This is a Guest Post by Geoff Cooper, Chief Economist & Director, PwC Cities Institute.
Earlier this month the PwC Cities Institute released its first report on the competitiveness of cities in Australasia over the last decade, titled Competitive Cities: A Decade of Shifting Fortunes.
The research takes a comparative approach to urban competitiveness over the last decade. It does not claim to be a definitive measure of competitiveness, which is complex and multifaceted – but uses income and cost of living to show one perspective.
As publicised, Auckland does not do well. It is the only city of eleven to experience falling discretionary income over the past decade (what’s left after tax and basic expenditure) – equal to about $5,000 or 7% of gross income (Figure 1). Figure 2 shows the annual change in discretionary income for 10 cities relative to Auckland (a positive figure means a city is doing better than Auckland).
How should we think about these numbers? Clearly, not every median household in Auckland has seen a drastic reduction in discretionary income. If that were the case, we’d know about it. The impact is a mix of opportunity and financial costs. For long term residents in Auckland, much of the change will probably go unnoticed – realised only by moving to another city. For Aucklanders that face marginal costs (think renters, homeowners that bought after 2016 and those workers Auckland is trying to attract), these impacts might hit the bottom line.
The largest changes have taken place since 2012, when a chasm began to emerge between Auckland and elsewhere (Figure 3). Unsurprisingly, this coincides with a big outflow of Aucklanders to New Zealand’s other cities (Figure 4). Net international migration into Auckland remained strong over this period, probably because international migrants do not face the same economic circumstances as the median Aucklander.
The most obvious culprit for Auckland’s poor performance is housing, which Auckland has let get away. Under certain mortgage assumptions (which we standardise across cities), it works out to be about a 15% increase in mortgage payments between 2008 and 2018 (Figure 5). That doesn’t look so bad, until we compare it with other cities. For example, Brisbane, Adelaide and Perth actually experienced lower estimated mortgage payments over the period, with falling interest rates more than offsetting house price rises.
It’s not unusual for commentators to explain Auckland’s housing costs away, arguing that Auckland is an attractive, growing city, and attractive cities are popular and expensive. As the argument goes, it’s just demand and supply – and there is only one Auckland. But Adelaide, Brisbane and Perth are all rated top 25 liveable cities in the world, are a similar size to Auckland and are all growing at a similar or faster rate than Auckland. The comparison challenges the idea that Auckland’s housing costs are an inevitable consequence of its urban stature. As other economists have pointed out, regional policy is at play.
If housing costs are too high, income is too low. Auckland’s median household income growth lags New Zealand’s other cities, meaning the difference between Auckland and other New Zealand cities is narrowing (Figure 6). This might be explained by some combination of a smaller share of economic growth going to labour in Auckland, falling relative productivity, or because of changing demographics and population, that shift the earnings distribution.
Rising food and transport expenditure is another driver. The Household Economic Survey is a blunt tool for evaluating these effects due to limited spatial representation and granularity and it misses out some significant costs (such as time spent in traffic), but the high level numbers are enough to think that more research is needed to understand why food expenditure is rising faster in Auckland than elsewhere. Is this a price effect or because Aucklanders are spending more on food? What role, if any, does the rising price of land play?
Rising transport expenditure is another driver, for which spatial patterns can help characterise. Residents solve transport and housing costs together, so that for a city with high house prices and significant supply constraints, you might expect residents to search out low land prices at the expense of higher transport costs. This is exactly what we see in Auckland, where many areas outside urban Auckland are growing faster (about 43% faster). In some cases the rates are mind boggling. For instance, Pokeno has grown at an annual average rate of some 23% each year since 2012 (Figure 7 – although Pokeno doesn’t fit on the chart). At that rate, a population doubles every 3-4 years.
Much of this is consistent with Unitary Plan capacity analysis conducted by Auckland Council’s Chief Economist Unit, where capacity gains were greatest in areas with low land values (Figure 8). And where are land values generally low? Where transport costs are high. The very areas that we see growing fastest in Auckland are those with the highest rates of private vehicle ownership.
Figure 7: Urban Auckland and it Surrounding Growth Areas
Source: Auckland Council Chief Economist Unit, Insights November 2018.
From a cost of living perspective, the last decade has been challenging for many. The city has slipped behind international and domestic competitors, and for the last few years has experienced internal migration outflows. GDP per capita is a bright spot, but it is almost three times higher than median wage growth (Figure 10). Meanwhile, living costs have diverged greatly from other cities, pricing out new and vulnerable residents and pushing up transport costs to unsustainable levels for many. As I have written about elsewhere, this is a problem full of complexities – but it is one worth solving. Done successfully, Auckland can turn the page on a decade of escalating costs and falling discretionary income and return to what it does best: offering Kiwis an opportunity to enjoy the big city life.
So basically it’s saying that wage growth hasn’t kept pace with cost of living (in particular housing) – not much of a shocker there.
Imagine how much better off Aucklanders would be if the city hadn’t been sold off under their feet to offshore buyers driving up prices and reducing availability? Or for that matter the economy if people still had that discretionary money to either save or spend rather than it going offshore as mortgage profits by the big 4 banks?
…or the financial headroom to own a home/pay a mortgage or rent comfortably and still have enough left over to know you could start a family?
I’m not sure we’ll see the full effect of this for some time.
The way the economy has been run since the mid 80’s its really little wonder we are where we are. The incremental elimination of wage earners ability to bargain for higher wages such as deunionisation and cheap exploitable labour brought in from developing countries has added competition to both the labour market wages and souring demand for housing. A perfect storm.
Housing used as a casino chip for those already on the ladder to further their wealth via speculation adds even more fuel to the fire allied to law makers who have some ability to change things that are either in denial or satisfied that the market will find a way.
All the while “prudent” budget management both local and central government has allowed public infrastructure to lag well behind the quick gains from wage crushing policy. It’s not rocket science!
There are a couple of generations facing a none too pleasant future come retirement years either reliant on renting or being mortgaged to the eyeballs who are going to find out how quickly time flies as you age and how little discretionary money they have week on week. And by association the fall out of this will negatively effect the well being of this country!
Agreed. The most effective way we can help in the medium term is to start investing in catch-up infrastructure projects that will, over time, make everyone richer, or at least socialise some of the costs we have shifted to younger generations; I’m not even touching climate change with this, it’s more a quality of life thing by preserving access to transport options and jobs while at the same avoiding congestion and time lost in traffic. Ideally, large-scale, transformational projects are going to be a feature of our landscape for the next decade; we cannot settle for the same inaction and lack of investment that has marred our city and country for the last 20 years or so.
And the catch-up infrastructure projects don’t have to be full of concrete or otherwise be capital heavy. They can be about operational infrastructure. We can employ people to do things that should be done.
No you can’t make people rich by taking their money off them and spending it on infrastructure. Infrastructure does not create growth, at best it will remove a bottleneck if one exists. Growth comes from increasing incomes either through increasing productivity or in our case through stopping foreign owned corporations from driving wages lower.
So infrastructure can’t increase productivity? Please explain. Seems counter to everything else I have read.
So what can increase productivity?
How do you explain that the most produvctive countries are the ones that spend the most on infrastructure? Like Northern European countries.
That is post hoc ergo propter hoc. Wealthy countries spend more on infrastructure because they are wealthy countries. There is not a growth model that I am aware of that includes infrastructure as a cause of growth. Growth is the result of capital accumulation, labour or population growth and modern models include technological changes and education. If there is a genuine bottleneck like no port (or some numpty moves the port hundreds of miles away, then and only then infrastructure becomes the cure to that bottleneck.) You can’t make people rich taxing them and spending it on fixing the banks of the Tiber, but you can improve their lives through not getting drowned.
The really interesting part is that some countries have retarded growth with infrastructure like the Japanese motorways and bridges to connect islands, which resulted in people spending less, as they knew one day they would have to pay for all the Governments expensive mistakes.
No sorry, I don’t buy it. Having lived in places like Czech Republic in the ’90s and Romania in the 2010’s, I saw how much poor infrastructure held countries back. Especially transport. It was catch up from Communist tims just as we are catching up from our terrible bout of laissez faire noeliberalism.
Whne I went back to the Czech Republic in the 2010’s, I could see how much infrastructure had been added.
OK fixing the banks of a river might not create wealth, but it might if valuable farmland was flooding regularly and now it isn’t.
I’m with goosoid. One generation of infrastructure built upon the back of the previous generation of infrastructure enables progress and growth. Progress and growth towards what, is the important question. It has to be the right sort of infrastructure for growth of the things that matter, like health and happiness, as opposed to the things that don’t, like GDP-defined economic growth.
“No you can’t make people rich by taking their money off them and spending it on infrastructure.” Well of course it won’t make the people who you take the money off rich, but it may certainly improve the financial outcome of the recipients of the infrastructure. As Goosoid says, Prague has a very cheap public transport system that is of very real benefit to the less well paid in that country.
I would caution against trying to explain Auckland’s poorformance on the basis of central government policies alone.
If the latter was the primary driver of these outcomes, then you’d expect Auckland to have fared about as well as Wellington, Christchurch, Tauranga, Hamilton, and Queenstown. And Australian cities to have fared similarly to each other.
Instead, when you look at the figures, you see Auckland has fared significantly worse than other New Zealand cities. And there’s a large divergence between different cities in Australia, too. That suggests to me that differences between cities are more likely to be determined by local government policies than central government.
In Auckland’s case, there seems to be something uniquely and especially bad about our policies on housing supply, which are driving up costs faster than other cities.
I don’t disagree entirely but especially between 2010ish onwards the efforts put into suppressing wage growth and increasing business profit and lowering the cost of labour for government by central government policy, official or otherwise, saw business simply bypassing the local labour pool to far more malleable workers from far more desperate plights. I think they officially called it skill shortages and I worked in an industry where this was present and its justification was laughable. “Managers” (use this term very liberally) was an especially silly skill shortage!
The real reason was these people could be paid below minimum wage, worked like dogs, miss out on their meagre entitlements, have few rights and be denied services available to other taxpayers receive but always with the stick hovering over them that their temporary visas may cease and with the carrot that if they were good boys and girls, to gain a more permanent residency.
Auckland’s population swelled as a result if you recall the previous government’s forlorn efforts to persuade migrants to other parts of the country. The other plus was they provided competition for rental property tenants and this fed on to the housing speculators/investors bottom line nicely. An unsustainable ecosystem if ever there was and frankly its no wonder we hover around such low inflation in our economy today.
Having said that local government sat by like possums in the headlights to this population influx, changing nothing and like all good politicians believing market forces would deliver. Wrong on that count.
If that was the sole, or even pribcipal, problem then why is Auckland performing so much worse than the Australian cities that have had much the same approach to importing labour?
Luxated, I don’t know.
Aussie has paid far better on virtually every level than us for a long time and were late comers to neo liberal policies that we embraced from 1984 on, and retained strong unions and labour laws. They even have insane things like overtime and penal rates like we once did.
The US is more like us, the same imbalances but on a more severe scale show up there, it’s just that we are years behind.
“If that was the sole, or even pribcipal, problem then why is Auckland performing so much worse than the Australian cities that have had much the same approach to importing labour?”
Simple answer, the per capita rate of net migration to NZ over the last five years has been 50% higher than the Australian rate.
+1 Zippo. Australia has a much greater capacity to absorb especially when spread over 5 big cities rather than our 1 (and yet as Zippo said per capita they have still taken less). Their economy has had decades of boost from mining/resources boom to help pay for infrastructure etc too.
+1. We imported 3rd world labour wages and conditions. To be fair most of the recent immigrants are excellant workers with good english. The service received at coffee shops and petrol stations and supermarket checkout is second to none – better IMHO than England, Scotland, France etc. Good for them but not good for my four kids working in Auckland – low wages, long hours, little job security, minimal on the job training. NZ immigration has been a kind of ponzi for far too long.
Same numbers from same countries but all earning over $75,000pa and our economy would be flying.
Waspman – I totally agree with you.
mmm, yes and no. It’s in the biggest, or bigger, cities where the effects of central government policies typically play out the strongest. So given we have had high rates of immigration in the last 20 years, to a significant part because of government policy, and most immigrants settle in Auckland, that has had a disproportionate impact on wage growth suppression and house price escalation in Auckland.
No, I’d still question that explanation for Auckland’s poorformance in terms of disposable income, more generally, and housing costs, in particular.
As far as I understand, in the period 2008-2018 Auckland’s population growth wasn’t notably faster than many other NZ and Australian cities included this analysis. On that basis, I don’t accept immigration as the droids we’re looking for.
The clear reason for Auckland’s poorformance–as noted in the post–is increasing housing supply, especially in central areas. That’s one area where Brisbane has exceeded beyond any city in Australasia, AFAIK.
P.s. Should read “the inability to increase housing supply”
I am going to add the accommodation supplement as a reason for our housing cost problem. Many landlords have realised that the ability of some tenants to access these has meant they can jack rents up. Apartments which are often sold on the basis of their yield have become more expensive as the rent received by the landlord increases.
The problem has been magnified by the government divesting their housing stock.
The more surprising thing is that governments repeat these subsidy schemes over and over. Older readers will remember the SMP’s of the 60’s causing NZ to have a huge sheep flock that weren’t producing great returns.
Now we are subsidising land owners to plant trees and seemingly we have overseas buyers (of land, not trees) forcing up the price of rural property as they compete to buy land.
And will there next be a feebate?
All of these schemes have the effect of transferring money from the less wealthy to the more wealthy.
Good post, thanks.
So Auckland is both more productive (last chart) and more inequitable than the rest of the country.
That is clear spatially, proximate areas are expensive. So the continued construction of widespread, connected, effective, and affordable transit system is a vital work-round to that spatial inequity.
It would be very interesting to know more about the internal emigration; is it mainly older people arbitraging the value of their AKL homes for a more comfortable life in cheaper parts, or more lower come earners unable to make ends meet…? Both probs…?
As well as, of course, raising the minimum wage/ living wage, and other rebalances.
As it’s long been clear that money doesn’t move down, on its own accord, even by the trickle, it rises like smoke from the ashes of the broken hearted….
Maybe the minimum wage needs to be regional?
And that definitely needs to be the case with public wages. A teacher on 70k in Invercargill is rich, a teacher on 70k in Auckland is poor.
Precisely Jimbo. Someone on a $100k salary in Auckland could move to Taumarunui and have a $20k part-time job and still be as well off.
To live well in Auckland you have to give yourself over to economic slavery. Which is why kiwis are leaving Auckland (to answer Patrick’s question).
I think that is the problem here. It is not so much a productivity issue but a decade or more of flooding the labour market with cheap labour as an alternative to allowing supply and demand to increase wages.
+1. Other countries require a high wage before issuing work visas.
Its call neo-liberalism economic policies all 30 odd years of it where the working poor keeps the keep will the wealthy have their riches.
The ridiculous over-investment in property is also a contributing factor.
Also, they don’t seem to be turning up as internal immigration in those other cities. And I’ve been told (is it true?) that lifestyle blocks are held on average for three years, suggesting just as many owners will be moving rural – city as city – rural. Maybe Whangarei, Dunedin, Gisborne, Napier, Nelson, New Plymouth… Maybe coastal properties?
Regions are also immigrating, so Aucklanders moving south are replacing locals going offshore…
Id be interested to see how much one would need to live the same lifestyle across a range of cities internationally and nationally. A sort of big mac index for living auckland vs wellington, invercargill, london etc
Seems to me given the issues with travel and especially housing that the suburbs least reliant on PT, given their proximity to the CBD for example and the ones best to exploit cycling and other alternatives should be bulldozed and turned into high rise suburbs. And it’s here I’m thinking the Freemans Bay/Ponsonby/Grey Lynn/Herne Bay/Parnells of this city.
That way the need for roading and PT spending would not really be a factor holding back better housing stocks and in turn, would be a practical solution.
By not removing the old, cold housing to add higher density in these places, developers (public and private) are looking to use the last vestiges of green space – public and private sports clubs, etc. Yet these are critical for ecological health, and should be being protected.
The number of cars per adult would be interesting to know, too. Through wealth there’s been the addition of off street parking at big cost to properties often not designed for it. The public space that is critical for cycling, walking, scootering, bus lanes, public plazas, has been gifted to the residents through residential parking schemes.
No wonder many are living car dependent lifestyles despite proximity to the city centre. Doesn’t mean wholescale bulldozing is required, but the UP certainly needs to be changed.
What really annoys me is where houses on 3 sections in this area are bulldozed to make one residence (not to forget the helicopter pad). Rod Duke I am looking at you… This should not be allowed in the Unitary Plan
Exactly. If heritage people want to perserve the historic housing, lift it up and move it to lower density, more rural areas so it can be enjoyed by people wanting to hark back to a mythical 1950s paradise.
Tose inner city suburns should be mainly terraced housing, 3-4 storey blocks of flats and 10 storey apartment blocks closer to the commercial centres. Then they would be real city suburbs.
Agree. I don’t think anyone should be forcing people to bulldoze their house and build apartments, but they defiantly should be allowed to if they want. Although I’m not sure I can really see the economics of it…
There’s no ‘forcing’ required. We could simply start with ‘allowing’.
Lift the zoning ban on what people can do with their property and you’ll see plenty of them change without any compulsion.
To me the current situation is odd. Houses which are worth only a fraction of the land under them. At those land values, your average house in Ponsonby sits on a million dollar worth of land.
We can look what we find in central areas in other cities. On large blocks like ours, you may get a slightly upscaled version of Euroblocs. Say, you build 4 storeys, 16m deep, and no setbacks on the sides. That is comparable to the suburbs of Prague. Assume you have 15m of street frontage. You get enough footprint for 2 large apartments on each floor. 8 dwellings instead of 1. Land cost will be $125,000 per dwelling instead of $1,000,000.
Note that you can build one such a building on one lot at a time. And we get to keep all our street trees, and most trees currently in those backyards.
I don’t know if that kind of development makes sense. I find it more plausible than the current situation.
I guess the issue at the moment, is even when an apartment does get built in the area, (e.g the Great North Road apartments or say that apartment that went up recently on Brown Street that replaced x2 old Villas) each apartment still sells for close to $1m! So the theory of land cost/# of apartments doesn’t quite equate, it just means more profit for the developer.
I imagine saturation of the market in the area would address that?
Roeland, yes a great idea about what to build on a 15m frontage and it happened in Takapuna with the ALBA apartments. I believe that these were done as a SHA arrangement. The result is a 9 storey apartment on a single section and it is in keeping with the new Takapuna.
Patrick, I completely agree with your comments to have a more affordable transport system.
Maybe a system like Vienna might also be useful to concentrate growth within an area that Vienna refer to as a boundary. Within the city boundary it is just one zone of travel, and a greater sum is paid beyond that boundary. Yes of course we have zones, but the small patronage that occurs once people live beyond two zones suggests that Auckland doesn’t have the pricing model right.
Yes I am aware that I am proposing subsidies that I have previously argued against, but the clear benefit of inducing people to use public transport is the reduction in congestion and emissions.
I also note that subsiding PT achieves a better financial return for the user than giving them a similar wage increase.
I know plenty of skilled, educated people whose income has stayed the same for 15 years.
I’d like to add something to this Heidi: Access to educational upskilling is far more limited than most would realise. Specialising in your existing field is easy after hours. Retraining in a different field at a bachelors level for many degrees requires classes only available during office hours.
Part of this is an access issue – it might work if you’re already working in the CBD, but getting in and out is a big time constraint if you’re having to travel in on company time and a lunch break. Another part is that our universities are still set up for students who are 18 – 23 and have minimal other commitments.
Cafes requiring people to have barrista qualifications, others wanting people to work for free as they train. People with degrees trying to get experience by offering to work for free in internships. The state of the universities is a whole ‘nother subject, too…
The capacity added via Unitary plan vs Land Price is no surprise but interesting to see none the less. Good luck to any young people wanting to buy inner West any time soon.
Made me wonder why Kiwi Build didn’t do a tiered system based on a radial model rather than just offering homes out in the wops for the same price they were already going for. Inner City suburbs at highest price then work outwards..
The RBNZ published research recently that showed between 1997 – 2017 average wages grew 1.5% above inflation per year. This is a good result and it means most people are significantly better off than they were 20 years ago. However, housing is the biggest issue and has grown significantly faster than general inflation, therefore, disposable income has gone down. If we want to turn this around then we need to increase supply in the areas that people want to live.
The Council needs to relax land use restrictions in the inner suburbs and allow for much greater density. Also, the council needs to streamline the process and prevent vexatious litigates. Central government needs to allow skilled workers to come to this country to do the actual building, provide greater skill training (i.e. encourage students to become tradesmen rather that this obsession with university), and sort out the building code, and break the materials monopoly.
None of these are particularly controversial (except allowing for density in Ponsonby) but it would make a world of difference to Auckland and might stop the number of NZ-born citizens leaving for greener pastures.
I’d suggest too that the government would be better using the KiwiBuild money to create a commercial, infrastructure bank that would fund high density developments. Maybe even buying the land first, sorting out zoning and then allowing developers to bid for the project. Japan/Germany style.
Right now, accessing capital is one of the main issues for developers. If the developer goes under, the government takes over the build and finds a new developer. The government won’t then be actually building and the private sector will get its slice of the pie.
I don’t believe in this idea of supplying low price housing. Better just to build as much housing as possible in the right place (close to CBD/PT links) an dof the right type (medium to high density). The market will adjust once there is more housing.
The government could also commit to buying a certain number of units as social housing. This is better than putting a whole lot of social housing in one area. That gives the people in social housing access to a whole lot of social capital from the relatively affluent people around them.
Agree. We already have enough bad housing that should be low price. We need more housing, not necessarily more low price housing.
goosoid – I agree with you.
There’s only so much that relaxing planning regs will do. There will always be a market driver to build larger, more expensive apartments in central locations.
The longer this narrative around planning de-regulation being the panacea to housing problems is pursued, the longer we’ll have a housing crisis.
Certainly, more liberal planning regulations are a necessary pre-condition. But they alone are not enough. Until the government starts building A LOT more housing (social and affordable), we are not going to get on top of these issues.
The problem being that affordable=sprawl, and that is what we are seeing with Kiwibuild.
Exactly, throw up some Kiwibuild in Kingsland and you’ll have to get into the ballot draw! You’ll also get the counter argument of ‘subsidy for the middle class’
Eden Park, that current bottomless money pit and waste of space could and should be put to good use with some Kiwibuild high rises!
Yes, I think Kiwibuild will need to be instructed directly by government to build city centre and inner suburb apartments as I think they’ve got some people with mindblocks against the concept.
Heidi, I agree that there should be a greater focus on apartments. For a long time we thought that we needed a quarter acre, even when we we were buying somewhat less. Then it became 500sq m and now it is probably 300sqs.
NZ, as identified in the report prepared by three government ministries says that we have a problem with the diminishing amount of productive land. Arguably the government is irresponsible in building houses on Auckland’s fringes and should be focusing on projects like that shown in this link.
It appears that this has been successful.
I generally like the look of the residential development that John Wood has linked.
It’s about the right height/story level. It’s got brick cladding (essential for insulation) and it looks the right combination of private and communal.
But one quick criticism: What’s with this “Residential lounge/Study lounge” thing? What’s the point of that?
Maybe that space would be better used for some sort of retail like a convenience shop, greengrocers or eatery?
What is the median income that goes to make up the statistics used?
What is the basis of the 2.25% above inflation?
What proportion of the work fore see’s Air Fares, new electronics as costs to live? (as is part of the basis of the cost of living).
The majority of the work force that I rub shoulders with has not benefited from the 1.25 % and it’s to be hoped that they can now make up a little ground with reasonable controls on the immigration competition to enable the reversal of some of the measures implimented over the past 30years.
Figure 8 shows where your dreams about a greater Auckland go to die.
It is like we still can’t figure out if we should manage housing like a commodity (shortage → build more), or like a currency (limit and control supply to maintain a certain value).
Would love to see a Post and study on the blanket protection of inner suburbs. How much having a living museum is holding Auckland back.
I love Grey Lynn where I currently live, but I know I’ll never ever be able to buy here, and the house I rent is a s**t heap, utter garbage, pricey rent, yet the rules only allow for 1 small dwelling on a fairly decent sized plot of land. Insane…
To avoid rising food prices us Aucklander’s should grow are own food. Also we will need a Crypto currency so we can exchange it. W could call it Auckland Bit. Or maybe we can use our hop cards and special vending machines in public transport hubs. Get rid of vending machines selling sports and other highly caffeniated and sugary drinks from Public transport venues and replace them with wholesome Auckland produced home made lemonade and locally produced lunch snacks.
Agree RE: Growing Food.
You might enjoy this:
Sure once I have finished my 10 hour day tryting to earn enough to pay my massively inflated mortgage, I will spend a few more hours working in the dark to tend my vege garden. Sounds awesome.
Do you work seven days per week.
So I spend my weekend growing food. Wow, living the dream. No thanks.
I agree with Adam Smith. I would rather pay someone else to grow my food.
Growing food isn’t everyone’s cup of tea, but we need to make sure that growing the easy foods that transport poorly remains a possibility. As long as you don’t follow the advice in many a glossy magazine, growing food is very cheap, especially for the superior nutrition it can provide when you do it well.
Food grown with fossil fuels, and transported with fossil fuels, in a world with more of the costs of transport internalised, will be more expensive. Future generations will thank us if we ensure there are fruit trees throughout the city, space for herbs and salad greens, and gardens for social gardening – one of the best ways to integrate communities and heal social wounds.
Absolutely agree Heidi. But me growing a few tomatoes or lettuces will not make an impact. What would is not building housing all over some of the best farmland in the world around Auckland.
Then the food could be produced and sold locally.
Transportation is a massive issue in my mind. The most economically affected Aucklanders generally live in the South and West of the city. When we look at some of the fundamentals of our transport landscape the marginalised continue to be left out of the picture. Some things to consider in no particular order. Disclaimer – There are a lot of generalisations to follow (i have no data just my own anecdotal view); if you strongly disagree with the overall sentiment then please call me out. I’m using 2 fictional people to frame my point – a Banker from Remuera and a call centre worker from Manurewa who sometimes works night shifts they both work near Britomart:
Fuel Tax – Guess who pays proportionally the most to get to their job in the city if they choose to drive.
Working Times – Guess who sometimes has to do a night shift and has no alternative but to drive and park in the Downtown Carpark
Transport charges based on zones – Guess who pays more to get to their job in the city. Further, guess who’s child has to often pay more to catch the train to school.
I’ve seen a number of times kids on the train explaining why they forgot their Hop Card or haven’t tagged on. As a adult it makes me cringe. Some of these kids appear to come from very modest means and lumping that additional stress onto them whilst they are trying to go to school makes me sick to the stomach. As an adult it’s embarrassing that we put these hurdles in place towards a kid trying to educate themselves. Goff’s free weekends package for me is mis-guided. Should ideally always be free to school kids. Failing that it should be free between 7 and 9 and then 230 -5. on weekdays.
Lack of Cycling Infrastructure – I applaud the Sky Path (hopefully i’m not infringing any I.P). However has anyone ever stopped to think about how that seems to our friend down in Manurewa. Great news … however down here in District 10. I have no means of ever accessing it or it serving any use to me.
With a focus on carbon reduction and with Labour’s imminent Wellbeing budget due next week surely there would be alot of ‘wellness’ dispersed by seeing how much cycle lane between CBD and Manurewa can be laid.
E-Bikes can easily do 25kph (Manurewa to the City is roughly 25km along SH1). In terms of bang for buck this would go along way to making Auckland more compact.
I noted the Rechargery E-Bike container in the Viaduct does rent to own schemes for around $40 a week. Way less then what our friend from Manurewa pays for on the train….
Anyway to round it up… We often advocate the strongest for things that ultimately benefit ourselves (this is human nature). However the shame is that often the people that have the spare time, financial security, education and energy to do so forget bout those outside of their sphere. Currently it seems more focus is given towards fixing AKL from the inside out rather than looking at tackling it from the outside in…
Edit (should stop to re-read before posting) –
With a focus on carbon reduction and with Labour’s imminent Wellbeing budget due next week surely there would be alot of ‘wellness’ dispersed by seeing how much cycle lane between CBD and Manurewa can be laid *for $100 million*.
There are plans for a cycleway ( a la NorthWestern) along the Southern Motorway.
But of course as AT/NZTA are doing it, it will require 20 years of reports and then have to be gold plated before it can be used. None of the airey fairey trials like worked in New York for us, no siree.
Do it once (eventually) and do it expensive is the motto.
Wouldn’t public transport be available before 11pm and after 6am for your night shift worker?
Great report Geoff. It really highlights how broken NZs housing and transport markets are. This is a massive failure by a generation of policy makers at the local and central government level.
Your report also highlights how the nature of NZs urban development is broken in different ways in different places.
Christchurch on the housing and income growth fronts is doing ok. Relatively competitive to Australian cities. But its transport system is absolutely poked. 50% of its increase in income has gone on rising transport costs. Which is significantly worse than Perth, Adelaide and Brisbane.
Chris Morahan summarised the PwC for Christchurch here.
So infrastructure can’t increase productivity? Please explain. Seems counter to everything else I have read.
So what can increase productivity?
How do you explain that the most produvctive countries are the ones that spend the most on infrastructure? Like Northern European countries.
First time I’ve seen this blog acknowledge that kiwis are leaving Auckland in greater numbers than they are going there. The claim by some that “kiwis are embracing what Auckland offers” is blown out of the water.
Here in Taumarunui you can buy a house for $80,000 and having weekly mortgage repayments of $38. I don’t think Auckland will ever reach that level of housing affordability.
Well of course not, but I doubt you can work as a Service Architect for a global IT company in Taumaranui, so its swings and roundabouts. Cities basically!
You can live in forest for free if you aren’t bothered about employment opportunities!
It may appear that way but just last week I had two software developers, a database maintenance programmer and a user interface coder, seriously looking to telecommute if they moved to Taumarunui.
The only hiccup in their plans was the lack of regional train. They would be there by now if the KR northerner train still stopped there so they could get to AKL at least one day a week.
I’m some people have the potential to do this, but Cities continue to grow at a pace never seen before across the world despite the massive advances in technology.
People live in Cities to share knowledge, socialise,access to amenities and importantly earn more money than they can elsewhere. Auckland is lacking on the later!
Joe, why would you want to have a high paying job if your mortgage payments are $38 a week?
The only reason you need a high paying job in Auckland is because it’s so damn expensive.
When your mortgage repayments are $38 a week, you don’t even need a full time job. Work a few hours a week, and kick back on your own time for the rest of it! Life isn’t supposed to be about working until you’re old. But admittedly, few people can see beyond the brainwashing.
You assume everyone wants to retire and not work. I don’t. I want to work a manageable amount each day.
The thought of retiring to a small country town with no culture or dynamicism is not attractive at all. And since we are one of the most urbanised countries in the world, it seems most NZers agree with me.
This blog has definitely mentioned the southwards drift previously.
But then I have to live in Taumarunui so my mental health will suffer. No thanks.
Of course NZers are leaving Auckland. But a lot also arrive every year from provincial NZ looking for job opportunities they won’t find anywhere else in NZ.
Kiwis, and everyone, are leaving Taumaranui at a much faster rate. 13% decline in total population between the last censuses.
Pair that with some other sobering statistics from the census, 14% unemployment, half of adults with income below $20,000 per annum, one in five dwellings unoccupied.
I do hope that Auckland never achieves housing affordability like Taumaranui, because it would mean a failed local economy, poor job prospects, a shrinking population, and a glut of abandoned homes that aren’t being lived in.
Nick, I can see how you’ve come to those false conclusions about Taumarunui. The statistics you quote lack the scope to measure the lifestyle here.
People who live self-sufficient lives may be counted as “unemployed”, or “income below $20,000” by city-bound staticians who can’t see beyond their textbook definition of a capitalist life, but that just makes their statistics irrelevant, as it does it your viewpoint.
To your mind, you no doubt equate having an internet connection as meaning “I have to pay the internet firm $80 a month” as opposed to “I have to mow my neighbours lawn twice each month in exchange for access to their internet connection”.
As for population, it was around 2000-3000 for much of the 20th century, rising to 6000 when the railways were at their busiest, and sits at 4500 today post-railways era.
The empty houses you refer to are being bought by Aucklanders one by one.
I understand that Taumaranui isn’t for everyone, but why do people dump on it so much? So what if you aren’t earning $20,000? Interest on a mortgage there would only be $4,000 a year and the sections are so big that you could grow all of your fresh vege. The lifestyle is *different*, not worse. By your logic someone is worse off working three days a week and earning less, even if their mortgage is paid off.
Completely agree with you Geoff that it is a capitalist viewpoint to see formal employment and gross income as measures of success. Also completely agree that Taumaranui needs a reliable rail connection to Hamilton and Auckland to allow people to live in Taumaranui and access a remote office 1-2 days a week (or work 2 days a week and live off of the lower income).
I’m not really fussed with a subsistence lifestyle either way, a critique of capitalism or how you get your internet. I just responding to the idea that Aucklanders are flocking their in droves, which doesn’t stack up with the rapidly falling population or align with an unemployment rate four times the national average. Well I suppose it could, if you have a lot of retirees and people that don’t work moving there, replacing people who have left to find jobs elsewhere.
You’re solution might be right for you but it isn’t one that scales large to a whole population, not least because if everyone did it there wouldn’t be plenty of spare houses keeping the market price low. Funny how you seem sour on capitalism when it is exactly the capitalist system that let you buy a very cheap house and live your preferred lifestyle.
Nick, I didn’t say Aucklanders are coming to Taumarunui in droves. Not sure how you got. They are leaving Auckland in droves though.
The high unemployment rate is because half the population are Maori, and they have strong ties to the land and whanau, and wouldn’t leave after the railways shed their jobs along with the resulting decline in support businesses. That’s a cultural thing, but as I wrote earlier, how people look after themselves will by and large not show up in statistics or economic evaluations. You’ve judged them on those things, and so have formed a false conclusion.
But the point of course is that even those economic indicators you refer to are not really bad things, unless you’re looking through staunch capitalist eyes.
Less population also means less pollution, less consumerism, a complete halt to land development, and avoidance of the need to new housing, transport links and infrastructure. It’s actually the way of the future.
In that respect, Taumarunui represents the future of every other town and city, including Auckland. It’s important to remember that humanity is going to cross an important threshold in the near future – the average global birthrate is going to enter negative values, and the human race will enter permanent population decline that no part of the world will escape. Eventually, Auckland will have surplus housing and businesses closing down. It will happen everywhere.
Rather than fear that change, as I suspect people such as yourself do, we need to embrace it. It’s actually good news for the planet, and it’s unavoidable.
“People who live self-sufficient lives” – if they are calssified as unemployed that means they receive an unemployment benefit. Not very self sufficient if you ask me.
I also assume you were only able to go and basically retire in Tamarunui because you had worked in Auckland with a decent job and accumulated some capital. Could you have done that if you had lived in Taumarunui your whole life?
Geoff, I appreciate your presenting this as a lifestyle option.
Greenies who don’t want more neighbours in Auckland because they have a vision of being surrounded by green food growing and not much traffic need to take a leaf out of your book. Their vision can be achieved already, out of Auckland. They can embrace the joys of small town life and give up the conveniences of city life. (And take special care that they don’t follow the usual pattern of driving much more in the process.)
Auckland, like any city, has a different option for becoming green, and it cannot involve sprawl, because that creates a city with poor urban form, and requires too much land, fuel, time and resource put into transport. A green city will involve people doing city things, in a greener way, and without the city having a big ecological footprint. It requires a compact city, sustainable transport options, and a focus on green infrastructure.
Where the visions clash is when people want to be surrounded by a small town-style bungalow/villa + garden environment but have the amenity of a city. I’m not sure if the people holding the small town vision hogging the critical isthmus land need to die before they’ll give it up to a city-appropriate green vision, or if we can adjust policies to ramp up the rate of change.
If people want living locally, growing locally to the point of resisting intensification and reappropriation of roads for sustainable transport, then what they should do is do what you’ve done – move to the small towns and live by their words. Including finding or making a living, which may not have to be much in monetary terms, to pay for the cost of housing.
As a complement to Geoff’s piece, check out this recent study. Some pretty ugly stats for Auckland.
Matt, Matt L has often quoted this statistic as Auckland having the third highest monthly pass cost.
I have just used public transport in a large number of European cities and they have had a common model for pricing that advantages the habitual user of PT and hence their monthly and yearly passes are cheap.
Here’s an example from Vienna expressed in NZ dollars:
a single fare $4.13
24 hour pass $13.80
72 hour pass $29.48
monthly pass $87.93
By comparison if you buy a yearly pass its $760.
With PT so affordable for the locals it is not unusual to have crush loading on trams and metro at many times of the day.
I have long argued that Auckland monthly passes should be more affordable if the city is seriously concerned about putting more people on PT. With the dropping of prices in Vienna they found that their opex didn’t increase significantly because patronage grew so strongly.
Locals told me that their PT was not always so good and that most of the development has come in the last 50 years and development continues.
At the start of the thread there was a discussion on paying for infrastructure. In Austria all employers pay a payroll tax that funds PT infrastructure in Vienna. Why not in NZ? Would NZ derive more value from such a payroll tax than they do from KiwiSaver? Read the attached link before you answer the question.
I think they should really focus more strongly on some sort of annual pass or subscription model. Where the cost is targeted at around the average spend across the year. For some perspective, the existing fare revenue is about $200m a year, divide that across every single person in the city and it’s $117 each a year. That might be a bit too socialist to be palatable, and if you gave access to everyone then the usage and cost would have to shoot up. But it makes you think, if we could get 1/3rd of Aucklanders paying $10 a week subscription to PT, we could increase service levels and capacity 50%.
There is some issue of whether you make that everywhere-all zones (where the price would be higher and people making short trips would tend to cross-subsidise those making long ones) or if you try and do it with a range of prices per zone (where you’d have to pick your zones in advance, which is cheaper and fairer, but loses that ability to randomly travel anywhere on occasion without extra cost and world tend to keep people sticking to a regular commute).
Whatever the form, that would ideally be accessible through a range of means. An obvious one is a PAYE style deduction, free of fringe benefit taxes where a relatively small cost comes off each paycheck. Another would be a student/child ID pass rolled in with school and tertiary fees somehow. Perhaps the government could shadow-pay the child fares at school level, while at uni the discounted fare could be rolled into semester fees.
With workers paying their way, children and students covered through a partial subsidy, and Gold Cards already fully functioning for pensioners, you’d establish a structure for community services card holders similar to the Gold Card and have practically everyone (who is missed?) having practically unlimited access to PT. That would give a great basline for equitable access to study, jobs and services.
couldn’t there be other revenue sources, why not more commercial advertising on trains etc?
Does any of the regional fuel tax go into fare subsidisation? If not, why not? There’s been good progress, but more needs to be done.
A tax accountant may like to confirm, but as I understand it employers can provide a fringe benefit of up to $1200 per year. If an employee chose to forgo salary for a transport pass then this would be free of FBT?
Matt P, new revenue sources are only limited by the governments imagination, or lack thereof, depending on how you think they are progressing.
Here’s an example from Britain. I have attached a link to the charges attached to car ownership in the UK and if you scroll down you will see the carbon charges. As I understand it revenue raised from motoring in the UK goes to general taxation and not just roads. 7% of all revenue is raised in this way.
Also note that those who buy expensive cars pay more. Surely that wouldn’t be possible here? Remember when the fabric of our society was almost destroyed when the government proposed to tax baches. I have to admit that I am struggling to formulate a credible argument why more expensive cars shouldn’t be taxed more, but does it even need to be credible?
I note that the UK has made significant progress in reducing carbon emissions and NZ hasn’t. Never mind, sometime, not so soon, we will at least have targets. (I wonder if they will be targets of the same nature that AT had regarding fuel use, where it all seemed to become too hard, so they looked to review the target.)
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