Calling for a fundamental shift away from land development as Hawai'i's core economic engine, Gov. Linda Lingle yesterday sketched a new vision for the state, asking lawmakers to work with her to restructure the economy toward innovation, human development and a stronger role as a broker between East and West.

In her inaugural address at the state Capitol Rotunda after being sworn in for a second four-year term, Lingle described that shift as the state's greatest challenge in the coming years.

"Continuing to base our economy and our future on land development is foolhardy because land is finite, and because land often causes deep rifts in our island community, a community that depends so heavily on harmony among our people," she said.

"These rifts will become more frequent and intense over time as the amount of developable land diminishes."

Land has been the source of wealth and power in Hawai'i throughout its history, but concerns about sustainability have become more frequent as people grow frustrated with traffic, housing costs and encroaching urbanization.

Lingle said she would speak in greater detail about the economic shift at her State of the State speech in January but said it would likely involve promoting new ideas in renewable energy, agriculture, the environment and ocean resources.

"We will never catch today's global economic waves by developing our land," Lingle said. "Instead, we need to begin focusing on human development — the kind of development that recognizes our economic success in the future depends upon innovation and new ideas, of which there is an unlimited supply."

Lingle's advisers said afterward that the governor's plans would be bold and would help the state build a workforce and new technology to compete in the growing Asia-Pacific region.

DEMOCRATS REACT

Democratic leaders in the state Legislature who attended the inauguration said they are interested in hearing more details from Lingle. Many said it was surprising to hear a Republican governor speak critically about land development or about the need for government to help restructure the economy.

"It floored me," said state House Speaker Calvin Say, D-20th (St. Louis Heights, Palolo, Wilhelmina Rise), who has said he would try to work cooperatively with Lingle next session.

State House Majority Leader Kirk Caldwell, D-24th (Manoa), said lawmakers want to promote innovation and new technology, but he said Lingle might be overreaching in her remarks about the economy. "I question whether government should be in the business of restructuring the economy," he said.

State Senate President Colleen Hanabusa, D-21st (Nanakuli, Makaha), said lawmakers also want the state to be more competitive in Asia and other regions but do not want to lose sight of local needs. "I think what she said was fine, but the concern I have is that we have needs within the state," she said.

Some conservative Republicans said Lingle's comments on the economy appeared contrary to free-market principles. Her choice not to devote more time in her speech to themes such as tax relief or deregulation may also further disappoint conservatives who have been stewing privately about her direction.

"If we were looking at a vision, it was a cloudy vision," said state Sen. Sam Slom, R-8th (Kahala, Hawai'i Kai).

Lingle has said that tax relief and deregulation would be among her priorities in a second term, and the governor will likely be more specific about her policy agenda over the next several weeks leading up to the State of the State speech.

Linda Smith, Lingle's senior policy adviser, said the governor would stress the development of human capital. "We see it as the government being the catalyst for bringing out the capabilities of our people," she said.

Lingle's speech was the high point in a day of celebration for her second term. Lingle, the first Republican governor in four decades when she first won in 2002, is also the first Republican governor re-elected. Her wide margin of victory in November and her high job-approval ratings give her some leverage with majority Democrats.

Her own strong showing alongside gains made by Democrats in other races suggests the voters produced a mandate for her and the Legislature to work together, Lingle said.

FOCUS ON FAMILY

Lt. Gov. James "Duke" Aiona, who was sworn in after Lingle, said he would spend much of the second term developing public policy that strengthens families. "The vitality and the integrity of a community is dependent upon the character of its people, rather than the form of its government," Aiona said.

Lingle, dressed in a beige jacket and black skirt with a single red lei around her neck, was greeted with a hug and kiss from her father, Richard Cutter, and stepmother, Mary, near the King Kamehameha statue in front of the state Judiciary complex. The Royal Order of Kamehameha and students from Hakipu'u Learning Center and Anuenue School joined Lingle and Aiona in paying respects at the statue, at 'Iolani Palace and at the Queen Lili'uokalani statue near the Capitol.

State Supreme Court Chief Justice Ronald Moon administered the oath of office to Lingle, which was followed by a 19-gun cannon salute. Moon also administered the oath to Aiona. Four Army CH-47 Chinook helicopters flew over the Capitol Rotunda after the inauguration while plumeria blossoms from Maui were dropped down on the Rotunda from Capitol balconies.

A luncheon was held for Neighbor Island guests at Washington Place, and dinner and entertainment were staged on the grounds at 'Iolani Palace.

Lingle's challenge to shift the state's economy away from land development could become a major policy debate, but other parts of her speech were more personal, even sentimental, about Hawai'i, a slight departure for someone who has been criticized for being too stiff and rehearsed.

The governor talked about surfing and rubber slippers and eating sashimi and pounding mochi on New Year's Day. She said people are just as comfortable celebrating the Filipino Centennial, King Kamehameha Day and the Chinese New Year as commemorating the Fourth of July or Veterans Day.

And she talked about her first impressions when she arrived here from the Mainland more than 30 years ago. "The view, although magnificent, was a superficial one that allowed me to see and smell the beauty of Hawai'i but not yet feel the deeper beauty of a place unlike any other that would only be revealed to me over time," she said.

Reach Derrick DePledge at ddepledge@honoluluadvertiser.com.