“the London-based Canterbury Association envisioned Christchurch as an English utopia in the South Pacific. They planned an orderly, tiered society (the first settlers had to brandish a reference from an English vicar attesting to their ‘sobriety and respectability’), with an aristocracy and the Church of England as its head and an underclass of artisans and minions to serve them. They named their fledgling city after an Oxford college (Christ Church) and laid it out like an English city, complete with a Cathedral, University and a boy’s school, Christ’s College, modelled on Eton”.

170 years later it’s been challenged by natural forces and has come off second best: down but not quite out. The CBD has seen between 25-30% of building completely destroyed and another 25-30% seriously damaged. The Eastern districts, long known to be built on land of dubious quality, are in serious distress. How does a city recover from this type of disaster?

Well the first thing to remember is that cities have been completely leveled before and have been rebuilt. Lisbon is a fine example of this. On November 1st  1755 an earthquake and tsunami pretty much flattened the city killing tens of thousands and causing damage that reverberated Europe wide. The people of Lisbon responded in an incredible fashion. Wasting no time

“On December 4, 1755, little more than a month after the earthquake, Manuel da Maia, chief engineer to the realm, presented his plans for the re-building of Lisbon. Maia presented five options from abandoning Lisbon to building a completely new city. The first plan was to rebuild the old city using re-cycled materials; this was the cheapest option. The second and third plans proposed widening certain streets. The fourth option boldly proposed razing the entire Baixa quarter and “laying out new streets without restraint”. This last option was chosen by the king and his minister.^[13]“

I would like to consider option 4: razing the entire city and starting again.

Why don’t we demolish the whole CBD and start again, create another utopian vision, this time for a sustainable city: a living breathing system with an integrated energy grid, hi technology buildings in an urban landscape designed for people, creativity and innovation. Of course we could repair and keep our finest historical buildings: the Arts Centre, the Cathedral, the Museum, Christ’s College and any others of a similar standing. There may be some key sites we will have to rebuild but let’s get real: many buildings in Christchurch are/were a complete eyesore; many streets are not that exciting to walk down (for example Colombo Street); many tired shops with very average retail offerings. Many will not be missed and as the most over shopped city in the universe, we can surely survive the loss of many of these. The key challenge will be in how we managed our old heritage with our future one.

So let’s dream a little, not so much as think big but dream big. This is a chance for a new beginning just as it was 170 years ago. We have the opportunity to shape a new future, to create a world leading city and environment, to lead the way and to create new jobs in a hi technology based ecosystem. Our CBD could be smaller and nestled into and around Hagley Park. We simply need better, smarter and healthier buildings, not bigger ones.

I’m going to share some design thoughts just to give people a taste of what dreams can generate, what imagination can create. We want to create something amazing out of this…to somehow make those we have lost proud of what we chose to attempt, to make good out of bad.

Start dreaming now. Lisbon managed it in 1755. I’m sure we can.

- Tax Reform: The perennial favourite, Capital Gains Tax, made some waves as did some more detailed examination of a possible Land Tax. This initially popped up 18 months ago as a floated idea and more recently was discussed at length over at Interest.co.nz.  The session on Tax Reform was sponsored by the Treasury so expect more debate on this in the near future.

- Aid and Development: There were a few papers on corruption and developmental outcomes which were worth following (though I haven’t seen anything to rival Paul Collier’s work). I especially enjoyed a paper on whether aid was helping to achieve the Millenium Development Goals. To me it was clear that whilst aid can make some contribution, targeted p2p actions such as microfinance and giving are more likely to have a lasting impact as they tunnel through the swathe of government and administration on both ends of the aid pipleline. Message to Government: Let people do the giving.

- Business and Innovation: It’s good to see economists looking at this topic since it’s of major importance to NZ. Again lack of capital and R+D incentives for business was a clear problem. We simply can’t compete with countries like Finland or Israel when all our capital is tied up in housing.

- Health: One good paper on “fat” taxes or food “subsidies”. It simply reinforced my position of taking a supply side approach. It’s hard to influence demand through pricing strategies when the underlying commodity (food) is experiencing huge swings in price. As with oil and carbon taxes, the prices movements in food prices will overwhelm any attempt to reduce demand by taking away GST for example (12.5%). Perhaps incentives like gift vouchers/cash in savings accounts will help focus (a bit like the idea to pay girls an annual stipend for each year they don’t get pregnant). We have to get our future health costs down somehow and creative solutions may be required. Time to call in the behavioral psychologists methinks.

- The Financial Crisis: Nice paper looking back at financial collapses over the last 200 years. Yes they happen with regularity…..whoa…yes we know that. The cycle goes back as far as records allow. Even the Bank of England was not immune from overstretching itself… a run on the Central Bank itself. Ooops. So my simple question is: When are we going to change the system?

Overall it was a good conference and a lot came out of it. For next year I can see more focus on the impact of microfinance and p2p activities, more focus on tax reform, more focus on the debt based financial system and hopefully we will have some more ideas to contribute ourselves.

Also good to see someone with a laptop on the go! Surely a first for the NZAE.

It’s great to have two companies to compare and contrast.

Kiva is more personal. I choose who I want to lend to and can received feedback and updated information on how the borrower is getting on. This is really important as it builds a web of social capital.

With Microplace you are buying a package of loans and so you don’t have that personal contact. Also there is the issue of return. I think it’s good you can get a return on your loan as long as it does not influence the rate being paid by the eventual borrower.

So you could actually lend to the same borrower through either Kiva or Microplace but somehow Microplace can get you a small return on your money. I’ll be digging further to see how they do this.  So far they have been very helpful and open.

In a way the securitisation approach is not much different from mortgage backed securities where people invest in a package of mortgages. Of course we all know what’s happened with those. However i would stress this is completely different in that all the loans are unsecured anyway. It’s also important to note that default rates on microfinance are a mere 1-3%.

When we cut out the banks and go direct we enable relationships of trust to be built. This allows the traditional aspects of social relationships to take place. No one cares if you default to the bank but to default to other people can bring personal shame and other social fallout.

These 2 companies are blazing a trail for the rest of the finance industry. P2P finance could well be the next big thing.