Chamber welcomes inquiry into transport

The Productivity Commission's inquiry into international freight transport services is of high importance to Otago and Southland, Otago Chamber of Commerce chief executive John Christie said yesterday.

"We are well served by major ports in New Zealand, something you would expect being an island nation. But I understand we have capacity issues. There is a shortage of major routes and that affects prices."

Shipping lines were making money again but had dropped some routes in the name off efficiency, he said.

As some routes had disappeared, capacity issues emerged.

That was a major problem for Otago and Southland, both of which relied heavily on primary producers exporting huge quantities across the region's wharves, Mr Christie said.

Finance Minister Bill English and Regulatory Reform Minister Rodney Hide on Thursday announced the commission's first two inquiries would be into housing affordability and international freight services.

Mr Christie said that in a New Zealand context, he could understand that housing affordability could be a problem affecting productivity if it stopped people from relocating to New Zealand because of costs.

However, international freight competitiveness was the issue that would most affect businesses in the South.

"That issue certainly warrants further research and work."

But not all people were happy with the two lines of inquiry.

New Zealand Property Investors vice-president Andrew King said the research on house prices was misguided.

They were not the main cause of poor productivity.

"If improving the country's productivity is the aim of the commission, then surely there are more pertinent issues the commission should focus on than Auckland's house prices.

"Blaming house prices for poor productivity is distracting attention from the real problems."

People put their money into housing because it was a major part of their lives they had control over.

With many losing their faith in managed funds, and seeing no growth in the sharemarket, people had little faith in the financial services industry, he said.

There were probably more serious factors affecting New Zealand's productivity other than the lack of capital.

They could include selling the country's most profitable business - like banks - to overseas owners; selling low value primary products rather than hi-tech and high value products; poor management of companies; ineffective use of new technology or low economies of scale through focus on the domestic market, Mr King said.

"The obsession with the housing market as all that is wrong with productivity in New Zealand has to stop, otherwise will never get to the crux of the main problems."

Westpac Institutional Bank chief executive David McLean welcomed the housing inquiry, saying it would help get a better understanding of the varied needs of New Zealanders.

"Government assists those in need but a change in the current model of state housing will really make a difference. The nature and scale of the social housing problem demands we do so.

"New Zealand needs more houses in the right places. It is hard to build new houses when thousands and thousands of houses in the existing stock need to be rebuilt."

Mr McLean urged the Government to consider public private partnerships (PPPs) and not-for-profit initiatives using Government capital and/or stock transfers for social housing projects.

The commission, which formally started work yesterday, has a wide-ranging brief to inquire into productivity-related matters.

It is funded by money redirected from the budgets of 29 government agencies.

It is due to report back on housing affordability by February 1 and on freight services by April 1 next year.


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