Auckland facing Hobson’s Choice: Expansion or Implosion?

Choosing Auckland

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

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

The emergence of New Zealand’s first city

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

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

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

Primacy in the 21^st century
The cumulative advantages of scale served Auckland well.  Although still a small city globally (347^th 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.

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

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

Reaching choke point?

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

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

Externalities abounding

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

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

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

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

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

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

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

It’s the geography, Stupid

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

This strategy flies in the face of Auckland’s geography and the natural constraints it imposes.  It raises the prospect of fiscal failure for the council because it requires high cost works with limited if any productivity gains while compounding depreciation, maintenance, capital and servicing liabilities. 

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.  And any slowdown would only compound the city’s fiscal miseries.

Hobson’s choice

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

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

Not Another Downtown Sports Stadium? How Many White Elephants do we Need?

More Monumentalism
I’ve said it before but it looks like it needs saying again: Auckland does not need a new downtown stadium. (Actually,the  last time I said it I was talking about convention centres.  But the principles, and the downsides, are much the same).

Somewhat surprisingly, then, new Auckland Mayor Phil Goff, who is clearly concerned about the risk to the city's fiscal position in the face of a ballooning transport and infrastructure spend, has revived the idea of a waterfront stadium.  This by one of the steadier, more rational, and experienced members of the last Labour Government: what was he thinking? 

Through Council Controlled Organisation, Regional Facilities Auckland (RFA), Mr Goff has commissioned a pre-feasibility study 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.

The answer in four

I’m not sure much work is required to demonstrate:

(1) Stadiums do not pay their way 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;

(2)  Through expensive stadiums ratepayers end up subsidising professional sports teams;

(3) Where downtown and waterside locations are growing new stadiums are an uneconomic use of valuable land;

(4) 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.

In short, a quick review of the existing evidence would save ratepayers' money even on a pre-feasibility report.

How to pay?
The evidence suggests that we can't.

The 2016 RFA annual report 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: 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. 

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.

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. 

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.

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.  The experience in the US, the apex of professional sports, is quite compelling; the major leagues free ride on local government funded stadiums. 

Little surprise, then, that the New Zealand Government is not interested in contributing to the guesstimated $1bn price tag.

So what are the benefits???
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.

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 negligible if not negative. This is  despite the benefits touted by the beneficiaries: the sports codes, the development sector, the city boosters and, dare I say it, the consultants (see, for example,  Sanders H, 2002, “Convention Myths and Realities: a Critical Review of Convention Center Feasibility Studies”, Economic Development Quarterly).

Transforming downtown?

The urban transformation effects are more often than not illusory.  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 Central Rail Link. 

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.

(And quite apart from any operating disadvantages, the rectangular stadium structure favoured by Mr Goff will exacerbate the creation of dead spaces around it).

Seeking a better city? Do better with what we’ve got
Certainly, there is a need to rationalise our existing stadiums, to focus on getting costs down and revenue up. RFA has been looking at the options for some time now.

The ideal strategy at this time in the city's development 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.   

Throwing a downtown stadium into the mix is simply going to hinder progress.

Why the distraction?
It’s not just the capital outlay that would contribute to the City’s indebtedness and put more pressure on the city’s credit rating. Long-term operating, maintenance and depreciation costs will be substantial.  The risks this raises are enough to say don't even think about going there.

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. 

If we are going to throw money at things that make a difference, let's start by cleaning up the city’s sewage overflows, sorting out stormwater network problems, or by lifting our commitment to resolving ever-increasing transport and housing issues.

Breaking Through and Moving on: Beginnings of a New Plan for Auckland

The Break Through
After years of pushing the compact city fallacy and ignoring the obvious approach 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.  The New Zealand Herald 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.” A range of smaller rural settlements has also been identified for further development, spread over 130km from north to south. 

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.  After all, there is only so much that can be crammed into the current urban area, especially in central Auckland. without destroying its appeal.  Apartments in the suburbs, the latest battlefield for entrenched urban planning, is least popular of all options.

We’re not there yet, but momentum is gathering for moving Auckland into a sustainable future. 

Breaking with the past makes sense
The ground has been giving for a while now.  The conceit of planning by projection is clear as migration figures deviate wildly from the analysts’ assumptions.  The estimates of housing supply underlying the Unitary Plan are demonstrably spurious.  The impacts of intensification on air and water quality and nature in the city are now coming to be realised.  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.

The advantages
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.  So, to change my tack, here are some advantages of the new direction towards satellite cities and settlements.  It provides:

·       The opportunity to develop attractive, affordable 21^st 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;

·        Better access to nature, greenspace, clean air, cycleways and trails, and recreational amenities;

·        Consequently, better health – an antidote for the urban epidemic of obesity;

·        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;

·        Pressure off traffic congestion in the urban area;

·        Protection and restoration of community life –an alternative to the transience and anomie of apartment living;

·        A chance to focus on quality development in existing suburbs 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.

·        Urban form better suited to limiting the impact of extremeevents (mainly associated with climate change, but there is an increase in fretting over Auckland’s volcanic field), reducing over-concentration of resources, people and infrastructure, and an improved capacity to recover from disasters with dispersed development.

The provisos
Will all these good things come to pass?  Here are four provisos we need to consider as we allow our “pearls on a string” to expand:

(1)  Ensure that the mini cities have adequate commercial and employment land and in doing so avoid applying 20^th century views of what should be where on that land, and how densely it should be occupied.  Just set some standards to manage conflicting uses, protect the environment, mandate minimum levels of amenity, and let the investment happen;

(2)  Ensure that mini-cities are well-connected, to each other, to the main urban area, and to key economic nodes (including port and airport).  Corridors need to be generous to allow for diverse traffic, transport modes, and growth;

(3)  Planners need to back off saying what should happen where and when, and instead say what is required before development can proceed.  This will allow demand to influence the timing of investment.  It will lower the speculative gains and land banking that coercive planning and orchestrating development sequences foster. 

(4)  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.

So what can the Council offer?
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.  Instead, the Council needs the skills to negotiate delivery packages with investors and developers, and to provide oversight, and authority. 

And Wither Auckland Council?
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.  Marry the mini-cities approach with the push for Urban DevelopmentAuthorities and we can begin to peel back the institutional onion that is Auckland Council.

So here’s a thought.  The mini-cities could be subject to development under an Urban Development Authority.  This should involve some community representation.  And when the development task is over, perhaps they could assume the managerial and regulatory role of a local authority.  

Sure, I was wrong when I gave the new, consolidated (or overweight) Auckland City just five years.  It’s still with us.  But maybe it’s time we acknowledged the short-comings and costs of a super city.  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.