Over the last few months I’ve been travelling all over New Zealand and parts of Australia for work. (This is part of the reason I haven’t found time to write blog posts!) I’ve been to Christchurch (twice), Wellington (twice), Hamilton (twice), Tauranga, Queenstown, and probably one or two other places.
All of these cities, and many others, are experiencing unexpectedly rapid growth and frantically planning to catch up: transport infrastructure, water infrastructure, zoning codes. As an example, here’s a chart of recent population growth in Dunedin and Lower Hutt, which have historically been sleepy, slow-growth areas. In the last few years, they’ve benefitted from increasing spillover from Auckland, Christchurch, and other places. Both cities have grown as much in the last three years as they did in the previous seventeen.
My first reaction to this is that it’s a blip: New Zealand’s population growth has always been volatile, and we may simply be hitting a temporary peak. If that’s the case, we should probably relax a bit: the tide has come in, but it will go out again.
But what if that’s not the case?
The most recent national population projections from Statistics New Zealand show New Zealand growing to 6.2 million people by 2068. This is a relatively modest pace of annual growth – around 0.6% growth per annum – and one that will see many areas of New Zealand decline in population. But, as a 2016 Stats NZ study showed, our population projections have been systematically wrong twice in the recent past.
In the 1970s and 1980s, as New Zealand went from fast post-war growth to chronic economic crisis, it consistently undershot projections. (My parents left NZ in these years, as there simply wasn’t much opportunity here.) In the 1990s and 2000s, New Zealand overshot population projections based on trends from the dismal years. (I came back in the late 2000s, and stayed because NZ now offers many more economic and social opportunities than it did when my parents were young.)
- Thanks to MMP and good-government reforms in the 1980s and 1990s, we have relatively stable and trusted political institutions, which means that our economy is less likely to be derailed by nonsense like Brexit or the Trump clown show. (See Acemoglu and Robinson on the damaging economic effects of political instability.)
- We have a high and growing level of amenity for residents, based both on our beautiful natural surroundings and the increasing social and cultural advantages of well-functioning cities and a diverse population. Unless we want to undermine what makes New Zealand attractive, this will continue to attract people.
- Culturally, New Zealanders have a high willingness to innovate and build consensus on how to adapt to change, meaning that although we don’t necessarily get things right from the get-go, we do tend to find ways of muddling through. This is a big advantage in a rapidly-changing world.
So even if it isn’t necessarily the most likely scenario, I would argue that it is important to plan for a future in which New Zealand grows more rapidly than expected. For instance, Sweden, which has a land area of 450,295 sq km, 15% of which is in the Arctic Circle and hence uninhabitable, compared with our very habitable 268,021 sq km, currently has a population of 10 million people, compared with 4.7 million Kiwis. What if we hit that by mid-century? What would it mean for how we live, how we work, and how we travel?
This scenario would probably mean that:
- Auckland has between 3 and 4 million people, or a population somewhere between present-day Brisbane and Melbourne, both of which are perfectly nice places to live
- Hamilton and Tauranga are approaching 500,000 residents, or a bit larger than present-day Wellington and Christchurch, and the Waikato is probably full of a number of mid-sized towns and cities
- Greater Christchurch has a population between 0.8 and 1.2 million, with Wellington a bit behind
- A range of other towns and cities are approaching the size of present-day Hamilton and Tauranga – for instance, picture Whangarei, Nelson, and Queenstown with 150-200,000 residents
- Parts of the country that are now worrying about managing decline have received a shot in the arm from big-city residents seeking a quieter life in the countryside.
Now, I wouldn’t necessarily go out and start spending money on roads, rapid transit, and water pipes based on this scenario – that stuff is expensive! – but I do think we need to plan for it, because it could happen. In my view, there are four key things that we should be getting in place now, to maximise the upside from this scenario and minimise the risks.
First, we have to rethink the way we do urban planning and infrastructure funding for growth. At the moment, when unexpected growth happens, we get caught out by a lack of appropriate zoning (especially for enabling housing in the most accessible and attractive areas of cities) and delays in figuring out how to pay for new infrastructure to enable growth. Housing affordability for young and low-income people is what loses out from the subsequent shortfall in housing. This is obviously a complex topic, so I’m not exactly sure how exactly we should change, but it seems like we do need to change. (The Productivity Commission’s recent report contains some suggestions, for those who want hundreds of pages of report to read.)
Second, we will need to plan proper multi-modal transport networks for all major cities in New Zealand – not just Auckland, Wellington, and sometimes Christchurch. For instance, Tauranga is a city on a harbour, with a few major transport corridors linking together the southern, western, and northern suburbs with the centre. In other words, it’s quite like Auckland. If it doubles in size, it will probably also need a rapid transit network to give people the option to avoid the motorway. In a high-growth environment, the value of transport choices will only rise. Let’s plan for it now.
Third, we will need to plan for proper inter-regional transport. If the Upper North Island grows as I’ve described above, it could resemble a New Zealand version of the Dutch Randstad – a city-region with a mix of green spaces and intensely developed spaces, all linked together with efficient inter-regional rapid transit. Or it could resemble Los Angeles in the South Pacific – smog, concrete-canyon motorways, and parking everywhere. We’ve got a choice about this.
Finally, and most importantly, we need to realise that this scenario could be great for us. There are some downsides to larger cities, but the evidence shows that these are balanced out by the economic and social advantages. As I’ve written before, bigger and better cities offer people more choices, in everything from work to entertainment to politics to relationships. There’s a reason why young New Zealanders move to London and Sydney and Melbourne. Better, more vibrant cities would help to overcome that and make New Zealand a more attractive place for young Kiwis.
As an example, a recent empirical study on the impact of migration on economic and social wellbeing in OECD countries found that New Zealand has experienced large positive effects from migration. These benefits, which were worth something on the order of 4.3% of GDP, principally arose due to the benefits of a larger and more diverse population for consumer choice and fiscal sustainability. (Immigration was also found to reduce economic inequality in NZ, as the benefits for less-educated workers were greater than for university-educated workers.)
We should welcome the opportunities that a New Zealand with 10 million New Zealanders would bring, and plan ahead to maximise those opportunities.