Otago's economy: 'Be there or be square'

A lack of accommodation in Queenstown for temporary workers during winter may be holding back...
A lack of accommodation in Queenstown for temporary workers during winter may be holding back Otago's economy. Photo from NZSKI.

Otago remains third-equal on the ASB/Main Report regional economic scoreboard with some "excellent reading'' of results, ASB chief economist Nick Tuffley says.

Otago was awarded four stars by the scoreboard, which is "be there or be square''.

It sits equal with Canterbury and Hawke's Bay on four stars. Auckland and Bay of Plenty top the scorecard, each with five stars.

Mr Tuffley said tourists were continuing their Queenstown love affair, with guest nights up 18% annually at the end of March.

"The big question from here is can we squeeze any more in this winter?''

The rest of the scoreboard made for excellent reading, with the lone exception being jobs growth, he said.

With the number of jobs falling by about 2%, and the second-lowest unemployment rate, the issue was a lack of available workers.

With house prices lifting by double-digits on an annual basis, housing affordability might be the one thing holding back more workers from living their Queenstown dream and for Otago grabbing its fifth star, Mr Tuffley said.

"But let's not forget Dunedin. Here's a little known fact: Dunedin - aka Gig City - has the fastest broadband connections in the country at almost three times the average speed of the next fastest city.''

Otago Chamber of Commerce chief executive Dougal McGowan told the i while tourism continued to be the main driver of the regional economy, there were growing concerns about the region's ability to cope with increased demands without significant infrastructure investment.

There was concern the lack of infrastructure investment would also impact on the visitor experience.

Already there were signs of skill shortages throughout the region, along with a lack of housing, he said.

Throughout the Central Otago region, there was a growing need for temporary workers' accommodation. More importantly, there was a need for sustainable low-cost housing options for local permanent residents.

"People are finding it harder to move to the area to fill the skills shortage as there is nowhere affordable for them to live.''

It was even worse in the colder winter months when people could not live in tents or caravans as they did during summer.

The councils in the area were working hard to provide solutions to the immediate problems, Mr McGowan said.

Otago needed to ensure it retained a diversified economy as reliance on one sector made it vulnerable to global economic and political changes.

There was little economic data coming from the smaller rural towns where it was expected some contraction in spending would be happening after limited gains being recorded in dairy prices this year.

Overall, Mr McGowan was happy with the state of the regional economy, with many financial and business indicators showing improvements. Increased spending on larger ticket items were being recorded, including new car sales due to the realised new residential values.

Some property valuations were showing considerable increases.

That might also be the case with a jump in the construction sector where a mixture of large scale projects were under way, along with a surge in renovations.

That had caused a spike in the number of consents throughout the region with accumulated pressure resulting in some delays, he said.

Southland rated three stars as the southern hub of the New Zealand dairy industry continued to hurt, Mr Tuffley said.

Retail sales were falling and were being dictated by low confidence levels rather than the surprising job growth.

Like most other regions, tourism was strong, with guest nights rising at the second-fastest pace in the country.

As Queenstown burst at the seams, places such as Te Anau were well-placed to benefit.

Agriculture still played the largest role in the region's economic fortunes. On that front, an improvement would have to wait until later in the year, he said.

 


At a glance

•Otago rates well on economic scoreboard
•Southland still hurting because of dairy prices
•Tourism likely to help both Otago and Southland economies
•Chamber of Commerce warns about lack of infrastructure

 


 

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