The Northland Economy

 
The Northland economy accounted for 2.5% of total economic activity in New Zealand in the year to March 2008. Northland's regional GDP in the same year was $4.47 billion. To March 2005 the figures were 2.8% and $3.6 billion.

 

Northland’s economy has grown slower (2.9%pa) than the national economy over the past ten years (3.3%) but equaled it over the past five years.  If measured in terms of GDP per capita Northlands’ growth matches that of the national economy over the ten year period and exceeds national growth over the past five years.  However, because Northland’s GDP per capita growth is off a considerably smaller base than at the national level, the absolute gap between Northland’s per capita GDP and national per capita GDP has widened over the ten year period.

 

As a consequence of the low base, lack of economic stability and low levels of investment in value adding industry in the region, Northland continues to feature poorly in the nation’s deprivation statistics.

 

Economic growth in Northland has been volatile; over the past ten years annual growth has varied from 5.4% in 2001 and 5.2% in 2006 to -1.4% in 2003.  



Key sectors
Northland is considerably more dependent on primary output (contributing 15.4% to GDP) than the national economy (7.1%).   However, Northland is middle ranking among the regions in terms of primary industry’s contribution to GDP.

Among broad industries manufacturing is the largest in Northland, contributing 16.6% of value added to the region’s economy in the March 2008 year.  Second largest is agriculture, forestry and fishing (14.7%) followed by business and property services (11.9%).

 

Tourism makes a larger contribution (5.8%) to GDP in Northland than it does at the national level (5.0%).  However, Northland’s share of national tourism GDP is significantly lower than its share of total guest nights and total tourism expenditure due to lower average daily spend by tourists, the composition of spend and leakage of spend to other parts of the country.  When compared against the 19 major industry categories tourism is in the middle in terms of contribution to GDP.
Whangarei is by far the largest contributor to Northland’s GDP, accounting for more than half (54.0%) of the region’s value added. Far North contributes slightly more than a third (34.6%) while Kaipara contributes about 11%.

 

Business profile

Of Northland’s approximately 12,000 businesses, the majority are small (less than five employees), part time (e.g. Bed & Breakfasts in the tourism sector), or “lifestyle (and hence growth resistant) businesses.


As a consequence, the potential for significantly impacting Northland’s prosperity, currently sits with a very limited population of competent, profitable, growth capable businesses. The following define some key characteristics of the Northland business profile:

 

• Currently only a small number of “corporates” are operating in Northland. In addition, there are twenty to thirty significant businesses (excluding pastoral businesses). However, there are very few growth-ready SMEs with product, distribution and competent growth management in place
• Investment in value adding technologies has been limited and is critical to raise the quality and productivity of employment in Northland
• Northland’s prosperity is tenuously tied to tourism, pastoral farming, forestry, and, building and property development. There is an absolute need to broaden the base of industry.
• Economic development activity to date has focused on growing local assets – increasing the local skill base and growing local companies.  This alone will not achieve transformational growth in Northland, due to the low starting base. Transformational change will require significant large scale investment.
• Gaps in Northland’s human capital and a rapidly aging skills pool threaten to impede growth.

The Northland economy in summary:
• Starting from a low base
• Low growth/high variability between years
• Relative strength in Whangarei
• Relative vulnerability in Far North and Kaipara
• Highly dependant on a few sectors
• Key sectors are comparatively low skill/low wage
• Value add to primary resources has significant impact but is comparatively rare
• On-going growth of current sectors is a critical component of future economic strength
• Low economic and social strength impacts the potential growth rate through
• Low local investment
• Gaps in capability
• Role of Iwi as future investors is critical

 

 

Realistically, Northland needs interventions to hold its current comparative position. To improve its social and economic well being in a substantive way requires new ideas, collaborative actions and a “Northland” approach. For further information go to Drivers of the Economy