Friday, 12 August 2016

Post-Earthquake: The Facts, The Figures, The Forecast

As part of my role with the Canterbury Employers’ Chamber of Commerce I am often asked to speak publicly about where we are at in post-earthquake Christchurch, particularly from an economic perspective. Given the ever changing nature of the recovery I often just speak “off the cuff” without notes, however I am frequently asked for a summary of my address (particularly the facts and figures) which many in my audiences have found of great interest. So here is my up to date assessment of where we are at in the story of the regeneration of Christchurch.

2016 will see us halfway through the reconstruction of our city. We have a total of approximately $32 billion of reconstruction activity out of a total earthquake cost of between $45 and $50 billion. This year we will have spent to date around $17 billion on residential reconstruction, commercial reconstruction and public sector rebuild. The total expected cost of residential repairs is around $12.7 billion, commercial reconstruction will total around $13 billion and public sector/civil reconstruction around $6.5 billion. These costs do not include the costs of land damage, land remediation and regeneration activity outside physical construction. We are currently spending $100 million a week on the rebuild which totals around $5 billion per year. That is expected to continue through to the end of 2018 when it will gradually decline through to 2024/2026.

The good news is we are halfway through our reconstruction; the other good news is we still have halfway to go. Any perception that the rebuild has peaked needs to be eliminated from our thinking. The rebuild has plateaued and we will continue to spend $100 million a week regenerating our city for some years to come.

One of the interesting aspects of the rebuild that is not well understood is the role of insurance. Insurance monies, including private sector insurance of $20 billion and EQC of around $13 billion, is very much underpinning the regeneration of our city. Total insurance of $33 billion being applied to a population of around 360,000 is unprecedented worldwide. Although we have had our issues with the insurance companies the reality is that Christchurch was the best insured community ever to have been struck by a major disaster when measured on insurance cover per capita. Also, when looking at the total cost of the earthquakes, I know of no other community of 360,000 people anywhere in the world that has incurred the damage of $45 billion in such a confined area. We are all living through a unique experience.

The other interesting issue about insurance is how it is playing out in terms of the regeneration of Christchurch. The $33 billion of insurance proceeds is underpinning the rebuild. Just looking at our housing stock $3 billion of insurance proceeds has already been applied to repairing 70,000 houses that had under $100,000 of damage through the Fletchers EQR programme (which is now complete). A further $10 billion of insurance money is being applied to rebuilding and repairing approximately 25,000 houses that had in excess of $100,000 worth of damage or were red zoned or destroyed altogether. We lost a total of around 10,000 of those homes completely.

The really interesting statistic is that of those 25,000 homes, approximately 5,000 will be rebuilt or repaired through insurance managed processes. The balance of 20,000 homes will be cash settled and the cash proceeds will be in the hands of the homeowner to affect the rebuild or repair. We can expect some slippage with some of those insurance proceeds with people deciding to spend money elsewhere, however it is very evident that a lot of people who are repairing or rebuilding homes are applying more money to the rebuild or repair than their insurance company has paid them. This will mean that we are going to end up with a lot of high quality, new, energy efficient, strong and safe homes in our city.

From a commercial perspective we are also seeing a massive amount of insurance money being reinvested into the commercial rebuild in our city. The total of $13 billion that will be applied to restoring the commercial building fabric of mainly central Christchurch will result in a high quality offering of accommodation, hospitality, office and retail space. There are some signs that there may be a short term over supply of office space, particularly in the central city and in the suburbs of Christchurch, as people start to move around and back into the central city. That will be a normal part of the process of regeneration and we can expect a bit of bouncing on the way through in the terms of supply and demand. However, again the end result will be a high quality building stock which is well designed, strong, functional and offering much better accommodation of all types than was the case prior to the earthquakes.

Our civil construction is advancing satisfactorily with the horizontal infrastructure largely due for completion by the end of 2016 at a total cost of around $3 billion. The other civil and public sector investments are starting to manifest themselves in the city. The most obvious of which are clearly evident with the Justice Precinct, Environment Canterbury’s new building, the Bus Interchange and the Avon River Precinct redevelopment all making their presence felt.

The official end date for the rebuild of Christchurch is projected to be 2026 with the tailing off of regeneration from 2018/2019. The opportunities throughout the city and Canterbury, together with the massive challenges ahead in construction across New Zealand, will ensure that opportunities to actively participate in the economy will continue. Christchurch is indeed a city with opportunity and that opportunity in the context of a rebuild is with us for a long time yet. 

Monday, 1 August 2016

Lyttelton Port of Christchurch

I spent some time in Lyttelton last weekend. It is a remarkable community steeped in history and with an eclectic retail and hospitality offering. Of course it is a community completely integrated with our Port.

Lyttelton Port of Christchurch (LPC) is in one of the most exciting stage of development in its history as it rebuilds and enhances the Port to meet Canterbury’s increasing freight demands and ensure it has the capacity and capability required for the future. The Port is a vital strategic asset with an essential role in Canterbury’s growth and the recovery of Christchurch.

The Port is the gateway for South Island trade. It manages 56% of the South Island’s total import/exports and its volume growth is forecast to increase at greater than GDP levels throughout the next 30 years, from over 370,000 TEU (20 foot containers) to about 1.2 million TEU a year by 2043.

Its billion dollar redevelopment features more than twenty large projects which are either underway or being planned. Together, these will create a thriving Port for the future. All the projects are inter-related and the success of each is imperative for the overall success of the planned development.

The Port needs to have the right facilities and capacity to continue to attract major international shipping lines. This gives the region’s exporters and importers access to completive fright networks and cost effective access to markets and goods. The Port’s redevelopment provides local, national and international customers with confidence to invest and do business in Canterbury.

The Lyttelton Port Recovery Plan (LPRP) is the blueprint for the journey ahead. It was developed with extensive community feedback and engagement. The public were overwhelmingly supportive of the Port’s plans and LPC remains committed to engaging the community.

A key focus is moving Port operations to the east onto land being reclaimed in the west in Te Awaparahi Bay. This will free up parts of the Inner Harbour for public access. The aim is to redevelop Dampier Bay to create an engaging and vibrant waterfront for the enjoyment of locals and visitors and provide a new 200 berth marina with modern amenities.

Already this year we have seen the Port achieve major milestones in its development. In June MidlandPort, LPC’s new Inland Port at Rolleston, opened providing a rail connection for container freight with Lyttelton Port.

It is a step change in container freight efficiency for the region and in supporting Canterbury and the South Island’s long term trade growth. It is strategically positioned at the intersection of major arterial transport routes to offer shippers in the region unprecedented connectivity throughout the South Island and rail access to all points west and south of Rolleston. It also supports better supply chain efficiency, particularly for central Canterbury importers and exporters. It supports the increasing productivity from the Canterbury plains, primarily the export growth driven by increased irrigation, and the freight increases forecast following the completion of the Southern Motorway.

Transporting containers by rail reduces truck traffic congestion on roads round Christchurch and travel delays, effectively taking 40 to 80 truck trips off our roads every day.

Another milestone development was the opening in February of the Port’s new $85 million Cashin Quay 2 wharf. It is an example of how the Port is increasing capacity and growing container trade as it plans to meet the challenge of the next 30 years. It supports Lyttelton being the international freight Port for the South Island, doubling container berth capacity. Already there is significant improvement in ship turn-around times.

A key part of the Big Picture is the Port’s preparation for a large forecasted increase in freight and the arrival of bigger vessels carrying more containers. As well as needing deeper berths and more space, the new larger, heavier vessels will also need a deeper, wider, navigation channel. The Port has announced its proposed shipping channel deepening project and began the process of engaging with the public to seek feedback before submitting a resource consent application in September. 

Internationally, container ships have been getting bigger for many years. To accommodate these larger ships the Port is proposing to dredge the channel to increase its depth by 5-6m.

With 99% of New Zealand’s freight carried by sea, and a 50% forecast in trade growth through Lyttelton, alongside Lyttelton’s container volumes set to double over the next decade and double again by 2041, it is imperative the Port secure a deeper draught.

Dredging of the harbour’s channel is not new and has occurred regularly since the first dredge came to Lyttelton Port in 1880. The harbour has a natural depth of 5 to 12m, but with successive dredging a shipping channel with a consistent depth of 12.5m has been formed. To allow the bigger ships to call at Lyttelton requires a depth of approximately 17-18m and increasing the channel width by 20m.

The Port is seeking community input to ensure the public is comfortable with the plan. It is proposing extensive environmental monitoring and a protection plan. It is committed to protecting the health of marine mammals, the harbour’s environment and ecology and the mahinga kai values of whakaraupō and koukourārata throughout the project.

As part of preparing for the resource consent LPC has invested more than $3 million, working with a range of expert scientists, to undertake investigations into any effects the proposed dredging could have.

The Port’s future is as the hub for Canterbury and South Island freight so it can support New Zealand’s economy and prosperity. It has started a journey that will ensure the region has a modern thriving Port servicing the region over the next 30 years that is well connected to the community and supports a healthy harbour environment. It is important the community it serves understand the value of the Port to them and their region and supports its plans for the future.

Thursday, 28 July 2016

The Chamber Board Nominations Now Open

We are rapidly approaching another  AGM scheduled for October 12 2016.

Prior to that we  are required to hold elections for our Board.

The Board consists of 12 Directors, each serving a two year term. There are six positions available this election. Candidates must be existing members of The Chamber and adhere to the nomination process as specified in our constitution.

Nominations must be received no later than Friday 19 August 2016. Electronic voting commences in September and closes 5.00pm Tuesday 11 October.

The Chamber Elections are always hotly contested, which shows that our democratic processes are alive and well.

I would encourage members to consider being nominated. Being a Board member is a rewarding but not too demanding experience.

Being involved with The Chamber at Board level is an excellent way to be introduced to governance roles and to assist The Chamber to determine its policies and strategic direction

We look forward to receiving nominations - if you would like further information please don’t hesitate to contact me on 03 366 5096 or email petert@cecc.org.nz.

Full details and nomination forms are available on our website here.

Friday, 22 July 2016

Heading home

On 22 July the Canterbury Employers’ Chamber of Commerce (the Chamber) arrives home at last. We move back to 57 Kilmore Street where the Chamber was based for close to 30 years before the devastating earthquakes of 2010 and 2011.

For the first time in 157 years the Chamber will be based in a purpose built and dedicated new building which has been designed specifically to meet its needs with a range of meeting rooms, high quality open plan office space and supporting facilities. From its beginnings in Lyttelton in 1859, through a variety of locations in Lyttelton and Christchurch city the Chamber now has a real home of its own and paradoxically this is because of the tragedy and destruction of the earthquakes.

It is a story worth telling because it is a story that will be common to so many people who are transitioning back into the central city five tumultuous years after approximately 1,100 commercial buildings were destroyed or irreparably damaged. The Chamber building survived the September 2010 earthquake but was rendered un-occupiable in February 2011. Ironically there was a health and safety seminar being conducted at the time. No-one was hurt but the building was damaged beyond repair. The Chamber then relocated to my residence for six months before relocating to the Westpac Business Hub at Addington and then to Colombo Street. After a five year journey we return home.

The journey was not without its difficulties. We had a prolonged negotiation with our insurance company (as did many other businesses) and we had significant disruption with regards to our temporary relocations. But we always remained “a safe pair of hands” for the business community. As a part of that we worked very closely with the Canterbury Development Corporation (who also lost their building) in the delivery of business support services through Recover Canterbury. Recover Canterbury was a very positive and constructive joint venture that assisted thousands of businesses post-earthquake.

We eventually cash settled with our insurance company and about a year ago set about finalising plans for the rebuild at Kilmore Street. We were confronted with rigorous consenting processes. We had issues with poor substrate and some contamination on our site (which for many years hosted a dry-cleaning company) but we moved through the difficulties. Through the good support of project managers, architects, builders and a plethora of tradespeople we have ended up with an elegant statement in the central city.

Our new building is designed to be accessible, it is energy efficient and has been specifically built to operate as a functional base for the Chamber now and into the future. It will be a well-used facility with a core staff of 30 who on a good day can process in excess of 100 sets of export documentation and host several membership training programmes and events concurrently. The Chamber conducts over 200 training and development programmes and events each year and many of those will now be delivered from the home base. The Chamber building will be host to thousands of visitors annually who we know will enjoy our new offering.

Returning to a permanent base will allow us the luxury of thinking more strategically about the role we will play in supporting employers across Canterbury in a volatile and rapidly changing environment. It is now all about making the most of the opportunities that are ahead of us.
After a long and torturous pathway, like so many other businesses coming into the central city, it is
great to be heading home.

Friday, 1 July 2016

Energy Efficient Christchurch

One of the really interesting and beneficial side effects of rebuilding our city is that we will be tracking towards energy efficiency in a way that was unprecedented before the earthquakes.

In the commercial sector the new buildings that are being built all over our city and in particular in our central city are being built to new building standards which incorporate much improved insulation, double glazed windows, the use of heat sinks, heat pumps and a general appreciation for the need to build in an energy efficient way.

Some buildings are deliberately being built green, others will be green just because they are built to modern building standards. That will change the energy profile of the commercial buildings in our city to the better.

In our household sector there are approximately 25,000 homes that have an excess of $100,000 of damage that will be rebuilt or repaired. Of those, 10,000 will be rebuilds and of that total almost 20,000 will be cash settled, private controlled repairs or rebuilds. In the process of rebuilding or radically repairing houses they will be subject to the new building code and will incorporate high standards of insulation and other designs to promote and enhance energy efficiency. There are examples in this city already where new builds of approximately the same area of the house they are replacing and have reduced the energy consumption by 60-70%. The most important component in this is insulation. Well insulated houses are warm, energy efficient houses and a direct investment in family health and financial wellbeing.

However, there is a significant proportion of our community who are still seriously disadvantaged with regard to ensuring their houses are warm and safe and that they have insulation of a standard required to deliver reduction in heating costs and health benefits to the household.

It is important as we begin to demonstrate, in the context of the rebuild, an evolution towards one of the most energy efficient cities in Australasia that we take care of those people who need help in this context.

One of the agencies that has been material in improving the insulation in Canterbury is the Community Energy Action Charitable Trust (CEA). CEA has been operating in Canterbury for 22 years and has insulated over 20,000 homes. It can provide subsidies to low income households to create warmer, drier and healthier homes. With highly trained and experienced assessors and installers it not only provides subsidised assistance but also offers a professional non-subsidised insulation install service. This is a worthy cause which has demonstrable benefits.

There is a direct correlation between warm homes and reduced absenteeism from school and businesses due to sickness. Recently released findings from the Healthy Home programme, that CEA was involved in, which provided insulation and/or heating to 900 high health needs hospital patients within Canterbury, showed a nearly 30% reduction in hospital bed days for those patients who were assisted, which in turn saved the Canterbury District Health Board nearly $1 million in the first year. It irrefutably showed that investing in insulation is investing in improved health and wellbeing.

The difference insulation makes to a home is something that most of us do not think about when building or renovating but the results can be dramatic. Insulation provides heat retention while reducing the amount you need to spend to heat your home to keep it at a healthy temperature. Having an energy efficient heat source is also important. Homes that leak heat, leak money.

At the Canterbury Employers’ Chamber of Commerce we believe that insulating homes and commercial buildings is investing in our future. We want Christchurch to be recognised as one of the most energy efficient communities in the southern hemisphere and we encourage people who can afford to insulate their homes to do so. People who cannot afford to insulate should seek help from organisations such as the CEA.  It really does make a difference.


Monday, 20 June 2016

Modern workplace dynamics


Most adult New Zealanders are working for someone most of the time. The workplace relationship has changed markedly over the years. I recall when I started work what I did in my own time was my business and what I did in the company’s time was the company’s business and I should never let the two conflict according to my Manager. I was required to be at work at 08.00 hours, I could take 30 minutes for lunch and was not expected to leave my job until 17.30 hours unless there were exceptional circumstances.

The employment relationship has improved dramatically over the years for most of us and there are some key drivers in modern workplace dynamics.

The first is flexibility. Good employers adopt flexible workplace practices as a mechanism to attract good people to improve productivity and to respond to next generation employees who demand flexibility as part of their lifestyle. A recent national survey of employers conducted by the Ministry of Business, Innovation and Employment (MBIE) stated that 36% of all employers are operating some sort of flexible work practice and that percentage is increasing over time.

Another consideration in the context of the modern workplace is a philosophy of empowerment. Good employers are much more interested in outcomes than they are in ring-fencing employees and demanding that they operate in an output driven environment (that was the old way of doing things).

Good employment practice is driven by strong personal relationships. The breaking down of hierarchies and understanding that everyone in the workplace has an important role to play as a member of a team. Good employers realise that every person in their workforce has something significant to contribute and needs to be recognised in that context.

We are also seeing much more cultural diversity and this has been particularly true in Christchurch in the last five years. The same MBIE survey stated that nationwide 25% of all employees have employed a migrant in the last 12 months. That figure would stand up well in Christchurch. 60% of all employee’s state that migrants make an important contribution in the workplace.

Increasing accessibility is indicative of the modern workplace. It is now accepted as a part of good employment practice that workplaces are accessible and that people with disabilities are not impeded in a working environment. Most importantly health and safety, which used to be regarded as a bit of an add-on in the workplace, is now mainstreamed into good employment practice. We have seen through the Health and Safety Charter here in Christchurch significant health and safety improvements in anticipation of the new Health and Safety Act. We now recognise that a good workplace is a healthy and safe workplace. In the MBIE survey referred to above 83% of employers say that good health and safety practices are good for business. Of course that figure should be 100%!

The old paradigm of work/life balance is now an anathema. It is not about work/life balance and the perception that work is bad and life is good and somehow we have to get the balance right. The term I encourage is getting your “life balance” right. Your life balance comprises your family life, your social activity, your sporting pursuits, your working pursuits, your spiritual pursuits and your community engagement. It is not just a matter of a tension between work and life and getting the balance right anymore. 

The important message from an analysis of modern workplace dynamics is that good employers are continuously improving the workplace environment, have respect for employees and are encouraging the contribution they make to good work outcomes. Employers who do not keep up with this new environment will be severely disadvantaged. They will simply not be able to attract and retain good talent, and after all, it is good employees that make businesses work. 

Wednesday, 18 May 2016

The Chamber's submission on the Council’s Annual Plan and Long Term Plan.

The Chamber has produced a very considered, detailed submission on the Council’s Annual Plan and Long Term Plan.

We are concerned that the Council is proposing to manage the rebuild in a slower, more conservative manner than they have stipulated in The Long Term Plan. We believe this will have long term negative ramifications for our city.

Please find the submission here for your perusal.

We anticipate there will be local media interest. We value your feedback.