Every weekend we dig into the archives. This post by Peter was originally published in July 2017.
This piece was originally written for Fightback magazine and published online in March.
As an economist specialising in urban issues, I spend most of my time analysing and debating how transport and housing policy can make society wealthier, healthier, and happier. But it’s important to keep equity, exclusion, and politics in view as well: When the average person’s fortunes rise, is everybody better off, or are some people left behind? And if some people feel excluded from society’s good fortune, will they react by building up an alternative, or by tearing down what’s already there?
In this article, I want to step back from purely economic concerns and ask how we can build a city that is more equitable and inclusive, rather than simply more efficient. However, in saying this, I don’t want to give the impression that we must sacrifice economic outcomes to improve equity, or vice versa. On the contrary, many of the housing and transport policies that will benefit us economically will also contribute to a more equitable society.
The problem of scarcity
Urban space is fundamentally limited. A person on a bike cannot occupy the same space as a truck – or, at least, it would be very unwise for them to try it. Two people cannot build houses on the same plot of land – unless they stack their homes and call it an apartment building. Consequently, access to many urban amenities, like coastal views or convenient commutes to a range of jobs, are also limited to those with the right and the means to occupy desirable places.
In a market economy, access to these amenities is usually rationed by price. People with the ability to pay for a nice location get to enjoy living there, and others must go elsewhere. This isn’t to say that non-market allocation systems will necessarily produce a fairer outcome. For instance, in the Soviet Union the best dachas, or holiday homes, were reserved for political and technical elites. However, it does suggest that, to get a more equitable outcome, we need to overcome the scarcity of housing in nice locations and the scarcity of good transport choices throughout the city.
Good urban policy can overcome scarcity. For instance, survey evidence shows that Aucklanders value their natural environment, including beaches, coasts, and public parks. However, a piece of research that I led last year found that home-buyers in Auckland pay substantially more to live near the coast but not to live near regional or local parks.
The difference is that coastal locations are in scarce supply, while parks are not. Because councils chose to build many neighbourhood parks and preserve major green spaces like the Waitakere Ranges and Maungawhau / Mt Eden, very few homes are more than a kilometre from the nearest park. Because there are many parks, access to them doesn’t have to be rationed by price.
Capital accumulation and Auckland’s housing affordability crisis
In Limits to Capital, geographer David Harvey observed that capital tends to seek a ‘spatial fix’ through investment in urban housing and infrastructure that promises a deferred (but potentially large) return. While we could debate aspects of Harvey’s narrative, it is clear that house prices have experienced a structural increase in most places since the 1960s. This reflects increasing allocation of capital to housing, and in turn results in rising wealth inequality.
This is happening in Auckland, too. Capital has flowed into Auckland’s housing market for a variety of reasons, including falling global interest rates and tax preferences for residential property investment. By and large, the money hasn’t been put to work building new homes. Instead, it’s bid up the price of existing housing. As Stu Donovan pointed out in an article on Transportblog[i], we’re living in a topsy-turvy world in which the best way to make money off housing isn’t to develop it, but to own it and speculate on future price increases.
Rising house prices may be appealing in the short run, but in the long term they add up to a social catastrophe. For one thing, the benefits of rising prices aren’t shared equitably, as home ownership is falling and wasn’t evenly distributed to begin with. Effectively, rising house prices represent a transfer of wealth from young people to older home-owners and investment property owners. If this persists for generations, young people without inherited wealth may never catch up.
For another, rising prices compel people to do a range of undesirable things to economise on housing costs. For some, this means staying in overcrowded or unhealthy accommodation because there isn’t anywhere else to go. As a result, Aucklanders suffer unnecessarily from preventable diseases like rheumatic fever and asthma. For other people, it may mean saving money to buy a home rather than starting a family or a business. You can see the effects of these pernicious trade-offs throughout society.
Fixing Auckland’s housing problems
David Harvey also points out, in The Right to the City, that it is possible to enlist capital inflows to benefit society, rather than to benefit private speculators. He focuses on the role of taxation in reallocating capital, but I’d like to generalise the point a bit further and discuss a few ways that current capital inflows can be put to work to overcome Auckland’s problems of scarcity.
As discussed above, when nice things are in scarce supply, prices tend to rise until some people give up and go elsewhere. We can see that effect clearly in the market for coastal property, but it’s also very real for housing in Auckland in general. We don’t have enough housing to meet the needs of the people who are living here, or who would want to live here. So prices have risen, which has induced a few people to leave, either to elsewhere in New Zealand or overseas, and forced others to cram into overcrowded or unsafe housing. Some people have no home at all.
Scarcity of housing in Auckland isn’t immutable, like a physical law. It’s true that land is scarce in Auckland, as the city sits on a few narrow strips of land in the middle of a large ocean. But if we do things differently, we can house more people in the space and break our vicious cycle of housing speculation.
The first and most important step is to ensure that urban planning rules allow more housing to get built, in the right places. Some people have sought to build walls of rules around neighbourhoods or entire cities, to keep them from growing and changing. But there is another way to achieve good urban outcomes: planning rules that enable more to be done and ensure that what’s done is done well, with good attention to the interface between buildings and the street and the long-run quality of neighbourhoods.
Design is important, but location is even more important. In Auckland, there are a number of amenities that are concentrated in a small number of locations. For instance, people value coastal living and they value the consumer amenities and good employment accessibility that are concentrated near the geographic centre of the region. Rules that limit new housing in these areas will result in an inequitable city, in which nice locations are the exclusive preserve of the well-off.
Auckland’s urban planning rulebook has come a long way in recent years. As I wrote on Transportblog last year[ii], the final Unitary Plan has roughly tripled the number of homes that could be built in Auckland, which gives us room to ease the housing shortfall.
With luck, this will change the property game in Auckland, tilting the incentives away from speculative investments (i.e. buying and holding for capital gains) and towards socially beneficial investments in new housing. But it may not be sufficient on its own, because private developers aren’t going to continue to build homes if prices start dropping. The data on building consents and house prices makes it clear that they, too, are in a boom-bust cycle: When prices fall, or stop rising as rapidly, developers pull back the number of homes they build.
This is where state housing, a long-standing progressive solution to housing equity issues, can play a vital role. The government (or the council) doesn’t necessarily need to build most of the new homes, or even more than a small share of them, to improve the fairness of the housing market. If it simply commits to stepping forward when private developers step back, it will help to stabilise boom-bust cycles in home construction. This will in turn ensure that the people at the bottom of the ladder don’t fall off the ladder when the next boom comes around.
Inequalities in Auckland’s transport system
So far I’ve talked mainly about housing, but transport is the other side of the urban equation. This, again, is an area where Auckland has a number of inequalities that could be addressed by redirecting a bit of the capital that’s sloshing around.
I want to focus on three specific aspects of transport inequality. The first is cars. Due to a set of choices that we made over the last 60 years, Auckland has a transport system that is heavily reliant upon cars. It’s possible to get most places in the city, most of the time, by car, but not necessarily by public transport or cycling.
This has its benefits, except when everyone’s trying to drive at the same time or when there’s a crash on the motorway, but they aren’t evenly distributed. Census data shows that over one in five low-income Auckland households lack access to a car, meaning that they face significant difficulties in reaching destinations.
This is linked to unequal levels of accessibility to jobs and education from different parts of the city. This measure reflects the combination of where people live and work and how easy it is to get around. The Auckland Transport Alignment Project recently looked at this, as shown in the maps below. Over the next decade, working-class suburbs in West and South Auckland are expected to experience declining accessibility to jobs by car and, with the exception of areas around Auckland’s rail network, relatively modest gains in public transport accessibility.
This reflects the scarcity of non-car transport options in these parts of the city. Where it exists, Auckland’s rapid transit system plays a key role in supporting accessibility by all modes. Busways and rail lines speed up public transport journeys, benefitting those who do not own cars. And by giving people the option to get out of the car if the roads are stuffed, they also moderate traffic congestion. But unless we take measures to reduce the scarcity of rapid transit options, these benefits will not reach all Aucklanders.
Finally, there are serious inequalities in health outcomes related to physical activity. Although obesity rates are an imperfect proxy for physical activity, they point to some serious differences in the accessibility and safety of walking and cycling options between different parts of the city. In North and Central Auckland, obesity rates are below the national average. In South Auckland, obesity rates are 26% higher than the national average for adults, and 70% higher for children.
People living in places where it is easier and safer to walk and cycle tend to walk and cycle more. In addition to saving people money, this can reduce the burden of preventable illnesses for individuals and communities. But this will not happen if walkable neighbourhoods and safe cycling facilities remain in scarce supply.
Abundant access for Aucklanders
To fix the inequities in Auckland’s transport system, we must move from scarcity of transport choices to an abundance of choices. We can build a city that has what public transport expert Jarrett Walker calls “abundant access”, in which:
The greatest possible number of jobs and other destinations are located within 30 minutes one way travel time of the greatest possible number of residents.[i]
Jarrett’s concept of abundant access focuses on accessibility via public transport, but similar goals could be outlined for all transport modes. For instance, we should also aim to ensure that:
- It is safe for all Aucklanders to walk to school or the shops
- People of all ages, from 8 to 80, feel comfortable cycling to a range of destinations.
Delivering abundant access will not necessarily be easy. It will require us to make some hard choices about how to deploy scarce resources, ranging from transport budgets to road space. It may require some capital to be reallocated towards infrastructure development. But it is possible, and, if we want Auckland to become a more equitable city, it will be essential.
Space for new politics?
This article has been primarily focused on policy, not politics. However, it is often the case that new forms of politics are needed to deliver policy change.
As I’m an economist rather than a political organiser, I won’t pretend to know how to catalyse new political movements. That being said, I hope that this article has offered some useful suggestions for shaping a progressive political agenda. First, it’s important to recognise that many of Auckland’s social and spatial inequalities are driven by scarcity – in particular, scarcity of housing, especially in desirable locations, and transport choices.
Second, we must react to scarcity by building bridges, not walls. In an urban context, progressive politics must respond to scarcity by delivering abundance. If people don’t have places to live, build more homes. If people can’t get around, provide them with abundant access. In a city, we are all citizens – we have a right to the place where we live.