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Change or be left behind says Olsen

Covid-19 has upended business but millions of dollars are on the table for businesses ready to “risk it for the biscuit”, says Infometrics senior economist Brad Olsen.

Mr Olsen was in Gisborne for an event run by BusinessCentral, a business lobby and training group.

The Herald sat down with the high profile economist to talk about Tairawhiti's economy and the opportunities for growth.

Mr Olsen says he travels the country speaking with businesses and organisations like Trust Tairawhiti, and sees a bright future ahead, albeit with bumps along the way.

Tairawhiti's most significant sector, forestry, has massive changes ahead, he says.

The Climate Commission has recommended a ramp down in planting of new exotic forests for carbon storage and an increase in planting native forests.

“And there's a challenge around how we balance what we do in the climate space with what we do with our strong primary sector,” Mr Olsen said.

“If we can start to utilise some of our rugged territories for carbon sinks at the same time as having plantations for usable wood stocks, as well as having our agriculture and horticulture, I think there is room for all of that.”

On top of dealing with the climate emergency, markets are changing.

“There is a focus on trying to maintain the good stuff we've got. I mean, we've got good trading conditions with China.

“Russia is looking to ban exports of logs in 2022. That's going to change the market dynamics.

“So where do we go forward when it comes to wood exports?

“We have to plan the domestic aspect of it in terms of when we plant and where we plant, but just as importantly, what is coming into the future?”

Mr Olsen points to the rise of new markets in India and established trading partners like the US.

“There is nearly $200 million worth of additional export market potential for the likes of MDF (medium-density fibreboard) into the US.”

“Now the US is a big strong economy. They have a big focus on development at the moment.

“There's a lot of money that's ploughing around there. So why are we not exporting more into that space?

“There is a similar sort of thing in terms of plywood exports to the US, Canada and Thailand. We're talking a good few $100 million worth of additional exports there.”

New Zealand needs to cast its eye further, not just at the number of trees we grow, but how we can take advantage of the enormous amount of demand in the world at the moment, Mr Olsen said.

But wood is not the only business in town, he said. Money from the Provincial Growth Fund is starting to get the local economy moving fast.

Over $200 million was earmarked for Gisborne, from improving the roads to building a new airport, which Mr Olsen says will help drive the local economy and productivity.

“You're seeing more innovation flow through because needs must.

“The focus from business is that either we are going to change or we're going to get left behind.

“Businesses are looking for the next steps and that will prompt productivity growth.

“All of this takes time. You want to see quick changes, but productivity change and a directional shift does take a few years to work through.

“Covid has upended so many things in such a short order that I think you are going to see businesses that are moving in the right direction but the fruits of that labour are going to take a few more years to directly come through in the numbers.

“The early signs are positive for this region.”

The massive changes from Covid-19 now demand businesses change and invest more to stay competitive.

A key area for businesses to exploit is the rosy image New Zealand has built up in the international community through how the country handled the pandemic, Mr Olsen said.

“The question is now, how do you use the strong “Brand New Zealand” we've built up over the last 12 months? That is a large part of our story now.”

Many say they are unsure where, when or how to invest, Mr Olsen said.

“One thing we've heard from businesses over the last few weeks is that some are feeling to be in a very challenged and unsettled environment.

“But a lot are going out there and saying, ‘look, we either sink or swim, we either move fast and break stuff or we ourselves might get broken.'

“One of the things Covid has taught us is to put all the ideas on the table and understand what might work.

“I think New Zealand has done this quite well. We can move fast. We don't have to let perfect be the enemy of the good. We need to maintain our economic momentum, and the way you do that is by pressing forward, trying a few things, and as you go, putting things down when they don't work and picking another up to try something new.

“I mean, we're launching rockets. When I see that sort of stuff, I think, that is the New Zealand we want in the future — trying something new and being bloody good at it because we are.

“There's a lot of opportunity out there for people who look for it, to grab it and run with it.”

MONEY ON THE TABLE: Infometrics senior economist Brad Olsen says there is a bright future ahead, but with bumps along the way. Picture supplied