Media Release

29 May 2013

Public service cuts, council holding back Wellington, says survey

Wellington businesses say public service cutbacks and the performance and leadership of Wellington City Council are the main factors holding back the Wellington economy, according to a survey by Wellington Employers’ Chamber of Commerce.

The survey also shows that some form of local body amalgamation is now favoured by 76 per cent of businesses – the highest since they were polled on the issue – and that business confidence is on the rise.

The Business Confidence Survey, which was released today by Wellington Employers’ Chamber of Commerce was carried out between 8 – 14 May, before the Budget and after Prime Minister John Key made his remarks about Wellington being a ‘dying’ city. There were 366 respondents.

For the first time, the survey asked businesses what were the top three issues they believed were holding back the Wellington economy. Responses relating to public service retrenchment, and performance and leadership of Wellington City Council, featured most heavily, followed by inadequate infrastructure and the absence of long-haul flights to Asia

When asked about public sector retrenchment, 17 per cent of respondents said they had been directly affected, and 44 per cent said they had been indirectly affected.

The survey shows that business confidence is increasing. A net 44.9 per cent said they were expecting their own business situation to improve over the next 12 months (58 per cent up, 13 per cent down). This is up from a net 35.4 per cent in the previous survey three months prior. Some 28 per cent said they expected their situation to remain the same.

In addition, a net 58.8 per cent of companies said they were expecting the national economy to improve – up from just 46.7 per cent three months ago.

When asked about the Wellington economy, a net 18.4 per cent of respondents said they expected it to improve – down on 21.7 per cent three months ago.

Other significant findings include:

• 30 per cent of businesses expect to have an increase in staff in the next 12 months, compared with 16 per cent expecting a reduction.

• 23.7 per cent of businesses expected to decrease the level of investment in plant and equipment over the next 12 months, as opposed to 21.4 per cent who expected to increase it.

• When asked to specify the limiting factors they were facing, the difficulty in finding and retaining good staff featured particularly heavily. Some 34.6 per cent said it was harder to find skilled or specialist labour than it was 12 months ago. Just 6.8 per cent said unskilled labour was harder to find.

Raewyn Bleakley says she is not surprised that public service cutbacks and council leadership feature highly as reasons for the slow economy.

“Both of these issues have received a lot of publicity of late, so it’s not a surprise they are top of mind for business.

“Public service cutbacks always affect Wellington in some way, and it is something we have to live with. That’s why we have to be continually looking at ways to expand the business sector and to diversify.

“Council performance and leadership has been a particular bugbear. They stumbled over the flyover and spending on the mayor’s office, where leadership and accountability were seriously questioned, and the survey shows there’s still a way to go to restore confidence. That sort of thing has an effect on confidence.

“We are looking forward to seeing what impact the new Chief Executive will have, and a breakfast we are hosting in June will give members the opportunity to hear from him.

“But what I’m greatly encouraged by is the positive response about Wellington businesses’ own expectations.

“This is the response that historically aligns best to economic activity. It is more significant than what they think of the economy as a whole.

“It’s very encouraging that a net 45 per cent expect their own business situation to improve.

“We have a great city and massive potential – we just have to get out there and take advantage of it.”

Raewyn Bleakley said she was not surprised by the increase in support for some form of local government amalgamation.

“The survey has asked this question many times over the past couple of years and it usually records around 70% support, though that has been slowly rising as the debate has gathered momentum. I believe people are starting to realise that this is something that needs to happen.”

ENDS

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