This is part two in a five part series of guest posts on the Christchurch rebuild from reader Brendon Harre. It first appeared on the Making Christchurch blog.

You can read Part 1 here.

Part 2. The Crown/Fletcher development within the context of the Christchurch rebuild and national economy

This is the hoped for Christchurch after the CBD is successfully developed.

Brendon Harre - Chch Part 2 - Fletcher Impression

To get an impression of where Fletchers intends to build, follow this link for pictures of the Christchurch city environment as it is now in 2015. You will see pictures of a damaged city core. Suburbs close to the centre of city abandoned due to the liquefaction risk. New suburbs being built further out, many in satellite towns like Rolleston and Lincoln.

Before the earthquakes, there were 6000 businesses in the central city, the area bounded by the four avenues, with a daily working population of 51,000. About 7000 residents lived in some 3500 households, mainly in the north-east corner. The hospital – one of the largest in Australasia – remains a big employer and government workers are coming back as damaged governmental buildings are repaired or replaced. However, the private sector commercial rebuild is slow, with many businesses committed to long term leases elsewhere in the city. Many offices have been built outside of Christchurch Central Development Units (CCDU) control east of the city centre on Lincoln Road and Victoria Street.

Brendon Harre - Chch Part 2 - Fletcher Impression 2

Brendon Harre - Chch Part 2 - Fletcher Impression 3

How much has the Crown spent on rebuilding Christchurch? Much less than people realise is chartered accountant Cam Preston’s answer. There was a significant initial amount of support, but since then the Crown has gone about reducing expectations and focusing on national issues rather than local rebuild goals – such as the government getting back into surplus. This has had ramifications for how the Eastern Frame development evolved.

Preston says what also catches his accountant’s eye is the way the Government used the cost share to capitalise as much of the Blueprint spending as possible.

That is, projects were treated not as operating expenditure — cash spending that would affect that year’s surplus calculation — but instead as a capital investment, something that was being bought by the state to produce an eventual financial return.

Once capitalised like this, the provision could be entered in a different column — rolled into the general national debt, the $80b of borrowings, to which no one was paying much attention.

As an accounting trick, Preston says the corporate world does this all the time. An expense becomes an asset. But it has consequences. It builds in assumptions that later have to be realised.

Take the $400m the Government has spent on compulsorily acquiring land for the anchor projects. That is money going out the door in any particular year. But because the land has been booked as a capital asset, it doesn’t come off the surplus figure. Rather it is something new the Crown owns as a positive investment.

Of course the expense will have to be reconciled one day when the anchor project actually gets built. If the Crown simply gives an anchor to the city as a gift — as people seemed to be getting the impression would be the case with the metro sports facility, the convention centre, the green frame — then suddenly that land investment will have zero value. Its purchase price has to be recognised as a cash out-going.

Or even if the Government has to acknowledge a write-down of the booked land value — as it very well might with the East Frame being sold now for apartment blocks having been bought originally at commercial building land prices — then again, ouch, a direct hit on the budget surplus column.

Preston says this is where some of the delays and secrecy that surround the anchor projects start to make more sense. The cost share shuffled a large chunk of the promised core Crown spend — he calculates $3.6b of the $8b non-EQC money — safely out of the surplus spotlight. The question is then when can the Government afford to take the hits involved in parking the expense?

For instance, it was an open secret that Fletcher Living had won the East Frame tender earlier this year. However the official announcement was bafflingly delayed until just the other week — a few days after the June 30 close of the 2014/2015 financial year.

And even then the Government was opaque about any write-downs. Brownlee claimed the Crown would see no loss on the land value. It would get back what it paid, he says.

However Fletcher will be acquiring the land over a decade to do the apartments in stages. And there is a complicated profit sharing arrangement that will not be finalised until the end of this year. Preston says all this looks like a way to keep the land cost tucked away on the right side of the surplus ledger.

For some reason Canterbury finds it hard to negotiate its local interest against national pressures. There is a despondency amongst locals that public bodies or services can be of help. There is much bitterness against all the government institutions involved in the rebuild. Both those representing the Crown — Brownlee, CCDU, CERA and Commissioner appointed Ecan and those representing the local interest — CCC.

Canterbury’s poor record of receiving national public spending for local infrastructure can best be seen in transport funding. The Canterbury and Wellington regions are of similar size, population and economy. Although Canterbury is the faster growing region. Yet somehow Wellington has 150km of passenger rail and, once Transmission Gully is finished, 100km of motorways. Meanwhile, once Christchurch’s Northern and Southern motorways and bypasses are completed it will have something like 30–40 km of motorways and no passenger rail. This being despite Canterbury having some of the easiest conditions for transport infrastructure construction and significant need for it.

MoT regional revenue vs expenditure chart

Peter Nunns from Transportblog said back in March regarding transport spending from 2002/03 to 2011/12.

A few things jump out from the chart. The first is that NZTA’s spent slightly more than it raised from fuel taxes, road user charges, and other sources. The second is that there are some big disparities between revenue and expenditure in some regions. In particular: Auckland and Wellington are getting about 20–25% more in NZTA expenditure than they pay in revenue, while Canterbury is getting only slightly more than half as much expenditure as it pays in revenue.

The newly elected Christchurch City Council have a positive vision for the future of Canterbury in which the Council and the Crown work together to create a much larger and more cohesive region, connecting a successful dense core to affordable more dispersed satellite towns. So far this vision has gained little traction at the national level.

The goal of Canterbury having 2 million people by 2050 may seem grandiose, but there is no doubt that Canterbury is one of New Zealand’s faster growing regions. With the right support, New Zealand could have a second international sized city – comparable to Adelaide. Christchurch is of a size and has the geography that with the right planning policies, infrastructure provision and a competitive/productive construction industry, new developments –homes and businesses could be built very affordably. An affordable growing Christchurch would contribute a lot to rebalancing New Zealand’s economy. Whether this happens or not is reflected in the large degree of uncertainty in Canterbury’s growth projections from Statistics NZ. Which range from either keeping up with Auckland to barely growing at all.

Statistics NZ's 2013-2043 population growth projections
Statistics NZ’s 2013-2043 population growth projections

A growing successful international sized city needs a functional inner city area. Will the Fletcher/Crown development provide this for Christchurch?

Share this


  1. When you look around the world at cities that were created to “balance” or redirect population growth, and by default, economic activity, one lesson comes out. You need a great deal of government intervention. Did I say a great deal? How about massive? Taking CHCH from 300,000 to 2 million is on that scale.

    I don’t claim to know all the stories, but three that come to mind are Astana, Curitiba and Brasilia. The Emirates are of a similar nature. China has numerous new cities and their record of success is spotty. Such places tend to be in third world countries, and emblematic of mega-projects of public infrastructure – dams, bridges, highways, stadiums, grand public buildings, airports – common to authoritarian regimes looking for global prestige and blind domestic allegiance. NZ isn’t quite there yet. It isn’t likely that this government would ever accept such a plan, much less put in motion a series of massive interventions that would direct virtually all of the nation’s growth to one city.

    Let Christchurch be what it’s going to be. With high design and amenity quality it will attract residents and investors on its own terms and be a more natural place reflective of NZ, and in a appropriate economic niche among our other cities.

    1. I think two million is grandiose. But I can see 3/4 million as a possibility. Taking Christchurch up to the lower end of the international sized cities. Christchurch is effectively the capital of South Island. It has an international airport. Good tertiary institutions. A balanced economy ranging from commodity agricultural production to advanced communication devices made by Tait Electronics. Long term prospects are good with the appropriate level of support.

      P.S Greater Christchurch is close 500,000 residents.

  2. For Christchurch to come anywhere close to achieving that goal Canterbury would have to start investing in regional infrastructure right now to support such massive growth. It’s not achievable – but it would involve a much grander vision than currently exists – and no-one seems willing to commit the time or the money.

  3. Mr Preston isn’t the most reliable source – see the Auditor General’s slap down

    In terms of investment, whether the Crown expenses or capitalises, the money is still spent in the recovery period. That at a future date, some value will be realised is a good thing for us taxpayers.

    The Transport Blog should focus on the “Accessible City” plan – Which is a coherent response to multi modal transport planning. The new Manchester Street and the new Bus Interchange are pretty clear markers of a new transport coherence to central Christhcurch.

    1. We are keen to run more guest posts on Chch, none of us are based there so do not feel qualified to cover the city ourselves as well as it should be. We would be especially keen to hear evidenced views on the transport network…. For example, is the singularity of the big exchange working? Could it instead have had more through routing? Are the buses being kept out off important city streets for aesthetic reasons and will that affect their appeal and utility? Is the door slammed on a rail programme? Are key bus routes future proofed for Light Rail, ie being run like an LRT system and with routes that could be up graded? Especially between the city and Uni? How is the cycle network? Is the plan overloaded with parking structures?

      etc etc….

    2. Cantab. I think Cam is a reputable source for the material I quoted him on. No one is arguing that the government is not buying capital items like land and it intends to sell it later.

      I am just explaining what is happening with regard to the Eastern Frame and asking some questions. I leave it to the reader to decide the wisdom or not of our government’s actions.

      In many ways the Christchurch earthquakes is a huge, terrifying experiment, that over time will teach us a many things about NZ. If we are willing to examine it. As one economist -Eric Crampton describing the need to learn from the disaster said, “I have had to keep looking away from the Dementor’s gaze. But if we keep looking away, worse will happen…” from the essay “The plan against the rebuild” in the book -Once in a lifetime: City-building after Disaster in Christchurch.

      Patrick. I will ask around if anyone can contribute some more transport orientated material for Christchurch. It is not really my area of speciality either.

Leave a Reply

Your email address will not be published. Required fields are marked *