Is bigger better? Trying to reshape Auckland’s lagging economy

Getting Auckland growing – a national policy imperative

It has become conventional wisdom that New Zealand’s performance depends on Auckland’s economy, and that this in turn depends on agglomeration – the supposed economic advantages associated with large cities. 

But is Auckland really the driver of New Zealand’s growth?  It would be nice if it was, if innovation and investment in urban business was the main source of our prosperity.  And hopefully it will be a major contributor one day.  But the truth is, as I pointed out earlier, the country remains dependent on the fortunes of our non-urban sector. 

So how are we going to wind Auckland up from being a place where consumption and income redistribution are concentrated, to be the focus of national economic growth?

Promoting agglomeration to promote economic development

 Policy advisors make much of the virtues of agglomeration – sheer city size – as a driver of growth. [1] By concentrating in our largest urban area, businesses are presumed to reap productivity benefits.  Is this right?  And is it sufficient to drive national economic performance?

The benefits to firms of locating in large urban areas were first discussed late in the 19^th century by economist Alfred Marshall. The low cost of transactions with nearby businesses, shared access to specialised services and suppliers, a common labour market, and information sharing explain the advantages enjoyed by firms in big cities.

Arguments underpinning agglomeration economies are firmly rooted in the industrial age.  So they are questionable when wealth is associated with services as much as goods, logistics companies integrate international transport, communications are seamless, and capital moves easily to most places in the world.

There is still some statistical evidence to suggest that firms in bigger cities (or states) might grow faster than in smaller ones.  The difficulty, though, is in separating differences in performance from differences in the fine mix of products, services, and occupations that naturaly concentrate in larger cities in response to the larger markets there in a cumlative process that is not necessarily economically rational. 

But does it lend itself to policy?

Despite this, agglomeration theory has been adopted by policy makers in two areas. First, has been promotion of concentrations or clusters of businesses as a growth policy.  Second, compact city advocates argue that a higher density of employment in large cities is a path to higher productivity. 

Leaving aside possible flaws in data, methods, and assumptions, the statistical evidence reveals at most 10% gain in aggregate productivity for a 100% increase in employment density.  More commonly the estimated gain is half that.  Anyway, any estimate is so influenced by method and measurement as to undermine any confidence in policy based on it, as demonstrated in a recent report by Motu Research for the New Zealand Transport Agency. 

Surely there are easier, less costly ways to gain a few percentage points in productivity and output: to do with the quality of the labour force, for example, the quality of investment, or commitment to research and development?

Living in policy dreamland

As far as I can see from reading many international studies on agglomeration, the cost of lifting the capacity of ageing infrastructure within existing urban areas rarely gets a mention.  In trying to reveal cause and effect from within a tangled web of associations, the studies assume away the actual costs of increasing land use densities.  They ignore the quite different circumstances and histories of the cities and states bundled into their samples.  And they often mistakenly infer investor and firm behaviour on the basis of trends among cities. [2]

Transforming the buildings and infrastructure that make up a city to increase land use densities in the hope that businesses will screw more out of their investments is a very costly exercise.  The impact on the quality of urban life is also likely to be unacceptable.  Crowding and congestion, the unreliability of over-capacity and dated infrastructure and network services, and increased risk of service disruption mean that significant increases in density are unlikely to be sustainable even if they can be achieved without a fiscal blow-out.

Quite apart from the economic and political naivety of jumping from quantitative analysis to policy prescription, is bigger better anyway?  A simple look at recent history does not show that it is.

Auckland is already bigger – but is its performance better?

A focus on Auckland’s growth presumes that it is our only city big enough to have an international presence, so that we should focus policy and plans on reaping agglomeration benefits there. 

To explore this presumption we look at how well Auckland has done recently.  In 2000 the region had 32.6% of New Zealand’s employees, nearly two and half times Canterbury’s employment. [3] Surely this spectacular concentration of economic activity would become apparent in Auckland’s superior performance?  if agglomeration economies are to be evident anywhere, they would show up here.

Well, no.  Look at the graph.

Auckland’s employment growth lagged Canterbury’s through to 2010. It lagged non-metropolitan New Zealand (areas outside Auckland, Canterbury and Wellington).  And when the global financial crisis hit in 2007, Auckland’s employment fell faster.  Even Wellington, trailing early in the decade, was not hit as hard, down just 0.7% from 2007 to 2010 compared with Auckland’s negative 2.8%.

Naturally Auckland still dominated national employment in 2010 (32.4% of the total), but according to the theory that dominance should have increased not diminished.

So how do we explain this?

First, maybe the economic benefits of agglomeration are overstated.  Tthe empirical evidence tends to be generalised and static.  Despite the growing complexity and apparent precision of analyses, the causal impact on firm performance of lifting urban densities remains fuzzy and trivial. They are a weak foundation for policy.

Second, I suspect that all those factors assumed away in the analyses are actually important in the real world.  We cannot exclude the physical environment of individual cities, their history, the condition of sunk capital (public and private), different regulatory environments firms, and stocks of human capital, skills, and experience. To assume that proximity and density have a predominant influence over the investment and operation of firms seems naive.  And we cannot ignore the external costs of over-concentration.

Third, what if it really works? What if the secret of economic growth is simply being the biggest city? And at the sam time, what if breaking down economic barriers means that the advantage of size is measured across nations, not just within them?  Where does this leave Auckland?

New Zealand economy’s is increasingly integrated with Australia’s. Labour, capital, goods and services move relatively easily between the two countries.  Where does New Zealand stand in an Australasian urban system?  The second graph gives us some clues. Look at where Auckland stands in the bigger picture.

Australia’s metropolitan areas outperformed their New Zealand counterparts between 2000 and 2007. [4] In percentage terms, Sydney was a bit of a laggard.  But this simply confirms that being biggest is no guarantee of top performance.  Melbourne outstripped both Auckland and Sydney. 

More interesting were the second tier cities, Brisbane and Perth. With just 12% of Australasian metropolitan employment in 2000, Brisbane accounted for 18% of its growth!  Compare this with Sydney: with 29% of employees in 2000, it accounted for just 22% of subsequent growth.

Auckland had 7.8% of Australasian metropolitan employment in 2000 but accounted for only 7.1% of growth, significantly less than Perth (11.8%) and a little more than Adelaide (6.8%). 

Two simple conclusions 

One, in a global economy we cannot reap greater economic benefits from urban agglomeration than our Australian (or, especially, our Asian) neighbours. Being the biggest city in New Zealand offers no particular advantage in an international economy.  We have to find a different way.

Two, in both Australia and New Zealand, being biggest does not guarantee topping the economic performance tables.  Let’s do what needs to be done to make Auckland a great place to do business.  But size is certainly not everything in these stakes.

Sure, these are broad comparisons based on general data, but if we think that promoting agglomeration holds the policy key to Auckland’s – and New Zealand’s – economic performance, we need to think again.

[1]        E.g., Ascari Partners (2007) Assessing Agglomeration Impacts in Auckland: Linkages with Regional Strategies, Report to Auckland Regional Council

[2]           It is a mistake to infer the behaviour of individuals from the behaviour of populations, the so-called ecological fallacy. There are exceptions, e.g., David Mare’s Labour Productivity in Auckland Firms deals with micro-level data in an attempt to reveal the impact on individual firms of locating in Auckland

[3]           Based on employment data from the Statistics New Zealand Business Directory. 

[4]           Labour market data is for the major statistical regions in February so that the figures are broadly comparable with the New Zealand Business Directory figures.

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Think Big – the Sequel?

Preparing Auckland's Spatial Plan

The New Zealand Herald recently profiled the man who will oversee Auckland’s spatial plan.  Roger Blakeley has had an impressive career.  His new job is the latest in a series of senior career shifts which equip him well to oversee preparation of a thirty year plan for the region. 

However, Reporter Bernard Orsman only picked up on the last twenty years or so of Dr Blakely’s career.  He omitted his presumably formative early years at the Ministry of Works and Development. It’s worth raising what the Ministry stood for then, and what it might teach us now.

New Zealand’s Legacy of Central Development Planning

The Ministry was New Zealand’s super-planning and construction arm of government.  Founded as the Public Works Department in 1886, it operated as the agency of national development until dismantled by the Labour government 110 years later.  During that time it conceived and developed the nation’s transport and electricity infrastructure, designed and built schools, hospitals, and other public buildings.  It operated through seven large regional offices, a legacy of New Zealand’s provincial beginnings.

It was a highly centralised but effective agency, appropriate for a youthful, under-populated country with scarce human resources dispersed across a difficult physical environment.  It set upon developing its emerging urban centres with their ports, airport, growing populations and industry, and opening up provinces through rail and road in a reasonably balanced manner.  It build dams and power houses in remote areas and reticulated electricity throughout the land.  It dominated the planning and construction of public infrastructure for most of the 20^th century.

Think Big and National Development - a late experiment in central planning

Like me, Dr Blakely will probably recall that in the late 1970s and early 1980s when the Ministry was the logical arm of government to provide services to the Minister of National Development and “Think Big”.  This was the centrally conceived and designed programme intended to lift New Zealand out of the economic doldrums with a series of substantial capital projects to increase self-sufficiency in liquid fuels, exploit the Maui gas deposit, and lift foreign exchange earnings.

Like Auckland’s proposed spatial plan today, Think Big 20 years ago had a long-term time frame.  It was a programme of what, for the time and place, were massive publicly-sponsored industrial works.  They were born of a narrow and largely political consensus out of an ostensibly conservative government. This consensus was strong enough to over-ride early concerns of the Liquid Fuels Trust Board – the assembly of public and private sector experts appointed to oversee the core projects– regarding the economic efficiency of some of the projects.

Consequently, the Board developed a priority list reflecting instead “strategic” and other non-economic criteria to justify fast tracking the programme under the National Development Act. 

The result was the ill-fated Motunui Synfuels plant, and a host of supplementary projects.  These may have provided a Keynesian-style boost to the economy through construction impacts.  Unfortunately, their economics foundered on (among other things) what proved to be a seriously flawed assumption that oil prices would continue to escalate over the coming decade. 

There has been no real attempt to measure the impact of the Think Big programme, and views remain divided [1].  Commercially the results were poor, and the impact on both the government deficit and the foreign exchange account negative.  There may have been other costs, as well, through such things as inefficient use of the Maui gas resource and under-pricing of electricity generating capacity for expansion of the Bluff aluminium smelter.

So what are the lessons for a 30 Year Spatial Plan?

No doubt there are lessons from the MWD and Think Big that Dr Blakeley with his early experience in the Ministry of Works and Development can reflect on for Auckland’s planning. 

For example, ill conceived plans, centralised plans, and plans prepared in haste, may be more costly than no plans at all.  A decade is a very long time in forecasting project outcomes.  Uncertainty is not something to be assumed away – the consequences of getting it wrong should inform every big decision.  Flexibility and resilience needs to be built into projects.  Fall back positions need to be left open. 

Economic efficiency is over-ridden at a cost: the rationale for projects and plans that do not stack up in terms of economic benefits needs to be both transparent and robust.  Plans and projects should be firmly grounded in analysis and evidence, and not simply emerge from workshops, caucusing, consensus among colleagues, and group think.  

The National Infrastructure Plan and Auckland’s Spatial Plan – Think Big reborn?

The risks of getting the spatial plan wrong in Auckland are high, especially if it shapes infrastructure spending.  We can ill afford over-investment or investment in the wrong projects or wrong places.

The risks are likely to be even more critical in a spatial plan in which infrastructure is seen as playing a formative role.  This may well be the case.  Richard Forgan, executive director of the recently formed National Infrastructure Unit, suggested at a seminar conducted by the Institute of Public Administration (IPANZ) in Auckland recently that spatial plan may be where the National Infrastructure Plan is given expression. [2] 

Based on his diverse experience, and no doubt the experience of the team he has assembled, Dr Blakeley will recognise, though, that infrastructure exists only to serve the reasonably foreseeable needs of communities and their businesses.  Infrastructure cannot be imposed from the top down but should reflect a realistic understanding of development trends, prospects, and possibilities, and their land use consequences.  Poorly conceived, centralised plans can undermine society’s wealth.   Perhaps that is why the Ministry of Works and Development was seen in the 1980s as past its use by date.  Let’s not resurrect it in a different form in Auckland.

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[1]          http://en.wikipedia.org/wiki/Think_Big,  www.techhistory.co.nz/ThinkBig/Petrochemical%20Decisions.htm

[2]          The National Infrastructure Unit is based in Treasury.  It is responsible for preparing a National Infrastructure Plan, with a board of appointed experts from the private and public sectors overseeing it.  Sound familiar?

Paris in the Antipodes

Is Auckland’s spatial plan already drafted?

The new Chief Planning Officer has revealed his vision for Auckland in an interview with Bernard Orsman in the New Zealand Herald.  Dr Blakely is promising “dialogue with Aucklanders to develop a ‘high-level and strategic’ plan”.  However, he has apparently already adopted as a starting point that the city will have to accommodate an extra 600,000 people by 2031 .  This projection reflects assumptions about such things as fertility, mortality, residential preferences and, most of all, migration. 

Assuming that these will prevail over the next thirty years is a bold basis for vision building. Is it one which would emerge from “dialogue with Aucklanders” though?

Of course, there is a circular argument here. The spatial plan could have a significant impact on how rapidly Auckland’s population grows, especially through its impact on that most volatile of demographic drivers, migration.  Will it make Auckland a more attractive place to live?

Here Dr Blakely introduces a further vision: the city “cannot keep spreading outwards indefinitely, but needs to improve the quality of urban intensification”.  He even suggests what this might look like:  “There is no reason, he says, why Auckland cannot follow cities such as Paris, with low-cost, high-quality medium-density housing”.

Which Paris?

Like many others lucky enough to have got there, I love Paris, the largest tourist destination in the world. But I live in Auckland.  And the two are a world apart.

While it is not clear whether Dr Blakely is referring to the entire metropolitan area – the Ile de France, comprising eight departments and the city of Paris – or just the City, with its 20 locally elected mayors accountable to the Mayor of Paris. THe distinction is important. 

The metropolitan area has close to 12 million people at a density of around 975 people per square kilometre.  Paris City has a little over 2 million at a density of over 20,800 people per square kilometre.  I am not sure that Aucklanders would aspire to either. [1]

In any case, history and geography don’t lend themselves to such a comparison. Paris, built on a plain, has 2,000+ years on us for a start.

Lessons from Paris?

Interestingly, though, its modern history is one of decentralisation and declining densities.
Paris was remodelled in the mid 19^th century at the time of the second republic.  Visionary prefect Baron Haussmann oversaw the demolition of the crowded medieval settlement of perhaps 1,000,000 people on the banks of the Seine, and its replacement with the wide, radiating boulevards, parks, public spaces, and medium-rise architecture that make the City of Paris what it is today.  It is a light, open city, designed for street living, but one which has proven itself capable of catering for the age of mass private and public transport.

The 20th century saw the next noteable phase of Parisian urbanisation, the rapid extension of the metropolitan area beyond the City.  The City's population peaked in the early 1930s at around 2.9m people, but has declined, by 25% or 730,000 people by 2005.   In contrast, the balance of the urban area expanded by 5.2m.[2]  This saw the absorption of surrounding settlements and the development of leafy, low density suburbs facilitated by the extension of public transport, especially the metro, and freeways. 

The ageing of some of the early town centres in the inner ring suburbs has seen a different dynamic emerge in the 21st century. This is where medium to high rise apartments were erected late in the previous century to house poorer communities, especially immigrant communities. Because they have been consigned to ageing centres in this way, their residents are often remote from work opportunities.  Consequently, poverty has become concentrated in high density. older inner suburbs outside the central city, suburbs which in 2005 became the new setting for urban riots in Paris.

Let’s hope this is not a parallel that arises if Auckland chooses to focus high density housing in ageing suburbs or centres.  Much more imagination is called for both to reinvigorate these areas and to house our expanding population.

Lessons from Auckland

Perhaps there are lessons to be learnt from Paris. 

But let’s first acknowledge the history and geography of our own city before adopting prescriptions from others.  Auckland is a built on an isthmus.  It is 150km from north to south, less than 5km across at its narrowest point.  It is constrained by harbours, estuaries and creeks, by hills and ranges.  

This geography shaped the early city, with the bulk of 19th century development on an isthmus within an isthmus, the old Auckland City.  Extension along the Great South Road was driven first by a colonial commitment to subjugating disaffected indigenous people, and subsequently alienating and cultivating their fertile lands.  This southern orientation was extended by Auckland’s role first as an export port for the food and materials produced by the new colony, and then in the 20^th century as the principal point of entry for imports and, consequently, for manufacturing import substitutes and distributing them to the rest of the country.

Orientation to the south was reinforced for the most of Auckland’s history by the barrier of Waitemata Harbour.  Settlement on the North Shore was confined to the nautical town of Devonport, parts of the East Coast Bays accessible by boat, and the resorts of Browns Bay,  Orewa, and Waiwera.  Only after the Second World War did serious settlement on the North Shore begin and only after construction of the Auckland Harbour Bridge did that trickle turn into a flood.  At that point, Auckland began to realise its potential as a linear city, one which might evolve around State Highway 1 into a series of linked centres each offering easy access to country and coast

The essence of Auckland

Most obviously, though, Auckland, is a maritime city, its appeal, its edges, and its possibilities heavily influenced by the sea. Many of its people have travelled over the sea, and continue to do so, to arrive and settle somewhere remote, mild of climate, and intrinsically attractive. They have brought with them diverse cultures.   They have come to a region with a history of outdoor living. 

Perhaps all that has to change, but in changing it, we need to be sensitive to where we are coming from as well as where we are going to.  We will not be able to replicate Parisian street life on an Auckland map.  We may, however, be able to retain and extend the qualities of suburban open space, build the character of urban villages, and avoid the alienation and dislocation that arises from imposing a new model over the old.

Start with who we are and what we’ve got

Let’s start our spatial planning with an appreciation of where we have come from, and of the values that evolve in an environment where urbanisation has been shaped by a geography, history and culture quite removed from those of cities elsewhere. 

We can learn from overseas experience, but we do not have to emulate it. For the moment, we may have heard more than enough from Portland, Seattle, Vancouver, Brisbane and Paris.  Me too-ism and echoes of other cities are not what will make this a more attractive place to live. We need more than dialogue around received wisdoms.  It is time to look and listen to what will work for Auckland. 

[1] Of course, density is, to some extent, in the eye of the beholder.  How urban boundaries are determined, what water bodies and parks are included, where edges are drawn – via administrative boundaries in the above figures but it could be according to contiguous development –all make a difference. Based on continuous and contiguous urban areas, the Demographia analysis places metropolitan Paris’ density at 3,300 and Auckland’s at 2,200 people per square kilometre.

[2] Based on http://en.wikipedia.org/wiki/Demographics_of_Paris

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Avoiding scelrosis in a super sized council

Is bigger better, or simply more bureaucratic?

Technically, bureaucracy is the rational response to size in organisations.  As organisations get bigger, particular structures and processes are needed to ensure equity and even handedness, and to avoid service failures .  Consistency and predictability become everything.  Quite simply, more and more resources need to be committed to internal management, including more managers of managers. 

As a result, large organisations become slow moving and resist change as internal relationships and established ways of doing things dictate their response to changing market conditions.

The ups and downs of organisational performance

This explains the widely observed U-curve describing organisational performance.  As they  grow organisations are initially able to reduce costs by increasing the volume of transactions – products manufactured, sales made, or services delivered – faster than they increase costs.  They do this by more effective use of people, machines, or distribution channels, by better buying, easier access to capital, and investing in machinery, people, and processes to improve how they do things. 

But at a certain point costs start to increase faster than transactions.  The specialisation of functions which helped achieve scale economies begins to get in the way of internal coordination.  Fixed costs -- in buildings, plant and machinery – increase and cannot be readily reduced to offset a slowdown in demand or stronger competition. Large workforces and long-standing labour agreements reduce the ability to adjust to changing circumstances.  At the professional and management level, silos emerge and internal communications can become a sticking point.

Organisational implosions - some industry examples

Consequently, if tastes change, new markets emerge or old ones decline, technology advances, or new regulatory rules come into play, large, bureaucratic organisations struggle to respond.  Smaller, more flexible organisations emerge to fill the gap.

I have seen this in a number of industries I have worked in over the years.  New Zealand’s meat processing sector is one.  The  forestry sector is another, international aviation yet another. 

The recent tribulations of the US automobile industry also come to mind.  Any long-established industry dominated by large organisations subject to changing external demands is vulnerable, with long-established brands and dominant players suddenly collapsing – or propped up by hapless taxpayers – as the world around them changes.

How to respond?

There are ways to avoid organisational sclerosis – but they don’t always work.  Matrix management is a complicated and not especially effective attempt to align external functions across internal divisions.  The creation of special project teams within organisations is another response, restructuring another.  These, though, may simply delay the inevitable.  Breaking up an overgrown organisation is the most common end point, voluntary or not. 

Diseconomies of scale in local government

It is widely argued that local government operates on a U-shaped cost curve . When we researched local government in the 1980s, the literature suggested that the optimum size for a council was one with a population of between 80,000 and 180,000.  The precise point depended on the range of functions and was difficult to pin down.  Maybe administering a population of 180,000, even 200,000 is a good guide for a maximum council size today.  [1]

Working with experienced local government management we established why this happens.  As councils have to deal with an increasing number of residents and businesses, they simply need more employees and skills.  They need more managers based on simple organisational precepts like limiting spans of control. 

As demands proliferate across communities, the range of specialisations required also expands.  Internal communications become a growing challenge.  Larger councils rely on increasing delegation.  This in turn leads to a reduction in the autonomy of staff and an increase in rules to maintain consistent outcomes - the classic bureaucratic response to scale. Initiative at the front line diminishes, and with it responsiveness and client satisfaction.  Constituents become further removed from representatives.  Senior managers operate increasingly through intermediaries.

Councils falling out of touch

This is born out by my experience working with councils throughout New Zealand.  In the economic fields, for example, large councils find out what is happening by commissioning reports – often from consultants whose role is to inform the analysts whose role it is to inform the managers whose role it is to inform the politicians. Politicians’ and managers’ external contacts are more likely to be with the secretaries of business associations, chambers of commerce, or lobby groups than with the people actually doing the business. 

By way of contrast, in smaller councils, politicians and senior managers sit down with local business people to discuss what is happening and what they may require of the council.

In community development, large councils commission reports, conduct internal workshops, and hold meetings with other agencies.  Staff who work well out there with the community come inside to become managers.  By contrast, the staff who work well with the community in small councils continue to do just that, work with the community.  Door knocking is their main mode of operation.

So what can Auckland City do?

So where does this leave the new Auckland unitary council, with a population going on for 1.5 million? 

There may be ways to avoid the premature ageing associated with the bureaucratic processes required to keep a large organisation on an even keel.  Key network, infrastructure and developmental tasks have already been hived off into Community Controlled Organisations. The challenge here is for the council is to take advantage of any efficiencies resulting while maintaining consistency of direction across these "external" silos as well as the traditional internal silos based on functional and professional affiliations.

While there is some hope that the spatial plan will provide a mechanism for cutting across the council's internal and external structures, it will take strong governance  to ensure that the service tails don’t wag the policy dog.

And what of the rest of the council’s functions, those that most impact on the quality of places within Auckland?  The key may lie in part in the local board structure.  How far will the council dare to delegate to local boards responsibility for defining and delivering the services appropriate to individual communities?  And how far might it manage to engage the communities themselves in their own governance? 

Creating a form of local government that can deliver services effectively from within the large council structure visited on Aucklanders by the recent reform is the challenge, both an organisational one and a fiscal one .  Failure to meet it effectively might well see the reform process revisited in the not-too-distant future.

[1]             The statistical analyses give mixed results because they are so context-dependent.  However, there is generally agreement that big is not necessarily better in local government.  See the work by Brian Dollery in Australia, for example,

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Whither local democracy?

Central Government Retains its Hold

The Minister of Local Government is reported in the New Zealand Herald to be considering establishing a committee of Cabinet with the power to make decisions over Auckland matters.  This echoes a suggestion by the Royal Commission on Auckland Governance.  It emerges though at this last minute as yet another in a series of convoluted arrangements made in response to the contested decision-making that has been a feature of local governance Auckland.

The reason for this proposal is that the new Auckland Council will have to deal with a large range of government departments.  But so does every other council.  Perhaps the real problem is that the new arrangements reveal the fragmentation of central government.  If so, why the special treatment for Auckland?  While it is by far the biggest local council that government has to deal with, that does not mean that Auckland’s problems are necessarily more complex than those of councils elsewhere.  In fact, consolidation into a unitary council was meant to have strengthened local capacity to deal with any issues that might be holding back the region’s development.

Coupled with the way in which the Minister has stage-managed the implementation of reform, from the time he issued a brief government response – Making Auckland Greater – usurping the Commission’s tome, through the appointment of the transition agency and the local government commissioner, to the three Acts of Parliament defining the structure of the new council, this reform has been driven from Wellington.  Appointments to the boards of the Council Controlled Organisations responsible for infrastructure and network services were also made by the Minister.  And now it has been announced that both the Minister and Prime Minister are addressing the inaugural meeting of the new council, something that journalist Brian Rudman suggests is “intimidating”.

Wellington in Auckland

Certainly, scale means Auckland’s economic performance makes it a focus of government attention.  But this was addressed in 2005 by the establishment of the Government Urban and Economic Development Office (GUEDO).  This included personnel from the Ministries of Economic Development, Transport, Environment, and the Department of Labour (DOL) “to achieve greater alignment of Government priorities and effort towards sustainable urban and economic development of the Auckland region”. 

The office joined the frenzy of reporting and caucusing about Auckland’s economic development, working closely with the Auckland Regional Council on a series of projects aimed at defining the “Auckland problem” and finding ways of resolving it. The results are not yet obvious as the region has continued to underperform the rest of the country in terms of employment growth, most evident in a 3.6% contraction between February 2008 and February 2009, compared with 2.3% for the rest of the country.

In 2010, joining the spirit of reform that took over the region, GUEDO changed its name to the Auckland Policy Office to reflect a “broader role in developing and implementing government policy in Auckland”.  Today central government’s Auckland Policy Office incorporates the Departments of Internal Affairs, the Prime Minister and Cabinet, Building and Housing, Treasury, the State Services Commission, the Ministries of Social Development and Culture and Heritage, the Securities Commission and the Environmental Protection Agency. Only a minority of these departments have staff in the Auckland office.  However, the APO is overseen by a committee of the departmental chief executives, suggesting that there should already be an appreciation in Wellington of Auckland issues and coordinated departmental positions on how to respond to Auckland initiatives.  What more do we need?

Another sign of Wellington’s growing presence in Auckland is the growth in central government administration in the region, with the numbers up by 60% over the past decade, to 6,100 compared with 4,710 in local government. (These figures do not include employees within operative services, including hospitals, schools, or water supply).  Even the central government bureaucracy in Wellington did not grow at such a rate, although it still managed to expand employment by 47% over a decade in which the capital’s total employment only grew by 17%.

Structural Change and Contested Decision-Making

One thread behind the creation of one council was the difficulty in getting agreement on major infrastructure projects – the region’s debate over and consequent rejection of the central government’s proposal to turn a large area of the waterfront into a rugby stadium being the obvious example.  Yet even after reform it seems that Auckland’s capacity to make its own decisions will still ride heavily on central government advice, agenda, and approval.  

But by raising the contestability of regional decisions to the national level, is there any guarantee of better outcomes for Auckland and Aucklanders?

Delivering on a Community Mandate

At least the “almost-local” ward electoral system and the creation of local boards in the new arrangement has created an opportunity for communities to be heard, and for this concession we should be grateful.  As it is, the representative system first time around was not to be denied, with a community-grounded platform prevailing in the mayoral election.  It remains to be seen how far the Mayor, Len Brown, can marry a community mandate with a structure in which economic rationality was intended to prevail.  And how far central government will support this, the local electorates’ preference, remains an unknown.

So in Auckland how far the representative system will deliver local democracy depends, still, on the leaning of a minority (if popular) mayor, and on central government designs.  Commentators watch with anticipation the capacity of our new mayor and council to deliver, and to deliver quickly, if they are to survive the next election. There is not much new in this.  It is how electoral politics works.

However, for local democracy to be truly and consistently served, it may be that the best form of governance comes from empowering communities to assist with decisions and, even more, perhaps, to deliver them. With the removal of physical infrastructure services and economic initiative to CCOs, the time might be ripe for a community development mandate to be addressed.  This can be done as much through developing the capacity of communities to implement what they want and not simply to define it. 

The issue may not be so much of what can we give communities, Mr Mayor, but how can we help our communities to serve themselves? This is a long way from the model imposed from the centre, but not beyond the reach of a new Auckland.  It is the way to true local democracy which perhaps, just perhaps, the new arrangements have opened up.  The alternative is to be looking always over our shoulder at central government.

Deskilling the super services

The new super services

Journalism has broken its barriers, with mass journalism on the net the new reality.  IT numbers are exploding as applications proliferate.  Pilot numbers just keep on going up, even through the collapse of airlines and recession.  Actors are on the march as Hollywood studios fade out behind the assault of animation and global production locations.  Medical technicians - radiographers, laboratory workers – can wind down the health sector by their industrial action.  At the same time, medical assistants not doctors are increasingly attending the sick.  Could these things be related?

It is a paradox of technology that as it advances, so it demystifies, and so it allows more and more people into what were once very exclusive clubs.

Pre-packaged expertise

The world of machinery, machine tools, and automation that deskilled industrial production over the past century, that broke the power of many industrial trades, today has parallels among the services.  The result is that expertise that can be relatively easily replicated and taught in bite-sized chunks replaces the more prolonged intellectual training that has been the mark of high order services and professions.

Medical diagnosis that was once the preserve of high intellect, keen intuition, and years of dedication is now simplified, facilitated, accelerated by instruments operated and read by technicians.  Airline pilots today require the capacity to read and respond to computers more than to understand and manage the vagaries of a flying machine, or to read the weather and keep a watchful eye on the world outside the cockpit. 

Computer programmes are most likely to be based on databases or specialised applications or compiled from open code, several steps closer to everyday language than the arcane source codes and machine language that was once the programmers’ obscure domain. 

The design of grand buildings – and not so grand ones – is no longer a cross–over between artist and engineer.  Computers programmes bypass the creative doodling, figuring and skilled drafting of architects.  Even the mechanics of auto maintenance require a capacity to read instruments rather than to understand all the intricacies of the internal combustion engine.  Lawyers can lean on computers to scan and analyse cases or highlight the subtleties of legislation rather than on librarians and late nights to painstakingly compile ever more complex cases .

Policy analysis and the management of the state itself, once the preserve of refined graduates of refined universities, is now the plaything of legions of social scientists of various persuasions.

We can all have more

So what does all this mean?  Among other things, it means that more people have access to more services.  It means that services once available only to the rich are now available to the masses.  It means that the exclusivity of the most qualified and the most excellent in delivering services is diminished as the capacity of technology and technicians takes over.  It may also mean that our expectations of services – to travel comfortably and arrive safely, to be made well, to live in light and comfort, or to be entertained extravagantly -- have increased.

It may also mean the democratisation of services.  On the one hand, we have a greater expectation that our expectations will be fulfilled.  On the other, practices which were once the preserve of the highly educated and skilled are now subject to industrial action.

But where does it come from?

This all raises the question of where the creative capacity behind the deskilling of the service sector lies.  Is it in the hands of a continuing cadre of bright academics and thinkers, the super nerds?  Does it lie deep within the laboratories of multinational firms?  Or is the necessary insight and innovation most likely to come from the creative fringes of entrepreneurship?  The answer probably covers all these categories and more.  It may be just a small subset of Richard Florida's transformative creative class, the truly creative core of an expanding sector service providers.  

What does it mean?

The issues raised by the demystifying and democratising of higher order services are associated with the nature of development.  Here are some possibilities:

(1)    High order services are moving at an increasing rate through the cycle of innovation, development, and delivery.  They have their own momentum as we seek and are delivered ever increasing applications of services.

(2)    High order services are unhinged from their social and geographical centres.  More people in more places can benefit from the enhanced living standards they offer.  In this respect they promise a degree of social levelling.

(3)    They involve a shift from personal to corporate supply.  The simplification and replicability associated with deskilling formerly highly skilled services means that they are more likely to be supplied by larger organisations, while still offering opportunities for small niche providers to provide specialist applications.

(4)    As the general level of skills in a profession rises through the intrusion of technology, so a small cadre of super skilled rise even further – the super specialist fulfilling new demands: the highly specialised surgeon, the international expert in environmental law, or the reporter with years spent on the front line providing globally syndicated columns on international affairs.

(5)    High order services can be delivered from anywhere to anywhere with relative ease.  They may no longer be a marker of social progress, to be developed and delivered from the largest cities or most developed nations.

All of this seems to be about growing demand as monopoly over supply is diminished.  There will still be instances where the new technicians may withdraw their labour, however, in a fashion unheard of among their professional predecessors.  At that point an increased level of societal dependence on the newly democratised services might become evident.  But it is more likely that the excessive incomes associated with highly specialised services will themselves diminish.

City matters

And what are the implications for our cities?  We can draw analogies from the history of production perhaps.  The diminishing importance of accessibility as new channels of distribution come into being .  The capacity to offer services from remote, low cost locations .  While this suggests the prospect of diminished travel for services, another prospect may be that proliferation of higher order services increases demand for local, regional, national, and international movement.  It may also contribute to the decentralisation of populations to the extent that dependence on metropolitan institutions diminishes.

There may also be a further spread of incomes as the growing body of service experts, the new technicians, increase their share of wealth while those without the skills are left to the low-paid low-level maintenance jobs, and low service suburbs. 

Do we need a solution?

Having made a prognosis the temptation here is to suggest an outcome.  Having diagnosed a problem, perhaps, to suggest a remedy.  Having identified an area of uncertainty, to propose a policy.  But no.  Having been somewhat skimpy on analysis, I had better leave that to the experts.