tag:blogger.com,1999:blog-70116552320931636422024-02-23T07:56:40.585+13:00Cities MatterEvidence-based commentary on urban developmentPhil McDermotthttp://www.blogger.com/profile/06869744647213369964noreply@blogger.comBlogger141125tag:blogger.com,1999:blog-7011655232093163642.post-16610306139944477192022-06-09T19:07:00.005+12:002022-06-13T16:05:53.849+12:00Auckland at a Turning Point 2: Marking Down the Labour Market<p><span style="font-size: large;"> </span><b><span style="font-size: large;">Reality Bites</span></b></p>
<p class="MsoNormal"><span style="font-size: large;"><span>For some years I have been calling out the over-exuberant
growth expectations behind Auckland’s planning. I have also argued that creating a single council to pursue a compact city strategy was wrong. First, the supercity structure was always going to increase the cost of local government while diminishing its responsiveness to the increasing diversity of communities and changing external conditions. Second, planning </span>based on intensification and centralisation was always going to frustrate the growth it was meant to accommodate, pumping up house
prices, business costs, and congestion. </span></p>
<p class="MsoNormal"><span style="font-size: large;">These were hardly popular views, and it gives me no pleasure
to say today that the chickens have come home to roost. Emigration is rising.
Housing demand is softening, although too late to prevent a growing division between expanded renter and shrunken owner classes. The need for social housing is well up, while the already
high cost of home building keeps getting higher. (And through grandiose spending plans, Auckland Council has become a fiscal and economic liability). <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: large;">Meantime, in neighbouring Australia wages are higher, house
prices and living costs lower, and the labour market buoyant, leading once
more to the loss of young and productive people across the Tasman. And,
more Aucklanders heading for the regions will compound the slump in the
residential market – in prices and in building (but not necessarily the cost of
building).<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: large;">The region has for decades taken the lion’s share of the
country’s population growth, but that dominance is fast diminishing.<o:p></o:p></span></p>
<p class="MsoNormal"><b><span style="font-size: large;">The labour market: pausing or turning?<o:p></o:p></span></b></p>
<p class="MsoNormal"><span style="font-size: large;">Unfortunately, the same goes for employment. Auckland’s job growth
has trailed the rest of the country since the Global Financial Crisis (Figure 1), leading national growth into negative territory
over the past five years (inset). <o:p></o:p></span></p><p class="MsoNormal"><span style="font-size: large;"></span></p><h4 style="text-align: center;"><span style="font-size: large;">Figure 1: Regional Employment Growth, </span><span style="font-size: large;">2001-2021</span></h4><p class="MsoNormal"><span style="font-size: large;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhWuGblKwneff8Axjx5d35373ozDS3zsIfgokQLL0jGJbADwV8YTJZXSyse9vvpD21XBTCeh7uLhheW7_TgR4lzcv7WQI2H2zQBXcnRA-LAVMOPP_puCYoPH6RqZZIXZpNSBsbLaAUwkRKs-PlPa1drc_MpSsWm9GleJdy5qQv3QHk-XMPqVOd_b9J0/s3357/Employment%20Growth%20byu%20Region.png" style="margin-left: 1em; margin-right: 1em; text-align: center;"><img border="0" data-original-height="2192" data-original-width="3357" height="418" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhWuGblKwneff8Axjx5d35373ozDS3zsIfgokQLL0jGJbADwV8YTJZXSyse9vvpD21XBTCeh7uLhheW7_TgR4lzcv7WQI2H2zQBXcnRA-LAVMOPP_puCYoPH6RqZZIXZpNSBsbLaAUwkRKs-PlPa1drc_MpSsWm9GleJdy5qQv3QHk-XMPqVOd_b9J0/w640-h418/Employment%20Growth%20byu%20Region.png" width="640" /></a></span></p><p class="MsoNormal"><br /></p><div style="text-align: center;"></div><div align="center"><div align="center"><br /></div></div><p><span style="font-size: large;">This has not been helped by Auckland’s lagging productivity
growth (Figure 2). While Wellington and Auckland still record the highest
regional productivity, this is on the back of a tradition of falling primary
and manufacturing jobs and increasing, well-paid white-collar employment in the
business and government sectors.</span></p>
<p align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: large;">Figure 2:
Auckland’s Lagging Productivity Growth<o:p></o:p></span></b></p>
<div class="separator" style="clear: both; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh6gPjO3tnPKDp1z4CWc-1gRKK4-QafHHMW8zAxLgJC2M5U2lSjWdxVXcSCr_Q7KGr84SE48EN8-mCFMNJI9d3IMw79tq7DrCG2taRReX3aEzMn1ffqBEnWFAUF9x2QEgktg07p17vlUTRl0R5hUJvoHYS8h1QoE_7_45Wzk1DP0T5aDNwtcfXVljbV/s976/Regional%20Productivity.png" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: large;"><img border="0" data-original-height="638" data-original-width="976" height="418" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh6gPjO3tnPKDp1z4CWc-1gRKK4-QafHHMW8zAxLgJC2M5U2lSjWdxVXcSCr_Q7KGr84SE48EN8-mCFMNJI9d3IMw79tq7DrCG2taRReX3aEzMn1ffqBEnWFAUF9x2QEgktg07p17vlUTRl0R5hUJvoHYS8h1QoE_7_45Wzk1DP0T5aDNwtcfXVljbV/w640-h418/Regional%20Productivity.png" width="640" /></span></a></div><div style="text-align: left;"><span style="font-size: large;"> Source: Statistics NZ</span></div></div><p class="MsoNormal"><span style="font-size: large;">According to Statistics NZ February counts, there have been significant falls in business services, manufacturing, logistics, and Covid-impacted hospitality. Only construction and public services (including education, health and social care, and government services) held up (Table 1).</span></p><h4 style="text-align: center;"><b><span style="font-size: large;">Table 1: Recent Employment Changes in Auckland</span></b></h4><div style="text-align: center;"><div align="center"><table border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse: collapse; mso-padding-alt: 0cm 5.4pt 0cm 5.4pt; mso-yfti-tbllook: 1184; width: 251px;"><tbody><tr style="height: 13pt; mso-yfti-firstrow: yes; mso-yfti-irow: 0;"><td nowrap="" rowspan="2" style="background: white; border-bottom: solid black 1.0pt; border: 1pt solid windowtext; height: 13pt; mso-border-alt: solid windowtext .5pt; mso-border-bottom-alt: solid black .5pt; padding: 0cm 5.4pt; width: 92pt;" width="123"><p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: center;"><b><span style="font-size: 10pt;">Sector</span></b><b><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></b></p></td><td colspan="2" nowrap="" style="background: white; border-bottom: none; border-left: none; border-right: 1pt solid black; border-top: 1pt solid windowtext; height: 13pt; mso-border-right-alt: solid black .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 96pt;" valign="bottom" width="128"><p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: center;"><b><span style="font-size: 10pt;">2020-21</span></b><b><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></b></p></td></tr><tr style="height: 13pt; mso-yfti-irow: 1;"><td nowrap="" style="background: white; border-bottom: solid windowtext 1.0pt; border: none; height: 13pt; mso-border-bottom-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 49.55pt;" valign="bottom" width="66"><p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: center;"><b><span style="font-size: 10pt;"> Shift</span></b><b><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></b></p></td><td nowrap="" style="background: white; border-bottom: 1pt solid windowtext; border-left: none; border-right: 1pt solid windowtext; border-top: none; height: 13pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 46.45pt;" valign="bottom" width="62"><p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: center;"><b><span style="font-size: 10pt;"> %</span></b><b><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></b></p></td></tr><tr style="height: 12.5pt; mso-yfti-irow: 2;"><td nowrap="" style="background: white; border-bottom: none; border-left: 1pt solid windowtext; border-right: 1pt solid windowtext; border-top: none; height: 12.5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 92pt;" valign="bottom" width="123"><p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm;"><span style="font-size: 10pt;">Primary</span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td><td nowrap="" style="background: white; height: 12.5pt; padding: 0cm 5.4pt; width: 49.55pt;" valign="bottom" width="66"><p align="right" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: right;"><span style="font-size: 10pt;">210</span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td><td nowrap="" style="background: white; border-right: solid windowtext 1.0pt; border: none; height: 12.5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 46.45pt;" valign="bottom" width="62"><p align="right" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: right;"><span style="font-size: 10pt;">3.4%</span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td></tr><tr style="height: 12.5pt; mso-yfti-irow: 3;"><td nowrap="" style="background: white; border-bottom: none; border-left: 1pt solid windowtext; border-right: 1pt solid windowtext; border-top: none; height: 12.5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 92pt;" valign="bottom" width="123"><p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm;"><span style="font-size: 10pt;">Manufacturing</span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td><td nowrap="" style="background: white; height: 12.5pt; padding: 0cm 5.4pt; width: 49.55pt;" valign="bottom" width="66"><p align="right" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: right;"><span style="font-size: 10pt;">-2,400</span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td><td nowrap="" style="background: white; border-right: solid windowtext 1.0pt; border: none; height: 12.5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 46.45pt;" valign="bottom" width="62"><p align="right" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: right;"><span style="font-size: 10pt;">-3.0%</span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td></tr><tr style="height: 12.5pt; mso-yfti-irow: 4;"><td nowrap="" style="background: white; border-bottom: none; border-left: 1pt solid windowtext; border-right: 1pt solid windowtext; border-top: none; height: 12.5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 92pt;" valign="bottom" width="123"><p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm;"><span style="font-size: 10pt;">Utilities</span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td><td nowrap="" style="background: white; height: 12.5pt; padding: 0cm 5.4pt; width: 49.55pt;" valign="bottom" width="66"><p align="right" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: right;"><span style="font-size: 10pt;">300</span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td><td nowrap="" style="background: white; border-right: solid windowtext 1.0pt; border: none; height: 12.5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 46.45pt;" valign="bottom" width="62"><p align="right" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: right;"><span style="font-size: 10pt;">5.4%</span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td></tr><tr style="height: 12.5pt; mso-yfti-irow: 5;"><td nowrap="" style="background: white; border-bottom: none; border-left: 1pt solid windowtext; border-right: 1pt solid windowtext; border-top: none; height: 12.5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 92pt;" valign="bottom" width="123"><p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm;"><span style="font-size: 10pt;">Construction</span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td><td nowrap="" style="background: white; height: 12.5pt; padding: 0cm 5.4pt; width: 49.55pt;" valign="bottom" width="66"><p align="right" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: right;"><span style="font-size: 10pt;">3,600</span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td><td nowrap="" style="background: white; border-right: solid windowtext 1.0pt; border: none; height: 12.5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 46.45pt;" valign="bottom" width="62"><p align="right" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: right;"><span style="font-size: 10pt;">5.8%</span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td></tr><tr style="height: 12.5pt; mso-yfti-irow: 6;"><td nowrap="" style="background: white; border-bottom: none; border-left: 1pt solid windowtext; border-right: 1pt solid windowtext; border-top: none; height: 12.5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 92pt;" valign="bottom" width="123"><p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm;"><span style="font-size: 10pt;">Logistics</span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td><td nowrap="" style="background: white; height: 12.5pt; padding: 0cm 5.4pt; width: 49.55pt;" valign="bottom" width="66"><p align="right" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: right;"><span style="font-size: 10pt;">-4,600</span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td><td nowrap="" style="background: white; border-right: solid windowtext 1.0pt; border: none; height: 12.5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 46.45pt;" valign="bottom" width="62"><p align="right" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: right;"><span style="font-size: 10pt;">-4.6%</span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td></tr><tr style="height: 12.5pt; mso-yfti-irow: 7;"><td nowrap="" style="background: white; border-bottom: none; border-left: 1pt solid windowtext; border-right: 1pt solid windowtext; border-top: none; height: 12.5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 92pt;" valign="bottom" width="123"><p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm;"><span style="font-size: 10pt;">Retail</span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td><td nowrap="" style="background: white; height: 12.5pt; padding: 0cm 5.4pt; width: 49.55pt;" valign="bottom" width="66"><p align="right" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: right;"><span style="font-size: 10pt;">700</span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td><td nowrap="" style="background: white; border-right: solid windowtext 1.0pt; border: none; height: 12.5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 46.45pt;" valign="bottom" width="62"><p align="right" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: right;"><span style="font-size: 10pt;">0.9%</span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td></tr><tr style="height: 12.5pt; mso-yfti-irow: 8;"><td nowrap="" style="background: white; border-bottom: none; border-left: 1pt solid windowtext; border-right: 1pt solid windowtext; border-top: none; height: 12.5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 92pt;" valign="bottom" width="123"><p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm;"><span style="font-size: 10pt;">Hospitality</span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td><td nowrap="" style="background: white; height: 12.5pt; padding: 0cm 5.4pt; width: 49.55pt;" valign="bottom" width="66"><p align="right" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: right;"><span style="font-size: 10pt;">-3,000</span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td><td nowrap="" style="background: white; border-right: solid windowtext 1.0pt; border: none; height: 12.5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 46.45pt;" valign="bottom" width="62"><p align="right" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: right;"><span style="font-size: 10pt;">-5.1%</span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td></tr><tr style="height: 12.5pt; mso-yfti-irow: 9;"><td nowrap="" style="background: white; border-bottom: none; border-left: 1pt solid windowtext; border-right: 1pt solid windowtext; border-top: none; height: 12.5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 92pt;" valign="bottom" width="123"><p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm;"><span style="font-size: 10pt;">Business Services</span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td><td nowrap="" style="background: white; height: 12.5pt; padding: 0cm 5.4pt; width: 49.55pt;" valign="bottom" width="66"><p align="right" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: right;"><span style="font-size: 10pt;">-5,300</span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td><td nowrap="" style="background: white; border-right: solid windowtext 1.0pt; border: none; height: 12.5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 46.45pt;" valign="bottom" width="62"><p align="right" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: right;"><span style="font-size: 10pt;">-2.6%</span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td></tr><tr style="height: 12.5pt; mso-yfti-irow: 10;"><td nowrap="" style="background: white; border-bottom: none; border-left: 1pt solid windowtext; border-right: 1pt solid windowtext; border-top: none; height: 12.5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 92pt;" valign="bottom" width="123"><p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm;"><span style="font-size: 10pt;">Public Services</span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td><td nowrap="" style="background: white; height: 12.5pt; padding: 0cm 5.4pt; width: 49.55pt;" valign="bottom" width="66"><p align="right" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: right;"><span style="font-size: 10pt;">4,100</span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td><td nowrap="" style="background: white; border-right: solid windowtext 1.0pt; border: none; height: 12.5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 46.45pt;" valign="bottom" width="62"><p align="right" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: right;"><span style="font-size: 10pt;">2.3%</span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td></tr><tr style="height: 12.5pt; mso-yfti-irow: 11;"><td nowrap="" style="background: white; border-bottom: none; border-left: 1pt solid windowtext; border-right: 1pt solid windowtext; border-top: none; height: 12.5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 92pt;" valign="bottom" width="123"><p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm;"><span style="font-size: 10pt;">Personal Services</span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td><td nowrap="" style="background: white; height: 12.5pt; padding: 0cm 5.4pt; width: 49.55pt;" valign="bottom" width="66"><p align="right" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: right;"><span style="font-size: 10pt;">-700</span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td><td nowrap="" style="background: white; border-right: solid windowtext 1.0pt; border: none; height: 12.5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 46.45pt;" valign="bottom" width="62"><p align="right" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: right;"><span style="font-size: 10pt;">-1.7%</span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td></tr><tr style="height: 12.5pt; mso-yfti-irow: 12; mso-yfti-lastrow: yes;"><td nowrap="" style="background: white; border: 1pt solid windowtext; height: 12.5pt; mso-border-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 92pt;" valign="bottom" width="123"><p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm;"><span style="font-size: 10pt;">Total </span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td><td nowrap="" style="background: white; border-bottom: 1pt solid windowtext; border-left: none; border-right: none; border-top: 1pt solid windowtext; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 49.55pt;" valign="bottom" width="66"><p align="right" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: right;"><span style="font-size: 10pt;">-7,090</span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td><td nowrap="" style="background: white; border-left: none; border: 1pt solid windowtext; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt; width: 46.45pt;" valign="bottom" width="62"><p align="right" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: right;"><span style="font-size: 10pt;">-0.9%</span><span style="font-size: 10pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><o:p></o:p></span></p></td></tr></tbody></table></div></div><p class="MsoNormal"><span style="font-size: large;"><b>Structural Flaws</b></span></p><p class="MsoNormal"><span style="font-size: large;"><span>Unfortunately, this mix of employment is unlikely to help in the future. </span>The downturn realised in 2021 may well prove to be a significant turning point (Figure 3).</span></p><p class="MsoNormal"><span style="font-size: large;">For a start, the white-collar sectors, particularly in government and business administration, can be expected to shrink under the combined pressure of remote and flexible work practices and the loss of back-office occupations as advances in artificial intelligence automate an increasing array of transactional tasks. </span></p><p align="center" class="MsoNormal" style="text-align: center;"><b style="text-align: left;"><span style="font-size: large;"></span></b></p><p class="MsoNormal"><span style="font-size: large;"><span>Government-funded services can be expected to follow the same path, particularly with the inevitable tightening of the fiscal belt in the face of ballooning global deficits and rising interest rates. </span></span></p><p class="MsoNormal"><span style="font-size: large;"><span>How this will play out in the labour market – in favour of the administrators in the high rise offices or the providers on the ground – is yet to be seen. </span>As the white-collar sectors stutter, though, the future of the labour market will rely increasingly on production and distribution, especially as construction also faces a sharp downturn.</span></p><p align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: large;">Figure 3:
Auckland’s Changing Employment Structure, 2001-2021</span></b></p>
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjHhV4RuU-HuS8ll6yN7gxMPvS3cTegb7PYlydvq0hj5yZzzLsy9jlC9M_llpPw3_5HXIRUY71NacdibtAyzN40ipj7Aza3lYfjTbTu9dxl9jEEB4xQzbDv_Hrt4VSRo0479-NutS1FklMwznsdCIL73NDoamKQmww8E0Yiq3PVF-6f_3lkV9VqVrir/s3358/AK%20Structure%202.png" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: large;"><img border="0" data-original-height="2194" data-original-width="3358" height="418" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjHhV4RuU-HuS8ll6yN7gxMPvS3cTegb7PYlydvq0hj5yZzzLsy9jlC9M_llpPw3_5HXIRUY71NacdibtAyzN40ipj7Aza3lYfjTbTu9dxl9jEEB4xQzbDv_Hrt4VSRo0479-NutS1FklMwznsdCIL73NDoamKQmww8E0Yiq3PVF-6f_3lkV9VqVrir/w640-h418/AK%20Structure%202.png" width="640" /></span></a></div><div class="separator" style="clear: both; text-align: center;"><span style="font-size: large;"><br /></span></div>
<p class="MsoNormal"><span style="font-size: large;">At the same time, possibly radical changes in
world trade resulting from geopolitical upheavals and the increasing impact of
climate change will favour regional economies with efficient production and
distribution sectors. Among other things this is likely to sustain the movement of economically active households from Auckland to regional centres.</span></p>
<p class="MsoNormal"><b><span style="font-size: large;">Time for a reset?<o:p></o:p></span></b></p>
<p class="MsoNormal"><span style="font-size: large;">So here's my take on some of the hard issues facing Auckland against a background of a slowing world economy,an intensifying
climate emergency, soft if not declining population growth, and a vulnerable labour market. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: large;"><b>First, </b>we have to revisit our infrastructure plans,
acknowledging the vulnerability to climate change of key components, including the sewage
treatment plant, airport, ports, rail, and downtown Auckland. Apart from the protective (and conservative) investment this will call for, the city needs to reduce its penchant for investment that does little more than prop up values in the central city, and instead address the liveability of the suburbs where the vast majority of people live
and work. </span></p><p class="MsoNormal"><span style="font-size: large;">Infrastructure investment will have to be founded on sound evidence, be economically and environmentally sustainable, minimise fiscal and physical risk, and be shaped by reason rather than dogma, sound analysis rather than bureaucratic group think. </span></p><p class="MsoNormal"><span style="font-size: large;"><b>Second</b>, accept the logic of sustainable new suburbs, low impact housing (as opposed to multi-tiered, energy intensive, high density structures), and
detached settlements supported by
appropriately-scaled infrastructure, connected and networked by generous, multi-modal corridors.
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: large;"><b>Third</b>, address the divisive problem of
deprivation in Auckland, which has been reinforced by backward-looking policies favouring those
who own property over those who don't; those who live in gentrified,
well-serviced inner suburbs over those who don't; office over industrial employment; and large, centralised commercial centres over accessible local neighbour centres. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: large;"><b>Fourth</b>, acknowledge the reality of climate change and its
inevitable impact on properties and infrastructure in a city with an extensive shoreline. This may mean planning for resilience
rather than containment, reducing the intensity of
development in vulnerable areas among other things. The challenge is how to
manage a long-term reduction of value of central and harbour edge sites over just one or two
generations.</span></p><p class="MsoNormal"><span style="font-size: large;"><span><b>Finally</b>, adopt a fiscally responsible approach </span>to local government, reducing the bloated investment and operations that followed the creation of a monolithic city structure in 2010 and its quasi-commercial satellites and their opaque tolling operations. </span></p><p class="MsoNormal"><span style="font-family: inherit; font-size: large;">A good start could be made by acknowledging the reality of a slow-growth outlook by dismantling the Auckland Unitary Plan and its premise that
centralised activity to support the historical concentration of wealth should be sustained at all costs. Replace it with light handed planning that fosters a region of connected communities, each meeting most of the needs of its residents locally. </span></p><p class="MsoNormal"><span style="font-family: inherit; font-size: large;">There is a need to provide accessible opportunities for work, play, and care in an era in which personal mobility could be compromised. This cannot be achieved seeking to contain growth (and now, perhaps, decline) in a highly centralised, high density, public transit-dependent city. </span></p>Phil McDermotthttp://www.blogger.com/profile/06869744647213369964noreply@blogger.com0tag:blogger.com,1999:blog-7011655232093163642.post-79719301067056158002022-04-18T11:59:00.003+12:002022-04-21T09:29:11.404+12:00 Auckland at a Turning Point 1: The Coming Housing Glut<p><b><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;">Too little – and too late</span></b></p>
<div style="border: 1pt solid windowtext; mso-border-alt: solid windowtext .5pt; mso-element: para-border-div; padding: 1pt 4pt;">
<p class="MsoNormal" style="border: none; line-height: normal; margin-bottom: 0cm; mso-border-alt: solid windowtext .5pt; mso-layout-grid-align: none; mso-padding-alt: 1.0pt 4.0pt 1.0pt 4.0pt; padding: 0cm; text-autospace: none;"><span style="color: #001a1a; mso-ansi-language: EN-NZ; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-font-size: 12.0pt; mso-hansi-font-family: Calibri;">“… over the last 20 years, New
Zealand has experienced faster growth in real house prices than any other OECD
country. Housing has gone from being abundant and reasonably affordable to
being scarce and prohibitively expensive, especially in our fast-growing
cities.”<o:p></o:p></span></p>
<p class="MsoNormal" style="border: none; line-height: normal; margin-bottom: 0cm; mso-border-alt: solid windowtext .5pt; mso-layout-grid-align: none; mso-padding-alt: 1.0pt 4.0pt 1.0pt 4.0pt; padding: 0cm; text-autospace: none;"><i><span face="Arial-BoldMT" style="font-size: 11pt; mso-ansi-language: EN-NZ; mso-bidi-font-family: Arial-BoldMT;">The decline of housing supply in New Zealand: Why it happened and how to
reverse it</span></i><span face="Arial-BoldMT" style="font-size: 11pt; mso-ansi-language: EN-NZ; mso-bidi-font-family: Arial-BoldMT;">, </span><span face=""Arial",sans-serif" style="font-size: 11pt; mso-ansi-language: EN-NZ;">New
Zealand Infrastructure Commission, March 2022</span><span style="font-size: 11pt; mso-ansi-language: EN-NZ;"><o:p></o:p></span></p>
</div>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;"> </span><span style="font-size: 14pt;">The Infrastructure Commission concluded that faulty
land use policies created a housing shortfall in Auckland over the past twenty years. It
was right. The policy of rationing residential land as demand grew
rapidly and became more diverse means Auckland has world-leading house prices. This has had recent spill-over effects among smaller settlements as Aucklanders
look to move outside the city.</span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; mso-layout-grid-align: none; text-autospace: none;"><span style="font-size: 14pt; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;"> </span><span style="font-size: 14pt;">Despite this, the Commission endorsed Auckland's Unitary Plan and the government’s Medium Density Residential Standards,
supporting even more intensive development. </span><span style="font-size: 14pt;">Well, it’s too late. Two wrongs don't make a right, Piling more housing into
a falling market looks like the next big blunder.</span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; mso-layout-grid-align: none; text-autospace: none;"><span style="font-size: 14pt; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;"> </span><b><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;">The first blunder: a predictable
housing crisis</span></b></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;">A city on an isthmus always faced growth
challenges. When Auckland Regional
Council (ARC) in the 1990s dumped policies to disperse growth among four nodal subregions
(north, west, central, and south) and opted instead to intensify development focused
on the CBD, the writing was on the wall.
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;">The 1999 Regional Growth Strategy relied
on boosting density within a metropolitan fence and on blind faith in the
capacity of ageing infrastructure to accommodate it. It failed to consider how
much employment land to provide, and where, and relied instead on an outdated model
of the centralised, white-collar commuter city.
And it paid no attention to the fiscal, commercial, and social costs.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;">The Chairman of the ARC at the time, Phil
Warren, acknowledged the prospect that the Strategy would deliver high house prices
and heavy congestion, calling it “<i>a work in progress</i>”. This was too
subtle for the planners, who got it attached to local government legislation in
2004.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;">The rest is history: high house prices,
big-city congestion, expensive reconfiguring of ageing infrastructure, and a growing
and unfair division of wealth. <o:p></o:p></span></p>
<p class="MsoNormal"><b><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;">From high growth to low growth<o:p></o:p></span></b></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;">Over-emphasising intensification ahead
of selective (or, better, satellite) city expansion has been costly. It was also
risky, based on the presumption that Auckland would be a long-term people
magnet despite the fact that more New Zealanders were already moving out than moving in. Its no
surprise that a trickle in the 1990s is a flow today. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;">So, the planners had to bank on international migration
to prop up their projections despite another fact: migration is </span><span lang="EN-US" style="font-size: 14pt; line-height: 107%; mso-bidi-font-size: 12.0pt;"><a href="http://cities-matter.blogspot.com/2013/06/just-another-stake-in-sand-planning.html"><span lang="EN-NZ">cyclical</span></a></span><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;"> (Figure 1). The arrivals boom of
the last decade was running down well before it was sunk by Covid. Numbers peaked in 2017, then fell in 2018 and
2019, departures not so much. <o:p></o:p></span></p>
<p align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;">Figure 1: New Zealand International Migration Movements 1991-2020<o:p></o:p></span></b></p><p align="center" class="MsoNormal" style="text-align: center;"><b></b></p><div class="separator" style="clear: both; text-align: center;"><br /></div><b><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjCijQsfl3mUyUX0-7hQC-1nestda6t6yxVpArC5qCduzEkY7tQjnasVwmcvhcCvdSqh2sDaHqmmrEAVRKQubezKy3e_xSSeQX_ijjdADAf9pZpdkQ4SLNVEEU47ReZ9dSYvnJi4nuUGgXIMYyarVg-DMuIOAgZqEa3wCAByZcNM5NwYnz0HuSYcOZq/s3358/Fig%201%20Migration.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="2195" data-original-width="3358" height="418" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjCijQsfl3mUyUX0-7hQC-1nestda6t6yxVpArC5qCduzEkY7tQjnasVwmcvhcCvdSqh2sDaHqmmrEAVRKQubezKy3e_xSSeQX_ijjdADAf9pZpdkQ4SLNVEEU47ReZ9dSYvnJi4nuUGgXIMYyarVg-DMuIOAgZqEa3wCAByZcNM5NwYnz0HuSYcOZq/w640-h418/Fig%201%20Migration.jpg" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div></b>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;">Another fact: Auckland’s much-touted dominance
of national growth has been falling since 1996 (Figure 2). With Covid, it stalled
completely, while the rest of the country grew. So much for the heroic planning extrapolation of continuous growth. <o:p></o:p></span></p>
<p align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;">Figure 2: Population gains, Auckland and the Rest of New Zealand,
1991-2021<o:p></o:p></span></b></p>
<p class="MsoNormal" style="text-align: center;"><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt; mso-no-proof: yes;"><v:shape id="Picture_x0020_2" o:spid="_x0000_i1027" style="height: 184.5pt; mso-wrap-style: square; visibility: visible; width: 282.75pt;" type="#_x0000_t75">
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</v:imagedata></v:shape> <a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjqH3ROQwGm3CogAenWhNXVg0i0ocENaL7YoLdN4IuvAO-8BAMCq3m0E7RWFUi6J3W5uqjN699DUF7T6MSQDHztUmanO0mVChA15W0WZ6E_r1Xmm2EbxjmtD7RSfd-c2LKdELkQTA0yv1EBKsr5cYg2FO9UJh_W3nPs49NMvmcsVqrWafhjVgZajo5V/s3445/Figure%202%20Popn%20gains.jpg" style="font-size: 14pt; margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="2081" data-original-width="3445" height="386" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjqH3ROQwGm3CogAenWhNXVg0i0ocENaL7YoLdN4IuvAO-8BAMCq3m0E7RWFUi6J3W5uqjN699DUF7T6MSQDHztUmanO0mVChA15W0WZ6E_r1Xmm2EbxjmtD7RSfd-c2LKdELkQTA0yv1EBKsr5cYg2FO9UJh_W3nPs49NMvmcsVqrWafhjVgZajo5V/w640-h386/Figure%202%20Popn%20gains.jpg" width="640" /></a><br /><br /></span></p>
<p class="MsoNormal"><b><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;">This is not what we expected – or
planned<o:p></o:p></span></b></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;">It appears that the Council justified
its plans and infrastructure spending on flawed expectations. Compare Auckland’s
June 2021 population with two sets of Statistics NZ projections, for example
(Figure 3). The Council used the medium
projection published in 2017 (based on the 2013 census) to inform its updated
plan, <i>Auckland 2050. P</i>ublished in 2018, this projected 29% more growth to 2021 than actually occurred.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;">The next projections, published in
2021 using the 2018 Census, reduced the base figure, but still assume a medium migration
gain of 12,000 a year to 2023<a href="file:///C:/Users/pjmcd/Dropbox/Blogs/Auckland%20at%20a%20Turning%20Point.docx#_ftn1" name="_ftnref1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span face=""Calibri",sans-serif" style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 12.0pt; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[1]</span></span><!--[endif]--></span></a>.
This, already, looks unachievable. <o:p></o:p></span></p>
<p align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;">Figure 3: Projected and Actual Population Outcomes<o:p></o:p></span></b></p><p align="center" class="MsoNormal" style="text-align: center;"><b></b></p><div class="separator" style="clear: both; text-align: center;"><b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgsrBGB2vOWxDsDM2KZ3RfgTeKSZerudOipCOfnJAeg6yzKnfLhMR4_Go9YLHhOkoS-Sv18N1qCxcX668GJWe6x1obyuyPMDoiHNQUYmZia9KOMOX4gXMXr8pyA84xVQ0drtZZRq3oOfHvjaF_tKj2Av7XLjX_KilIcrLcGlXvcEn4R_Who2VZi7caS/s3358/Popn%20Projections.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="2195" data-original-width="3358" height="418" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgsrBGB2vOWxDsDM2KZ3RfgTeKSZerudOipCOfnJAeg6yzKnfLhMR4_Go9YLHhOkoS-Sv18N1qCxcX668GJWe6x1obyuyPMDoiHNQUYmZia9KOMOX4gXMXr8pyA84xVQ0drtZZRq3oOfHvjaF_tKj2Av7XLjX_KilIcrLcGlXvcEn4R_Who2VZi7caS/w640-h418/Popn%20Projections.jpg" width="640" /></a></b></div><b><br /><div class="separator" style="clear: both; text-align: center;"><br /></div><br /><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;"><br /></span></b><p></p>
<p align="center" class="MsoNormal" style="text-align: center;"><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt; mso-no-proof: yes;"><v:shape id="Picture_x0020_3" o:spid="_x0000_i1025" style="height: 246.75pt; mso-wrap-style: square; visibility: visible; width: 376.5pt;" type="#_x0000_t75">
<v:imagedata o:title="" src="file:///C:/Users/pjmcd/AppData/Local/Temp/msohtmlclip1/01/clip_image004.png">
</v:imagedata></v:shape></span><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;"><o:p></o:p></span></p>
<p class="MsoNormal"><b><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;">What are the consequences? <o:p></o:p></span></b></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;">Promoting multi-unit infill housing when growth stalls raises the risk of a surplus of dwellings,
particularly apartments and units. Are we looking at a housing glut?<o:p></o:p></span></p>
<p class="MsoNormal"><b><i><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;">Unders…<o:p></o:p></span></i></b></p>
<p class="MsoNormal"><span style="line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;"><span style="font-size: 14pt;">Between October 2014 and June 2018 Auckland
Council issued 33,000 certificates of compliance for new dwellings.</span><span class="MsoFootnoteReference"> <span style="font-size: x-small;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span face=""Calibri",sans-serif" style="line-height: 107%; mso-ansi-language: EN-NZ; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 12.0pt; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[2]</span></span><!--[endif]--></span></span><span style="font-size: x-small;"> </span></span><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;"> Yet, between 2013 and 2018, Auckland’s
population grew by 161,000 people, the equivalent of 54,000 households at 3
persons per household. This suggests </span><span style="font-size: 18.6667px;">21,000 too few houses built relative to </span><span style="font-size: 14pt;">population growth.</span></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;">This shortfall may have led to a lift in household
occupancy with more large multi-family, multi-generation and non-family households,
and left more people homeless or living in institutions <span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span face=""Calibri",sans-serif" style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 12.0pt; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[3]</span></span><!--[endif]--></span>
which, incidentally, raises questions about the drive for more small dwellings.
We certainly need to know more about social and demographic changes affecting housing demand
before we can be confident that boosting multi-units indiscriminately across Auckland is the
solution to the city's housing woes.<o:p></o:p></span></p>
<p class="MsoNormal"><b><i><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;">Overs …<o:p></o:p></span></i></b></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;">Since then, measures taken to facilitate
consenting have lifted construction. In the four years to December 2021 63,000
consents were issued, equivalent to around 60,000 completed dwellings. However,
population growth of just 60,800 people over the four years to June 2021 would
have generated demand only 21,000 new dwellings. This suggests a surplus of close
to 40,000 new dwellings relative to population growth.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;">This is good news for new home seekers
if it corrects an over-heated market, although it’s not clear that it resolves
the need for well-founded and well-placed social housing.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;">While the figures here are estimates, the story they tell is compelling. The pendulum is swinging
back, with the prospect that an emerging housing surplus becomes a glut. </span></p><p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;">Short-term supply constraints may
defer that outcome. Yet, while house prices should fall, Auckland’s flawed growth strategy
has already made life hard for young households, and less attractive for empty nesters.
So, with borders reopening post-Covid, international departures may well exceed
arrivals for several years. The population slump promises to be prolonged.<o:p></o:p></span></p>
<p class="MsoNormal"><b><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;">Stand by for a disrupted housing
market <o:p></o:p></span></b></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;">Over-supply is not good for the
construction sector. Those with long memories know that a slump in housing demand packs
a triple punch. It undermines many businesses committed to a key economic sector, with negative flow on effects. It
slows household spending as equity falls, especially if interest rates rise. And
it generates a flow of construction skills west, across the Tasman. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: 14pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-size: 12.0pt;">If the latest tranche of cookie
cutter units proves too crowded and cramped, other skilled and motivated young
households will be joining them. For those assigned unwillingly to “generation rent”
higher wages and lower prices across the Tasman may still offer the best path
to home ownership.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: 14pt;">Where, then, will the new demand come
from to pay for the council’s super-city commitments and aspirations?</span></p>
<div><!--[if !supportFootnotes]--><br clear="all" />
<hr align="left" size="1" width="33%" />
<!--[endif]-->
<div id="ftn1">
<p class="MsoFootnoteText"><a href="file:///C:/Users/pjmcd/Dropbox/Blogs/Auckland%20at%20a%20Turning%20Point.docx#_ftnref1" name="_ftn1" title=""><span class="MsoFootnoteReference"><span lang="EN-US"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: 10pt; line-height: 107%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[1]</span></span><!--[endif]--></span></span></a><span lang="EN-US"> </span> The medium projection then provides
for gains of 10,000 a year from 2023 to 2048.<o:p></o:p></p>
</div>
<div id="ftn2">
<p class="MsoFootnoteText" style="margin-left: 36pt; text-indent: -36pt;"><a href="file:///C:/Users/pjmcd/Dropbox/Blogs/Auckland%20at%20a%20Turning%20Point.docx#_ftnref2" name="_ftn2" title=""><span class="MsoFootnoteReference"><span lang="EN-US"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: 10pt; line-height: 107%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[2]</span></span><!--[endif]--></span></span></a><span lang="EN-US"> </span><span lang="EN-GB"> </span>This was completion rate of around 95% compared with consents issued in
the previous<span> </span>calendar year<span lang="EN-GB"><o:p></o:p></span></p>
</div>
<div id="ftn3">
<p class="MsoFootnoteText"><a href="file:///C:/Users/pjmcd/Dropbox/Blogs/Auckland%20at%20a%20Turning%20Point.docx#_ftnref3" name="_ftn3" title=""><span class="MsoFootnoteReference"><span lang="EN-US"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: 10pt; line-height: 107%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[3]</span></span><!--[endif]--></span></span></a><span lang="EN-US"> </span> Census data indicated an increase
of only 20,100 households.<o:p></o:p></p>
</div>
</div>Phil McDermotthttp://www.blogger.com/profile/06869744647213369964noreply@blogger.com1tag:blogger.com,1999:blog-7011655232093163642.post-69316698716462901912022-02-09T17:41:00.009+13:002022-04-28T17:23:00.043+12:00 Auckland Light Rail – Sinking a Tunnel or Sinking a City?<p><br /></p>
<p class="MsoNormal"><b>Light Rail: A
solution in sear</b><b>ch of a problem</b></p>
<p class="MsoNormal">Auckland has seen that
the creation of commissions, teams, or working parties to implement
simple-minded solutions to complex problems allows little room for debate on alternatives. Like the creation of the <span lang="EN-US"><a href="https://cities-matter.blogspot.com/2010/09/if-single-city-is-answer-for-auckland.html"><span lang="EN-NZ"><b>supercity</b></span></a></span> and Auckland’s <span lang="EN-US"><a href="https://cities-matter.blogspot.com/2011/12/rethink-link-does-auckland-really-need.html"><span lang="EN-NZ"><b>Central Rail Link</b></span></a></span>, the proposed CBD to Airport tunnelled light
rail is a solution in search of a problem.<o:p></o:p></p>
<p class="MsoNormal">In Tuesday’s <i>NZ
Herald</i> economist Tim Hazledine <span lang="EN-US"><a href="https://www.nzherald.co.nz/nz/tim-hazledine-throwing-light-on-rail-plans-for-auckland/QP2ZTWMPV65BBWWWZWXJMB4VXQ/"><span lang="EN-NZ"><b>strips Auckland’s congestion</b></span></a></span> problem back to basics. He raises some facts that seem to have been overlooked: the limited nature of the problem, the
availability of congestion pricing to resolve it, the changing of CBD work, the
low utility of a service stopping at 18 stations over a short distance, and
Auckland’s “topsy turvey topography”. <o:p></o:p></p>
<p class="MsoNormal">There's not a lot to add to
his critique, but here’s some more on the environmental issues and changes
in Auckland’s growth, both of which render the LRT already obsolete. <o:p></o:p></p>
<p class="MsoNormal"><b>Climate Emergency: Yeah? Nah?…<o:p></o:p></b></p>
<p class="MsoNormal">In 2019 Auckland
Council declared a <b><span lang="EN-US"><a href="https://ourauckland.aucklandcouncil.govt.nz/news/2019/06/auckland-council-declares-climate-emergency/"><span lang="EN-NZ">Climate Emergency</span></a></span>.</b> In January 2022 the Government <span lang="EN-US"><a href="https://www.lightrail.co.nz/news/media-statement-28-jan-2022/"><span lang="EN-NZ"><b>announced</b></span></a></span> new <span lang="EN-US">light rail (LRT) from
the CBD to Auckland Airport, flying in the face of that declaration: <span style="color: black;"><b><a href="https://coastal.climatecentral.org/map/11/174.8043/-36.879/?theme=sea_level_rise&map_type=year&basemap=roadmap&contiguous=true&elevation_model=best_available&forecast_year=2080&pathway=ssp3rcp70&percentile=p50&refresh=true&return_level=return_level_1&rl_model=gtsr&slr_model=ipcc_2021_med">risk
maps</a> </b></span><span style="font-size: x-small;">(1)</span> put the LRT terminals, the airport and the CBD’s Western Viaduct, below the annual
flood level before the end of the 60-year horizon used to justify it. <o:p></o:p></span></p>
<p align="center" class="MsoNormal" style="text-align: center;"><b><span lang="EN-US">Inundation
Prospects 2080: Auckland CBD and Airport<o:p></o:p></span></b></p><p align="center" class="MsoNormal" style="text-align: center;"><b></b></p><div class="separator" style="clear: both; text-align: center;"><b><a href="https://blogger.googleusercontent.com/img/a/AVvXsEjuX-A-YPzHGz3OURkHXXhQbXCt1d6K9yk36NY42FGL7PVPD2dOf2p4-NQAZH_z9Dk8qNgeTMxTltf1O8siOHZqiA1A8ba8NfrftaHe5UibqtSXkgPVjC_dizbWHSrcw8C2Mc1Ug8nUZAUgHCaiC7uTpuP5-Vlbw9gh1DDW3yUUKn7LzgsD8o3Ys1Vj=s878" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="878" data-original-width="555" height="400" src="https://blogger.googleusercontent.com/img/a/AVvXsEjuX-A-YPzHGz3OURkHXXhQbXCt1d6K9yk36NY42FGL7PVPD2dOf2p4-NQAZH_z9Dk8qNgeTMxTltf1O8siOHZqiA1A8ba8NfrftaHe5UibqtSXkgPVjC_dizbWHSrcw8C2Mc1Ug8nUZAUgHCaiC7uTpuP5-Vlbw9gh1DDW3yUUKn7LzgsD8o3Ys1Vj=w252-h400" width="252" /></a></b></div><div class="separator" style="clear: both; text-align: justify;"><span style="text-align: left;"><br /></span></div><div class="separator" style="clear: both; text-align: justify;"><span style="text-align: left;">Even without sea level rise and with heroic
assumptions about Auckland’s growth (more on that below), the project makes </span><span style="color: black; text-align: left;"><b><a href="https://cities-matter.blogspot.com/2021/12/auckland-cannot-afford-light-rail.html">no
economic sense</a>.</b></span><span style="text-align: left;"> An abysmally low return, the likelihood of delays, and
inevitable cost blowouts will undermine </span><b style="text-align: left;"><a href="https://www.stuff.co.nz/business/opinion-analysis/127674536/is-aucklands-new-14-billion-rail-line-a-harry-potter-fantasy">productivity</a>.</b></div><div class="separator" style="clear: both; text-align: justify;"><span style="text-align: left;"><br /></span></div><div class="separator" style="clear: both; text-align: justify;"><span style="text-align: left;">And on the environmental front, tunnelling
and the demand for concrete and steel will boost medium-term CO</span><span style="font-size: 13.3333px; text-align: left;">2</span><span style="text-align: left;"> emissions despite the declared climate emergency </span><span style="font-size: x-small; text-align: left;">(2)</span><span style="text-align: left;">. The project may not even achieve a net
greenhouse reduction before flooding at both ends of the line stymies its
operations. </span><span style="font-size: x-small; text-align: left;">(3)</span></div>
<p class="MsoNormal">So, there is an
elephant in the tunnel.<span lang="EN-US"><o:p></o:p></span></p>
<p class="MsoNormal"><b><span lang="EN-US">It gets worse. <o:p></o:p></span></b></p>
<p class="MsoNormal"><span lang="EN-US">The Minister of Transport also announced another
major construction project, a <a href="https://www.beehive.govt.nz/release/building-and-shaping-city-future-proofing-auckland-transport-infrastructure">“second”
harbour crossing</a>, predictably endorsed by lobby group, <a href="https://infrastructure.org.nz/transformational-auckland-transport-plan-will-create-a-world-class-nation-once-delivered/">Infrastructure
New Zealand</a>. <o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US">The new crossing will parallel the Auckland Harbour Bridge and share
its northern approach. Unfortunately, this portion of State Highway One road already floods in severe storms. Given
that it will flood more frequently as the sea level rises and storm events
increase, the planned crossing will do little for network resilience. (4)<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US">(We should mention that there is already a
second crossing. Between West Auckland and North Shore, it will not be
directly affected by climate change because its approaches are well above sea
level).<o:p></o:p></span></p>
<p class="MsoNormal"><b><span lang="EN-US">Tunnel-vision <o:p></o:p></span></b></p>
<p class="MsoNormal"><span lang="EN-US">Acknowledging a Climate Emergency should
lead to reconsideration of urban form and infrastructure to deal with the
structural drivers of emissions. Current plans for excessive public investment will provide disproportionate private benefits to the small minority of Auckland’s households and businesses that benefit from the operation of fixed-route, heavily subsidised transit services. Turning
attention, instead, to land use and the relationship where most people live and work (which is clearly not the CBD) should lead to more much equitable urban form and investment outcomes. <o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US">The government, the council, and
its agencies should be revising their long-term plans to recognise the reality
of climate change and shifting urban form, and aim to reduce transport demand
without penalising mobility. Instead, their </span>aim seems to be to cement in historical city form in the face of unprecedented climate change .</p>
<p class="MsoNormal"><span lang="EN-US">The plans will seriously disrupt lives and, through poor use of capital
and crowding out better investment, undermine productivity. On the plus side (?), they should sustain an oligopolistic civil engineering and infrastructure sector and prop up CBD and on-route property values. <o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US">Incidentally, climate myopia is not confined
to the public sector. It’s fascinating to see businesses taking up new, ”green”
commercial space in downtown Auckland’s future flood zone, while vacancies increase
in the elevated uptown offices they are abandoning. <o:p></o:p></span></p>
<p class="MsoNormal"><b>Auckland at a tipping
point<o:p></o:p></b></p>
<p class="MsoNormal">We need to acknowledge
another elephant.<o:p></o:p></p>
<p class="MsoNormal">With Covid people think about a new normal in terms of public health. Equally significant, though, Covid has accelerated shifts already changing Auckland’s growth path.
Consider the combined impacts of:<o:p></o:p></p>
<p class="MsoListParagraphCxSpFirst" style="margin-left: 18pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18pt;"><!--[if !supportLists]--><span style="font-family: Symbol; mso-ansi-language: EN-NZ; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]-->A cyclical
downturn in immigration, which commenced in 2018, accelerated under
Covid;<o:p></o:p></p>
<p class="MsoListParagraphCxSpMiddle" style="margin-left: 18pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18pt;"><!--[if !supportLists]--><span style="font-family: Symbol; mso-ansi-language: EN-NZ; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]-->A wage-disadvantaged
economy will prolong the migration deficit beyond the “Covid effect”;<o:p></o:p></p>
<p class="MsoListParagraphCxSpMiddle" style="margin-left: 18pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18pt;"><!--[if !supportLists]--><span style="font-family: Symbol; mso-ansi-language: EN-NZ; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]-->Technology
advances and changing work practices <span lang="EN-US"><a href="https://cities-matter.blogspot.com/2021/01/covid-19-unpacking-city.html"><span lang="EN-NZ"><b>undermining central city</b></span></a></span> growth;<o:p></o:p></p>
<p class="MsoListParagraphCxSpMiddle" style="margin-left: 18pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18pt;"><!--[if !supportLists]--><span style="font-family: Symbol; mso-ansi-language: EN-NZ; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]-->Land,
service, and congestion costs leading to the decentralisation of industry;<o:p></o:p></p>
<p class="MsoListParagraphCxSpMiddle" style="margin-left: 18pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18pt;"><!--[if !supportLists]--><span style="font-family: Symbol; mso-ansi-language: EN-NZ; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]-->Changes in
attitudes to work, careers, and lifestyle reshaping how and where people want
to live, and where and when they want to work;<o:p></o:p></p>
<p class="MsoListParagraphCxSpMiddle" style="margin-left: 18pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18pt;"><!--[if !supportLists]--><span style="font-family: Symbol; mso-ansi-language: EN-NZ; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;"> </span><span style="font-family: "Times New Roman"; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">A</span></span> continuing population push out of Auckland;<o:p></o:p></p>
<p class="MsoListParagraphCxSpMiddle" style="margin-left: 18pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18pt;"><!--[if !supportLists]--><span style="font-family: Symbol; mso-ansi-language: EN-NZ; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;"> </span><span style="font-family: "Times New Roman"; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">Technology c</span></span>hanges in the distribution of goods (bar codes, robotics,
consumer-focused logistics) and services (decentralisation and democratisation
through IT and AI);<o:p></o:p></p>
<p class="MsoListParagraphCxSpLast" style="margin-left: 18pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18pt;"><!--[if !supportLists]--><span style="font-family: Symbol; mso-ansi-language: EN-NZ; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]-->An
increasingly obsolete 20th Century model of urban and commercial hierarchies behind Auckland’s long-term planning.<o:p></o:p></p>
<p class="MsoNormal">Auckland is unlikely to grow to match the bullish projections used by the
current crop of city planners and builders.
Nor will urban design based on debatable assumptions about where people should live
and work. <o:p></o:p></p>
<p class="MsoNormal"><b>Revising urban form
- planning for dispersal<o:p></o:p></b></p>
<p class="MsoNormal">With or without
climate change, it is time to ease over-investment in that ageing tiara, the
city centre, and put more into our scattered diamonds, emerging urban villages,
and our pearls on a string – the centres of Wellsford, Warkworth, Drury,
Pokeno, Tuakau, and the like – north and south of Auckland.</p>
<p class="MsoNormal">It is time to focus investment on the infrastructure and amenity needs of a range of urban centers rather than on mindlessly sinking public funds into the CBD. This means developing and maintaining well-balanced, localised land use and services. On the transport front, decentralised
investment can facilitate more active travel options and demand-based vehicle
sharing. Flexible bus options can operate both within and between centres, the
latter on strong corridor connections among them. <o:p></o:p></p><p class="MsoNormal">Fortuitously, supporting dispersal within and beyond the city means spreading the risks associated with climate change and adopting defensive rather than intensification strategies on the waterfront. </p>
<p class="MsoNormal"><b><span lang="EN-US">Dealing with the risk of climate change<o:p></o:p></span></b></p>
<p class="MsoNormal"><span lang="EN-US">Of course, that’s just an opinion from
outside the tent.<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US">But here's my take on these diverging
scenarios in the form of a risk/regret matrix.
The risks (“<i>How likely are the climate change projections?</i>”) fall
on the vertical axis, the planning options on the horizontal axis (“<i>Which
development path shall we take</i>”?)<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US"> </span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEhp3aaIvf0Ej0uvTh5tzzfQ9cQ8SihoQfeLgiX9dJnppQaEubZCg3wiCt4FIdyPmll1hKfzK0pLeimSjH14QoT6yDR20Pyx9v-cTR0purn42Je0ahsmgxB4pH9gdPADfnhxYJFsHt8HYG_Pq2G_rLmrDXAT49KdpUDITEJAkizheWEI57zQOVqGwAmV=s720" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="599" data-original-width="720" height="333" src="https://blogger.googleusercontent.com/img/a/AVvXsEhp3aaIvf0Ej0uvTh5tzzfQ9cQ8SihoQfeLgiX9dJnppQaEubZCg3wiCt4FIdyPmll1hKfzK0pLeimSjH14QoT6yDR20Pyx9v-cTR0purn42Je0ahsmgxB4pH9gdPADfnhxYJFsHt8HYG_Pq2G_rLmrDXAT49KdpUDITEJAkizheWEI57zQOVqGwAmV=w400-h333" width="400" /></a></div><br /><p></p>
<p class="MsoNormal"><b>The case for
changing direction</b></p><p class="MsoNormal">The
current investment path (which leads to cell A or C) looks wrong. If we stay with it and the models
are about right, we will write off a lot of investment and lower our ability to
react to the impacts of climate change (Cell A). Even if the climate
settles, we may still look back with regret at misplaced and under-costed commitments
(Cell C). </p><p class="MsoNormal">If, on the other hand, we shift to dispersed and flexible investment
and the climate remains benign (Cell D), we would at least have a policy
framework that should cope well with slower growth and reduce inequities within
the city.</p><p class="MsoNormal"><o:p></o:p></p>
<p class="MsoNormal">Finally, if we are
fully exposed to the rigours of an unstable climate, then catering for dispersed development and opting for flexible public transport would provide the resilience and capacity to bounce back
from climate disruption (Cell B). The
consequences of climate change may not be pleasant, but we will be better
placed to deal with them. There will be regret – it’s too late to wind back the
climate change clock – but we will have done our best to minimise it.<o:p></o:p></p>
<p class="MsoNormal"><b>By the way …</b><o:p></o:p></p>
<p class="MsoNormal">Globally, the money-printing
presses are grinding to a halt. The prospect that inflation will ease central
and local government deficits will be offset, in part, by rising interest
rates. Money is no longer free, or debt
without consequence. The case for major transport projects must be robust
rather than shaky, definitive rather than indicative.<o:p></o:p></p>
<p class="MsoNormal">Proceed with the LRT
and Auckland’s Climate Emergency will generate a fiscal crisis and see the
integrity of Auckland’s infrastructure undermined as the promise and pressures
of growth diminish, fiscal and financial liabilities increase, and the
sea encroaches. <o:p></o:p></p>
<div><!--[if !supportFootnotes]--><br clear="all" />
<hr align="left" size="1" width="33%" />
<!--[endif]-->
<div id="ftn1">
<p class="MsoFootnoteText"><span style="font-size: x-small;"><a href="file:///C:/Users/pjmcd/Dropbox/Blogs/On%20Track%20for%20the%20Perfect%20Storm.docx#_ftnref1" name="_ftn1" title=""><span class="MsoFootnoteReference"><span lang="EN-US"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span face=""Calibri",sans-serif" lang="EN-US" style="line-height: 107%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[1]</span></span><!--[endif]--></span></span></a><span lang="EN-US"> </span> <span>B<span lang="EN-US">ased on the
2021 IPCC global warming consensus</span></span></span></p><p class="MsoFootnoteText"><span style="font-size: x-small;"><a href="file:///C:/Users/pjmcd/Dropbox/Blogs/On%20Track%20for%20the%20Perfect%20Storm.docx#_ftnref2" name="_ftn2" title=""><span class="MsoFootnoteReference"><span lang="EN-US"><span class="MsoFootnoteReference"><span face="Calibri, sans-serif" lang="EN-US" style="line-height: 107%;">[2]</span></span><!--[endif]--></span></span></a><span lang="EN-US"> </span><span> For example, </span><span lang="EN-US"><a href="https://www.iea.org/reports/cement"><span lang="EN-NZ">cement</span></a></span><span> releases over 0.5tCO2/tonne and </span><span lang="EN-US"><a href="https://www.iea.org/reports/iron-and-steel"><span lang="EN-NZ">steel</span></a></span><span> over 1t/tonne produced.</span></span></p></div>
<div id="ftn3">
<p class="MsoFootnoteText" style="margin-left: 36pt; text-indent: -36pt;"><span style="font-size: x-small;"><a href="file:///C:/Users/pjmcd/Dropbox/Blogs/On%20Track%20for%20the%20Perfect%20Storm.docx#_ftnref3" name="_ftn3" title=""><span class="MsoFootnoteReference"><span lang="EN-US"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span face="Calibri, sans-serif" lang="EN-US" style="line-height: 107%;">[3]</span></span><!--[endif]--></span></span></a><span lang="EN-US"> </span> The Technical Appendices behind the <span lang="EN-US"><a href="file:///C:/Users/pjmcd/Dropbox/McDermott%2520Consultants/Resources/Auckland/Light%2520Rail/again.pdf"><span lang="EN-NZ">Indicative Business
Case</span></a></span>,
including Carbon Assessment, are not yet <span> </span><span> </span>published.<o:p></o:p></span></p>
</div>
<div id="ftn4">
<p class="MsoFootnoteText" style="margin-left: 36pt; text-indent: -36pt;"><span style="font-size: x-small;"><a href="file:///C:/Users/pjmcd/Dropbox/Blogs/On%20Track%20for%20the%20Perfect%20Storm.docx#_ftnref4" name="_ftn4" title=""><span class="MsoFootnoteReference"><span lang="EN-US"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span face="Calibri, sans-serif" lang="EN-US" style="line-height: 107%;">[4]</span></span><!--[endif]--></span></span></a><span lang="EN-US"> </span> Flooding could be offset by extensive and expensive
raising of the road (State Highway One), some of which will be needed anyway to
keep the existing bridge functional. Expanding it at the same time, over 8km of
vulnerable shoreline, raises a whole lot more issues (and costs). though.</span><span style="font-size: 9pt;"><o:p></o:p></span></p>
</div>
</div>Phil McDermotthttp://www.blogger.com/profile/06869744647213369964noreply@blogger.com0tag:blogger.com,1999:blog-7011655232093163642.post-70143118290617861242021-12-07T09:46:00.003+13:002021-12-07T09:46:59.959+13:00Auckland Cannot Afford Light Rail<p> <b><span lang="EN-US">A long and winding trail</span></b></p>
<p class="MsoNormal"><span lang="EN-US">The October report from the <a href="https://www.lightrail.co.nz/">Auckland Light Rail</a> team promoting tunneled
light rail from the City Centre to Mangere continues a history of reports built
on aspiration rather than evidence. Like its predecessors, it is long past its
use-by date. <o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US">A proposal for underground rapid rail proposed
by American consultants failed to get traction in 1965, a classic case of a
landmark project that could not be justified. <span style="mso-spacerun: yes;"> </span><o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US">That has not changed. Regular rejigging of
the dream since 2009 is a case of a solution looking for a problem. In an <a href="https://cities-matter.blogspot.com/2020/06/end-of-line-for-auckland-light-rail.html">earlier
post</a> I looked for a consistent rationale for light rail.<span style="mso-spacerun: yes;"> </span>All I found was:<o:p></o:p></span></p>
<p class="MsoNormal"><i><span lang="EN-US" style="background: white; color: black; mso-color-alt: windowtext;">considerable variation in the policy trail regarding what LRT
services might be required, and in what order: long-term cross-regional
commuting? linking the inner Isthmus suburbs and the CBD? lifting capacity
between the outer Isthmus suburbs and the CBD? or linking other employment
centres (Westgate, the airport) with the CBD? </span><span lang="EN-US"><o:p></o:p></span></i></p>
<p class="MsoNormal"><span lang="EN-US">It seems a decision has now been made.<span style="mso-spacerun: yes;"> </span>It is not a sound one. <o:p></o:p></span></p>
<p class="MsoNormal"><b><span lang="EN-US">Who will use it? <o:p></o:p></span></b></p>
<p class="MsoNormal"><b><span lang="EN-US">CBD commuters?</span></b><span lang="EN-US"> Not many. Jobs in the CBD declined by 7% last year. Over half were
in the business sectors that accounted for well over 50% of CBD growth in the
previous 20 years. Expect further falls: this is the sector in which the largest
share of <a href="https://cities-matter.blogspot.com/2021/01/covid-19-unpacking-city.html">jobs
can be done remotely</a>.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US">As it is, the CBD accounts for just 14% of
Auckland’s jobs. Its where fewer than half the commuters rely on cars. Most arrive
from the northern or the eastern suburbs. Very few will be using light rail from
the south, and most have bus options.<o:p></o:p></span></p>
<p class="MsoNormal"><b><span lang="EN-US">Inbound travellers?</span></b><span lang="EN-US"> Forget it. Mass tourism has tanked and there is no saying whether or
when numbers will recover.<span style="mso-spacerun: yes;"> </span>Anyway, it
relies on coaches. Independent travellers hire vehicles at the airport, or head
directly to their accommodation by taxi or shuttle.<span style="mso-spacerun: yes;"> </span>Some outbound travellers may use rail if they
live nearby and are not encumbered by cases, while inbound locals will usually head
directly home with their meeters and greeters.<o:p></o:p></span></p>
<p class="MsoNormal"><b><span lang="EN-US">Mangere workers?</span></b><span lang="EN-US"> A few, perhaps. The area employs 34,000 people, 80% on and around
Auckland Airport. The majority come from across South Auckland, though, and a
few from the west. Light rail running north doesn’t meet their needs.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></p>
<p class="MsoNormal"><b><span lang="EN-US">Non-work trips?</span></b><span lang="EN-US"> There may be demand for Isthmus-based trips for purposes other than
commuting. But given the many origins and destinations for personal, social,
retail, and education trips, flexible modern buses provide a far more cost-effective
option. <o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US">So, it is hard to see market support for the
optimistic projections underpinning the report (p32). <o:p></o:p></span></p>
<p class="MsoNormal"><b><span lang="EN-US"><o:p> </o:p></span></b></p>
<p class="MsoNormal"><b><span lang="EN-US">Does it stack up economically?<o:p></o:p></span></b></p>
<p class="MsoNormal" style="tab-stops: 382.75pt;"><span lang="EN-US">Even assuming
the projection of boardings is reasonable, a total benefit of $11.6bn for
Tunnelled Light Rail is no more than “<i>broadly commensurate with costs</i>”
(at $10.3bn).<span style="mso-spacerun: yes;"> </span>Costs and benefits are summed
over 60 years and discounted at 4%. These are geared to justifying projects with
high upfront costs and a long payback period; in other words, high risk, low
productivity projects. <o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US">It gets worse. It is not clear that the
costs of business and household disruption during construction have been
factored in. The cost of “<i>enabling infrastructure for ... urban
development</i>” (touted as a benefit, pp. 34-35) has not been included.<span style="mso-spacerun: yes;"> </span>No provision appears to have been made for the
erosion of <span style="mso-spacerun: yes;"> </span>bus patronage. And the stated
accuracy of the capital cost estimates still lies between -50% and +60%!<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US">Quite simply, the project lacks economic
justification. The consequences will be a huge cost to taxpayers and ratepayers:
see <a href="https://thefingeronthepulse.blogspot.com/2021/12/eyes-wide-open-cost-of-commuter-rail.html">here</a>
for an instructive (if more modest) example in Queensland.<o:p></o:p></span></p>
<p class="MsoNormal"><b><span lang="EN-US">Tail wagging the dog<o:p></o:p></span></b></p>
<p class="MsoNormal"><span lang="EN-US">The latest report is founded on the notion
that light rail will work if accompanied by intensive corridor development to sustain Auckland’s projected growth. So, we will be shaping urban land use to
support an ill-conceived project. <span style="mso-spacerun: yes;"> </span>Unfortunately, the unspecified and uncosted “<i>integrated
urban interventions</i>” required to make light rail work will add a lot more
to project costs than benefits, compounding the risk of under-specifying and
under-costing that have driven the cost blow-out, ongoing disruption, and
delays on the totally uneconomic <a href="https://cities-matter.blogspot.com/2020/05/its-not-shovels-that-count-its-what.html">Central
Rail Link</a>. <o:p></o:p></span></p>
<p class="MsoNormal"><b><span lang="EN-US">Let’s get real<o:p></o:p></span></b></p>
<p class="MsoNormal"><span lang="EN-US">The report appears to be a self-serving document
assembled by a range of agencies (“<i>central and local government working
together</i>”) driven by a ”<i>need to develop new living patterns</i>.” There
is scant regard for the public purse, or for how residents might like to live, a
severe case of <a href="https://en.wikipedia.org/wiki/Groupthink">groupthink</a>.
<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US">Here are some contrary arguments:<o:p></o:p></span></p>
<p class="MsoListParagraphCxSpFirst" style="margin-left: 18.0pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><!--[if !supportLists]--><span lang="EN-US" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span lang="EN-US">People have diverse mobility
and access needs – fixed route public commuter options only address a
small share of them. For many households and life stages automobility remains a
high priority.<o:p></o:p></span></p>
<p class="MsoListParagraphCxSpMiddle" style="margin-left: 18.0pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><!--[if !supportLists]--><span lang="EN-US" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span lang="EN-US">Bus transport in Auckland is working
well , despite competition with revitalised heavy passenger rail.<span style="mso-spacerun: yes;"> </span>Buses offer flexible operations, fiscally
responsible investment, and continuous technical improvement.<o:p></o:p></span></p>
<p class="MsoListParagraphCxSpMiddle" style="margin-left: 18.0pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><!--[if !supportLists]--><span lang="EN-US" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span lang="EN-US">Road-based transit will adapt with shared travel options in vehicles that are becoming safer, more
automated, and less prone to failure (increasing the capacity of the existing road
network). <o:p></o:p></span></p>
<p class="MsoListParagraphCxSpMiddle" style="margin-left: 18.0pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><!--[if !supportLists]--><span lang="EN-US" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span lang="EN-US">With rising carbon prices, the
uptake of electric light vehicles and hydrogen fueled heavy vehicles well within
the 60-year framework makes any argument around transport emissions
redundant. (A fraction of the cost of light rail could go a long way towards accelerating
that transition).<o:p></o:p></span></p>
<p class="MsoListParagraphCxSpLast" style="margin-left: 18.0pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><!--[if !supportLists]--><span lang="EN-US" style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span lang="EN-US">The decentralisation of services,
retailing and employment is a land use trend that promises to reduce trip
intensity and length, by meeting more <span style="mso-spacerun: yes;"> </span>household needs locally. It should be encouraged.<o:p></o:p></span></p>
<p class="MsoNormal"><b><span lang="EN-US">An elephant in the room: the growth fixation<o:p></o:p></span></b></p>
<p class="MsoNormal"><span lang="EN-US">A fixation on endless growth codified in
Auckland’s Unitary Plan may be misleading policymakers. Whether or not a city
of around <a href="https://www.aucklandcouncil.govt.nz/plans-projects-policies-reports-bylaws/our-plans-strategies/auckland-plan/development-strategy/future-auckland/Pages/what-auckland-look-like-future.aspx">2.5m
by 2050</a> is what people want or sustainable may no longer be moot.<span style="mso-spacerun: yes;"> </span>Even before Covid struck, the driver of the exceptional
post-GFC growth mesmerising super city planners – international migration – was
turning down, while the net outflow of people to other parts of New Zealand was
growing. <o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US">The halt to Auckland’s growth in 2021 is
not a blip, it is response to the cyclical nature of international migration, a
falling rate of natural increase, the decanting of an ageing population to
provincial New Zealand, slowing employment growth, and the diminishing
attraction of a city of over-priced housing and increasing congestion – which light
rail will do little to alleviate.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US">If productivity is driven down by ill-conceived
mega-projects, expect emigration to prevail over the next decade undermining
the growth assumptions on which Auckland’s planning and investment is based.
The city needs a Plan B.<o:p></o:p></span></p>
<p class="MsoNormal"><b><span lang="EN-US">Rapid Rail to Mangere – A Wet Feat?<o:p></o:p></span></b></p>
<p class="MsoNormal"><span lang="EN-US">And there’s a second elephant: climate
change. With heavy consumption of concrete and steel in tunneling, track
laying, and station development, the proposal runs headlong into New Zealand’s
commitment to halving net CO<sup>2</sup> emissions by 2030. Light rail’s
embodied emissions will exceed any gains from shifting people from cars and
buses for decades. <o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US">Worse - if temperatures rise by even 1.5<sup>o</sup>C
above the Climate Change datum (a prospect based on more realistic assumptions than
those used to support light rail) both Auckland Airport and much of the Wynyard
Quarter could be beneath the tideline. <o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US">Its time halt the expensive business of surveying,
consulting, and concocting cases, pack up the train set, and concentrate on
developing resilience in the existing transport system. Auckland is at a crossroad.<span style="mso-spacerun: yes;"> </span>It may be that it is time to take the path of
conserving resources, not squandering them <o:p></o:p></span></p>Phil McDermotthttp://www.blogger.com/profile/06869744647213369964noreply@blogger.com1tag:blogger.com,1999:blog-7011655232093163642.post-1133001726540740752021-02-26T13:48:00.043+13:002022-04-13T11:48:07.715+12:00In defence of NIMBYs<p><span style="font-family: arial;"><b><span style="font-size: medium;">Why? Not in my backyard! Or, w</span></b></span><b style="font-family: arial;"><span style="font-size: medium;">hy not in my backyard? </span></b></p><p class="MsoNormal"><span style="font-family: arial; font-size: medium;">NIMBYism is
seen as a negative, a selfish <i>not-in-my-backyard </i>reaction by residents to any significant changes proposed for their neighbourhood. But is that always justified? It depends on who you ask. </span></p>
<p class="MsoNormal"><span style="line-height: 107%;"><span style="font-family: arial; font-size: medium;">Certainly slamming NIMBYs makes for
good press, offering developers and planners the high ground in the encounter between
haves, with their commitment to the current environment, and the have-nots.<span style="mso-spacerun: yes;"> </span>The have-nots are those (other
than investors) that stand to benefit from the proposed change, be they drivers
on an expanded highway, commuters on new transit connections, potential
dwellers in new apartments, or workers <span style="mso-spacerun: yes;"> </span>in
new factories, warehouses, and offices. <o:p wfd-id="19"></o:p></span></span></p>
<p class="MsoNormal"><span style="font-family: arial; font-size: medium;"><span style="line-height: 107%;">So, it is
interesting when a media commentator like Kerrie McIvor defends the NIMBYs,
setting out the neighbourhood issues associated with residential intensification
</span><span lang="EN-US" style="line-height: 107%;"><a href="https://www.nzherald.co.nz/nz/kerre-mcivor-the-nimbys-might-have-a-point/7UNSRTKK7EM2CJGBEZPDUQF2RI/"><span lang="EN-NZ" style="mso-ansi-language: EN-NZ; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">from the ground up</span></a></span><span style="line-height: 107%;">.<o:p wfd-id="18"></o:p></span></span></p>
<p class="MsoNormal"><b><span style="line-height: 107%;"><span style="font-family: arial; font-size: medium;">People who know asking the questions that need to be answered<o:p wfd-id="17"></o:p></span></span></b></p>
<p class="MsoNormal"><span style="font-family: arial; font-size: medium;"><span style="line-height: 107%;">There
is increasing recognition of the legitimacy of local communities </span><span lang="EN-US" style="line-height: 107%;"><a href="https://www.washingtonpost.com/posteverything/wp/2014/10/23/stop-hating-on-nimbys-theyre-saving-communities/"><span lang="EN-NZ" style="mso-ansi-language: EN-NZ; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">reacting against development</span></a></span><span style="line-height: 107%;"> that threatens their established
way of life.<span style="mso-spacerun: yes;"> </span>The people most immediately
impacted may be the best-placed to ask critical questions.<span style="mso-spacerun: yes;"> </span>They also have </span><span lang="EN-US" style="line-height: 107%;"><a href="https://theconversation.com/30-minute-city-not-in-my-backyard-smart-cities-plan-must-let-people-have-their-say-59161"><span lang="EN-NZ" style="mso-ansi-language: EN-NZ; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">the right to ask them</span></a></span><span style="line-height: 107%;"> if council commitment
to citizen engagement is genuine, and if developers rely on claims of consultation to legitimise their proposals. <o:p wfd-id="16"></o:p></span></span></p>
<p class="MsoNormal"><span style="font-family: arial; font-size: medium;"><span style="line-height: 107%;">Denigrating
<u>all</u> local reaction under the </span><span lang="EN-US" style="line-height: 107%;"><a href="https://www.researchgate.net/profile/Andrew_Whittemore/publication/326311019_Reassessing_NIMBY_The_demographics_politics_and_geography_of_opposition_to_high-density_residential_infill/links/5b649835aca2724c1f201ca1/Reassessing-NIMBY-The-demographics-politics-and-geography-of-opposition-to-high-density-residential-infill.pdf"><span lang="EN-NZ" style="mso-ansi-language: EN-NZ; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">singular</span></a></span><span style="line-height: 107%;"> label NIMBY also obscures the <a href="https://www.researchgate.net/profile/Andrew_Whittemore/publication/326311019_Reassessing_NIMBY_The_demographics_politics_and_geography_of_opposition_to_high-density_residential_infill/links/5b649835aca2724c1f201ca1/Reassessing-NIMBY-The-demographics-politics-and-geography-of-opposition-to-high-density-residential-infill.pdf">different
motivations</a> of opponents. It fails to distinguish those that resist change as
a matter of course from those whose insights and experience raise legitimate
questions.<o:p wfd-id="15"></o:p></span></span></p>
<p class="MsoNormal"><b><span style="line-height: 107%;"><span style="font-family: arial; font-size: medium;">Protecting the right to do it badly?<o:p wfd-id="14"></o:p></span></span></b></p>
<p class="MsoNormal"><span style="line-height: 107%;"><span style="font-family: arial; font-size: medium;">Dismissing
local opposition risks lowering the barrier to ill-conceived projects. If a
proposal cannot meet the challenges raised, questions must be asked about its
merits. <span style="mso-spacerun: yes;"> </span>No development may be better than poor development.<span style="mso-spacerun: yes;"> </span>Or, modification, even moderation, may lead to enhancements that make a
project more acceptable to locals and more attractive to the beneficiaries. Local opposition can lead to better outcomes all round, leading to better standards, <a href="https://www.nzherald.co.nz/nz/mt-wellington-townhouses-on-ruawai-road-raising-questions-about-auckland-councils-commitment-to-quality-design/F2OA7RZ227ESO7X6ONQC6EE6E4/">design</a>,
and delivery. <span style="mso-spacerun: yes;"> </span><o:p wfd-id="13"></o:p></span></span></p>
<p class="MsoNormal"><span style="font-size: medium;"><span style="line-height: 107%;"><span style="font-family: arial;">Unfortunately,
weak or token consultation, entrenched positions taken by advisors, and blue
sky financial or fiscal expectations by promoters lead to the discounting of
local concerns and expertise.<span style="mso-spacerun: yes;"> </span>This is
especially so when local issues emerge only when advanced plans, to which promoters are already committed, </span></span><span style="font-family: arial;">are revealed</span><span style="font-family: arial;">.</span></span></p>
<p class="MsoNormal"><span style="line-height: 107%;"><span style="font-family: arial; font-size: medium;">There is more
to NIMBYism, then, than resistance for resistance’s sake. After all, the challenge for planning is to reconcile development with environmental and community values.
<o:p wfd-id="11"></o:p></span></span></p>
<p class="MsoNormal"><b><span style="line-height: 107%;"><span style="font-family: arial; font-size: medium;">Busting down the doors – clogging up the pipes<o:p wfd-id="10"></o:p></span></span></b></p>
<p class="MsoNormal"><span style="line-height: 107%;"><span style="font-family: arial; font-size: medium;">Take the response
to the failing housing market over the last two decades.<span style="mso-spacerun: yes;"> </span>Neighbourhood resistance to intensification garners
little sympathy from decision-makers and commentators who see it as pitch
by those with secure housing in established neighbourhoods against the interests of those in
need of similar shelter and security. </span></span></p><p class="MsoNormal"><span style="font-family: arial; font-size: large;">This is an over-simplification.</span></p>
<p class="MsoNormal"><span style="line-height: 107%;"><span style="font-family: arial; font-size: medium;">Housing policies
have relied too often on the simplistic adoption of residential intensification to boost
supply.<span style="mso-spacerun: yes;"> </span>When planners and developers
choose a location for intensification because of its attractiveness the risk is that they end up creating the antithesis of what was
there. <span style="mso-spacerun: yes;"> </span>Nobody wins.<o:p wfd-id="8"></o:p></span></span></p>
<p class="MsoNormal"><span style="line-height: 107%;"><span style="font-family: arial; font-size: medium;">The result is
reliance on expensive land within boundaries often ill-equipped to cope . Affordable
housing under these circumstances means building low cost, low quality dwellings, with high embodied and operational energy demands and all-too-often construction defects. It may also mean a high bill from over-loaded, ageing, and capacity-constrained infrastructure: the roads, pipes, parks, and waterways needing rehabilitation and expansion which ratepayers – existing residents
and new – will have to pay for. <o:p wfd-id="7"></o:p></span></span></p>
<p class="MsoNormal"><b><span style="line-height: 107%;"><span style="font-family: arial; font-size: medium;">Looking out for the beneficiaries <o:p wfd-id="6"></o:p></span></span></b></p>
<p class="MsoNormal"><span style="line-height: 107%;"><span style="font-family: arial; font-size: medium;">Simple-minded
solutions to difficult problems – a shortage of dwellings in this case – can
lead to outcomes that benefit no-one. Dig deeper into the aspirations of the
unhoused, and it may be that the opponents of increasing density in urban areas
are championing what many people want and what apartment living fails to
provide. <o:p wfd-id="5"></o:p></span></span></p>
<p class="MsoNormal"><span style="line-height: 107%;"><span style="font-family: arial; font-size: medium;">Local
communities resisting change can be seen as the champions of the values that people
today see as rights: clean air, water clean enough to swim and fish in (and
drink), access to sunlight and green space, limits on noise and light
pollution, a degree of visual and aural privacy, reasonable access to private
services and public amenities, and security.<o:p wfd-id="4"></o:p></span></span></p>
<p class="MsoNormal"><span style="font-family: arial; font-size: medium;"><span style="line-height: 107%;">There is no
guarantee that the aspirations of future residents will be met by pockets of high-density
housing. </span><span lang="EN-US" style="line-height: 107%;"><a href="https://www.sciencedirect.com/science/article/abs/pii/S0305900612000189"><span lang="EN-NZ" style="mso-ansi-language: EN-NZ; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">Evidence</span></a></span><span style="line-height: 107%;"> from a study of five UK cities indicates that denser
neighbourhoods are still </span><span lang="EN-US" style="color: #2e2e2e; line-height: 107%;">“<i>more likely to provide poor access to quality green space</i>”,
while their residents “<i>are more likely to feel unsafe </i>[and] <i>experience
less social interaction than in lower density suburbs</i>”.<o:p wfd-id="3"></o:p></span></span></p>
<p class="MsoNormal"><span style="line-height: 107%;"><span style="font-family: arial; font-size: medium;">Too often, the
rush to compensate long-standing failures in the housing market has led to alternatives
that fail to deliver the real benefits of decent housing to the intended beneficiaries – the occupants of the new dwellings.<o:p wfd-id="2"></o:p></span></span></p>
<p class="MsoNormal"><b><span style="line-height: 107%;"><span style="font-family: arial; font-size: medium;">Equity should not rely on lowering standards<o:p wfd-id="1"></o:p></span></span></b></p>
<div style="text-align: left;"><span style="line-height: 107%;"><span style="font-family: arial; font-size: medium;">So, when
communities call for protection of their living space and the quality of the
local built environment, they are not denying it to others. They are calling
on those that can make a difference to do so in ways that add to the appeal of
urban living, rather than destroy it. Urban plans that prioritise the
destruction of organic suburban spaces to deliver sub-standard outcomes are
about pursuing a form of urbanism that lowers the quality of city living and frustrates the pursuit of equity by lowering the well-being
and expectations of an entire generation, not simply those that happen to make
the most noise about it.</span></span></div>Phil McDermotthttp://www.blogger.com/profile/06869744647213369964noreply@blogger.com0tag:blogger.com,1999:blog-7011655232093163642.post-76872364598028513302021-01-23T09:34:00.003+13:002021-03-11T12:45:27.159+13:00Covid 19 - Unpacking the City<p> <b><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;">The compact city – a crumbling consensus</span></b></p>
<p class="MsoNormal"><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;">The policy consensus promoting compact, centralised cities cannot be
sustained in a world ravaged by Covid-19. The current pandemic is accelerating
the move to dispersed urbanism. Beyond the direct impact of disrupted trade,
travel, and consumption on the economic foundations of cities lies the cascading
impact of changing work behaviours. This post considers what remote working
might mean for urban development.<o:p wfd-id="35"></o:p></span></p>
<p class="MsoNormal"><b><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;">Calculating the number of jobs that can be decanted<o:p wfd-id="34"></o:p></span></b></p>
<p class="MsoNormal"><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;">My </span><span lang="EN-US"><a href="https://cities-matter.blogspot.com/2021/01/the-long-term-consequences-of-covid-19.html"><span face=""Arial",sans-serif" lang="EN-NZ" style="mso-ansi-language: EN-NZ;">previous
post</span></a></span><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;"> summarised the McKinsey Global Institute (MGI) analysis of sector-specific
potential for remote working, applying the resulting metrics to New
Zealand.<span style="mso-spacerun: yes;"> </span>Here, in line with other
developed nations, around 30% of current jobs offer remote working potential. <span style="mso-spacerun: yes;"> </span><o:p wfd-id="33"></o:p></span></p>
<p class="MsoNormal"><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;">This post considers the possible impacts on urban
function and form by applying the MGI approach to New Zealand’s cities and
districts.<o:p wfd-id="32"></o:p></span></p>
<p class="MsoNormal"><b><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;">Urbanisation and Remote Working<o:p wfd-id="31"></o:p></span></b></p>
<p class="MsoNormal"><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;">The share of tasks that can be undertaken remotely has been calculated
across 19 sectors for 67 territorial local authorities (TLA). <span style="mso-spacerun: yes;"> </span>The results have been aggregated into: (1) the
three largest cities (Auckland, Christchurch, Wellington); (2) ten
provincial cities with populations between 50,000 and 175,000; (3) partly
urbanised districts characterised by smaller towns and townships; and (4) mainly
rural districts encompassing rural areas and small settlements (Figure 1).<span style="mso-spacerun: yes;"> </span><o:p wfd-id="30"></o:p></span></p>
<p align="center" class="MsoNormal" style="text-align: center;"><b><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;">Figure 1: Urban
Dimensions of Remote Working Potential, New Zealand<o:p wfd-id="29"></o:p></span></b></p>
<p align="center" class="MsoNormal" style="text-align: center;"><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;"><o:p wfd-id="28"> </o:p></span><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh2DUyJDToAt5u7nnSBuKOxr_rRzo0aUntn-RAYEy4eX6MGn9-_RJjI8TqG80EaRlmGPS2W2WkTJI7pZM__eySeNBIqb8fXHsGguTdyD7zC9rRQKjUVNZVmJZY89d0SYfaTrGgVo4YDDxI/s1280/Figure+1+Covid+Impact.jpg" style="font-family: Arial, sans-serif; margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="1280" height="360" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh2DUyJDToAt5u7nnSBuKOxr_rRzo0aUntn-RAYEy4eX6MGn9-_RJjI8TqG80EaRlmGPS2W2WkTJI7pZM__eySeNBIqb8fXHsGguTdyD7zC9rRQKjUVNZVmJZY89d0SYfaTrGgVo4YDDxI/w640-h360/Figure+1+Covid+Impact.jpg" width="640" /></a><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;"><o:p wfd-id="27"><br /><br /></o:p></span></p><div class="separator" style="clear: both; text-align: justify;" wfd-id="26"><span face="Arial, sans-serif" style="text-align: left;">The potential for remote working appears to be a matter of scale: the
large urban areas offer the greatest opportunities. 36% of Wellington’s jobs
could be done remotely, 32% in Auckland and 29% in Christchurch.</span><span face="Arial, sans-serif" style="text-align: left;"> </span><span face="Arial, sans-serif" style="text-align: left;">The potential is lower among small provincial cities (28%), partly-urbanised districts (25%), and rural areas (22%).</span></div>
<p class="MsoNormal"><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;">It appears that more urbanised areas have greater potential to substitute remote work for fixed-workplace
employment.<span style="mso-spacerun: yes;"> </span>This is confirmed when we plot
potential for remote working against urbanisation across all TLAs (R<sup>2</sup>=0.47,
Figure 2).<span style="mso-spacerun: yes;"> </span><o:p wfd-id="25"></o:p></span></p>
<p align="center" class="MsoNormal" style="text-align: center;"><b><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;">Figure 2:
Urbanisation and Remote Working Potential, New Zealand Council Areas<o:p wfd-id="24"></o:p></span></b></p>
<p class="MsoNormal" style="text-align: center;"><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;">..<span style="mso-spacerun: yes;"> </span></span></p><div class="separator" style="clear: both; text-align: center;" wfd-id="23"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhkf1g1N4QzCMDjkxToUNIYi4_b2y84pg3zjw4GQi-nbE7dXr-F55_7cdU181c8wZtwgpSSKsZHvvkxmA5pf4xUCqcImjtQAqW21XgOuiyD51X24MaSePFvgqxnO9cF8avxwGy8_1SGXsY/s1280/Figure+2+Covid+Impact.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="1280" height="360" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhkf1g1N4QzCMDjkxToUNIYi4_b2y84pg3zjw4GQi-nbE7dXr-F55_7cdU181c8wZtwgpSSKsZHvvkxmA5pf4xUCqcImjtQAqW21XgOuiyD51X24MaSePFvgqxnO9cF8avxwGy8_1SGXsY/w640-h360/Figure+2+Covid+Impact.jpg" width="640" /></a></div><br /> <o:p wfd-id="22"></o:p><p></p>
<p class="MsoNormal"><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;">Examination of the variation around this relationship between urbanisation
and remote working potential indicates the role of differences in local employment
structure.<span style="mso-spacerun: yes;"> </span>More production-based jobs offer lower
potential for remote working, while more business and service jobs lift the potential.
<o:p wfd-id="21"></o:p></span></p>
<p class="MsoNormal"><b><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;">Where within the city?<o:p wfd-id="20"></o:p></span></b></p>
<p class="MsoNormal"><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;">This section considers variation in the potential for remote working <u>within</u>
Auckland (New Zealand’s dominant city with 1.7+m residents). Figures for 20
Local Board areas based on the MGI sector coefficients have been aggregated and
organised in Figure 3 from north to south (left to right on the axis).<span style="mso-spacerun: yes;"> </span>Reflecting the city’s linear geography, areas
at each end are most distant from the CBD.<span style="mso-spacerun: yes;">
</span>The CBD and its fringe comprise the “Central” area, sitting within the
Isthmus, which contains the city’s older, inner suburbs. <o:p wfd-id="19"></o:p></span></p>
<p class="MsoNormal"><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;">Based on this example, remote working potential varies more within the
city than among cities, ranging between 41% in the centre (47% in the CBD
fringe) to 10% in the upper north and west and 2% in the rural south. The
former reflects the high value, administrative, business, and professional jobs
in the inner city and suburbs, and the latter the greater share of manufacturing
and personal service (face-to-face) jobs in the suburbs and primary production
on the fringe. <o:p wfd-id="18"></o:p></span></p>
<p align="center" class="MsoNormal" style="text-align: center;"><b><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;">Figure 3 The
Prospects for Remote Working within Auckland<o:p wfd-id="17"></o:p></span></b></p>
<p class="MsoNormal" style="text-align: center;"><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;"><o:p wfd-id="16"> </o:p></span></p><div class="separator" style="clear: both; text-align: center;" wfd-id="15"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhk7izhD5jQw1BN6QzIwPC6rEzK_H4MH8TeqPSnrFNDFOXUBMtjJxxu6u71NokXIZ9cXcM-zRLDrQ0Wvn7hyphenhyphenbPP72uhKdrFHuZ75ZvyQWFKDoskLuRqNxdJRKsfFWkqiCEPRmELTZOW-Bk/s1280/Figure+3+Covid+Impact.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="1280" height="360" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhk7izhD5jQw1BN6QzIwPC6rEzK_H4MH8TeqPSnrFNDFOXUBMtjJxxu6u71NokXIZ9cXcM-zRLDrQ0Wvn7hyphenhyphenbPP72uhKdrFHuZ75ZvyQWFKDoskLuRqNxdJRKsfFWkqiCEPRmELTZOW-Bk/w640-h360/Figure+3+Covid+Impact.jpg" width="640" /></a></div><br /><p></p>
<p class="MsoNormal"><b><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;">Push and Pull Drivers<o:p wfd-id="14"></o:p></span></b></p>
<p class="MsoNormal"><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;">Much of this theoretical capacity is likely to be taken up.<span style="mso-spacerun: yes;"> </span>On the push side, the risk of exposure to
infectious diseases is reduced by limiting exposure to places where people
congregate for work, education, and entertainment. One benefit is
limiting the spread of other infectious illnesses, a personal and <a href="https://www.newshub.co.nz/home/money/2020/05/remote-working-can-result-in-higher-cost-savings-and-productivity-for-businesses-experts.html">productivity</a>
bonus. Remote meetings offer another productivity gain, lowering travel costs
and focusing information exchange, supervision, and negotiation. <o:p wfd-id="13"></o:p></span></p>
<p class="MsoNormal"><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;">On the pull side, remote working has been positive for many people and
businesses, with reports that the practice is being adopted on an ongoing basis in New Zealand despite limited community transmission of Covid and internationally.<o:p wfd-id="12"></o:p></span></p>
<p class="MsoNormal"><b><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;">What about the downsides?</span></b><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;"><span style="mso-spacerun: yes;"> </span><o:p wfd-id="11"></o:p></span></p>
<p class="MsoNormal"><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;">A suitable work (or school) space within a dwelling is needed to maintain
both productivity and satisfaction from remote working at the individual level.
With housing affordability constraints impacting on younger people and families,
in particular, their capacity to work effectively from home will be
constrained. <o:p wfd-id="10"></o:p></span></p>
<p class="MsoNormal"><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;">Lack of face-to-face contact with colleagues <a href="https://umbrella.org.nz/wellbeing-and-remote-working/">limits the benefits</a>
of work based social interaction. In a Covid-free environment, however, one
option is to mix remote working with workplace attendance one, two, or three
days a week. <o:p wfd-id="9"></o:p></span></p>
<p class="MsoNormal"><b><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;">Impact at the centre<o:p wfd-id="8"></o:p></span></b></p>
<p class="MsoNormal"><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;">However it evolves, the urban impacts of remote working will be
far-reaching. As employment in the central city stutters, policy makers and
investors will have to rethink the principles of workplace location, investment, and development. <o:p wfd-id="7"></o:p></span></p>
<p class="MsoNormal"><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;">Hospitality, personal services, and discretionary retailing in the city
centre will suffer from reduced commuter and work-related spending. They will
also suffer from any changes in the attraction of the city centre for housing.
Modest apartments in multi-storied buildings marketed for a city lifestyle will
lose appeal, becoming a welfare, last resort, or first housing step rather than
lifestyle choice. <o:p wfd-id="6"></o:p></span></p>
<p class="MsoNormal"><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;">Add the </span><span lang="EN-US"><a href="https://cities-matter.blogspot.com/2010/10/deskilling-super-services.html"><span face=""Arial",sans-serif" lang="EN-NZ" style="mso-ansi-language: EN-NZ;">deskilling
of high order services</span></a></span><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;">, displacement of predictable or repetitive
transactional tasks by </span><span lang="EN-US"><a href="https://www.mckinsey.com/featured-insights/future-of-work/skill-shift-automation-and-the-future-of-the-workforce"><span face=""Arial",sans-serif" lang="EN-NZ" style="mso-ansi-language: EN-NZ;">AI</span></a></span><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;">, and the prospect
that the international travel industry shifts away from mass tourism, and the outlook
for city centres as we know them dims. <o:p wfd-id="5"></o:p></span></p>
<p class="MsoNormal"><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;">Against this, the resurgence of suburban centres, provincial cities, satellite
towns, and country life may build on the intrinsic appeal of living locally as more people decamp from intensively urbanised areas, provided,
perhaps, that the policy-makers do not seek to <a href="https://www.nzherald.co.nz/nz/west-auckland-traffic-congestion-and-what-is-planned-to-cure-it/ZTFWVXN6JEI72AUM67BCYQDDEA/">impose
the densities of inner cities</a> on under-resourced suburbs and cling on to the notion of commuting-based city centres. <o:p wfd-id="4"></o:p></span></p>
<p class="MsoNormal"><b><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;">And Infrastructure?<o:p wfd-id="3"></o:p></span></b></p>
<p class="MsoNormal"><span face=""Arial",sans-serif" style="mso-ansi-language: EN-NZ;">As it stands, the compact city comes at considerable cost. The demands on ageing infrastructure from
intensification were never anticipated by the city builders.<span style="mso-spacerun: yes;"> </span>Maintaining or rebuilding energy and water
supplies, the capacity and reliability of wastewater systems, boosting
transport networks and retrofitting ageing transit systems all demand substantial
expenditures, mortgaged in large part against expectations of growth that must now
be in doubt.<span style="mso-spacerun: yes;"> </span><o:p wfd-id="2"></o:p></span></p>
<p class="MsoNormal">If nothing else, the impetus Covid has given to dispersal must shift
attention to infrastructure challenges in existing suburbs. While highlighting the hard questions
in a policy environment beset by an unnatural aversion to greenfield
development (in which the potential for sustainable settlement has suddenly become
compelling); it also raises challenges for small, erstwhile sleepy settlements unprepared
for the demands of a <a href="https://www.newzealandmovers.co.nz/blog/property-crisis-1-in-3-have-looked-at-leaving-auckland">growing
flow of ex-urbanites</a>. </p>Phil McDermotthttp://www.blogger.com/profile/06869744647213369964noreply@blogger.com1tag:blogger.com,1999:blog-7011655232093163642.post-48656992354737138182021-01-02T10:49:00.000+13:002021-01-02T10:49:03.791+13:00The long-term consequences of Covid-19 on the workforce: who – and how many – will work from home?<p> <b><span style="font-size: 12pt;">Crises are
transformational.</span></b></p><p><span style="font-size: 12pt;">The second world war was a
crisis that transformed the world.</span><span style="font-size: 12pt;"> </span><span style="font-size: 12pt;">Out
of the ruins of a militaristic, fascist state, Germany emerged as the exemplar
of liberal democracy. </span><span style="font-size: 16px;">It led to the unification of Europe after centuries of conflict. </span><span style="font-size: 12pt;">And it transformed technology, precipitating a revolution
in the communications and computing which drives today’s economies. </span></p>
<p class="MsoPlainText"><span style="font-size: 12pt;">More recently, the oil crises
of the 1970s drove the search for alternative sources of hydrocarbons, boosted ongoing investment
in alternative energy , and fueled the geo-political fire
in the Middle East. Another: the terrorist challenges of the 21<sup>st</sup>
century, highlighted by the 2001 bombing of the Twin Towers, escalated Middle
Eastern conflict, promoted advances global in surveillance technology and information
exchange, and initiated the undermining of US hegemony in world affairs. <o:p wfd-id="75"></o:p></span></p>
<p class="MsoPlainText"><span style="font-size: 12pt;"><o:p wfd-id="74"> </o:p></span><b><span style="font-size: 12pt;">And now, Covid-19</span></b></p><p class="MsoPlainText"><span style="font-size: 12pt;">The 2020/21 pandemic has boosted
research into the virus and its mutations, has seen massive investment in vaccine
development (and now global distribution ), and stretched emergency
medical facilities.</span><span style="font-size: 12pt;"> </span><span style="font-size: 12pt;">It will lead to
lasting gains in public health practice. It has invigorated debt-led
state spending, altered the trajectory of the world’s economies, and tested the
foundations of liberal democracy.</span></p>
<p class="MsoPlainText"><b><span style="font-size: 12pt;">What are the impacts on
employment?</span></b></p><p class="MsoPlainText"><span style="font-size: 12pt;">The obvious impacts are on
economic structure – which sectors have increased and which have lost jobs and
income.</span><span style="font-size: 12pt;"> </span><span style="font-size: 12pt;">Health and IT, distribution and
communication services have made big gains.</span><span style="font-size: 12pt;">
</span><span style="font-size: 12pt;">In some areas limits on trade have sustained or even increased
manufacturing jobs, in others they have reduced them. Travel and hospitality
are suffering, and may have changed forever. We may even see the toning down of
mass consumption necessary to avert the worst of climate change.</span></p>
<p class="MsoPlainText"><span style="font-size: 12pt;">There will be other more
immediate changes.<span style="mso-spacerun: yes;"> </span>The design of
workspaces will change, with attention likely to shift from fitting as many
workers as possible into a space to addressing workforce wellbeing. And the
rigid timetabling of the production day is likely to fall away as more people work
remotely.<span style="mso-spacerun: yes;"> </span><o:p wfd-id="73"></o:p></span></p>
<p class="MsoPlainText"><span style="font-size: 12pt;"><o:p wfd-id="72"> </o:p></span><b><span style="font-size: 12pt;">Working Remotely</span></b></p>
<p class="MsoPlainText"><span style="font-size: 12pt;">The capacity to work from
home – or on the road <span style="mso-spacerun: yes;"> </span>– has been increasing
slowly for three decades building on advances in IT and Cloud-based computing. With
Covid’s aggressive contagion, the case for remote working has become compelling.
<span style="mso-spacerun: yes;"> </span><o:p wfd-id="71"></o:p></span></p>
<p class="MsoPlainText"><span style="font-size: 12pt;">The result has been a rapid
lift in the capacity, flexibility, and reliability of the necessary technology.
With this infrastructure in place, there will be no going back, even in a
vaccinated world. Quite apart from diminished risk of illness, people will be
reluctant to relinquish the up-side of lock down: flexible work practices, more
control over their working (and leisure) lives, and, perhaps, more appealing work environments.<o:p wfd-id="70"></o:p></span></p>
<p class="MsoPlainText"><span style="font-size: 12pt;"><o:p wfd-id="69"> </o:p></span><b><span style="font-size: 12pt;">Who will be affected?</span></b></p>
<p class="MsoPlainText"><span style="font-size: 12pt;">The answer depends on what
tasks can be performed effectively outside the disciplines of a set workplace. Back-of-office
jobs processing and transferring information are obvious candidates in the historic
view that higher order jobs (involving negotiation, personnel management, or specialist
expertise) require face-to-face contact<i>.</i> The success of virtual boardrooms, classrooms,
offices, courtrooms, and council chambers under lock-down has put the lie to
that. <o:p wfd-id="68"></o:p></span></p>
<p class="MsoPlainText"><span style="font-size: 12pt;">Lock-down has demonstrated that traditional face-to-face tasks do not demand a continuous joint presence. Remote
working will mean fewer days at the office, better organised meetings,
and fewer social precursors to getting business done.<o:p wfd-id="67"></o:p></span></p>
<p class="MsoPlainText"><b><span style="font-size: 12pt;"><o:p wfd-id="66"> </o:p></span></b><b><span style="font-size: 12pt;">The numbers</span></b></p>
<p class="MsoPlainText"><span style="font-size: 12pt;">McKinsey Global Institute analysed
jobs and tasks in different sectors across nine nations to identify “<i>work
that doesn’t require interpersonal interaction or a physical presence at a
specific worksite</i>” <a href="file:///C:/Users/pjmcd/Dropbox/Blogs/The%20capacity%20to%20work%20from%20home%20has%20been%20increasing%20over%20the%20past%20two%20decades%20with%20the%20advances%20in%20IT%20and%20the%20development%20of%20the%20Cloud.docx#_edn1" name="_ednref1" style="mso-endnote-id: edn1;" title=""><span class="MsoEndnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span face=""Calibri",sans-serif" style="font-size: 12pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin;">[i]</span></span><!--[endif]--></span></span></a>.
Figure 1, reproduces the results for the United States, showing the shares of jobs
in each sector that can be undertaken effectively at a distance. <a href="file:///C:/Users/pjmcd/Dropbox/Blogs/The%20capacity%20to%20work%20from%20home%20has%20been%20increasing%20over%20the%20past%20two%20decades%20with%20the%20advances%20in%20IT%20and%20the%20development%20of%20the%20Cloud.docx#_edn2" name="_ednref2" style="mso-endnote-id: edn2;" title=""><span class="MsoEndnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span face=""Calibri",sans-serif" style="font-size: 12pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin;">[ii]</span></span><!--[endif]--></span></span></a>
<o:p wfd-id="61"></o:p></span></p>
<p class="MsoPlainText"><span style="font-size: 12pt;">It demonstrates substantial
potential for remote working in high value-added sectors. For example, 76% of financial
services jobs could be undertaken remotely, 68% in business management, 62% in technology,
scientific and professional services, and 58% in information technology and communications
58%. <o:p wfd-id="60"></o:p></span></p>
<p align="center" class="MsoPlainText" style="text-align: center;"><b><span style="font-size: 12pt;">Figure 1: The potential for effective remote working
in the United States<o:p wfd-id="57"></o:p></span></b></p>
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<p class="MsoPlainText" style="text-indent: 21.3pt;"></p><div class="separator" style="clear: both; text-align: center;" wfd-id="36"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhkrVKCk0I-iNSjxFsr6K8Me1WyZdfy1RD58UV2QIK5rl2uFLR7JJiH-wlqqX_DVT0h3GtohBB8NU-Y7s9QfU1sCfSW5DWqxiZvozil6s0BDp3upLN5IKUrZwe_MLUHaVv3S9BWiN6nfDU/s1528/McKinsey+Remoe+working+factors.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="999" data-original-width="1528" height="416" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhkrVKCk0I-iNSjxFsr6K8Me1WyZdfy1RD58UV2QIK5rl2uFLR7JJiH-wlqqX_DVT0h3GtohBB8NU-Y7s9QfU1sCfSW5DWqxiZvozil6s0BDp3upLN5IKUrZwe_MLUHaVv3S9BWiN6nfDU/w640-h416/McKinsey+Remoe+working+factors.jpg" width="640" /></a></div><br /><div class="separator" style="clear: both; text-align: center;" wfd-id="35"><span style="font-size: 12pt; text-align: left; text-indent: 21.3pt;">Source:
McKinsey Global Institute (November 2020)</span><span style="font-size: 12pt; text-align: justify;"> </span></div><p></p>
<p class="MsoPlainText"><span style="font-size: 12pt;">Potential is lower in sectors where tasks demand direct contact with materials or customers . Just 8% of tasks in hospitality can be performed remotely without eroding productivity, 7% in agriculture.<o:p wfd-id="59"></o:p></span></p><p class="MsoPlainText"><span style="font-size: 12pt;">The analysis was repeated for eight other countries. The results largely reflect their different economic structures.</span><span style="font-size: 12pt;"> </span><span style="font-size: 12pt;">UK has the greatest potential for remote working (33% of the total workforce). Germany, Japan, and France had </span><span style="font-size: 16px;">levels</span><span style="font-size: 16px;"> </span><span style="font-size: 12pt;">similar to the US (29%).</span><span style="font-size: 12pt;"> </span><span style="font-size: 12pt;">Less developed countries have less potential: Mexico (18%), China (16%) and India (12%).</span></p><p class="MsoPlainText"><b><span style="font-size: 12pt;">And in New Zealand?<o:p wfd-id="32"></o:p></span></b></p>
<p class="MsoPlainText"><span style="font-size: 12pt;">Applying McKinsey's sector
estimates to New Zealand<a href="file:///C:/Users/pjmcd/Dropbox/Blogs/The%20capacity%20to%20work%20from%20home%20has%20been%20increasing%20over%20the%20past%20two%20decades%20with%20the%20advances%20in%20IT%20and%20the%20development%20of%20the%20Cloud.docx#_edn3" name="_ednref3" style="mso-endnote-id: edn3;" title=""><span class="MsoEndnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span face=""Calibri",sans-serif" style="font-size: 12pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin;">[iii]</span></span><!--[endif]--></span></span></a>
suggests that here as well 29% of jobs could be undertaken remotely without reducing
productivity. The two most “footloose” sectors (professional, scientific, and
support services and business management and administration) account jointly
for 30% of the potential (Figure 2).<span style="mso-spacerun: yes;"> </span>Education
and health sectors are also potentially major contributors given numbers they
employ.</span></p><p class="MsoPlainText" style="text-align: center;"><b style="font-size: 12pt;"><span style="line-height: 17.12px; mso-ansi-language: EN-NZ; mso-ascii-font-family: Calibri; mso-bidi-font-size: 12.0pt; mso-hansi-font-family: Calibri;"> </span></b><b style="font-size: 12pt; text-align: center;"><span style="font-size: 12pt;">Figure 2: The potential for remote working in New Zealand sectors</span></b></p><p align="center" class="MsoPlainText" style="text-align: center;"><span style="font-size: 12pt;"><o:p wfd-id="23"></o:p></span></p><div class="separator" style="clear: both; text-align: center;"><span style="font-size: 12pt;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEicwlYOJn-pFJoLvLNeSJRQNdw9tVSb8wTERAm8vVyDqPQdMIjdOLgKhZa5KQ89pzkp5gJk8yXNPIn_6hTS9UeW0o2XSm1eySxr5_pStGyarakNMoXbime4THof8ipmAP_Z9eLNLIIXurA/s1556/Remote+Working+potential+NZ.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="999" data-original-width="1556" height="410" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEicwlYOJn-pFJoLvLNeSJRQNdw9tVSb8wTERAm8vVyDqPQdMIjdOLgKhZa5KQ89pzkp5gJk8yXNPIn_6hTS9UeW0o2XSm1eySxr5_pStGyarakNMoXbime4THof8ipmAP_Z9eLNLIIXurA/w640-h410/Remote+Working+potential+NZ.jpg" width="640" /></a><span style="font-size: 12pt;"> </span></span></div><p></p>
<p class="MsoPlainText"><b><span style="font-size: 12pt;">What Next?<o:p wfd-id="22"></o:p></span></b></p>
<p class="MsoPlainText"><span style="font-size: 12pt;">The Covid-19 crisis, an
event that almost nobody predicted<a href="file:///C:/Users/pjmcd/Dropbox/Blogs/The%20capacity%20to%20work%20from%20home%20has%20been%20increasing%20over%20the%20past%20two%20decades%20with%20the%20advances%20in%20IT%20and%20the%20development%20of%20the%20Cloud.docx#_edn4" name="_ednref4" style="mso-endnote-id: edn4;" title=""><span class="MsoEndnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span face=""Calibri",sans-serif" style="font-size: 12pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin;">[iv]</span></span><!--[endif]--></span></span></a>,
is driving significant change to economies, migration, geopolitics, and public
health.<span style="mso-spacerun: yes;"> </span>It is also promoting rapid
changes in the way we work. There can be no expectation of reverting to the
old ways. It makes sense to prepare for a<span style="mso-spacerun: yes;">
</span>future in which a third of the workforce, more in high-value growth
sectors, only occasionally attends a formal workplace.<span style="mso-spacerun: yes;"> </span>The consequences for lifestyles and land use,
especially in advanced economies, will be far reaching. The next post will
consider some of those consequences for New Zealand .<o:p wfd-id="19"></o:p></span></p>
<div style="mso-element: endnote-list;" wfd-id="0"><!--[if !supportEndnotes]--><br clear="all" />
<hr align="left" size="1" width="33%" />
<!--[endif]-->
<div id="edn1" style="mso-element: endnote;" wfd-id="13">
<p class="MsoEndnoteText" style="margin-left: 36pt; text-indent: -36pt;"><a href="file:///C:/Users/pjmcd/Dropbox/Blogs/The%20capacity%20to%20work%20from%20home%20has%20been%20increasing%20over%20the%20past%20two%20decades%20with%20the%20advances%20in%20IT%20and%20the%20development%20of%20the%20Cloud.docx#_ednref1" name="_edn1" style="mso-endnote-id: edn1;" title=""><span class="MsoEndnoteReference"><span lang="EN-US"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: 10pt; line-height: 107%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[i]</span></span><!--[endif]--></span></span></span></a><span lang="EN-US"> </span><span lang="EN-US" style="font-size: 8pt;"><span style="mso-tab-count: 1;"> </span></span><span style="font-size: 8pt; mso-ansi-language: EN-NZ;">McKinsey Global Institute (November 2020) </span><span lang="EN-US"><i><span lang="EN-NZ" style="font-size: 8pt; mso-ansi-language: EN-NZ;"><a href="https://www.mckinsey.com/featured-insights/future-of-work/whats-next-for-remote-work-an-analysis-of-2000-tasks-800-jobs-and-nine-countries">What’s next for
remote work: An analysis of 2,000 tasks, 80 jobs, and nine countries</a></span></i></span><a href="file:///C:/Users/pjmcd/Dropbox/Blogs/The%20capacity%20to%20work%20from%20home%20has%20been%20increasing%20over%20the%20past%20two%20decades%20with%20the%20advances%20in%20IT%20and%20the%20development%20of%20the%20Cloud.docx#_ednref2" name="_edn2" style="mso-endnote-id: edn2; text-indent: -36pt;" title=""><span class="MsoEndnoteReference"><span lang="EN-US"><span style="mso-special-character: footnote;"><span class="MsoEndnoteReference"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: 10pt; line-height: 107%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[ii]</span></span><!--[endif]--></span></span></span></a><span lang="EN-US" style="text-indent: -36pt;"> </span><span style="mso-ansi-language: EN-NZ; text-indent: -36pt;"><span style="mso-tab-count: 1;"> </span></span><span lang="EN-US" style="font-size: 8pt; text-indent: -36pt;">The McKinsey study also estimated a greater potential
for more remote working in each sector, but the marginal increase to a
theoretical <span> </span>maximum came at a cost to productivity. This analysis draws only on
the lower, effective figure.</span></p></div>
<div id="edn3" style="mso-element: endnote;" wfd-id="5">
<p class="MsoEndnoteText"><a href="file:///C:/Users/pjmcd/Dropbox/Blogs/The%20capacity%20to%20work%20from%20home%20has%20been%20increasing%20over%20the%20past%20two%20decades%20with%20the%20advances%20in%20IT%20and%20the%20development%20of%20the%20Cloud.docx#_ednref3" name="_edn3" style="mso-endnote-id: edn3;" title=""><span class="MsoEndnoteReference"><span lang="EN-US"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: 10pt; line-height: 107%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[iii]</span></span><!--[endif]--></span></span></span></a><span lang="EN-US"> </span><span style="mso-ansi-language: EN-NZ;"><span style="mso-tab-count: 1;"> </span></span><span style="font-size: 8pt; mso-ansi-language: EN-NZ;">Based on Statistics New Zealand <i>Business Demography
Tables</i><o:p wfd-id="6"></o:p></span></p>
</div>
<div id="edn4" style="mso-element: endnote;" wfd-id="1">
<p class="MsoEndnoteText" style="margin-left: 36pt; text-indent: -36pt;"><a href="file:///C:/Users/pjmcd/Dropbox/Blogs/The%20capacity%20to%20work%20from%20home%20has%20been%20increasing%20over%20the%20past%20two%20decades%20with%20the%20advances%20in%20IT%20and%20the%20development%20of%20the%20Cloud.docx#_ednref4" name="_edn4" style="mso-endnote-id: edn4;" title=""><span class="MsoEndnoteReference"><span lang="EN-US"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: 10pt; line-height: 107%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[iv]</span></span><!--[endif]--></span></span></span></a><span lang="EN-US"> </span><span style="mso-ansi-language: EN-NZ;"><span style="mso-tab-count: 1;"> </span></span><span style="font-size: 8pt; mso-ansi-language: EN-NZ;">Bill Gates’ 2015 prediction in a Ted Talk is a
noteable exception: - </span><span lang="EN-US" style="font-size: 8pt;"><a href="https://www.ted.com/talks/bill_gates_the_next_outbreak_we_re_not_ready">Bill
Gates: The next outbreak? We're not ready | TED Talk</a></span><span style="font-size: 6pt; mso-ansi-language: EN-NZ;"><o:p wfd-id="2"></o:p></span></p>
</div>
</div>Phil McDermotthttp://www.blogger.com/profile/06869744647213369964noreply@blogger.com1Mangawhai, New Zealand-36.126214399999988 174.5746136-64.4364502848024 139.41836091779098 -7.8159785151975676 -150.26913371779096tag:blogger.com,1999:blog-7011655232093163642.post-88274231074693133282020-07-07T21:52:00.002+12:002021-02-10T09:39:47.537+13:00Preparing for a Post-Covid19 Economy: capacity building or building capacity?<br />
<div class="MsoNormal">
<b><span style="font-size: large;">We seem to have the pandemic under control - what next?<o:p></o:p></span></b></div>
<div class="MsoNormal">
<span style="font-size: large;">Now that community transmission has been eliminated in New
Zealand and some rigour brought to border control, it is timely to think about economic
recovery. That’s not straightforward. As the pandemic rages globally restricted
travel, limited trading opportunities, and disrupted supply chains mean that we
have to make the most of an inevitably shrunken economy. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: large;">Making decisions about where to put economic resources – including
spending on recovery – is made harder because we have no idea what the future
holds. We can no longer predict economic conditions and the outcome of policies with any confidence if we rely on past experience. We can, however, make decisions
about how to deal with today’s crisis in a way that prepares us for tomorrow’s unknowns.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><span style="mso-spacerun: yes;"><br /></span></span></div>
<div style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-element: para-border-div; padding: 1.0pt 4.0pt 1.0pt 4.0pt;">
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<i><span style="font-size: large;">This post suggests
focusing early recovery on employment-intensive sectors that better equip the
community to rise to the unknown challenges of the new normal, rather than building the infrastructures associated with the old. <o:p></o:p></span></i></div>
</div>
<div class="MsoNormal">
<b><span style="font-size: large;"><br /></span></b></div>
<div class="MsoNormal">
<b><span style="font-size: large;">The Infrastructure Capacity Consensus<o:p></o:p></span></b></div>
<div class="MsoNormal">
<span style="font-size: large;">To date, New Zealand’s rebuilding strategy has been defined mainly
in terms of building physical infrastructure to cater for economic activity as
we knew it.<span style="mso-spacerun: yes;"> </span>Among other things, the
Government has just committed $3bn to start on its list of shovel-ready
projects. While it's early days, the National opposition already says we need more
infrastructure. While there may be debate about how much, what projects, and in
what order, there is no obvious disagreement with the notion of building our
way out of the darkness.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: large;">This risks justifying spending on <a href="https://cities-matter.blogspot.com/2020/05/its-not-shovels-that-count-its-what.html">uneconomic
infrastructure</a> that undermines productivity and prejudices long-term
growth. Promoting infrastructure to create jobs simply promotes investment
that cannot otherwise be justified in sectors already facing supply chain
and skill bottlenecks. When these are publicly funded they not only increase fiscal risk; they potentially
starve activities that promise greater employment and a more assured long term
return. <o:p></o:p></span><br />
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<b><span style="font-size: large;">Building Capacity as an Alternative<o:p></o:p></span></b></div>
<div class="MsoNormal">
<span style="font-size: large;">What about another approach? What about building the
capacity of people, rather than structures, to deal with a future that will not
be a rerun of the past? This will emphasise more jobs more immediately,
maintain better short-term domestic demand , and build the adaptability
and resilience needed in the long-term.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: large;">It does not mean dismissing infrastructure, but calls for spending
on it to be moderated, focusing on what we know is needed and not the nice-to-have or me-too projects, favouring instead activities that deepen the skill base, develop talent, promote creativity,
and encourage entrepreneurship.<o:p></o:p></span></div>
<div class="MsoNormal">
<b><span style="font-size: large;"><br /></span></b></div>
<div class="MsoNormal">
<b><span style="font-size: large;">Investing in people<o:p></o:p></span></b></div>
<div class="MsoNormal">
<span style="font-size: large;">Today we are confronted by a deficit of demand, not a
deficit of infrastructure. Investing in people will lift demand directly, hold together
a fractured domestic economy, and lay the groundwork for long-term recovery and
resilience. Our nation’s capacity to respond will be best served if the
population is in good health, well housed, well educated, and well employed.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><b>So, what are the best sectors for promoting employment?<br />
</b>Employment multipliers are used here to address this question.<span style="mso-spacerun: yes;"> </span>The multipliers relate job numbers to output
in each of the 106 sectors used to define the economy.<span style="mso-spacerun: yes;"> </span>The jobs may be <u>direct</u> (within the sector
in question), <u>indirect</u> (associated with supplying materials, components,
goods, and services to that sector),and <u>induced</u> (from the spending of
employees in the first two categories).<span class="MsoFootnoteReference"> <a href="file:///C:/Users/pjmcd/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/1ZZUR2MA/Capacity%20building%20or%20building%20capacity%20FC%20Comments.docx#_ftn1" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "calibri" , sans-serif; line-height: 107%;">[1]</span></span><!--[endif]--></span></a></span><o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span>
<span style="font-size: large;">Table 1 lists the sectors with the highest employment
multipliers. Among other things, this indicates that one million dollars of additional
output (or funding) in pre-school education would give the most jobs for $1,000,000 spent: around </span><span style="font-size: large;">29 in total, comprising </span><span style="font-size: large;">around 21 in the sector itself, 3 in activities supplying
it, and 5 from the resulting household spending. Specialised food
retailing also scores well, with a strong indirect effect reflecting how it
draws on domestic suppliers.</span><a href="file:///C:/Users/pjmcd/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/1ZZUR2MA/Capacity%20building%20or%20building%20capacity%20FC%20Comments.docx#_ftn2" name="_ftnref2" style="font-size: x-large;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><span class="MsoFootnoteReference"><span style="font-family: "calibri" , sans-serif; line-height: 107%;">[2]</span></span></span></span></a><span style="font-size: large;"> </span><span style="font-size: large;"> </span></div>
<div class="MsoNormal">
<span style="font-size: large;"><span style="mso-spacerun: yes;"><br /></span></span></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<b><span style="font-size: large;">Table 1: Sectors
with Highest Output:Employment Multipliers (2017)<o:p></o:p></span></b></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjqd40TCtx1JZTriNbZ68n5_LQcCdixZfirakrEgjQrRlaCr49Yo-HhZf_mLPO51-Nbx8bWfDY5TRjWuAISUBFl44rNTAd8Iev3Rk-HQY9WV7zBJkZ1QjPtiJ18dArafrRJLwwKJdyADNI/s1600/Table+1+Multipliers.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="360" data-original-width="849" height="267" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjqd40TCtx1JZTriNbZ68n5_LQcCdixZfirakrEgjQrRlaCr49Yo-HhZf_mLPO51-Nbx8bWfDY5TRjWuAISUBFl44rNTAd8Iev3Rk-HQY9WV7zBJkZ1QjPtiJ18dArafrRJLwwKJdyADNI/s640/Table+1+Multipliers.jpg" width="640" /></a></div>
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<b><span style="font-size: large;"><br /></span></b></div>
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<span style="font-size: large;">Table 2 compares multipliers from the most
employment-intensive industry groups drawn from Table1 with those for the
industry targeted by infrastructure spending, construction. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: large;">From this we see that:<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 18.0pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<!--[if !supportLists]--><span style="font-size: large;"><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> T</span></span></span>he employment boost from spending in <u>construction</u>
sits close to the median for all sectors, but well below education, health, and
social care services. <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 18.0pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<!--[if !supportLists]--><span style="font-size: large;"><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span></span><u>Residential building</u> is a slightly better
job-booster than civil engineering (roads, bridges, and the like) and
non-residential building.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 18.0pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<!--[if !supportLists]--><span style="font-size: large;"><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span></span><u>Residential and non residential building</u> both
generate significant indirect employment, reflecting reliance on local
suppliers and subcontractors.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 18.0pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<!--[if !supportLists]--><span style="font-size: large;"><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span></span><u>Non-tertiary education </u>sectors have a
substantial direct employment impact, with a relatively high induced impact
suggesting that the sector’s typically “middle incomes” sustain above-average
household spending.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 18.0pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-size: large;"><br /></span></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<b><span style="font-size: large;">Table 2: Employment
Contribution, Selected Industries (2017)<o:p></o:p></span></b></div>
<div class="separator" style="clear: both; text-align: center;">
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<b><span style="font-size: large;"><br /></span></b></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-size: large;"><span style="mso-no-proof: yes;"><v:shape id="Picture_x0020_4" o:spid="_x0000_i1029" style="height: 192.75pt; mso-wrap-style: square; visibility: visible; width: 426pt;" type="#_x0000_t75">
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</v:imagedata></v:shape></span><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 18.0pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<!--[if !supportLists]--><span style="font-size: large;"><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span></span>Spending on <u>tertiary education</u> may
generate less immediate employment because of higher overheads and salaries.<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-size: large;"><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span></span><u>Medical and residential care</u> and social
assistance also have significantly greater employment impacts than construction.<span style="mso-spacerun: yes;"> </span>Some of this will come from low paid “care”
jobs, an issue highlighted by the critical nature of this sector to the Covd19
response. <o:p></o:p></span></div>
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<span style="font-size: large;"><br /></span></div>
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<span style="font-size: large;">Promoting job-intensive sectors may seem two-edged: they
tend to pay the lowest wages (Figure 10).<a href="file:///C:/Users/pjmcd/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/1ZZUR2MA/Capacity%20building%20or%20building%20capacity%20FC%20Comments.docx#_ftn3" name="_ftnref3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "calibri" , sans-serif; line-height: 107%;">[3]</span></span><!--[endif]--></span></span></a>
However, low income households are likely to direct most of their additional
spending to food and consumables, ensuring a large share of increased earnings
flow through the retail and service sectors. <o:p></o:p></span></div>
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<b><span style="font-size: large;">Figure 1: Average
Wages by Sector, Q4 2019<o:p></o:p></span></b></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjVjwgjhAv0dUl60yOtb0xTFxzDoJ8HC9a9lV7fzWZp1cXlobaKXc6QniKaO0E-26QfQ2dwcsx5foGEuEF-eVCzto0YdUqL18EKJelk7iH1hTyMg4mpA_Rphbn0yE8E-_O_bPFu50a3gUg/s1600/Wages+by+Sector.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="993" data-original-width="1520" height="414" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjVjwgjhAv0dUl60yOtb0xTFxzDoJ8HC9a9lV7fzWZp1cXlobaKXc6QniKaO0E-26QfQ2dwcsx5foGEuEF-eVCzto0YdUqL18EKJelk7iH1hTyMg4mpA_Rphbn0yE8E-_O_bPFu50a3gUg/s640/Wages+by+Sector.jpg" width="640" /></a></div>
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<span style="font-size: large;">In addition, these are the sectors that promote well-being
across the community and should increase people’s skills and their
abilities to deal with change. <o:p></o:p></span></div>
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<b><span style="font-size: large;"><br /></span></b></div>
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<b><span style="font-size: large;">Creating value<o:p></o:p></span></b></div>
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<span style="font-size: large;">The benefits of recovery driven by employment-intensive
industries also depend on how much value they add to the economy. According to
the 2013 National Inter-Industry Tables, the share of output that is value
added in the construction sector is modest, although low margins are offset in part by the substantial
purchase of intermediate goods and services by the sector.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
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<span style="font-size: large;">While gross output is substantially lower in health and
education than in construction, more value is created, largely in salaries and
wages.<span style="mso-spacerun: yes;"> And because h</span>ealth and education each generate
more household income than construction, funds channeled into these industries
will lead to greater downstream demand in retail, services, and
hospitality. <o:p></o:p></span></div>
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<b><span style="font-size: large;">Table 3: Value
Added, Imports, and Compensation of Employees, Selected Sectors (2013)<o:p></o:p></span></b></div>
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<b><span style="font-size: large;">Towards a Multi-Layered Recovery – Scaling back the
Infrastructure Sell<o:p></o:p></span></b></div>
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<span style="font-size: large;">Infrastructure still has a role to play, especially in
accommodating extra capacity in the priority sectors indicated by these figures.
And, to be fair, the first $2.4bn of spending outlined by the Government
included a strong commitment to social and affordable housing, well distributed
sanitation and community enhancement projects, and environmental initiatives
(Figure 2). Just under 30% was directed towards transport. However, this omits
the big promises made to <a href="https://cities-matter.blogspot.com/2020/06/end-of-line-for-auckland-light-rail.html">Auckland
transit projects</a> and major highway developments. <o:p></o:p></span></div>
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<b><span style="font-size: large;"><br /></span></b></div>
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<b><span style="font-size: large;">Figure 2:
Distribution of the First Round of Shovel-Ready Spending<o:p></o:p></span></b></div>
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" o:spid="_x0000_i1025" style="height: 218.25pt; visibility: visible; width: 362.25pt;" type="#_x0000_t75">
<v:imagedata o:title="" src="file:///C:/Users/pjmcd/AppData/Local/Temp/msohtmlclip1/01/clip_image006.png">
<o:lock aspectratio="f" v:ext="edit">
</o:lock></v:imagedata></v:shape></span><o:p></o:p></span></div>
<div class="MsoNormal">
<b><span style="font-size: large;"><br /></span></b></div>
<div class="MsoNormal">
<b><span style="font-size: large;">Investing in Human Resources<o:p></o:p></span></b></div>
<div class="MsoNormal">
<span style="font-size: large;">It is time to back off spending on mega-transport projects for
which demand is uncertain and, instead, to focus on building the capacity of our people to
deal with a changing economy. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: large;">Already there has been a commitment to step-up health
funding in the May 2020 budget. The Simpson report on reorganising health and
disability delivery (by consolidating and centralising administration and
“professionalising” governance) may also help with a reset, although on the
face of it looks a little like an expensive rearrangement of deckchairs. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: large;">Beyond that, a step up in new and innovative educational and
vocational projects and initiatives across society may be the best means of
ensuring that the recovery from Covid19 can be sustained, and that the country will be even better placed to deal with such
crises in the future.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: large;">Directing funding towards a more diverse, inclusive, and flexible
education sector may mean increasing funding to both the educators and the educated.
A simple start could include: increasing the funding of pre-school education; lowering
staff student ratios in schools; developing applied tertiary courses in technology,
production and distribution, agriculture and horticulture, and resource
management; and encouraging and funding applied research. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><b><br /></b></span></div>
<div class="MsoNormal">
<span style="font-size: large;"><b>Infrastructure should serve recovery, not shape it<br />
</b>Without doubt, initiatives in these areas will drive demand for further
infrastructure.<span style="mso-spacerun: yes;"> </span>But this investment will
be focused on the needs of the sectors that underpin social well-being and economic productivity, and that foster the capacity of people to adapt to
whatever demands the new normal might make. <o:p></o:p></span></div>
<div style="mso-element: footnote-list;">
<!--[if !supportFootnotes]--><span style="font-size: large;"><br clear="all" />
</span><br />
<hr align="left" size="1" width="33%" />
<!--[endif]-->
<br />
<div id="ftn1" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin-left: 36.0pt; text-indent: -36.0pt;">
<a href="file:///C:/Users/pjmcd/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/1ZZUR2MA/Capacity%20building%20or%20building%20capacity%20FC%20Comments.docx#_ftnref1" name="_ftn1" style="font-size: x-large;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "calibri" , sans-serif; line-height: 107%;">[1]</span></span><!--[endif]--></span></span></a>
<span style="font-size: large;"> </span>The multiplier estimates are
based on the national input-output tables (Statistics NZ, 2014) calculated and
updated to 2017 by Insight Economics in Auckland. I gratefully acknowledge
access to them, and am solely responsible for their interpretation here. <span style="font-size: large;"><o:p></o:p></span></div>
</div>
<div id="ftn2" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin-left: 36.0pt; text-indent: -36.0pt;">
<a href="file:///C:/Users/pjmcd/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/1ZZUR2MA/Capacity%20building%20or%20building%20capacity%20FC%20Comments.docx#_ftnref2" name="_ftn2" style="font-size: x-large;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "calibri" , sans-serif; line-height: 107%;">[2]</span></span><!--[endif]--></span></span></a>
<span style="font-size: large;"> </span> Employment in retailing
largely reflects the induced effect of growth in other sectors. Spending by
overseas visitors in retailing (and hospitality), though, represents additional
external demand. <span style="font-size: large;"><o:p></o:p></span></div>
</div>
<div id="ftn3" style="mso-element: footnote;">
<div class="MsoFootnoteText">
<a href="file:///C:/Users/pjmcd/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/1ZZUR2MA/Capacity%20building%20or%20building%20capacity%20FC%20Comments.docx#_ftnref3" name="_ftn3" style="font-size: x-large;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "calibri" , sans-serif; line-height: 107%;">[3]</span></span><!--[endif]--></span></span></a> <span style="font-size: large;"> </span>Although wages in sectors like
medical care span a wide range.<span style="font-size: large;"><o:p></o:p></span></div>
</div>
</div>
<br />Phil McDermotthttp://www.blogger.com/profile/06869744647213369964noreply@blogger.com0tag:blogger.com,1999:blog-7011655232093163642.post-61188883141263466272020-06-24T13:45:00.002+12:002021-04-08T12:19:48.459+12:00End of the line for Auckland light rail?<br />
<b><span style="font-size: large;">Rethinking the future</span></b><br />
<b>
</b><span style="font-size: large;">While New Zealand has restored modest levels of domestic activity following
the Covid19 outbreak, prospects for full recovery are undermined not just by continuing border threats, by the twin
blows of falling global trade and rising global indebtedness. Even if the
country remains largely virus-free, it faces ruptures to the economy and employment,
migration and housing, commuting and travel. Under these circumstances many of the
shovel-ready projects placed before Government for funding may be of minimal long-term
value, leading instead to additional fiscal strain and <a href="http://cities-matter.blogspot.com/2020/05/its-not-shovels-that-count-its-what.html">lower productivity</a>.</span><br />
<br />
<span style="font-size: large;">It is time for a real rethink. </span><br />
<br />
<div style="border: 1pt solid windowtext; mso-border-alt: solid windowtext .5pt; mso-element: para-border-div; padding: 1pt 4pt;" wfd-id="21">
<div style="border: none; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 1.0pt 4.0pt 1.0pt 4.0pt; padding: 0cm;" wfd-id="25">
<b><span style="font-size: large;">Rethinking Auckland’s
Public Transport</span></b></div>
<div style="border: none; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 1.0pt 4.0pt 1.0pt 4.0pt; padding: 0cm;" wfd-id="24">
<i><span style="font-size: large;">This post suggests that
Auckland can no longer afford to indulge in think big public transport
projects. First, i</span></i><i><span style="font-size: large;">t again flags the need to shelve Auckland’s Central Rail Link. </span></i></div>
<div style="border: none; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 1.0pt 4.0pt 1.0pt 4.0pt; padding: 0cm;" wfd-id="23">
<i><span style="font-size: large;">It then lists the documents
supporting various light rail rapid transit options, which led to the questionable government commitment to light rail, reflected now in the
postponement of the Minister’s decision on who might build light rail to the airport. But if that decision is made in due course, this would lead to a greater fiscal disaster
than the CRL. LRT should now be jettisoned. </span></i></div>
<div style="border: none; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 1.0pt 4.0pt 1.0pt 4.0pt; padding: 0cm;" wfd-id="22">
<span style="font-size: large;"><i>Instead, it may be time
to revisit the prospect for a modern, bus-based transit system to better respond to major shifts in
demand and reduce the exposure of ratepayers and taxpayers to a fiscal black hole</i>.</span></div>
</div>
<br />
<br />
<br />
<span style="font-size: large;"><b>Back track on this one first<br />
</b>For starters, it makes sense for Auckland to follow economist Tim
Hazeldine’s <a href="https://www.newsroom.co.nz/2020/05/11/1162413/tank-the-tunnel">advice</a>
and pull the plug on Auckland’s <a href="https://cities-matter.blogspot.com/2020/05/no-light-at-end-of-this-tunnel.html">Central
Rail Link</a>. The cost of shelving it should be far less than the cost of completing
it. </span><br />
<br />
<span style="font-size: large;"><b>As for LRT, do not even get started<br />
</b>It also makes sense to abandon plans for light rail transit. A <span style="background-color: white; color: black; display: inline; float: none; font-family: "times new roman"; font-size: 24px; font-style: normal; font-variant: normal; font-weight: 400; letter-spacing: normal; text-align: left; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;">solution in search of a problem, <span style="background-color: transparent;">t</span></span>here was
never a robust case for it. And even if investment funds are willing to front
up with the dollars, ratepayers (and taxpayers) will struggle to meet the returns they will require to justify such a high-cost, high-risk project. </span><b></b><br />
<br />
<span style="font-size: large;">It appears that LRT has been <a href="https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12342556">shunted aside</a> by the government for the moment, athough evidently officials continue to work on it. </span><br />
<span style="font-size: large;">Now, though, is the time to finally lock it
away.</span><br />
<br />
<span style="font-size: large;"><b>Tracking light rail proposals<br />
</b>I intended to review the economic rationale for the LRT but could not pin down
exactly what we are going to get, for how much, and why. So, all I can offer are conclusions based
on reviewing as much of the associated documents as I could find. </span><br />
<br />
<span style="font-size: large;">Here is what I covered (with links).</span><br />
<br />
<div style="margin-left: 18pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18pt;" wfd-id="20">
<span style="font-size: large;"><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;">
</span></span>The <i>Auckland Transport Plan</i> (Auckland
Regional Transport Authority, 2009) suggested rapid transit would be needed in
the long-term to relieve commuting congestion on four cross-city routes.</span></div>
<br />
<div style="margin-left: 18pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18pt;" wfd-id="19">
<span style="font-size: large;"><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;">
</span></span>The <a href="https://at.govt.nz/media/imported/4981/Regional%20Land%20Transport%20Strategy%20(RLTS)%202010-2040.pdf"><i><span face=""dincond-regular" , sans-serif" style="line-height: 107%;">Auckland Regional Land Transport Strategy
2010-2040</span></i></a><span face=""dincond-regular" , sans-serif" style="line-height: 107%;">
(Auckland Transport) firmed up on these prospects with proposed construction
between </span>2031-2040.<i> </i></span></div>
<br />
<div style="margin-left: 18pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18pt;" wfd-id="18">
<span style="font-size: large;"><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;">
</span></span>The <a href="https://at.govt.nz/media/1191335/Regional-Land-Transport-Plan-Adopted-Version-July-2015.pdf"><i>Auckland
Regional Land Transport Plan</i></a> <i>2015</i>-<i>2025</i>
(Auckland Transport) switched tracks, promoting LRT to fill the gap in services
between the inner suburbs and the CBD. </span></div>
<br />
<div style="margin-left: 18pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18pt;" wfd-id="17">
<span style="font-size: large;"><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;">
</span></span>The <a href="https://at.govt.nz/media/1913570/cap-programme-business-case.pdf"><i><span style="color: #2f5496; mso-themecolor: accent1; mso-themeshade: 191;">Auckland
Central Access Plan</span></i></a><i><span style="color: #2f5496; mso-themecolor: accent1; mso-themeshade: 191;"> </span>(CAP) Programme Business Case</i> (Auckland
Transport, March 2016) proposed “<i>higher capacity rapid transit</i>” services
on the isthmus.</span></div>
<br />
<div style="margin-left: 18pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18pt;" wfd-id="16">
<span style="font-size: large;"><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;">
</span></span>A <a href="https://at.govt.nz/media/1913578/central-access-plan-pbc-peer-review.pdf">Peer
Review</a> (April 2016) supported the CAP but noted that it was based on a heavy
focus on public transport; reliance on land use assumptions from the 2011 <i>Auckland
Plan</i> (Auckland Council), and most significantly, ignored affordability,
which “<i>should be addressed as soon as possible</i>” (p2).</span></div>
<br />
<div style="margin-left: 18pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18pt;" wfd-id="15">
<span style="font-size: large;"><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;">
</span></span>The <a href="https://at.govt.nz/media/1927342/draft-smart-indicative-business-case.pdf"><i>South-western
Multi-Modal Airport Rapid Transit: Draft Indicative Business Cas</i></a><i>e</i>
(SMART, Jacobs NZ Ltd, June 2016, for Auckland Transport) compared the economic
and financial performance of heavy rail, light rail, and bus-based rapid
transit for the CBD to Auckland Airport route. While LRT was favoured, further investigation
of Bus Rapid Transit was also recommended.</span></div>
<br />
<div style="margin-left: 18pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18pt;" wfd-id="14">
<span style="font-size: large;"><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;">
</span></span>The <a href="https://www.nzta.govt.nz/assets/resources/advanced-bus-solution/Advanced-bus-solution-final-report.pdf"><i>Advanced
Bus Solution</i></a> (LEK, January 2017, for NZTA) specified a more advanced system
offering a higher level of service over a larger catchment. It indicated an
incremental B:C ratio of 1.28 from the improvements proposed. While different
discount rates prevent detailed reconciliation with the SMART report, the
analysis suggests that a bus option could match LRT in economic terms.</span></div>
<br />
<div style="margin-left: 18pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18pt;" wfd-id="13">
<span style="font-size: large;"><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;">
</span></span>The <a href="https://at.govt.nz/media/1973168/item-102-mass-transit-advanced-bus-solution-final.pdf"><i>Advanced
Bus Solution Report</i></a> (Auckland Transport, February 2017) suggested the LEK solution may only be sufficient until the 2040s, and involved technical uncertainties
and transition risks. It instead proposed staged transition from bus to light
rail.</span></div>
<br />
<div style="margin-left: 18pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18pt;" wfd-id="12">
<span style="font-size: large;"><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;">
</span></span>The <a href="https://www.transport.govt.nz/assets/Uploads/Land/Documents/a4288f6c7e/ATAP-Evaluation-Report.pdf">Auckland
Transport Alignment Project</a> (ATAP), a
collaboration between Auckland Council and central government, advanced rapid
rail to Auckland Airport and Westgate as part of the rapid transit package in its
2018 <a href="https://www.transport.govt.nz/assets/Uploads/Land/Documents/7bbf7cd0db/ATAP2018.pdf">report</a>.
</span></div>
<br />
<div style="margin-left: 18pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18pt;" wfd-id="11">
<span style="font-size: large;"><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;">
</span></span></span><span style="font-size: large;">The <i>Auckland <a href="https://at.govt.nz/media/1977374/rltp-consultation-single-pages-small.pdf">Regional
Land Transport Plan 2018</a>-2028 </i>confirmed these routes. </span></div>
<br />
<div style="margin-left: 18pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18pt;" wfd-id="10">
<span style="font-size: large;"><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-bidi-font-style: italic; mso-fareast-font-family: Symbol;"><span style="font-family: "times new roman";"></span>·<span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;">
</span></span>The final <a href="https://www.transport.govt.nz/assets/Import/Uploads/Land/Documents/19-422-ATAP-Better-Travel-Choices-mode-shift-plan-Dec-2019-FINAL.pdf">ATAP
report</a> (2019) called for a $8.4bn investment in rapid transit over ten
years (excluding the western line). This
included heavy rail, busways, and light-rail. The cost of light rail, scheduled
post-2024, was not identified<i>. </i></span></div>
<br />
<span style="font-size: large;"><b>Government gets on board<br />
</b>In 2015 the government and Auckland Council agreed to <a href="https://www.beehive.govt.nz/release/terms-reference-agreed-auckland">align
transport spending</a> for projected growth of 700,000 people over 30 years. The
government committed to <a href="https://www.stuff.co.nz/auckland/103402210/what-you-need-to-know-about-the-28b-auckland-transport-alignment-project">$18.5bn
of $28bn</a> total funding called for by 2028. The Minister of
Transport then <a href="https://www.transport.govt.nz/land/auckland/atap/">proposed
prioritising the CBD-Airport link</a> from this “<i>indicative package</i>” (Cabinet
Economic Development Committee, July 2018). He requested NZTA to prepare a
business case, and called for measures to accelerate the project. </span><br />
<br />
<span style="font-size: large;">Treasury and the Ministry of Transport reported on an early
draft of the business case in <a href="https://www.transport.govt.nz/assets/Import/Uploads/Land/Documents/Akl-light-rail/aa33acac66/Auckland-Light-Rail-Business-Case-Joint-MOT-and-Treasury-Briefing-paper.pdf">November
2018</a>. They noted expectations for “<i>balanced
and robust</i>” economic analysis, a “<i>rigorous process</i>” for considering
risks to government, “<i>clearly articulated financial implications</i>”, and “<i>appropriate</i>”
governance arrangements. While their advice was redacted, the report said that the
NZTA Board was unlikely to be “<i>in a position to resolve all issues that a
business case requires as a minimum</i>” at its November meeting. </span><br />
<br />
<span style="font-size: large;"><b>And off again?<br />
</b>It appears that the rigorous analysis recommended by Treasury<a href="file:///C:/Users/pjmcd/Dropbox/Writing/End%20of%20the%20Line.docx" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span face=""calibri" , sans-serif" style="line-height: 107%;">[1]</span></a>
was sidestepped. Instead, in June 2019 two potential suppliers were announced for the
City-Airport LRT, with proposals <a href="https://www.beehive.govt.nz/release/next-steps-auckland-light-rail">received</a> in August from NZTA itself and from NZ Infra, a
joint venture between Canadian investors CDPQ Infra and</span><span style="font-size: large;"><span face=""arial" , sans-serif" style="background: white; color: #464749; line-height: 107%;"> </span>the NZ Superannuation Fund. The NZ Infra pitch raised the prospect of
funding it off the books. </span><br />
<br />
<span style="font-size: large;">A decision on the preferred partner was not made, although $1.8bn
was committed to seed funding. However, the total
cost of just this link was estimated at <a href="https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12260915">$6bn</a>, suggesting earlier estimates were wildly out and
that LRT would never be economically rational, and throwing doubt on delivery of ATAP’s
$8.4bn full rapid transit package.</span><br />
<br />
<span style="font-size: large;">In October 2019, it was revealed that the NZ Infra proposal was
likely to provide for grade separation (including undergrounding) at a significantly higher cost than the
at-grade NZTA proposal (costing perhaps <a href="https://www.stuff.co.nz/national/116758191/aucklands-light-rail-under-queen-st-and-over-mt-eden-the-super-funds-tunneling-or-flying-tram">$10bn</a>).
While this has the advantage of retaining capacity on existing corridors for
other modes and might lead to lower long-term operating costs, it is impossible
to see it stacking up in economic terms.
Add in likely cost over-runs and it is surely a fiscal step too far.</span><br />
<br />
<span style="font-size: large;">Hence, reported splits in the governing coalition over the
issue in May 2020 are hardly surprising. Labour is reportedly leaned towards
the NZ Infra PPP proposal while junior partner New Zealand First appeared <a href="https://www.stuff.co.nz/national/119863249/government-splits-three-ways-on-light-rail-as-more-details-emerge-of-dramatic-super-fund-plan">unwilling
to commit</a> to any LRT.</span><br />
<br />
<span style="font-size: large;"><b>LRT at any cost?<br />
</b>Despite changing technical and financial parameters, and the uncertainties of
a post-Covid19 world, the NZ Super Fund remains “<a href="https://www.interest.co.nz/news/104877/ceo-matt-whineray-says-nz-super-fund-still-keen-auckland-light-rail-project-also"><i>enthusiastic
about</i></a>” Auckland LRT. That is not surprising: securing long-term,
government-guaranteed returns is commercially clever in an uncertain,
recessionary economic environment in which equities so much riskier and bonds
so much less rewarding. But it wouldnot work for Auckland and Aucklanders.</span><br />
<br />
<b><span style="font-size: large;">So, what can we take from this history?</span></b><br />
<span style="font-size: large;">There is considerable variation in the policy trail regarding what
LRT services might be required, and in what order: long-term cross-regional
commuting? linking the inner Isthmus suburbs and the CBD? lifting capacity between
the outer Isthmus suburbs and the CBD? or linking other employment centres
(Westgate, the airport) with the CBD? This makes it difficult to trace the
costs – and economics – of even the version currently being advanced, the
CBD-airport LRT.</span><br />
<br />
<span style="font-size: large;">After more than a decade of official deliberation, we have
no idea what the configuration of regional LRT will be, or of the costs, but we can be confident that they will be a lot more than the figures bandied around at present. (With four
years to go before completion, the <a href="https://cities-matter.blogspot.com/2020/05/no-light-at-end-of-this-tunnel.html">CRL
is already 70% over</a> the original budget). One way or another ratepayers and
taxpayers will be footing a substantial bill if LRT development proceeds. <a href="file:///C:/Users/pjmcd/Dropbox/Writing/End%20of%20the%20Line.docx" name="_ftnref2" style="mso-footnote-id: ftn2;" title=""><span face=""calibri" , sans-serif" style="line-height: 107%;">[2]</span></a><span style="vertical-align: baseline;"> If </span>n<span style="vertical-align: baseline;">othing else,
uncertain</span>ty<span style="vertical-align: baseline;"> over </span>the future of international travel
and the recovery of aviation mean that the time
has come to dump the proposal for a CBD -airport line.</span><br />
<br />
<span style="font-size: large;">The public has been sold the sizzle but there is no
sausage.</span><br />
<br />
<b><span style="font-size: large;">Time to take the bus?</span></b><br />
<br />
<span style="font-size: large;">Just as disturbing as undue preoccupation with LRT is the
failure to <span style="background-color: white; color: black; display: inline; float: none; font-family: "times new roman"; font-size: 24px; font-style: normal; font-variant: normal; font-weight: 400; letter-spacing: normal; text-align: left; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;">fully </span>evaluate advanced bus transit. This would offer the ability to
invest incrementally to cater for short and medium-term shifts in public transport demand. It provides opportunities to:</span><br />
<br />
<div style="margin-left: 18pt; mso-add-space: auto; mso-list: l1 level1 lfo2; text-indent: -18pt;" wfd-id="9">
<span style="font-size: large;"><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;">
</span></span>Adopt new technologies as they evolve, continuously
advancing service levels;</span></div>
<br />
<div style="margin-left: 18pt; mso-add-space: auto; mso-list: l1 level1 lfo2; text-indent: -18pt;" wfd-id="8">
<span style="font-size: large;"><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;">
</span></span>Respond to major changes in land use and patronage; </span></div>
<br />
<div style="margin-left: 18pt; mso-add-space: auto; mso-list: l1 level1 lfo2; text-indent: -18pt;" wfd-id="7">
<span style="font-size: large;"><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;">
</span></span>Fashion a network that provides wide-ranging
connections across Auckland’s distinctive geography; and </span></div>
<br />
<div style="margin-left: 18pt; mso-add-space: auto; mso-list: l1 level1 lfo2; text-indent: -18pt;" wfd-id="6">
<span style="font-size: large;"><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;">
</span></span>Align investment and funding more clearly with
benefits. </span></div>
<br />
<span style="font-size: large;">At the same time, a bus-based transit system would substantially
lower economic and fiscal risk compared with large scale, fixed-track solutions.
</span><br />
<br />
<span style="font-size: large;">If nothing else, the shock of Covid19 provides the opportunity
– and excuse –to avoid repeating the Central Rail Link experiment. The future is
more likely to be about demand-responsive rolling stock using largely existing corridors
to serve communities and commercial activities across Auckland, rather than carving out new routes or reducing the flexibility
and accessibility of existing arterials to favour limited corridors of
residents and prop up values in selected commercial destinations. </span><br />
<br />
<br />
<div style="mso-element: footnote-list;" wfd-id="0">
<hr align="left" size="1" width="33%" />
<div id="ftn1" style="mso-element: footnote;" wfd-id="4">
<div style="margin-left: 36pt; text-indent: -36pt;" wfd-id="5">
<span style="font-size: large;"><a href="file:///C:/Users/pjmcd/Dropbox/Writing/End%20of%20the%20Line.docx" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span face=""calibri" , sans-serif" style="line-height: 107%;">[1]</span></a> “Given the size of the
project, the fiscal risks and the build and operational challenges, we consider
a strong examination of the implementation choices is essential” <a href="https://treasury.govt.nz/sites/default/files/2018-11/oia-20180416.pdf">Treasury
report T2018/1002</a></span></div>
</div>
<div id="ftn2" style="mso-element: footnote;" wfd-id="1">
<div style="margin-left: 36pt; text-indent: -36pt;" wfd-id="3">
<span style="font-size: large;"><a href="file:///C:/Users/pjmcd/Dropbox/Writing/End%20of%20the%20Line.docx" name="_ftn2" style="mso-footnote-id: ftn2;" title=""><span face=""calibri" , sans-serif" style="line-height: 107%;">[2]</span></a> <span style="line-height: 107%;">The CRL experience, </span><a href="https://treasury.govt.nz/sites/default/files/2018-11/oia-20180416.pdf"><span style="line-height: 107%;">Treasury
advice</span></a><span style="line-height: 107%;">, and </span><a href="https://www.tandfonline.com/doi/abs/10.1080/01441640309904"><span style="line-height: 107%;">global
experience</span></a><span style="line-height: 107%;"> all point to the likelihood of costs blowing out, this in a
period when it is almost inevitable that patronage will be less than projected.
</span></span></div>
<div style="margin-left: 36pt; text-indent: -36pt;" wfd-id="2">
<br /></div>
</div>
</div>
<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike><span style="font-size: large;"></span>Phil McDermotthttp://www.blogger.com/profile/06869744647213369964noreply@blogger.com3tag:blogger.com,1999:blog-7011655232093163642.post-44107561257293941452020-05-20T09:16:00.001+12:002020-06-17T08:08:51.564+12:00No light at the end of this tunnel - reflecting on failed infrastructure
<br />
<div style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-size: large;"><b><span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;">The big risk and high cost of thinking big.<br />
</span></b><span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;">I flagged a concern in the <a href="https://cities-matter.blogspot.com/"><span style="color: blue;">last post</span></a> about the fiscal and productivity
impacts of projects that don’t stack up economically. The risk is that the
post-Covid recovery leads to indiscriminate infrastructure spending which would
compound the already severe fiscal effect of essential deficit spending on
public health, household incomes, and business support . </span></span></div>
<br />
<div style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><span style="font-size: large;">Given their dismal track record here and overseas, it is likely that
large infrastructure and especially transport projects will dig the fiscal hole
deeper without delivering the benefits that might help the country climb out of
it. We know that the Think Big energy projects of the early 1980s precipitated
a foreign exchange crisis. Had they been economically sound the ten hard
years of economic restructuring that followed may have been moderated. </span></span></div>
<br />
<div style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-size: large;"><b><span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;">Looking back to go forward<br />
</span></b><span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;">There is no sense in trying to replicate the past. But it does
make sense to learn from it.</span></span></div>
<br />
<div style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><span style="font-size: large;">In this case, it seems the lesson was not learned. I posted several
critiques of Auckland’s Central Rail project back in <a href="https://cities-matter.blogspot.com/2011/12/rethink-link-does-auckland-really-need.html"><span style="color: blue;">2011</span></a> and <a href="https://cities-matter.blogspot.com/2012/12/derailing-auckland-unravelling.html"><span style="color: blue;">2012</span></a>. Today we can see just how big a cost
ignoring past infrastructure failures has imposed - so far - in the case of the
CRL if only to temper a new found enthusiasm for thinking big.</span></span></div>
<br />
<div style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-size: large;"><b><span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;">Auckland’s Central Rail Link, 25c in the dollar?<br />
</span></b><span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;">How ever long it takes to finish and however much it gets used,
Auckland's CRL is an economic disaster.</span></span></div>
<br />
<div style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><span style="font-size: large;">The first cost estimate for the tunnel was $2.3bn, released by Auckland
Council in 2011. That did not account for the prior expenditure of $500m on
electrification to make the tunnel environmentally acceptable, or the
consequential costs of purchasing new rolling stock, extending and updating
existing stations, and compensating business owners badly impacted by prolonged
civil engineering works. </span></span></div>
<br />
<div style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><span style="font-size: large;">Even with those omissions, though, the project was deemed unworthy of
government support by <a href="https://www.beehive.govt.nz/release/case-city-rail-link-no-stronger"><span style="color: blue;">Transport Minister</span></a> Brownlee, with “<i>a decidedly
weak benefit:cost ratio of just 44 cents in the dollar</i>”. </span></span></div>
<br />
<div style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><span style="font-size: large;">In any case, the estimated tunnel benefit:cost ratio turns out to have
been on the high side. That the project was under-specified is evident in
the 2018 announcement that platforms had to be lengthened, adding around $250m
to the costs. </span></span></div>
<br />
<div style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><span style="font-size: large;">And it was under-costed. By <a href="https://www.cityraillink.co.nz/city-rail-link-cost-timeline"><span style="color: blue;">April 2019</span></a> the cost estimate was up to
$4.4bn. This covered construction cost increases of $327m, “non-direct
costs” of $130m, and a new provision for escalation and contingencies of $310m.</span></span></div>
<br />
<div style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><span style="font-size: large;">Converting the original budget and additional costs to December 2019
dollars (using the price index for construction inputs) reveals an over-run of
around $1.7bn, 70% ahead of the original budget <u>after</u> accounting for
inflation. Given that there has been no suggestion that the projected
benefits will increase, the potential economic return now sits at around 25c in
the dollar.</span></span></div>
<br />
<div style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><span style="font-size: large;">We can expect further cost escalation given that completion date (prior
to Covid19) was pushed out from 2021 to 2024. This is likely to be extended
further <span style="background: white;">by </span><a href="https://www.cityraillink.co.nz/crl-media-releases-2019"><span style="color: #0066cc;">pandemic-related constraints</span></a><span style="background: white;"> including </span>disruption to contractors, labour,
and supply chains, and by increased competition from local and international
“shovel-ready projects”. That's more bad news for those central city businesses
that have seen revenues plummet in the face of ongoing disruption by the
prolonged street works.</span></span></div>
<br />
<div style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-size: large;"><b><span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;">Strong growth rates are misleading<br />
</span></b><span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;">Let's consider potential benefits in light of the past ten years' public
transport performance. The introduction of electric units in 2014 and
station and service improvements across the network saw strong relative growth
in rail patronage. It seems the benefits of improved service levels on the
network are already being reaped without the $4.4+bn CRL. </span></span></div>
<br />
<div style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><span style="font-size: large;">However, this needs to be kept put in perspective. While rail boardings
almost tripled over the ten years to February 2020, the real gains were in bus
use (70% of the total):</span></span></div>
<br />
<div style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgHQmlpbbFdWagE1qZH5FmF8yJ8_jp2t_q-yYY6XWSSGsh2Lwa92k54QByiD5aLlZEHpj9C2CKiX7H6nQN6emXrlvZHMZUOQ9bo-1zWjfPMfBtkbNjSbwtktJXyKg8F2whDov6_jRpmm18/s1600/Public+Transport+Growth.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="102" data-original-width="303" height="215" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgHQmlpbbFdWagE1qZH5FmF8yJ8_jp2t_q-yYY6XWSSGsh2Lwa92k54QByiD5aLlZEHpj9C2CKiX7H6nQN6emXrlvZHMZUOQ9bo-1zWjfPMfBtkbNjSbwtktJXyKg8F2whDov6_jRpmm18/s640/Public+Transport+Growth.jpg" width="640" /></a></div>
<div align="center" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: center;">
<br /></div>
<br />
<div style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 72.0pt; margin-right: 0cm; margin-top: 0cm; text-indent: -36.0pt;">
<span style="color: black; font-family: "Arial",sans-serif;"><span style="font-size: large;">
Source: <a href="https://at.govt.nz/about-us/reports-publications/at-metro-patronage-report/"><span style="color: blue;">https://at.govt.nz/about-us/reports-publications/at-metro-patronage-report/</span></a></span></span></div>
<br />
<div style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><span style="font-size: large;">Significantly, 87% of gains in bus patronage were in “<i>frequent,
connector, local, targeted</i>” services according to Auckland Transport.
This strengthens the argument for flexible bus services rather than high cost,
fixed route rail. </span></span></div>
<br />
<div style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><span style="font-size: large;">It is also likely that gains to rail included a transfer of some
passengers from buses so that the impact on car use and the increase in public
transport use will be less than indicated by increased trips by rail. </span></span></div>
<br />
<div style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-size: large;"><b><span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;">How important is rail to central city commuting?<br />
</span></b><span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;">According to the 2018 Census, a relatively low 55% of work trips by the
159,000 people working in the Waitemata Local Board Area were by private or
company vehicle. Of those, 6% of were made by passengers. Company
vehicles accounted for 11% of the total. As these vehicles are most likely
required for work purposes their occupants are unlikely to transfer to
PT. </span></span></div>
<br />
<div style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><span style="font-size: large;">This means that the market for improved rail and bus services is just
46% of possible commuter trips . Public transport already has a high
penetration rate of 29% of commuters working in Waitemata. However, less
than a third of these were by rail, despite the relative growth in numbers. The
prospects of getting many of the remaining private car users to shift to rail
are low. Rail patronage may have to grow mainly through trips transferring from
buses.</span></span></div>
<br />
<div style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><span style="font-size: large;">Narrowing the focus , there were 18,000 commuters to the inner city in
2018. Only 19% relied on a private or company vehicle (between 3,100 and 3,200
vehicles) in 2018. <span style="background: white;">The likelihood of getting a
significant reduction in this number is slim. </span></span></span></div>
<br />
<div style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><span style="font-size: large;">A surprisingly high 50% said they walked to work, while 22% used public
transport (only a fifth of those by rail). The strategy of getting more
inner city workers living there seems to be working. Ironically, it’s a success
that raises questions over expectations that investment in the CRL will
influence travel in the inner city. </span></span></div>
<br />
<div style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-size: large;"><b><span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;">Will CRL even deliver a significant mode shift?</span></b><span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><br />
The Council wants people out of cars. Whether or not that's achievable -
or even reasonable - was the CRL the way to achieve it?</span></span></div>
<br />
<div style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><span style="font-size: large;">Apart from the fact that the project is uneconomic and fiscally
damaging, the fact is that over three quarters of Auckland’s labour force works
outside Waitemata Local Board area, with 77% of them relying on private or
company vehicles to get to work. </span></span></div>
<br />
<div style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<b><span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><span style="font-size: large;">Even if the billions invested into the CRL were to effect a significant
lift in public transport patronage, it is a spend that could have been much
more effectively directed towards offering more flexible bus-based
transit serving the wider urban area.</span></span></b><span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"></span></div>
<br />
<div style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-size: large;"><b><span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;">And that was before Covid19. <br />
</span></b><span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;">Today, the lack of flexibility of rail comes into even sharper focus in
light of the potential changes in working practices, the diminished appeal of
high density living, commuting, and working, possible land use changes, and the
imposition of social distancing for the foreseeable future. These prospects,
along with post-Covid19 delays in constriction, mean that the CRL is likely to
fall even further short of helping to achieve “<i>Government’s plans for higher
economic productivity and the Auckland Plan vision of being the world’s most
liveable city</i>” (City Rail Link, Business Case 2015).</span></span></div>
<br />
<div style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><span style="font-size: large;">Spending $4.4bn (and climbing) on lifting the capacity of rail patronage
by building the CRL tunnel looks like an economic and and fiscal fail. It
is also looking like a major policy fail.</span></span></div>
<br />
<div style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: black; font-family: "Arial",sans-serif; mso-bidi-font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-NZ;"><span style="font-size: large;">Which brings us to the even bigger white elephant in the room,
Auckland's proposed light rail. This is the subject of my next post.</span></span></div>
<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike><span style="font-size: large;"></span>Phil McDermotthttp://www.blogger.com/profile/06869744647213369964noreply@blogger.com0New Zealand-40.900557 174.885971-65.2754965 133.577377 -16.5256175 -143.805435tag:blogger.com,1999:blog-7011655232093163642.post-43169008686371776662020-05-11T14:30:00.001+12:002020-05-12T10:41:19.340+12:00Its not the shovels that count: its what they're shovelling <div style="text-align: justify;">
</div>
<span style="font-size: large;"></span><br />
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
</div>
<div style="text-align: justify;">
<b><span style="font-size: large;">Is boosting infrastructure the best road to economic recovery for New Zealand?</span></b></div>
<div style="text-align: justify;">
</div>
<div style="text-align: justify;">
<span style="background-color: white; color: black; display: inline; float: none; font-family: "times new roman"; font-style: italic; font-variant: normal; font-weight: 400; letter-spacing: normal; text-align: left; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;"><span style="font-size: large;">If we do not get investment for recovery right
we will undermine productivity and economic progress for generations to come. Indiscriminate infrastructure development at this time risks limiting options by absorbing and concentrating resources in an area in which performance has been demonstrably deficient.</span></span><b></b><i></i><u></u><sub></sub><sup></sup><strike></strike></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjLGGfVBWFxgebWrPjx9rsfeh4o_Dl033hQHoE5qO1TFbGeGMAbNMXvEUUtpT4XP-8QIQQusXrjmEyWzZ0TEWtCQSWC4waA8iaO-k08GtruBFwCxhdskUMrZeWm8M-WSQo4scShOiKPDjE/s1600/Shovels.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="703" data-original-width="829" height="271" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjLGGfVBWFxgebWrPjx9rsfeh4o_Dl033hQHoE5qO1TFbGeGMAbNMXvEUUtpT4XP-8QIQQusXrjmEyWzZ0TEWtCQSWC4waA8iaO-k08GtruBFwCxhdskUMrZeWm8M-WSQo4scShOiKPDjE/s320/Shovels.jpg" width="320" /></a></div>
<span style="font-size: large;"></span><br />
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
<span style="font-size: large;">New Zealand's recovery from Covid19 requires short-term job gains
and long-term income growth if we are to throw off the shackles of public debt. Committing substantial resources to “shovel-ready”
projects without rigorous assessment risks excessive spending to meet uncertain demand.
The result of over-investment will be lower foreign reserves, a diminished credit rating, and a
prolonged productivity deficit.</span></div>
<span style="font-size: large;"></span><br />
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
</div>
<div style="text-align: justify;">
<b><span style="font-size: large;">Get the economics right first</span></b></div>
<div style="text-align: justify;">
</div>
<div style="text-align: justify;">
<span style="font-size: large;">Economic justification is essential to establish whether the
benefits generated by infrastructure justify the resources consumed in its development. Projects
that do not stack up have a negative fiscal impact, requiring ongoing tax- or
rate-payer subsidy. While otherwise uneconomic projects may provide non-market
benefits (to the environment, social equity, or public health for example), if
we do not first consider their economic efficiency, we cannot know whether they are the
best means of achieving those benefits. </span><br />
<span style="font-size: large;"><br /></span>
<span style="font-size: large;">We do know, however, that the wrong projects can set our economy back: the Think Big projects contributed substantially to a run on foreign exchange reserves in the early 1980s.</span></div>
<span style="font-size: large;"></span><br />
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
</div>
<div style="text-align: justify;">
<b><span style="font-size: large;">Current failures</span></b></div>
<div style="text-align: justify;">
</div>
<div style="text-align: justify;">
<span style="font-size: large;">The damage from uneconomic projects tends to increase if
they are large scale. The literature on cost blowouts for major infrastructure
projects – especially in transport – is extensive. Auckland's Central Rail Link , for which the case was <a href="http://cities-matter.blogspot.com/2011/12/rethink-link-does-auckland-really-need.html">flawed
from the outset</a>, and <a href="https://www.newsroom.co.nz/2020/05/03/1155823/unreal-turn-for-transmission-gully">Transmission
Gully</a> are text book cases. Consider
the following:</span></div>
<ul>
<li style="mso-list: l1 level1 lfo1;"><div style="text-align: justify;">
<span style="font-size: large;"><b>Under-specification</b> at the outset, with inadequate technical assessment or design myopia leading to re-specification and add-on costs in the course of development; </span></div>
</li>
<li><div style="text-align: justify;">
<span style="font-size: large;"><b>Under-costing</b> from relying on precedent and current (or historical) costs for estimation, failure to consider the effect of competing demand for resources, and the optimism-bias of project protagonists leading to unwarranted approvals and subsequent cost blow-outs;</span></div>
</li>
<li style="mso-list: l1 level1 lfo1;"><div style="text-align: justify;">
<span style="font-size: large;"><b>Contract failures </b>from accepting low tenders and engaging at-risk contractors to meet tight project budgets, leading to higher costs when contractors fail and re-tendering is necessary;</span></div>
</li>
<li style="mso-list: l1 level1 lfo1;"><div style="text-align: justify;">
<span style="font-size: large;"><b>Project delays </b>from under-specification and under-costing compounded by resource shortages (including labour and skills), tying up capital and delaying benefits.</span></div>
</li>
</ul>
<div style="text-align: justify;">
<span style="font-size: large;">The failures threatening the CRL are such that economist Tim Hazeldine’s <a href="https://www.newsroom.co.nz/2020/05/11/1162413/tank-the-tunnel"><span style="color: windowtext; text-decoration: none; text-underline: none;">view</span></a> is that it is time to <a href="https://www.newsroom.co.nz/2020/05/11/1162413/tank-the-tunnel">stop pouring good money after bad</a>. The contingencies facing such large scale projects should double down the call for rationality in today’s perilous economic environment. </span></div>
<span style="font-size: large;"></span><br />
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
</div>
<div style="text-align: justify;">
<b><span style="font-size: large;">Unproven Demand</span></b></div>
<div style="text-align: justify;">
</div>
<div style="text-align: justify;">
<span style="font-size: large;">Because large-scale investments take time to finish, demand
at completion may be quite different from what was projected at inception. Along
with the impact of unexpected disruptions, extended pay-back periods add to uncertainty
over what demand a project may eventually have to meet. </span></div>
<span style="font-size: large;"></span><br />
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
</div>
<div style="text-align: justify;">
<span style="font-size: large;">As of today, the Infrastructure Commission’s <a href="https://infracom.govt.nz/projects/pipeline">pipeline of major public capital
works</a> , although incomplete, outlines around $16b or more of
spending. Approximately 60% of this is for transport. (These figures are based
on the cost ranges provided). Yet major
transport projects today face substantial shifts in demand, such as:</span></div>
<div style="text-align: justify;">
</div>
<ul>
<li style="mso-list: l1 level1 lfo1;"><div style="text-align: justify;">
<span style="font-size: large;">Revised working conditions lowering building occupancy and increasing the appeal of large footplate, low-rise, suburban workspaces with natural light and airflow;</span></div>
</li>
<li style="mso-list: l1 level1 lfo1;"><div style="text-align: justify;">
<span style="font-size: large;">Changed working arrangements (staggered hours, home-based working); </span></div>
</li>
<li><div style="text-align: justify;">
<span style="font-size: large;">Newly suppressed demand for and lower passenger densities on public transport;</span></div>
</li>
<li style="mso-list: l1 level1 lfo1;"><div style="text-align: justify;">
<span style="font-size: large;">An increased preference for medium/low density suburban living environments;</span></div>
</li>
<li style="mso-list: l1 level1 lfo1;"><div style="text-align: justify;">
<span style="font-size: large;">A shift from large scale venue-based recreation;</span></div>
</li>
<li style="mso-list: l1 level1 lfo1;"><div style="text-align: justify;">
<span style="font-size: large;">Reduced international travel and tourism;</span></div>
</li>
<li style="mso-list: l1 level1 lfo1;"><div style="text-align: justify;">
<span style="font-size: large;">Reduced demand for mall-based retailing in favour of local services and centres;</span></div>
</li>
<li><div style="text-align: justify;">
<span style="font-size: large;">More on-line retailing and in-home services.</span></div>
</li>
</ul>
<div style="text-align: justify;">
</div>
<div style="text-align: justify;">
<span style="font-size: large;">We can add to this market uncertainty the impact of changing technologies,
including prospects for:</span></div>
<div style="text-align: justify;">
</div>
<ul>
<li style="mso-list: l1 level1 lfo1;"><div style="text-align: justify;">
<span style="font-size: large;">Enhanced face-to-face telecommunications;</span></div>
</li>
<li><div style="text-align: justify;">
<span style="font-size: large;">Gains in vehicle autonomy increasing capacity on existing highways;</span></div>
</li>
<li><div style="text-align: justify;">
<span style="font-size: large;">Falling electric vehicle costs boosting private transport and demand-responsive public transport;</span></div>
</li>
<li><div style="text-align: justify;">
<span style="font-size: large;">Aircraft operations favouring smaller aircraft on point-to-point rather than hub-and-spoke networks;</span></div>
</li>
<li><div style="text-align: justify;">
<span style="font-size: large;">Continuing logistics gains integrating production and distribution with direct delivery;</span></div>
</li>
<li><div style="text-align: justify;">
<span style="font-size: large;">Artificial Intelligence, product printing, design refinement, innovation, and changing consumption preferences jointly supporting local production of specialised goods;</span></div>
</li>
<li><div style="text-align: justify;">
<span style="font-size: large;">Distributed specialist services (law, health, medicine) supported by AI, gains in computing power, seamless tele-conferencing, and advanced instrumentation;</span></div>
</li>
<li><div style="text-align: justify;">
<span style="font-size: large;">Decentralised settlement with modern, localised infrastructure, decentralised employment, and efficient inter-regional and international information and transport connections.</span></div>
</li>
</ul>
<div style="text-align: justify;">
</div>
<div style="text-align: justify;">
<b><span style="font-size: large;">A Shortage of Resources</span></b></div>
<div style="text-align: justify;">
</div>
<div style="text-align: justify;">
<span style="font-size: large;">Supply chains are over-stretched in the development sector. This flows through to delays, costs,
and failures all-too-often overlooked by local politicians and their
consultants in the haste to justify economically suspect projects. </span></div>
<span style="font-size: large;"></span><br />
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
</div>
<div style="text-align: justify;">
<span style="font-size: large;">Shovel-ready projects track straight into this quagmire of
unrealistic supply chain and labour market expectations. Yet, Infrastructure New Zealand has effectively
lobbied the civil engineering/development complex to the top of the national economic
agenda. It is supported by a network of professional players (engineering,
consulting, planning, design, and legal) and the vested interests of operators.
Because of its visibility, infrastructure building also
plays to political monumentalism. </span></div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
</div>
<div style="text-align: justify;">
<b><span style="font-size: large;">What are the alternatives?</span></b></div>
<div style="text-align: justify;">
</div>
<div style="text-align: justify;">
<span style="font-size: large;">A shovel ready recovery locks us into projects based on the
economy and labour market of the past. Uneconomic or marginally economic projects
limit our ability to do other things. It would be better to focus on
initiatives that lift adaptability (the ability to change what we are doing),
and flexibility (the ability to vary how we are doing it). </span></div>
<span style="font-size: large;"></span><br />
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
</div>
<div style="margin-left: 21.3pt; text-align: justify; text-indent: -21.3pt;">
<span style="font-size: large;">Here are some
ideas that might contribute: </span></div>
<ul>
<li><div style="margin-left: 21.3pt; text-align: justify; text-indent: -21.3pt;">
<span style="font-size: large;"><b>V</b><b>et and prioritise infrastructure projects, </b>ditching those like Auckland light rail plans with costs bound to blow out and which face uncertain demand;</span><span style="font-size: large;"><b> </b></span></div>
</li>
<li><div style="margin-left: 21.3pt; text-align: justify; text-indent: -21.3pt;">
<span style="font-size: large;"><b>Pursue best practice</b> in the assessment, design, specification, and management of any projects that may be justified (most likely in public health, water quality, and the like);</span> </div>
</li>
<li><div style="margin-left: 21.3pt; text-align: justify; text-indent: -21.3pt;">
<span style="font-size: large;"><b>Prioritise social infrastructure</b> (education, health, and housing) for short- and long-term benefits. </span></div>
</li>
<li><div style="margin-left: 21.3pt; text-align: justify; text-indent: -21.3pt;">
<span style="font-size: large;"><b>Promote innovation and entrepreneurship</b> with vocational education to increase career mobility and deepen domestic skills and experience. </span></div>
</li>
<li><div style="margin-left: 21.3pt; text-align: justify; text-indent: -21.3pt;">
<span style="font-size: large;"><b>Pursue an open business environment</b> to facilitate enterprise, mobilise capital, ensure productive resources and feedstocks can be widely accessed, and streamline regulation;</span> </div>
</li>
<li><div style="margin-left: 21.3pt; text-align: justify; text-indent: -21.3pt;">
<span style="font-size: large;">Address business support to <b>future-oriented capacities</b>, rather than propping up existing structures and practices;</span> </div>
</li>
<li><div style="margin-left: 21.3pt; text-align: justify; text-indent: -21.3pt;">
<span style="font-size: large;"><b>Review approaches to trade facilitation, </b>support for innovation and technology, and business taxation. </span></div>
</li>
<li><div style="margin-left: 21.3pt; text-align: justify; text-indent: -21.3pt;">
<span style="font-size: large;"><b>Maintain household incomes: </b>increasing local consumer spending, especially among low income households, will have the highest immediate impacts on employment while providing breathing space as the country and the world adjust to the economic shock of Covid 19.</span></div>
</li>
</ul>
<div style="margin-left: 21.3pt; text-align: justify; text-indent: -21.3pt;">
<br /></div>
<div style="text-align: justify;">
<span style="font-size: large;">Quite simply, an infrastructure-dominated programme that imposes new and potentially
open-ended fiscal demands on currently constrained incomes is more likely to undermine
than boost economic activity.</span></div>
<div style="text-align: justify;">
<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike><span style="font-size: large;"></span></div>
Phil McDermotthttp://www.blogger.com/profile/06869744647213369964noreply@blogger.com0tag:blogger.com,1999:blog-7011655232093163642.post-73331707384707238112018-11-26T13:05:00.000+13:002019-01-15T15:20:46.130+13:00Amalgamation and Streamlining City Governance: the Auckland Experiment So Far<div style="margin: 0px 0px 10.66px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">The performance of the Super City – so far, so so</span></b></div>
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Previous posts indicate that amalgamating
local government in Auckland has not yielded <span style="margin: 0px;"><a href="https://cities-matter.blogspot.com/2018/11/consolidating-council-does-bigger.html"><span style="color: #0563c1;">efficiencies</span></a></span>.
Catch-up spending may account for some of the costs, which have run well ahead
of population growth, and the consolidated Council may be doing more things
than its predecessors.</span></div>
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">However, a failure to deliver on
expectations suggests that performance is still a problem. This blog looks at
the governance structures underpinning Auckland Council’s decision-making,
concluding that amalgamation has simply changed governance problems, not resolved them.</span></div>
<br />
<div style="margin: 0px 0px 10.66px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Governance: councillors acting with authority</span></b></div>
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Authority for governing locally comes from the democratic process. Elected politicians are expected to
represent the preferences of constituents in decision-making (which does not
reduce the imperative to act within the law, consider sound technical advice,
and evaluate the costs, benefits, and risks of alternative courses of action).</span></div>
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Implementing decisions falls to a
chief executive appointed by and accountable to the Council. The CEO in turn
appoints subordinate managers to implement policies. While the executive team is
also required to advise on the decisions the Council takes, staff are <u>not</u>
the Council. The Council is an elected body that ultimately speaks and acts
collectively.<a href="file:///C:/Users/pjmcd/Dropbox/Auckland%20Review/Governancne.docx" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span style="margin: 0px;"><span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="color: #0563c1;">[1]</span></span></span></span></span></a></span></div>
<div style="margin: 0px 0px 10.66px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Boards and managers</span></b></div>
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Council and staff roles have a parallel
in corporate boards of directors and company executives.<span style="margin: 0px;"> </span>Despite different conventions, similar
principles apply. For example:</span><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;"><br /></span></div>
<div style="margin: 0px 0px 0px 24px; text-indent: -18pt;">
<span style="font-family: "symbol"; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;">
</span></span></span><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Effective
engagement is required between council and constituents so that decisions take account
of residents’ and ratepayers’ interests;</span></div>
<br />
<div style="margin: 0px 0px 0px 24px; text-indent: -18pt;">
<span style="font-family: "symbol"; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;">
</span></span></span><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Accountability
comes from clarity and openness so that the grounds, costs, and expected
outcomes of decisions can be understood by constituents;</span></div>
<br />
<div style="margin: 0px 0px 10.66px 24px; text-indent: -18pt;">
<span style="font-family: "symbol"; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;">
</span></span></span><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Clarity of
communication and accountability between Mayor and CEO is critical to turning
policy decisions into executive actions.</span></div>
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">How many around the table?</span></b><br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">The effectiveness of governing
bodies in the private, not-for-profit, and public organisations is influenced
by the size of the governance group. While this is a matter of ongoing professional
and academic debate and <span style="margin: 0px;"><a href="read:http://dorgerconsulting.com/2011/07/20/size-matters-right-sizing-your-board-of-directors/"><span style="color: #0563c1;">deliberation</span></a></span></span><span style="font-family: "calibri light" , sans-serif; margin: 0px;">,</span><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;"> it is generally agreed that 10 members should be sufficient to
bring the necessary breadth of views and skills to the table while avoiding the distractions
associated with larger boards.<span style="margin: 0px;"> </span>Councils
may have more than ten members, however, or use outside advisors to ensure that the full range of
community views are brought to individual issues.<a href="file:///C:/Users/pjmcd/Dropbox/Auckland%20Review/Governancne.docx" name="_ftnref2" style="mso-footnote-id: ftn2;" title=""><span style="margin: 0px;"><span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="color: #0563c1;">[2]</span></span></span></span></span></a></span></div>
<div style="margin: 0px 0px 10.66px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Managing complexity: committees and council-controlled
organisations</span></b></div>
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Councils work in diverse task
environments. Traditionally complexity is managed through specialised committees
reporting to the full council, which makes decisions based on their recommendations.</span></div>
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Using Council Controlled
Organisations to deliver selected public goods and services is another way to deal
with complexity. CCOs are governed by appointees, often with business
experience, rather than elected representatives.<span style="margin: 0px;"> </span>While operating to a charter framed by the council,
they can act outside the confines of the public service. </span></div>
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Auckland’s CCOs – a mixed blessing?</span></b><br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">An earlier post suggested that higher
costs may be associated with Auckland Council’s <span style="margin: 0px;"><a href="https://cities-matter.blogspot.com/2018/10/aucklandssuper-city-and-costs-of.html"><span style="color: #0563c1;">reliance
on CCOs</span></a></span>. Table 1 lists them, including statements of purpose (from
annual reports). These indicate changing roles, raising questions around
mission creep and how and why council-mandated charters may be altered. </span></div>
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">For example, ATEED positions
itself as multi-functional, moving closer to the Council’s environmental
management and infrastructure responsibilities, while committing to a whole-of-labour
market quality focus.</span></div>
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">The Auckland Transport statement suggests
a shift from supporting changing land use through transport investment and
public transport operations to urban planning (“shaping Auckland”) and shaping transport
behaviour. </span></div>
<br />
<div align="center" style="margin: 0px 0px 10.66px; text-align: center;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Table 1: Auckland City’s Council Controlled Organisations</span></b> <a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhW41dleQwIWHzGPmbRBFsCmM9ESaKvrXqYu0nX-vV5XserX6OX71iOhuskOL_sDlq8CKa5MXKS56Qlc-YGMbVhvnDvyHWwpuSe-ggVxaJ2e-kpRZS0n2_uim6P3gLuZjhVvL1MWscVzVc/s1600/Picture1.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="814" data-original-width="886" height="586" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhW41dleQwIWHzGPmbRBFsCmM9ESaKvrXqYu0nX-vV5XserX6OX71iOhuskOL_sDlq8CKa5MXKS56Qlc-YGMbVhvnDvyHWwpuSe-ggVxaJ2e-kpRZS0n2_uim6P3gLuZjhVvL1MWscVzVc/s640/Picture1.png" width="640" /></a></div>
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Tails wagging the dog?</span></b><br />
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">It may be inevitable that CCO roles
evolve as demographic and economic conditions change. It is also important that
those changes reflect rather than lead council policy. (However, CCO directors
and officers do have a role to play in advising the Council in their respective
areas of expertise.)</span><br />
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="font-family: "times new roman"; font-size: small;"></span><br /></span>
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Auckland City is now running into <span style="margin: 0px;"><a href="http://www.mylook.co/new-zealand-herald-(opinion)/john-tamihere-shine-a-light-on-these-costly-creations_9549153"><span style="color: #0563c1;">hard
questions</span></a></span> over the CCO model. In the spotlight at the moment, for
example,<span style="margin: 0px;"> </span>is the Regional Facilities
Agency and the initiatives it is pursuing to “rationalise” long-established <span style="margin: 0px;"><a href="https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12161421"><span style="color: #0563c1;">sporting
venues</span></a></span>. </span></div>
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Another <span style="margin: 0px;"><a href="https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12120334"><span style="color: #0563c1;">example</span></a></span>
is the failure of Panuku Development to align development planning with council
plans.<span style="margin: 0px;"> </span>It’s also problematic when a
subsidiary pursues commercial objectives contrary to the wishes of the community,
as when Ports of Auckland published <span style="margin: 0px;"><a href="https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11667330"><span style="color: #0563c1;">expansion
plans</span></a></span> into the Waitemata Harbour. Similarly, <span style="margin: 0px;"> </span>the subsidiary’s “out-of-scope” commercially-founded
plans for a hotel and car park clash with <span style="margin: 0px;"><span style="color: #0563c1;"><a href="https://thespinoff.co.nz/auckland/02-11-2017/a-green-park-on-top-of-a-carpark-and-other-remarkable-plans-for-the-auckland-port/">Council’s
plans</a><u> </u></span></span>for the waterfront.</span></div>
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Issues of autonomy,
accountability, and conflict can reduce the value of CCOs and subsidiaries as they are directed by boards a step removed from democratic
responsibilities and managed by executives not directly accountable to the
Auckland Council CEO.</span></div>
<div style="margin: 0px 0px 10.66px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Local boards: compensating for a reduction in representation?</span></b><br />
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Local democracy depends on local
representation. Amalgamation was in large part about reducing the number of
councillors, from around 117 across eight councils in 2009 to 21 today (Table
2). This saw one council member for every 14,500 people in 2009 fall to one for
every 64,600 in 2018, a 78% reduction in representation.</span></div>
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">There was a slight increase in
local board members (25% up compared with community boards in 2009), but given boards' limited responsiblities, the
overall reduction in representation and consolidation of regional rather than
local governance suggests a significant decline in democratic accountability. The
increase in appointed directors of regional-scale CCOs<a href="file:///C:/Users/pjmcd/Dropbox/Auckland%20Review/Governancne.docx" name="_ftnref3" style="mso-footnote-id: ftn3;" title=""><span style="margin: 0px;"><span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="color: #0563c1;">[3]</span></span></span></span></span></a>
can be seen as contributing further to the centralisation of decision-making.</span></div>
<div style="text-align: center;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Table 2: Local Government Representation, Auckland 209 and 2018</span></b></div>
<br />
<div align="center" style="margin: 0px 0px 10.66px; text-align: center;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;"></span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiu_VJJRCOcYUVyGx_2YLZiv9Rj4pNBerO6asDy6xF89tLVgsu8h6hpAVizKSMcHua-q98Fd-xJ0UKt4YQptj8-MfG7aua2t5ECnSuuDefF-2VK7O_M4jtJQZC9r-GghW_YCN5NwAmM-WU/s1600/Representation+207+and+2016.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="548" data-original-width="1165" height="300" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiu_VJJRCOcYUVyGx_2YLZiv9Rj4pNBerO6asDy6xF89tLVgsu8h6hpAVizKSMcHua-q98Fd-xJ0UKt4YQptj8-MfG7aua2t5ECnSuuDefF-2VK7O_M4jtJQZC9r-GghW_YCN5NwAmM-WU/s640/Representation+207+and+2016.png" width="640" /></a></div>
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Insofar as participation in elections
reflects it, consolidating Auckland did little for elector engagement. Residential
turnout for council elections in 2016 was 38%, exactly the same
as in 2007.</span><br />
<div style="margin: 0px 0px 10.66px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;"><br /></span></b>
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Local Boards, Local Representation?</span></b><br />
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">It is unlikely that the powers delegated to local boards are sufficient to offset the loss of representation.<span style="margin: 0px;"> Although </span>the numbers of elected members of the individual boards lie within a reasonable range for organisational effectiveness (Figure 2, below), the spread of representation (defined as residents per councillor) varies substantially <span style="background-color: transparent; color: black; display: inline; float: none; font-family: "calibri light" , sans-serif; font-size: 18.66px; font-style: normal; font-variant: normal; font-weight: 400; letter-spacing: normal; line-height: 20px; text-align: left; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;">among them</span>,
well above the +/- 10% considered appropriate for electoral equity. </span></div>
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Putting aside the exceptions of Waiheke
and Great Barrier islands with their small populations, the highest level of
representation is 7,400 persons per board member, well ahead of the lowest at 17,000
(the average being 10,800).</span></div>
<div align="center" style="margin: 0px 0px 10.66px; text-align: center;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Figure 1: Representation on Local Boards</span></b><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;"> </span></div>
<div style="margin: 0px 0px 10.66px; text-align: center;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;"></span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhNdZ3qCHG0OGnthCz3cQqwlFmGUPHLsj-Df0vyLLC-kfy4BpTY0qlIclfFFKtjlDgJf-UI-UdgQrDrKBqkUMrm8vvA1kwaUKHMMr9rvP-wuflkx4Wc_Mev2X91EMBcyvU6T8O2wdvma2U/s1600/Local++Boards.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="996" data-original-width="1534" height="414" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhNdZ3qCHG0OGnthCz3cQqwlFmGUPHLsj-Df0vyLLC-kfy4BpTY0qlIclfFFKtjlDgJf-UI-UdgQrDrKBqkUMrm8vvA1kwaUKHMMr9rvP-wuflkx4Wc_Mev2X91EMBcyvU6T8O2wdvma2U/s640/Local++Boards.png" width="640" /></a></div>
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">And the Council?</span></b><br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Given its size, Auckland Council has
the potential to be compromised by unwieldy numbers and the cross-currents and mixed
agendas that attend a crowded governance table. The committee
structure is unlikely to offset this because, in a rather strange arangement, all councillors are members of the three main committees
(Table 3).<span style="margin: 0px;"> </span>Over-sizing committees reduces
the advantages of having small groups specialise in key areas before deliberation on policy options by the full Council.</span></div>
<div style="margin: 0px 0px 10.66px; text-align: center;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Table 3: Auckland Council Committees</span></b></div>
<div class="separator" style="clear: both; text-align: center;">
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<span style="font-family: "calibri light" , sans-serif; font-size: 11pt; line-height: 107%; margin: 0px;"> IMSB:
<span style="margin: 0px;"><a href="https://www.imsb.maori.nz/about-us/introduction/"><span style="color: #0563c1;">Independent Māori
Statutory Committee</span></a></span></span><br />
<br />
<div style="margin: 0px 0px 10.66px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Time to review Auckland’s governance arrangements?</span></b><br />
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">The outline of governance here suggests
that the Auckland Council has the potential for cumbersome decision-making
despite any streamlining intended from consolidation of powers.</span></div>
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">For example:</span></div>
<div style="margin: 0px 0px 0px 24px; text-indent: -18pt;">
<span style="font-family: "symbol"; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;">
</span></span></span><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">The Council operates
in a top-heavy manner, if only because its key decision-making functions are
subject to deliberation by committees of 22;</span></div>
<div style="margin: 0px 0px 0px 24px; text-indent: -18pt;">
<span style="font-family: "symbol"; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;">
</span></span></span><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">The
relationships among the governors (councillors, CCO directors and board members) and managers are potentially complex
and communications constrained across boundaries;</span></div>
<div style="margin: 0px 0px 10.66px 24px; text-indent: -18pt;">
<span style="font-family: "symbol"; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;">
</span></span></span><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Representation
within the council is based on low elector turnout, while representation across
local boards is uneven.</span></div>
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Given the evidence of rapidly
rising costs in Auckland Council’s first eight years, the picture of consolidated power at the centre without obvious democracy,
decision-making, or performance benefits suggests that it is time to again review
Auckland’s governance arrangements.</span><br />
<br />
<div style="mso-element: footnote-list;">
<br clear="all" />
<hr align="left" size="1" width="33%" />
<div id="ftn1" style="mso-element: footnote;">
<div style="margin: 0px 0px 0px 48px; text-indent: -36pt;">
<a href="file:///C:/Users/pjmcd/Dropbox/Auckland%20Review/Governancne.docx" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span style="margin: 0px;"><span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%; margin: 0px;"><span style="color: #0563c1;">[1]</span></span></span></span></span></a><span style="font-family: "calibri"; font-size: x-small;"> <span style="margin: 0px;"> </span>Note to reporters: it is important
for clarity to use a singular verb when reporting on the Council. The Council <u>are</u>
not to blame for getting it right or wrong: the Council <u>is</u>.</span></div>
</div>
<div id="ftn2" style="mso-element: footnote;">
<div style="margin: 0px;">
<a href="file:///C:/Users/pjmcd/Dropbox/Auckland%20Review/Governancne.docx" name="_ftn2" style="mso-footnote-id: ftn2;" title=""><span style="margin: 0px;"><span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%; margin: 0px;"><span style="color: #0563c1;">[2]</span></span></span></span></span></a><span style="font-family: "calibri"; font-size: x-small;"> <span style="margin: 0px;"> </span>The Independent Māori <span style="margin: 0px;"> </span>Statutory Board pays an important role in this
respect in Auckland.</span></div>
</div>
<div id="ftn3" style="mso-element: footnote;">
<div style="margin: 0px 0px 0px 48px; text-indent: -36pt;">
<a href="file:///C:/Users/pjmcd/Dropbox/Auckland%20Review/Governancne.docx" name="_ftn3" style="mso-footnote-id: ftn3;" title=""><span style="margin: 0px;"><span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%; margin: 0px;"><span style="color: #0563c1;">[3]</span></span></span></span></span></a><span style="font-family: "calibri"; font-size: x-small;"> <span style="margin: 0px;"> </span>The Royal Commission on Auckland
Governance (2009) claimed “over 40” CCOs associated with local councils in 2009
(Final report, p.13). This implies a trade-off through amalgamation between many small organisations
operating locally and a few large ones operating regionally.</span></div>
</div>
</div>
<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike>Phil McDermotthttp://www.blogger.com/profile/06869744647213369964noreply@blogger.com0tag:blogger.com,1999:blog-7011655232093163642.post-13082638132521758922018-11-19T22:10:00.000+13:002019-01-15T15:32:30.989+13:00Consolidating a Council - Does Bigger Simply Mean ... Bigger?<b><span style="color: black; margin: 0px;">Reviewing the Auckland experiment </span></b><span style="color: black; margin: 0px;"></span><br />
<span style="color: black; margin: 0px;">This is
the fourth post reviewing the progress of Auckland Council following the
amalgamation in 2010 of seven territorial and one regional
authority and the reorganisation of transport and water delivery agencies. The aims
included greater regulatory consistency across the region, the capacity to make adequate,
coordinated provision for growth, and cost savings. </span><span style="color: black; margin: 0px;"> </span><br />
<br />
<div style="line-height: normal; margin: 0px;">
<b><span style="color: black; margin: 0px;">The story
so far</span></b><span style="color: black; margin: 0px;"></span></div>
<span style="color: black; margin: 0px;">The previous posts looked at trends in Auckland
Council from 2012 to 2018: <a href="https://cities-matter.blogspot.com/2018/10/supersize-my-city-super-for-some.html"><span style="color: #0563c1; margin: 0px;">employment up 17%</span></a>; employment costs up
24% (in real terms); <a href="https://cities-matter.blogspot.com/2018/10/aucklandssuper-city-and-costs-of.html"><span style="color: #0563c1; margin: 0px;">operating expenditure up 26%</span></a>; <a href="https://cities-matter.blogspot.com/2018/10/bigger-city-bigger-bills.html"><span style="color: #0563c1; margin: 0px;">total revenue up 51%</span></a>. The leap in revenue
reflects spending on property, plant and equipment, up 32% in 2018
compared with 2012, or NZ$11bn over the period. All this, while population grew
by around 15%. </span><br />
<div style="line-height: normal; margin: 0px 0px 10.66px;">
<span style="color: black; margin: 0px;"><br /></span>
<span style="color: black; margin: 0px;">Despite the jump in costs and funding, we
can’t label the Auckland Experiment a failure on the evidence so far. So this post adds to the
analysis by looking briefly at performance, albeit in general terms. It looks at broad efficiency trends by comparing Auckland with New Zealand’s other regions. These include unitary councils
(regional and local functions combined) and multi-council regions.</span></div>
<div style="line-height: normal; margin: 0px 0px 10.66px;">
<span style="color: black; margin: 0px;">But first a couple of scene-setters. What is
the role of councils? And how might efficiencies arise from amalgamation and
operating at a larger scale? </span></div>
<div style="line-height: normal; margin: 0px;">
<i><span style="color: black; margin: 0px;">Skip these
two boxes if you just want to look at the numbers.</span></i></div>
<div style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-element: para-border-div; padding: 1.0pt 4.0pt 1.0pt 4.0pt;">
<div style="border-image: none; border: medium; line-height: normal; margin: 0px 0px 10.66px; padding: 0cm;">
<b><span style="color: black; margin: 0px;">Scene Setter 1 - What councils do (or should do)</span></b><span style="color: black; margin: 0px;"></span></div>
<div style="border-image: none; border: medium; line-height: normal; margin: 0px 0px 10.66px; padding: 0cm;">
<span style="color: black; margin: 0px;">There are good arguments for local councils to
oversee the provision of local public goods where the market won’t deliver or
where there are natural monopolies. It is also appropriate for them to levy
rates over property to do so, and to charge directly for the services they
provide. </span></div>
<div style="border-image: none; border: medium; line-height: normal; margin: 0px 0px 10.66px; padding: 0cm;">
<span style="color: black; margin: 0px;">Obviously council roles will change as shifts in
technology or behaviour create competition where none existed before (and they
consequently pull out of infrastructure or service delivery) or where the
public appetite for amenities changes (for example from passive to active
reserves). </span></div>
<div style="border-image: none; border: medium; line-height: normal; margin: 0px 0px 10.66px; padding: 0cm;">
<span style="color: black; margin: 0px;">It is important, though, that property rates relate
to the infrastructure provided, and that charges for services relate to the
fair cost of their production. It is also important that councils produce
infrastructure and services efficiently. Unduly high costs penalise residents and businesses, reducing a city’s competitiveness and
attraction. </span></div>
<div style="border-image: none; border: medium; line-height: normal; margin: 0px 0px 10.66px; padding: 0cm;">
<span style="color: black; margin: 0px;">Councils also have an obligation to continuously
review and evaluate what infrastructure and amenities <u>should</u> be
provided, where, and when. In this they are required to reflect on
constituents’ needs and preferences, engaging with the community through
survey, consultation, submissions, and, ultimately, the ballot box. This is
necessary to legitimise new activities and allow cross-subsidies between
services, areas, or generations. </span></div>
<div style="border-image: none; border: medium; line-height: normal; margin: 0px 0px 10.66px; padding: 0cm;">
<span style="color: black; margin: 0px;">Discretionary council decisions should also: be legal,
reasonable (both matters that may be contested in the courts), and should not
unduly lower efficiency.</span></div>
</div>
<br />
<div style="line-height: normal; margin: 0px;">
<span style="color: black; margin: 0px;"> </span><span style="color: black; margin: 0px;"> </span></div>
<div style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-element: para-border-div; padding: 1.0pt 4.0pt 1.0pt 4.0pt;">
<div style="border-image: none; border: medium; line-height: normal; margin: 0px 0px 10.66px; padding: 0cm;">
<b><span style="color: black; margin: 0px;">Scene Setter
2 Potential efficiencies from
reorganisation</span></b><span style="color: black; margin: 0px;"></span></div>
<div style="border-image: none; border: medium; line-height: normal; margin: 0px 0px 10.66px; padding: 0cm;">
<span style="color: black; margin: 0px;">There are the three ways by which efficiency might
be improved through local government consolidation and reform: </span></div>
<div style="border-image: none; border: medium; line-height: normal; margin: 0px 0px 10.66px; padding: 0cm;">
<u><span style="color: black; margin: 0px;">Administrative gains</span></u><span style="color: black; margin: 0px;">: from lowering administrative,
compliance, transaction, and regulatory costs. Processes may be
streamlined, duplication eliminated, best practices implemented, and economies
of scale gained (increasing what is achieved by more than what it costs). </span></div>
<div style="border-image: none; border: medium; line-height: normal; margin: 0px 0px 10.66px; padding: 0cm;">
<u><span style="color: black; margin: 0px;">Technical gains</span></u><span style="color: black; margin: 0px;"> through improved financial capacity to invest in
new systems, processes, and plant to lift output, enhance outcomes, reduce
service failures, and lower costs. </span></div>
<div style="border-image: none; border: medium; line-height: normal; margin: 0px 0px 10.66px; padding: 0cm;">
<u><span style="color: black; margin: 0px;">Allocative gains</span></u><span style="color: black; margin: 0px;"> from delivering the most appropriate mix of goods
and services, and making effective use of capital to best deploy people and
plant to achieve desired outcomes. </span></div>
</div>
<div style="line-height: normal; margin: 0px;">
<b><span style="color: black; margin: 0px;"><br /></span></b></div>
<div style="line-height: normal; margin: 0px;">
<b><span style="color: black; margin: 0px;">Measuring
gains</span></b><span style="color: black; margin: 0px;"></span></div>
<span style="color: black; margin: 0px;">In this post, I consider the efficiencies
in Auckland Council that should come from administrative and
technical advances using changes in two measures: the number of local government employees and operating expenditure per head of population.</span><br />
<span style="color: black; margin: 0px;"><br /></span>
<br />
<div style="line-height: normal; margin: 0px 0px 10.66px;">
<span style="color: black; margin: 0px;">Auckland
Council numbers are compared with numbers for all New Zealand regions from
2000 to 2018. Following the logic justifying amalgamation, the
creation of Auckland’s large unitary council in 2010 should have increased the residents served
relative to council employment numbers and lowered costs to residents more than
in regions with smaller, multiple councils. And within Auckland we would
expect council costs to decline relative to population.</span></div>
<div style="line-height: normal; margin: 0px 0px 10.66px;">
<span style="color: black; margin: 0px;">The indicators used assume that the council output is a function of
population. This is a high order assumption, over-riding differences in the mix
and quality of amenities and services and differences in the physical environment of regions. Equally, employee numbers is also only an
approximate measure of inputs.</span></div>
<div style="line-height: normal; margin: 0px 0px 10.66px;">
<span style="color: black; margin: 0px;">While these assumptions keep analysis simple, they also limit the conclusions that can be drawn.</span></div>
<div style="line-height: normal; margin: 0px 0px 10.66px;">
<b><span style="color: black; margin: 0px;">Employment
up, productivity down?</span></b><br />
<span style="color: black; margin: 0px;">We know employment growth has been modest
within the enlarged Auckland Council, confined to Council Controlled
Organisations. However, the costs of council employment have risen
significantly, in part through staff movement into higher-paid bands. </span></div>
<div style="line-height: normal; margin: 0px 0px 10.66px;">
<span style="color: black; margin: 0px;">To consider the bigger picture, the number of residents in each of the 16 regions was
divided by the number of people employed in local government administration and in water supply,
sewage and drainage servcies (sourced from Business Demography, Statistics NZ). <span style="background-color: transparent; color: black; display: inline; float: none; font-family: "times new roman"; font-size: 16px; font-style: normal; font-variant: normal; font-weight: 400; letter-spacing: normal; text-align: left; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;">The higher the figure, the more productive a region is
(fewer employees relative to residents). The line should rise if
productivity is improving.</span></span><br />
<span style="color: black; margin: 0px;"><br /></span>
<span style="color: black; margin: 0px;">The results for Auckland and the median for all regions have been
plotted in Figure 1. </span><span style="color: black; margin: 0px;">Auckland stands out as more productive than most
regions, but contrary to expectations, more so before the 2010 reforms than
after. Other strong performers are smaller regions with unitary
councils (Gisborne, Nelson, and especially Tasman). </span></div>
<div style="text-align: center;">
<b><span style="color: black; margin: 0px;">Figure 1: Residents per Council Employee, 2000-2018</span></b><span style="color: black; margin: 0px;"> </span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgCgaNQ35DU9qIfKIifbhgVBiqYvICQ_LCCR3kjHZ1gb3MvrFAGJj8HsyhRefVib8H4DQWQc7fFc2ZEcLq6cMldk992zUTkHJjrKo5GId__4TLD2_96ktplwfpWAvdZYyZFpW6CG6UD8ug/s1600/People+Per+Employee.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="960" data-original-width="1561" height="393" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgCgaNQ35DU9qIfKIifbhgVBiqYvICQ_LCCR3kjHZ1gb3MvrFAGJj8HsyhRefVib8H4DQWQc7fFc2ZEcLq6cMldk992zUTkHJjrKo5GId__4TLD2_96ktplwfpWAvdZYyZFpW6CG6UD8ug/s640/People+Per+Employee.png" width="640" /></a></div>
<span style="color: black; margin: 0px;">The downward slope indicates more employees relative to population, suggesting <u>falling</u> productivity. Of course, this
may indicate changes in the scope of council activities, but it is hard to
envisage a shift that would lead to a 26% fall in 8 years (as in Auckland) or
even a 14% fall (as in the national median). And if costs rise faster than output, regional (and national) productivity suffers.</span><br />
<br />
<div style="line-height: normal; margin: 0px;">
<span style="color: black; margin: 0px;">While
Auckland ranks well against other regions on this
measure (see the bar graph and right-hand scale), its steep downward slope and
convergence on the median across regions is inconsistent with expectations of economic gains
from consolidation (despite the recovery in 2017).</span></div>
<div style="line-height: normal; margin: 0px;">
<b><span style="color: black; margin: 0px;"><br /></span></b></div>
<div style="line-height: normal; margin: 0px;">
<b><span style="color: black; margin: 0px;">Expenditure:
more for less?</span></b><span style="color: black; margin: 0px;"></span></div>
<span style="color: black; margin: 0px;">Operating expenses (sourced from Statistics NZ)
have been summed for councils in each region from 2000 to 2017, converted to
2018 dollars and divided through by regional populations. In theory,
expenditure per head should fall as councils become more efficient, and should
be lower in larger councils, Auckland being the obvious example (see the Scene
Setter 2, above).</span><br />
<span style="color: black; margin: 0px;"><br /></span>
<br />
<div style="line-height: normal; margin: 0px 0px 10.66px;">
<span style="color: black; margin: 0px;">Well,
neither expectation appears to hold. Operating costs per employee have been
increasing. In Auckland there was some moderation after 2012 but it is
difficult to distinguish its performance from the median for all councils in Figure 2. </span><br />
<span style="color: black; margin: 0px;"><br /></span>
<span style="color: black; margin: 0px;">Figure 2 also includes high and low performers. The best performing regions fall below the lower quartile and the worst above the higher quartile. The single best performer recently has been the Hawke's Bay with its population concentrated in the twin cities of Napier and Hastings. The worst has been the West Coast with its sparse population spread over a physically challenging area. </span><span style="color: black; margin: 0px;"><br /></span></div>
<div style="line-height: normal; margin: 0px;">
<span style="color: black; margin: 0px;">The key observation, though, is that efficiency as measured here has not improved in Auckland which continues to sit around the middle of the pack.</span><span style="color: black; margin: 0px;"> </span></div>
<br />
<div align="center" style="line-height: normal; margin: 0px 0px 10.66px; text-align: center;">
<b><span style="color: black; margin: 0px;">Figure 2: Council Expenditure per
Resident, 2000-2017</span></b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgS6JXqktwTDyHGHo6XvKYIvMP2RFzY-_mhLONo_6BnFLFnE7_Fs58f6_ZIEAmFLAuxfXVOSlaxZNSrHCw6TS1CNe4l1Kbjb-XDQUW7oCHQwFWPg7Pgawa09pJ574L3hGKb6UP0T9LD2xY/s1600/OpEx+pe+Head.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="995" data-original-width="1524" height="416" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgS6JXqktwTDyHGHo6XvKYIvMP2RFzY-_mhLONo_6BnFLFnE7_Fs58f6_ZIEAmFLAuxfXVOSlaxZNSrHCw6TS1CNe4l1Kbjb-XDQUW7oCHQwFWPg7Pgawa09pJ574L3hGKb6UP0T9LD2xY/s640/OpEx+pe+Head.png" width="640" /></a></div>
<b><span style="color: black; margin: 0px;">What can
we conclude?</span></b><span style="color: black; margin: 0px;"></span><br />
<span style="color: black; margin: 0px;"></span><br />
<div style="-webkit-text-stroke-width: 0px; background-color: transparent; color: black; font-family: Times New Roman; font-size: 16px; font-style: normal; font-variant: normal; font-weight: 400; letter-spacing: normal; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; orphans: 2; text-align: left; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;">
<span style="color: black; margin: 0px;"><span style="color: black; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">On
the measures used here, local government costs are moving ahead of population growth in most regions. Auckland is no exception. </span>At best, te city has maintained efficiency in line with other regions. Consolidation of Auckland's councils has not been enough to reverse a decline. </span></div>
<span style="color: black; margin: 0px;">
</span><span style="color: black; margin: 0px;"><br /></span>
<br />
<div style="line-height: normal; margin: 0px 0px 10.66px;">
<span style="color: black; margin: 0px;">As noted, these measures of efficiency assume a similar mix and level of services delivered by the consolidated council as delivered under similar conditions by councils in other
regions, and as delivered by the previous Auckland councils. At the level this analysis, our most robust conclusion is that the measures used provide no evidence that consolidation has lifted Auckland's game. To date, the costs of consolidation have not yielded obvous benefits.</span><span style="color: black; margin: 0px;"><br /></span></div>
<div style="line-height: normal; margin: 0px;">
<span style="color: black; margin: 0px;">Exploring why means looking into allocative efficiency: is the additional funding Auckland Council is receiving being allocated to investments that lift productivity as they deliver
better services? In the absence of evidence of better performance </span><span style="color: black; margin: 0px;"><span style="background-color: transparent; color: black; display: inline; float: none; font-family: "times new roman"; font-size: 16px; font-style: normal; font-variant: normal; font-weight: 400; letter-spacing: normal; text-align: left; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;">the consolidated council does not hyet yet appear to be on the path to
savings. </span>And if Auckland is
going to deliver on the promise of 2010, can we afford the spending evidently
required to get there? </span><span style="color: black; margin: 0px;"> </span><br />
<span style="color: black; margin: 0px;"><br /></span></div>
<b><span style="color: black; margin: 0px;"><span style="background-color: #eeeeee;">→ An aside on allocative efficiency</span></span></b><span style="color: black; margin: 0px;"></span><br />
<span style="color: black; margin: 0px;"><span style="background-color: #eeeeee;">Sound allocation decisions are necessary to deliver operating gains: spending the right amount on the right things and getting the right people to put them in place. In Auckland Council resource allocation is
driven in large part by Council Controlled Organisations. The quality of resource allocation decisions needs unravelling at that level. </span></span><br />
<span style="color: black; margin: 0px;"><span style="background-color: #eeeeee;"><br /></span></span>
<br />
<div style="line-height: normal; margin: 0px 0px 10.66px;">
<span style="background-color: #eeeeee;"><span style="color: black; margin: 0px;">However, it is timely to note that a recent <a href="https://www.nzherald.co.nz/index.cfm?objectid=12158815&ref=twitter"><span style="color: #0563c1; margin: 0px;">internal report</span></a> regarding decision-making for
cycleway investment by Auckland Transport identifies that spending was
justified by over-estimating demand. This is on top of major
under-estimates of the cost of the Central Rail Link which was justified
on the basis of a <a href="http://cities-matter.blogspot.com/2011/12/rethink-link-does-auckland-really-need.html"><span style="color: #0563c1; margin: 0px;">$2.3bn budget</span></a> in 2011 (and a series of
assumptions that were <a href="http://cities-matter.blogspot.com/2012/12/a-flawed-case-aucklands-cityrail-link.html"><span style="color: blue; margin: 0px;">hardly grounded in reality</span></a>). That budget had (predictably) blown out to
$3.4bn by 2016, and <a href="https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12115025"><span style="color: #0563c1; margin: 0px;">continues to climb</span></a>, with no clarity on where it will end up. </span></span></div>
<div style="line-height: normal; margin: 0px 0px 10.66px;">
<span style="background-color: #eeeeee;"><span style="color: black; margin: 0px;">These examples confirm how large organisations are prone to resource misallocation; the larger the project the more likely it is to blow out, and the bigger any over-run will be. The impact of failures in resource allocation decisions in a large council can be
further-reaching than similar failures by smaller organisations, given the increased funds at their disposal. And placing a substantial share of the increased funds in CCOs at arm's length from the political process may be no remedy. Poor spending decisions by councillors or their agents and advisors can lead to uneconomic investment: over- or under-capacity, in the wrong place, badly timed, or over-priced. The end result? A drag on city efficiency and productivity.</span></span></div>
<div style="line-height: normal; margin: 0px;">
<hr align="left" size="1" width="33%" />
<span style="color: black; margin: 0px;"> [1] There
is a difference. <u>Efficiency</u> refers to how well tasks are done, and
specified outcomes achieved. <u>Productivity</u> requires that those
outcomes are the correct ones. </span></div>
<br />
<div style="margin: 0px 0px 10.66px;">
<br /></div>
<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike>Phil McDermotthttp://www.blogger.com/profile/06869744647213369964noreply@blogger.com0tag:blogger.com,1999:blog-7011655232093163642.post-66088803397742520202018-10-30T10:04:00.000+13:002018-12-23T10:13:27.342+13:00Bigger City, Bigger Bills<span style="font-size: large;"></span><br />
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;"><i>In brief ...</i></span></b><br />
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;"><i>The last posting outlined rapid spending </i><span style="background-color: transparent; color: black; display: inline; float: none; font-family: "calibri light" , sans-serif; font-size: 18.66px; font-style: italic; font-variant: normal; font-weight: 400; letter-spacing: normal; text-align: left; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;">growth </span><i>by Auckland Council since created by amalgamating seven units of local government and one regional council. This post demonstrates that while rates increased only a little ahead of population growth, the boost in investment by the Council since it was created has been funded by growing charges for services and by borrowing. While the finances have been well-managed and debt remains reasonable, there is a question-mark over how long the rapid growth and cost of council activities can outpace the growth of the community and economy. </i></span><br />
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;"><i><br /></i></span>
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;"><i>This raises a number of questions. The key question: at what point will excessive </i><span style="-webkit-text-stroke-width: 0px; background-color: transparent; color: black; display: inline !important; float: none; font-family: "calibri light" , sans-serif; font-size: 18.66px; font-style: italic; font-variant: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: left; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;">council </span><i>spending begin to limit the growth it aims to cater for? </i></span><br />
<i><span style="font-family: "calibri light" , sans-serif; font-size: large;"></span></i><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;"><i><br /></i></span>
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;"><i></i>Keeping rates down</span></b><br />
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Auckland Council costs have gone
up by around 26% over just six years by <span style="margin: 0px;"><a href="https://cities-matter.blogspot.com/2018/10/aucklandssuper-city-and-costs-of.html"><span style="color: #0563c1;">my
estimate</span></a></span>. Surely the ratepayers will be rebelling against that?<span style="margin: 0px;"> </span></span></div>
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Well, not necessarily. Over the
same period, <u>rates collected</u> only went up 17% (in 2018 dollars), or 2.6%
per year, roughly in line with population growth of 15%.<span style="margin: 0px;"> </span>(That’s not to say they didn’t go up by more
in some areas as the Council sought to equalise them across the newly formed city
<a href="file:///C:/Users/pjmcd/Dropbox/Blogs/Bigger%20City,%20Bigger%20Costs.docx" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span style="margin: 0px;"><span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="color: #0563c1;">[1]</span></span></span></span></span></a>).</span></div>
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">But total <u>council revenue</u> went
up a lot more, by 51% (in 2018 dollars, based on council annual reports).
So, rates accounted for a falling share of revenue, dropping from almost half
of the total in 2012 to 38% in 2018 (Figure 1).</span></div>
<br />
<div align="center" style="margin: 0px 0px 10.66px; text-align: center;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Figure 1: Auckland Rates and Other Income, 2012-2018</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEghGbpsCSZt3kkaH5KtlmLLXrbURo98aO4ij42MnGAvkp4HCoGy3xQE0PokXMtZsXpvEcksADUbWBwUTtTTVmJIOksnKnDW3CtV81ywhx6NCpHHy_V9bSpmzksJkZjmB3angG3KpKZUoaA/s1600/Rates+and+Revenue.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="1280" height="360" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEghGbpsCSZt3kkaH5KtlmLLXrbURo98aO4ij42MnGAvkp4HCoGy3xQE0PokXMtZsXpvEcksADUbWBwUTtTTVmJIOksnKnDW3CtV81ywhx6NCpHHy_V9bSpmzksJkZjmB3angG3KpKZUoaA/s640/Rates+and+Revenue.jpg" width="640" /></a></b></div>
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</div>
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Citizens are paying in other ways</span></b><br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Charges for local services went up
by 44%, or $385m. Most of this is also paid by residents, who have little choice when it comes to water and waste or transport charges.<span style="margin: 0px;"> At the same time, d</span>evelopment and financial contributions went up $108m or 150%. While this reflects city growth (and maybe some catch-up from development <span style="background-color: transparent; color: black; display: inline; float: none; font-family: "calibri light" , sans-serif; font-size: 18.66px; font-style: normal; font-variant: normal; font-weight: 400; letter-spacing: normal; line-height: 20px; text-align: left; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;">delayed
</span>while the Council was trying to sort out where <a href="http://cities-matter.blogspot.com/2012/10/redesigning-city-planning-affordable.html"><span style="color: #0563c1;">growth
might go</span></a>), these are paid for mainly by home buyers (especially first home
buyers): current and future city ratepayers.<span style="margin: 0px;">
</span></span></div>
<br />
<div align="center" style="margin: 0px 0px 10.66px; text-align: center;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Figure 2: Main Components of Revenue, 20-12-2018</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi4S4RjLALMch699g_QKg8Iji1il6_O_pp5Gk3z0fuMMXdCEm52Jaqw9wkcD8xhcOzTk886jKCWEO4ByNsI_oo3tAec6GZmh9yJlTanL31NA9EbxZjOCU5CLdOMH-RZ9wN6L7M03ZqTo60/s1600/Components+of+revenue.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="655" data-original-width="979" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi4S4RjLALMch699g_QKg8Iji1il6_O_pp5Gk3z0fuMMXdCEm52Jaqw9wkcD8xhcOzTk886jKCWEO4ByNsI_oo3tAec6GZmh9yJlTanL31NA9EbxZjOCU5CLdOMH-RZ9wN6L7M03ZqTo60/s640/Components+of+revenue.jpg" width="640" /></a></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Building assets – and liabilities</span></b><br />
<div style="margin: 0px 0px 10.66px; text-align: justify;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Interestingly, vested assets
accounted for 33% of revenue growth reported and 13% of total revenue in 2018 ($510m),
up from just 2% in 2012.<span style="margin: 0px;"> </span>Roads, sewer and
water pipes (and pumps), reserves and parks, and so forth are transferred to Council <span style="-webkit-text-stroke-width: 0px; background-color: transparent; color: black; display: inline !important; float: none; font-family: "calibri light" , sans-serif; font-size: 18.66px; font-style: normal; font-variant: normal; font-weight: 400; letter-spacing: normal; line-height: 20px; orphans: 2; text-align: justify; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;">at “fair value”</span>as development proceeds .<span style="margin: 0px;"> </span>They are reflected in the balance
sheet as a component of non-current assets. </span></div>
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Vested assets are ultimately
funded from new property purchase (in addition to development fees, also passed
on in property prices). </span></div>
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">One way or another, residents pay.</span></div>
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Vested assets are also an ongoing liability given the commitment to maintain them and fund their depreciation.<span style="margin: 0px;"> </span>It is critical that they are well-placed and
of a standard that will carry them well into the future if rates are not to escalate indefinitely.</span></div>
<br />
<div style="margin: 0px 0px 10.66px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Lifting investment</span></b></div>
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">The Council’s accounts tell a
story of recent growth. To better understand how growth is funded, and sidestep
accounting conventions which see, for example, expenditure reflected in a
reduction in the value of assets and vested assets recorded as revenue, it is
useful to look at cash flow figures (Figure 3).</span></div>
<br />
<div align="center" style="margin: 0px 0px 10.66px; text-align: center;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Figure 3: Auckland Council Cash Flow, 2012-2018</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjiPM38lxqRiX0CLb2mbHykLZhhJTR6aZxAGMs1vSHlxzpNhoDCYlo8WNuz_hUcvNxf6yDlDX-vr4CFeeux7EA2RiaArufG8t1ng4bwmUwx-8RNhL-Tb53oNHOato13kKGTb0005Uid2BQ/s1600/F+4+Cash+Flow.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="613" data-original-width="1012" height="386" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjiPM38lxqRiX0CLb2mbHykLZhhJTR6aZxAGMs1vSHlxzpNhoDCYlo8WNuz_hUcvNxf6yDlDX-vr4CFeeux7EA2RiaArufG8t1ng4bwmUwx-8RNhL-Tb53oNHOato13kKGTb0005Uid2BQ/s640/F+4+Cash+Flow.jpg" width="640" /></a></b></div>
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<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">They indicate a 36% increase in
revenue from rates, grants, fees, and charges between 2012 and 2018,
supplemented by borrowings.<span style="margin: 0px;"> </span>Annual
borrowing declined significantly over the period, from 26% of cash in 2012
to only 6% in 2018. Presumably increased fees and charges have facilitated
this, together with adoption of more diverse financial instruments, the
latter reflected in the growth of the Other category (including dividends,
interest, and $218m from the Crown in 2018).<span style="margin: 0px;"> </span></span></div>
<br />
<div style="margin: 0px 0px 10.66px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Keeping the lid on – so far</span></b></div>
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">At the same time, the ongoing business
of the Council is reflected in just 6% growth in the costs of suppliers and
employees, compared with 21% growth in investment.<span style="margin: 0px;">
</span>The fastest growing costs have been interest payments, more than doubling,
although at this stage they account for only 10% of total spending (Figure 3). Annual borrowings
(net of repayments) have trended down.<span style="margin: 0px;"> </span></span></div>
<br />
<div align="center" style="margin: 0px 0px 10.66px; text-align: center;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Figure 4: Annual Borrowing and Interest Payments, 2012-2018</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgQFF215DkHlyxRfsXtpb_LuufvGEt9gRZ7TdmYaZLvobg1e960rYTMucJ6TrT8gSyskEGPlBd68XuwcSd_YZVP6X85XdOsg0nG2eCCDF7Kq5rywWKDpqtEUpMfTajauXtN3R0Pm7SCyY4/s1600/Intersy+%2526+Loans.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="630" data-original-width="1023" height="394" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgQFF215DkHlyxRfsXtpb_LuufvGEt9gRZ7TdmYaZLvobg1e960rYTMucJ6TrT8gSyskEGPlBd68XuwcSd_YZVP6X85XdOsg0nG2eCCDF7Kq5rywWKDpqtEUpMfTajauXtN3R0Pm7SCyY4/s640/Intersy+%2526+Loans.jpg" width="640" /></a></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;"></span></b><br />
<br />
<div style="margin: 0px 0px 10.66px; text-align: justify;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Long-term debt was up by $3.3bn (70%) in 2018, to $7.9bn, and total borrowings up $4.3bn to $10.8bn. Increased indebtedness is
reflected in the increased value of assets, up $13bn (35%) including revaluations, to $50.2bn. Overall, ratepayer
equity remained a relatively high 67% in 2018, although well down from an even
healthier 74% six years earlier.</span></div>
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">It’s not clear, though, whether
this debt is doing much for the community.<span style="margin: 0px;"> It needs to be. Total borrowing </span>per head of population (using StatsNZ June population estimates) grew by 76%, from $3,631 in 2012 to $6,384 in 2018. </span><br />
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">One way of charting the value of debt is to plot it against GDP, with the expectation that any improvements in public infrastructure and services might be reflected in output some time later.<span style="margin: 0px;"> </span>The time span considered and a lag in the availbality of regional GDP data limits such an assessment. However, short-term movements offer no evidence of a productivity benefit yet. Comparing
June council debt with regional GDP 21 months later (possible only from June 2011 for debt to the four years to March 2016 for GDP) shows
a 62% increase in debt compared with a 20% increase in GDP .<span style="margin: 0px;"> </span>As measured by Stats NZ, Auckland's GDP growth was strong, but not as strong as the growth in the Council’s indebtedness. </span></div>
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">Where to from here? </span></b><br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">The Council has kept the lid on its
finances, despite the growth of debt, through moderately higher rates and sharply increased fees and charges.<span style="margin: 0px;"> </span>This year it introduced even more ways to pay.<span style="margin: 0px;">
</span>It is set to selectively tax income (on properties providing tourism accommodation)
and mobility (levying road user charges over and above road costs which are already funded by the Government’s Road User Charges).</span></div>
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">The Super City is delivering for
the moment – at least in volume – but at what long-term cost? An appetite for
increasing charges and growing debt to support rapid spending growth raises questions. For example:</span><br />
<br />
<div style="margin: 0px 0px 0px 24px; text-indent: -18pt;">
<span style="font-family: "symbol"; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;">
</span></span></span><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">How much of
the spending addresses the Council’s core business and how much is
discretionary? And how is spending prioritised?</span></div>
<br />
<div style="margin: 0px 0px 0px 24px; text-indent: -18pt;">
<span style="font-family: "symbol"; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;"> </span></span></span><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">What is the
quality of investment, both by the Council and <span style="background-color: transparent; color: black; display: inline; float: none; font-family: "calibri light" , sans-serif; font-size: 18.66px; font-style: normal; font-variant: normal; font-weight: 400; letter-spacing: normal; line-height: 20px; text-align: left; text-decoration: none; text-indent: -24px; text-transform: none; white-space: normal; word-spacing: 0px;">by
developers </span>in new public infrastructure ? What are the long-term implications of the new wave of infrastructure for long-term spending on maintenance and funding depreciation?</span></div>
<br />
<div style="margin: 0px 0px 0px 24px; text-indent: -18pt;">
<span style="font-family: "symbol"; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;"> </span></span></span><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">What happens
if population-based demand falls below expectations?<span style="margin: 0px;"> </span>The high population projections justifying much of the current spending are by no means guaranteed.<span style="margin: 0px;"> </span>If growth in resident numbers falls short, the surge in civic investment could stymie growth through the costs it imposes on households and businesses.
</span></div>
<br />
<div style="margin: 0px 0px 0px 24px; text-indent: -18pt;">
<span style="font-family: "symbol"; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;"> </span></span></span><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">How well will current investments meet the
expectations of future Aucklanders about how and where they will live, work,
and play?.<span style="margin: 0px;"> </span>Or, are we cementing current
preferences into a future about which we have far-from-perfect knowledge?</span></div>
<br />
<div style="margin: 0px 0px 0px 24px; text-indent: -18pt;">
<span style="font-family: "symbol"; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;">
</span></span></span><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">At what point
will residents and ratepayers resist rising monopolistic charges for public
services? And how will such charges impact on the rest of the economy?<span style="margin: 0px;"> </span></span></div>
<br />
<div style="margin: 0px 0px 10.66px 24px; text-indent: -18pt;">
<span style="font-family: "symbol"; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;">
</span></span></span><span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">In what ways is council spending impacting on regional productivity and output?</span></div>
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri light" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;">It is only eight years since the
Council was formed but if a rapid increase in council costs is placing growth at risk, it may be timely to revisit the question of how Auckland is, or
should be, governed.<span style="margin: 0px;"> </span></span></div>
<br />
<div style="margin: 0px 0px 10.66px;">
<br /></div>
<div style="mso-element: footnote-list;">
<hr align="left" size="1" width="33%" />
<div id="ftn1" style="mso-element: footnote;">
<div style="margin: 0px 0px 0px 48px; text-indent: -36pt;">
<a href="file:///C:/Users/pjmcd/Dropbox/Blogs/Bigger%20City,%20Bigger%20Costs.docx" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span style="margin: 0px;"><span style="margin: 0px;"><span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%; margin: 0px;"><span style="color: #0563c1;">[1]</span></span></span></span></span></span></a><span style="font-size: x-small;"><span style="font-family: "calibri";"><span style="margin: 0px;"> <span style="margin: 0px;"> </span></span><span style="margin: 0px;">In Auckland the property rate charged is based on capital value --
land plus improvements -- and the consolidated council has been seeking to
eliminate variations in the rate per dollar across the region</span></span></span><span style="margin: 0px;"></span></div>
</div>
</div>
<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike>Phil McDermotthttp://www.blogger.com/profile/06869744647213369964noreply@blogger.com0tag:blogger.com,1999:blog-7011655232093163642.post-36658248262747507432018-10-24T22:00:00.003+13:002018-12-23T10:05:03.913+13:00Auckland’s Super City and the Costs of Consolidation<span style="font-size: 14pt; line-height: 107%; margin: 0px;"><i><b>Synopsis</b></i></span><br />
<span style="font-size: 14pt; line-height: 107%; margin: 0px;"><i>This post sets
out trends in the costs incurred by the Auckland Council over the past six
years.<span style="margin: 0px;"> </span>The Government created a single
council plus subsidiaries model for the governance of the region in 2010. </i></span><br />
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;"><i>The post
starts with an update of the cost of employment growth in the new Council.<span style="margin: 0px;"> </span>It then shows that under the new structure
the rate of investment has been an even bigger driver of cost increases. Costs
have clearly outstripped population growth, suggesting that the model adopted
has not prevented the so-called super city from running into the diseconomies
associated with excessive scale.</i></span></div>
<br />
<div style="margin: 0px 0px 10.66px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-size: 16pt; line-height: 107%; margin: 0px;">Early hopes
– and risks</span></b><br />
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">Problems reconciling
regional infrastructure and environmental policy with local interests led to
consolidation of one regional and seven territorial councils into a single
“super city”.<span style="margin: 0px;"> </span>Auckland Council was
created in 2010 as a city of 1.44m people.<span style="margin: 0px;">
</span>It was intended to reconcile competing territorial interests, rationalise
public investment, align regulation and services, streamline processes, and
achieve economies of scale. All this, it was believed , would make Auckland competitive
on a world stage and lead to a “more liveable” city. </span></div>
<span style="margin: 0px;"><span style="font-size: 14pt; line-height: 107%; margin: 0px;"><a href="http://cities-matter.blogspot.com/2010/09/blog-post.html"><span style="color: #0563c1; font-family: "calibri";">I questioned</span></a></span></span><span style="font-size: 14pt; line-height: 107%; margin: 0px;"> whether the reorganisation would achieve
efficiencies, or simply lead to diminishing returns from increased organisational
size and complexity. With eight years of the super Council behind us, we can
consider how well it has worked. In this post, I consider cost performance.</span><br />
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;"><b>But first,
does bigger mean better?</b></span><br />
<i style="mso-bidi-font-style: normal;"><span style="font-size: 14pt; line-height: 107%; margin: 0px;">(Skip this section if you just want
to see the numbers).</span></i></div>
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">Auckland’s
consolidation was based on the premise that a bigger organisation would be
better for a growing city.<span style="margin: 0px;"> </span>But there are
flaws in that assumption.<span style="margin: 0px;"> </span></span><br />
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">As
organisations grow beyond an optimum size, returns to scale fall and even
reverse as efficiencies become outweighed by the shortcomings – the
diseconomies -- of oversizing. Large producers and service providers may be impeded
by ageing technology and legacy products and services, becoming vulnerable to
competition from new entrants and innovators. Top-heavy management, entrenched
processes and behaviours, structural and social complexity slow organisations’ responses
to changing circumstances. Investment and operating practices become erratic as
internal units pursue their interests without regard to the goals of the wider organisation
or as they compete for internal resources. </span></div>
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">We have seen
organisational failures from excessive scale in manufacturing, aviation,
construction, retailing, computing, IT, financial services, and others. Some
large organisations may avoid collapse by transforming themselves into smaller
units, a painful and not always successful process.<span style="margin: 0px;"> </span>Others may be taken over, absorbed, or simply
closed.<span style="margin: 0px;"> </span>A few get bailed out.<span style="margin: 0px;"> </span></span><br />
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">Large cities
can also fail, when advantages of agglomeration are offset by increasing
costs.<span style="margin: 0px;"> </span>Businesses may suffer from the
constraints of ageing and under-capacity infrastructure, increasing service
charges, and rising land costs. Congestion and high house prices impact on
employment costs and reduce a city’s attraction to new and existing households,
leading to skill shortages. </span></div>
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">Diminishing
returns also apply to </span><span style="margin: 0px;"><span style="font-size: 14pt; line-height: 107%; margin: 0px;"><a href="https://theconversation.com/do-mergers-make-for-better-councils-the-evidence-is-against-bigger-is-better-for-local-government-56813"><span style="color: #0563c1; font-family: "calibri";">city
councils</span></a></span></span><span style="font-size: 14pt; line-height: 107%; margin: 0px;">.<span style="margin: 0px;"> </span>And when large councils fall short,
ratepayers pay. This may well be the case for Auckland if the Council’s costs
run too far ahead of population growth. </span><br />
<br />
<div style="margin: 0px 0px 10.66px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-size: 16pt; line-height: 107%; margin: 0px;">The data</span></b><br />
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">The figures
used to explore Auckland Council’s costs are from annual reports.<span style="margin: 0px;"> </span>Group costs are divided between the “core Council”
and its subsidiaries</span><a href="file:///C:/Users/pjmcd/Dropbox/Blogs/The%20Costs%20of%20Council.docx" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span style="margin: 0px;"><span style="font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="color: #0563c1;">[1]</span></span></span></span></span></span></a><span style="font-size: 14pt; line-height: 107%; margin: 0px;">. The analysis is indicative, based
on aggregate cost movements. All amounts are adjusted to 2018 dollars using the
CPI.</span></div>
<span style="font-size: 14pt; line-height: 107%; margin: 0px;"><b>An update on
employment – onward and upward</b></span><br />
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">My </span><span style="margin: 0px;"><span style="font-size: 14pt; line-height: 107%; margin: 0px;"><a href="http://cities-matter.blogspot.com/2018/10/supersize-my-city-super-for-some.html"><span style="color: #0563c1; font-family: "calibri";">last
post</span></a></span></span><span style="font-size: 14pt; line-height: 107%; margin: 0px;"> documented
Council employment growth, especially in higher income brackets, from 2012 to
2017.</span><a href="file:///C:/Users/pjmcd/Dropbox/Blogs/The%20Costs%20of%20Council.docx" name="_ftnref2" style="mso-footnote-id: ftn2;" title=""><span style="margin: 0px;"><span style="font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="color: #0563c1;">[2]</span></span></span></span></span></span></a><span style="font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;">
</span>The Annual Report to June 2018 is now available.<span style="margin: 0px;"> </span>Here’s what happened:</span><br />
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">Group employment
growth slowed to 0.8% in 2018, compared with 3.4% average over the previous
five years. The gain from 2012 to 2018 stills sits at 18%, though, (1,830 more
employees), ahead of 15% population growth in the city. </span></div>
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">Core Council
employment</span><a href="file:///C:/Users/pjmcd/Dropbox/Blogs/The%20Costs%20of%20Council.docx" name="_ftnref3" style="mso-footnote-id: ftn3;" title=""><span style="margin: 0px;"><span style="font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="color: #0563c1;">[3]</span></span></span></span></span></span></a><span style="font-size: 14pt; line-height: 107%; margin: 0px;"> fell by 1% in 2018. 200 jobs were lost
from the under $100,000 salary bracket.<span style="margin: 0px;">
</span>Against this, the numbers in the $100,000 to $200,000 band were up 11.5%
(140 jobs).</span><br />
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">Here’s the
rub: in 2018 employment in council subsidiaries and CCOs grew by 3.2% (150 jobs),
with over half of this in positions paying more than $100,000 a year. Over
the six years to 2018 employment in subsidiaries increased by 1,460 people (43%)
with 35% among those earning over $100,000. In 2018 there were over 1,000
people earning between $100,000 and $200,000 in the subsidiaries, and 120
earning over $200,000.</span></div>
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">Although employment
growth slowed in 2018, higher paid jobs continued to grow. The result?<span style="margin: 0px;"> </span>A 24% increase in the cost of employment
($168m) between 2012 and 2018.</span><br />
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">It appears
that c</span><span style="font-size: 14pt; line-height: 107%; margin: 0px;">ouncil-controlled organisations are a Trojan horse –a
vehicle for employment and salary growth a step removed from political control
(Figure 1).<span style="margin: 0px;"> </span>In 2013 they accounted for 33%
of the Group workforce.<span style="margin: 0px;"> </span>Today, they
account for 40%, and for 47% of employees earning between $100,000 and $200,000, and for 82% of those earning over $200,000. <span style="margin: 0px;"> </span>Subsidiaries and CCOs jointly accounted for 74%
of the growth in Group employment costs.</span></div>
<br />
<div align="center" style="margin: 0px 0px 10.66px; text-align: center;">
<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14pt; line-height: 107%; margin: 0px;">Figure 1: Wage, Salary & Superannuation Costs, 2012 -
2018</span></b><span style="font-size: 14pt; line-height: 107%; margin: 0px;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiesPMcnIkti9YoVebGF7Oy1e5BLuY-2Zvgfn9IXUwUB9rc4jW-_VY4Tc1kWM_haQi0dVrm2b7LZW-2PXbq8BnVrSm_XP3rjO4swX2grQegab4z6gw_AKPkKOk-IzoitmeoyixHlkaiccg/s1600/Employment+Costs.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="1280" height="360" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiesPMcnIkti9YoVebGF7Oy1e5BLuY-2Zvgfn9IXUwUB9rc4jW-_VY4Tc1kWM_haQi0dVrm2b7LZW-2PXbq8BnVrSm_XP3rjO4swX2grQegab4z6gw_AKPkKOk-IzoitmeoyixHlkaiccg/s640/Employment+Costs.jpg" width="640" /></a></span></div>
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">This cementing in of high-end salaries reinforces my view that
super City performance is likely to be impeded by the </span><span style="margin: 0px;"><span style="font-size: 14pt; line-height: 107%; margin: 0px;"><span style="color: #0563c1;"><span style="font-family: "calibri";"><span style="color: black;"><a href="http://cities-matter.blogspot.com/2010/10/avoiding-scelrosis-in-super-sized.html">growth
of a tier of management</a><u> </u></span></span></span></span></span><span style="font-size: 14pt; line-height: 107%; margin: 0px;">committed to keeping the organisation going as much as to
achieving its community objectives.<span style="margin: 0px;"> </span></span><span style="font-size: 14pt; line-height: 107%; margin: 0px;"></span><br />
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">More people
and higher salaries cement in higher costs.<span style="margin: 0px;">
</span>But just how much do they contribute to an overall increase in council
costs?<span style="margin: 0px;"> </span>This rest of this post looks at what
is happening to other council costs. </span></div>
<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14pt; line-height: 107%; margin: 0px;">Costs: the bigger picture</span></b><br />
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">Group
operating expenditure grew 26% in real term from 2012 to 2018 (over $800m), ahead
of the 24% increase in employment costs. <span style="margin: 0px;"> </span>The biggest boost came from depreciation and
amortisation</span><a href="file:///C:/Users/pjmcd/Dropbox/Blogs/The%20Costs%20of%20Council.docx" name="_ftnref4" style="mso-footnote-id: ftn4;" title=""><span style="margin: 0px;"><span style="font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="color: #0563c1;">[4]</span></span></span></span></span></span></a><span style="font-size: 14pt; line-height: 107%; margin: 0px;">, up almost $200m (30%). Nearly 70% of
this was attributable to subsidiaries and CCOs (Figure 2).<span style="margin: 0px;"> </span></span><br />
<br />
<div align="center" style="margin: 0px 0px 10.66px; text-align: center;">
<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14pt; line-height: 107%; margin: 0px;">Figure 2: Expenditure
by Category, Core Council and Subsidiaries, 2012-2017</span></b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhjO0ckGW011ZWsWmYmXDID60dpOLWajZI-pd4KASWOASrrxn22WNHXZMEmVXeC4Yua1Fn88zjLtcOI3NWziAhq-oUNq3oBX-VDU_rjv-SCGBvbLAXID_mIiw8RGaoP8e0w2oI3jLgMYvw/s1600/Composition+of+Costs.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="1280" height="360" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhjO0ckGW011ZWsWmYmXDID60dpOLWajZI-pd4KASWOASrrxn22WNHXZMEmVXeC4Yua1Fn88zjLtcOI3NWziAhq-oUNq3oBX-VDU_rjv-SCGBvbLAXID_mIiw8RGaoP8e0w2oI3jLgMYvw/s640/Composition+of+Costs.jpg" width="640" /></a></div>
<div style="margin: 0px 0px 10.66px; text-align: left;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">The growth
of depreciation reflects an increase of over $11bn in the Council’s property,
plant and equipment portfolio (up 32%) from 2012 to 2018. A rapid increase in
tangible assets is also reflected in repairs and maintenance spending (20% of
the “Other” category in Figure 2), with annual costs up by 46% <span style="background-color: transparent; color: black; display: inline; float: none; font-family: "times new roman"; font-size: 18.66px; font-style: normal; font-variant: normal; font-weight: 400; letter-spacing: normal; line-height: 20px; text-align: left; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;"> ($84m) </span>from 2012 to 2018 (Figure 3). </span></div>
<div style="text-align: center;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;"><b>Figure 3: Tangible Asset Values and Costs</b></span><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjBNPYqp5Wk4o7BXPNJpf9imtuqRv3ZldecWkKwLyyzrar3ffpTBLM51pPa_UNj-2TOobmmo6ggY9cOC1U5i-U_IQYoy0j567odJY6NlQzHHWteWHihBWri0bgNPYypCxIsDsaV5tygD9A/s1600/PPE.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="1280" height="360" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjBNPYqp5Wk4o7BXPNJpf9imtuqRv3ZldecWkKwLyyzrar3ffpTBLM51pPa_UNj-2TOobmmo6ggY9cOC1U5i-U_IQYoy0j567odJY6NlQzHHWteWHihBWri0bgNPYypCxIsDsaV5tygD9A/s640/PPE.jpg" width="640" /></a></div>
<div style="margin: 0px 0px 10.66px; text-align: left;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">A high level
of investment commits the Council to substantial long-term costs. This is also the case with respect to property expenses, apparently responding
to increased employment or newer, better-appointed offices to reflect the increasing salaries being paid: utilities, occupancy, rental and lease costs climbed
by 79% ($69m).</span></div>
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">In contrast,
the largest category of Other spending, on goods and services, grew by just</span><br />
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">10% (still up by $68m over six years, to $723m in 2018).<span style="margin: 0px;"> Only c</span>onsultancy and professional services
declined, by one third to $140m.</span><a href="file:///C:/Users/pjmcd/Dropbox/Blogs/The%20Costs%20of%20Council.docx" name="_ftnref5" style="mso-footnote-id: ftn5;" title=""><span style="margin: 0px;"><span style="font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="color: #0563c1;">[5]</span></span></span></span></span></span></a><span style="font-size: 14pt; line-height: 107%; margin: 0px;"></span><br />
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">Subsidiaries
and CCOs grew more rapidly than the core Council in all categories other than finance
costs. This presumably reflects the role of the core in funding increased civic
investment and activity through its CCOs.<span style="margin: 0px;">
</span></span></div>
<b style="mso-bidi-font-weight: normal;"><span style="font-size: 16pt; line-height: 107%; margin: 0px;">Internal
Transfers</span></b><br />
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">This funding role is also evident in core Council spending on grants, subsidies, and sponsorships
(GSS). <span style="margin: 0px;"> </span>While the detail of transfers is
not provided in the City’s annual reports, a large share are made to CCO investment
and operations. Core Council expenditure on GSS grew by 65% from $623m in 2012
to $1,030 in 2018, 54% of the total increase in core Council costs over the
period.<span style="margin: 0px;"> </span></span><br />
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">The 2018
annual report identifies that around 88% of these payments went to the CCOs in
2017 and 2018, with Auckland Transport the principle recipient. </span></div>
<br />
<div style="margin: 0px 0px 10.66px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-size: 16pt; line-height: 107%; margin: 0px;">Conclusions
and questions</span></b><br />
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">Two obvious
conclusions can be taken from this brief analysis:</span></div>
<div style="margin: 0px 0px 0px 48px; text-indent: -18pt;">
<span style="font-family: "symbol"; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;">
</span></span></span><span style="font-size: 14pt; line-height: 107%; margin: 0px;">Council
costs are ramping up ahead of population growth, primarily through commitment
to a substantial investment programme over the past six years, backed by an
increasingly expensive if not expansive workforce.</span></div>
<br />
<div style="margin: 0px 0px 10.66px 48px; text-indent: -18pt;">
<span style="font-family: "symbol"; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;">
</span></span></span><span style="font-size: 14pt; line-height: 107%; margin: 0px;">Reliance
on a CCO model in the consolidated council has been central to the increase in employment,
investment, and related costs. In 2018 CCOs and subsidiaries account for 70% of
council investment in property, plant and equipment ($32.7bn). <span style="margin: 0px;"> </span></span></div>
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">In light of
these conclusions, it is interesting that the Royal Commission on Auckland
Governance put budgeted operating costs across eight councils in 2008-09 at close
to $2b and capital investment at $1.25bn.</span><a href="file:///C:/Users/pjmcd/Dropbox/Blogs/The%20Costs%20of%20Council.docx" name="_ftnref6" style="mso-footnote-id: ftn6;" title=""><span style="margin: 0px;"><span style="font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="color: #0563c1;">[6]</span></span></span></span></span></span></a><span style="font-size: 14pt; line-height: 107%; margin: 0px;"> In 2018 dollars this is around $2,600/head of population. It compares with $4,580/head in 2018, a 76%
increase in just ten years!<span style="margin: 0px;"> </span></span><br />
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">Given these observations, determining
the efficiency and effectiveness of the Council's increased spending clearly requires analysis
of the individual CCO accounts. A number of questions
need addressing, among them:</span></div>
<div style="margin: 0px 0px 0px 24px; text-indent: -18pt;">
<span style="font-family: "symbol"; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;">
</span></span></span><span style="font-size: 14pt; line-height: 107%; margin: 0px;">Does
the spectacular growth in council costs result from a prior failure to meet the
city’s needs? Does it reflect a fundamental change in the direction and scope
of council activity? Or has the organisation simply over-stepped the threshold
of efficiency?<span style="margin: 0px;"> </span></span></div>
<br />
<div style="margin: 0px 0px 0px 24px; text-indent: -18pt;">
<span style="font-family: "symbol"; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;">
</span></span></span><span style="font-size: 14pt; line-height: 107%; margin: 0px;">Do
the CCOs enhance the effectiveness of the Council, and local democracy? Or are
they reducing the accountability of the Council at the same time as it
increases the scope, scale, and quality of its investment? </span></div>
<br />
<div style="margin: 0px 0px 10.66px 24px; text-indent: -18pt;">
<span style="font-family: "symbol"; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;">
</span></span></span><span style="font-size: 14pt; line-height: 107%; margin: 0px;">Is a governance model that focuses on functional specialisation at
a regional level rather than on local priorities, appropriate for a diverse and
growing city?</span><br />
<span style="font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;"><br /></span></span>
<span style="font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;">And, of course, who pays, and how? This is the subject of my <a href="https://cities-matter.blogspot.com/2018/10/bigger-city-bigger-bills.html">next blog</a>. </span></span><br />
<span style="font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;"><br /></span></span></div>
<div style="mso-element: footnote-list;">
<hr align="left" size="1" width="33%" />
<div id="ftn1" style="mso-element: footnote;">
<div style="margin: 0px 0px 0px 48px; text-indent: -36pt;">
<a href="file:///C:/Users/pjmcd/Dropbox/Blogs/The%20Costs%20of%20Council.docx" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span style="margin: 0px;"><span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%; margin: 0px;"><span style="color: #0563c1;">[1]</span></span></span></span></span></a><span style="font-size: x-small;"><span style="font-family: "calibri";"> <span style="margin: 0px;"> </span><span style="margin: 0px;">Subsidiaries include five Council Controlled
Organisations (CCOs), Ports of Auckland </span>Ltd, <span style="margin: 0px;">and Auckland Council</span></span></span><span style="font-size: x-small;"><span style="font-family: "calibri";"><span style="margin: 0px;"> Investments Ltd. </span></span></span></div>
</div>
<div id="ftn2" style="mso-element: footnote;">
<div style="margin: 0px 0px 0px 48px; text-indent: -36pt;">
<a href="file:///C:/Users/pjmcd/Dropbox/Blogs/The%20Costs%20of%20Council.docx" name="_ftn2" style="mso-footnote-id: ftn2;" title=""><span style="margin: 0px;"><span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%; margin: 0px;"><span style="color: #0563c1;">[2]</span></span></span></span></span></a><span style="font-family: "calibri"; font-size: x-small;"> <span style="margin: 0px;"> </span>2012 rather than 2010 is used
as the base year to provide for the costs of reorganisation before then, and
because of more consistent and therefore comparable reporting.</span></div>
</div>
<div id="ftn3" style="mso-element: footnote;">
<div style="margin: 0px 0px 0px 48px; text-indent: -36pt;">
<a href="file:///C:/Users/pjmcd/Dropbox/Blogs/The%20Costs%20of%20Council.docx" name="_ftn3" style="mso-footnote-id: ftn3;" title=""><span style="margin: 0px;"><span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%; margin: 0px;"><span style="color: #0563c1;">[3]</span></span></span></span></span></a><span style="font-family: "calibri"; font-size: x-small;"> <span style="margin: 0px;"> </span>The core Council conducts
those functions not delegated to Council Controlled Organisations or performed
by subsidiaries</span></div>
<div style="margin: 0px;">
<a href="file:///C:/Users/pjmcd/Dropbox/Blogs/The%20Costs%20of%20Council.docx" name="_ftn4" style="mso-footnote-id: ftn4;" title=""><span style="margin: 0px;"><span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%; margin: 0px;"><span style="color: #0563c1;">[4]</span></span></span></span></span></a><span style="font-family: "calibri"; font-size: x-small;"> <span style="margin: 0px;"> </span>Depreciation is applied to tangible
assets, amortisation to intangible assets</span></div>
</div>
<div id="ftn4" style="mso-element: footnote;">
</div>
<div id="ftn5" style="mso-element: footnote;">
<div style="margin: 0px 0px 0px 48px; text-indent: -36pt;">
<a href="file:///C:/Users/pjmcd/Dropbox/Blogs/The%20Costs%20of%20Council.docx" name="_ftn5" style="mso-footnote-id: ftn5;" title=""><span style="margin: 0px;"><span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%; margin: 0px;"><span style="color: #0563c1;">[5]</span></span></span></span></span></a><span style="font-size: x-small;"><span style="font-family: "calibri";"> <span style="margin: 0px;"> </span></span></span><span style="font-size: 9pt; margin: 0px;">It might be argued that the reduction of $67m in fees goes some
way – but only some way - towards offsetting the $157m boost in wage and salary
costs</span><span style="font-size: 7pt; margin: 0px;"></span></div>
</div>
<div id="ftn6" style="mso-element: footnote;">
<div style="margin: 0px 0px 0px 48px; text-indent: -36pt;">
<a href="file:///C:/Users/pjmcd/Dropbox/Blogs/The%20Costs%20of%20Council.docx" name="_ftn6" style="mso-footnote-id: ftn6;" title=""><span style="margin: 0px;"><span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%; margin: 0px;"><span style="color: #0563c1;">[6]</span></span></span></span></span></a><span style="font-family: "calibri"; font-size: x-small;"> <span style="margin: 0px;"> </span>Royal Commission on Auckland Governance (2009)
Volume 1, Executive Summary p15, Department of Internal Affairs</span></div>
</div>
</div>
<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike>Phil McDermotthttp://www.blogger.com/profile/06869744647213369964noreply@blogger.com0tag:blogger.com,1999:blog-7011655232093163642.post-41954907920297085292018-10-01T12:31:00.000+13:002018-10-08T11:38:16.327+13:00Supersize my City: Super for Some<div class="separator" style="clear: both; text-align: center;">
<u><span style="color: #000120;"></span></u><br /></div>
<h2>
</h2>
<h2 style="text-align: left;">
Is it the growth we want?</h2>
<div style="text-align: left;">
</div>
<div style="margin: 0px 0px 10.66px; text-align: left;">
<span style="line-height: 107%; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif;">I
have been thinking about the increasing cost of Auckland Council.<span style="margin: 0px;"> </span>Is it simply a sign of growth, or is it
something to do with the nature of the large councils (or <a href="http://cities-matter.blogspot.com/2015/08/living-with-giants-lessons-from.html"><span style="color: #0563c1;">large
organisations</span></a> in general)? And if it is all about growth, it raises other
questions that remain <a href="http://cities-matter.blogspot.com/2018/09/what-happens-when-carrying-capacity.html"><span style="color: #0563c1;">unanswered</span></a>,
questions of physical and social capacity. Is it about coping with something
that seems inevitable? Or is it something that the community wants and can
embrace?<span style="margin: 0px;"> </span>And if so, what will happen when
that growth slows?</span></span></div>
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</div>
<div style="margin: 0px 0px 10.66px; text-align: left;">
<span style="line-height: 107%; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif;">And
how does the growth we are experiencing align with the much-touted ambition to
be the world’s most liveable city?<span style="margin: 0px;"> </span>(And what
precisely does that mean?) There is a risk that we have leapt to the answers
without quite understanding the questions.<span style="margin: 0px;">
</span></span></span></div>
<div style="text-align: left;">
</div>
<h2 style="margin: 16px 0px 0px; text-align: left;">
Another question</h2>
<div style="text-align: left;">
</div>
<div style="margin: 0px 0px 10.66px; text-align: left;">
<span style="line-height: 107%; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif;">There’s
another elephant on the Isthmus, one I turn to here. Can we sustain the costs
of a super-sized council created to combat the supposed inadequacies of smaller
councils? As the Council seeks out new sources of revenue, will they be enough
to head off the fiscal headwinds that the Council may encounter, especially as
the costs of living in Auckland increase?</span></span></div>
<div style="text-align: left;">
</div>
<div style="margin: 0px 0px 10.66px; text-align: left;">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="line-height: 107%; margin: 0px;">If,
as was hoped, a single city was to be more streamlined and efficient, this
should be evident in its employment performance. I concentrate on council employment
and its costs in this post. To do so I<span style="margin: 0px;"> </span>returned first to an analysis I have undertaken
before </span><span style="margin: 0px;">(in <span style="margin: 0px;"><a href="http://cities-matter.blogspot.com/2014/09/local-governance-amalgamation-and.html"><span style="color: #0563c1;">2014</span></a></span>
and <span style="margin: 0px;"><span style="color: #0563c1;"><a href="https://cities-matter.blogspot.com/2016/04/planning-in-auckland-doing-less-with.html">2016</a><u>). </u></span></span>N</span><span style="line-height: 107%; margin: 0px;">ow that the
super city has been with us for eight years the numbers should be more settled.</span></span></div>
<div style="text-align: left;">
</div>
<h2 style="margin: 16px 0px 0px; text-align: left;">
Employment growth: onward and upward</h2>
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</div>
<div style="margin: 0px 0px 10.66px; text-align: left;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">The amalgamation of six separate territorial authorities and
a regional council (including the Auckland Regional Transport Authority and
Watercare Services) was aimed at savings through integration and economies of
scale. </span></div>
<div style="text-align: left;">
</div>
<div style="margin: 0px 0px 10.66px; text-align: left;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">Gains on the employment front from amalgamation were short-lived,
however.<span style="margin: 0px;"> </span>Stats NZ showed employment figures
soon back above trend as indexed growth in Auckland moved ahead of the rest of
the country (Figure 1).<span style="margin: 0px;"> </span></span></div>
<div style="text-align: left;">
</div>
<div style="margin: 0px 0px 10.66px; text-align: center;">
<b style="mso-bidi-font-weight: normal;"><span style="line-height: 107%; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif;">Figure 1:
Local Government Employment Growth, Auckland and the Rest of New Zealand,
2000-2017</span></span></b><br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEisRczjVKcp3mWmerL5zmcm3j3IDpyf6YY0orxPI7SnxBEKiWhmsdwsLbsH7Am5r-_AFqoSQGHisjgN9nS0aHymEH-eTqEyUTZaz4gzuSMz_GtHFs13AM9MAQhlK6vG40VMTRcRQ1RQOYU/s1600/Employment.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="720" data-original-width="1280" height="360" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEisRczjVKcp3mWmerL5zmcm3j3IDpyf6YY0orxPI7SnxBEKiWhmsdwsLbsH7Am5r-_AFqoSQGHisjgN9nS0aHymEH-eTqEyUTZaz4gzuSMz_GtHFs13AM9MAQhlK6vG40VMTRcRQ1RQOYU/s640/Employment.jpg" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><div style="text-align: left;">
<span style="background-color: transparent; color: black; display: inline; float: none; font-family: "times new roman"; font-size: 12.8px; font-style: normal; font-variant: normal; font-weight: 400; letter-spacing: normal; text-align: center; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;">Source: Business Demographics, Statistics NZ</span></div>
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<b style="mso-bidi-font-weight: normal;"><span style="line-height: 107%; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><i></i><u></u><sub></sub><sup></sup><strike></strike><br /></span></span></b></div>
<span style="font-family: "arial" , "helvetica" , sans-serif;">It gets worse when we look at the annual June reports for
the Council since 2012.<span style="margin: 0px;"> </span>They show significantly
more employees when the subsidiaries – the CCOs – are accounted for:</span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span>
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<td style="background-color: transparent; border-image: none; border: 1.33px solid rgb(0, 0, 0); margin: 0px; padding: 0cm 5.4pt; width: 176.95pt;" width="236"><div style="line-height: normal; margin: 0px; text-align: left;">
<span style="margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">Figures from:</span></span></div>
</td><td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-style: solid none; border-width: 1.33px 0px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: left;">
<b style="mso-bidi-font-weight: normal;"><span style="margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">2012</span></span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">2013</span></span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">2014</span></span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">2015</span></span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">2016</span></span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span style="margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">2017</span></span></b></div>
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<tr style="mso-yfti-irow: 1;"><td style="background-color: transparent; border-color: rgb(0, 0, 0); border-style: none solid; border-width: 0px 1.33px; margin: 0px; padding: 0cm 5.4pt; width: 176.95pt;" width="236"><div style="line-height: normal; margin: 0px; text-align: left;">
<span style="margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">Auckland council (June Reports)</span></span></div>
</td><td nowrap="" style="background-color: transparent; border-image: none; border: 0px rgb(0, 0, 0); margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: left;">
<span style="margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">6,789</span></span></div>
</td><td nowrap="" style="background-color: transparent; border-image: none; border: 0px rgb(0, 0, 0); margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: left;">
<span style="margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">7,008</span></span></div>
</td><td nowrap="" style="background-color: transparent; border-image: none; border: 0px rgb(0, 0, 0); margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: left;">
<span style="margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">7,051</span></span></div>
</td><td nowrap="" style="background-color: transparent; border-image: none; border: 0px rgb(0, 0, 0); margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: left;">
<span style="margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">7,123</span></span></div>
</td><td nowrap="" style="background-color: transparent; border-image: none; border: 0px rgb(0, 0, 0); margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: left;">
<span style="margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">7,184</span></span></div>
</td><td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none solid none none; border-width: 0px 1.33px 0px 0px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: left;">
<span style="margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">7,220</span></span></div>
</td></tr>
<tr style="mso-yfti-irow: 2;"><td style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none solid solid; border-width: 0px 1.33px 1.33px; margin: 0px; padding: 0cm 5.4pt; width: 176.95pt;" width="236"><div style="line-height: normal; margin: 0px; text-align: left;">
<span style="margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">Statistics NZ (as at February)</span></span></div>
</td><td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none none solid; border-width: 0px 0px 1.33px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: left;">
<span style="margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">5,000</span></span></div>
</td><td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none none solid; border-width: 0px 0px 1.33px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: left;">
<span style="margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">6,600</span></span></div>
</td><td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none none solid; border-width: 0px 0px 1.33px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: left;">
<span style="margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">6,800</span></span></div>
</td><td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none none solid; border-width: 0px 0px 1.33px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: left;">
<span style="margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">7,400</span></span></div>
</td><td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none none solid; border-width: 0px 0px 1.33px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: left;">
<span style="margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">7,600</span></span></div>
</td><td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-style: none solid solid none; border-width: 0px 1.33px 1.33px 0px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: left;">
<span style="margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">6,400</span></span></div>
</td></tr>
<tr style="mso-yfti-irow: 3; mso-yfti-lastrow: yes;"><td style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none solid solid; border-width: 0px 1.33px 1.33px; margin: 0px; padding: 0cm 5.4pt; width: 176.95pt;" width="236"><div style="line-height: normal; margin: 0px; text-align: left;">
<span style="margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">Difference (rounded)</span></span></div>
</td><td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none none solid; border-width: 0px 0px 1.33px; margin: 0px; padding: 0cm 5.4pt;" valign="bottom"><div style="line-height: normal; margin: 0px; text-align: left;">
<span style="margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">1,790</span></span></div>
</td><td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none none solid; border-width: 0px 0px 1.33px; margin: 0px; padding: 0cm 5.4pt;" valign="bottom"><div style="line-height: normal; margin: 0px; text-align: left;">
<span style="margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">410</span></span></div>
</td><td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none none solid; border-width: 0px 0px 1.33px; margin: 0px; padding: 0cm 5.4pt;" valign="bottom"><div style="line-height: normal; margin: 0px; text-align: left;">
<span style="margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">250</span></span></div>
</td><td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none none solid; border-width: 0px 0px 1.33px; margin: 0px; padding: 0cm 5.4pt;" valign="bottom"><div style="line-height: normal; margin: 0px; text-align: left;">
<span style="margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">-280</span></span></div>
</td><td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none none solid; border-width: 0px 0px 1.33px; margin: 0px; padding: 0cm 5.4pt;" valign="bottom"><div style="line-height: normal; margin: 0px; text-align: left;">
<span style="margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">-420</span></span></div>
</td><td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-style: none solid solid none; border-width: 0px 1.33px 1.33px 0px; margin: 0px; padding: 0cm 5.4pt;" valign="bottom"><div style="line-height: normal; margin: 0px; text-align: left;">
<span style="margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">820</span></span></div>
</td>
</tr>
</tbody></table>
</div>
<div style="text-align: left;">
</div>
<div style="text-align: left;">
</div>
<div style="margin: 0px 0px 10.66px; text-align: left;">
<span style="font-size: xx-small;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="line-height: 107%; margin: 0px;"><span style="font-size: xx-small;"><span style="margin: 0px;"> </span>S</span></span></span><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="line-height: 107%; margin: 0px;"><span style="font-size: xx-small;">ource: Auckland Council Annual Reports; Stats NZ Business Demographics</span></span></span></span><span style="line-height: 107%; margin: 0px;"></span></div>
<div style="text-align: left;">
</div>
<div style="margin: 0px 0px 10.66px; text-align: left;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">Interestingly, the dip in 2016 in Statistics NZ figures does
not show up in the Council’s data.<span style="margin: 0px;"> This is preumably influenced by the fact that some of the Council's service delivery functions (water and waste, for example) turn up in other sectors. </span></span></div>
<div style="text-align: left;">
</div>
<div style="margin: 0px 0px 10.66px; text-align: left;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">However, it turns out that employment growth has taken place primarily in Council's subsidiaries. Consider the staff figures for the period 2012
to 2017:</span></div>
<div style="text-align: left;">
</div>
<div style="text-align: left;">
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse; margin: 0px; text-align: left; width: 604px;">
<tbody>
<tr style="mso-yfti-firstrow: yes; mso-yfti-irow: 0;">
<td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: solid none solid solid; border-width: 1.33px 0px 1.33px 1.33px; margin: 0px; padding: 0cm 5.4pt;"><span style="font-size: x-small;"></span><br /></td>
<td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: solid none solid solid; border-width: 1.33px 0px 1.33px 1.33px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">2012</span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-style: solid none; border-width: 1.33px 0px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">2013</span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-style: solid none; border-width: 1.33px 0px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">2014</span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-style: solid none; border-width: 1.33px 0px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">2015</span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-style: solid none; border-width: 1.33px 0px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">2016</span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: solid solid solid none; border-width: 1.33px 1.33px 1.33px 0px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">2017</span></span></div>
</td>
<td style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: solid solid solid none; border-width: 1.33px 1.33px 1.33px 0px; margin: 0px; padding: 0cm 5.4pt; width: 55.15pt;" valign="bottom" width="74"><div style="line-height: normal; margin: 0px; text-align: center;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">Gain</span></span></div>
<div style="line-height: normal; margin: 0px; text-align: center;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">2012-17</span></span></div>
</td>
<td style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: solid solid solid none; border-width: 1.33px 1.33px 1.33px 0px; margin: 0px; padding: 0cm 5.4pt; width: 55.2pt;" valign="bottom" width="74"><div style="line-height: normal; margin: 0px; text-align: center;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">Share of Gain</span></span></div>
</td>
</tr>
<tr style="mso-yfti-irow: 1;">
<td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-style: none solid; border-width: 0px 1.33px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">Core Council
Staff</span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border-image: none; border: 0px rgb(0, 0, 0); margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">6,789</span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: 0px rgb(0, 0, 0); margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">7,008</span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: 0px rgb(0, 0, 0); margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">7,051</span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: 0px rgb(0, 0, 0); margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">7,123</span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border: 0px rgb(0, 0, 0); margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">7,184</span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none solid none none; border-width: 0px 1.33px 0px 0px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">7,220</span></span></div>
</td>
<td style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none solid none none; border-width: 0px 1.33px 0px 0px; margin: 0px; padding: 0cm 5.4pt; width: 55.15pt;" valign="bottom" width="74"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">431</span></span></div>
</td>
<td style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none solid none none; border-width: 0px 1.33px 0px 0px; margin: 0px; padding: 0cm 5.4pt; width: 55.2pt;" valign="bottom" width="74"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">6%</span></span></div>
</td>
</tr>
<tr style="mso-yfti-irow: 2;">
<td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none solid solid; border-width: 0px 1.33px 1.33px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">CCOs'
Staff</span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none none solid; border-width: 0px 0px 1.33px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">3,368</span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none none solid; border-width: 0px 0px 1.33px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">3,608</span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none none solid; border-width: 0px 0px 1.33px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">4,071</span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none none solid; border-width: 0px 0px 1.33px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">4,257</span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none none solid; border-width: 0px 0px 1.33px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">4,407</span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-style: none solid solid none; border-width: 0px 1.33px 1.33px 0px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">4,673</span></span></div>
</td>
<td style="background-color: transparent; border-color: rgb(0, 0, 0); border-style: none solid solid none; border-width: 0px 1.33px 1.33px 0px; margin: 0px; padding: 0cm 5.4pt; width: 55.15pt;" valign="bottom" width="74"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">1,305</span></span></div>
</td>
<td style="background-color: transparent; border-color: rgb(0, 0, 0); border-style: none solid solid none; border-width: 0px 1.33px 1.33px 0px; margin: 0px; padding: 0cm 5.4pt; width: 55.2pt;" valign="bottom" width="74"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">39%</span></span></div>
</td>
</tr>
<tr style="mso-yfti-irow: 3;">
<td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none solid solid; border-width: 0px 1.33px 1.33px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">Total
Group</span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none none solid; border-width: 0px 0px 1.33px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">10,157</span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none none solid; border-width: 0px 0px 1.33px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">10,616</span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none none solid; border-width: 0px 0px 1.33px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">11,122</span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none none solid; border-width: 0px 0px 1.33px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">11,380</span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none none solid; border-width: 0px 0px 1.33px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">11,591</span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-style: none solid solid none; border-width: 0px 1.33px 1.33px 0px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">11,893</span></span></div>
</td>
<td style="background-color: transparent; border-color: rgb(0, 0, 0); border-style: none solid solid none; border-width: 0px 1.33px 1.33px 0px; margin: 0px; padding: 0cm 5.4pt; width: 55.15pt;" valign="bottom" width="74"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">1,736</span></span></div>
</td>
<td style="background-color: transparent; border-color: rgb(0, 0, 0); border-style: none solid solid none; border-width: 0px 1.33px 1.33px 0px; margin: 0px; padding: 0cm 5.4pt; width: 55.2pt;" valign="bottom" width="74"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">17%</span></span></div>
</td>
</tr>
<tr style="mso-yfti-irow: 4; mso-yfti-lastrow: yes;">
<td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none solid solid; border-width: 0px 1.33px 1.33px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">CCOs'
Share</span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none none solid; border-width: 0px 0px 1.33px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">33%</span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none none solid; border-width: 0px 0px 1.33px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">34%</span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none none solid; border-width: 0px 0px 1.33px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">37%</span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none none solid; border-width: 0px 0px 1.33px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">37%</span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-image: none; border-style: none none solid; border-width: 0px 0px 1.33px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">38%</span></span></div>
</td>
<td nowrap="" style="background-color: transparent; border-color: rgb(0, 0, 0); border-style: none solid solid none; border-width: 0px 1.33px 1.33px 0px; margin: 0px; padding: 0cm 5.4pt;"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">39%</span></span></div>
</td>
<td style="background-color: transparent; border-color: rgb(0, 0, 0); border-style: none solid solid none; border-width: 0px 1.33px 1.33px 0px; margin: 0px; padding: 0cm 5.4pt; width: 55.15pt;" valign="bottom" width="74"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="color: black; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">75%</span></span></div>
</td>
<td style="background-color: transparent; border-color: rgb(0, 0, 0); border-style: none solid solid none; border-width: 0px 1.33px 1.33px 0px; margin: 0px; padding: 0cm 5.4pt; width: 55.2pt;" valign="bottom" width="74"><div style="line-height: normal; margin: 0px; text-align: right;">
<span style="font-size: x-small;"></span><br /></div>
</td>
</tr>
</tbody></table>
</div>
<div style="text-align: left;">
</div>
<div style="margin: 0px 0px 10.66px; text-align: left;">
<span style="line-height: 107%; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;">Source: Auckland Council Annual
Reports</span></span></div>
<div style="text-align: left;">
</div>
<div style="margin: 0px 0px 10.66px; text-align: left;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">While growth within the “core Council” has trailed
population growth (6.3% compared with the Stats NZ estimate of a 7.2%
population gain), the CCOs have grown much faster.<span style="margin: 0px;"> </span>They accounted for 75% of employment growth in the Group,
reaching almost 40% of the total. The result: overall council employment increased
at more than twice the rate of population growth.<span style="margin: 0px;"> </span>It was also well ahead of 5% inflation since
2012. <span style="margin: 0px;"> </span></span></div>
<div style="text-align: left;">
</div>
<div style="margin: 0px 0px 10.66px; text-align: left;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">On employment grounds c<span style="line-height: 107%; margin: 0px;">ouncil growth is easily outstripping the
growth of the city. </span></span></div>
<div style="text-align: left;">
</div>
<h2 style="margin: 16px 0px 0px; text-align: left;">
The cost of council employment</h2>
<div style="text-align: left;">
</div>
<div style="margin: 0px 0px 10.66px; text-align: left;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">Even if wages and salaries stayed constant, the prospect of
savings in employment costs from combining councils was astray. A<span style="line-height: 107%; margin: 0px;">nnual reports show growth in the cost of council
employment (“Employee Benefits” including contributions to superannuation,
provisions for redundancy, and the like) increased 24% from 2012 to 2017 across
the Group. The subsidiaries, the CCOs, grew employment costs by 45%; the core Council
by a more modest 12%, although this was still twice the rate of growth in Auckland's employment.
</span></span></div>
<div style="text-align: left;">
</div>
<div style="margin: 0px 0px 10.66px; text-align: center;">
<b style="mso-bidi-font-weight: normal;"><span style="line-height: 107%; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif;">Figure 2:
Employment Costs, Auckland Council and CCOs, 2012-2017</span></span></b></div>
<div style="text-align: left;">
</div>
<div style="margin: 0px 0px 10.66px; text-align: left;">
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEizE3SMYfxCFDL268PudevzJ6FQ5q_cwkUuDl4wHymaLyhouaJhnWyenJeZEUh6dGaI3lxdsHBMR5tcbSYT-o4rMurK07VqccwpKcPiUJzECzu4A1Q5G0TW2zbNgxkl6gPy49BYcAMSs_Y/s1600/Slide1.JPG" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="720" data-original-width="1280" height="360" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEizE3SMYfxCFDL268PudevzJ6FQ5q_cwkUuDl4wHymaLyhouaJhnWyenJeZEUh6dGaI3lxdsHBMR5tcbSYT-o4rMurK07VqccwpKcPiUJzECzu4A1Q5G0TW2zbNgxkl6gPy49BYcAMSs_Y/s640/Slide1.JPG" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="font-family: "arial";"> </span><span style="background-color: transparent; color: black; font-family: "times new roman"; font-size: 16px; font-style: normal; font-variant: normal; font-weight: 400; letter-spacing: normal; line-height: 17.33px; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; text-align: center; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;"><span style="font-size: xx-small;"><span style="font-family: "arial" , "helvetica" , sans-serif;"> </span><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: xx-small;">Source: Income and Expenditure tables,
Auckland Council Annual Reports</span></span></span></td></tr>
</tbody></table>
<span style="line-height: 107%; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif;">Across the Group,
employment costs were $853m in 2017, $163m up on 2012. <span style="margin: 0px;"> </span>So much for $66m in staff savings ($74m in
2017 dollars) <a href="http://cities-matter.blogspot.com/2010/09/blog-post.html"><span style="color: #0563c1;">touted
in 2010</span></a> as justifying the super city.<span style="margin: 0px;">
</span>.<span style="margin: 0px;"> </span></span></span></div>
<div style="text-align: left;">
</div>
<h2 style="margin: 16px 0px 0px; text-align: left;">
Super city, super salaries</h2>
<div style="text-align: left;">
</div>
<div style="margin: 0px 0px 10.66px; text-align: left;">
<span style="line-height: 107%; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif;">If the
workforce growth that took place had been at stable incomes, the cost of
employment would have been $481m for the Council and $330m for the
subsidiaries, $811m.<span style="margin: 0px;"> </span>This leaves an additional
$42m attributable to wage creep <u>after</u> inflation ($27m in the core
Council and $15m in the CCOs).</span></span></div>
<div style="text-align: left;">
</div>
<div style="margin: 0px 0px 10.66px; text-align: left;">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="line-height: 107%; margin: 0px;">How
did this happen? </span><span style="line-height: 107%; margin: 0px;">Well, Bernard
Orsman in an <span style="margin: 0px;"><a href="https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11929637"><span style="color: #0563c1;">article</span></a></span>
in the <i style="mso-bidi-font-style: normal;">New Zealand Herald</i> last year
put his finger on it: </span></span></div>
<div style="text-align: left;">
</div>
<div style="line-height: normal; margin: 0px 26.46px 10px; text-align: left;">
<i style="mso-bidi-font-style: normal;"><span style="color: #333333; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif;">“One in five staff at Auckland
Council is earning more than $100,000 as the wages bill for the Super City
blows out for the third year in a row.</span></span></i></div>
<div style="text-align: left;">
</div>
<div style="line-height: normal; margin: 0px 26.46px 10px; text-align: left;">
<i style="mso-bidi-font-style: normal;"><span style="color: #333333; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif;">“… <span style="margin: 0px;"> </span>the number of executives earning more than
$200,000 has increased by 25 per cent in the past year, from 155 to 194,
according to figures in the council's 2016-2017 annual report”.</span></span></i></div>
<div style="text-align: left;">
</div>
<div style="line-height: normal; margin: 0px 26.46px 10px; text-align: left;">
<span style="margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif;">and</span></span><i style="mso-bidi-font-style: normal;"><span style="color: #333333; margin: 0px;"></span></i></div>
<div style="text-align: left;">
</div>
<div style="line-height: normal; margin: 0px 26.46px 10px; text-align: left;">
<i style="mso-bidi-font-style: normal;"><span style="color: #333333; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif;">“The council and its six
council-controlled organisations (CCOs) employ 11,893 staff, of whom 2,322 earn
more than $100,000”.</span></span></i></div>
<div style="text-align: left;">
</div>
<div style="margin: 0px 0px 10.66px; text-align: left;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">Changes in these figures since 2012 reveal some interesting developments
(Figure 3).</span></div>
<div style="text-align: left;">
</div>
<div style="margin: 0px 0px 10.66px; text-align: center;">
<b style="mso-bidi-font-weight: normal;"><span style="line-height: 107%; margin: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif;">Figure 3: Shares of Salaries $100,00: Auckland
Council 2012-2017</span></span></b></div>
<div style="text-align: left;">
</div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhdYp5uTeQlDO1D0teH02CHUPKnzLN8ewCjN9UFVXtEk2R2nTH_4LntVuYuGNVgysRlZRzsS4hyphenhypheni6jEqJWc-jxcwNpiggxuAffffxNQ4jz6NTNpp-LYit9G9SlMEMXfif5IJaMw3zjWgE4/s1600/Slide2.JPG" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="720" data-original-width="1280" height="360" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhdYp5uTeQlDO1D0teH02CHUPKnzLN8ewCjN9UFVXtEk2R2nTH_4LntVuYuGNVgysRlZRzsS4hyphenhypheni6jEqJWc-jxcwNpiggxuAffffxNQ4jz6NTNpp-LYit9G9SlMEMXfif5IJaMw3zjWgE4/s640/Slide2.JPG" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><div style="-webkit-text-stroke-width: 0px; background-color: transparent; color: black; font-family: Times New Roman; font-style: normal; font-variant: normal; font-weight: 400; letter-spacing: normal; margin: 0px 0px 10.66px; orphans: 2; text-align: left; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;">
<span style="line-height: 17.33px; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-size: xx-small;"><span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"> </span>Source: Auckland Council and CCO Annual
Reports</span></span></span></div>
</td></tr>
</tbody></table>
<div style="margin: 0px 0px 10.66px; text-align: left;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">First, growth in the core Council occurred entirely in the
$100,000-plus bracket, rising from under 10% to 16% of employees while those earning
less than $100,000 declined. This means that all growth in employees earning
under $100,000 a year took place in the CCOs. Is this a sign that the core
Council is already suffering organisational ossification (entrenching people,
systems, and values as the outside world continues to change)?</span></div>
<div style="text-align: left;">
</div>
<div style="margin: 0px 0px 10.66px; text-align: left;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">Second, while 1,500 people in the core Council earned
between $100,000 and $200,000 a year in 2017and 70 over $200,000, a
disproportionate share of high salary growth took place in the CCOs.<span style="margin: 0px;"> </span>By 2017 there were around 1,100 people earning
$100,000-$200,000 in CCOs, up 48% since 2012, and 120 earning over $200,000, up
62%.</span></div>
<div style="text-align: left;">
</div>
<div style="margin: 0px 0px 10.66px; text-align: left;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">Not only has absolute employment growth focused on the CCOs,
but they have provided fertile grounds for supersizing salaries, leading to significantly
higher average wages compared with the core Council by 2017.<span style="margin: 0px;"> </span>This is despite growth in the latter taking place
entirely at the higher end of the salary scale.</span></div>
<div style="text-align: left;">
</div>
<div style="margin: 0px 0px 10.66px; text-align: left;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">It </span><span style="font-family: "arial" , "helvetica" , sans-serif;">seems that both the council and its subsidiaries have
been busy uploading salaries as well as people </span></div>
<div style="text-align: left;">
</div>
<h2 style="margin: 16px 0px 0px; text-align: left;">
Even more questions</h2>
<div style="text-align: left;">
</div>
<div style="margin: 0px 0px 10.66px; text-align: left;">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="background-color: transparent; color: black; display: inline; float: none; font-family: "arial" , "helvetica" , sans-serif; font-size: 16px; font-style: normal; font-variant: normal; font-weight: 400; letter-spacing: normal; text-align: left; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;">While council reports are full of measures of progress and performance, there are still some outstanding questions. </span></span><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="background-color: transparent; color: black; display: inline; float: none; font-family: "arial" , "helvetica" , sans-serif; font-size: 16px; font-style: normal; font-variant: normal; font-weight: 400; letter-spacing: normal; text-align: left; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;"> </span></span></div>
<div style="margin: 0px 0px 10.66px; text-align: left;">
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">For example: </span></div>
<div style="margin: 0px 0px 10.66px; text-align: left;">
<ul>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">Can we justify this growth in employment costs by increased productivity? </span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">Maybe we need to look at the bigger income and expenditure question?</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">Did we simply replace territorial fragmentation with functional fragmentation?</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">And where are the governance and efficiency gains for local democracy in that? </span></li>
</ul>
</div>
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"></span><br /></span>
<br />
<div style="text-align: left;">
<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike><span style="font-family: "arial" , "helvetica" , sans-serif;"></span></div>
Phil McDermotthttp://www.blogger.com/profile/06869744647213369964noreply@blogger.com0tag:blogger.com,1999:blog-7011655232093163642.post-75993308991587344942018-09-06T11:49:00.000+12:002018-09-27T10:34:26.775+12:00But Wait! there’s more. Why a bed tax on Airbnb in Auckland really is a bad tax<br />
<div style="margin: 0px 0px 10.66px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri"; font-size: large;">The opposition is
growing</span></b></div>
<span style="font-family: "calibri";"><span style="font-size: large;">A <span style="margin: 0px;"><a href="https://cities-matter.blogspot.com/2018/08/the-bed-tax-is-bad-tax.html"><span style="color: #0563c1;">couple
of blogs back</span></a></span> I said that imposing a bed tax on informal
accommodation mostly offered through peer-to-peer web sites is a bad idea.<span style="margin: 0px;"> </span>My reasons: it is a targeted tax, it ignores
the fact that the accommodation capacity made available through platforms like
Airbnb is already paid for by rates and user charges; and visitors who pay to
use spare rooms or backyard cottages can be expected to have no more impact on
public services than family members or friends who don’t pay.<span style="margin: 0px;"> </span></span></span><br />
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri";"><span style="font-size: large;">The informal sector provides low cost capacity at the
margins to support the expansion of the visitor industry, thereby reducing
uncertainty for commercial investors in tourism.<span style="margin: 0px;"> </span>The Auckland Chamber of Commerce made the additional
point that Airbnb, Book-a-Bach, and the like cater for visitors who might not
otherwise visit Auckland.<span style="margin: 0px;"> </span>So I struggle
to understand why the Council should take this stand, especially when the idea
of a bed tax on commercial accommodation is <span style="margin: 0px;"><a href="https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12058669"><span style="color: #0563c1;">already
under attack</span></a></span>.<span style="margin: 0px;"> </span></span></span></div>
<span style="font-family: "calibri"; font-size: large;">The more I read about the policy the less I like it. Here
are four reasons.</span><br />
<br />
<div style="margin: 0px 0px 10.66px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri"; font-size: large;">1 <span style="margin: 0px;"> </span>A Poorly Designed Tax</span></b><br />
<span style="font-family: "calibri";"><span style="font-size: large;">The tax is complicated, intrusive, and
consequently inefficient. It is being added to the rates bill, confounding what
is otherwise a generally straightforward levy based on the capital value of
property.<span style="margin: 0px;"> </span>This confusing revenue
collection process by local government will impose new administrative costs for
little gain. <span style="margin: 0px;"> </span></span></span></div>
<span style="font-size: large;"><span style="font-family: "calibri";">The Council evidently identified between 8,000 and 12,000
households renting out rooms or properties, and has managed to target 1,100 of
them.<span style="margin: 0px;"> </span>It sent out two letters to those
it identified and set the rate depending on whether the owners replied or not</span><a href="file:///C:/Users/pjmcd/Dropbox/Blogs/But%20wait%20theres%20more%20on%20the%20bed%20tax.docx" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span style="margin: 0px;"><span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri" , sans-serif; line-height: 107%; margin: 0px;"><span style="color: #0563c1;">[1]</span></span></span></span></span></a><span style="font-family: "calibri";">.<span style="margin: 0px;"> </span>Too bad if you were away at the time, or
failed to clear your mail, or simply thought it was all a bit silly, and didn’t
reply. The result: a higher rate set as punishment.<span style="margin: 0px;"> </span></span></span><br />
<br />
<span style="font-family: "calibri"; font-size: large;">Oh, if you only rent out one room or let rooms for fewer
than 29 nights in a year you won’t have to pay. Good luck to the Council in enforcing that. I
wonder if the cost in wages (and political capital) is worth the effort. </span><br />
<br />
<div style="margin: 0px 0px 10.66px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri"; font-size: large;">2<span style="margin: 0px;"> </span>Compounding the tax impost</span></b><br />
<span style="font-size: large;"><span style="font-family: "calibri";">The new rate is actually a tax, a tax on providers rather than on consumers.<span style="margin: 0px;"> B</span>ed-taxes are an expensive form of
revenue collection compared, with say, a visitor levy collected at port or
airport. And the amount they might generate is trivial in the bigger
picture: GST, rates on commercial tourism properties, and income tax
derived from the hospitality sector already contribute substantially to
government revenue. </span><a href="file:///C:/Users/pjmcd/Dropbox/Blogs/But%20wait%20theres%20more%20on%20the%20bed%20tax.docx" name="_ftnref2" style="mso-footnote-id: ftn2;" title=""><span style="margin: 0px;"><span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri" , sans-serif; line-height: 107%; margin: 0px;"><span style="color: #0563c1;">[2]</span></span></span></span></span></a></span></div>
<span style="font-family: "calibri"; font-size: large;">In the case of the informal accommodation sector, the revenue received by owners
who use booking platforms to attract short-stay visitors to their spare room, empty
cottage, or holdiay home is already captured in the income tax net. They also pay
additional user charges for the services consumed through their property. </span><br />
<span style="font-family: "calibri";"><span style="font-size: large;"><br /></span></span>
<span style="font-family: "calibri";"><span style="font-size: large;">The bed tax is
inequitable in a number of ways.<span style="margin: 0px;"> Ow</span>ners are treated
differently from those who let rooms or cottages to long-stay tenants or outside
formal booking platforms, or anyone else running a small business from a
residential area. The use of spare capacity in the housing sector, a sector in
which many households are over-invested, is penalised when many would think it
should be encouraged.<span style="margin: 0px;"> </span></span></span><br />
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri"; font-size: large;">Inequity is compounded when the providers of bed and
breakfast services are working to make ends meet with a little additional
income.<span style="margin: 0px;"> </span>There are many households in
Auckland having to do this with long-term sub-lets.<span style="margin: 0px;"> </span>Why should those that take the short-term
rental path instead be treated differently?</span><b style="mso-bidi-font-weight: normal;"></b></div>
<br />
<div style="margin: 0px 0px 10.66px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri"; font-size: large;">3<span style="margin: 0px;"> </span>A new ratepayer business subsidy</span></b></div>
<span style="font-family: "calibri";"><span style="font-size: large;">According to the Mayor, the revenue raised by bed taxes
generally (including from AirBnB operators) is used to fund Auckland Tourism,
Events, and Economic Development (<span style="margin: 0px;"><a href="https://www.aucklandnz.com/"><span style="color: #0563c1;">ATEED</span></a></span>), Auckland Council’s
development agency. <span style="margin: 0px;"> </span></span></span><br />
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri";"><span style="font-size: large;">ATEED incurs spends on marketing and promotions to boost demand
for selected commercial goods, services (including underwriting events), and sectors. <span style="margin: 0px;"> </span>This may be justifiable for emerging sectors,
to support innovation, and even for city branding.<span style="margin: 0px;"> </span></span></span></div>
<span style="font-family: "calibri";"><span style="font-size: large;">But these are items that might be more appropriately charged
to general revenues of the Council in a clearly transparent, politically
contestable process.<span style="margin: 0px;"> </span>Beyond that, initiatives
to promote established sectors like tourism may be best funded by direct
charges on the beneficiaries.<span style="margin: 0px;"> </span>The
capacity to fund would then be based on capacity to deliver, rather than on coercion;
on revenue earned rather than on tax- based subsidies.<span style="margin: 0px;"> </span></span></span><br />
<br />
<div style="margin: 0px 0px 10.66px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri"; font-size: large;">4<span style="margin: 0px;"> </span>An Anti-Competitive Move</span></b><br />
<span style="font-family: "calibri"; font-size: large;">Finally, the new bed tax appears to be an anti-competitive move by the council. <span style="margin: 0px;"><u><span style="color: #0563c1;">The Mayor says</span></u></span> “<i style="mso-bidi-font-style: normal;">it was introduced after representatives from
the hotel and motel industry approached him about Airbnb’s advantages</i>”.<span style="margin: 0px;"> </span>Hmmm – are these the same interests
benefiting from the subsidies ATEED passes on? <span style="margin: 0px;"> </span>It begins to look like they want it both ways. </span></div>
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri"; font-size: large;">Either way, I question the role of local government in manipulating rates to manipulate the market.</span></div>
<span style="font-family: "calibri";"><span style="font-size: large;">Informal accommodation has always been around.<span style="margin: 0px;"> </span>It is better organised today, and demand has
grown as a result of innovative, web-based booking systems – which, incidentally are increasingly relied
on by hotel and motel operators.<span style="margin: 0px;"> </span>The new platforms are also raising standards through user and provider feedback.</span></span><br />
<br />
<span style="font-family: "calibri";"><span style="font-size: large;">It is a pity to levy rates to counter any perceived competitive impact , consequently suppressing some of the innovation and enterprise that a mature sector needs to stay healthy.<span style="margin: 0px;"> </span></span></span><br />
<br />
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri"; font-size: large;">So why bother?</span></b><br />
<span style="font-size: large;"><span style="font-family: "calibri";">Tourism has boomed in New Zealand and around the world.<span style="margin: 0px;"> </span>The question is how much we want to
participate in that boom.<span style="margin: 0px;"> </span>Here’s what Statistics
NZ estimates tourism was worth to New Zealand in the year ending March 2017:</span><a href="file:///C:/Users/pjmcd/Dropbox/Blogs/But%20wait%20theres%20more%20on%20the%20bed%20tax.docx" name="_ftnref3" style="mso-footnote-id: ftn3;" title=""><span style="margin: 0px;"><span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri" , sans-serif; line-height: 107%; margin: 0px;"><span style="color: #0563c1;">[3]</span></span></span></span></span></a></span><br />
<br />
<div style="line-height: normal; margin: 0px 0px 0px 24px; text-indent: -18pt;">
<span style="font-size: large;"><span style="font-family: "symbol"; margin: 0px;"><span style="margin: 0px;">·<span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal; margin: 0px;">
</span></span></span><span style="font-family: "calibri";">Total expenditure $36.0 billion;</span></span></div>
<span style="font-size: large;"><span style="font-family: "symbol"; margin: 0px;"><span style="margin: 0px;">·<span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal; margin: 0px;">
</span></span></span><span style="font-family: "calibri";">International tourism expenditure $14.5 billion;</span></span><br />
<span style="font-size: large;"><span style="font-family: "symbol"; margin: 0px;"><span style="margin: 0px;">·<span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal; margin: 0px;">
</span></span></span><span style="font-family: "calibri";">Domestic tourism expenditure $21.4 billion;</span></span><br />
<span style="font-size: large;"><span style="font-family: "symbol"; margin: 0px;"><span style="margin: 0px;">·<span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal; margin: 0px;">
</span></span></span><span style="font-family: "calibri";">Direct contribution to GDP: $14.7 billion (5.9%
of NZ GDP);</span></span><br />
<span style="font-size: large;"><span style="font-family: "symbol"; margin: 0px;"><span style="margin: 0px;">·<span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal; margin: 0px;">
</span></span></span><span style="font-family: "calibri";">Indirect value added of industries supporting
tourism $11.3 billion (4.6% of NZ GDP);</span></span><br />
<span style="font-size: large;"><span style="font-family: "symbol"; margin: 0px;"><span style="margin: 0px;">·<span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal; margin: 0px;">
</span></span></span><span style="font-family: "calibri";">230,793 people directly employed in tourism (8.4%
of NZ employment);</span></span><br />
<span style="font-size: large;"><span style="font-family: "symbol"; margin: 0px;"><span style="margin: 0px;">·<span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal; margin: 0px;">
</span></span></span><span style="font-family: "calibri";">$3.3 billion in goods and services taxes.</span></span><br />
<br />
<div style="line-height: normal; margin: 0px;">
<span style="font-family: "calibri"; font-size: large;">This is a business worth maintaining and hgrowing.<span style="margin: 0px;">
</span>More detailed 2016 figure indicate that spending was close to $1,000
for every international visitor night recorded.<span style="margin: 0px;">
</span>The guests in Airbnb and Book-a-Bach may spend a little less, and many
of them will be New Zealanders, but surely we don’t want to exclude participation
by home-based providers in a sector that returns so much to the country. </span></div>
<br />
<div style="line-height: normal; margin: 0px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri"; font-size: large;">Tourism in Auckland</span></b><br />
<span style="font-family: "calibri"; font-size: large;">How about tourists in Auckland? </span></div>
<br />
<div style="line-height: normal; margin: 0px;">
<span style="font-family: "calibri";"><span style="font-size: large;">Here are some figures from the
ATEED website.<span style="margin: 0px;"> </span>There was an estimated 7.32m
guest nights in commercial accommodation in the year ending June 2018, based on
a total of 5.59m domestic overnight visits and 2.69m international arrivals.<span style="margin: 0px;"> </span>Their estimated spend of $8.36bn in the
region must have done a fair bit to sustain Auckland businesses and their rates
payments, on top of a Goods & Services Tax contribution of over $1bn .<span style="margin: 0px;"> </span></span></span></div>
<br />
<div style="line-height: normal; margin: 0px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri"; font-size: large;">Conclusion</span></b><br />
<span style="font-family: "calibri"; font-size: large;">The Council is wasting resources and political capital on chasing a
minor sum that will discourage a valuable activity on the fringes of our
visitor sector.</span></div>
<br />
<div style="line-height: normal; margin: 0px;">
<span style="font-family: "calibri"; font-size: large;"><span style="font-family: "times new roman";"></span><span style="font-size: small;"></span>If it really wants to play in the tourist pool, why not lobby
government to splash out a share of all the GST that visitors generate in
Auckland.<span style="margin: 0px;"> </span></span><br />
<br />
<span style="font-family: "calibri"; font-size: large;">Or else simply be grateful for
the support visitors give to the retail, entertainment, and hospitality
sectors, and continue to collect rates from the properties and businesses they
support. But think again about implementing a bad tax to fund a promotional agency, ATEED,
with revenue of $84.6m in 2017 (up 37% on 2016), 83% of which is in any case funded
by grants and subsidies <span style="background-color: transparent; color: black; display: inline; float: none; font-family: "calibri"; font-size: 24px; font-style: normal; font-variant: normal; font-weight: 400; letter-spacing: normal; text-align: left; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;">(up 29% on 2016) </span>primarily provided by the ratepayer. </span></div>
<br clear="all" />
<div style="mso-element: footnote-list;">
<hr align="left" size="1" width="33%" />
<div id="ftn1" style="mso-element: footnote;">
<div style="margin: 0px;">
<span style="font-size: large;"><a href="file:///C:/Users/pjmcd/Dropbox/Blogs/But%20wait%20theres%20more%20on%20the%20bed%20tax.docx" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span style="margin: 0px;"><span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri" , sans-serif; line-height: 107%; margin: 0px;"><span style="color: #0563c1;">[1]</span></span></span></span></span></a><span style="font-family: "calibri";"> <span style="margin: 0px;"> </span>Interview with Mayor Phil Goff on
the <span style="margin: 0px;"><a href="https://www.newshub.co.nz/home/travel/2018/09/auckland-mayor-phil-goff-clarifies-airbnb-tax.html"><span style="color: #0563c1;">AM
Show</span></a></span></span></span></div>
</div>
<div id="ftn2" style="mso-element: footnote;">
<div style="margin: 0px 0px 0px 48px; text-indent: -36pt;">
<span style="font-size: large;"><a href="file:///C:/Users/pjmcd/Dropbox/Blogs/But%20wait%20theres%20more%20on%20the%20bed%20tax.docx" name="_ftn2" style="mso-footnote-id: ftn2;" title=""><span style="margin: 0px;"><span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri" , sans-serif; line-height: 107%; margin: 0px;"><span style="color: #0563c1;">[2]</span></span></span></span></span></a><span style="font-family: "calibri";">
<span style="margin: 0px;"> </span>The Council is not sure what
the take will be from a <span style="margin: 0px;"><a href="https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12058669"><span style="color: #0563c1;">commercial
bed tax</span></a></span>, although it appears that last years collection was just over
$13m. </span></span></div>
</div>
<div id="ftn3" style="mso-element: footnote;">
<div style="margin: 0px;">
<span style="font-size: large;"><a href="file:///C:/Users/pjmcd/Dropbox/Blogs/But%20wait%20theres%20more%20on%20the%20bed%20tax.docx" name="_ftn3" style="mso-footnote-id: ftn3;" title=""><span style="margin: 0px;"><span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri" , sans-serif; line-height: 107%; margin: 0px;"><span style="color: #0563c1;">[3]</span></span></span></span></span></a><span style="font-family: "calibri";"> <span style="margin: 0px;"> </span><span style="margin: 0px;"><a href="file:///C:/Users/pjmcd/Dropbox/McDermott%2520Consultants/Resources/Tourism/tourism-satellite-account-2017.pdf"><span style="color: #0563c1;">Satellite
Tourism Accounts 2017</span></a></span>, Statistics NZ, p7</span></span></div>
</div>
</div>
<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike><span style="font-size: large;"></span>Phil McDermotthttp://www.blogger.com/profile/06869744647213369964noreply@blogger.com0tag:blogger.com,1999:blog-7011655232093163642.post-91146647771159983232018-09-03T18:23:00.000+12:002018-09-04T18:50:43.199+12:00What happens when carrying capacity is exceeded? The planning debate we have to have<br />
<div style="margin: 0px 0px 10.66px;">
<br /></div>
<div style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-element: para-border-div; padding: 1.0pt 4.0pt 1.0pt 4.0pt;">
<div style="border-image: none; border: medium; margin: 0px 0px 10.66px; padding: 0cm;">
<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14pt; line-height: 107%; margin: 0px;">In 250 words …</span></b></div>
<div style="border-image: none; border: medium; margin: 0px 0px 10.66px; padding: 0cm;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">The failures of Auckland’s Unitary
Plan could have been avoided if it had been based on the physical capacity of
Auckland to absorb development, rather than on how to cram in as many households as we can imagine over the next forty years.<span style="margin: 0px;"> </span>This
would have focused on the population that the environment can sustain, not the population that comes from extrapolating sseveral years of high migration gains. </span></div>
<div style="border-image: none; border: medium; margin: 0px 0px 10.66px; padding: 0cm;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">Using carrying capacity as a
starting point helps rationalise infrastructure investment and enables aspirations
for growth beyond “natural” limits to be assessed relative to the
additional investment required. It would reveal the fiscal impact of the Plan based on understanding the City's environmental assets
and residents’ needs.</span></div>
<div style="border-image: none; border: medium; margin: 0px 0px 10.66px; padding: 0cm;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">Unfortunately, the approach adopted seeks to accommodate inflated population projections in a confined space,
raising questions around environmental impacts, economic consequences, fiscal
outcomes, and sustainable growth.</span></div>
<div style="border-image: none; border: medium; margin: 0px 0px 10.66px; padding: 0cm;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">It may not be too late to
adopt a carrying capacity approach.<span style="margin: 0px;">
</span>It may mean redrawing the map of development and density,though, rethinking connections within Auckland and with other cities, and backing off
over-specification of <u>what</u> is allowed, focusing instead on desirable outcomes
within the physical and social limits to growth.<span style="margin: 0px;"> </span></span></div>
<div style="border-image: none; border: medium; margin: 0px 0px 10.66px; padding: 0cm;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">It also means debating some difficult
questions: How many residents is too many? How do we enforce limits? And how
does this impact on the national economy? <span style="margin: 0px;"> </span></span></div>
</div>
<span style="font-size: large;"></span><br />
<br />
<div style="margin: 0px 0px 10.66px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14pt; line-height: 107%; margin: 0px;">A Plan for
What?</span></b></div>
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">Auckland’s Unitary Plan appears to be unravelling. Congestion
continues to grow.<span style="margin: 0px;"> </span>The infrastructure
spending required to keep the city functioning and its waters clean
keeps growing. The Central Rail Link budget is <span style="margin: 0px;"><a href="https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12093951"><span style="color: #0563c1; font-family: "calibri";">blowing
out</span></a></span> (<span style="margin: 0px;"><a href="https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12115025"><span style="color: #0563c1; font-family: "calibri";">as
far as we know</span></a></span>!)<span style="margin: 0px;"> </span>The public
costs of running the city are running away.<span style="margin: 0px;">
</span><span style="margin: 0px;"> </span>Between 2012 and 2017 operating
expenses jumped 21% in (in 2017 dollars) while population increased by around
12%: that’s an 8% increase per head.<span style="margin: 0px;">
</span>Borrowing went from around $3,600 per resident to $5,010, a 40% jump. </span><br />
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">And now the taxpayer is being called on to top up investment as
central government steps in to fund a <a href="https://www.tvnz.co.nz/one-news/new-zealand/full-details-governments-huge-10-year-28-billion-auckland-transport-package-unveiled"><span style="color: #0563c1; font-family: "calibri";">transport
package for Auckland</span></a>, even as additional charges are placed on residents
and households by way of fuel levies and, possibly, a bed tax on private
short-term rentals.<span style="margin: 0px;"> </span></span><br />
<span style="font-size: 14pt; line-height: 107%; margin: 0px;"><br /></span>
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">And now the government is <span style="margin: 0px;"><a href="https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12116480"><span style="color: #0563c1; font-family: "calibri";">overriding</span></a></span>
the Unitary Plan, a plan with <span style="margin: 0px;"> </span>rules that
even the people who wrote them – the City’s planners – <span style="margin: 0px;"> </span>apparently <span style="margin: 0px;"><a href="https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12115565"><span style="color: #0563c1; font-family: "calibri";">struggle
to interpret</span></a></span>.</span></div>
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">The Unitary Plan is all about the metrics of fitting more and
more people into a confined space and pouring resources into the central city in
the hope that it may retain its commercially dominant role.<span style="margin: 0px;"> </span>This may serve some interests.<span style="margin: 0px;"> </span>But how well does it serve Auckland’s
population at large, now and in the future and what are the long-term
consequences for the physical and social environments?</span></div>
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">Even as our understanding of the risks of over
development improves, the Unitary Plan and ad hoc responses to its short-comings
threaten to reduce resilience and sustainability by over-running Auckland’s carrying
capacity, particularly by emphasis on intensification on the Isthmus.</span><br />
<span style="font-size: 14pt; line-height: 107%; margin: 0px;"><br /></span>
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiPTU6H2dPiGYMMhkK5v0HdsFmc63RqXPQkW5iV2kiyYSQf0e0sML44ztQvBaM1iNDJOpdH1Es1RnGWJkXp7-MAFmE6DuARFNrh8icoY9nozmux8BNQcjPyBE4WHKXPlGVud-uAJU-U5Dk/s1600/Customs+St.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="1600" data-original-width="1200" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiPTU6H2dPiGYMMhkK5v0HdsFmc63RqXPQkW5iV2kiyYSQf0e0sML44ztQvBaM1iNDJOpdH1Es1RnGWJkXp7-MAFmE6DuARFNrh8icoY9nozmux8BNQcjPyBE4WHKXPlGVud-uAJU-U5Dk/s320/Customs+St.jpg" width="240" /></a></div>
<span style="font-size: 14pt; line-height: 107%; margin: 0px;"><br /></span></div>
<br />
<div style="margin: 0px 0px 10.66px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14pt; line-height: 107%; margin: 0px;">Fiscal, Economic,
and Social Consequences</span></b></div>
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">The fact that we are investing hand over fist in
infrastructure may provide some reassurance about the capacity to accommodate
growth, but carries its own risks. Infrastructure that is not justified economically,
retrofitting under-capacity, aged, or obsolete infrastructure, and unbudgeted
overruns all undermine productivity. Getting infrastructure investment right, based
on sound land use planning among other things, is critical to sustaining the investment necessary
for well-founded city growth. Otherwise, i</span><span style="font-size: 14pt; line-height: 107%; margin: 0px;">nadequate or inappropriate infrastructure will undermine
investment and productivity.<span style="margin: 0px;"> </span></span><br />
<span style="font-size: 14pt; line-height: 107%; margin: 0px;"><br /></span>
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">Increased housing
and commuting costs that arise from a deficient urban plan will also do so.<span style="margin: 0px;"> </span>High living costs translate into high costs
of employment.<a href="file:///C:/Users/pjmcd/Desktop/Carrying%20Capacity.docx" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span style="margin: 0px;"><span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="color: #0563c1;">[1]</span></span></span></span></span></a><span style="margin: 0px;"> </span>These, like high land costs and
infrastructure deficiencies, also reduce the attraction of the City for
productive investment.<span style="margin: 0px;"> </span></span><br />
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">A large and growing rental
population is o<span style="background-color: transparent; color: black; display: inline; float: none; font-family: "times new roman"; font-size: 18.66px; font-style: normal; font-variant: normal; font-weight: 400; letter-spacing: normal; line-height: 20px; text-align: left; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;">ne result of high living costs</span>.<span style="margin: 0px;"> </span>This is inherently destabilising.<span style="margin: 0px;"> </span>It places downward pressure on birth rates as young households delay or abrogate child raising.<span style="margin: 0px;">
</span>It makes recruitment of specialist skills more difficult.<span style="margin: 0px;"> And it creates a large fotloose component within the community, something that also increases the cost of employment. </span>All this, in turn, raises the risk that what has been a modest net population loss from Auckland to other parts of the country over the past thirty years will accelerate..</span></div>
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">The current building boom arising from catch-up
infrastructure and housing projects is creating a whole set of issues of its
own. Cost overruns are inevitable when major private and public projects, and the
<span style="margin: 0px;"><a href="https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11959711"><span style="color: #0563c1; font-family: "calibri";">drive
to boost housing</span></a></span> intensify <span style="margin: 0px;"><a href="http://www.scoop.co.nz/stories/BU1806/S00454/average-cost-of-building-continues-to-rise-in-main-centres.htm"><span style="color: #0563c1; font-family: "calibri";">competition
for scarce skills and labour</span></a></span>, for land, and materials. </span></div>
<br />
<div style="margin: 0px 0px 10.66px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14pt; line-height: 107%; margin: 0px;">Thinking
about carrying capacity</span></b></div>
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">If this gloomy prognosis has any crediblity, then its time to confront the question, how much growth can Auckland physically
accommodate? </span><br />
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">Identifying physical carrying capacity means addressing questions with a mix of science and subjectivity: when will the things we value
about the Auckland environment be lost if we over-develop? Where are the
environmental thresholds? At what point do we call a halt to untrammelled
growth and consider alternative development strategies? </span><br />
<span style="font-size: 14pt; line-height: 107%; margin: 0px;"><br /></span></div>
<div style="margin: 0px 0px 10.66px;">
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjcE8o6etNl3oCBVXXkTluwhstTo_aS3osWapu-o2LSB51psJBlXMAKNC3iQGaU1ohyphenhyphenX2VrAX1xCkaO9PBKjEPzjXeIxGwFqQgyCRc2uzE9SoPeaqgJnj6GDqNdgHYjYZfKvOtYFCMswW4/s1600/Pohutukawa.JPG" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="1600" data-original-width="1200" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjcE8o6etNl3oCBVXXkTluwhstTo_aS3osWapu-o2LSB51psJBlXMAKNC3iQGaU1ohyphenhyphenX2VrAX1xCkaO9PBKjEPzjXeIxGwFqQgyCRc2uzE9SoPeaqgJnj6GDqNdgHYjYZfKvOtYFCMswW4/s400/Pohutukawa.JPG" width="300" /></a></div>
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">While politically difficult, here are some of the matters we must
consider.<span style="margin: 0px;"> </span>First, at what population
level will we have transformed the city to the point that it hits the threshold
for sustainability, and how do we identify that?<span style="margin: 0px;"> </span>When might our valued natural and productive marine
and terrestrial ecosystems collapse, or be threatened with collapse from the
weight of overuse? And what are the issues raised by recognising that we cannot continue to pursue hgrowth at any costs?</span></div>
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">The answers will change as our knowledge of natural systems
increases, along with out capacity to manage the effects of development.<span style="margin: 0px;"> </span>But if we look at the state of our coastal
waters, the fishing resources of the Gulf, the risks to our forests, and the
dwindling of indigenous wildlife, it seems these things have not weighed in
sufficiently in our planning. </span></div>
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">Another question: how do we factor resilience into our plans
for Auckland, especially in the face of climate change?<span style="margin: 0px;"> </span>This may call for a retreat
from the foreshore, or the funding of major structures in the marine
environment, and the development of new transport corridors if the central city
is not to be subject to regular and inceasingly severe disruption (the more we pack into the CBD, the mre far-reaching extreme weather events will become)..<span style="margin: 0px;">
</span></span></div>
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">There is also a question of equity and social justice: how
far are particular sections of the community going to be required to carry the
cost of excessive growth, or be excluded from the benefits?</span></div>
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">Finally, we need to address the role of infrastructure.<span style="margin: 0px;"> </span>The wrong infrastructure, or infrastructure
in the wrong place, will effectively reduce the region’s carrying capacity,
just as too little will.<span style="margin: 0px;"> </span>Our refusal to
think of the treatment of transport corridors and future demands on them is
already emerging as a significant limiting factor. </span></div>
<br />
<div style="margin: 0px 0px 10.66px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14pt; line-height: 107%; margin: 0px;">Start with
“H<i style="mso-bidi-font-style: normal;">ow much?” </i>and then move on to<i style="mso-bidi-font-style: normal;"> “How?”</i></span></b><span style="font-size: 14pt; line-height: 107%; margin: 0px;"></span></div>
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">Identifying and managing carrying capacity is more
fundamental than simply debating trains versus cars, public versus private
transport, high density versus low density housing, mixed use versus single use
zones, heritage versus high rise, greenfields versus brownfields, malls versus
local centres, or city centre versus suburbs. </span><br />
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">If we had been planning for Auckland based on how much growth
the City can support without undermining its natural, economic, and social
resources, we would likely have produced a plan quite different from the
hotchpotch we are saddled with today.<span style="margin: 0px;"> </span></span></div>
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">And the argument that Auckland must grow if the nation is to grow
is simplistic. We already seem to have reached the point at which the diseconomies of
agglomeration in the city exceed any benefits it might offer business.<span style="margin: 0px;"> </span>Auckland’s GDP growth from 2000 to 2017, for
example, lagged the rest of New Zealand, placing 14<sup>th</sup> out of the 15
regions listed by Statistics New Zealand. <a href="file:///C:/Users/pjmcd/Desktop/Carrying%20Capacity.docx" name="_ftnref2" style="mso-footnote-id: ftn2;" title=""><span style="margin: 0px;"><span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="color: #0563c1;">[2]</span></span></span></span></span></a></span></div>
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">It is time to rethink the strategy for our largest urban
centre.</span></div>
<br />
<div style="margin: 0px 0px 10.66px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14pt; line-height: 107%; margin: 0px;">Getting
ahead</span></b></div>
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">A plan that builds from the ground up would explore technical
thresholds and how they might change in the future. It would highlight the
unknown and provide for flexibility and adaptability, rather than rigidity and
over-written rules. There would be greater clarity on what is not allowed, and
why, and ideally a scientifically informed consensus on the limits to growth. </span><br />
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">At a practical level the plan would provide the canvas, not
the paint. It would accept that a growing city comprises a collection of connected
communities and that, given their varying character and capacity, one set of rules
for all does not work. <span style="margin: 0px;"> </span>The attempt at homogeneity has led to a complex current plan which points the
way to overdevelopment and uninspiring sprawl. Better that we recognise, among other things, the significance of diverse suburbs and <a href="file:///C:/Users/pjmcd/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/B5GLXCEZ/email.mht"><span style="color: #0563c1; font-family: "calibri";">suburban
life and work</span></a>, and ensure that within them the public realm supports healthy communities.</span></div>
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">It should recognise that containing development within an
urban boundary is flawed in a growing city, boosting the externalities that
occur when carrying capacity is exceeded, and diminishing the quality of life. These include <span style="background-color: transparent; color: black; display: inline; float: none; font-family: "times new roman"; font-size: 18.66px; font-style: normal; font-variant: normal; font-weight: 400; letter-spacing: normal; line-height: 20px; text-align: left; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;">bottlenecks and congestion, infrastructure and service failures, high employment and service costs, water and air pollution, and vulnerability to disruption. </span></span><br />
<span style="font-size: 14pt; line-height: 107%; margin: 0px;"><span style="background-color: transparent; color: black; display: inline; float: none; font-family: "times new roman"; font-size: 18.66px; font-style: normal; font-variant: normal; font-weight: 400; letter-spacing: normal; line-height: 20px; text-align: left; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;"><br /></span></span>
<span style="font-size: 14pt; line-height: 107%; margin: 0px;"><span style="background-color: transparent; color: black; display: inline; float: none; font-family: "times new roman"; font-size: 18.66px; font-style: normal; font-variant: normal; font-weight: 400; letter-spacing: normal; line-height: 20px; text-align: left; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;">That c</span>ontiguity does not lead to efficient urban development, is a reality <span style="margin: 0px;"><a href="https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11937945"><span style="color: #0563c1; font-family: "calibri";">finally
being realised</span></a></span>.<span style="margin: 0px;"> <span style="background-color: transparent; color: black; display: inline; float: none; font-family: "times new roman"; font-size: 18.66px; font-style: normal; font-variant: normal; font-weight: 400; letter-spacing: normal; line-height: 20px; text-align: left; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;">We should be looking at the evolution of satellite towns and
cities in the regional hinterland, and at the quality of connections with them
and with provincial cities and regions (although they too will have to address carrying
capacity issues as they gear up for a migration-driven boost to growth).</span><span style="background-color: transparent; color: black; font-family: "times new roman"; font-size: 18.66px; font-style: normal; font-variant: normal; font-weight: 400; letter-spacing: normal; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; text-align: left; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;"> </span></span></span><br />
<span style="font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;"><br /></span></span>
<span style="font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;">The promotion of satellite towns and cities, adapting smart growth principles to the sites selected, incorporating modern and sustainable infrastructure solutions, and providing for diverse and dynamic investment and employment, increases the capacity to adapt urbanisation to changing circumstances. It potentially provides for greater degree of resilience locally, through a high level of community self-sufficiency, and regionally, through multiple sites of production and consumption, and plentiful, accessible green space. </span></span></div>
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">A ground-up plan will set broad land-use parameters within
which infrastructure services should be provided, and guidelines for their
assessment set out, rather than seeking to prescribe and control what will
happen, where, and when . The timing and capacity of
infrastructure cannot be pre-determined too far ahead of the growth it might cater
for without excessive costs and risk. Any major public infrastructure provided for in a plan should be
subject to rigorous economic, fiscal, and environmental evaluation. Uneconomic infrastructure is costly and a drag on productivity.<span style="margin: 0px;">
</span></span></div>
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">Local or commercial infrastructure might simply be assessed on
environmental and safety standards and the disciplines of finance and market left
to determine development within those parameters.</span></div>
<br />
<div style="margin: 0px 0px 10.66px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14pt; line-height: 107%; margin: 0px;">Beyond
Auckland</span></b></div>
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">The fact that central government is becoming more and more
involved in sorting out Auckland’s problems may signal time for a fundamental
change in how we do urban development.<a href="file:///C:/Users/pjmcd/Desktop/Carrying%20Capacity.docx" name="_ftnref3" style="mso-footnote-id: ftn3;" title=""><span style="margin: 0px;"><span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri" , sans-serif; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="color: #0563c1;">[3]</span></span></span></span></span></a><span style="margin: 0px;"> The development of </span>Wellington, for example, has benefited from
modest growth. However, today growth <span style="margin: 0px;"><a href="https://www.stuff.co.nz/business/77708402/Urban-development-agency-idea-gets-green-light-from-Wellington-city-councillors"><span style="color: #0563c1; font-family: "calibri";">pressure
is mounting</span></a></span>, pressure which could well undermine its claim to be the
world’s <span style="margin: 0px;"><span style="color: #0563c1;"><span style="font-family: "calibri";"><a href="https://www.wellingtonnz.com/discover/plan-trip-to-wellington/">coolest
little capital</a><u>.</u></span></span></span> </span><br />
<br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">Wellington, like urban centres <span style="margin: 0px;"><a href="https://www.nzherald.co.nz/bay-of-plenty-times/news/article.cfm?c_id=1503343&objectid=11350534"><span style="color: #0563c1; font-family: "calibri";">Tauranga</span></a></span>
and <span style="margin: 0px;"><a href="https://www.odt.co.nz/regions/queenstown/qldc-unveil-bold-plan-cope-growth"><span style="color: #0563c1; font-family: "calibri";">Queenstown</span></a></span>,
faces growth challenges that arise in large part from the costs and constraints physical character imposes on growth.<span style="margin: 0px;"> </span>The challenge many New Zealand centres face
is how to retain the character that makes them both appealing and viable in the face of new growth pressures.<span style="margin: 0px;"> </span></span><br />
<span style="font-size: 14pt; line-height: 107%; margin: 0px;"><br /></span>
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">In Auckland and beyond, it is time to address
how much centres might grow based not on naïve cohort projections but on just how much we
can accommodate.<span style="margin: 0px;"> </span>It is a shift in urban planning and policy that
raises some uncomfortable issues.<span style="margin: 0px;"> </span>But it
may be better to address them sooner rather than later, before we destroy the
very qualities that make our settlements and cities prosperous.</span></div>
<br />
<div style="mso-element: footnote-list;">
<br clear="all" />
<hr align="left" size="1" width="33%" />
<div id="ftn1" style="mso-element: footnote;">
<div style="margin: 0px 0px 0px 48px; text-indent: -36pt;">
<a href="file:///C:/Users/pjmcd/Desktop/Carrying%20Capacity.docx" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span style="margin: 0px;"><span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%; margin: 0px;"><span style="color: #0563c1;">[1]</span></span></span></span></span></a><span style="font-size: x-small;"><span style="font-family: "calibri";">
<span style="margin: 0px;"> </span>This negative impact may be
masked by methods used to estimate regional productivity that assume high wages
reflect greater output per worker rather than compensation for excessive
housing and commuting costs.<span style="margin: 0px;"> </span></span></span></div>
</div>
<div id="ftn2" style="mso-element: footnote;">
<div style="margin: 0px;">
<br /></div>
</div>
<div id="ftn3" style="mso-element: footnote;">
<div style="margin: 0px 0px 0px 48px; text-indent: -36pt;">
<a href="file:///C:/Users/pjmcd/Desktop/Carrying%20Capacity.docx" name="_ftn3" style="mso-footnote-id: ftn3;" title=""><span style="margin: 0px;"><span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%; margin: 0px;"><span style="color: #0563c1;">[3]</span></span></span></span></span></a><span style="font-family: "calibri"; font-size: x-small;">
<span style="margin: 0px;"> </span>The fact that the Government
asked the Productivity Commission to visit ground aero with respect to <a href="https://www.productivity.govt.nz/inquiry-content/2682?stage=4"><span style="color: #0563c1;">urban
planning</span></a> says as much.</span></div>
</div>
</div>
<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike>Phil McDermotthttp://www.blogger.com/profile/06869744647213369964noreply@blogger.com0tag:blogger.com,1999:blog-7011655232093163642.post-32731257087205583032018-08-03T17:56:00.000+12:002018-08-03T17:59:15.213+12:00The Bed Tax is a Bad Tax<span style="font-size: large;"></span><br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri";"><span style="font-size: large;">Auckland Council has introduced a <span style="margin: 0px;"><a href="https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12100088"><span style="color: #0563c1;">tax
on properties providing online accommodation</span></a></span> services by way of a
targeted rate.<span style="margin: 0px;"> </span>This a bad tax and a bad
precedent.<span style="margin: 0px;"> </span>If we think about it, the
only rationale must be to raise more revenue to reduce the Council’s fiscal
risk (more on that below), and to protect the accommodation sector.<span style="margin: 0px;"> </span></span></span></div>
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri"; font-size: large;">Distorting the tax
system</span></b><br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri"; font-size: large;">New Zealand has a simple tax system based on general income
and consumption taxes and property rates.<span style="margin: 0px;">
</span>Government has long resisted targeted taxes. Yet that is precisely what
this new rate is<span style="margin: 0px;"> </span>- a bed tax.<span style="margin: 0px;"> </span>It is aimed at households supplementing their
income through renting spare capacity.<span style="margin: 0px;"> </span>But
the income raised in this way is already subject to income tax –Airbnb and
other the peer-to-peer platforms ensure that the income earned is transparent. </span></div>
<span style="font-family: "calibri";"><span style="font-size: large;">Yet there is no justification for targeting rating at the
occupancy of houses because this is covered under existing capital value-based residential
rates. More valuable homes incur higher rates. The more bedrooms, larger the
home, the higher the rate, all else being equal. Where a house is in a desirable
area and the occupants can charge more for the bed and breakfast service; but they
will already be paying higher rates.<span style="margin: 0px;"> </span></span></span><br />
<span style="font-size: large;"></span><br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri"; font-size: large;">Incidentally, building consent costs reflect house size and
value, providing an expectation that all the rooms so consented will be
occupied.</span></div>
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri"; font-size: large;">No impact on public
costs</span></b><br />
<span style="font-family: "calibri"; font-size: large;">The anomalous nature of this form of tax is obvious: what
happens when the children start earning and are asked by Mum and Dad to pay
board. Do we increase the rates then?<span style="margin: 0px;"> </span>Or
when people take in a permanent boarder to help make ends meet? </span><br />
<span style="font-size: large;"></span><br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri";"><span style="font-size: large;">Should we lower rates on a property when the children leave
home? We can always increase them again if they come home. But if they move elsewhere
-- to Dunedin, Wellington, Tauranga, or Sydney perhaps -- their demand on
Auckland services disappears.<span style="margin: 0px;"> </span>And if
they stay in Auckland they will pay rates in their new abode.<span style="margin: 0px;"> </span></span></span></div>
<span style="font-family: "calibri"; font-size: large;">Either way, there is no impact on demand for public services
if their place is occupied by occasional visitors. In any case, much infrastructure
is paid for directly through user charges. So if we accommodate visitors in an empty
bedroom the services they consume are already accounted for. </span><br />
<span style="font-size: large;"></span><br />
<div style="margin: 0px 0px 10.66px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri"; font-size: large;">Renting a room is
rational economics</span></b><br />
<span style="font-family: "calibri"; font-size: large;">Look at it another way. We are constantly told that we are
over-capitalising our residential assets, at the cost of more productive
investments.<span style="margin: 0px;"> </span>Well, here’s an example of
people taking an initiative to increase the productivity of housing; and what does
the Council do? Increase the rates on the asset, in effect taxing a
productivity gain. And that positive outcome is supplemented by the additional
demand that the visitors make on commercial goods and services, and the support
they provide for recreational and cultural facilities.<span style="margin: 0px;"> </span>All of this adds to the health of the economy
(and the rate take).<span style="margin: 0px;"> </span>So why would the
Council discourage it with yet another impost?</span></div>
<span style="font-size: large;"><b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri";"> </span></b><b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri";">What about the
accommodation sector?</span></b></span><br />
<span style="font-family: "calibri"; font-size: large;">Web-based services like Airbnb and Booking.com are
disrupting the accommodation sector. Low cost airlines and their web-based
sales did much the same to air transport.<span style="margin: 0px;">
</span>Since then we have experienced a travel and tourism boom and, incidentally,
a long overdue restructuring of the aviation sector.</span><br />
<span style="font-size: large;"></span><br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri"; font-size: large;">Why should formal accommodation be protected from such innovation?
While web-based booking platforms have cut into the traditional travel agent
sector and make a claim on the commissions of transport and accommodation
operators, they are also a tool for increasing occupancy to the point that few
accommodation providers operate without them. </span></div>
<span style="font-family: "calibri";"><span style="font-size: large;">The emergence of a substantial informal accommodation sector
might provide just the smoothing mechanism needed to reduce investment risk in
accommodation.<span style="margin: 0px;"> </span>Traditionally capacity shortfalls
constrain tourism growth in destinations until an investor is prepared to bet
another 50, 100, 200 or more hotel rooms on demand.<span style="margin: 0px;"> </span>When a whole lot of new rooms are introduced in
one hit, the uptake is often slow, putting the investment at risk and eroding
other operators’ occupancies.<span style="margin: 0px;"> </span></span></span><br />
<span style="font-size: large;"><br /></span>
<span style="font-family: "calibri"; font-size: large;">All too often the early investors are burnt, and it is only
the second or third investors that begin to make any money out of formal accommodation.<span style="margin: 0px;"> </span>In this environment, development stutters
along, demand potential is unrealised, and the quality of investment<span style="margin: 0px;"> </span>- in all respects - is questionable. </span><br />
<span style="font-size: large;"></span><br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri"; font-size: large;">But when growth can build smoothly through an active
informal sector in which entry and exit is easy and capacity dispersed, the
environment for new investors is less risky.<span style="margin: 0px;">
</span>The informal sector in effect provides a proving ground for growth and a
buffer should growth falter.<span style="margin: 0px;"> </span>If the bed
and breakfast sector is a threat, why are there so many new hotel beds planned
for Auckland?</span></div>
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri"; font-size: large;">So why bother?</span></b><br />
<span style="font-family: "calibri";"><span style="font-size: large;">Auckland Council is facing a fiscal squeeze.<span style="margin: 0px;"> </span>It has opted for a growth model – a compact
city - that places pressure on outmoded, under-capacity, and increasingly
obsolete infrastructure, and consequently is facing major retrofitting challenges.<span style="margin: 0px;"> </span>That model, defined in large part by the revamping
of the Central Business District, creates a host of external costs, including
congestion, loss of green space, heavy investment in mass public transit, and rebuilding
underground infrastructure no longer fit for purpose.<span style="margin: 0px;"> </span>Politically it is difficult to keep raising
general rates to do this, and to levy sufficient area-of-benefit rates on CBD
landowners could undermine the model.<span style="margin: 0px;"> </span></span></span><br />
<div style="margin: 0px 0px 10.66px;">
<span style="font-family: "calibri";"><span style="font-size: large; margin: 0px;">Perhaps the council should consider the adverse fiscal and equity consequences of such a model.</span></span></div>
<span style="font-family: "calibri"; font-size: large;">Instead, taxpayer subsidies and new forms of local taxation are
being called on to support it.<span style="margin: 0px;"> </span>The petrol tax is an
obvious one, a tax that, among other things, penalises people who do not
regularly access the CBD and inner suburbs. The targeted bed and breakfast rate
is another one that will hit people who may well need the small amount of
income it yields to meet their own commitments. </span><br />
<span style="font-family: "calibri"; font-size: large;"><br /></span>
<span style="font-family: "calibri";"><span style="font-size: large;">In its scramble for fiscal
respectability, Auckland Council appears not to be respecting the financial
needs of its citizens, nor is it looking to the long-term prospects of the
visitor sector within Auckland.<span style="margin: 0px;"> </span></span></span><br />
<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike><span style="font-family: "calibri";"></span>Phil McDermotthttp://www.blogger.com/profile/06869744647213369964noreply@blogger.com0tag:blogger.com,1999:blog-7011655232093163642.post-43638151902791959722017-04-20T14:11:00.000+12:002017-06-24T15:50:29.910+12:00Auckland facing Hobson’s Choice: Expansion or Implosion?<span style="font-size: large;"></span><br />
<div style="margin: 0px 0px 11px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri"; font-size: x-large;">Choosing Auckland</span></b></div>
<span style="font-family: "calibri"; font-size: x-large;">In 1840, the first New Zealand Governor, </span><a href="https://nzhistory.govt.nz/people/william-hobson"><span style="color: #0563c1; font-family: "calibri"; font-size: x-large;">William Hobson</span></a><span style="margin: 0px;"><u><span style="color: #0563c1; font-family: "calibri"; font-size: x-large;">,</span></u></span><span style="font-family: "calibri"; font-size: x-large;"> sailed into Waitemata Harbour and chose Auckland as
the country’s new capital.</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: x-large;"> </span></span><span style="font-family: "calibri"; font-size: x-large;">The harbour offered
ease of embarkation and disembarkation.</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: x-large;">
</span></span><span style="font-family: "calibri"; font-size: x-large;">Fertile coastal lands meant that settlers could grow food crops, and the
local Maori tribe, Ngati Whatua, welcomed the promise of protection and trade that European
settlement offered.</span><br />
<span style="font-size: x-large;"></span><br />
<div style="margin: 0px 0px 11px;">
<span style="font-family: "calibri"; font-size: x-large;">Auckland’s early fortunes fluctuated.</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: x-large;"> </span></span><span style="font-family: "calibri"; font-size: x-large;">The city could only be reached easily from
other early settlements in New Zealand by sea .</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: x-large;"> </span></span><span style="font-family: "calibri"; font-size: x-large;">It was on an
isthmus divided by two harbours, crossed by flood-prone creeks and peppered
with swamps.</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: x-large;"> </span></span><span style="font-family: "calibri"; font-size: x-large;">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.</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: x-large;"> </span></span></div>
<span style="font-size: x-large;"></span><br />
<div style="margin: 0px 0px 11px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri"; font-size: x-large;">The emergence of New
Zealand’s first city</span></b></div>
<span style="font-family: "calibri"; font-size: x-large;">Auckland survived, though, even when New Zealand’s
administrative capital was moved to Wellington, 600km south, in 1865.</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: x-large;"> </span></span><span style="font-family: "calibri"; font-size: x-large;">Rivers were bridged, wetlands drained, waterfronts
reclaimed, and a railway pushed into the fertile and now subdued Waikato region, and beyond.</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: x-large;"> </span></span><br />
<span style="font-size: x-large;"></span><br />
<div style="margin: 0px 0px 11px;">
<span style="font-family: "calibri"; font-size: x-large;">The city prospered in the 20</span><sup><span style="font-family: "calibri"; font-size: x-large;">th</span></sup><span style="font-family: "calibri"; font-size: x-large;"> Century, dominating
the import and distribution of manufactured goods and exporting regional produce.
</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: x-large;"> </span></span><span style="font-family: "calibri"; font-size: x-large;">Consequently, it developed a substantial
import-substitution manufacturing sector, boosted by </span><a href="http://www.teara.govt.nz/en/economic-history/page-8"><span style="color: #0563c1; font-family: "calibri"; font-size: x-large;">protectionist
policies</span></a><span style="font-family: "calibri"; font-size: x-large;"> introduced in the 1930s.</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: x-large;"> </span></span></div>
<span style="font-size: x-large;"></span><br />
<div style="margin: 0px 0px 11px;">
<span style="font-family: "calibri"; font-size: x-large;">When the economy was deregulated, starting in the late 1970s,
</span><a href="http://www.teara.govt.nz/en/factory-industries/page-5"><span style="margin: 0px;"><span style="color: #0563c1; font-family: "calibri"; font-size: x-large;"> </span></span><span style="color: #0563c1; font-family: "calibri"; font-size: x-large;">manufacturing’s role contracted</span></a><span style="font-family: "calibri"; font-size: x-large;">.</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: x-large;"> </span></span><span style="font-family: "calibri"; font-size: x-large;">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 (much of it taking place beyond its boundaries), and catering to the needs of a steadily growing population.</span></div>
<span style="font-size: x-large;"></span><br />
<div style="margin: 0px 0px 11px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri"; font-size: x-large;">Primacy in the 21</span><sup><span style="font-family: "calibri"; font-size: x-large;">st</span></sup><span style="font-family: "calibri"; font-size: x-large;">
century</span></b><br />
<span style="font-family: "calibri"; font-size: x-large;">The cumulative advantages of scale </span><a href="http://www.massey.ac.nz/massey/about-massey/news/article.cfm?mnarticle=new-zealands-super-city-and-growing-24-10-2013"><span style="color: #0563c1; font-family: "calibri"; font-size: x-large;">served
Auckland well</span></a><span style="font-family: "calibri"; font-size: x-large;">.</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: x-large;"> </span></span><span style="font-family: "calibri"; font-size: x-large;">Although still a
small city globally (347</span><sup><span style="font-family: "calibri"; font-size: x-large;">th </span></sup><span style="font-family: "calibri"; font-size: x-large;">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 skills and resources in a small
country (population 4.8 million, less than the Sydney metropolitan area’s 5 million 2,000km across the Tasman Sea) and the low density of settlement over the rest of
New Zealand. </span></div>
<span style="font-size: x-large;"></span><br />
<div style="margin: 0px 0px 11px;">
<span style="font-family: "calibri"; font-size: x-large;">Auckland remains New Zealand’s centre of
disembarkation.</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: x-large;"> </span></span><span style="font-family: "calibri"; font-size: x-large;">Even as increasing
numbers of residents decamp for hinterland towns and </span><a href="http://m.nzherald.co.nz/hawkes-bay-today/opinion/news/article.cfm?c_id=1503459&objectid=11511398"><span style="color: #0563c1; font-family: "calibri"; font-size: x-large;">smaller
cities</span></a><span style="font-family: "calibri"; font-size: x-large;">, New Zealanders returning from overseas, new migrants, and
international students tend to make Auckland their first stop (Figure 1). As a result, the city accounted for 50% of national population growth over the five
years to 2016, a period of exceptional migration gains. </span></div>
<span style="font-size: x-large;"></span><br />
<div style="margin: 0px 0px 11px;">
<span style="margin: 0px;"><span style="font-size: x-large;"></span><br /></span></div>
<span style="font-size: x-large;"></span><br />
<div style="margin: 0px 0px 11px;">
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgZSlu_bhErfsYmsDhfliGs3ky52bHd_xYbDSlO7w1_0z-iiYwqwtB90heyCohAnmfGZdvFcRhXKyilLPzh7reobOZ0c84cGuUcPBXNP2RkD8pbmVex628vxod95me0Aqzni8gW9aLXh7I/s1600/Migration+Ak+%2526+RoNZ.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><span style="font-size: x-large;"><img border="0" height="416" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgZSlu_bhErfsYmsDhfliGs3ky52bHd_xYbDSlO7w1_0z-iiYwqwtB90heyCohAnmfGZdvFcRhXKyilLPzh7reobOZ0c84cGuUcPBXNP2RkD8pbmVex628vxod95me0Aqzni8gW9aLXh7I/s640/Migration+Ak+%2526+RoNZ.jpg" width="640" /></span></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="font-size: x-large;">Figure 1: Net Long-Term Migration, Auckland and the Rest of New Zealand, 1991-2016</span></td></tr>
</tbody></table>
<span style="font-size: x-large;"></span><br /></div>
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri"; font-size: x-large;">Reaching choke point?</span></b><br />
<span style="font-size: x-large;"></span><br />
<div style="margin: 0px 0px 11px;">
<span style="font-family: "calibri"; font-size: x-large;">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.</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: x-large;"> </span></span><span style="font-family: "calibri"; font-size: x-large;">Physical constraints have put the squeeze on </span><a href="http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11838627"><span style="color: #0563c1; font-family: "calibri"; font-size: x-large;">housing</span></a><span style="font-family: "calibri"; font-size: x-large;">
and </span><a href="http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11834114"><span style="color: #0563c1; font-family: "calibri"; font-size: x-large;">transport</span></a><span style="font-family: "calibri"; font-size: x-large;">.</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: x-large;"> </span></span><a href="http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11831599"><span style="color: #0563c1; font-family: "calibri"; font-size: x-large;">Ageing
underground infrastructure</span></a><span style="font-family: "calibri"; font-size: x-large;"> struggles to cope. </span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: x-large;"> </span></span><span style="font-family: "calibri"; font-size: x-large;">The city may be approaching – or have already
exceeded –Tamaki Makarau’s carrying capacity.</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: x-large;">
</span></span><span style="font-family: "calibri"; font-size: x-large;">That, though, is not something that Auckland Council seems ready to
contemplate.</span></div>
<span style="font-size: x-large;"></span><br />
<div style="margin: 0px 0px 11px;">
<span style="font-family: "calibri"; font-size: x-large;">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.</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: x-large;">
</span></span><span style="font-family: "calibri"; font-size: x-large;">A </span><a href="http://www.aucklandcouncil.govt.nz/EN/planspoliciesprojects/plansstrategies/theaucklandplan/Pages/theaucklandplan.aspx"><span style="color: #0563c1; font-family: "calibri"; font-size: x-large;">plan</span></a><span style="font-family: "calibri"; font-size: x-large;">
preoccupied with boosting employment and housing in a confined CBD and to promote
increasingly intensive development on the Isthmus looks set to throttle growth.</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: x-large;"> </span></span></div>
<span style="font-size: x-large;"></span><br />
<div style="margin: 0px 0px 11px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri"; font-size: x-large;">Externalities
abounding</span></b></div>
<span style="font-family: "calibri"; font-size: x-large;">The outcome for Auckland of a strategy of consolidation and centralisation
in is already apparent:</span><br />
<span style="font-size: x-large;"></span><br />
<div style="margin: 0px 0px 0px 24px; text-indent: -18pt;">
<span style="font-family: "symbol"; margin: 0px;"><span style="margin: 0px;"><span style="font-size: x-large;">·</span><span style="font-size: x-large; font-stretch: normal; font: 7pt "times new roman"; margin: 0px;">
</span></span></span><span style="font-family: "calibri"; font-size: x-large;">Under-capacity public and private transport
services and a lack of redundancy in the networks lead to </span><a href="http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11840242"><span style="color: #0563c1; font-family: "calibri"; font-size: x-large;">frequent
stoppages</span></a><span style="font-family: "calibri"; font-size: x-large;"> on </span><a href="http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11830432"><span style="color: #0563c1; font-family: "calibri"; font-size: x-large;">road</span></a><span style="font-family: "calibri"; font-size: x-large;">
and rail throughout the city, compounding </span><a href="http://cities-matter.blogspot.com.au/2013/01/congestion-density-and-transit-have-we_11.html"><span style="color: #0563c1; font-family: "calibri"; font-size: x-large;">already
excessive congestion</span></a><span style="font-family: "calibri"; font-size: x-large;">;</span></div>
<span style="font-size: x-large;"></span><br />
<div style="margin: 0px 0px 0px 24px; text-indent: -18pt;">
<span style="font-family: "symbol"; margin: 0px;"><span style="margin: 0px;"><span style="font-size: x-large;">·</span><span style="font-size: x-large; font-stretch: normal; font: 7pt "times new roman"; margin: 0px;">
</span></span></span><span style="font-family: "calibri"; font-size: x-large;">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 </span><a href="http://joelcayford.blogspot.com/"><span style="color: #0563c1; font-family: "calibri"; font-size: x-large;">Reflections on Auckland
Planning</span></a><span style="font-family: "calibri"; font-size: x-large;">);</span></div>
<span style="font-size: x-large;"></span><br />
<div style="margin: 0px 0px 0px 24px; text-indent: -18pt;">
<span style="font-family: "symbol"; margin: 0px;"><span style="margin: 0px;"><span style="font-size: x-large;">·</span><span style="font-size: x-large; font-stretch: normal; font: 7pt "times new roman"; margin: 0px;">
</span></span></span><span style="font-family: "calibri"; font-size: x-large;">Increasing </span><a href="http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11579491"><span style="color: #0563c1; font-family: "calibri"; font-size: x-large;">costs
to business</span></a><span style="font-family: "calibri"; font-size: x-large;"> – the costs of employment, congestion, business disruption, and
even space for growth raise the spectre of slowing investment, diminishing
productivity, and income growth;</span></div>
<span style="font-size: x-large;"></span><br />
<div style="margin: 0px 0px 0px 24px; text-indent: -18pt;">
<span style="font-family: "symbol"; margin: 0px;"><span style="margin: 0px;"><span style="font-size: x-large;">·</span><span style="font-size: x-large; font-stretch: normal; font: 7pt "times new roman"; margin: 0px;">
</span></span></span><span style="font-family: "calibri"; font-size: x-large;">Grossly </span><a href="http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11838627"><span style="color: #0563c1; font-family: "calibri"; font-size: x-large;">inflated
land prices</span></a><span style="font-family: "calibri"; font-size: x-large;"> 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;</span></div>
<span style="font-size: x-large;"></span><br />
<div style="margin: 0px 0px 0px 24px; text-indent: -18pt;">
<span style="font-family: "symbol"; margin: 0px;"><span style="margin: 0px;"><span style="font-size: x-large;">·</span><span style="font-size: x-large; font-stretch: normal; font: 7pt "times new roman"; margin: 0px;">
</span></span></span><span style="font-family: "calibri"; font-size: x-large;">Failures in </span><a href="http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11818146"><span style="color: #0563c1; font-family: "calibri"; font-size: x-large;">water</span></a><span style="font-family: "calibri"; font-size: x-large;">,
</span><a href="http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11830432"><span style="color: #0563c1; font-family: "calibri"; font-size: x-large;">sewage,
and stormwater systems</span></a><span style="font-family: "calibri"; font-size: x-large;"> threaten the health of the harbours and estuaries which
give Auckland its character;</span></div>
<span style="font-size: x-large;"></span><br />
<div style="margin: 0px 0px 11px 24px; text-indent: -18pt;">
<span style="font-family: "symbol"; margin: 0px;"><span style="margin: 0px;"><span style="font-size: x-large;">·</span><span style="font-size: x-large; font-stretch: normal; font: 7pt "times new roman"; margin: 0px;">
</span></span></span><span style="font-family: "calibri"; font-size: x-large;">A growing likelihood that significant natural
events (such as intense </span><a href="http://www.nzherald.co.nz/nz/news/image.cfm?c_id=1&gal_cid=1&gallery_id=172723#29280575"><span style="color: #0563c1; font-family: "calibri"; font-size: x-large;">low
pressure storms</span></a><span style="margin: 0px;"><u><span style="color: #0563c1; font-family: "calibri"; font-size: x-large;">)</span></u></span><span style="font-family: "calibri"; font-size: x-large;"> will increasingly bring a
congested city, its critical services, and its </span><a href="http://cities-matter.blogspot.com.au/2012/11/the-auckland-plan-high-risk-recipe.html"><span style="color: #0563c1; font-family: "calibri"; font-size: x-large;">centre
to a halt</span></a><span style="font-family: "calibri"; font-size: x-large;">.</span></div>
<span style="font-size: x-large;"></span><br />
<div style="margin: 0px 0px 11px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri"; font-size: x-large;">It’s the geography, Stupid</span></b></div>
<span style="font-family: "calibri"; font-size: x-large;">The response to the challenge of growth 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., </span><a href="http://cities-matter.blogspot.com.au/2011/10/auckland-draft-plan-flying-in-face-of.html"><span style="color: #0563c1; font-family: "calibri"; font-size: x-large;">here</span></a><span style="font-family: "calibri"; font-size: x-large;">
and </span><a href="http://cities-matter.blogspot.com.au/2013/05/what-were-they-thinking-plan-built-on.html"><span style="color: #0563c1; font-family: "calibri"; font-size: x-large;">here</span></a><span style="font-family: "calibri"; font-size: x-large;">).</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: x-large;"> </span></span><br />
<span style="font-size: x-large;"></span><br />
<div style="margin: 0px 0px 11px;">
<span style="font-family: "calibri"; font-size: x-large;">This strategy flies in the face of Auckland’s geography and
the natural constraints it imposes.</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: x-large;"> </span></span><span style="font-family: "calibri"; font-size: x-large;">It
raises the prospect of fiscal failure for the council because it requires high cost works with
limited if any productivity gains while compounding depreciation, maintenance,
capital and servicing liabilities.</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: x-large;"> </span></span><br />
<br />
<span style="font-family: "calibri"; font-size: x-large;">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 business and households alike.</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: x-large;">
</span></span><span style="font-family: "calibri"; font-size: x-large;">And any slowdown would only compound the city’s fiscal miseries. </span></div>
<span style="font-size: x-large;"></span><br />
<div style="margin: 0px 0px 11px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri"; font-size: x-large;">Hobson’s choice</span></b></div>
<span style="font-family: "calibri"; font-size: x-large;">So now we are faced with our own Hobson’s choice (</span><a href="https://en.wikipedia.org/wiki/Hobson%27s_choice"><span style="color: #0563c1; font-family: "calibri"; font-size: x-large;">Thomas</span></a><span style="font-family: "calibri"; font-size: x-large;">’ not
William’s): the city has little option but to find ways to expand.</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: x-large;"> </span></span><span style="font-family: "calibri"; font-size: x-large;">It is time to embrace </span><a href="http://cities-matter.blogspot.com.au/2011/06/alternative-to-compacting-auckland.html"><span style="color: #0563c1; font-family: "calibri"; font-size: x-large;">new
approaches</span></a><span style="font-family: "calibri"; font-size: x-large;"> to land and its use in the region, </span><span style="color: #4472c4; margin: 0px;"><a href="http://cities-matter.blogspot.com.au/2012/10/redesigning-city-planning-affordable.html"><span style="color: #4472c4; margin: 0px;"><span style="font-family: "calibri"; font-size: x-large;">how and where it is developed</span></span></a><span style="font-family: "calibri"; font-size: x-large;">,
</span></span><span style="font-family: "calibri"; font-size: x-large;">and how it is connected. </span><br />
<span style="font-size: x-large;"></span><br />
<div style="margin: 0px 0px 11px;">
<span style="font-family: "calibri"; font-size: x-large;">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 </span><a href="http://cities-matter.blogspot.com.au/2014/10/living-in-cbd-or-simply-passing-through.html"><span style="color: #0563c1; font-family: "calibri"; font-size: x-large;">for
a few</span></a><span style="font-family: "calibri"; font-size: x-large;">, this will only happen with a dramatic shift in thinking.</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: x-large;"> </span></span><span style="font-family: "calibri"; font-size: x-large;">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 </span><a href="http://www.productivity.govt.nz/inquiry-content/2682?stage=4"><span style="color: #0563c1; font-family: "calibri"; font-size: x-large;">Productivity
Commission</span></a><span style="font-family: "calibri"; font-size: x-large;">. </span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: x-large;"> The choices for Auckland are narrowing.</span></span></div>
<div style="margin: 0px 0px 11px;">
</div>
<div style="margin: 0px 0px 11px;">
<b></b><i></i><u></u><sub></sub><sup></sup><strike><br /></strike></div>
Phil McDermotthttp://www.blogger.com/profile/06869744647213369964noreply@blogger.com0tag:blogger.com,1999:blog-7011655232093163642.post-30753484720040162862017-03-14T19:37:00.002+13:002020-05-05T09:59:13.649+12:00Not Another Downtown Sports Stadium? How Many White Elephants do we Need? <br />
<div style="margin: 0px 0px 11px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri"; font-size: large;">More Monumentalism</span></b><br />
<span style="font-family: "calibri"; font-size: large;">I’ve said it before but it looks like it needs saying again:
Auckland does not need a new downtown stadium. (Actually,the </span><a href="http://cities-matter.blogspot.com.au/2011/01/unconventional-take-on-convention.html"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">last
time I said it</span></a><span style="font-family: "calibri"; font-size: large;"> I was talking about convention centres.</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: large;"> </span></span><span style="font-family: "calibri"; font-size: large;">But the principles, and the downsides, are
much the same).</span></div>
<span style="font-family: "calibri"; font-size: large;">Somewhat surprisingly, then, new Auckland Mayor Phil Goff, who is clearly concerned
about the risk to the city's </span><a href="http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11767697"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">fiscal
position</span></a><span style="font-family: "calibri"; font-size: large;"> in the face of a ballooning transport and infrastructure spend, has
revived the idea of a waterfront stadium.</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: large;">
</span></span><span style="font-family: "calibri"; font-size: large;">This by one of the steadier, more rational, and experienced </span><a href="https://www.parliament.nz/en/mps-and-electorates/former-mps/document/51PlibFormerPhilGoff1/goff-hon-phil"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">members
of the last Labour Government</span></a><span style="font-family: "calibri"; font-size: large;">: what was he thinking?</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: large;"> </span></span><br />
<br />
<div style="margin: 0px 0px 11px;">
<span style="font-family: "calibri"; font-size: large;">Through Council Controlled Organisation, </span><a href="http://www.aucklandstadiums.co.nz/sites/about-us/landing"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">Regional
Facilities Auckland</span></a><span style="font-family: "calibri"; font-size: large;"> (RFA), Mr Goff has commissioned a </span><span style="margin: 0px;"><span style="color: #4472c4; margin: 0px;"><a href="http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11815995"><span style="color: #4472c4; margin: 0px;"><span style="font-family: "calibri"; font-size: large;">pre-feasibility study</span></span></a></span></span><span style="font-family: "calibri"; font-size: large;">
from Price Waterhouse Coopers of a stadium with capacity for 25,000 to 50,000 people.
The consultants will consider potential CBD sites, the benefits (and presumably
costs) to the city, demand, development of a stadium precinct, building and
running costs, and planning issues.</span></div>
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri"; font-size: large;">The answer in four</span></b><br />
<div style="margin: 0px 0px 11px;">
<span style="font-family: "calibri"; font-size: large;">I’m not sure much work is required to demonstrate:</span></div>
<span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: large;">(1) </span></span></span><span style="font-family: "calibri"; font-size: large;">Stadiums </span><a href="https://www.stlouisfed.org/Publications/Regional-Economist/April-2001/Should-Cities-Pay-for-Sports-Facilities"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">do
not pay their way</span></a><span style="font-family: "calibri"; font-size: large;"> and, it might be added, the economic impact studies that
suggest that they justify the subsidies dished out to get
them up and keep them running are usually spurious;</span><br />
<br />
<div style="margin: 0px 0px 0px 24px; text-indent: -18pt;">
<span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: large;">(2)</span><span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal; margin: 0px;"><span style="font-size: large;">
Through expensive stadiums r</span></span></span></span><span style="font-family: "calibri"; font-size: large;">atepayers end up </span><a href="http://www.huffingtonpost.com.au/entry/taxpayers-nfl-stadiums_us_55f08313e4b002d5c077b8ac"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">subsidising
professional sports teams</span></a><span style="font-family: "calibri"; font-size: large;">; </span></div>
<br />
<div style="margin: 0px 0px 0px 24px; text-indent: -18pt;">
<span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: large;">(3)</span><span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal; margin: 0px;"><span style="font-size: large;"> </span></span></span></span><span style="font-family: "calibri"; font-size: large;">Where downtown and waterside locations are growing new stadiums are an uneconomic use of valuable land;</span></div>
<br />
<div style="margin: 0px 0px 11px 24px; text-indent: -18pt;">
<span style="margin: 0px;"><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: large;">(4)</span><span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal; margin: 0px;"><span style="font-size: large;"> </span></span></span></span><span style="font-family: "calibri"; font-size: large;">Auckland’s waterfront does not need a big area
to be sterilised and effectively privatised – or confined to the use
of the few people who can afford the eye-watering cost of tickets to get in.</span></div>
<span style="font-family: "calibri"; font-size: large;">In short, a quick review of the existing evidence would save
ratepayers' money even on a pre-feasibility report.</span><br />
<br />
<div style="margin: 0px 0px 11px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri"; font-size: large;">How to pay?</span></b><br />
<span style="font-family: "calibri"; font-size: large;">The evidence suggests that we can't.</span><br />
<span style="font-family: "calibri"; font-size: large;"><br /></span>
<span style="font-family: "calibri"; font-size: large;">The 2016 RFA </span><span style="color: #0563c1; font-family: "calibri"; font-size: large;"><a href="https://drive.google.com/file/d/0BwhmjdmWWk2SVVVHN3ZtV2NxRkk/view" target="_blank">annual report</a></span><span style="font-family: "calibri"; font-size: large;"> does not separate out the
performance of individual facilities (indoor and outdoor sports stadiums, Auckland Museum, Zoo, and Art Gallery). But we can guess that excess capacity
(or limited demand) in the outdoor stadiums contributed to the relatively poor aggregate figures: </span><span style="font-family: "calibri"; font-size: large;">total income (before revaluations) of $131.5m included a capital subsidy of close to $26m and an operating subsidy of almost $31m from the Council, and just $44m in revenue across all facilities.</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: large;"> </span></span><br />
<span style="margin: 0px;"><span style="font-family: "calibri"; font-size: large;"><br /></span></span>
<span style="margin: 0px;"><span style="font-family: "calibri"; font-size: large;">In fact, total entrance and admission fees amounted to under $11m, with venue hire just over $13m, this based on land, buildings and plant (excluding art works) assets of around $800m.</span></span></div>
<div style="margin: 0px 0px 11px;">
<span style="font-family: "calibri"; font-size: large;">Given this record, it’s hard to see a new $1bn sports and concert facility making any
financial headway, especially when all the evidence suggests
stable if not declining attendance. A few hallmark events and concerts aren't going to boost revenue ahead of what is being dragged in at the three other signifcant stadiums in the city. </span></div>
<span style="font-family: "calibri"; font-size: large;">It’s also hard to see sponsorships making any dent in the public funding
that would be needed for a new stadium. Sponsorships of all RFA venues apparently generated under $620,000 in 2016.</span><br />
<div style="margin: 0px 0px 11px;">
<span style="font-family: "calibri"; font-size: large;"><br /></span>
<span style="font-family: "calibri"; font-size: large;">And, despite any
enthusiasm they might show for the project, Auckland’s major sports franchises,
the Rugby Super 18 Blues and the NRL Warriors, are in no position to provide
financial support.</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: large;"> </span></span><span style="font-family: "calibri"; font-size: large;">The experience in the
US, the apex of professional sports, is quite compelling; the </span><a href="http://college.holycross.edu/RePEc/hcx/Baade-Matheson_NFLMegaEvents.pdf"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">major
leagues free ride</span></a><span style="font-family: "calibri"; font-size: large;"> on local government funded stadiums.</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: large;"> </span></span></div>
<span style="font-family: "calibri"; font-size: large;">Little surprise, then, that the New Zealand </span><a href="http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=11817137"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">Government
is not interested in</span></a><span style="font-family: "calibri"; font-size: large;"> contributing to the guesstimated $1bn price tag.</span><br />
<br />
<div style="line-height: normal; margin: 0px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri"; font-size: large;">So what are the benefits???</span></b><br />
<span style="font-family: "calibri"; font-size: large;">We do not need reports
telling us about wonderful spin off effects, or me-too claims about how a
global city needs a landmark stadium, or to have appointed advisors spraying ratepayers’ money about building
monuments to civic stupidity when we can’t even begin to get a return on our
existing facilities investments. </span></div>
<div style="line-height: normal; margin: 0px;">
<span style="font-family: "calibri"; font-size: large;"><br /></span></div>
<div style="line-height: normal; margin: 0px;">
<span style="font-family: "calibri"; font-size: large;">The bulk of research in the United States finds the
economic contribution from major sports leagues or the construction of stadiums
for them (or of convention centres) is </span><a href="http://news.stanford.edu/2015/07/30/stadium-economics-noll-073015/"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">negligible
if not negative</span></a><span style="font-family: "calibri"; font-size: large;">. This is </span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: large;"> </span></span><a href="http://www.leaderpost.com/business/Professors+weigh+economic+impact+downtown+stadium/2639891/story.html"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">despite
the benefits touted</span></a><span style="font-family: "calibri"; font-size: large;"> by the beneficiaries: the sports codes, the
development sector, the city boosters and, dare I say it, the consultants (see, for
example, </span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: large;"> </span></span><span style="font-family: "calibri"; font-size: large;">Sanders H, 2002, “</span><a href="http://journals.sagepub.com/doi/pdf/10.1177/08942402016003001"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">Convention
Myths and Realities: a Critical Review of Convention Center Feasibility Studies</span></a><span style="font-family: "calibri"; font-size: large;">”,
</span><i style="mso-bidi-font-style: normal;"><span style="font-family: "calibri"; font-size: large;">Economic Development Quarterly).</span></i></div>
<span style="font-size: large;"><b><br /></b></span>
<span style="font-size: large;"><b>Transforming downtown?</b></span><br />
<div style="margin: 0px 0px 11px;">
<span style="font-family: "calibri"; font-size: large;">The </span><a href="https://sites.ualberta.ca/~bhumphre/papers/pfm2003.pdf"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">urban
transformation effects</span></a><span style="font-family: "calibri"; font-size: large;"> are more often than not illusory.</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: large;"> </span></span><span style="font-family: "calibri"; font-size: large;">Even if there were to be benefits from developing major civic projects in rundown precincts they would be
irrelevant in central Auckland, with the CBD already straining under the
weight of tourism, mushrooming apartment building, office development, and
the construction of another mayoral monument, the </span><a href="http://cities-matter.blogspot.com.au/2012/12/a-flawed-case-aucklands-cityrail-link.html"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">Central
Rail Link</span></a><span style="font-family: "calibri"; font-size: large;">.</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: large;"> </span></span></div>
<span style="font-family: "calibri"; font-size: large;">It is a mistake to think that there will be benefits from opening waterfront spaces up to the public by building what is effectively a large enclosure that is empty most of the time. Instead, we will end up with a temple to elitism, excluding
the general public, and surrounded by draughty voids where there might
otherwise be more street activity, more people, and more income earning
opportunities.</span><br />
<span style="font-family: "calibri"; font-size: large;"><br /></span>
<span style="font-family: "calibri"; font-size: large;">(And quite apart from any operating disadvantages, the rectangular stadium structure favoured by Mr Goff will exacerbate the creation of dead spaces around it).</span><br />
<span style="font-family: "calibri"; font-size: large;"><br /></span>
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri"; font-size: large;">Seeking a better city? Do
better with what we’ve got</span></b><br />
<span style="font-family: "calibri"; font-size: large;">Certainly, there is a need to rationalise our existing
stadiums, to focus on getting costs down and revenue up. RFA has been </span><a href="http://www.aucklandstadiums.co.nz/about-us/Documents/stadiumsaucklandissuespaper20120613.pdf"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">looking
at the options</span></a><span style="font-family: "calibri"; font-size: large;"> for some time now.</span><br />
<span style="font-family: "calibri"; font-size: large;"><br /></span>
<span style="margin: 0px;"><span style="font-family: "calibri"; font-size: large;">The ideal strategy at this time in the city's development </span></span><span style="font-family: "calibri"; font-size: large;">might be to rationalise existing investment, intensify returns from sunk capital, and
realise any land value uplift that might come, for example, from shrinking
Eden Park, consolidating and diversifying other facilities, creating local specialisations, and maintaining a presence close to the wider communities of Auckland.</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: large;"> </span></span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: large;"> </span></span><br />
<div style="margin: 0px 0px 11px;">
<span style="margin: 0px;"></span><span style="font-family: "calibri"; font-size: large;"><br /></span>
<span style="font-family: "calibri"; font-size: large;">Throwing a downtown stadium into the mix is simply going to hinder progress.</span></div>
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri"; font-size: large;">Why the distraction?</span></b><br />
<span style="font-family: "calibri"; font-size: large;">It’s not just the capital outlay that would contribute to the
City’s indebtedness and put more </span><a href="http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11638214"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">pressure
on the city’s credit rating</span></a><span style="font-family: "calibri"; font-size: large;">.</span><span style="margin: 0px;"><span style="font-family: "calibri"; font-size: large;"> L</span></span><span style="font-family: "calibri"; font-size: large;">ong-term
operating, maintenance and depreciation costs will be substantial. The risks this raises are enough to say don't even think about going there.</span><br />
<span style="font-family: "calibri"; font-size: large;"></span><span style="font-family: "calibri"; font-size: large;"><br /></span>
<span style="font-family: "calibri";"><span style="font-size: large;">There are also the foregone opportunities, both for
more intensive and continuous use of downtown land, and for investment in physical
or social infrastructure that might contribute more meaningfully to community
wellbeing. </span></span><br />
<span style="font-family: "calibri";"><br /></span>
<span style="font-family: "calibri";"><span style="font-family: "times new roman"; font-size: large;">If we are going to throw money at things that make a difference, let's</span></span><span style="font-family: "calibri"; font-size: large;"><span style="font-family: "times new roman"; font-size: small;"> </span>start by cleaning up the city’s </span><a href="http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11785299"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">sewage
overflows</span></a><span style="font-family: "calibri"; font-size: large;">, sorting out </span><a href="http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10752950"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">stormwater
network problems</span></a><span style="font-family: "calibri"; font-size: large;">, or by lifting our commitment to resolving ever-increasing transport and housing issues. </span>Phil McDermotthttp://www.blogger.com/profile/06869744647213369964noreply@blogger.com0tag:blogger.com,1999:blog-7011655232093163642.post-3464179348982913862017-03-07T14:44:00.000+13:002017-03-12T09:51:50.228+13:00Breaking Through and Moving on: Beginnings of a New Plan for Auckland<br />
<div style="margin: 0px 0px 11px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14pt; line-height: 107%; margin: 0px;">The Break
Through</span></b><br />
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">After years of pushing the <a href="http://cities-matter.blogspot.com.au/2010/09/ins-and-outs-of-spatial-planning.html"><span style="color: #0563c1; font-family: "calibri";">compact
city fallacy</span></a> and ignoring the <a href="http://cities-matter.blogspot.com.au/2011/06/alternative-to-compacting-auckland.html"><span style="color: #0563c1; font-family: "calibri";">obvious
approach</span></a> to solving Auckland’s particular growth problems, the city and its
planners have at last begun to water down their dearly held but doomed compact
city plan.<span style="margin: 0px;"> </span>The <i style="mso-bidi-font-style: normal;"><a href="http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11812455"><span style="color: #0563c1; font-family: "calibri";">New
Zealand Herald</span></a></i> revealed that today “the council's planning committee
will consider a report to allow for 120,000 new homes at six main locations in
the north, north-west and south of the city.”<i style="mso-bidi-font-style: normal;"> </i>A range of smaller rural settlements has also been identified for
further development, spread over 130km from north to south.<span style="margin: 0px;"> </span></span></div>
<br />
<div style="margin: 0px 0px 11px;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">While only 30% of the assumed requirement for 400,000
dwellings is targeted for the “mini-cities”, the appetite for new greenfield,
peri-urban settlement won’t stop there.<span style="margin: 0px;">
</span>After all, there is only so much that can be crammed into the current
urban area, especially in central Auckland. without destroying its appeal.<span style="margin: 0px;"> </span>Apartments in the suburbs, the latest battlefield
for entrenched urban planning, is least popular of all options.</span></div>
<br />
<div style="margin: 0px 0px 11px;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">We’re not there yet, but momentum is gathering for moving
Auckland into a sustainable future.<span style="margin: 0px;"> </span></span></div>
<br />
<div style="margin: 0px 0px 11px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14pt; line-height: 107%; margin: 0px;">Breaking
with the past makes sense</span></b><br />
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">The ground has been giving for a while now.<span style="margin: 0px;"> </span>The conceit of planning by projection is
clear as migration figures deviate wildly from the analysts’ assumptions.<span style="margin: 0px;"> </span>The estimates of housing supply underlying
the Unitary Plan are <a href="http://cities-matter.blogspot.com.au/2016/07/silk-purse-planning-can-aucklands.html"><span style="color: #0563c1; font-family: "calibri";">demonstrably
spurious</span></a>.<span style="margin: 0px;"> </span>The impacts of intensification
on air and water quality and nature in the city are now coming to be
realised.<span style="margin: 0px;"> </span>And the impact on council
finances as it aims to retrofit under-capacity infrastructure and pours money
into transit threaten the City’s credit rating and the pockets of its citizens.</span></div>
<br />
<div style="margin: 0px 0px 11px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14pt; line-height: 107%; margin: 0px;">The
advantages</span></b><br />
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">I have been documenting the short comings of a compact city
plan somewhat tediously since my report on the proposal to the Auckland
Regional Council in 1999.<span style="margin: 0px;"> </span>So, to change my
tack, here are some advantages of the new direction towards satellite cities
and settlements.<span style="margin: 0px;"> </span>It provides:</span></div>
<div style="margin: 0px 0px 0px 24px; text-indent: -18pt;">
<span style="font-family: "symbol"; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;"> </span></span></span><span style="font-size: 14pt; line-height: 107%; margin: 0px;">The opportunity to develop attractive, affordable 21<sup>st</sup>
century settlements, with emphasis on diversity, mobility, mixed activity,
and balance – all so much easier to achieve in green fields compared with retrofitting
existing services, congesting the suburbs, and squeezing housing into
compromised brownfield or mixed use sites;</span></div>
<br />
<div style="margin: 0px 0px 0px 24px; text-indent: -18pt;">
<span style="font-family: "symbol"; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;">
</span></span></span><span style="font-size: 14pt; line-height: 107%; margin: 0px;">Better access to nature, greenspace, clean air,
cycleways and trails, and recreational amenities;</span></div>
<br />
<div style="margin: 0px 0px 0px 24px; text-indent: -18pt;">
<span style="font-family: "symbol"; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;">
</span></span></span><span style="font-size: 14pt; line-height: 107%; margin: 0px;">Consequently, better health – an antidote for the
urban epidemic of obesity;</span></div>
<br />
<div style="margin: 0px 0px 0px 24px; text-indent: -18pt;">
<span style="font-family: "symbol"; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;">
</span></span></span><span style="font-size: 14pt; line-height: 107%; margin: 0px;">Greater opportunities for self-reliance (detached,
terrace, and duplex houses provide safe play space for toddlers and food
growing opportunities) and more time to enjoy it;</span></div>
<br />
<div style="margin: 0px 0px 0px 24px; text-indent: -18pt;">
<span style="font-family: "symbol"; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;">
</span></span></span><span style="font-size: 14pt; line-height: 107%; margin: 0px;">Pressure off traffic congestion in the urban area;</span></div>
<br />
<div style="margin: 0px 0px 0px 24px; text-indent: -18pt;">
<span style="font-family: "symbol"; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;">
</span></span></span><span style="font-size: 14pt; line-height: 107%; margin: 0px;">Protection and restoration of community life –an
alternative to the transience and anomie of apartment living;</span></div>
<br />
<div style="margin: 0px 0px 0px 24px; text-indent: -18pt;">
<span style="font-family: "symbol"; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;">
</span></span></span><span style="font-size: 14pt; line-height: 107%; margin: 0px;">A chance to focus on quality development in <a href="http://cities-matter.blogspot.com.au/2011/05/sustaining-suburbs.html"><span style="color: #0563c1; font-family: "calibri";">existing
suburbs</span></a> and on sustaining what makes Auckland an attractive place to live
in and visit; quiet streets, healthy treescapes, generous parks and play spaces,
bungalows and gardens, ease of movement, local shops and services, and a sense
of place.</span></div>
<br />
<div style="margin: 0px 0px 11px 24px; text-indent: -18pt;">
<span style="font-family: "symbol"; font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;">
</span></span></span><span style="font-size: 14pt; line-height: 107%; margin: 0px;">Urban form better suited to limiting the <a href="http://cities-matter.blogspot.co.nz/2015/11/planning-to-fail-wrong-assumptions.html" target="_blank">impact of extremeevents</a> (mainly associated with climate change, but there is an increase in fretting
over <a href="http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11444436" target="_blank">Auckland’s volcanic field</a>), reducing over-concentration of resources,
people and infrastructure, and an improved capacity to recover from disasters with
dispersed development.</span></div>
<br />
<div style="margin: 0px 0px 11px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14pt; line-height: 107%; margin: 0px;">The
provisos</span></b><br />
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">Will all these good things come to pass?<span style="margin: 0px;"> </span>Here are four provisos we need to consider as
we allow our “pearls on a string” to expand:</span></div>
<div style="margin: 0px 0px 0px 24px; text-indent: -18pt;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;">(1)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;"> </span></span></span><span style="font-size: 14pt; line-height: 107%; margin: 0px;">Ensure that
the mini cities have adequate commercial and employment land and in doing so avoid
applying 20<sup>th</sup> century views of what should be where on that land,
and how densely it should be occupied.<span style="margin: 0px;">
</span>Just set some standards to manage conflicting uses, protect the
environment, mandate minimum levels of amenity, and let the investment happen;</span></div>
<br />
<div style="margin: 0px 0px 0px 24px; text-indent: -18pt;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;">(2)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;"> </span></span></span><span style="font-size: 14pt; line-height: 107%; margin: 0px;">Ensure that
mini-cities are well-connected, to each other, to the main urban area, and to
key economic nodes (including port and airport).<span style="margin: 0px;"> </span>Corridors need to be generous to allow for
diverse traffic, transport modes, and growth;</span></div>
<br />
<div style="margin: 0px 0px 0px 24px; text-indent: -18pt;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;">(3)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;"> </span></span></span><span style="font-size: 14pt; line-height: 107%; margin: 0px;">Planners
need to back off saying what should happen where and when, and instead say what
is required before development can proceed.<span style="margin: 0px;">
</span>This will allow demand to influence the timing of investment. <span style="margin: 0px;"> </span>It will lower the speculative gains and land
banking that coercive planning and orchestrating development sequences foster.<span style="margin: 0px;"> </span></span></div>
<br />
<div style="margin: 0px 0px 11px 24px; text-indent: -18pt;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;"><span style="margin: 0px;">(4)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;"> </span></span></span><span style="font-size: 14pt; line-height: 107%; margin: 0px;">Treat these
as greenfield opportunities in the widest sense: encourage innovation in design,
infrastructure, and investment to achieve more cost effective delivery, allow
for new funding instruments, and reduce demands on public finances.</span></div>
<br />
<div style="margin: 0px 0px 11px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14pt; line-height: 107%; margin: 0px;">So what can
the Council offer?</span></b><br />
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">Many years of resistance to peri-urban growth suggest that
planners are not necessarily the people to determine when this the proposed development
might take place, or even to design it.<span style="margin: 0px;"> </span>Instead,
the Council needs the skills to negotiate delivery packages with investors and
developers, and to provide oversight, and authority.<span style="margin: 0px;"> </span></span></div>
<br />
<div style="margin: 0px 0px 11px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14pt; line-height: 107%; margin: 0px;">And Wither
Auckland Council?</span></b><br />
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">Finally, while I find this development a justification for
the many critical pieces I have written about Auckland’s planning in the past,
I will indulge in one more observation.<span style="margin: 0px;">
</span>Marry the mini-cities approach with the push for <a href="http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11800492" target="_blank">Urban DevelopmentAuthorities</a> and we can begin to peel back the institutional onion that is Auckland Council. </span></div>
<br />
<div style="margin: 0px 0px 11px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14pt; line-height: 107%; margin: 0px;">So here’s a
thought.<span style="margin: 0px;"> </span>The mini-cities could be
subject to development under an Urban Development Authority.<span style="margin: 0px;"> </span>This should involve some community
representation.<span style="margin: 0px;"> </span>And when the development
task is over, perhaps they could assume the managerial and regulatory role of a
local authority. <span style="margin: 0px;"> </span></span></b></div>
<br />
<div style="margin: 0px 0px 11px;">
<span style="font-size: 14pt; line-height: 107%; margin: 0px;">Sure, I was wrong when I gave the new, consolidated (or
overweight) Auckland City <a href="http://cities-matter.blogspot.com.au/2016/04/planning-in-auckland-doing-less-with.html"><span style="color: #0563c1; font-family: "calibri";">just
five years</span></a>.<span style="margin: 0px;"> </span>It’s still with us.<span style="margin: 0px;"> </span>But maybe it’s time we acknowledged the short-comings
and costs of a super city.<span style="margin: 0px;"> </span>And if the region’s
future does lie in Council Controlled Organisations and special purpose
authorities to fulfil its functions, perhaps it’s time to at least shrink it
down to fulfil basic funding, purchasing, high order spatial planning, and
regulatory functions. </span></div>
<br />
<div style="margin: 0px 0px 11px;">
<br /></div>
Phil McDermotthttp://www.blogger.com/profile/06869744647213369964noreply@blogger.com0tag:blogger.com,1999:blog-7011655232093163642.post-68567115325570164772016-07-31T13:48:00.000+12:002016-07-31T16:23:54.632+12:00Back to Basics: Planning, Housing Markets, and the Cost of Ignoring Economics <b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">Acknowledging
the impact of planning on housing</span></span></b><br />
<br />
<div style="margin: 0cm 0cm 8pt;">
<span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">At last, economists, commentators and the media in New
Zealand are recognising what has been evident in many countries since late in
the 20</span><sup><span style="font-size: large;">th</span></sup><span style="font-size: large;"> century; that plans to contain city growth in urban
boundaries betray the hopes of large and growing numbers of urban dwellers and
job seekers. </span></span></div>
<span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">In Auckland, </span><a href="http://www.aupihp.govt.nz/"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">an
independent panel</span></a><span style="font-size: large;"> has modified the </span><a href="http://www.aucklandcouncil.govt.nz/EN/planspoliciesprojects/plansstrategies/unitaryplan/Pages/ihpreportsrecommendations.aspx"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">proposed
Unitary Plan</span></a><span style="font-size: large;"> to allow more dwellings.
But it is too little, too late; so Auckland remains consigned to
increasing social division fashioned around a new poverty, a poverty rooted in
the failure of the housing market.</span></span><br />
<br />
<div style="margin: 0cm 0cm 8pt;">
<span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">This post doesn’t deal with numbers, or with evidence
of why the Auckland Unitary Plan remains a </span><a href="http://cities-matter.blogspot.co.nz/2016/07/silk-purse-planning-can-aucklands.html"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">pig’s
ear</span></a><span style="font-size: large;">. Plenty of </span><a href="http://www.interest.co.nz/property/82843/going-not-giving-auckland-more-affordable-housing-any-more-fact-most-2016-projects"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">others</span></a><span style="font-size: large;">
have picked up on that. Instead, it aims
to set out the basics of housing supply – the complexity of the market itself
and the economic principles that regulators need to understand if the ground lost
is going to be recovered.</span></span></div>
<br />
<div style="margin: 0cm 0cm 8pt;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">The
Conclusion</span></span></b></div>
<div style="margin: 0cm 0cm 8pt;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"></span></b><span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">This is quite a longish post that concentrates on the
basics of housing markets and economics.
If you don’t want to read it all, here is my conclusion.</span></span></div>
<br />
<div style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-element: para-border-div; padding: 1.0pt 4.0pt 1.0pt 4.0pt;">
<div style="border-image: none; border: medium; margin: 0cm 0cm 8pt; padding: 0cm;">
<span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">There are
no options if we want to make housing affordable again. Without adequate supply, initiatives to
dampen demand will be futile at best, destructive at worst. </span></span></div>
<div style="border-image: none; border: medium; margin: 0cm 0cm 8pt; padding: 0cm;">
<span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">Arbitrary
restrictions on urban land development that cannot be justified on
environmental or infrastructure grounds must be removed from the city’s plan. Attempting to force people into small, high
density dwellings by rationing land for inside or outside the metropolitan
boundary penalises </span><u><span style="font-size: large;">all</span></u><span style="font-size: large;"> new housing and large sections of the community. </span></span></div>
<div style="border-image: none; border: medium; margin: 0cm 0cm 8pt; padding: 0cm;">
<span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">Prescribing
when, where, and how much greenfield
development can take place means that the price of brownfield land, infill, and
remaining unbuilt lots within the urban boundary is inevitably pushed up to the
point that virtually any dwellings in any location – whether apartments,
terrace houses, or detached homes on tiny sites – will be unaffordable (and
unfundable) for a very large share of the community. Trying to make high density housing
affordable will require small dwellings, cheaply fitted out, built to minimum
specifications, little suited to most market segments. They will be unattractive to developers and
to the banks, and, if they can be delivered, are likely to concentrate rather than alleviate
the health and welfare consequences of inadequate housing. </span></span></div>
<div style="border-image: none; border: medium; margin: 0cm 0cm 8pt; padding: 0cm;">
<span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">This is
basic economics: generation rent, the millennials, the homeless, and families
across the board will benefit only if land speculation is taken out of the
housing equation by removing arbitrary restrictions on where, when, and how
much urban development can occur in and around Auckland. </span></span></div>
</div>
<br />
<div style="margin: 0cm 0cm 8pt;">
<span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">If you struggle with this conclusion perhaps you could
read on.</span></span></div>
<br />
<div style="margin: 0cm 0cm 8pt;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">What
Happens When You Limit Land for Housing?</span></span></b></div>
<span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">It’s simple, really: if supply is artificially restricted
in a market with growing demand, that market will be distorted. As a result, monetary and non-monetary costs will
be higher than they need to be. </span></span><br />
<span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">If the market is at all complex, regulations aimed at managing
demand to offset a supply failure (like investment or lending thresholds for
house mortgages) will lead to further distortion. Distortion will show up in unexpected
and inequitable outcomes, advantaging some groups and disadvantaging others. </span></span><br />
<br />
<div style="margin: 0cm 0cm 8pt;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">A complex
market</span></span></b></div>
<span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">In a growing city the market for housing is continuously
changing, which makes it difficult to predict.
It’s also complex, which makes it difficult to regulate. </span></span><br />
<br />
<div style="margin: 0cm 0cm 8pt;">
<span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">Complexity comes from the many ways housing demand is
divided up; for example: </span></span></div>
<br />
<div style="margin: 0cm 0cm 0pt 18pt; text-indent: -18pt;">
<span lang="EN-US" style="font-family: "symbol"; line-height: 107%;"><span style="font-size: large;">·</span><span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"><span style="font-size: large;"> </span></span></span><span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">Across suburbs and sectors (e.g., inner,
outer, north, south, east, and west);</span></span></div>
<br />
<div style="margin: 0cm 0cm 0pt 18pt; text-indent: -18pt;">
<span lang="EN-US" style="font-family: "symbol"; line-height: 107%;"><span style="font-size: large;">·</span><span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"><span style="font-size: large;"> </span></span></span><span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">According to where individuals or
households stand on the housing “ladder”, which in simple terms distinguishes
among people seeking a first home, households after a subsequent family home (or
homes), empty nesters aiming to downsize, and those wanting a retirement home;</span></span></div>
<br />
<div style="margin: 0cm 0cm 0pt 18pt; text-indent: -18pt;">
<span lang="EN-US" style="font-family: "symbol"; line-height: 107%;"><span style="font-size: large;">·</span><span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"><span style="font-size: large;"> </span></span></span><span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">By demography which, while associated
with progress on the housing ladder, will further influence the dwellings people
need according to household size and type (non-family household, solo occupant,
couple without children, couple with children, solo parent with children,
extended family, and so forth);</span></span></div>
<br />
<div style="margin: 0cm 0cm 0pt 18pt; text-indent: -18pt;">
<span lang="EN-US" style="font-family: "symbol"; line-height: 107%;"><span style="font-size: large;">·</span><span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"><span style="font-size: large;"> </span></span></span><span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">By different lifestyle preferences among,
for example: large and small dwellings, modest and indulgent scale or design;
different types of locality (in or near the city centre, coastal, suburban, urban
village, rural township, countryside); and, increasingly, whether or not in a
planned or managed community;</span></span></div>
<br />
<div style="margin: 0cm 0cm 8pt 18pt; text-indent: -18pt;">
<span lang="EN-US" style="font-family: "symbol"; line-height: 107%;"><span style="font-size: large;">·</span><span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"><span style="font-size: large;"> </span></span></span><span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">By ability to pay, through which a household
might exercise its preferences.</span></span></div>
<br />
<div style="margin: 0cm 0cm 8pt;">
<span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">Together these divisions can be used to describe many market
segments, each with distinctive housing needs and expectations. Consequently, a trade-off between medium/high
density and lower density development is meaningless: a differentiated housing
market needs both, and options within each.</span></span></div>
<span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">When housing supply is suppressed by regulations that
reduce the availability of land, the impact is spread unevenly over dwelling
types and therefore impacts unevenly on demand segments. This is most obvious in the way in which new
entrants are excluded from home ownership, along with low income earners,
single income households, and young families with a preference for space; in
fact, young people generally. Social
divisions that were once defined predominantly by income and socio-economic
status are now also marked by a generational divide.</span></span><br />
<br />
<div style="margin: 0cm 0cm 8pt;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">Housing and
employment</span></span></b></div>
<span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">The adverse impacts of limiting the land available to
meet housing demand – by location, type, and price – are compounded by the link
between housing markets and the labour market. Like the housing market, the labour
market is organised geographically. People
want employment close to where they live; and businesses want to invest close
to where the sorts of workers they need are likely to reside. </span></span><br />
<br />
<div style="margin: 0cm 0cm 8pt;">
<span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">Ideally, the catchments for certain types of labour
will overlap with the areas in which those people live. This makes jobs readily
accessible to households. Accessibility can
be maintained as cities grow with the development of transport connections that
let people move easily between residence and work. This is straightforward when a city is small
enough and the city centre and inner suburbs account for a large share of
employment. But as cities grow and employment
becomes more specialised, the role of the central city changes, and jobs and
houses become dispersed, increasing the time and resources committed to
commuting. </span></span></div>
<span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">Restricting land for housing </span><u><span style="font-size: large;">and</span></u><span style="font-size: large;"> employment increases
the costs of investment in both. It
makes houses less affordable and business expansion costlier. The increased commuting times, costs, and
congestion penalise both residents and businesses. By lowering discretionary spending, increasing
staff turnover, and inflating wages, the effect is to reduce productivity and
competitiveness.</span></span><br />
<br />
<div style="margin: 0cm 0cm 8pt;">
<span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">Fiscal pressures also increase, through the need to fund
more roads, transit, and associated facilities.
</span></span></div>
<br />
<div style="margin: 0cm 0cm 8pt;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">The social
costs </span></span></b></div>
<span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">There are costly </span><a href="http://www.salvationarmy.org.nz/uploads/file/20120823TSA%20Housing%20Report%202%20Web(1).pdf"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">social
consequences</span></a><span style="font-size: large;">. The impacts of substandard housing and overcrowded living conditions
are well known. They include poor health,
difficulties securing and holding down jobs, erratic school attendance, limited
educational achievement, and diminished employment prospects. </span></span><br />
<span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">Even for those who are housed, the high costs can create
financial stress, contributing to domestic violence, and welfare and charity
dependence. The absence of starter homes,
high rental commitments, and excessive mortgage repayments act to delay family
formation and child-bearing, reducing fertility. Ultimately, high housing costs will also suppress
any offsetting demographic or economic gains that might come from immigration
by making a city unaffordable to new arrivals. It may well fuel outward migration, particularly
among those with the skills and motivation to improve their situation
elsewhere, robbing a city of some of its most </span><a href="http://www.nzherald.co.nz/lifestyle/news/article.cfm?c_id=6&objectid=11668578"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">socially
mobile citizens</span></a><span style="font-size: large;">.</span></span><br />
<br />
<div style="margin: 0cm 0cm 8pt;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">The
consequences of declining ownership</span></span></b></div>
<span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">That fact that lower affordability reduces the
opportunity to own a house is now </span><a href="http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11590002"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">well
documented</span></a><span style="font-size: large;">. A prolonged period of renting
becomes the only viable option for many if not most new households. </span></span><br />
<br />
<div style="margin: 0cm 0cm 8pt;">
<span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">This brings its own problems, especially in New
Zealand where the institutional arrangements that might bring stability to renting
are absent. Lack of secure tenure is
reflected in negative measures of school attendance, job retention, income
growth, and social networking. In contrast,
home ownership has been a traditional path for saving and building equity, with
the benefits of home improvement and appreciation accruing to the owner-occupiers. Ownership provides households the stability
required to underpin educational and career progression, savings, health, and
social stability. </span></span></div>
<br />
<div style="margin: 0cm 0cm 8pt;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">The opportunities
to profit</span></span></b></div>
<span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">The upsides of a housing shortage are confined to
particular groups. Home owners with
significant equity may purchase one or more investment properties for rental
purposes, boosting their incomes while bidding upprices. This favours older
groups at the end of their careers and heading towards retirement, further
highlighting the contrast in fortunes between retiring baby-boomers and the </span><a href="http://www.stuff.co.nz/stuff-nation/assignments/share-your-news-and-views/14523437/What-do-Millennials-owe-Baby-Boomers"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">millennial
generation</span></a><span style="font-size: large;"> </span></span><br />
<br />
<div style="margin: 0cm 0cm 8pt;">
<span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">Then there are the speculators. They may be small investors on-selling their rental
properties for the capital gain. Or,
they may simply be owner-occupants who buy and sell regularly, sometimes
improving their houses, but always seeking to exploit rapid price escalation by
on-selling. </span></span></div>
<span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">Large scale institutional investors, development
companies and investment trusts, may accumulate green or brownfield land for
development, and simply hold it in undeveloped form to farm the long-term gains
from appreciation, writing holding costs off against investments elsewhere. This slows the market – with less properties
on sale than might otherwise be the case – and entrenches the shortage,
compounding the distortion initiated by planning restrictions. </span></span><br />
<br />
<div style="margin: 0cm 0cm 8pt;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">Fixing it</span></span></b></div>
<span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">Increasing housing supply alone will not solve the
problem once the distortions initiated by inappropriate plans have become
embedded in the behaviour of market participants, as is the case in Auckland
with 15 years of compact city plans.
While boosting the supply of land for development is an essential first
step on the path to normalcy in the housing market, reform to taxation laws will
also be necessarily to remove the market manipulation evident in land banking
and speculative investment. Imposing a modest capital gains tax across the
board is the most obvious such measure, which would bring New Zealand into line
with the </span><a href="http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11681169"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">rest
of the world</span></a><span style="font-size: large;">.</span></span><br />
<br />
<div style="margin: 0cm 0cm 8pt;">
<span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">On the land use front, there are no options if we
really do want to make housing affordable again. Any attempt to force people into small, high
density dwellings by limiting how much land will be made available for new
housing penalises </span><u><span style="font-size: large;">all</span></u><span style="font-size: large;"> categories. By prescribing when and where
greenfield development can take place, the price of brownfield land, infill,
and remaining unbuilt lots within the urban boundary is pushed up to the point
that any dwellings built on it – whether apartments, terrace houses, or
detached homes on tiny sites – will be highly priced and remain unaffordable to
a very large share of the community.
Making high density housing affordable means small dwellings, cheaply
fitted out, and built to a minimum specification, little suited to most market
segments and difficult to finance. </span></span></div>
<br />
<div style="margin: 0cm 0cm 8pt;">
<span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">This is basic economics: generation rent, the
millennials, the homeless, and families across the board will benefit from
access to housing in whatever form they might seek only if land speculation is
taken out of the equation. This means removing
arbitrary restrictions on where, when, and how much urban development can occur.
Until then, the Auckland Plan, even in
its revised form, will remain the major impediment to creating a livable city
which works for the majority of its residents.
</span></span></div>
<br />
<div style="margin: 0cm 0cm 8pt;">
<br /></div>
<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike><span style="font-size: large;"></span>Phil McDermotthttp://www.blogger.com/profile/06869744647213369964noreply@blogger.com0tag:blogger.com,1999:blog-7011655232093163642.post-15634949349479498052016-07-25T12:33:00.000+12:002016-07-27T22:24:42.290+12:00Silk Purse Planning: Can Auckland’s Unitary Plan Be Remade?<br />
<div style="margin: 0cm 0cm 8pt;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri"; font-size: x-large;">The Next Step on the Auckland Planning Path</span></b></div>
<div style="margin: 0cm 0cm 8pt;">
<span style="font-family: "calibri"; font-size: large;">The </span><a href="http://www.aupihp.govt.nz/"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">Independent Hearings Panel</span></a><span style="font-family: "calibri"; font-size: large;"> has presented
its recommendations for the Proposed Auckland Unitary Plan (PAUP) to Auckland Council. We now await their public release and the response
of the Council to the recommended changes.</span></div>
<br />
<div style="margin: 0cm 0cm 8pt;">
<span style="font-family: "calibri"; font-size: large;">The Panel faced a huge
challenge</span><a href="file:///D:/Users/pjmcd_000/Documents/Blogs/Silk%20Purse%20Planning.docx" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span style="font-family: "calibri" , sans-serif; font-size: 11.0pt; line-height: 107%;"><span style="color: #0563c1; font-size: large;">[1]</span></span></a><span style="font-family: "calibri"; font-size: large;">
in trying to ground the PAUP. An obvious problem it has had to deal with is the </span><a href="http://cities-matter.blogspot.co.nz/search?updated-min=2015-01-01T00:00:00%2B13:00&updated-max=2016-01-01T00:00:00%2B13:00&max-results=4"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">erroneous
estimate</span></a><span style="font-family: "calibri"; font-size: large;"> of Auckland’s capacity to absorb around 70% of predicted growth within the proposed
urban boundary, a fundamental starting point for the Plan. </span></div>
<br />
<div style="margin: 0cm 0cm 8pt;">
<span style="font-family: "calibri"; font-size: large;">The question is,
has the Panel managed to turn this sow’s ear into a silk purse? And, if so, will the Council accept its
recommendations?</span></div>
<br />
<div style="margin: 0cm 0cm 8pt;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri"; font-size: x-large;">Room to move?</span></b></div>
<div style="margin: 0cm 0cm 8pt;">
<span style="font-family: "calibri"; font-size: large;">One of the challenges
the Panel faced was whether to focus simply on the rules, their application,
and their effects; or to address the more fundamental issue of the appropriateness of the principles
on which the Plan is based. From my reading of the Panel’s
early communications, it could not avoid the latter.</span></div>
<span style="font-family: "calibri"; font-size: large;">Certainly, much of the
debate about the Unitary Plan has focused on the key principles and objectives around
city containment and intensification. Just like the </span><a href="https://geog397.wiki.otago.ac.nz/images/b/bf/Auckland_regional_growth_strategy.pdf"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">Auckland
Regional Growth Strategy</span></a><span style="font-family: "calibri"; font-size: large;"> (1999) from which it evolved via the </span><a href="http://cities-matter.blogspot.co.nz/2011/10/auckland-draft-plan-flying-in-face-of.html"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">Auckland
Spatial Plan</span></a><span style="font-family: "calibri"; font-size: large;"> (2011), the PAUP is wedded to locating the majority of regional
growth in the existing built-up area. </span><br />
<span style="font-size: x-small;"></span><br />
<div style="margin: 0cm 0cm 8pt;">
<span style="font-family: "calibri"; font-size: large;">Unlike the Regional
Growth Strategy, though, the Unitary Plan had to make the near impossible leap
from principle to practice. That’s where
the high rise vision fell to the ground. </span></div>
<div style="margin: 0cm 0cm 8pt;">
<span style="font-family: "calibri"; font-size: large;"> In order to work, rule-based policies need predictability
in the scale, nature, and timing of population and employment growth. They assume conformity, compliance, and consistency
of response by those they impact on. And
they assume that multiple decisions on business expansion and housing
investment can be nudged to fit the web that a large number of complicated and
often ambiguous rules seek to weave. Good luck with all that.</span></div>
<span style="font-family: "calibri"; font-size: large;">However well the Panel
has done its job, the implementation of the Plan's web of rules is bound
to be source of frustration, costs, and conflict for some time to come.</span><br />
<br />
<div style="margin: 0cm 0cm 8pt;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri"; font-size: x-large;">Mission impossible?</span></b><br />
<span style="font-family: "calibri"; font-size: large;">The very idea of a
single long term plan for a large (16,100sq km), largely rural (</span><a href="http://theplan.theaucklandplan.govt.nz/rural-auckland/"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">over 70%</span></a><span style="font-family: "calibri"; font-size: large;"> of
the landmass) region containing a rapidly growing and </span><a href="http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11213317"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">diversifying</span></a><span style="font-family: "calibri"; font-size: large;">
urban mass is flawed. </span></div>
<span style="font-family: "calibri"; font-size: x-small;"><br /></span>
<span style="font-family: "calibri"; font-size: large;">The challenge is compounded
by the fact that it is </span><b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri"; font-size: large;">unitary</span></b><span style="font-family: "calibri"; font-size: large;"> plan. It tries to cover environmental, economic, cultural, and
social policies in a single document intended to set the long term land use directions -
or constraints – on Auckland’s development when we have little idea of what the
future holds. </span><br />
<span style="font-family: "calibri"; font-size: x-small;"><br /></span>
<span style="font-family: "calibri"; font-size: large;">This suggests that
regardless of the quality of the Panel and its deliberations, the mission was impossible
to start with. A minimalist or at least
more measured and flexible approach to Auckland’s future would have served the region
better.</span><br />
<span style="font-family: "calibri"; font-size: x-small;"><br /></span>
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri"; font-size: x-large;">The real issues</span></b><br />
<span style="font-family: "calibri"; font-size: large;">Auckland faces two underlying
problems that mean a comprehensive plan cannot deliver what its protagonists want
by way of streamlining, clarity, and consistency of decision-making. </span><br />
<br />
<div style="margin: 0cm 0cm 8pt;">
<span style="font-family: "calibri"; font-size: large;">First, Auckland comprises
many </span><a href="http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10837572"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">diverse
communities</span></a><span style="font-family: "calibri"; font-size: large;">, each with its own needs, prospects, and possibilities. Given an increasingly articulate, disparate, media
savvy, and engaged population and galloping technical change, crafting a plan
that will satisfy the many communities, cultures, and interests that comprise
Auckland is well-nigh impossible. </span></div>
<span style="font-family: "calibri"; font-size: large;">Becoming more
authoritarian – more rule dependent – to deliver a vision based on containing the city will increase the challenge of implementing the
plan, increase resistance, and lead to more unexpected outcomes.</span><br />
<br />
<div style="margin: 0cm 0cm 8pt;">
<span style="font-family: "calibri"; font-size: large;">Second, a single unitary
council is simply wrong for Auckland.
Rather than streamlining processes it disempowers constituents. Promised
</span><a href="http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11680592"><span style="color: #0563c1; font-family: "calibri"; font-size: large;">efficiencies
are not delivered</span></a><span style="font-family: "calibri"; font-size: large;">. Costs blow out. Systems become more complicated. Regular restructuring and internal reforms
distract staff. Various subordinate
organisations – branches, divisions, council controlled organisations, even
subcommittees -- take on a life of their own, pulling in different directions. The weight of management increases, compromising
the governance relationship with the board (or council), and the organisation loses
its way. </span><br />
<span style="font-family: "calibri"; font-size: large;"><br /></span></div>
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri"; font-size: x-large;">The elephant in the council chamber</span></b><br />
<span style="font-family: "calibri"; font-size: large;">Large-scale mergers don’t
often work. This one doesn’t look any
different. The Committee for Auckland in its push for a
single city, the Royal Commission on Auckland Governance with its 800-page prescription,
and the Minister for Local Government of the day with his can-do/will-do approach,
all got it wrong. </span><br />
<br />
<div style="margin: 0cm 0cm 8pt;">
<span style="font-family: "calibri"; font-size: large;">They apparently didn’t
reflect on the recent history of the New Zealand corporate sector. This would have shown them that as you push
seemingly complementary organisations together with their different roles,
markets, management practices, and cultures, they tend to become unwieldy, bureaucratic,
slow moving, and ultimately unmanageable.
Our leading businesses in forestry, primary processing, food production,
and development went on a merger spree in the 1970s, only to find themselves
undone and asset stripped in the 1980s and 1990s. </span></div>
<span style="font-family: "calibri"; font-size: large;">No
matter how good a job the Independent Panel has done, a land use plan cannot
remedy the flaws inherent in a large unitary council trying to be all things to
all peoples. </span><br />
<br />
<div style="mso-element: footnote-list;">
<span style="font-size: x-small;"></span><br clear="all" />
<hr align="left" size="1" width="33%" />
<div id="ftn1" style="mso-element: footnote;">
<div style="background: white; margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt;">
<a href="file:///D:/Users/pjmcd_000/Documents/Blogs/Silk%20Purse%20Planning.docx" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span style="font-family: "times new roman" , serif; line-height: 107%;"><span style="color: #0563c1; font-size: x-small;">[1]</span></span></a><span style="font-size: x-small;"> </span><a href="http://www.interest.co.nz/opinion/82745/bernard-hickey-praying-along-reserve-bank-and-government-unitary-plan-now-auckland"><span style="color: #0563c1; font-size: x-small;">Bernard
Hickey</span></a><span style="font-size: x-small;"> documents it:</span><span style="font-size: large;"> </span></div>
<div style="background: white; margin-bottom: 6.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt;">
<span lang="EN" style="color: #333333; font-family: "arial" , sans-serif; font-size: 8.0pt;"><span style="font-size: x-small;">"On
Friday, Auckland's 'Eagle' landed in the offices of the Council and it's a
moment that will prove pivotal in the future of both Auckland and the rest of
the economy. The Independent Hearings Panel on the Auckland Unitary Plan
handed 1,000 of documents, plans and recommendations over to officials after
five years of work, including 249 public meetings and 21,210 pieces of written
feedback.</span></span></div>
<div style="background: white; margin-bottom: 6.0pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 6.0pt;">
<span lang="EN" style="color: #333333; font-family: "arial" , sans-serif; font-size: 8.0pt;"><span style="font-size: x-small;">"There
were 13,394 submissions from members of the public and all sorts of interested
parties covering 1.494 million separate submission points over 249 days of
hearings on 70 separate topics. Submitters made 4,000 appearances and
submitted over 10,000 pieces of evidence".</span></span></div>
<div style="margin: 0cm 0cm 0pt;">
<br /></div>
</div>
</div>
<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike><span style="font-size: large;"></span>Phil McDermotthttp://www.blogger.com/profile/06869744647213369964noreply@blogger.com0tag:blogger.com,1999:blog-7011655232093163642.post-23254203231739287082016-05-19T19:10:00.001+12:002016-05-19T19:28:57.393+12:00Breaching the barricade: the beginning of the end for containing Auckland's growth<i style="mso-bidi-font-style: normal;"><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">After 25
years of opposing indiscriminate urban containment – some of it through this
blog, more through advising clients (including councils) and participating in
Environment Court Hearings – it is pleasing to me to see the growing tide that looks
like sweeping it away.</span><span style="font-size: large; mso-spacerun: yes;"> </span><span style="font-size: large;">This is not a
tide that will block higher density development where that offers
benefits to the households and businesses that may occupy it. But it is a sea change in thinking that promises to restore
a semblance of balance in planning and policy for Auckland City and its
citizens.</span></span></i><br />
<span style="font-size: large;"></span><br />
<div style="margin: 0in 0in 10pt;">
<i style="mso-bidi-font-style: normal;"><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">And this should not just be about houses. It is about the people who occupy them and the communities
they live in.</span><span style="font-size: large; mso-spacerun: yes;"> </span></span></i></div>
<span style="font-size: large;"></span><br />
<div style="margin: 0in 0in 10pt;">
<b style="mso-bidi-font-weight: normal;"><span style="font-size: large; line-height: 115%;">Breaching the
barricade</span></b><br />
<span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">It’s clear that limiting land supply by means of the
Metropolitan Urban Limit (MUL, and now the proposed Rural Urban Boundary) is at the
heart of the Auckland housing crisis – too few homes, over-priced dwellings,
and a growing economic and social divide defined by access to housing.</span><span style="font-size: large; mso-spacerun: yes;"> </span></span></div>
<span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">The housing storm is not only causing social distress and
undermining the liveability of Auckland; it is also influencing the Reserve
Bank’s role in </span><a href="http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11638287"><span style="color: blue; font-family: "calibri"; font-size: large;">monetary
policy</span></a><span style="font-size: large;"> and impinging on public discussion around </span><a href="http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11628403"><span style="color: blue; font-family: "calibri"; font-size: large;">migration
and population policy</span></a><span style="font-size: large;">.</span></span><br />
<span style="font-size: large; line-height: 115%;"><br /></span>
<span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">After two decades of myopic urban policy, this travesty is finally gaining </span><a href="http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11630414"><span style="color: blue; font-family: "calibri"; font-size: large;">widespread
recognition</span></a><span style="font-size: large;"> .</span><span style="font-size: large; mso-spacerun: yes;"> </span><span style="font-size: large;">Today </span><a href="http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11640772"><span style="color: blue; font-family: "calibri"; font-size: large;">politicians
are picking up</span></a><span style="font-size: large;"> on years of analysis by the <a href="http://www.productivity.govt.nz/inquiry-content/1509?stage=4" target="_blank">Productivity Commission</a>, among
others in proposing doing away completely with the MUL.</span><span style="font-size: large; mso-spacerun: yes;"> </span></span><br />
<span style="font-size: large; line-height: 115%;"><br /></span>
<span style="font-size: large; line-height: 115%;">Failure to recognise the simple truth that we need to expand the
city to accommodate an expanding population means that candidates who don’t
change tack could find themselves foundering in the forthcoming council
elections.</span><span style="font-size: large; line-height: 115%;"> </span><br />
<span style="font-size: large;"></span><br />
<div style="margin: 0in 0in 10pt;">
<b style="mso-bidi-font-weight: normal;"><span style="font-size: large; line-height: 115%;">The bigger
picture</span></b><br />
<span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">This is not an Auckland-only debate.</span><span style="font-size: large; mso-spacerun: yes;"> </span><span style="font-size: large;">All OECD nations are experiencing it one way
or another; and even </span><a href="http://cities-matter.blogspot.com.au/2011/07/are-all-cities-born-same.html"><span style="color: blue; font-family: "calibri"; font-size: large;">developing
nations</span></a><span style="font-size: large;"> are confronted by western advisors seeking to transfer this
particular practice to places where it is neither relevant nor appropriate. How
urban policy has got into this mess is another issue for another time.</span></span></div>
<span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">Within New Zealand, plans to compress urban settlement are not
confined to Auckland.</span><span style="font-size: large; mso-spacerun: yes;"> </span><span style="font-size: large;">Containment has
long-been a preoccupation in Canterbury, driving thinking about the shape of Christchurch even though the city has little more than a quarter of the residents of Auckland.</span><span style="font-size: large; mso-spacerun: yes;"> </span><span style="font-size: large;">The compact city policy was hung onto even after earthquakes
destroyed swathes of the inner city and its eastern suburbs.</span><span style="font-size: large; mso-spacerun: yes;"> </span><span style="font-size: large;">It also holds sway in Wellington where the
physical geography and risk profile are hardly conducive to more
intensification. </span></span><br />
<span style="font-size: large;"></span><br />
<div style="margin: 0in 0in 10pt;">
<b style="mso-bidi-font-weight: normal;"><span style="font-size: large; line-height: 115%;">The risks</span></b><br />
<a href="https://www.blogger.com/" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"></a><a href="https://www.blogger.com/" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"></a><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">Now that the Auckland community, through its politicians, is contemplating
changing course, let’s not make the mistake of assuming that this can be done
simply by building more houses.</span><span style="font-size: large; mso-spacerun: yes;"> </span><span style="font-size: large;">It’s
actually about building communities, and repairing the damage done by years of denying the need for more land.</span><span style="font-size: large; mso-spacerun: yes;"> </span><span style="font-size: large;">And it’s about doing so in a
manner that is sympathetic to both the environment and the public pocket.</span></span></div>
<span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">Launching lifeboats does not solve the problem: it simply changes
the risks.</span><span style="font-size: large; mso-spacerun: yes;"> </span><span style="font-size: large;">Take the creation
of Special Housing Areas in Auckland.</span><span style="font-size: large; mso-spacerun: yes;">
</span><span style="font-size: large;">First, there is the collateral damage to the Resource Management Act. Its
credibility and currency are undermined when it has to be bypassed in this
manner.</span><span style="font-size: large; mso-spacerun: yes;"> </span><span style="font-size: large;">That has to be attended to.</span></span><br />
<span style="font-size: large;"></span><br />
<div style="margin: 0in 0in 10pt;">
<span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">Second, and more importantly, we are now faced with proliferating
housing under pressure, much of it sprawling grey over the edge of currently
built up areas, with little regard to the need for local employment, access to
retailing, services, parks and walkways, and green space, or for strong
arterial connections to other parts of the region. </span><span style="font-size: large; mso-spacerun: yes;"> </span><span style="font-size: large;">We risk creating potentially new forms of
deprivation in communities, lacking amenities, physical stranded, and socially isolated.</span></span><br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhjVnjriM-FPdtrnXsgMeLx43NH8yAgDlc43OHmP2VlL2T4iLnGFTLeQF9tVMAohy6xEk1235x-Mhmiyw8a_kOR9YSk6kArlhBpqUH7vgs-bsKctMFnBRkBeB6R7SPBT_ltk8xdG31iNgQ/s1600/Millwater.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="235" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhjVnjriM-FPdtrnXsgMeLx43NH8yAgDlc43OHmP2VlL2T4iLnGFTLeQF9tVMAohy6xEk1235x-Mhmiyw8a_kOR9YSk6kArlhBpqUH7vgs-bsKctMFnBRkBeB6R7SPBT_ltk8xdG31iNgQ/s400/Millwater.jpg" width="400" /></a></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg65DRAte1StqfsQDcWVd3IepxbGlexpc5UMRTJuY0I71jONOVPozONrvZ-Oj-Mpq74YTphpxkVaypFeOtB5DMb7MUvSJ4_vbreuJDoQu-RJUL5eGuhgEc8w0ojM1vRxNSy4mBwzzd6vK0/s1600/Hobsonville+Aerial.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"></a></div>
<span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">The haste with which the Council is rushing through Special Housing
Area approvals risks a shortfall in the quality and capacity of infrastructure.</span><span style="font-size: large; mso-spacerun: yes;"> </span><span style="font-size: large;">And the opportunities SHAs offer for developers
to make rapid commercial headway also raises questions over the quality of
urban design that will be achieved.</span></span></div>
<span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-size: 11.0pt;">
</span>
<b style="mso-bidi-font-weight: normal;"><span style="font-size: large; line-height: 115%;">Some success
stories?</span></b><br />
<span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">That is not to deny examples of well-designed housing areas
with some integration into the fabric of the city.</span><span style="font-size: large; mso-spacerun: yes;"> </span><span style="font-size: large;">Hobsonville Point is the exemplar, but
well-founded developments like this shouldn’t need to rely on special housing status and,
ideally, should be readily achieved under existing legislation.</span><span style="font-size: large; mso-spacerun: yes;"> </span></span><br />
<br />
<span style="color: #001ba0; font-family: "arial" , "sans-serif"; line-height: 115%; text-decoration: none;"><span style="mso-ignore: vglayout;"></span></span><a href="https://www.bing.com/images/search?q=images+hob+sonville+pint&view=detailv2&&id=3468F13D714F979E12B99BD623AA940A281FD865&selectedIndex=124&ccid=GRgZwDKf&simid=608010646760522313&thid=OIP.M191819c0329fdd0b91ce90e3780decf2o0"><span style="color: #001ba0; font-family: "arial" , "sans-serif"; line-height: 115%; text-decoration: none;"><span style="mso-ignore: vglayout;"></span></span></a><br />
<span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">Ironically, the success of such projects results from the
damage already done because they can </span><a href="http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11600097"><span style="color: blue; font-family: "calibri"; font-size: large;">command
high prices</span></a><span style="font-size: large;"> in a market starved for dwellings.</span></span><br />
<span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large; mso-spacerun: yes;"> </span></span><br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi-0g2Al90S3taRbqwlkPPbEy49dZhG3lz8r_6BA-noBIlOy4VpIFjK40w68hDBgdLItc2LhWRDbZKIQELWjt6XTdqPpTdUvMuu78fs6jh4g8BtqUsxl6YlshB8NJc-vEWeqvvufShJ8-c/s1600/Hobsonville+Housing.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: large;"><img border="0" height="192" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi-0g2Al90S3taRbqwlkPPbEy49dZhG3lz8r_6BA-noBIlOy4VpIFjK40w68hDBgdLItc2LhWRDbZKIQELWjt6XTdqPpTdUvMuu78fs6jh4g8BtqUsxl6YlshB8NJc-vEWeqvvufShJ8-c/s640/Hobsonville+Housing.png" width="640" /></span></a></div>
<span style="font-size: large;"></span><br />
<div style="margin: 0in 0in 10pt;">
<span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">Unfortunately, this doesn’t make for affordability relative to
even Auckland City's aspirational <a href="http://ourauckland.aucklandcouncil.govt.nz/articles/media/council/2015/10/action-on-price-to-income-ratio-the-key-issue-for-housing-affordability-says-chief-economist/" target="_blank">cost-to-annual income ratio of 5</a> (compared with the more conventional, and historical 1:3 ratio).</span><span style="font-size: large; mso-spacerun: yes;"> </span></span><br />
<span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-size: 11.0pt;"><br /></span>
<span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">For example, a three bedroom, one garage home
</span><span style="font-size: large; mso-spacerun: yes;"> </span><span style="font-size: large;">in the latest Hobsonville Point release would typically
cost </span><a href="http://www.hobsonvillepoint.co.nz/downloads/Precinct-Price-List-130516.pdf"><span style="color: blue; font-family: "calibri"; font-size: large;">in
excess of $800,000</span></a><span style="font-size: large;">. Four bedroom homes with capacity for two cars are
priced around $1m or more. The recently reported average salary in Auckland</span><span style="font-size: large; mso-spacerun: yes;"> </span><span style="font-size: large;">(of $74,000, which has been labelled
unrealistically high, and no doubt sits well above the median income)
suggests prices well over 10 times the average income for the majority of new
homes in a high density suburb. </span></span></div>
<span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">And even well-designed developments generate substantial traffic
on an already overloaded regional network.</span><span style="font-size: large; mso-spacerun: yes;">
</span><span style="font-size: large;">Hobsonville Point adds to congestion on the under-capacity north-western
motorway. Additional swathes of housing on the Hibiscus Coast are overloading
critical motorway intersections in the north, even as their commuters crawl
past local land long-slated for employment uses that for some reason has
yet to get off the drawing board. </span></span><br />
<span style="font-size: large;"></span><br />
<div style="margin: 0in 0in 10pt;">
<b style="mso-bidi-font-weight: normal;"><span style="font-size: large; line-height: 115%;">Charting the way forward</span></b><br />
<span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">The only way to get new Auckland houses priced anywhere near a price to income ratio of one:five </span><span style="font-size: large;">is not to lift supply in an incremental fashion
behind an arbitrary barricade (a sure recipe for sprawl), or in keeping with potentially </span><a href="http://cities-matter.blogspot.com.au/2016/02/wisdom-or-doctrine-democracy-versus.html"><span style="color: blue; font-family: "calibri"; font-size: large;">spurious
projections of dwellings</span></a><span style="font-size: large;">, or even to toss out Special Housing Areas here
and there.</span><span style="font-size: large; mso-spacerun: yes;"> </span><span style="font-size: large;">It is to open up the supply
of land across the region to the disciplines of the market, subject to some important qualifications.</span></span></div>
<span style="font-size: large;"></span><br />
<div style="margin: 0in 0in 10pt;">
<span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">Doing so should </span><span style="font-size: large;">be innovative, comprehensive development shaped around
the needs of households and communities, rather than by the predilections of a particular
phalanx of planners and their political patrons, </span></span></div>
<span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">At the very least, though, any new housing areas should at the
outset include land for new business investment to absorb and take advantage of
an expanding labour force without obliging commuters to sit for hours in cross-regional traffic. </span><span style="font-size: large; mso-spacerun: yes;"> </span><span style="font-size: large;">This means enabling
large, generously landscaped, high amenity, and readily accessed land for
employment.</span><span style="font-size: large; mso-spacerun: yes;"> </span></span><br />
<span style="font-size: large;"></span><br />
<div style="margin: 0in 0in 10pt;">
<span style="font-size: large; line-height: 115%;">New urban precincts also need adequate community resources by
way of commercial and cultural centres, formal and informal parks, and the
means to access them, on- and off-road.</span></div>
<span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">Finally, it is important to find new ways to fund
development, ways that recognise the long-term benefits to the community as a
whole of investment in modern, efficient infrastructure.</span><span style="font-size: large; mso-spacerun: yes;"> </span><span style="font-size: large;">It is pleasing to see the proposal by the
Labour Party to move towards </span><a href="http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11640374"><span style="color: blue; font-family: "calibri"; font-size: large;">long-term
funding</span></a><span style="font-size: large;"> via bonds which will spread both the costs and the benefits of sensible,
comprehensive development. </span><span style="font-size: large; mso-spacerun: yes;"> </span></span><br />
<span style="font-size: large;"></span><br />
<div style="margin: 0in 0in 10pt;">
<b style="mso-bidi-font-weight: normal;"><span style="font-size: large; line-height: 115%;">Avoiding
the shoals</span></b><br />
<span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;"><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">Breaking down the barricade does not mean that we should sail into uncharted waters.</span></span><br />
<span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;"><br /></span></span>
<span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">Basic building codes and environmental standards will be required to ensure the integrity of development.</span><span style="font-size: large; mso-spacerun: yes;"> </span></span></span><span style="font-size: large;"><br /></span>
<span style="font-size: large;">It is important
that areas of environmental sensitivity beyond the city are flagged.</span><span style="font-size: large; mso-spacerun: yes;"> </span><span style="font-size: large;">Most of them are known – areas of native bush
and regeneration, cultural and heritage land marks, areas of physical
instability, wet lands, reclamations and low-lying coastal zones, flood-prone
river valleys, and the like. Areas of elite, high producing soils that society
particularly values may also be flagged for preservation.</span><br />
<span style="font-size: large;"><br /></span></span><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-size: 11.0pt;"><span style="font-size: large;">But charting these shoals in the course of expansion is a preferable approach to development than
a city anchored </span><span style="font-size: large;">behind a barricade.</span></span></div>
<br />Phil McDermotthttp://www.blogger.com/profile/06869744647213369964noreply@blogger.com0