Friday, 26 August 2016

Good Health Threatened

There has been a great deal of media coverage recently about the Canterbury health system and the constraints it faces. Amid the confusion, it is timely to recognise what the total health system (led by the Canterbury DHB) has actually achieved.

Despite the challenging circumstances post the 2010/2011 earthquakes, our health system has continued to deliver the very best care to our community. There will always be people whose needs haven’t been met, but our health system has always been there for the people of Canterbury. The leadership of our health system has made a personal commitment to ensuring that, whatever happened after the earthquakes, the community could rely on its health system.

Keeping the Canterbury health system on track has necessitated creative solutions to problems never faced by any organisation before.  The system needed to keep services running safely from damaged buildings, including delivering surgery during thousands of aftershocks and it needed to find innovative ways to change services in response to the changed needs of broken and fragmented communities. This included a dramatic increase in mental health demand.  It also needed to have an eye to the future and planning future services and facilities. 

The enormity of these challenges cannot be underestimated. The 18,000 people that work in community and primary care, hospital, mental health and public health services took this opportunity to make the Canterbury health system even better. And they have. In every respect it rates highly amongst its peers as an efficient, effective health system. It is internationally recognised and praised as one of the top five integrated health systems in the world.

Solutions developed in Canterbury are now being adopted around the world. In the UK another journey is starting, to implement the Canterbury way of working. This follows in the footsteps of most of Australia. The NHS England transformation strategy “Five Years Forward” was informed by what they learned from Canterbury.  Canterbury clinicians and leaders are sought-after speakers in international forums. Locally, the Canterbury approach has been used as a case study by the Productivity Commission, the States Services Commission and ACC. Internationally, the list is longer and includes the World Bank, the Kings Fund and the World Health Organisation. And last year the Canterbury Clinical Network won the IPANZ Supreme Award for public sector value.

These are high accolades indeed!

But all of this is at risk as yet another challenge is thrown at a system which is already so stretched. The replacement acute hospital is still two years away and our population is increasing rapidly. However, and inexplicably, Canterbury’s share of national funding is declining which is placing extreme financial pressure on the DHB.

With everything Canterbury has had to deal with, and in unique circumstances, I would have thought that the Ministry of Health might have considered the impact of continuing to apply the standard funding formula. They might have questioned a formula that reduces Canterbury’s share of national funding, despite an increasing population. Other experts have noted that post earthquakes, population changes and changes in health need, make the use of a population based funding formula inappropriate.  Canterbury is leading the world in understanding the impacts of a major natural disaster, on a first world country and the possibilities of an integrated system. The rest of the world is watching Canterbury!

The level of impact on the health and wellbeing of this community as a result of New Zealand’s largest natural disaster is unprecedented. In my opinion it is now time for the DHB to be supported and encouraged to continue to do what it has done so incredibly well – meet the needs of its community, without negative interference, under funding, or undermining from the Health Ministry.

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.