The Moxie Sessions: Will the last person out of Ohura please turn out the lights (but for the love of God don’t unplug the navigation beacon)

Opinion

Vaughn Davis

Ohura (Vaughn Davis)

You’ve been to Ohura. It’s about half way between Auckland and Wellington as the Boeing 737 flies, and that’s how you’ve been there: 36,000 feet up (33,000 if you were heading north) in seat 12C on the way to or from some meeting.

You have to know what you’re looking for. The captain won’t announce that Ohura is coming up on the left hand side (or the right), because the route passes smack bang over the top of the place. 36,000 feet below, just outside of town, there’s a navigation beacon for airplanes, and its endless Morse code song marks a tiny kink in the air route. Your 737 knows it’s there, though, so if you pay very close attention, about half way between Auckland and Wellington, you’ll feel the auto-pilot direct the tiniest of tiny left turns as you pass the beacon.

And that’s Ohura. 

It’s not good for very much but, unlike a bunch of other small towns, it’s actually good for something. The navigation beacon is fully automatic, though, so why is the town still there? Why do its 129 residents (we counted them in 2013) stay there? And why do the other 4.5 million of us help provide them with health, education, electricity and, presumably, fast Internet?

Ohura isn’t alone. Towns have inertia, and tend to live on long after their purpose for being. Down the river (Ohura sits on a tributary of a tributary of the Whanganui), the city of Whanganui meanders on in much the same way its namesake river has in the 100 years since anyone used it for commerce. North of Auckland, Helensville moulders at the heart of a Kauri exporting district that logged itself out of existence before the end of the 19th Century.

At least Helensville is growing (slightly). Whanganui has been on a slide since 1936. Dunedin hasn’t added a citizen in 100 years. And Ohura’s citizenry has almost halved since 2006. It’s a story told all across almost New Zealand and is what led NZIER economist Shamubeel Eaqub to coin the phrase “zombie towns.” 

So are those cities and towns unlucky enough not to be Auckland really dying? Can anything be done? And does it even matter? Is this the same issue the Prime Minister happened upon when he (controversially) described the capital as on its last legs?

There’s no better way to answer questions like these, of course, than to assemble a group of a dozen clever Aucklanders. So that’s exactly what we did at GridAKL recently for the 27th meeting of The Moxie Sessions. 

For NZ Institute of Economic Research principal economist Shamubeel Eaqub, provincial 'zombification' is very real, and down to three factors. Firstly, like Whanganui, small towns’ relevance is fading. River navigation isn’t important in 2015, and the coal mines that once supported Ohura closed in the 1960s. The second factor is the technological and infrastructure changes that allow agglomerations like Auckland to happen, and encourage them to grow. And the final nail in the coffin is the exodus of young people from the provinces to where the educational and employment opportunities are.

Auckland University Professor Shaun Hendy isn't a fan of small towns (at least on a professional level – he comes from Palmerston North).  He believes that connectivity and concentration of people are essential for the creation of ideas, and he’s got the research to back it up. His team’s studies show that the level of innovation – as measured by patents registered – correlates to population size. The bigger the city, the more patents – not just in total, but per head of population.

From Shaun’s perspective, even Auckland isn’t big enough – he sees our future in connecting New Zealanders both virtually and physically to create “a city of 4 million.”

Hawke’s Bay expat and Wiki New Zealand founder Lillian Grace agrees. Despite building a business on data, she sees the value in physical connectivity and wonders if investment in airline links – even going as far as funding free flights to and from Hawke’s Bay – might deliver far greater returns than the cost it would require.

Samantha Seath from Economic Development Agencies New Zealand supports physical infrastructure too, but sees strong political leadership in the regions as key to their prosperity. “Identifying a niche, making a plan then going for it,” is, she says, a more sustainable path than relying on central government. “MBIE can only go so far.”

Auckland-centricity aside (although not one of us was born here), it’s an odd way for a Moxie Sessions discussion to go. The group’s purpose, after all, is to investigate how New Zealand can best take advantage of the Internet economy, not lobby for more trains, planes and automobiles.

But as Shaun Hendy’s numbers indicate, and almost everyone in the room seemed to support, it’s physical connectivity as much as virtual that drives innovation and growth. Virtual connectivity is a great way to stay in touch with people that you already see a lot of. Which is great news for big cities – or towns closely connected to them – but not so great for Ohura. The connection that will make the difference, it looks like, won’t just happen via the information superhighway, but the one you drive on.

Every month, The Moxie Sessions brings together a small group of business thinkers to discuss ways New Zealand can take advantage of the Internet to boost its national competitiveness. For more, see http://themoxiesessions.co.nz. This month, we returned to technology and innovation precinct Grid AKL to discuss connectivity between New Zealand’s cities and its regions.

Thanks to Alcatel Lucent and its ng Connect programme for their generous sponsorship that helps to make The Moxie Sessions possible.

Check out the standing invitation, the podcasts and the records of previous events at http://themoxiesessions.co.nz, and follow @moxiesessions on Twitter.

Vaughn Davis is principal at social media and advertising agency The Goat Farm.


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The only problem is that, in innovative fields like software, patents are not only not a measure of innovation, I would argue they're a contra-indicator - corporations use patents to *stop* innovation rather than using them to motivate innovators. We're optimising for the wrong thing. And we need to come up with a better metric for innovation. Patents have almost no value in this discussion - they're just a simple thing to count.

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Good point Dave and one that we didn't really question in the discussion. So if patents are a poor measure of innovation as you assert, what is a good measure? If you accept that measuring innovation (or anything, really) is an important step towards improving it, what would you put in place of patent numbers? (I'm seeing Shaun tomorrow so will pass on your suggestions.)

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Sadly, there's no other easy countable thing that I've been able to find (I've searched quite a lot, as this has bugged me for a while). There probably is no simple metric because innovation is almost never simple. By definition, it can't be categorised (it tends to new categories, that's why it's innovative). I wish I could provide an alternative. But I just look at the fact that the most innovative software around these days is open source (which rejects patents) and we've managed to make it impossible to patent software in NZ any more (that's a GREAT thing) so it pretty much completely removes that metric for one of our most innovative sectors in NZ. I'd be very keen to discuss this with Shaun, because I really think a different metric needs to be found so that we can stop trying to optimise business for generating patents, because I think that's totally counter productive.

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I get this type of comment a lot.

First, patents do correlate quite well with almost all other metrics of innovation, including input measures such as spending on R&D and output measures such as productivity. Of course it is the latter that we are usually most interested in when we are thinking of innovation - i.e. how can we innovate to increase productivity, or, equivalently, how can we add more value per hour worked.

Now while patents certainly don't measure innovation in all industries (e.g. software), they do measure innovation in many (e.g. manufacturing, pharmaceuticals). So if we can figure out why some places produce more patents than others, we might be able to figure out why some places are more innovative than others. And we can always check that productivity also changes in the same way in big cities (it does) if we are worried patents might be misleading us. The advantage of patents over productivity though is that we can see what is going on in detail, whereas productivity is an aggregate measure. It is also worth noting that we see similar effects in scientific articles as we do in patents.

The idea that we should "optimise business for generating patents" is a misunderstanding of our argument. What we should be doing is optimising businesses to be more innovative. The assumption we make is that the same things that can make certain types of businesses produce more patents (e.g. connectivity, open innovation etc) can also make other types of businesses more innovative.

Hope this helps clarify the argument. I am not concerned about producing more patents - rather I want to understand why some places produce more than others (and are more productive) so that I can figure out how we might make NZ more productive.

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Thanks for your clarification, Shaun. Given that software is where much of the innovation is currently happening, I'd very much like to work out how we can measure or characterise software innovation (because it's definitely not tied to patents). I'd certainly be interested in discussing the further with you and/or other folks at Te Pūnaha Matatini.

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Innovation cannot be measured... It is omnipresent in all of us; existing in various degrees and states.

Furthermore, the premise that innovation can be measured by the number of patents issued (expressed as a percentage of population size) cannot be accepted, since of all the patents which are granted, only a miniscule number are ever commercialised.

In addition, some of the really innovative people in NZ one will never hear of or, read about, either keeping their innovation a commercial secret or, for altruistic reasons , give their brilliance away.

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The good people of Ohura probably can't afford to leave. Taumarunui may be there only option in terms of affordability? Surprise, surprise, it's just up the road, mind you Raetihi just down the road... The fact is there are two economies in New Zealand and the one that provides and pays for the insanity that is growth in Auckland is going broke. We need a Provincial Party.

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Correct. I would move back to the city if I could afford it. There is a distinction to be made between quantity of life and quality of life. The two economies thesis needs a caveat and that is consequence of the hollowing out of the middle class. The first economy [sic] may well implode in on itself. The outcome of the Auckland property market &c will be a very hollowed out and impoverished middle class. This is the same middle class that has the educated innovators &c. There is little cultural and tech innovation from the finance sector from the commoditisation of money. See Boyle's book Who Killed the Middle Class.

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If people really are only staying in the provinces because they can't afford to move to the city, and if cities really do drive innovation and economic growth, then housing affordability becomes a discussion not just about real estate but about national competitiveness.

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Hi john, it turns out the good people of Ohura ARE leaving – that 2013 population figure was well down from the previous census. But it's not alone, and the story isn't about Ohura as much as it's about whether or not we as a country should be doing anything other than let towns like it quietly die.

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For as long as farming continues to be our primary industry, then small towns will continue to exist to service them. Interestingly, as a group of generally isolated individuals, it is farmers who are ostensibly the most innovative of all. Their very survival depends on it. We may also see the renaissance of smaller towns as our aging population migrates from the big cities. Furthermore, these people will eventually form cliques and share experiences, which may well ultimately result in the establishment of new, local, business enterprise.

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Yes, the economic cards are sadly stacked against Ohura and many other even larger communities. Despite some marginal infrastructural costs of an additional resident being modest. And our regional towns do seem to produce a disproportionately large number of Olympic gold medalists, All Blacks, first climbers of Mt Everest, atom splitters, writers. Probably arises from an childhood founded in unfill rather than an infill housing. Hey, but I'm singing from the wrong song sheet. It's all about an Auckland regional migration policy , more houses, more infill, higher marginal infrastructural costs. Bullshit. We need more long grass for little kids to crawl through and use their imaginations and to develop the early confidence to have a crack at whatever lofty goal they desire.

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You don't understand the dynamics of small communities and confuse size with innovation and growth with significance. Local areas will generate such activity as their resources justify, provided only that they are not disadvantaged by central government policies that fail to understand their quite different character. Ohura was based on mining, farming, and local services. The mines (including Waitewhena) were always marginal and by the late 1960s uneconomic without the central government intervention which propped them for a while. Their closure led to the use of the facilities for Ohura Prison. Once central government tired of that and closed it, and railways also changed the population of Ohura would and did fade away. Just like timber mill towns. There is no comparison with Whanganui, whose distribution role (much more the port than the river) was destroyed by - wait for it - central government's uneconomic and regulation enforced cheap rail! The city has reconfigured on its own initiative around its resources, and today has many innovative businesses, including NZ leaders with international achievements. None other than Paul Callaghan grew up here - so you could say it's the home of NZ innovation! It's now successfully in balance with its economic position and resources. I could quote another dozen examples of similar centres whose contribution to the NZ economy fully matches what they seek from it. If Auckland can't understand this and be part of it, we have a serious problem as a country as Auckland will be waiting for economic gains which will never come.

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Hi Hugh, I'm not sure I completely understand anything and I hope I never do... but the part of the conversation that interested me the most was that it challenged the assumption that all towns and cities must, for their own sakes, be supported so they can continue to exist (even when their original reason for being has long disappeared). This is a tough one to swallow, politically, but the arguments for an economic upside of concentrating our population even more than it currently is seem solid. (As a side note, everyone at the table grew up and in some cases worked and studied elsewhere in the country before moving to Auckland.)

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What is driving centralisation? Idealogical economics, and its benefactors.

People have this illusion (or should I say the illusion has been created) they will be better off working in Auckland.

The reality is quite different, for the following reasons:
1. The cost of housing (rent/mortgage payments) leaves them with the equivalent or less take home pay than they would get in the provinces.
2. Most spend an additional 15 plus hours more a week stuck in traffic going to work or recreation than they would in the provinces. Put in context, there are 168 hours in a week, with say 56 hours spend sleeping and 43 hours working (including provincial commuting time), leaving some 68 hours for recreation. The extra 15 hours lost commuting in big cities represents some 22% lost in recreation time otherwise available in the provinces.
3. Moving to Auckland often means moving away from family support, and the benefits that go with this.

Due to the above factors, big cities do not drive efficiency or better lifestyles; quite the opposite. Only few people benefit, and its normally at the expense of their fellow. Banksters and higher level management seem to be the only short term winners, but generally its at the price of family time.

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The majority of NZ export dollars are earned by agriculture. Whilst the people who actually earn export dollars live in provincial areas then there will always be a need for towns to service their needs. The author may go on about the dying of provincial NZ but if you dig beneath the surface except for being an entry/exit point for nz Auckland produces only a tiny proportion of any export dollars or contribution to the real economy. It is really just a giant service town for migrants and those in the service industry. Growing Auckland really has no benefit....unless they turn back the clock 100 years and grass over Epsom and turn it back in to farmland.

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Hi Da... hard to argue with someone called Facts, but I'll give it a crack.

I'm not going on about all NZ provincial towns being allowed to die, just presenting a counterpoint to the accepted position that all NZ provincial towns must be saved. Those that support rural NZ, as you mention, fair enough. Those whose purpose has long disappeared (or whose size is out of proportion to their purpose), RIP.

As for the majority of NZ's export dollars being earned by agriculture, we agree on that problem. Luckily, some smarter minds than mine (but maybe not yours – who knows?) are working on solving that.

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Bollocks. Small towns will thrive if the residents are delivering goods/services that can be sold profitably. If they cannot deliver goods/services that can be sold profitably, then they will die and deserve to die. And MBIE can do nothing about it. They should not attempt to do anything. Instead they, employees of MBIE, should themselves get out of the taxpayers trough and find something productive to do.

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Richard S - agree with your comments.
Declaration of interest - I live in Hawke's Bay.
The notion that "innovation" is created and is the sole preserve of those who choose to reside north of the Bombays is best described by a four letter would that begins with c and ends with p.
Let me quote my own family as an example - left Auck. 6 years ago, moved to HB, within a year had purchased an acre of land, built new house plus shedding etc for not much more than $400K. Established own business, in food related sector, growing exponentially, nominated in numerous hospitality awards, numerous unsolicited media reviews, doesn't have the time to cope with all the offers and potential to extend his business even further, family is important, great environment for kids - go figure what is important to you all of you out there??
May I respectfully suggest that Auckland does not have it all together and certainly is NOT the sole possessor of innovation or anything else for that matter !!

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Jack, it doesn't matter whether it's Auckland or Ashburton, Hamilton or Hastings... worldwide, innovation happens where there are lots of people well connected, working on a range of different things. Grow Hastings to 4 million and odds-on there'd be as much innovative thinking coming out of the Hawke's Bay as there is out of Sydney or Melbourne. The reality is, though, Auckland is our biggest city by a long way so right now it seems a better bet.

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Vaughn, I think you are quite confused.
In my experience the people that move to Auckland aren't innovators, rather they are people that are too scared to innovate. They complain about not getting the next opportunity or promotion into their next middle management or team leader position. They will happily move to a city for an additional $15,000 pay rise, but at no point consider their overall position and future (quality of life, mortgage, traffic, stress). These people are not innovators, as innovators would not make such decisions, these people are the followers and survivors of the world, doing what they think is best for themselves and their family (nothing wrong with that, but don't confuse those people with being innovators and entrepreneurs).
Additionally whether you live in Auckland or a smaller town is irrelevant in the bigger scheme of things. Auckland isn't significant globally, or even in the Pacific. Auckland is the 352nd largest city in the world and does not attract the world's top talent, it is simply the largest town on an isolated island.

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Hi John, you're quite right – I am confused and try to remain at least a little bit that way most days. There's nothing more paralysing than the quicksand of certainty. I am interested in listening to people who dig into difficult questions though, and Shaun Hendy's research on innovation fascinates me. Population size really does matter – the more people in a city, the more patents per thousand people. That's not a perfect measure of innovation (as discussed above) but it's not a bad surrogate. Viewed that way, Auckland's growth at the expense of the provinces makes me feel optimistic about our future as a centre for innovation – but as you point out, it would be good to find ways to accelerate that and improve on our #352 spot!

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Hi Vaughn. Although I disagree with the simplicity of patent = innovation, I would like to understand whether you are measuring ownership correctly. Are you confident that the location of the patent 'owner' isn't just the registered office or lawyers/accountants/head office for the innovator? As a tech lawyer (formerly working in Auckland for a decade+) I know that many clients based elsewhere in the country had their registered offices at our address and would register IP against their registered office address. Given that the large majority of the service industry is based in Auckland, it is probable that many non-Auckland companies will have their registered office in Auckland and as a consequence their IP ownership will appear to also be from Auckland.

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Hi John and you make a bloody excellent point. To be clear, the research and the geolocation of patent owners it involves is by Shaun Hendy at Auckland University, so I'll see if he can pop in and address that. Pretty sure he was talking about "home" addresses of the patent applicants but I know he can clear that up.

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Hi John,

That is a good question. In our dataset we have both the address of the applicant (usually, but not always, a head office) and the home addresses of the inventors. For the work described in the article above we use the cities where the inventors live (if there are two inventors and live in different cities then we add half a patent to each city). So what we are seeing is not just an artefact of the data but something real.

Having said that, obviously many companies will choose to locate close to the services they need (e.g. lawyers) and this will have an influence on where their employees live, including those that invent things. So part of the reason (but not the only reason) Auckland out-performs Christchurch (or Ohura) is due to the better services Auckland offers inventors.

At this point can I recommend my book "Get Off the Grass" or that by Ed Glaeser "The Triumph of the City" (I think) who has done a lot of work on teasing out the relative importance of the different economic forces at work in cities.

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Hi John,

That is a good question. In our dataset we have both the address of the applicant (usually, but not always, a head office) and the home addresses of the inventors. For the work described in the article above we use the cities where the inventors live (if there are two inventors and live in different cities then we add half a patent to each city). So what we are seeing is not just an artefact of the data but something real.

Having said that, obviously many companies will choose to locate close to the services they need (e.g. lawyers) and this will have an influence on where their employees live, including those that invent things. So part of the reason (but not the only reason) Auckland out-performs Christchurch (or Ohura) is due to the better services Auckland offers inventors.

At this point can I recommend my book "Get Off the Grass" or that by Ed Glaeser "The Triumph of the City" (I think) who has done a lot of work on teasing out the relative importance of the different economic forces at work in cities.

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You have hit the nail on the head John.

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