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How to Revitalize Hawaii’s Economy – Extended Version

(page 3 of 5)

Sullivan: The last time we did a real comprehensive plan here was during the Aryoshi administration, and the world’s changed. It’s time to rethink that whole concept and develop a plan for the future to integrate the world as it is today. Why education matters is totally different today. The Internet didn’t exist when they did that plan. Concepts around manufacturing are totally different. The idea of disruptive innovation and design thinking are totally different. It’s a different world and I think it’s time for Hawaii to step into the future. A couple of years ago at a sustainability conference, they asked some kids: Do you believe there’s a job for you in the future? Dead silence. No. You know that’s the answer, no. But the real problem is us. The grownups running the place don’t get it and the kids see the writing on the wall. We’ve got to take a different view of the future to integrate that kind of thinking. That hasn’t been done in a long time. Not everybody is going to be happy about everything, but I think there’s the opportunity for a more thoughtful, more politically expedient focus that reflects on ag and education and tourism and all of these other things. I think it would be more efficient for the state to do something like that. There’s no panacea here. Issues on capital formation, issues on tech. The discussion going on in the U.S. right now on manufacturing is totally different. The U.S. lost its ability to manufacture, so the discussions going on in places like DARPA (Defense Advanced Research Projects Agency) is how do we bring it back? What’s the new kind of manufacturing? We’re talking about a thing now called miniature manufacturing that could be done very effectively in Hawaii. It wasn’t even possible back then. And, by the way, there’s a lot of synergy among ag, the life sciences, the medical school. There’s this convergence of thinking and the infrastructure that is needed to make them succeed can be shared by everybody.

Petranik:  So one way to revitalize the economy would be to have a comprehensive vision that most of us share.

Sullivan:  A big vision.

Okimoto: I think collaboration between all sectors helps. Right now ag is partnering with Kyo-ya in presenting more local food at the (Starwood) hotels. Tech, of course, helps ag and that’s why we have the seed corn company guys here and other businesses in the ag sector. We need leaders who are going to be collaborative and bringing industries together within the state. That way everybody has an opportunity to grow and everybody gets to understand each other’s issues. That’s key, because if you don’t understand what ag is about, or what tourism is about, or tech, then when you hear that tech has Act 221 and you don’t understand it, then you’re thinking, “Wow, they’re getting a free pass.” Things like that. But once you learn about the different industries you learn how you can help each other and I think that’s very, very important going forward. For example, Kamehameha Schools is doing great stuff in agriculture, too, because they realize, I think everybody realizes, that agriculture has to stay, has to be a part of Hawaii. It’s just that people don’t know how and we’re looking at that now and that’s really important work.

Dancil:  It’s a collaboration, everybody at the table talking. Ag, we can help you start on the biotech side. Tourism is our core industry. How can we help tourism be the best it could be? Can we give them tech tools so that tourists can utilize them to have a more rich experience here? How do we sort of help the industries already here to work to be even better?

Fukunaga:  That’s really the point of the conference that you mentioned, Pat. The Hawaii 2050 Sustainability Task Force (http://www.hawaii2050.org/) may have gotten a little bit polarized between the House and Senate and the legislative process, but I think in terms of what people said they wanted, most people have a sense of what that sustainability vision looks like. I think what has started to happen in the legislative arena is that people realized that it was going to take a big commitment of funds, resources, people and planning, and maybe that’s what derailed some of the legislative support for it, but a lot of the momentum is already in place. It’s now a matter of all the industries and community partners beginning to step up to the plate and saying this is really where we want to go. At the beginning it was scary. Russell Kokobun, he was one of the champions of the sector, he stepped up to the plate and looked around and saw nobody else was really there, but I think more and more as we talk about what it’s going to take, it’s really about collaboration and working together.

Belsby: I agree with the big vision. I also think that a lot of industries and companies and various interests were kind of fighting over the wealth that was created in 2006-2007. The crisis has now put us all on the same side of the table. With that said, I think there was value in creating a big vision, but I would not let that stop us from identifying five real projects that we can accomplish in the next 24 to 36 months. Projects that don’t require $200 million, but projects that might be $10 or $15 or $20 million, that could bring these interests together and have them work together and actually accomplish something together, so that collaboration has something to show for its efforts.

For example, we talk about agriculture sustainability and feeding ourselves in the event of some major disruption in shipping, whether it be a political event or a weather event. If it’s a weather event, theoretically the crops just got destroyed. So, can we build a major cold-storage facility on the North Shore or on Big Island or elsewhere? Something that we’ve formed together, a farmers’ co-op, with support from other quarters, of course. A lot of the green-energy technology could be employed to create this opportunity, and we can multiply that in four or five different places on four or five different islands. I would rather have us think as a team about four or five projects that we could work on that are not going to stop us from dreaming the big vision. We’ll dream it together while we’re building the cold-storage facility.

Nishizaki:  I’ve been in the visitors industry ever since 1969. I think all of these things about other industries helping out is great, but right now if you look at quick fixes in Hawaii, this industry is the quick fix. We’ve got to get visitors back. Over the last two years, visitor spending has declined around 23 percent. That is a tremendous amount. Think of the multiplier effect in the community. That’s a large percentage of the workforce. The visitor industry employs around 160,000 people. So, maybe it’s our fault, I mean, basically these results for not going out and saying how important it is, but we’ve got to get our visitors back up. If we drive the visitors down, and there’s a delicate balance there, being a local person; sometimes people say as the visitor count gets to 7 million, it starts to create problems for the local residents because the traffic, and I quickly remind that if you’re driving in from Central Oahu plains and the traffic is bad, most of the visitors are still in bed, so they’re not in that traffic, they’re not creating that problem. The traffic is coming out because frankly, people coming to work.

We’ve got to improve the visitor product so it benefits not just the visitors but locals. If locals go to Waikiki, then visitors will go to Waikiki. If locals go to Kaanapali, the visitors will go to Kaanapali. In the short term, we’ve got to focus on what is really Hawaii’s driving force. I’m in it and I believe in it. I believe that it is a good industry. I believe that it needs support. With all due respect to the senator, it’s “Visitors don’t vote, so let’s increase the tax.” On July 1, the TAT (Transient Accommodations Tax, or hotel tax, went up) another  percentage point (to 9.25 percent). What is the message we’re sending to visitors? We tell them to come to Hawaii, but we make them pay 9.25 percent TAT, plus the GET. It’s not the right message.

We support the ag industry, even though in another year tomato prices are going to go up (laughter). But we will use local products and we want to use local products. Why is ag important to us? Our local shops want local products and because of sustainability. If we ship in less, we pay less for fuel. The last thing is ag – I lived out in Wahiawa, open space, pineapple and sugarcane fields. We need homes here and housing. But visitors don’t come here to look at subdivisions or homes. We need the green space because that’s what they come to Hawaii for. Locals also like to look at green space. We need to balance that out.

Okimoto: That’s a good point. Even ag and development can work hand in hand.  I’ll give you examples: I’ve been getting a lot of heat about supporting Hoopili (a proposed residential and commercial development in Ewa) and I truly support it because it’s been embedded in community, it’s in community growth plans. If that’s where the community wants to grow communities, then I’m for it. That’s why rail is really important to the overall whole plan because development is going to be centralized around that rail line going out to Kapolei, and everything will go up and not out. That will preserve more land for agriculture going forward. It bothers me that these people, I will say it’s environmentalists, think this is a bad thing, because the more you centralize it along the rail, the less development there is going to be on the Windward side and elsewhere. We should we concentrate on preserving ag lands that are still zoned ag now. People need to realize that you’ve got to do what you can do now, and if we go back and keep fighting about Hoopili and things that have been decided, where people and companies have spent millions of dollars on development plans and all of these things, that is not the right way to do it. We have enough ag lands going forward to preserve for ag, and to me that development (aligned with rail) in the long run will help us keep more ag land in ag.

Chock: If you ask local people – and we have, through our People’s Pulse Survey (conducted by Hawaii Business Roundtable and Pacific Resource Partnership, http://www.prp-hawaii.com/Peoples-Pulse.aspx) – and we asked, “How do you define sustainability?” And most of the respondents defined sustainability as being able to raise a family here in Hawaii, seeing their kids grow up here and have a job here. And if you look at all the metrics, Hawaii ranks 49th in the country in home ownership. We rank 50th in terms of intergenerational families living under the same roof. To me, that’s not any kind of sustainable balance to get local kids motivated about wanting to come back to Hawaii after they go away to get a good education, if there’s nothing for them to come back to. What kind of message are we sending the business community when the state and the county made planning decisions 20 or 30 years ago to redirect urbanization and residential growth to the second city of Kapolei, and now, there is an undercurrent that wants to revisit whether or not that was a good decision? (This reconsideration) comes after the county and the state said to the development community, “This is where we want you to build homes.” A lot of dialogue has been on the jobs aspect of rail, and I think that’s part of it, but I think the long-term dialogue is on how we want to redirect and rebuild our urban center from Kapolei to Downtown Honolulu. There are lots of opportunities for us to address issues of open space and redevelopment in a way that is environmentally friendly and still gives businesses a chance to create more density in the urban core. That’s something Kirk’s group (master planning for Kakaako) is taking a look at and kind of moving people off the mentality that the American dream to own a home isn’t necessarily the one with a big yard and a picket fence, but it might be a 900-square-foot condo where you can live and work in Kaka’ako and be part of the life sciences or some of the budding industries that we have now started to incubate. So I think there should be a balanced dialogue that takes into consideration all aspects of what we’ve talked about doing.

Belsby: I see us right now, from an urban growth perspective, in a state of transition, and transition is always painful. If you go the San Francisco Bay area 30 years ago, everyone was driving into San Francisco to go to work, not unlike everyone driving into Honolulu to go to work today. In the Bay area today, it’s a reverse commute: More people are going from San Francisco down to San Jose in the morning because that is where the jobs are. I’m not suggesting 30 years from now everyone will be driving to Kapolei in the morning, but I think and I hope that it will be at least more balanced. So, we have to approach some of these problems from a longer-term perspective. Most of our problems cannot be solved in the next legislative session.

And when we talk about agriculture, I think some people are saying, “I want more agriculture.” I think a lot of people are substituting agriculture with the concept of open space, and so I don’t think we’ve really resolved, “Do we really need more agriculture or do we need open space?” At the end of the day, and I defer to Dean, but some of the studies that I’ve seen suggest that we could largely be self-sustainable on vegetables and some fruits with 40,000-50,000 acres of good productive agricultural land. We have that much land. (Okimoto signals his concurrence.) What we don’t have is the labor to provide a successful agricultural product that is price-friendly at the market. What that is telling us is that the labor force, going back to Kyle’s point, cannot afford a home to live here to work in the agricultural sector where labor rates are admittedly lower than in many other industries. So when we talk about the affordable housing problem, yes there is, but I think the first thing we need to do is just to provide housing first because under the supply and demand theory, if we can supply enough housing, the prices will moderate. A few minutes ago we understood how very quickly tomato prices were going to come up because the supply would come down. The same theory works in housing. Yet, we make it a point to limit housing and then wring our hands over what happens to the price of housing.

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