Monday the 3rd of April's meeting was held at the PNCC Chambers, firstly with an informal meet and greet session in the Council Chambers, some of the finest in NZ, and, in many ways, is a legacy of Sir Brian Elwood, Mayor of PN 1971 to 1985.
At the presentation's start, Grant mentioned that Palmerston North has two sister cities worldwide: Missoula (Montana, USA) and Guiyang (Guizhou Provence, China). Noting that Missoula is the setting for the TV series Yellowstone, although it is filmed in Utah, the location is 100% Missoula.
Grant gave a 'State of the City address, including: Introducing our new Council and CEO, some major city and regional projects, regional economy stats, a snapshot for 2023 and an outlook for 2024
Grant Smith had just returned to Palmerston after visiting the 2023 Smart Cities Summit and Expo in Taipei. There were 350 cities from 42 countries represented by thousands of delegates. The summit's aim was sustainability in the future, discussing and sharing digital and technology solutions to overcome some of our challenges.
We (PN) missed a bullet, or more likely missed a missile, with Cyclones Gabrielle and Hale, and our thoughts go out to all that were affected by the pair of weather events. It brought back memories of 2004 (nearly 20 years ago) and, more latterly, 2015. Comparatively, we got off lightly, there was some flooding as much, or the water that flows through the Manawatū River falls in the Hawkes Bay catchment. Water flow through the Manawatū River peaked at 12.5m, equalling the 2015 flood, not as high as 2004 or our most significant surge in the 1880 flood, those levels being marked on the Pou by the Fitzherbert Bridge. The Manawatū has gradually become more flood resilient; over the years, much flood mitigation work has been undertaken, and this work continues, particularly after flood events.
As for helping our neighbours recover from their disasters, Grant reported he could see firsthand the destruction about Hawkes Bay, and the Council has set up a Palmerston North-Napier Response Fund to help with Cyclone Gabrielle relief and clean up. The City has lent several city officers, departments and EMS, and personnel from Ohakea and Linton to assist. Something that was done in 1931 after the Napier Earthquake when 3000 Napier residents came to live in Palmerston North for 12 to 18 months.
Grant acknowledged the role and impact the various service clubs, including Rotary and, in particular, the Rotary Club of Milson, have had not only at the time of need post-cyclone but also in an ongoing manner, that positively affects the lives of people in our City, region and also overseas. Grant noted many of the projects local and New Zealand Rotary have undertaken. He congratulated the Rotary Club of Milson on its 50 th Anniversary later this year.
2023 will be a challenging year, individually and collectively, with a post-COVID inflation-driven economy, interest rate increase, labour shortages and the climate change-driven disasters of recent weeks.
Following the Local Body Elections in October last year, we now have a lineup that, in many ways, is the perfect balance of continuity, experience, change, and a 2:1 re-elected to first-time councillors. The new councillors are Debi Marshall-Lobb (Deputy Mayor), Roly Fitzgerald, Mark Arnott, William Wood and Kaydee Zablin. Immediately there are several issues to address, including the local business economy and being an enabler in keeping it pumping along given the current problems; some city infrastructure issues; three waters; housing; growth and sustainability; Our looming Annual Budget with its associated challenges setting rates; planning for the next LTP 2024-26 and with auditing Council efficiencies.
At the same time as the local body election, our new CEO Waid Crockett joined PNCC. Waid is GIS (geographic information system) Engineer by trade; his moving back to the Manawatū is a bit of a homecoming as he worked in the Manawatū in the 80s before heading overseas, and his family still farms in the region. He has a significant commercial and local government with CE stints in Australia (Hunter Valley), and in NZ in Tauranga, then 5 years as CE for South Taranaki District Council before coming to Palmerston North. Waid has brought with him a new culture internally, and a new Management team has begun to emerge around Waid, and it is now reassuring to have the operational arm pulling in the same direction as governance, resulting in a more focused 'One Team' approach.
The past three years have seen many disruptions to the events run in the City, which have impacted heavily on the broader regions visitor, hospo, retail, entertainment and accommodation sectors. Thankfully this year it has been full steam ahead with our summer events, so this year, to have 1st class cricket, sold-out theatre shows, A-League football international speedway, UCI and international cycling, ANZ netball, NZ rural games, the festival of cultures, Holi festival, Weet-Bix TRYathlon, NZ Secondary Schools volleyball and yesterdays Super Rugby Pacific game Hurricanes v Western Force, where 10,000 fans packed the Arena, and 2024 optimistically is looking better. Our tourism and visitor numbers are up and have increased 7.7% in the year up to January 2023, and tourism spend in the City has topped $275M in the year to January 2023, and this is gratifying to the various event organisers. Many of whom are still recovering the effects of COVID.
Cyclone Gabrielle highlighted the country's fragile communication, energy, and infrastructure and its reliance on a functioning electricity grid. As we move to an electric-only Bus and truck fleet, it seems there is an advantage to dual fuel or hybrid rather than full EV. There are enduring concerns about the supply and cost of energy to provide the City's day-to-day services. This coupled with the jitters over the effects of inflation and the cost of money, and the Reserve Bank promising an induced recession during the Cyclone Gabrielle recovery and reconstruction.
Then there is the three waters debate, we are continuing with or plans and process for the $500 Million Nature Calls project and plant build, as whatever happens in this Three Waters space, we unlike some other centres – are reasonably well catered for, with the City's Three Waters reticulation infrastructure among the best in the country. There are also anxieties about overall community health, well-being and social cohesion, then chuck in a General Election, which of course brings its own uncertainty about how the results at the polls might affect or change Government policies. Then there are ongoing global geo-political upheavals and uncertainties, and you could say things have the potential to be a reasonably volatile 2023. We do live in interesting times. The challenge for us is to make the most of these situations and circumstances to advance this City so it remains a great place to live in, and place ourselves in the best position for 2024.
On the eve of Local Body elections it was announced that after extensive negotiations the 1906 former Chief Post Office building in the Square is to be developed by NZ's Safari Group in to a highclass inner-city hotel. Safari are planning a $50 Million five-level 86 room Wyndham-Tryp Hotel with provisions for conference gym, health spa, and retail facilities, that will preserve and maintain its Landmark façade. Safari specialise in heritage refits having done 18 around NZ so far. The project is planned to be complete at the end of 2025.
Just last month, Stuff media piece reflecting on the move of people out of our six main metro centres for better opportunities in regional New Zealand. It ranked 11 of those regions for their desirability, based on: unemployment rates; housing affordability ratio; GDP per capita; and sunshine hours. Timaru topped that poll, Manawatū came in 7th , ahead of Nelson/Tasman, Hawkes Bay, Gisborne and Northland. Unemployment at 3% put us 4 th out of 11, Housing affordability ratio 5.8% 5 th out of 11, GDP per capita at $67569 7 th of 11, but sunshine at 1920 hours only 10 th of the 11 beating only Southland. In our favour was Massey University and the most extensive wind farms in the country, if only the authors had delved a bit deeper, as there is a lot more to the Manawatū than what they mention in four categories. For instance, many of the wider opportunities we have for advancing Palmerston North and region, lie in our catalyst projects such as Central NZ' Te Utanganui' Distribution Hub in the North-East industrial area, with Kiwi Rail freight hub at its source, and direct links to Ports (Wellington, Napier and Taranaki), airports and roading cross-roads and ring-road, place us in a unique position; Regional Food Strategy based at FoodHQ, in the National Food Science Centre at Massey University strengthening our claim as NZ's 'food innervation city' and we will be investigating UNESCO City of Cuisine status, which will improve our outward profile in the wider national food chain. Analysis shows there are substantial resources available across the wider city economy to support the development of high-value agri-food ecosystem. Take sunshine out of the table and Manawatū would fare much better.
During 2022 despite COVID, our regional economy was fortunate to maintain its overall momentum. Our City's strengths lie in diversity with a comparatively high proportion of goods-producing industries, a diverse public sector, and a high-value service sector. The combined government, education, and health sectors combined generate 32.5% of GDP and employ 37.4% of our workforce, which compares these sectors 17.0% and 23.3% nationally. This sector is less sensitive to changes in economic conditions, and this sectors has supported not only local household incomes but also bolstered city economic activity during times of challenge. Put it simply, traditionally the Manawatū is less likely to have the extreme growth highs or suffer extreme lows, local growth 7.1% compared to a National figure of 5.1%.
There are large capital works in the region that include: the $650 Million Te Ahu a Turanga:Manawatū Tararua Highway which can be seen making steady progress in the hills above Ashhurst. It marked the 50% milestone a few weeks ago and is on target for an early 2025 completion date. The Pitt Street intersection up-grade , and four-laning of Ferguson Street to complete the City's ring-road is now in the 3 rd of 5 stages, and planned to be finished in May 2023. Before the street refurbishment, the water infrastructure had to be upgraded. It is part of a $500 million city-wide upgrade of water mains, which was further complicated by unforeseen subsoil issues, making it a complex project. The Cuba Street refurbishment has been recently completed. Wastewater infrastructure around the City has also been a project of note and continues; recently completed is the South-bound Pioneer Highway Cardiff to Botanical section. Wind farms are an area with significant investment planned over the next few years. The $450 Million Turitea Windfarm expansion, the largest in NZ, is due for completion in April, and just completing the consent stage is the replacement of the two-blade NZ Windfarms turbines.
Defence is one of the region's more significant sectors. Construction of new infrastructure at Ōhakea to accommodate the new P-8 Poseidon surveillance aircraft continues along with workshop and national logistics work at Linton. The defence sector has experienced substantial growth in the region, and these projects result from services moving from other areas to the Manawatū. Defence GDP increased by 19.6% over the last ten years and 57.4% in the previous 20 years, with employment rising by 18.5% and 35.8% over 10 and 20 years, respectively.
Te Whatu Ora/MidCentral Health has a proposed $370 Million acute Services block at Palmerston North Hospital, with approximately $65 million of upgraded facilities already underway, such as the new Inpatient Mental Health Unit and completion of the new ED-MAPU expansion unit.
Manawatū owned and operated Central Healthcare LTD, and the owners of Aorangi Hospital are planning a 10,000m 2 Healthcare facility on Milson Line, expected to open towards the end of 2024. MetLifeCare is expanding with 49 new 2-bedroom villas on Carroll Street, Summerset has plans to build a 300-bed retirement village on a 9-hectare site near the corner of Napier Road and Stoney Creek Roads, and there is a proposed Flourish Aokautere village in early planning, for Pacific Drive with 140 single-level villas, 20 apartments and 120-bed medical centre, providing rest-home, dementia, and hospital-level care.
Education is another primary sector for the City and region, accounting for 9.7% of total employment in the town. Massey has a $230 million investment in a new Veterinary Sciences Hospital and Library.
Plenty of ongoing public and commercially funded work keeps the construction industry busy in the region. We have had a good build-up of resources and capacity in residential construction over the past few years.
The Council's 114-section Tamakuku subdivision off James Line is now attracting buyers with the construction of houses about to start. We have consulted on District Plan changes to re-zone significant new areas for new housing around Ashhurst, Aokautere and Kakatangiata City West between Awapuni and Longburn to prepare for the next two decades of city growth. Last month Kāinga Ora announced plans to construct 300 new homes across the City, with new builds city-wide in Roslyn; Takaro; Hokowhitu; Highbury; Terrace End; West End; Awapuni; Westbrook and near the city centre, along with redevelopments of many of existing Kāinga Ora properties which often involves removal of older homes on larger sections and replacement with multiple modern homes.
Even with the pipeline involving many projects flowing through, the residential construction market has been softened relative to the previous two years due to rising interest rates, stricter mortgage lending requirements and immediate land availability. House sales fell 18.2% in Palmerston North over the year to February 2023, which compares well to the 29.9% for the country as a whole. The average time on the market has risen to 59 days, about the same as the national 60 days. There are signs the softening of house prices has bottomed out. The same interest rate rises, borrowing requirements and the rising cost of living combine to dampen the market.
Along with the rising cost of construction and the factors mentioned already, resource consent numbers have fallen but are still healthy. The total value of consents for the year to January 2023 was down 20% to $197.9 Million, and non-residential approvals were down 8.8%.
The supply of rental properties increased by 150 over the year to January 2023. There are now 7647 properties with an average weekly rental of $444, which compares well with the average of $522 across New Zealand, making Palmerston North a more affordable place to rent.
Demand for public housing in the City has fallen 12.1% over 2022, but more than 600 families are still on the register, and the need remains high. In the Quarterly report last week, the Palmerston North economy continued to perform above expectation in 2022there are clear signs of slowing across the domestic economy. Our GDP hit $6.34 billion over the year to December 2022, with a growth of 2.9%, compared to 2.8% growth nationally. Between April and December 2022, the City generated 758 new jobs to reach 47005 employment roles. Total earnings from jobs in the City increased by 7.1% in the year to December 2022 to a total of $2.26 billion. Competition for workers is high, with the tight labour market conditions reflected in low unemployment figures below the regional and national unemployment rates.
A 7% increase in retail spending in the year to February 2023 is slightly behind the national inflation rate of 7.2%, which indicates that consumers are continuing to spend on essential goods and services despite the sharply rising costs.
New car registrations in Palmerston North fell by 14.7 % in the year to December, compared to 16.8% across the Manawatū-Whanganui Region and only 2.2% across New Zealand. Commercial registrations in Palmerston North fell by 5.5%, compared to 8.6% across the ManawatūWhanganui Region and 6.2% across New Zealand.
Some of these new spending trends are placing pressure on local businesses. There are now 8397 business units operating in the City, averaging 6.8 employees each. The national average is 4.3 employees per business. SMEs (companies with less than 20 employees) make up 94% of local businesses and create 38% of the City's total jobs, and 32.8% of employees work for companies with more than 100 staff.
Lastly, the return of Central Districts Field Days in March was preceded by the Rural Games; we should appreciate that the primary sector helped stave off the global cash shortfall caused by the lack of tourist and travel dollars during the COVID lockdowns. Although returns have flattened over the past 6 to 12 months, agriculture remains responsible for almost 50% of our wider region's GDP. For instance, dairy product manufacturing was our largest export, contributing $439.4 million in revenue to the City's economy.
Last week's announcement we are to co-host year about the basis with Christchurch the E Tipu: the Boma Agri Summit, an international 5-day agri-food conference supporting New Zealand's food and fibre industries. Partnering with Manawatū District and CEDA will fit our existing agri-based events such as CD Field Days, the NZ Food Awards and the Rural Games.
This has only been a broad summary of our situation, our resilience and potential, and an insight into our economic foundations and where we are heading in the next 12 months. Although a rocky 2023 is likely, a calmer 2024 should follow.