Auckland is currently growing more rapidly than the rest of New Zealand – as it has been doing for most of the last century. At the same time, other New Zealand regions are struggling with aging populations and drifting economies.
Understandably, some people look at these trends and conclude that Auckland’s a bit of a problem. If the city’s prospering while small towns decline, isn’t it because the government is spending too much money trying to pump growth into Auckland and too little elsewhere?
In short, is Auckland costing New Zealand too much?
The answer, in a word, is no. If anything, the government’s spending a little bit less in Auckland than it spends elsewhere. But don’t just take my word for that – let’s take a look at the data on where central government is spending money.
A few years back, NZIER did a useful analysis of where the government spent money and provided services. The following tables summarises their key findings. Overall, they find that Auckland gets only 31-32% of overall government expenditure – slightly less than its share of the population.
For all the visual thinkers out there, here’s a chart of government spending per person in New Zealand’s five most populous regions. Aucklanders get less spending per capita than the other large regions. This reflects the city’s young demographics – more workers, fewer pensioners – as well as the economies of scale enabled by larger, denser places.
But regardless of those advantages, the picture is clear: Aucklanders get a bit less government spending per person than residents of other regions – not more.
But, you say, what about all these costly transport investments we keep hearing about? Isn’t NZTA putting up megabucks to dig the Waterview tunnels and widen motorways and occasionally build the odd kilometre of busway? Isn’t Auckland Transport looking for money for CRL and light rail?
In other words, maybe we’re putting all our capital investment eggs in the Auckland basket?
NZIER’s report also seems to puncture that myth. They found that Auckland received around 35% of central government’s overall capital expenditures – only a wee bit more than the city’s share of the population. So it’s not like the government’s investing wildly in Auckland and leaving no money for other regions.
That being said, data on transport expenditures alone paints a slightly different picture. When I looked at NZTA’s regional expenditure analysis, I found that Auckland received almost half of the agency’s spending on new and improved roads over the last decade. (Unfortunately, consistent data isn’t available on PT infrastructure expenditure, as a lot of that is funded out of general tax funds or local government rates.)
However, this level of spending isn’t fundamentally out of line with Auckland’s growth. The following table looks at spending and population growth outcomes for New Zealand’s five most populous regions. It compares the share of NZTA’s spending on new and improved roads over the 2004-2013 period with each region’s share of national population growth between the 2006 and 2013 Censuses and their share of projected population growth to 2043.
|Region||Share of NZTA spending on new and improved roads, 2005-2014||Share of population growth 2006-2013||Share of projected population growth 2013-2043|
|Bay of Plenty||8.0%||4.4%||4.1%|
A couple of things jump out at me from this table:
- Although Auckland has received a large share of new road spending over the last decade, this may just be enough to keep up with current and projected population growth.
- NZTA spending on new roads in Canterbury over this period hasn’t been wildly disproportionate relative to its population growth over the same period – although spending figures will have been bumped up by the Canterbury earthquake rebuild. However, Canterbury’s growth projections imply that there may be a case to spend more in the region.
- On the flip side, Wellington, Waikato, and the Bay of Plenty all received a higher share of spending on new roads than their growth projections imply. Wellington, for example, has received 10% of national spending on new roads over the past decade, even though it’s only projected to accommodate 5% of national population growth over the next three decades. (Transmission Gully will boost the spending figure higher.)
Finally, spending on new roads only accounts for around 1/2 of NZTA’s overall budget. The remainder, which is spent on stuff like road maintenance and PT operations, tends to be distributed on a more or less proportionate basis.
So that’s it in a nutshell. Auckland’s hardly the rapacious parasite that some people make it out to be – it’s not sucking small towns dry of their tax dollars. If anything, it’s the opposite: taxes paid in Auckland fund pensions for small town residents. And while Auckland has been getting a higher share of spending on new roads, that’s not unreasonable given the current and projected rate of population growth in the city.
What do you think about regional government spending?