I recently attended a presentation by an economic forecaster.
His presentation did not include anything particularly new, but it drew together the findings of many other reports on New Zealand’s economic outlook. These findings were from New Zealand sources such as the Reserve Bank and Treasury, as well as from international experts such as the World Bank and the Organisation for Economic Co-operation and Development.
And the overall picture is grim. In New Zealand we have high levels of Government debt and the accompanying high rates of interest. Our interest rates will remain higher for longer than in similar countries. We have increasing unemployment, which has risen steadily since 2022. The number of people who cannot pay their loans has also risen. About 13 per cent of people who borrow are unable to repay their loans at the moment. And the number of businesses defaulting on loans has risen 28 per cent in the last year.
These sorts of statistics only tell a partial story, of course. Unemployment increases hit women more than men. Younger people are more likely to be unable to replay mortgages than older people. Retail businesses are much more likely to default on loans than other types of business.
Amongst all this gloom, there were two bright spots that stood out to me. One was that tourism continues to perform well. The other was that the energy sector continues to grow, particularly the electricity market where increased demand is likely to be happening for a long time.
I mention these things for two reasons. Firstly, tourism is one of the mainstays of the Wairarapa economy, and while electricity generation is not a major part of our economy now, that may change.
One of the gems in our tourist industry is Destination Wairarapa [DW]. This small team of people do a highly effective job of putting us on the tourism map. They are up against considerable competition from tourism marketing companies in New Zealand and from all over the world. DW gets funding from two main sources: council grants and member organisations. Recently there have been concerns about whether councils are committed to continuing their funding of the organisation.
I can assure the local tourist industry that the SWDC intends to continue its long-term support of DW.
Tourism in an industry that connects the Wairarapa. For example, Carterton has its Events Centre, Masterton has the region’s largest accommodation facility, and South Wairarapa has the attractions of its small villages. All of these together create excellent reasons for people to come to the Wairarapa.
However, no matter how good these attractions are, unless they are marketed, they will attract few visitors. It is vitally important for the future of tourism in our district that everyone connected with tourism supports DW, including by putting their hands in their wallets. For DW to do its best work, that funding needs to be secure for at least the medium term.
In New Zealand, at the moment, wind and solar generation account for roughly 7 per cent of our electricity supply. By 2035 this figure is estimated to be 25 per cent. The Wairarapa is well placed to be part of this increased power generation. It will enable many landowners to diversify their incomes, and it will ensure greater energy security locally. Particularly in the construction phase, it will bring added income to local businesses. It will reduce New Zealand’s dependence on foreign sources of energy. However, change is often challenging, and we will need to consider the challenges of change against the possibility of reduced economic activity. My view is that we should not squander the opportunities we have.
