Bay of connections MAKING AN IMPACT

Bay of connections IMPACT REPORT 2013 MAKING AN IMPACT

Greater Connections. Greater Results. As the 2013 calendar year draws to a close, Bay of Connections is working with more people and organisations than ever before, with representation from businesses, agencies and regions that go far beyond our original boundaries. These connections have allowed Bay of Connections, its people and its strategies to have a far greater impact than in our geographic region alone. This Annual Report outlines the activities of the 2013 calendar year and an insight into the year ahead. This 2013 Annual Report is not a financial results document. It gives a snapshot of the progress, highlights and activities of Bay of Connections during the 2013 calendar year.

In this exciting time for the Bay of Connections, we are now seeing the undeniable impact our strategies are having at both a regional and national level.

"Bay of Connections has moved into a new phase of activity and progress." Welcome to the Annual Report for the Bay of Connections. Moving forward together Bay of Connections Governance Group At its heart, the Bay of Connections strategy is a regional economic development framework, designed to encourage economic growth in the Bay of Plenty. What does that mean in reality? It s about connecting people, businesses, iwi, agencies, individuals and organisations to identify opportunities that will create growth and expansion for new and existing businesses and industries in our region. Ultimately, Bay of Connections is about creating quality jobs. The Bay of Plenty represents almost six percent of the New Zealand economy by employment and in the last 10 years we have seen a high level of employment growth. However, the average household income remains relatively low, and within this there are clear and significant sub-regional differences between the east and west of the region. Creating high value sectors and jobs is a common thread across all Bay of Connections strategies, and is a target that the new regional Māori economic development strategy is seeking to achieve. Development of this strategy has been one of the highlights of Bay of Connections activity over the past 18 months. This strategy will create real positive impact across the wider Bay of Plenty, not just for Māori, but for our entire economy. Another exciting area of growth for the region is Rugby Sevens a strategy which was launched early this year and is already progressing at pace with the Bay of Plenty cementing itself as the Home of Sevens. The potential for this strategy is not just about sport, but the economic development opportunities that come with the game s massive growth internationally, and its inclusion in the 2016 and 2020 Olympics. The strategy offers opportunities across the whole Bay of Plenty, and links in with tourism, education, training and much more. In the past year, I have often been heard to say that Bay of Connections has moved into a new phase of activity and progress. We have spent a number of years simply talking. These conversations were critical. Without them we would not have built the level of trust and understanding needed for our region to move forward, together. Those discussions have laid a vital foundation. Now it is time to build on that foundation as we look towards making further impact in the next 12 months and beyond. John Cronin Chair, Governance Group Bay of Connections 4

"...we are focused on continuing to build economic strength across the central North Island..." It s been a busy 12 months for Bay of Connections, its Governance and Management Groups, and the large and growing number of people involved in developing and implementing sector strategies. In the past 12 months we have developed and released an updated Aquaculture strategy, launched the Rugby Sevens strategy, assisted in development of the Cycling and Mountain Biking Tourism Marketing Network, and developed the regional Māori economic development strategy. This is in addition to our business-as-usual; implementing the existing strategies for Aquaculture, Forestry, Freight Logistics and Energy. Not directly a part of, but complimentary to Bay of Connections, is Bay of Plenty Regional Council s Regional Infrastructure Fund. The key projects that secured funding in August 2013 are all related to Bay of Connections strategies and sectors. These include a new Innovation Centre at Scion in Rotorua, a shared tertiary campus, the Harbour Marine Precinct in Tauranga, and the proposed Ōpōtiki Harbour Transformation Project.It is exciting that these projects dovetail into the sector strategies under Bay of Connections this will result in a wider positive impact for the region. Another key activity this year has been our increasingly close working relationship with our neighbouring regions, particularly Waikato. This is essential for economies of scale. Taupō s longstanding inclusion in Bay of Connections is a winning combination, and our links with the key sectors grows stronger each year particularly in Aquaculture, Forestry, Energy and Freight Logistics. Bay of Plenty, Waikato and Auckland form a triangle of growing centres, and it is vital that we work together across our industries and sectors to create the critical mass that will allow us to compete both on a national, and international scale. Through Bay of Connections, we are focused on continuing to build economic strength across the central North Island and through to our Port and coasts, to cement our place in the New Zealand economy. It is has been a positive and productive year, and we look forward to continuing this progress in 2014. Strengthening our Connections Bay of Connections Management Group Fiona McTavish Chair, Management Group Bay of Connections 5

VISION Bay of Plenty - A prosperous region supported by sustainable sectors MISSION To deliver sector-based strategies and action plans that generate and encourage additional sustainable employment for the Bay of Plenty MEET OUR TEAm Governance Group John Cronin Local Government Anthony Olsen Maori Business Hemi Rolleston Priority One Jacob Kajavala Eastern Bay Business Andy Blair Enterprise Great Lake Taupo John Green Grow Rotorua Bryce Heard Rotorua Business Graeme Marshall Tauranga Business Richard Jones Maori Business Sir Michael Cullen Toi-EDA 6 Photo of Sir Michael Cullen courtesy of NZ Post

VALUES We will collaborate in our community with integrity, respect and transparency, and in a friendly manner MANAGEMENT Group Fiona McTavish Bay of Plenty Regional Council Lionel Crawley New Zealand Trade and Enterprise Cate Hlavac New Zealand Trade and Enterprise Fritz Frohlke Enterprise Great Lake Taupo Our Region John Galbraith Toi-EDA Andrew Coker Priority One Francis Pauwels Grow Rotorua Cheryl MacGregor Bay of Connections Advisor Jackie Read Bay of Connections Support Jacky James Bay of Connections Communications 7

THE BAY OF CONNECTIONS MODEL CENTRAL GOVERNMENT Growth Objectives INFORM EACH OTHER RELATIONSHIPS BAY OF CONNECTIONS HOW IT WORKS EASTERN BAY OF PLENTY ROTORUA TAUPO WESTERN BAY OF PLENTY Toi-EDA Grow Rotorua Rotorua District Council Enterprise Great Lake Taupo Taupo District Council Priority One TWO WAY RELATIONSHIP CONNECT Enterprise development focused agencies COBOP Collaboration Bay of Plenty Local and Central Government forum Refer to inside back cover for the partners involved.

GOVERNANCE GROUP BAY OF CONNECTIONS M A N AGE M ENT GRO UP BAY OF PLENTY REGIONAL COUNCIL Facilitates Energy Biking Aquaculture SECTOR STRATEGIES & & Sport Recreation Recreation Rugby Sevens Forestry Maori Freight Logistics

2013 highlights AQUACULTURE Updated and released Aquaculture Strategy Report on Freshwater Aquaculture Report on Freshwater Aquaculture Opportunities in the Bay of Plenty publicly released Sevens Strategy Sevens Strategy developed and released Maori Economic Development Strategy Regional Maori Economic Development Strategy developed Sevens Tournament National Sevens Tournament secured in the Bay of Plenty MARKETING NETWORK Cycling and Mountain Biking Tourism Marketing Network established Freight Logistics CAREER BRANDING Freight Logistics career branding project launched the best career you ve never heard of FREIGHT LOGISTICS PROJECT EXTENDED Freight Logistics freight data and movement mapping project extended MEDIA COVERAGE Increased level of media coverage across all sector strategies TRADE DELEGATION Forestry representation on Prime Minister s trade delegation to China FUTURE IMPACT Bay of Connections is a regional growth strategy. It is sector based and is designed to be simple, aspirational and measurable. The key outcome from the strategy is simple creating quality jobs. For the strategy to succeed there also needs to be an aspirational growth target. And we need to know how and whether we are going to achieve that target. In November 2013 MartinJenkins developed an employment scenario based on the successful implementation of the Bay of Connections Strategy. The employment scenario was an aggregation of the successful delivery of individual sector strategies, and their indirect impacts on other sectors of the Bay of Connections economy. A successful Bay of Connections Strategy will deliver an additional 5,000 jobs by 2025. These jobs will be over and above business as usual outcomes. As part of the project, a clearer understanding of how the various sector strategies contribute to the overall Bay of Connections strategy has emerged. This is a starting point for what future work is needed to align actions to deliverable outputs and, in turn, employment outcomes. This will form the basis of the broader evaluation framework that has been developed for the Bay of Connections strategy, and will be able to be incorporated into future monitoring and reviews. The full report is at www.bayofconnections.com The Bay of Connections Strategy now has a set of tangible employment targets that individual sector strategies can aim for and aspire to. PRESENTATIONS AND REPRESENTATION Presentations to and representation at a number of national conferences across the range of Bay of Connections sectors Regional Infrastructure Fund Support of successful Regional Infrastructure Fund bids in Tauranga, Opotiki and Rotorua 10

This graph shows the increase in employment for Bay of Connections sectors under the business as usual scenario and the Bay of Connections strategy scenario. 2,500 BOC Sector Strategies BOC Other Key Sectors 2,000 Additional FTEs in 2022 1,500 1,000 500 0 Aquaculture BOC BAU Wood Energy Freight Logistics Sport & Recreation ICT Kiwifruit Dairy Other Food Cultivation... Marine Tourism Emerging Technologies Meat Our Region Sector job growth between business as usual and Bay of Connections scenarios. Business as usual Bay of Connections Strategy FTEs 2012 2022 Increase %PA FTEsPA 2022 Increase %PA FTEsPA difference bettween BAU and BOC BOC Sector Strategies Aquaculture 316 392 76 2.2% 8 1,927 1,611 19.8% 161 1,535 Wood 5,834 5,921 87 0.1% 9 7,182 1,348 2.1% 135 1,261 Energy 871 1,293 422 4.0% 42 2,433 1,562 10.8% 156 1,140 Freight Logistics 4,284 5,194 910 1.9% 91 6,274 1,990 3.9% 199 1,080 Sport & Recreation 1,793 1,999 206 1.1% 21 2,123 330 1.7% 33 124 ICT 872 1,010 138 1.5% 14 1,207 355 3.3% 34 197 Total Sector Strategies 13,970 15,809 1,838 1.2% 184 21,147 7,176 4.2% 718 5,338 BOC Key Sector Kiwifruit 4,195 4,557 362 0.8% 36 4,665 470 1.1% 47 108 Dairy 5,780 6,144 364 0.6% 36 6,253 473 0.8% 47 109 Other Food Cultivation & 3,578 4,305 727 1.9% 73 4,523 945 2.4% 94 218 Tourism 6,513 7,425 912 1.3% 91 7,698 1,185 1.7% 119 274 Marine 366 494 128 3.1% 13 533 167 3.8% 17 38 Emerging Techs 1,068 1,546 478 3.8% 48 1,689 621 4.7% 62 148 Meat 2,009 2,065 56 0.3% 6 2,082 73 0.4% 7 17 Other Key Sectors 23,510 26,536 3,027 1.2% 303 27,444 3,934 1.6% 393 908 Total Key Sectors 37,480 42,345 4,865 1.2% 486 48,590 11,111 2.6% 1,111 6,246 Other (Non-key) Sectors 84,293 97,592 13,299 1.5% 1,330 98,922 14,629 1.6% 1,463 1,330 Total All Industries 121,772 139,936 18,164 1.4% 1,816 147,512 25,740 1.9% 2,574 7,576 Source:MartinJenkins 11

Frequently asked questions What is Bay of Connections? Bay of Connections is a regional growth strategy. It is simple and aspirational. It s about having a prosperous region driven by sustainable sectors. The aim is to establish and implement sector-based strategies that generate more job growth. It s also about growing a strong and vibrant community, encouraging collaboration between business and industry, improving well-being and encouraging innovation and leadership. And it s about identifying and capturing areas of growth and opportunity. Bay of Connections is seen as a successful regional economic development model. The key to its success is the philosophy of collaboration, co-operation and partnership that is at its heart. The population in the region is 303,412 (Central 99,401, Western 155,256, Eastern 48,755). It generates 6.1 percent of New Zealand s GDP, or $11.5 billion. The region employs 118,000 and there are around 38,700 businesses in the Bay of Connections region. Who is involved in Bay of Connections? A large and growing number of individuals, businesses, organisations and agencies are involved in Bay of Connections in a range of different ways. This includes those contributing to the sector strategies and implementing the actions. Bay of Connections is led by a Governance Group of 10 members three from business, four from the economic development agencies, two Māori business representatives and a local Government representative. The Governance Group is supported by the region s economic development agencies, councils, New Zealand Trade and Enterprise, and Bay of Plenty Regional Council, who provides overall management of the strategy. Refer to page 23 for the Bay of Connections partners. WhERE is Bay of Connections' region? Bay of Connections region covers the wider Bay of Plenty, including Taupō, Rotorua, Western Bay of Plenty and Eastern Bay of Plenty. It covers 34,000 square kilometres of land and sea. Bay of Connections also has strong links into Waikato. Tuhua (Mayor I) Waihi Beach Katikati Tauranga City Motiti I Whakaari/ White I Cape Runaway Tauranga Western Bay of Plenty District Moutohora I Whakatane Te Kaha L Rotorua Rotorua Rotorua District Kawerau Kawerau District Whakatane District Murupara Opotiki Opotiki District Taupo L Taupo Taupo District North Island Locality Turangi New Zealand 12

CULTIVATION AND How does Bay of Connections work? Bay of Connections identifies the key strengths and areas of opportunity for the region, from both developed and developing sectors. It is export and globally focussed. It is informed by data, research, information, analysis and consultation at a local, regional and national level. Thirteen sectors have been identified as the key export-focused areas, supported by three enabling areas that cut across the economy. Each of the sectors has been measured against a set of selection criteria to determine their readiness for engagement in the strategy. These are: 1. Regional capability and/or comparative advantage 2. Aligned with national sectors that are globally competitive 3. Strong sector buy-in and leadership 4. Strategy interventions/actions can support transformative growth. Sector strategies are in place for Aquaculture, Forestry and Wood Processing, Freight Logistics, Energy, Rugby Sevens and Māori Economic Development. Each strategy is developed by an industry-led advisory group. Bay of Connections Governance Group maintains oversight of the strategies, with the support and advice of Bay of Plenty Regional Council. Forestry Energy Freight Logistics Aquaculture Marine MEAT Tertiary and skills communications Sport and Recreation Our Region Infrastructure DAIRY Transport ICT KIWIFRUIT Tourism TECHNOLOGIES Emerging Processing Other food Why is it working? Bay of Connections provides a simple framework for the region to work together, to achieve greater economic growth. Together, the region has the scale to be nationally and internationally significant. Quite simply, it just makes sense to work together. Bay of Connections has achieved a great deal since it was first launched in 2008. It is seen as a role model for regional economic collaboration. The success of the Bay of Connections is simple: It is industry-led, bringing together some of the strongest business leadership in the wider region. It has strong leadership through its governance group and advisory groups. A willingness to work together, and a regional, national and international perspective. We have removed the boundaries between local regions and sectors. The strong philosophy of collaboration, co-operation and partnership that is at its heart. How will its success be measured? The ultimate measure of success for Bay of Connections will be through job growth. Other measures of success include continual progress and implementation of sector action plans, retention of top industry experts and continued involvement from Central and local Government. 13

STRATEGY Summary Freight Logistics Forestry and Wood Energy Aquaculture Sevens Processing Bay of Connections has five strategies in place for Forestry, Freight Logistics, Energy, Aquaculture, and Rugby Sevens. They are at varying degrees of maturity, with industry participation being the key. We are working with Sport Bay of Plenty to assist with a Biking strategy, and the Māori Economic Development Strategy is due to be launched early next year. Existing sector strategies will evolve over time to ensure that they continue to contribute to growth in the Bay of Connections economy. The full Bay of Connections Strategy is at www.bayofconnections.com 14

MAori Economic Development Strategy 2013 Highlights STRATEGY Regional Maori economic development strategy developed. Data Maori economy situation and data analysis completed and released. HUI Four consultation hui held across the wider Bay of Plenty, along with a final engagement hui. Vision: Maori creating wealth, jobs and prosperity across the region. GOAL: Maori individuals and households in the Bay of Plenty meet or exceed the New Zealand average on key wealth and wellbeing measures by 2030 (income, employment, health, education). The Māori Economic Development Strategy, He Mauri Ohoohu, was developed during the year in partnership with Te Puni Kokiri. It is supported by the four economic development agencies: Priority One, Grow Rotorua, Enterprise Great Lake Taupō, and Toi-EDA. The strategy has been designed to align with the national strategy for Māori economic development, He kai kei aku ringa, and it is the first regional strategy of its kind in Aotearoa New Zealand. Māori are recognised as major stakeholders and contributors to economic growth in the region. The current value and future potential of the Māori economy can be seen across all Bay of Connections sector strategies, including Aquaculture, Forestry, Energy, Freight Logistics, and Sport and Recreation, particularly Rugby Sevens. Māori can make an even greater contribution to the future growth of the region, as they make up a large proportion of, and own a significant asset base across, key sectors in the wider Bay of Plenty. In addition, Māori comprise nearly half of all young people under 15 in the region. Work began on the Māori strategy in late 2012. An Advisory Group was established and led by Richard Jones and Anthony Olsen. It includes representatives from various iwi and Māori trust boards, government agencies, local and central government and business. The strategy has been developed by a collaborative team from BERL, Tahana Ltd and the University of Waikato. The strategy development consisted of a situation and data analysis, five hui across the region and stakeholder meetings. The strategy has six strategic priority areas Strategic Leadership, Collective Asset Use, Business Networks, High Value Business Growth, Capital and Investment, and Education and Skill Development. The next phase of activity will involve the development of more detailed and specific action plans, working in partnership with local iwi, Government agencies, councils, economic development agencies and key stakeholders. This is a priority area for activity in 2014. Our Strategies - Maori Eco Development 15 Photo courtesy of Rui Camilo

Sport and Recreation STRATEGY 2013 Highlights The Bay of Plenty is seen by many as a destination of choice, combining business, lifestyle and pleasure. The region s wide-ranging sports and recreational opportunities offer real potential as economic growth opportunities. To support the development of economic opportunities in the sport and recreation sector, the Rugby Sevens strategy was developed and launched earlier this year, led by the Bay of Plenty Rugby Union, and work is in progress to develop a biking strategy. This is being led by Sport Bay of Plenty, in partnership with Bay of Connections and with support and advice from local, regional and national organisations, such as Tourism NZ (TNZ). MARKETING NETWORK A Cycling and Mountain Biking Tourism Marketing Network established for the central North Island. MARKETING STRATEGY In development. BIKING Our Strategies - Sport and Recreation A Cycling and Mountain Biking Tourism Marketing Network (CMBTMN) was established this year, with the support of Bay of Connections, to promote cycling and mountain biking in the central North Island for domestic and international visitors. The category has been identified as a key special interest sector by TNZ and it is seen as an enabler for growth of inbound, high-value visitors, which has the potential to create positive and sustainable economic growth. CMBTMN is focused on the central North Island, including the wider Bay of Plenty, with a Steering Committee membership comprised of regional tourism bodies from Rotorua, Taupō and Bay of Plenty (western and eastern), Coromandel, Eastlands, Hawkes Bay, Hamilton/Waikato Tourism and Ruapehu. The CMBTMN is also supported by regional sporting bodies and Rotorua International Airport. The key proposition for cycling and mountain biking for CMBTMN lies both in the quality and diversity of cycling trails in the central North Island, and that the region has the highest concentration and variety of trails in New Zealand. The role of CMBTMN is to raise a wide awareness of the trails and to build on the central North Island s quality biking reputation, internationally and domestically. CMBTMN and its framework has developed significantly in 2013, with a joint marketing strategy to be developed in the next six months. Bay of Connections will continue to be involved during this phase of work. 16

RUGBY sevens strategy 2013 Highlights STRATEGY The Sevens Rugby strategy developed and launched in April. THREE EVENTS The Bay of Plenty won the rights to host three significant national events the National Sevens, the National Secondary School Girls Tournament and the North Island Under 15 Boys Tournament. FUNDING Funding secured to support the National Sevens Tournament. Funding secured to develop a Rugby Sevens Study Abroad programme. MEETINGS A series of international meetings to promote the Bay of Plenty Rugby Sevens development programme. After 18 months of development, the Bay of Plenty Rugby Sevens Strategy was complete in April this year. The strategy has seven focus areas. It leverages the opportunities that have been created by the growing popularity of Rugby Sevens internationally, and the introduction of the game to the 2016 and 2020 Olympics. The seven focus areas are: Event Hosting National Team Base High Performance Facilities and Training Courses Education Tourism International Opportunities Funding and Revenue through Events, Olympics and International Partnerships, Project Seed Funding Since the strategy s release there have been a number of highlights. The Bay of Plenty was awarded the National Rugby Sevens tournament in Rotorua for two years from 2014. The bid is a significant win for the region and will help cement the Bay of Plenty as the Home of Sevens a key objective of the Sevens strategy. The Bay of Plenty also secured the National Secondary School Girls Tournament and the North Island Under 15 Boys Tournament, both to be held in Mt Maunganui. Bay of Plenty Rugby (BOPRU) has completed an extensive upgrade of its training facilities, with All Blacks management electing to hold their first training camps of 2013 at Mt Maunganui. This reinforced the region s reputation for quality facilities and locations. The national mens Sevens team continue to use the Bay of Plenty as its preferred base, raising the profile of the region s programmes and facilities. Members of BOPRU have met with key Rugby Sevens stakeholders internationally, leveraging significant international events such as the Hong Kong Sevens and a university tournament in Paris. BOPRU has also been invited to Sevens tournaments in Shanghai and Brisbane, which provide opportunities to engage with international stakeholders and promote the Rugby Sevens programme. Other successful engagements have included BOPRU coaches being based at Penn State University in the United States for six weeks, and the coaching of the Cook Islands Sevens team through a tournament in Fiji. This resulted in their qualification both for the Hong Kong Sevens tournament, and for next year s Commonwealth Games. Work is in progress to with the Bay of Plenty s Sister City relationships for Rugby Sevens, particularly in Asian countries. BOPRU will participate in a Tauranga City Council visit to Yantai in early 2014 to promote Sevens coaching, training and education. In November, Bay of Plenty Polytechnic and the BOPRU secured funding from Education New Zealand to develop a Rugby Sevens Study Abroad programme targeted at college students in the United States. The programme will enable US College students to complete a semester of study at Bay of Plenty Polytechnic in courses that can be credited back to their US degree. This will connect the region s education and sports strategies and will provide both economic and social benefits for the Bay. Our Strategies - Rugby Seven 17

AQUACULTURE STRATEGY 2013 Highlights Research Report The public release of the Freshwater Aquaculture Opportunities in the Bay of Plenty research report, undertaken by the University of Waikato. SUPPORT Support for Opotiki Harbour Transformation Project s successful bid for the Regional Infrastructure Fund. MUSSEL FARM Continued progress of the development of an offshore mussel farm at Opotiki and continued success with early trials. DISCUSSIONS Meeting with Deputy Prime Minister/Finance Minister, including discussion on regional aquaculture opportunities. SUBMISSIONS Submissions developed for Bay of Plenty Regional Council draft Regional Coastal Environment Plan, Ministry of Primary Industries Freshwater Reforms 2013 and Beyond and Review of Land-Based Freshwater Aquaculture Developments. TRIALS Ongoing geoduck, sea cucumber and flat oyster trials in the Bay of Plenty. Our Strategies - Aquaculture Vision: Bay of Plenty is a world-class Aquaculture region. GOAL: To grow an integrated and sustainable aquaculture industry in the Bay of Plenty with export sales of $250 million by 2025. An updated three year Action Plan which was released in March. The four focus areas for the next three years are: Leadership through collaboration and communication with all stakeholders (including Government, iwi, industry and other regions) to enable and advocate for aquaculture New opportunities in aquaculture, including new species, new technology and the use of geothermal energy sources for land-based aquaculture Marine Science, Technology, Education and Training Infrastructure support for Marine and Aquaculture Industries. The Regional Aquaculture Organisation (RAO) continues to be an influential representative and lobby group. It is sought after for input and feedback into local, regional and national aquaculture policy and regulatory processes. The Group s activities and influence have had an impact on the development of the local aquaculture industry, as well as developments on a national level. The RAO has members from industry, iwi, local and Central Government and government agencies, from the Bay of Plenty and across the country. The group meets two-monthly, chaired by Australasian aquaculture expert Graeme Coates. A key focus in the past 12 months has been to ensure that significant freshwater opportunities and the current regulatory and perception barriers to these opportunities remain on the agenda both at a local and national level. These include commercial farming of trout and tuna (eel). While changes and developments in this area will be gradual, the RAO considers that the potential benefits are large, and worth pursuing. Another key focus of the RAO during the year was support for the Ōpōtiki Harbour development and Eastern Sea Farms project. The benefits to the economy could be up to $55 million GDP, and up to 450 full time equivalent jobs, while the benefit to cost ratio has been calculated at $7.30 benefits for every $1 invested in the harbour. Realising this project is therefore important for Ōpōtiki and the region. The proposed Opotiki mussel farm remains a cornerstone initiative towards achieving the export sales goal of $250 million. The project received a significant boost by the award of $18 Million from the Regional Infrastructure Fund toward the construction of an all-weather harbour to service the farm, and also the many other marine commercial and recreational activities that will be enabled by the harbour. RAO is currently supporting an initiative to place full-time marine research capacity in the Eastern Bay to service the advanced trials on the marine farm and also other high-potential commercial opportunities. 18

Forestry Freight and Wood Logistics Processing Strategy Strategy 2013 Highlights TRADE DELEGATION Local forestry industry representation on Prime Minister s trade delegation to China. RESEARCH Research presentation from University of Auckland Faculty of Engineering staff on New Zealand and international timber standards. JOINT MEeTING Joint meeting with Freight Logistics Action Group focusing on cargo handling innovations relating to forestry and wood products, shipping trends and industry health and safety. MEETINGS Six meetings in 2013 at Kawerau, Rotorua, Tauranga (joint Freight meeting). SUBMISSION Submission to Bay of Plenty Regional Council Annual Plan. Tuhoe s Living Building Presentation on Tuhoe s Living Building at Taneatua a feature wooden building and example of community development. Vision: A world-class Forestry and Wood Processing region. GOAL: By 2020 we will be adding value to over 70% of the logs harvested in the region. A key theme to the work of the Forestry and Wood Processing Action Group (FWAG) this year has been connection and consolidation with the local and regional forestry industry, as well as with relevant national organisations, including Central Government. Chaired by Rotorua-based forestry consultant Bryce Heard, and co-ordinated by sector expert John Galbraith, the group maintains a healthy and active membership and meets every two months in key sector locations around the region. Following on from last year, FWAG has continued to provide leadership in facilitating industry discussions about proposed developments, and continues to work with industry organisations and Government agencies to identify and leverage new markets. A key aspect has been development of a co-ordinated approach to raise the profile of the scope, scale and strength of the sector in the wider Bay of Plenty, including iwi ownership and opportunities, sawmill capacity and future use, such as by-products for emerging technologies like bio-fuels and bio-chemicals. A key emphasis in 2013 has been an in-depth look at the opportunities and barriers in the China market, culminating in representation on the Prime Minister s trade mission to that country in April. Extensive follow-up discussion has taken place in a range of forums since this trade visit to explore further opportunities, including potential regional trade agreements, to cement and grow the wood products relationship with China. A key presentation at the September Wood Summit has reinforced the challenges the industry faces in trying to compete in these markets. A key development in 2013 has been the establishment of four sub-groups to specifically focus attention and activity, and to deliver real impact both to the sector and to local communities and economies. The development of these four sub-groups is a clear reflection of the discussions and themes that have emerged and continued to evolve since the strategy was launched in 2011. These are: Timber Standards Utility Log Processing Research Iwi Forestry/Processing Interests FWAG works closely with the Economic Development Agencies across the region, particularly with Grow Rotorua, Enterprise Great Lake Taupō, and Kawerau District Council, which has its own forestry growth objectives. A core focus in 2014 will be to ensure that the Bay of Connections strategy and networks add value to these different work streams, while ensuring ongoing integration with the Bay of Connections strategy. Our Strategies - Forestry 19

Freight Logistics Strategy 2013 Highlights data-sharing project Expansion of the datasharing project to include fuel and log transport; the project originally included dairy, kiwifruit and wood products. Meetings with Ministry of Transport and New Zealand Transport Agency on datasharing project. regional careers Development of regional careers branding and highprofile presence at Tauranga Rotary Careers Expo and Priority One FutureFocus. SUBMISSIONS Submissions to Bay of Plenty Regional Council s Annual Plan and SmartGrowth Strategy review. Tertiary Review Members appointed to contribute to Tertiary Review of freight logistics qualification. WORKSHOP Representation at Intelligent Transports Systems Technology Workshop. Our Strategies - Logistics Vision: World-class Freight Logistics. GOAL: Lift New Zealand s ranking in Logistics Performance. The Freight Logistics Action Group (FLAG) continues to be one of the most active and advanced strategies in the Bay of Connections portfolio. This is particularly significant given the highly competitive nature of the industry in New Zealand, as the Group s real success comes from the high level of collaboration and information-sharing amongst the members and their organisations. The group is chaired by industry lawyer John Gordon, supported by freight logistics specialist John Galbraith. There are four sub-groups: Workforce and Skills Technology Health, Safety and the Environment Infrastructure As noted earlier in this report, the Bay of Plenty, Waikato and Auckland form a key triangle of growing influence. This is demonstrated by freight movements between the three regions representing more than half of all national freight movements. A large component is the Port of Tauranga operation, which plays a key role in primary sector growth and success across the region. FLAG identifies the Port as the key infrastructure asset in the wider Bay of Plenty. It is therefore interested in identifying and advancing projects that will add value and efficiencies to the Port operation, which will then filter down to the wider industry. In 2013 the Group set its key objective for the year: to drive significant logistics efficiency gains across the industry with an expected positive impact, not just on the freight logistics sector, but in wider industries across the Bay of Plenty. Subsequent projects to support this have included a focus on increasing the delivery hours to the Port (through off-port collaboration and organisation), promoting the better use of available technologies such as GPS and data sharing, and the increased use of High Productivity Motor Vehicles (large trucks) to reduce congestion on main Port routes. Other focus areas in 2013 have included health and safety, with analysis of local and national statistics, sharing best practice operations and national policy changes and potential legal impacts for members of the industry. A presentation by freight logistics law specialists Sharp Tudhope highlighted potential issues for the freight logistics sector, on the back of recent high profile cases such as Pike River. Another focus during the year was education and postioning of freight logistics as a rewarding and attractive career pathway. The project was initiated in the Workforce and Skills subgroup, and resulted from an increasingly urgent need to attract new experienced, inexperienced and trained workers into the industry for a range of different roles and pathways. This led to the branding tagline the best career you have never heard of and a high profile presence at the Western Bay of Plenty Careers Expo Priority One FutureFocus 2013. 20

Forestry Freight and ENERGY Wood Logistics Processing STRATEGY Strategy Strategy 2013 Highlights FUNDING Support for joint Scion and GNS funding proposal for utilizing geothermal and biomass resources for industry. Norske Skog secured significant government funding to investigate the production of transport biofuels from wood. RESEARCH Engagement research completed in 50 homes across Western Bay of Plenty, with 90% of those surveyed making energy improvement changes in their homes. ONGOING PROJECT Ongoing home engagement programme implemented with 500 assessments completed. EDAs Ongoing work with EDAs, such as Grow Rotorua, about identifying and developing energy opportunities. IWI GROUPS Ongoing support and advice for iwi groups about energy investment and development. PRESENTATION Key presentation at Geothermal Maori Symposia in June. Vision: Wealth and wellbeing via energy. GOAL: By 2030, the wider Bay of Plenty has additional energy investments of $3 billion and 13,000 new jobs. The Energy covers energy use, the use of natural resources to underpin investment, energy supply, and economic growth arising from those investments. It was launched in late 2011, and is chaired by the Governance Group s Anthony Olsen with advice from industry expert Brian Cox. As the richest region in the country for natural resources (solar, biomass and geothermal) available for investment the Action Plan provides a framework for stakeholders to pursue specific opportunities. For example, Scion s WoodScape project carried out during the year provides an investment framework for the wood processing sector on how they can gain additional value from wood including the production of transport biofuels and bio-chemical co-products. These opportunities are now being pursued by Norske Skog who secured $6.75million of Government co-funding to investigate how they can produce transport biofuels using their existing assets and skilled capabilities. The Kawerau Symbiosis Project and work initiated by Grow Rotorua throughout the year are both providing an investment platform on which the region can develop profitable businesses based on emerging bio technologies. While energy plays a critical role in development of such projects, it is the energy products that will be in demand as New Zealand moves into a post petroleum era. Grow Rotorua has been investigating a geothermal based district heating scheme and a joint project using geothermal for heating the offices of the District Council, RSA and Police. This demonstrates the benefits of clustered use. A key energy use project undertaken during the year was a coalface research project which involved working with residents in 50 homes across the Western Bay of Plenty, to analyse existing energy use and make recommendations for areas of improvement. Funded by EECA, and carried out by Social Ecology, the research aimed to prove that by working with people in their own homes, with their own appliances and chattels, a greater level of change in energy use would be achieved. The research was successful, with 90 per cent of those involved making some level of change. In some cases the level of change was significant, including the purchase of new energy efficient appliances such as fridges and heat pumps, wrapping hot water cylinders, installation of solar water heating and changing shower heads. In early 2014 the strategy is set to be updated. It will be further refined and focused so that the Energy Action Group is able to facilitate additional value both to those who are actively involved in the sector, and those who stand to benefit for growth and investment in energy including household consumers who use energy every day. Our Strategies - Energy 21

Notes 22

BAY OF CONNECTIONS PARTNERS GOVERNANCE GROUP MANAGEMENT GROUP SECTOR GROUPS 3 Business 4 Economic development 2 Maori business 1 Local government Bay of Plenty Regional Council 4 Economic development agencies 1 New Zealand Trade & Enterprise Aquaculture Energy Forestry Freight Logistics Sport & Recreation Biking Rugby Sevens Maori EASTERN BAY OF PLENTY ROTORUA TAUPO WESTERN BAY OF PLENTY TOI-EDA Sub-Regional Economic Development Agency Supporting and developing key industry sectors Attracting people to live, work and play in the Eastern Bay A valued and creditable resource to the region Education & skills Networked economy PARTNERS Bay of Plenty Regional Council COBOP CONNECT Eastern Bay Chamber of Commerce Export NZ Bay of Plenty Horticulture cluster Kawerau District Council Kawerau Enterprise Agency Kawerau Industrial Symbiosis Mataatua Assembly Motu Trails Charitable Trust Ngati Tuwharetoa NZ Trade and Enterprise Opotiki District Council Opotiki Marine Advisory Group Sustainable Business Network Te Puni Kokiri Te Runanga o Ngati Awa Te Wananga o Awanuiarangi Tourism cluster Whakatane District Council PARTNERS Accident Compensation Corporation Bay of Plenty District Health Board Bay of Plenty Regional Council Careers New Zealand Department of Child, Youth and Family Department of Conservation PARTNERS Bay of Plenty Polytechnic Bay of Plenty Regional Council Eastern Bay of Plenty Chamber of Commerce EMA Northern Export NZ - Bay of Plenty Rotorua Sustainable Economic Growth Strategy Sub-Regional Economic Growth Strategy Lift the reputation of Rotorua as a leader in the forest industry, tourism, geothermal and agricultural sectors to ensure Rotorua is recognised as: - Preferred lifestyle destination - An attractive and easy place to invest and do business, and - A district with an enabling regulatory environment PARTNERS Bay of Plenty & Waikato Regional Councils Export NZ Bay of Plenty Grow Rotorua Ltd (Rotorua Economic Development Agency) Iwi, including but not limited to: Pukeroa Oruawhata Trust, Ngati Whakaue commercial entities, Te Arawa Lakes Trust, Te Arawa Group Holdings Ltd, Federation of Maori Authorities, Te Pumautanga o Te Arawa Trust and other relevant Te Arawa entities Relevant Government departments Rotorua business community with a particular focus on the following sectors: - Forest Industry - Tourism - Geothermal - Agriculture Rotorua Chamber of Commerce Rotorua District Council Rotorua Tourism committee Scion and other relevant science, research & development entities Sustainable Business Network Te Puni Kokiri The councils, economic development agencies and relevant planning agencies of the upper North Island of NZ Waiariki institute of Technology and other relevant education and workplace skills providers ENTERPRISE GREAT LAKE TAUPO Taupo Economic Development Agency Support existing businesses Attract or create new businesses Create jobs PARTNERS Agriculture and Aquaculture industry CRI s GNS Science and Scion Department of Conservation Destination Great Lake Taupo EDA s and District Councils Energy industry Entrepreneurs and Investors Events Capital Export NZ Bay of Plenty Forestry and Wood processing industry Lake Taupo Arts Festival Trust (Erupt Events) Maori - Iwi, hapu & land trusts Ministry for Foreign Affairs and Trade Ministry of Primary Industries National Government NZ Trade and Enterprise Regional Councils Bay of Plenty and Waikato Sustainable Business Network Taupo Chamber of Commerce Taupo District Council Tertiary providers Waiariki, Waikato Uni Tourism Industry Town Centre Taupo COBOP (Collaboration Bay of Plenty) - Local and Central Government Department of Corrections Department of Inland Revenue Department of Internal Affairs Family & Community Services Housing NZ Corporation Kawerau District Council Lakes District Health Board Ministry for Primary Industries Ministry of Business, Innovation and Employment Ministry of Education Ministry of Health Ministry of Justice Ministry of Social Development Ministry of Youth Development NZ Fire Service NZ Police NZ Trade and Enterprise NZ Transport Agency Opotiki District Council CONNECT - Enterprise development focused agencies Grow Rotorua Institute of Directors - Bay of Plenty Kawerau Enterprise Agency Maori Business Network Ministry of Business, Innovation and Employment: Science and Innovation Group SMART ECONOMY Sub-Regional Economic Development Strategy Innovation & entrepreneurship Lifestyle Business environment Education & skills Networked economy PARTNERS Ag/Hort sector Bay of Plenty Polytechnic Bay of Plenty Regional Council COBOP CONNECT Creative Tauranga EMA Export NZ Bay of Plenty Katch Katikati Ministry of Business, Innovation & Employment Ministry of Social Development NZ Trade & Enterprise Priority One SmartGrowth Sustainable Business Network Tauranga Chamber of Commerce Tauranga City Council Te Puke Economic Development Group Te Puni Kokiri Tertiary Education Commission Tertiary Partnership Tourism Bay of Plenty Western Bay of Plenty Tertiary Providers Western Bay of Plenty District Council Rotorua District Council Taupo District Council Tauranga City Council Te Puni Kokiri Tertiary Education Commission Western Bay of Plenty District Council Whakatane District Council Work and Income NZ Ministry of Social Development Te Puni Kokiri NZ Trade and Enterprise Toi-EDA Priority One Tourism Bay of Plenty Rotorua Chamber of Commerce Waiariki Institute of Techology Rotorua District Council Western Bay of Plenty Sustainable Business Network District Council Tauranga Chamber of Commerce

Bay of Plenty - a world-class region One Region. One Goal. One Future. Bay of Connections ANNUAL REPORT december 2013 www.bayofconnections.com