Thursday, April 20, 2017

Auckland facing Hobson’s Choice: Expansion or Implosion?


Choosing Auckland
In 1840, the first New Zealand Governor, William Hobson, sailed into Waitemata Harbour and chose Auckland as the country’s new capital.  The harbour offered ease of embarkation and disembarkation.  Fertile coastal lands meant that settlers could grow food crops, and the local tribe, Ngati Whatua, welcomed the promise of protection and trade that European settlement offered.

Auckland’s early fortunes fluctuated.  The city could only be reached by sea from other parts of New Zealand.  It was on an isthmus divided by two harbours, crossed by flood-prone creeks and peppered with swamps.  In addition, tribes to the south resisted the sale and alienation of their fertile Waikato lands, stalling expansion of European settlement until the late 1860s. 

The emergence of New Zealand’s first city
Auckland survived, though, even when New Zealand’s administrative capital was moved to Wellington, 600km south, in 1865.  Rivers were bridged, wetlands drained, waterfronts reclaimed, and a railway pushed into the fertile Waikato region and beyond. 

The city prospered in the 20th Century, dominating the import and distribution of manufactured goods and exporting regional produce.  Consequently, it developed a substantial import-substitution manufacturing sector, boosted by the protectionist policies introduced in the 1930s. 

When the economy was deregulated, starting in the late 1970s,  manufacturing’s role contracted.  However, its presence and the city’s trading heritage set Auckland up as the primary service centre in New Zealand, providing business, professional, trade, and financial services to production usually based beyond its boundaries, and catering to the needs of a steadily growing population.

Primacy in the 21st century
The cumulative advantages of scale served Auckland well.  Although still a small city globally (347th on the UN Population Division’s 2015 city size listing), it accounts for 32% of New Zealand’s population and 34% of its employment. This primacy reflects the importance of consolidating human resources in a small country (New Zealand’s population is 4.8 million, less than Sydney it’s 5 million, 2,000km across the Tasman Sea) and the low density of settlement over the rest of the country.

Auckland remains New Zealand’s centre of disembarkation.  Even as increasing numbers of residents decamp for hinterland towns and smaller cities, New Zealanders returning from overseas, new migrants, and international students tend to make Auckland their first stop (Figure 1) so that the city accounted for 50% of the nation’s population growth over the five years to 2016, a period of exceptional migration gains.



Figure 1: Net Long-Term Migration, Auckland and the Rest of New Zealand, 1991-2016

Reaching choke point?

Today Hobson’s site seems unsuited for a city of even 1.5million, let alone the 2+ million projected for the not-too-distant future.  Physical constraints have put the squeeze on housing and transport.  Ageing underground infrastructure struggles to cope.  The city may be approaching – or have already exceeded –Tamaki Makarau’s carrying capacity.  That, though, is not something that Auckland Council seems ready to contemplate.

Unfortunately, an obtuse planning response to the challenge of growth is set to squander the human and physical capital already invested in the city, and to mar its natural qualities.  A plan preoccupied with boosting employment and housing in a confined CBD and to promote increasingly intensive development on the Isthmus looks set to throttle growth. 

Externalities abounding
The outcome for Auckland of a strategy of consolidation and centralisation in is already apparent:

·         Under-capacity public and private transport services and a lack of redundancy in the networks lead to frequent stoppages on road and rail throughout the city, compounding already excessive congestion;

·         Restrictive land use policies create a hopeless backlog of housing demand with severe economic and social impacts (see, for example, the presentation of economic commentator Shamubeel Eaqub in Joel Cayford’s Reflections on Auckland Planning);

·         Increasing costs to business – the costs of employment, congestion, business disruption, and even space for growth raise the spectre of slowing investment, diminishing productivity, and income growth;

·         Grossly inflated land prices feed into high housing costs, distorting the supply chain and generating a new middle-underclass, defined more by frustrated housing aspirations than by educational or family shortcomings;

·         Failures in water, sewage, and stormwater systems threaten the health of the harbours and estuaries which give Auckland its character;

·         A growing likelihood that significant natural events (such as intense low pressure storms) will increasingly bring a congested city, its critical services, and its centre to a halt.

It’s the geography, Stupid
The response to the challenge of growth in this environment has been to promote increasing densities in the central city and, latterly, in the inner suburbs, a strategy that is deeply flawed for this city, something I have laboured in earlier postings (e.g., here and here). 

This strategy, flies in the face of Auckland’s geography and the natural constraints it imposes.  It raises the prospect of fiscal failure because it requires high cost works with limited if any productivity gains while compounding depreciation, maintenance, capital servicing, and subsidy costs.  The city will be hard placed to meet its financial commitments if the current crisis of growth accelerates, further lifting ratepayer costs and reducing the affordability of Auckland to nosiness and households alike.  And any slowdown would only compound the city’s fiscal miseries.

Hobson’s choice
So now we are faced with our own Hobson’s choice (Thomas’ not William’s): the city has little option but to find ways to expand.  It is time to embrace new approaches to land and its use in the region, how and where it is developed, and how it is connected.

Given that Auckland Council seems hell-bent on promoting consolidation on a site ill-suited to it and in a culture in which it will work only for a few, this will only happen with a dramatic shift in thinking.  That might come if Government moves quickly to embrace the proposals for revamping urban planning through the rewrite of the Resource Management Act and shake up of the planning establishment proposed by the Productivity Commission The choices for Auckland are narrowing.