Tuesday, 21 March 2017

Keeping Our Heads Above Water

New Zealand is a country blessed with copious quantities of fresh water. Recently some parts of our country have had a lot more than they want, some a lot less. It is an extraordinarily precious resource that must be cared for and used more wisely than it is being used at present.

Historically water usage in Canterbury, and in wider New Zealand, has been very opportunist. We have taken water from wherever we can get it and have used it for whatever we wanted to use it for. We have not had sufficient regard for the way it has been extracted, the way we have treated it and the way we have returned it to the environment. That is all changing. In my opinion 2017 will be the year that the real issues about the sensible utilisation of water right across our communities will begin to be understood and accepted.

In Canterbury almost all the available fresh water passes through or under the Canterbury Plains and out to sea. However, because of the way we have extracted water we have put pressure on very vulnerable areas in our environment, both through creating water shortages and through contaminating water systems in a way that is not sustainable. We need to work out ways to maximise the economic benefit of fresh water utilisation while concurrently protecting and continuously improving water quality and availability.

To drive this change we will inevitably need to harness existing and new technologies which are becoming cheaper, more powerful, more available and more applicable every day. Those technologies will be driven by far better data collection and analysis to ensure we make the right decisions. We will need to ensure that we get communities buying into the need for a different approach to water management. This will reduce waste and inefficiency, allow flexibility and support the development of infrastructure to ensure reliability of storage and water supply. We will also need to demonstrate leadership with respect to how we make better decisions with regards to water utilisation and how we facilitate investment and longer term planning to ensure that we use available water equitably and wisely.

The harvesting and controlled distribution of large volumes of water along the east side of the main divide will be critical in this regard. There have already been good examples of water schemes that harvest and farm water. The Opuha Scheme in South Canterbury is one, and more recently the Central Plains Water Scheme in North Canterbury which not only takes excessive run of river water when it can but also uses Lake Coleridge as a water sink to ensure reliability of supply. These schemes can guarantee water supply when it is needed and also support and encourage the amelioration of environment damage that has been done in the past.

The Canterbury Water Management Strategy (CWMS) has been a good model to manage water allocation and utilisation to date but it is just at its beginning. The important thing about the CWMS model is that it relies on input from right across various participants in our community, all of whom have different requirements for the protection and/or utilisation of water. It relies heavily on reaching a consensus with regards to how water is allocated. That inevitably involves compromise, an appreciation to think strategically and agree on what is the best outcome for the wider community.

Our future is not about putting unreasonable restrictions on water utilisation. It is much more about sourcing water from where we can and utilising it in a way that does not involve environmental degradation. That is possible with use of good technology, sensible water management structures, strategic thinking and good leadership. We can do that in Canterbury and we can lead the way for others to follow.   

Tuesday, 14 March 2017

Sharing Lessons of Disaster Recovery

Late last year I was invited to attend an ASEAN conference in Manila to present to all ten ASEAN countries lessons learned from the Christchurch earthquake from a business perspective.

ASEAN countries are prone to disasters of many types, including significant seismic activity, typhoons, hurricanes and floods. Their preoccupation with recovery is very much related to how individuals are protected in a post-disaster environment. My presentation in Manila was about how we protected the corporate infrastructure of Christchurch post-earthquake through various interventions with remarkable success.

The rationale for this intervention from a social protection perspective (looking after the people) is that by protecting the fabric of the companies you protect employment and therefore ensure optimal outcomes for people in a post-disaster environment.

This was a foreign concept for almost all the attendees at the ASEAN seminar in Manila. They were intrigued to hear how the Government supported a wage subsidy post-earthquake which meant that companies could maintain and protect employment relationships even though their businesses were seriously compromised.  I told them that our Government invested in excess of $250 million into Christchurch companies by way of a wage subsidy that was a lifeline for thousands of earthquake impacted companies. I also advised them of the behavior of our banks in affording extra facilities to affected companies and our insurance companies who in many instances provided part payment of insurance settlements to ensure continuing cashflow and the IRD who delayed payments on GST or provisional tax to ensure companies cashflows were optimised. The big lesson was that it was all about maintaining cashflow in companies and protecting employment relationships.

I was involved in some serious questioning with respect to the affordability of such interventions. I was told that it was all very well for a wealthy first world country to provide financial support for its businesses but how could poorer economies afford to do this? My response was to advise them that this was not a cost to Government but rather an investment. The millions invested in protecting corporate structures in Canterbury will have been repaid many times over through continuing PAYE payments, GST payments as well as corporate tax payments. Of course, the Government had far fewer people to pay the unemployment benefit to because people stayed in work.

My message to these communities was that this was a good way of protecting economic activity and social outcomes post-disaster and should be seriously considered as a proven disaster recovery mechanism.

The normal churn rate for businesses in Christchurch (in other words those businesses that go out of business every year for one reason or another) is around 11.4%. Since the earthquake, it has been around 11.6%. A remarkable statistic when you consider that up to 30% of our companies were predicted to collapse post-earthquake. Work done by the IRD demonstrates that GST payments, PAYE payments and corporate tax payments have continued to grow from immediately post-earthquake until today. Which is another good sign of corporate health and payback to the public purse.

Recently I was approached by the International Labour Organisation to present to another seminar in Mongolia on exactly the same topic. What we did in Christchurch has increasing interest in the Asia Pacific region. We should not underestimate the positive commercial outcomes that occurred in Christchurch post-earthquake and the lessons the world can learn from that. It is a great credit to all institutions involved, including our Government, who saw the merits of protecting cashflows in a post disaster environment as a means to optimise long term positive economic outcomes. It has worked in Christchurch and it can work elsewhere.