Reserve Bank of New Zealand Governor praises Southlanders

2019-06-11 05:30:10

Southland is holding its own in creating a sustainable economic future and the Reserve Bank of New Zealand governor says the rest of the country should take note.

Adrian Orr was in Invercargill on Tuesday where he attended a luncheon with about 110 banking and business leaders hosted by SBS Bank.

Orr's discussion included the proposal to require banks to hold more capital to strengthen them, and reduce the chance of them failing, and the lowering of the Official Cash Rate last month to 1.5 percent.

At the time, the Reserve Bank said global economic growth has slowed since mid-2018, easing demand for New Zealand's goods and services and there was uncertainty about the global economic outlook.

Employment was also near its maximum sustainable level.

Orr said the number one challenge for employment was a labour shortage.

"You guys [Southland] have led that challenge for a long while, you guys have had historically low unemployment. You know well what the challenge is."

However, there was confidence growing in the regions, and Southland could see a beneficial flow-on from that, Orr said.

"What you've being seeing is as the major urban centre, ie Auckland, has got very expensive, very crowded, a lot of people are making significant lifestyle and business investment decisions to shift.

"People are saying 'I can have a better quality of life in a more sustainable manner and I can run my business'.

"It's a natural and much anticipated outcome that people will always want to go to the big urban centre but overtime you will always have that spillover effect into the regions."

The challenges for primary industry and agriculture dominate areas such as Southland "were the concerns about ongoing demand for our products with the climate change challenge".

"Environmental sustainability is critical to be able to develop.

"The general public of New Zealand have put their hands up saying dirty water is the worse problem New Zealand has and for it to reach that level means that it's a significant challenge for the dairy sector but it is again a positive challenge because it means 'how can we do the same work more effectively and win the global race on being the most sustainable producers in the country and the world'.

"That will mean investment."

Investors wanted to know how a product was made, was it made on a sustainable basis, had it been done with full diversity and inclusion and were producers thinking long-term multi-generational, Orr said.

"New Zealand just has to accept that is the case, but we are in a great position for that."

Orr said Southlanders were leading the country it parts of finance.

"Southland, again, leads the world, leads New Zealand in having a sense of community, having savings and not getting to overcome with themselves.

"The rest of the country could learn a bit [from Southlanders] about reinvesting, about dealing with what you've got and enjoying it and these are long-term guardian type lessons.

"You got to think about what is the lifestyle you're after rather than 'how much can I borrow' because the borrowing part is to facilitate the lifestyle you have chosen.

"People get themselves highly committed and only ever think of the perfect scenario and you have to be a bit more cautious," he said.

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