Auckland feels like it’s at the cusp of something of a transition between being an ‘overgrown town’ and a ‘real city’ – with the distinction between the two manifesting itself in the difference between the Council’s vision for Auckland and central government’s vision. In the transport arena, central government thinks that the biggest problem is congestion on Auckland’s roads – which needs to be solved through building more roads. This makes sense if you think of Auckland as just an overgrown town – where widening a road normally seems to fix the transport problem faced. However, it doesn’t work in a large city and alternative approaches – like building a high quality public transport system – are increasingly necessary.
An article in yesterday’s Herald articulated the growing recognition – once again seemingly mainly led by the Council – that Auckland’s scale provides economic opportunities and the potential to be the “growth giant” of the country which simply don’t exist elsewhere in New Zealand:
Auckland Council chief economist Geoff Cooper says the city’s growth is far outstripping the rest of New Zealand.
“Auckland will add a person to its population every 19 minutes. This compares to one person every two hours for Christchurch and one person every 2.5 hours for Wellington,” he says.
With that rate of growth will come big challenges, especially on infrastructure, particularly tunnels, tarmac and bridges.
As the only chief economist employed by a territorial authority in New Zealand, Cooper says he is in a unique position, able to provide a level of data beyond many other councils’ resources.
Auckland is a powerhouse for the national economy, Cooper says, and average labour productivity for firms in the CBD is 139 per cent higher than outside the Auckland region, according to a Motu study.
“This shows just how important the central city is, not just for Auckland, but for New Zealand as a whole.
“Auckland firms are prepared to pay a high rental premium because of these returns. Creating an accessible and high-amenity city centre will be critical in allowing more firms to take advantage of these returns and generate a high performing business district,” he says.
There’s an interesting conundrum around Auckland’s rate of growth compared to the rest of the country – in that as Auckland gets bigger it creates a wider variety of economic opportunities and a sheer scale which improves productivity. Yet at the same time, to enable economic growth Auckland needs investment in infrastructure, spending that probably wouldn’t be necessary if that same growth happened elsewhere in the country. For example, Invercargill could probably cope with quite a lot more growth before needing any major transport investment.
That sort of “distributing growth” approach seems like it was perhaps more suited to economies of two or three decades (and beyond) ago, that modern 21st century economies. When lots of employment is in low-skilled manufacturing then it doesn’t really matter where the factory sets up – and looking around New Zealand there are still quite a lot of large factories in fairly small towns (resulting in those towns generally becoming incredibly dependent on that industry). However, in more service and knowledge focused economies with a greater and greater focus on skills, agglomeration benefits, specialisation and so forth. In this type of economy, large cities with large and diverse labour pools tend to do well.
Perhaps this is reflected in Auckland’s economy doing reasonably well in recent times:
“As Harvard professor and urban economist Edward Glaeser notes, ‘despite the technological breakthroughs that have caused the death of distance, it turns out the world isn’t flat, it’s paved. The city has triumphed’,” Cooper wrote.
The Auckland economy grew by 2.1 per cent in the past 12 months.
“While this is not particularly glamorous in its own right – Auckland’s 10-year average is 2.5 per cent – against the backdrop of a European sovereign debt crisis, a double-dip recession for Britain, stuttering growth for Germany and a reduced growth outlook for China, it looks rather more attractive,” Cooper said.
I think I fall on the side of taking advantage of Auckland’s potential size and the economic opportunities it provides, even if that comes at the cost of additional infrastructure. Distributing growth may have worked OK in the mid-2oth century economy but it just doesn’t seem to be the way of the future. This decision has some massive implications, perhaps the most relevant one to this blog is the key importance of projects like the City Rail Link in enabling Auckland to achieve its potential.