associated with resource management. I am a Certified Securities Analyst member of the Institute of Finance Professionals New Zealand. 1.2 I have been employed in providing economic and financial advice to a variety of industries over the past 25 years. My experience covers assessments for central government, membership of the 1991 Resource Management Bill Review Committee, and preparation of economics effects analyses for a large number of consent applications under the Resource Management Act 1991 (“RMA”). 1.3 I have previously been employed as Planning Officer, Senior Planning Officer and Deputy City Planner by the Palmerston City Corporation. As well as standard land use planning duties, I was involved in city economic development issues. I also served as Deputy Regional Planner for the Manawatu United Council. The latter role involved the development of regional plans. 1.4 I was also employed by the NZ Treasury in managing commercial assets and liabilities, asset sales, regulatory reform and the development of economic impact assessments. 1.5 I have undertaken economic impact assessment work in respect of mining and the mining industry (applications over 17 years for Newmont Waihi); Casino applications and tourism (six for the Casino Control Authority); sporting and recreational events (three Americas Cup events, motor racing, outdoor recreation); retailing (big box development, mall development and urban infrastructure design); and a variety of other industries. 3 My involvement with the project 1.6 I have been engaged by the Auckland Helicopter Limited Partnership (“AHLP”) to assess the key economic effects should the New Zealand Transport Agency’s (“NZTA”) proposed East-West Link project (“EWL” - a network connection running through the outskirts of Onehunga) compromise the operations of the existing Auckland Heliport (“the Heliport”) and its support infrastructure at 59 Miami Parade. 1.7 I have visited the Heliport site and am familiar with the business structure of AHLP and its associated companies. Expert Witness Code of Conduct 1.8 I have been provided with a copy of the Code of Conduct for Expert Witnesses contained in the Environment Court’s Practice Note 2014. I have read and agree to comply with that Code. This evidence is within my area of expertise, except where I state that I am relying upon the specified evidence of another person. I have not omitted to consider material facts known to me that might alter or detract from the opinions that I express. Layout of evidence 1.9 This evidence: (a) Begins by summarising the NZTA proposal (Section 3); (b) Outlines the nature of the AHLP business, including expenditure (Section 4); (c) Sets out the economic functions the AHLP business performs; assesses those impacts and seeks to identify their nature and extent (Section 5); (d) Considers alternative sites (Section 6); 4 (e) Briefly analyses the tourist market. Characteristics of the premium segment of that market are presented and the value of that market and the business of AHLP within it are highlighted (Section 7); (f) Discusses key concepts in estimating economic effects in cases. The methods and data adopted for this study are explored along with the treatment of adjustments to standard methods (Sections 8- 11); and (g) Presents the results of my analysis, being the estimated economic effects expressed in terms of dollar output and full time equivalent (“FTE”) employment positions. Effects are reported in annual and net present value terms for output and “life of proposal averages” for FTE employment (Section 12). (h) Briefly comments on the economic evidence for NZTA from Mr John Williamson (Section 13). 1.10 I provide an executive summary of my evidence in Section 2. 2. EXECUTIVE SUMMARY 2.1 This statement of evidence assesses the key economic effects should NZTA’s proposed EWL project compromise the operations of AHLP’s existing Heliport and its support infrastructure at 59 Miami Parade. Current proposals could see the operation effectively reduced to non- viability and the economic benefits flowing from it lost to the city, region and beyond. The AHLP Operation 2.2 The operation involves provision of storage, aircraft operation (flights), and engineering support for some 11 helicopters owned by the partners and working in the premium segment of the tourist industry. The operation shares not only the growth in the tourist industry generally, but also the exceptionally strong growth and potential of the premium market from which considerable high spend generates dollar output and jobs. 5 2.3 The complex at 59 Miami Parade and the business it supports provides flight and related tourist services, significant assets and operation capability in its markets (over $USD50 million in assets being the broad replacement value of helicopter assets), as well as vertically integrated capacity to operate the business, market registration and branding of capability in domestic and international tourist markets. Alternative heliport sites 2.4 Other sites that may be seen as alternative locations for activities undertaken at the Heliport – principally Mechanics Bay, Ardmore, Whenuapai and Auckland International Airport - are either used for other purposes in a manner which precludes an operation of comparable scope and magnitude to the AHLP facility (Mechanics Bay and Auckland Airport), are at an inconvenient and resource wasteful locations (Ardmore, Whenuapai and Auckland Airport), or would be prohibitively costly to develop. 2.5 Stringent Civil Aviation Authority (“CAA”) compliance requirements along with other consenting issues effectively rule out the potential for development of a “greenfields” heliport in proximity to the Auckland CBD and Auckland Airport that could safely, and viably, be used as a heliport. 2.6 There is a possible mitigation solution which involves the Heliport relocating to the east, within its existing site. I understand NZTA has indicated it is not able to commit to this option, in part because it is concerned that the costs of the relocation may undermine the overall financial viability of the project. I consider it improbable that the costs of the project could be so finely balanced that its entire viability hinges on a cost change of less than 1%. If this is the case, then this seriously calls into question the entirety of NZTA’s business case for proceeding with the project in its current alignment. Economic contribution of the premium tourism market 2.7 Growth in tourism in New Zealand (“NZ”) is expected to continue at some 5.4% per annum. Tourism has recently surpassed dairying as the principal 6 export earner for NZ1. Auckland is a destination for some 72% of all visitors to NZ, contributing some $5.0 billion to the local economy per annum. The premium segment of that market (in which AHLP operates) sees expenditures averaging some $50,000 per visit more than “standard visitors” (closer to $3,500 per visit)2. Economic contribution of AHLP’s operation 2.8 Economic effects of the loss of the AHLP operation have been estimated using conventional economic impact analyses which estimate direct, indirect, induced and enabled (tourist activity facilitated exclusively by their operations). A variety of standard data sources and methods