Recently, there have been a few letters from locals in the Barrier Bulletin (Great Barrier Island’s Fortnightly Newspaper) in regards to local employment opportunities which appear to be shrinking due to respective decisions being made on the mainland by people who do not live on the Island. My take on this is quite simple and perhaps also naive.
- Try not to judge the book by its cover. Not every off-island decision and not every on-island contract being given to (big) off-island contractors must equal a bad thing.
- In an ideal scenario most island decisions will be made by people living here, but complaining alone will never achieve much, one has to take on the challenge and lead by example.
In a recent anonymous letter in the Bulletin (I assume by a local business owner) a very important point was raised. Money that is spent on the island will go round and round, while money spent on the main land will not contribute towards our small macro-economy.
My understanding is that most Islanders like to support local businesses and would like that the money they spend on services and goods goes at least in part into the pockets of fellow locals, who in turn can then support local businesses by spending some of that money.
Well, there is a big dilemma though. In a small community where the majority has no disposable cash, with ever-increasing costs nationally and locally (thinking of for instance rates, freight, transport, schooling, insurances, fuel) combined with hardly-ever increasing hourly rates for employees and with the complacency of ALL including business owners, it just becomes more and more difficult to pay as an INDIVIDUAL (i.e. not someone who can depreciate costs through a business or claim it against tax(es)) for the goods and services that we need locally on the island.
Let me give a personal and simple example. I enjoy buying groceries at the StoneWall Shop (I’m probably there twice a week); staff are incredibly nice. My dad used to have a similar shop – I take it back it wasn’t that similar, if it existed here people would be knocked off their feet – and I know how hard it can be to say “Hi, how are you? Thank you…” and smile 200+ times a day.
I don’t have any personal experience as a (local) business owner, so I don’t know what major challenges they face especially here on the island other than these.
- Leases and rents for premises
- Freight costs
The former is contradictory to the entire idea of supporting local businesses. When I go to the mechanic and he charges me twice as much as I used to be charged for a warrant of fitness check (must be done twice a year in New Zealand), I do wonder how many locals get a WOF locally. There are about 900 residents, probably just as many batch-owners who have a vehicle on the island. Lets just say that 500 cars get checked annually twice, which would come to 45000 NZD. The check takes about 30 minutes and it is safe to assume that they don’t all just pass the test, but that some small mechanical repairs need to be taken care of.
Please do correct me if this is wrong, because this comes down to an hourly rate of 90 NZD, just for the checks without any repairs. Two WOFs per year for 500 cars, 30 min per WOF, i.e. 500 hours work, i.e. less than 13 weeks = 45000 NZD (seems like a great business to get into.)
I stress that I am obviously unaware of the costs of running such a business but I do wonder how high fix costs – such as a lease are – and boldly claim that all services could be supplied at a much smaller cost if the mechanic actually owned the premises.
My point here is not to disrespect the local mechanic’s business – actually, he is a top guy – but to state that the services and goods I get from him will be the same irrespective of the overheads. I want to support him, I don’t want to support the person who has heaps of property and leases it out, leaving others to run a business while merely collecting a rent.
The same holds for freight costs. Many find it is cheaper to go to the main land to buy photovoltaic systems or building timber than sourcing it here. So, how come it can be cheaper to rent a truck, pay the return trip for the ferry, drive around in town to get the things, than to just buying it here?
Well, one thing I noticed is that freight to the Island BUSINESSES is often a three-fold story. A business delivers the freight to Freight-Link (the monopoly which brings our freight) = 1st charge, Freight-Link ships it over = 2nd charge, local freight companies pick it up and deliver it to local businesses = 3rd charge.
In every step of this freight chain business, hard working women and men – who don’t run a business because it is fun but because they want to provide for their families – must make a profit.
Even in this very small perspective, omitting many factors and costs of the supply chain, one has to really start scratching the head. When I buy 1kg of rice in the local shop, I pay a profit for the company that sold the rice to the Island business, I pay a profit for that company for the delivery of the rice to Freight-Link, I pay Freight-Link, I pay a local business that delivers it to the local shop and finally, I pay a profit for the shop owner.
As mentioned before, I like StoneWall Shop, I like to support the people working there, but something is JUST NOT RIGHT, when a 1kg of (bulk, unpacked) rice costs 4.40 NZD, when I can buy the same rice for about 1.6 NZD per kg for a 5 kg pack at a supermarket in Auckland. I’m sure that I can secure a deal for rice for less than a dollar per kg in a span of a month negotiating with whole-sellers in Auckland.
Unless (local) businesses try their utter best to provide services and goods at the lowest prices they can afford, unless they regularly brainstorm on how to reduce their overheads and thus to reduce consumer prices, all overheads will always be forwarded to the consumer. Bearing in mind that the average consumer has an annual income which is dramatically smaller than the median NZ income.
I come to the following conclusion:
Complacency is here the killer. It reduces employment opportunities, reduces the overall living standards on the Island. Further, how can we quantify if our complacency is not as bad as off-islanders in business suits making on-island decisions?
So many locals work for 20 NZD per hour before tax and less and I can’t help wonder how much business owners and providers own per hour averaged over the last 10 years before personal tax. So a question that one may ask is, How much do local business owners try to reduce their overheads instead of merely passing them on. What would happen if all grocery shops negotiated collectively new freight deals with Freight-Link?
I buy some groceries locally and some online through a large NZ-based supermarket which ships my delivery to the Auckland Domestic Airport Terminal. Fly My Sky charges me 8 NZD per banana box.