THE global wine glut has been cited as a major contributor to Gisborne’s slump in economic performance in the latest Berl report for 2011.

Berl ranks local authorities, regional councils and cities each year on their overall economic performance — and in the latest report Gisborne ranks worst out of 66 local authorities. Wairoa also rates badly.

BDO Gisborne audit partner Daryl Keast says Gisborne has never been a star performer in Berl reports, compared with other regions in New Zealand.

“It is readily apparent that the Gisborne economy is suppressed, as it is elsewhere,” he said.

Absorbing the impact of the “wine glut” is cited as a contributing factor behind the latest figures.

“It has impacted on production value and work available,” said Mr Keast.

“As profits erode, businesses cut costs — which includes staff.

“One of the consequences is that spending power in the region is also reduced and people leave the district.”

Gisborne seemed to be riding out the current recession more successfully than previous recessions, said Mr Keast.

“Historically, we are first affected and last to recover,” he said.

“This time we have been buoyed by historically-high livestock prices, steady wood harvesting, low inflation and low interest rates.

“It is not realistic to expect this to continue forever.

“It is pleasing that our openness to economic growth is a positive feature . . . that is so important to maintaining attractiveness for businesses to come to this area,” he said.

“The wet growing season has contributed greatly to the economic downturn, says Mayor Meng Foon.

“The Tairawhiti economy is subject to international commodity prices,” he said.

“It looks like finally the world recession has hit Tairawhiti.

“We do have a great future, with positive growth from iwi in the future.

“The council continues to work hard on giving good service and support to put the business community on the front foot,” he said.

The figures provide some real data to back evidence of the tough times in some parts of the regional economy, says Gisborne Chamber of Commerce president Gavin Murphy.

“It also demonstrates the need to really define a strategy to make the Tairawhiti region one where businesses and investors want to come to set up their industries and businesses to create real GDP growth for the regional economy,” he said.

“While we have some great examples in the region already, we need to find a way of creating a greater range of real value-added industries not linked to the cycle of commodity prices and exchange rates.

“It is a hard issue to crack, but a real focus between business, the chamber, the council and other key stakeholders is needed to try to get some runs on the board with industry.

“Oil and gas exploration, production and distribution undertaken in an environmentally-sustainable and monitored way could go a long way to achieving that.”

It is estimated that the overall economic effects of the oil and gas industry in the Taranaki region is a $1.8 billion GDP contribution to the economy and the sector employs more than 4000 full-time people, says Mr Murphy.

“A sustained effort to find a way to use the energy from waste wood from the forestry industry is another way we could provide industry here and this has the benefit of being a very environmentally-renewable opportunity,” he said.

“These are the kinds of step-changes this region needs to identify and develop in a sustained and consistent way over time, in order to grow its economy and provide for the community.”