MEDIA RELEASE

Cr Manu Caddie 1 May 2013

East Coast Economic Study ‘Wasteful Whitewash’

A taxpayer funded study on the economic potential of Gisborne and the Hawkes Bay has been labeled dishonest and a wasteful distraction.

Gisborne District Councillor Manu Caddie said the mayors of the region have had the wool pulled over their eyes by Ministers Steven Joyce and Gerry Brownlee and will be selling the region short if they accept a position on the study working group.

“This study was a jack up from the moment it was mooted. The mayors spent months waiting to meet the ministers to argue the case for the Gisborne to Napier railway line to be reinstated, yet say within minutes the discussion quickly turned to the idea of a research report.” “After the meeting the study was announced and while many people were skeptical, I gave the mayors and ministers the benefit of the doubt that they would allow some community ownership of the study. A draft Terms of Reference was provided and a number of local stakeholders and two economists provided 22 recommended improvements, only one of the minor suggestions has been taken on board.” “I’m very disappointed that this study is obviously a ministerial whitewash that ignores the substantive issues and will be another piece of National Party propaganda that omits key issues and wastes time while Gisborne products become less competitive and businesses suffer.” “Minister Joyce has the gall to claim he knows best for the Gisborne economy while he funds a pissy little two month project that is another distraction in the growing list of socalled studies this government has commissioned that truncate the line of inquiry to deliver a result in line with Government ideology rather than what the evidence says is best for the region and the country.” “I can understand the pressure on mayors to not challenge ministers but they need to draw a line somewhere, it seems this is not an issue any of them want to take a stand on.”

Attached: 22 Recommended Improvements to Draft Terms of Reference Recommended

CHANGES TO DRAFT TERMS OF REFERENCE 1. There could be a stronger focus on attempting to counter the shift away from the study formally outlined in the joint Ministerial statement in February - "to deliver a broad and deep study of the region’s economic potential over the next 30 years and appropriate transport infrastructure that would service that."

This is misquoted in Context 1.1 - so the objective is to deliver a broad and deep study (not merely undertake one, an evidence-based one) and it is not "to identify the appropriate ..." but "and the appropriate transport infrastructure ..." - so a broad and deep study of the appropriate infrastructure too is prescribed by the ministers, not a quickie outline.

So the general project objective 1, and specific objective 3 needs to be rewritten to reflect this co-equal strength of the study's depth and breadth in transport as for economic potential. So of course if those words broad and deep words are meaningful, then the study should be well up in the range of possible depths and breadths of such studies, meaning a serious cost-benefit analysis of transport options taking account of all the externalities must surely be required. So the resources of dollars and time to allow this to be done need to be made available, as for any other broad and deep study of such matters!

2. It should be spelt out that the emphasis in draft ToR1.3 on the transport links with the Hawke's Bay Region is not to the exclusion of Tairawhiti's other transport links elsewhere including overseas - but just for emphasis that the study is not covering the economic potential of Napier City/Hastings District except in relation to those transport links with Tairawhiti. So 1.3 needs to say: ‘will consider the transport links between that region, the whole Hawkes Bay region and beyond.’ 3. Concern that the use of the term ‘evidence-based’ may be interpreted in a narrow way that only considers concrete information on past performance instead of also including the evidence from credible sources using best available indicators and predictors to estimate future trends, scenarios and opportunities.

4. An integration assessment of economic potential and transport infrastructure was considered an important third point in the "Project scope" in BERL’s notes, after the assessment of the economic potential and the transport infrastructure because infrastructure decisions can directly impact on economic potential and vice-versa. This should listed as #4 in the Specific Project Objectives, with "To identify priority areas of focus for possible future investigation" as #5.

The Scope under paragraph 2.0 is great. But then the rest of the ToR focuses on (a) and (b), but does not even acknowledge (c). Paras 2.3 to 2.6 are all about transport to realise potential, (and 2.7 is a sop), but there is no emphasis on integration of the economic and the transport assessments. That is, the ToR implicitly assumes that the role of transport infrastructure is to purely service the economy. This ignores the role of transport infrastructure in creating (or transforming) the economic potential of a region.

Recognition of the two-way interaction between infrastructure and development of a region is critical if the study is to go beyond a narrow perspective of how many trains/trucks are needed. How about looking into transformational transport infrastructure for integrated regional development? Strongly urge that importance of the integration component is upgraded, if only to allow the study to consider more wider methodology options for stage 2.

5. Concern that ‘economic development is regularly referred to, but it should be ‘sustainable economic development’. Boom and bust is not what we need and the wider social, environmental and cultural impacts of any significant economic development need to be built into future modelling.

6. Concern about the emphasis on all the MoT and NZTA studies which are unlikely to have a focus on multi-modal transport. Also concern about the reference to studies in favour of current Government policy while no mention is made of the literature review including independent studies that clearly point to other economic opportunities for the country and the region.

7. Concerned that in Para 2.5 "relevant stakeholders" would be nominated by the steering group. All too often this has been a method of excluding individuals and groups with knowledge essential to wise outcomes.

8. Concern that the Steering Group is chaired by a government official instead of a local leader.

9. Concern that the Chairpersons of the two Regional Transport Committees have not been included on the Steering Group. They would seem more appropriate than the Mayor of Hastings given the proposed geographic scope of the study.

10. Support the proposed smaller geographic area because it would be impractical and potentially irrelevant to include all of Hawkes Bay as well. The impression from the press release from the Ministers was that the study was for the Gisborne/Wairoa/Hawkes Bay Regions, not only Gisborne/Wairoa. An emphasis on Tairawhiti, defined as Gisborne and Wairoa, will create a very local focus that may be light on "hard data" (evidence) as the research the Rail Action Group has been trying to assess over the last two years has been with the background of a very big "IF" regarding rail, especially suitable rolling stock, and a minimum of any kind of promotion of a rail solution by KR along with price options as KR have not completed a proper business plan for the line, nor been able to provide any certainty of price to potential customers. They did lower the tracks in the tunnels and that had an immediate effect of connecting Gisborne to the world container markets via Napier. That link was demonstrated and LeaderBrand certainly appreciated the opportunity. There is confusion inherent in the MoBIE draft still on the geography, in that Wairoa District is part of the Hawke's Bay Region, but they are writing it as if it is not. It happens that Mohaka Forest (and major plantation forests further inland thereof) are within Wairoa District too, so they are included within the scope of the economic and transport study, the transport links from there to MoBIE's idea of the Hawke's Bay Region (so PanPac's mill, Port Napier etc) are within the scope as narrowly defined. But other forests south of the Waikare River are not.

11. This section states "will consider the transport links between that region and the Hawkes Bay Region". That completely overlooks the real economic potential of log transportation from the private forests within Hawkes Bay that are coming on line in the very near future in the Wairoa-Napier corridor itself, followed within a decade by private forests in the Wairoa area.

12. In the BERL Economics "Notes for a terms of reference" in "The transport infrastructure" section it is noted that the ToR should assess and quantify the capacity of transport in the region in terms of the four modes - road, rail, air and sea - capacity in terms of intra-region journeys, capacity in terms of links to other regions in New Zealand (links to the north and the west are particularly important for Gisborne), and capacity in terms of links to outside NZ. Rail is particularly valuable in providing the links that the Gisborne region in particular needs to other regions in NZ (to Palmerston North and then north and south from there) and links outside NZ through the Port of Napier (which handles the large 40' chilled containers that are able to be transported by rail from Gisborne, getting our produce delivered to overseas customers just the way they want it, all in good condition). (I have heard people say that rail is not very useful to Gisborne because it goes south and most of the road transport from Gisborne travels west to head towards Auckland. But, this is not quite right. Because of the big distribution centres in Palmerston North a lot of stock first goes there, then travels north and south. A lot of produce, e.g. from Ovation Meats & Waimata Cheese goes to Palmerston North by road from Gisborne, which is where the rail goes as well.) 13. Section 2: If the TOR are truly forward looking it will see the need for a spur line to Pan Pac and log reloads in the Napier-Wairoa corridor in the very near future.

14. Freight demand (2.3): The Wairoa-Napier link is very important in its own right and should contribute significantly to sustainable freight levels to supplement seasonal production from the Tairawhiti area.

15. There is no mention about KiwiRail's loss of opportunity in ongoing cartage of freight generated on the Napier - Gisborne line. Of course much of this freight would be destined for Napier, but the Clyde Lumber example is a good one, where KiwiRail miss out on the revenue generated from carting that sawn timber onwards to Hamilton. Rail freight of Gisborne's non-recyclable waste could be another example.

16. This "broad and deep" $150,000 study is not as broad and deep as the $500,000 Cost Benefit Analysis that the original BERL report recommended, let alone the analysis of the future economy for the region which would obviously require even more information. We still think the kind of study recommended by BERL is essential and would still only be a part of the wider consideration on the economic potential of the region and associated transport needs.

17. Factoring in the wide range of externalities must be part of this Study and must be noted in the Terms of Reference. In Scope 2.7 it is stated that: "Although this study focussed on economic growth and transport it is expected that the study will be cognisant of the social, cultural and environmental impacts of the region."

This is so badly written! We think it is meant to say that the study will focus on economic potential, and the rest doesn't make sense at all, and for the study to be ‘cognisant’ of the externalities is not sufficient. In the Terms of Reference it needs to be written what will be part of this study (e.g., impact on greenhouse gas emissions; impact on safety; impact on reliability of routes/modes; impact on ease of access (intra-region, inter-region, international); on social and community cohesion and retention of businesses, workforce and population, etc.).

18. Concern that there is no mention of considering the demographic trends, as suggested in BERL’s Notes. This would be useful and should be included in the Terms of Reference.

19. Concern that there is no reference to most recent and reliable climate science.

There must be recognition in the terms of reference that the IPCC is saying that over the next 30 years the regions will see considerable climate changes and the potential for economic development will be influenced by this. With the prediction of more frequent heavy rain events in the future the requirement for more than just one land transport route (SH2) between Gisborne and Napier becomes even more critical in the future. And, during this period the cost of fossil fuel is likely to double a couple of times.

20. Concerned that consultants will be contracted (Phase 3/page 6) to examine all existing data. It would be helpful to ensure there is a mechanism for interested parties to make suggestions for the Literature Review and review a draft. This literature review will come up light for Tairawhiti from what I have seen and the push back from Eastland Group in favour of coastal shipping will be intense.

21. We need to have the dollar value of the cost of future deaths on the road quoted on page 20, Road Safety, in the report, and some discussion on the reasons for trucks crashing or rolling (tight time constraints for drivers, owner operators' slim profit margins, and unsuitability of much of SH2 Gisborne-Napier for large trucks).

22. Concern that the numbers don’t add up. The Timeframes suggest one month for Stage 1 starting early May and then 5-6 months for Stage 2 which would take us through to October/November rather than an August completion.

ENDS

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