Regrettably, we don’t have enough to pay our state retirement system or our $40 billion of unfunded liabilities. We can’t fix our airports or roads, we can’t finish rail without regressive tax increases and we can’t replace the funding the late U.S. Sen. Dan Inouye brought in.
Tourism or not, we don’t have enough money to grow our economy or build our infrastructure. The odd thing is that we also turn away billions in offshore investments, an extravagance we can hardly afford. Our kids can’t find jobs or housing, but we reject deals that could help them. How rational is this?
Most recently we’ve been breaking our promise on the Thirty Meter Telescope. TMT followed the law and we issued the permit, but we have now stopped them from building. This abrogates the rule of law. The billions that would flow into our economy are held up, and more billions are being scared away.
The neighbor islands send cruise ships and wind farms packing. We tell the Superferry (which should have been a state project in the first place) that they can take a bath for $200 million. No ferry, no jobs, no winners there. Sen. Michelle Kidani (D, Mililani Town-Waikele-Royal Kunia) is seeking a study for another ferry, but don’t hold your breath.
After years of criticizing Hawaiian Electric Industries, now we are criticizing NextEra, a successful utility that would spend $4.3 billion to buy HEI. And we’re letting 29 intervenors do document requests against Hawaiian Electric and NextEra in an 18-month proceeding. Will NextEra hang around?
Not all offshore investors are ideal. Real estate investment trusts come to Hawaii, invest billions in land, raise ground rents on small businesses and send coupon clip returns back home without supporting the community. Sure, we can sell high-end condos to offshore investor-buyers. Just as in the Japanese bubble of the 1980s, that helps the sellers but not the economy, and makes housing for local people that much more expensive.
We need data to know where we stand on these investments. It’s hard to make sense of random reports. We publish data on tourism, but why don’t we publish data on offshore investments: Who are the investors and what are they buying?
Our tech and science companies sputter for lack of capital and incentives. We discuss priorities, but we have only emergencies, not the least of which are the coming storms of climate change and shortages of fuel, food and water. Do we have a plan to raise investment for strategic initiatives?
Instead, we have stalled projects in agriculture, astronomy, aquaculture, energy, housing and transportation, making our reluctance clear to the world. How many other investors have learned of this and stayed away? The losses are incalculable.
To mend fences, we need to show investors that it’s safe to invest here. If the Hawaii Tourism Authority can pitch Hawaii to millions of tourists, perhaps the Department of Business, Economic Development & Tourism can pitch Hawaii to a few offshore investors. That didn’t happen in the last two administrations, but maybe it can happen now.
But we have to go beyond the romance of the pitch; we need to commit money to economic incentives. We resist that and swing instead from political contributions to activist demands.
To achieve win-win relationships with our offshore investors, we need to manage them all the way through.
For regulated industries, regulators can impose conditions on ownership changes.
All agencies — legislative, regulatory, executive and judicial — must then manage the resulting business reasonably. We can’t change midcourse as we did in the Act 221 technology tax credits. We can’t give gubernatorial advice, then sink the company that takes it, as in the Superferry. We can’t grant permits, then suspend them, as in the TMT. Let’s be a haven, not a trap, for offshore investors.
It’s harder to manage unregulated businesses. But we could do friendly jawboning to make offshore investors into good citizens who support our people, culture and environment. This jawboning could be by the leaders of industry, government, community and the media. That could provide huge benefits, assuming we want investment in the first place.
Jay Fidell, a business lawyer, founded ThinkTech Hawaii, a digital media company that reports on Hawaii’s tech and energy sectors of the economy. Reach him at fidell@lava.net.
