By Laura Baker
Michael Barnett has held the role of chief executive of the Auckland Regional Chamber of Commerce and Industry since 1992. He has seen many people in similar roles come and go during this time, but 23 years on Michael still holds the position firmly.
It is for this reason and many more, including the roles he plays as the chamber’s director, chairman of the Equal Employment Opportunities Trust, chairman of the Auckland Business Leaders’ Group and the recognition he received by the Queen in the 2011 New Year’s Honours with a NZ Order of Merit, that has earned him a respected and esteemed name in the New Zealand business sector.
He has had a successful career to date, but he doesn’t like to boast about his own wins. Rather he says his work is an ongoing accomplishment with hundreds of small wins the organisation achieves for local business every week.
From the small businesses that he has helped establish, the debates he has participated in and consequently affected
change, to the industry sectors he has helped overcome struggles.
These ‘small wins’ have made him an influential figurehead the business world looks to for guidance and advice. And now more than ever during Auckland’s period of extreme growth is his expertise and knowledge needed.
He takes a moment to share his perspective on the city’s current business climate. Plus he shares valuable insight into what SMEs and large businesses can expect to experience going forward in the coming years and how to prepare for the challenges ahead.
On the hunt
The Auckland Chamber of Commerce is now looking abroad to fill the gigantic employee shortfall looming not too far off in the distant future.
In November last year representatives from the chamber travelled to a job expo in Perth. The trip was apart of a wider objective to meet New Zealand expats and foreigners and recruit them into the Auckland job market.
The trip to Perth and others like it are in an effort to find skilled employees to fill the thousands of roles available in Auckland in the infrastructure, transport and building industries.
“Auckland has a wall of work arriving and an estimated 30,000 jobs will be created over the next few years in the construction and infrastructure sector alone,” Michael says.
It’s a wall of work that is already taking its toll on Auckland businesses with close to 40 percent of businesses reporting they are already having difficulty getting the right people with the right skills.
Jobs in demand include, but are not limited to, truck drivers, engineers, project managers, distribution, logistics, building installation and completion trades.
The job creation is being fuelled by the expanding city’s growth, at a rate unseen before. The construction projects leading to the employee demand include several large roading developments.
Michael says if you look at the three major roading projects on the cards;
“The east/west connection – that’s a five year, $2.5 billion dollar project. The proposed city rail link is expected to cost several billion and is estimated to take six years, plus the third harbour crossing tunnel and again, this is a three billion dollar job which is expected to take a decade to complete.”
Michael says with these three projects alone an estimated 30,000 jobs will be created during the next five years. So in reality the chamber’s estimation of 30,000 vacancies is conservative.
Team building
This poses the question where are thousands of skilled workers going to come from?
Michael recommends businesses should approach the job vacancy crisis using three methods. He says in the first instance employers are likely going to have to depend on migrants coming into the country with the right skills to fill the immediate gap.
Secondly firms will need to be willing to invest in and train their own people to create the right workforce for tomorrows demand. And lastly, young people coming through university looking forward at work opportunities should seriously consider a career in the infrastructure and engineering sectors, and equally employers should encourage young people to get into these areas by activity seeking them out and making opportunities available.
“So for many businesses it’s not just the case of looking forward and saying wow there’s a good stream of work coming on. It’s really a time to stop and ask yourself ‘have I got the right team?’
“If not, it’s important to have a conversation about how you are going to build a team with the right skills to make sure that you can participate in the opportunities that are coming up in Auckland over the next decade.”
While it is essential for businesses to help themselves in order to beat this crisis, the chamber is all too well aware this is not a problem that is going away on its own. This is why it is taking proactive measures to draw skilled workers to the country.
The chamber is working with Immigration New Zealand to make ensure its policies will enable skilled people to easily move into the city. It also plans to continue exhibiting at international job fairs with several coming up in the United
Kingdom over the next few months. Business confidence Despite the employee deficiency, Auckland businesses appear to be very optimistic about the future. Sixty one percent of companies surveyed in the Chamber of Commerce’s February Business Confidence Survey expect their business situation will improve during the next six months – so what is driving this optimism?
Michael says it is down to the fact there is confidence at all levels of the market right now, starting with the consumer which is spending more freely. Business confidence is also being drawn from low petrol prices, which have taken
a notable drop since November.
He says petrol prices have a significant impact of the entire market because as the price of petrol declines, it means there is more money in the pocket of the consumer.
“If you work out how much fuel is sold in New Zealand every year and how much people have to spend each month, it’s significant. Since about December of last year people have had about $200 million a month more
spending power.”
Some of that $200 million goes towards debt reduction, but most of it is spent and put back into the local economy. The Auckland and Canterbury environments have seen retail sales up around 10 percent since December.
Michael says the strong, widespread business confidence is justified with no end in sight for the city’s growth. Auckland’s major infrastructure and housing developments will lead the regions prosperity until at least 2025 he says.
“This pace of growth is unlike anything Auckland has experienced in the past and it’s something we can look at and know we are secure for the next decade.”
Housing repercussions
While housing development isn’t an issue that falls directly under the chambers brief it is certainly an issue that demands the attention of all sectors due to its wide reaching effects.
The demand for ten thousand new homes in the city every year for the next five years isn’t just an issue that will impact the construction industry and house hunters. Michael says the housing demand shouldn’t be under-estimated due to the repercussions it will undeniably have on Auckland’s entire economic future.
“The problem is big because it’s not just about the 10,000 new homes the city needs every year – which is a mammoth task we are not meeting. But it also has a flow on effect to the attractiveness and liveability of the city and makes it greatly more difficult for people moving to the region for work.”
But while the housing boom has some downfalls, Michael says it won’t constrain growth. Since its amalgamation into one city it has grown at the rate of adding a new Tauranga to the Auckland region; this translates to a rate of growth of more than 100 additional people added to the city every day.
While this significant growth has already taken a firm grip, Michael says Auckland’s policy makers tasked with addressing the issue are lagging behind.
“Auckland as a city has done a bad job in explaining how we are going to deal with the issue. They’ve looked at it in singular streams and said that we need more land or we need to build more compact vertical dwellings, but there
is not going to be one solution – we need to look at all of the solutions together.”
Long road ahead
The city is suffering from a $200 million per year infrastructure funding shortfall for all
transport modes.
Auckland has got itself into this predicament because it has spent the past 40 years doing
nothing to seriously address its roading and infrastructure need Michael says.
“We are now paying the price for local government’s stupid promises and its reluctance to invest. We need to make sure we don’t put the same burden of cost and problem onto our grandchildren. This means we don’t just need to play catch up for what we didn’t do yesterday, but we need to be building for the future.”
Possible methods being considered to address this shortfall include congestion charges, regional fuel tax, and tolls on the network. “I think we should look at all possible methods to raise the funds rather than just putting our lazy hands into the pockets of the people of Auckland.”
While there isn’t a clear solution put in place yet one thing is clear – it’s is going to be a long road ahead.
A prosperous future
While yes, there is a skilled employee shortfall on Auckland’s doorstep, it sure isn’t all doom and gloom. With some early preparation put in place to build the right workforce for tomorrow, businesses can avoid this stumbling block.
Michael says it is important for businesses to position themselves to reap the rewards of Auckland’s growth, those who do will enjoy an exciting, prosperous future.
