20 March 2015

Southland economy performing strongly - Wheeler

The Southland Times

Reserve Bank policy could not cater to the needs of every individual region but Southland was performing strongly at a national level, the bank’s governor Graeme Wheeler said yesterday.

About 95 business leaders from throughout Southland attended a session with Wheeler, who was hosted by SBS Bank, yesterday at Ascot Park Hotel. Wheeler was appointed Governor of the Reserve Bank in September 2012, and yesterday was his first visit to the region in that capacity.

“It was wonderful to be invited down here.”

A question and answer session with the leaders was wide-ranging with questions including the role of loan to value ratios in the housing market and about oil prices, he said.

“We talked about the Southland economy. It’s doing very well down here.”

Southland recorded the highest economic increase of any region in the year ending March 2014, according to figures released by Statistics New Zealand last week. Dairy farming was the major driver of the 11 per cent increase in gross domestic product (GDP), which meant the province produced more than $5.5 billion in the year to March 2013. This was an increase of $500 million on the previous year and represents $57,135 per person in the year.

In terms of growth, since 2007 Southland had experienced the most rapid growth of any region in the country, he said.

These positive indicators led on to other statistics, such as Southland having the lowest unemployment rate in the country, Wheeler said.

When asked about Southland’s looming ageing workforce issues, Wheeler said monetary policy could not deal with demographic issues and the Reserve Bank could not apply policy on a regional basis.

“It’s very difficult to do.”

Southland’s major economic driver - the dairy industry - was carefully considered by the Reserve Bank and despite the forecast cut in milk-solid payouts he was confident farmers were “smoothing their spending” to account for the predicted drop in income this season. Dairy auction prices had rebounded which was a positive factor, he said.

Wheeler said if there was one perception he could turn around it would be that house prices would continue to rise indefinitely.