Follow us on Twitter

Auckland’s Chief Economist speaks up for future generations – Auckland needs to grow “up and out”

Auckland Council’s Chief Economist Geoff Cooper was in the paper on Thursday with a few interesting arguments about urban planning. The article is refreshing because in it Cooper challenges a few of the many sacred cows in the debate over growth and housing affordability.

In particular, Cooper discusses the “up versus out” narrative that has been wrapped around Auckland’s urban growth. In recent months, for example, both the New Zealand Initiative and consultancy NZIER have published research papers arguing that Auckland should open up greenfield land to improve housing affordability.

Cooper argues that these analyses have failed to notice the fact that the proposed Unitary Plan already does this:

Despite this complexity, discussion on Auckland’s urban policy is often reduced to “up” (intensification) or “out” (sprawl).

This simplification overlooks three key issues — Auckland Council’s proposed urban limit policy, the policies underlying a compact city, and the political economy of urban policy.

The proposed plan vastly extends the urban limit, aiming for an average of seven years infrastructure-ready land supply available at all times. Once implemented, around 20 per cent more urban zoned land will be available.

This is enough for up to 76,000 new dwellings (roughly equivalent to all of Hamilton).

Calls for more land supply miss the solutions being implemented.

In my view, a policy of greenfields growth could result in not insubstantial economic costs. These risks are discussed in a range of new studies,evidence which present evidence suggesting outlying locations are not necessarily more affordable once transport costs are taken into account (often difficult to do in advance). So while house prices might be cheaper, the costs of getting around can offset those savings. Not to mention the external costs of congestion wider society must bear from more development in peripheral urban locations.

On the other hand, Cooper also critiques debates over residential intensification. He points out that removing *restrictions* on urban intensification development, so as to enable more compact and diverse forms of housing, doesn’t amount to “forcing intensification upon communities”, as some have claimed. Instead, the Unitary Plan tends to remove barriers that prevent people from living at higher densities in locations that provide the attributes they seek, such as amenity and accessibility. Cooper comments:

Proposed policies for a compact city are also misunderstood.

Compact living policies are about creating choices, by reducing existing regulations that stop people living in higher density areas, when they want to.

The inherited planning framework by Auckland Council is heavily biased towards the “quarter acre section” through rigid regulations. This creates a push for urban sprawl.

The city’s rules prevent the supply of housing people want in the areas they want to live in – close to the city, with good transport and other amenities.

These preferences are clearly shown in soaring house prices on Auckland’s isthmus.

The draft plan was designed to create greater housing choice. But this has been scaled back significantly during public consultation.

Residents want to preserve their lot, but it comes at a cost to future Aucklanders. New height limits have been introduced in many suburbs, while existing height limits have been tightened, as have density constraints which means it will be harder to gain access to attractive suburbs.

The important thing Cooper highlights here is how policies that restrict housing  supply in desirable areas come with a significant cost. There’s a wide range of international evidence suggesting restrictive planning regulations, such as minimum parking regulations, density controls, and building height limits, tend to raise the cost of housing. A 2002 paper by Edward Glaeser and Joseph Gyourko, for example, found American cities with more restrictive zoning were less affordable:

The bulk of the evidence marshaled in this paper suggests that zoning, and other land use controls, are more responsible for high prices where we see them. There is a huge gap between the price of land implied by the gap between home prices and construction costs and the price of land implied by the price differences between homes on 10,000 square feet and homes on 15,000 square feet. Measures of zoning strictness are highly correlated with high prices… [I]f policy advocates are interested in reducing housing costs, they would do well to start with zoning reform.

New evidence from Auckland suggests that our planning regulations may have a similar effect, driving up housing costs above construction costs. While the proposed Unitary Plan loosens some regulations, it arguably doesn’t go far enough to truly improve housing choice and housing affordability. Indeed, in some locations it proposes much more onerous regulations than exist under existing district plans, such as on minimum size requirements for apartment. Such requirements have the potential to exacerbate housing costs for the households that can least afford it.

Finally, Cooper also highlights the sometimes perverse nature of the political economy of urban planning. As many people have pointed out, planning regulations have significant effects on intergenerational equity. While restrictive regulations might be good for existing homeowners, they’re extremely bad for new homeowners – and by extension future generations.

It seems fairly obvious to me that if a city is systematically unwilling to allow new housing supply to be built in desirable, accessible areas, then skilled young people will increasingly face a Hobson’s choice: Either pay too much for housing in an accessible place, or pay too much for transport in a cheaper fringe location. And in the long run, we can expect these people to choose another city to live in. Indeed, unaffordable cities place will tend to be disadvantaged in the increasingly global competition for skilled young labour. In this other recent article Cooper actually makes this very point: Auckland competes for people, business, and capital more with Brisbane. Sydney and Melbourne than with other places in New Zealand.

Unfortunately our political system seems especially bad at solving the intergenerational problems even though this is arguably one of its core functions.

This Government’s inability/unwillingness to make headway on carbon emissions being the prime example. As a young Aucklander with many Kiwi friends living overseas. I am fairly sure that the people who will benefit from better housing policy are, for the most part, not voting in elections or going along to consultation meetings. Many more may have not even been born yet. It is these voices that are so often not heard, nor even acknowledged, in the debates on the Unitary Plan.

Responsibility for this issue lies jointly with our political representatives and mainstream media outlets, who tend to lack the courage to push back on even the most blatant self-interested objections to urban development.

Ultimately I think it’s really useful to have Auckland Council’s Chief Economist speaking out on these issues and highlighting that Auckland needs to both grow “up and out”. Now it’d be nice if more people at a central  government level started to champion the same issues.

40 comments to Auckland’s Chief Economist speaks up for future generations – Auckland needs to grow “up and out”

  • Great post. I truly despise the excessive “consultation” in New Zealand politics. It is highly undemocratic because it shifts responsibility off politicians themselves – who’re elected to represent all of us and to spend all of their time understanding complex issues – and onto the “public”. But it’s not really the public, it’s a subset who speak loudest in the consultation who, by definition, are not representative of all of us and who cannot possibly understand the issues as well as someone with more time and data. Consultation is OK when it’s gathering valuable data for the political decision, but not when it overwhelms it. Limited doses, rather than the AC approach which is about 5 waves of widespread “consultation” on every damn thing they do.

    • spartan

      I was talking to a girl from Vancouver last night who was back packing and she was amazed at the lack of “transit” in Auckland and it was certainly not what she expected before she came here. She was under the impression that Kiwis were smart and innovative, I had to explain to her that when it came to transport in NZ we were still stuck in the 1950s

  • Simon

    This is an excellent article by Cooper. He articulates the issues very capably, and highlights starkly the effects of scaling back the UP as a result of NIMBYism.

  • Bryce P

    Our large towns and small cities need to become more dense, and offer more excitement and opportunities, fast. Or they will continue to loose their smart young people at an ever increasing rate. And then they will be in serious trouble as these retirees wont be able to afford the rates necessary to sustain these low density towns.

    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11292276

    • The world is a series of conveyor belts and “provincial places” are a part of this.

      Pick a Country … And this is what happens with people, largely.
      Small place > Bigger Place > Biggest Place > Another Country

      You only need look at population movements worldwide to see this, here is another example
      Pacific Island > Auckland

      There is a fundamental problem with small places, and it is a lack of people to achieve scale.
      Unless you have literally, a business living in a small place, or are sufficiently wealthy in paper, there is no good reason for people to live there.

      An example of this is Japan, where people live in Mega Cities because if makes sense and it is where people can do productive things.

      The payback is the vast amount of land in proportion to the country that is “wilderness”

      Technically, it is possible to make small places viable, link them via bullet train to big places.
      It is also very expensive.

      Why are there no car factories in New Zealand? Because it is not efficient.
      Why are there no car factories on Waiheke? Because it’s incredibly inefficient.

      • Brendon Harre

        Plenty of small towns around the world are doing well and are not dependent on ‘bullet train’ connections to ‘big places’.
        http://en.wikipedia.org/wiki/Vaasa
        http://en.wikipedia.org/wiki/Billund,_Denmark
        I am sure there are many, many other examples.
        One shouldn’t extrapolate Australasia’s resource economic dependence -mining Aussie, grass -NZ to the rest of the world…..

        • nonsense

          Vaasa, municipal tax rate 19.5%…

          • Brendon Harre

            Exactly. If the NZ provinces kept some of their taxes and developed their own infrastructure to maximise their strengths then we too might have Vaasa’s and Billund’s…. It is politics not economics that is holding us back……

        • Re : small towns doing well. Fantastic, they have a viable business model. Many of the problems facing small places are in no way unique to New Zealand. Small villages in the UK have in part survived because despite reducing employment in farming, plenty of cash rich people buy houses in these places ( or 2nd and 3rd ones), and help support shops and other community facilities.

          People also setup craft industries in these places because they are pleasant.

          This is separate from the argument that relocating large scale business makes any sense, as although land might be cheap, housing easy to build etc, if the businesses relocated take off, your small place heads down the road of being a bigger place and may even become the biggest one day.

          What have you actually achieved at this point? You’ve simply created another large place which requires all the same things the other large places need. Running two cars is more expensive than one and places are no different. This is an opinion, I simply prefer actual unspoilt wilderness as opposed to giving free reign to self-interest and building everywhere that seems pleasant.

          • Brendon Harre

            There is nothing to learn from the UK. It has had disastrous housing and industry conditions for 65 years.

            Who was suggesting relocating business -NZ is not the Soviet Union. Lego did not relocate to Billund -it was invented there and remains there. No Finnish government relocated industry to Vassa.

            Auckland is not the only place that a diverse range of industries can survive in.

            Big cities -Auckland, medium sized cities -Wellington and Christchurch and towns of various sizes all have their strengths and weaknesses. Give them some degree of independence and control and they all will do well.

    • Brendon Harre

      5000 rich kids get all those nice amenities in family centric inner city Vancouver. Great good for them. But how many tens of thousands of kids do not? How many families are struggling with unaffordable housing?

      • Not sure access can be blamed on The City, providing access to anything is a choice made by people, cities are a better way to provide the opportunity for this cost effectively, otherwise you duplicate everything, which is fine if you are aiming for redundancy in libraries, pools, park and Tarmac.

        To be cost effective, facilities should be used to their maximum capability, something which is sometimes referred to as “sweating your assets”. It is hard to do this, when you lack people to generate sweat.

  • Thankyou Ted E. Planning in this country leaves me in a state of absolute “bemusement”

    http://tinyurl.com/q8q76gh

  • Brendon Harre

    Why do we not do something like this in NZ cities?

    Dutch/European style New Towns for NZ?

    Right of way (ROW) to central hub for public transport (PT).

    ROW trunk road going past New Town with ‘on’ and ‘off’ access roads to New Town. No strip development allowed on trunk road.

    Industrial zone with ‘on’ and ‘off’ access to trunk road. Cycle way connection between PT hub and industrial zone for workers.

    Centre of New Town (a few blocks) -High density commercial/residential private development around PT hub. Designed to promote walking/cycling.

    Circling this -Medium/High density residential ‘KiwiBuild’ (local or central government compulsory purchases land at rural prices) development. These developments could be apartments, row houses or town houses with good walking/cycling access to PT hub.

    Circling this a very large area of medium/low density residential zoned land for private development. Every new housing development has to build a cycle way connecting to the PT Hub. This will encourage private developers to develop those areas closer to the New Town first. But if their are farmers/landowners ‘holding out’ for excessive prices that are many times greater than its rural value then developers can leap frog them by building a longer cycle way to more reasonable priced land.

    Some areas permanently off limits (no possibility of zoning change capital gains) as green spaces -park land, market gardens, allotments, future public amenities (schools, hospitals, transport ROWs….) or undevelopable land due to being flood prone, geotechnic unstable etc. But otherwise everywhere within easy cycling range -say 5km radius is zoned either residential/commercial/rural or industrial/rural.

    Due to the large amount residential zoning, raw undeveloped residential land prices drop down towards rural land prices for private land developers. This allows private developers the same chance to access affordable land as the government does with its compulsory purchase -KiwiBuilds.

    There is a commitment and expectation that if residential land prices and therefor house prices rise excessively then more Kiwibuild/New Towns would be constructed. Perhaps as close as 5km from existing New Towns depending on geography/other infrastructure etc. This process could occur well before all the existing zoned residential land is developed.

    I believe this sort of urban development would provide long term affordable housing. It would give kiwis the choices over multiple housing and transport types that many are seeking. This plan is practical and non-ideological. Avoiding the ideological debates of compact/small expensive cities versus sprawling/large inexpensive cities. It could be done in conjunction with new urban development rules that allow more ‘up’ development within existing urban areas. So it doesn’t claim to be the ‘silver bullet’ for housing affordability or urban planning, but it is one effective policy to help with affordable housing and car dependency. It combines the best features of NZ history of state housing and transport developments http://www.thesustainabilitysociety.org.nz/conference/2007/papers/HARRIS-Lost%20City.pdf
    and affordable private sector housing development (see map in this article) http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11188916 .

    It is a clear democratic difference to National’s Special Housing Areas that only have one type of housing -traditional stand alone housing and one type of transport option -the car.

    • Ted E

      Thank you for those references Brendon. I like your thinking and wonder how we came to lose our way. I remember the derogatory electioneering over Robbie’s visions.

  • Brendon Harre

    If Geoff Cooper wants to offer more housing choices here is something else to consider.

    Another option for going ‘out’ is the right to build an ‘eco-village’ anywhere idea.

    Currently if you are rich enough you can buy a lifestyle block of land at rural prices -typically 4 hectares for between $200K and $1000K and you are allowed to build one house on this land. The pretence being this is a genuine farm but it is often ultra low density housing (Complete with 4×4 that is more likely to be used for long distance commuting than genuine farm work, young princess Kate’s pony and young prince Williams recreational quad/dirt bike).

    Why cannot an ‘eco’ minded community put more houses on this 4 hectares and create a sustainable community?

    I think a group of ‘poor’ people should have the same ‘right’ to set up an ‘eco-village’ in the countryside as rich people do to build a single stand alone house on their lifestyle block.

    My rules for ‘eco-villages’
    -village independently manages the three waters -fresh, storm and waste within its own land area self sufficiently.
    -Villagers jointly responsible that this does not pollute, with the ultimate sanction of losing land/houses if they fail to do this.
    -Passive level or zero energy housing.
    -For every house on a separate title there is a minimum of 1000m2 (0.1 hectare) of land in common title managed by a village Council or body corporate for grazing, orchards, vege gardens and/or aquaculture. With the possibility that some of this is in allotments.

    So for instance 20 ‘eco-villagers’ could together buy a 4 hectare block for say $400k and have the ‘right’ to divide it up to 20 individual titles for housing on 2 hectares and 2 hectares of village common land for growing food. Each villager paying $20K for the raw land costs. Even with the expense of the passive level house, the three waters, whatever roading, fencing and other village expenses this surely has to be affordable housing of say between $300K -$400K. Possibly much cheaper if the villagers did the work themselves (community self-build).

    I think this housing option would appeal to some kiwis. For instance if someone can work from home, the partner could bring up children and help out on the ‘commons’. The ‘eco-villages’ need not be isolated -actually they would have a lot more community than traditional lifestyle blocks. There are also many rural schools and communities that would get mutual benefit from having a nearby ‘eco-village’.

    • John Polkinghorne

      The term “eco-village” is a bit of a misnomer; generally, people living in these areas would use a lot of petrol driving back to the city for work, shopping and so on, making them pretty unsustainable. There is still the odd commune around, and no doubt the people who live there do try to minimise their driving, but that’s not really representative of what might happen on a larger scale. Subsistence agriculture isn’t a particularly efficient land use either.
      It’s possible that with heavy use of wind and solar, and small houses with fairly few appliances, that these things could be kept independent from the electricity grid, but again it’s highly unlikely that the average NZ household, which uses around 8,000 kWh a year, could manage it.
      My first impression is that this ends up seeming quite a lot like the existing communes we have in NZ, and while some people undoubtedly enjoy that lifestyle, I don’t see people rushing out to sign up for the ones that are already there.

      • Brendon Harre

        Yet we allow 170,000 lifestyle blocks consuming more land than all our towns and cities combined. Surely my plan is better than that?

        What is wrong with giving people more choices? Maybe ‘eco-villages’ would not be popular but they would give kiwis a new option in how to live their life. What is wrong with that?

        • John Polkinghorne

          Fair enough, and I don’t have a problem with it providing that infrastructure costs and externalities are accounted for. There is always the tendency to want more than what we’re currently getting, without paying any more than what we currently do (eg http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11290062), not that any of us are immune from that.

          I do suspect, though, that those lifestyle block stats are a bit inaccurate – there are around 1.6 million households in NZ, and I’d be very surprised if 10% of them are living in properties that could be called lifestyle blocks. There could easily be that number of land parcels within a size band that corresponds to lifestyle block sizes – a few thousand square metres to a couple of hectares, say – but they wouldn’t all be used as individual dwellings. I’d also be a bit surprised if they were taking up a larger land area than our towns and cities – I spend a lot of time on Google Earth, and I’m struggling to think of any town in NZ which has a larger area of lifestyle blocks than its urbanised area. Have you got some sources?

          • Brendon Harre

            I’ll try to look for some hard statistics on lifestyle blocks. I definitely have read the stats on blogs etc. I believe it in Canterbury. I often go to Ohoka market in Canterbury. It has a Domain, Hall, petrol station and school but no actual ‘village’ of normal housing density. It is all 4 hectare blocks consuming many square kilometres. Essentially it is ultra low density housing for the rich. Google Earth it. This is repeated in many places all over the Canterbury plains. Go to real estate websites and search for lifestyle block sections and you will find they are often sold in blocks of 5 to 10. Again another example of ultra low density housing. Ten 4 hectare lifestyle blocks consume 0.4 square kilometres so it is not hard to see Canterbury lifestyle blocks could consume more land than Christchurch.

          • Brendon Harre

            http://www.aucklandcouncil.govt.nz/EN/planspoliciesprojects/plansstrategies/unitaryplan/Documents/Section32report/Appendices/Appendix%203.35.22.pdf

            The number of small rural properties has grown substantially in recent decades. According to
            McAloon(2009), the number of holdings below 40 hectares was 15,302 in 1972, and this grew
            to 35,701 by 1992.Gouin(2006) suggested this increase was largely because of new lifestyle
            blocks. The number of lifestyle blocks recorded in the national property valuation database has
            increased markedly since the late 1990s, from just over 100,000 in 1998 to the present figure of
            about 175,000 (Fig.1). P.2

          • John Polkinghorne

            Thanks for the link Brendon, an interesting read. Good point with Ohoka, and I should have thought of Mandeville in the same area as well. So it seems from the report that 175,000 properties could be considered lifestyle blocks in terms of their size and value, although they won’t all be used as such. I’d still be surprised if anything like that number were actually occupied by households, but even allowing for only some of those properties to be true “lifestyle blocks”, it does seem quite possible that they take up more land than NZ cities. That’d be an interesting study.

  • Brendon Harre

    It is politics not economics that is preventing NZ from having affordable European style New Towns and trying something new with affordable ‘eco-villages’. Simply change the rules for local government and the outcomes will change. I think for the better…..

  • Re : There is nothing to learn from the UK. It has had disastrous housing and industry conditions for 65 years

    Most everywhere has something to teach, actual value varies.

    Useful stuff the UK can teach us.

    1. How to constrain self-interest with fixed green belts
    2. How to maintain access to the coastline for everyone by allowing no one to build on it
    3. How to maintain off road, public access bridle ways throughout the country

    Whilst having a population over 15 times that of New Zealand.

    Housing is a choice, a lot of people are badly housed in the UK? People made bad choices.

    New Zealand could do with 20 million more immigrants ( QED we are all immigrants). The problem is 20 million people living the “kiwi way” is a recipe for disaster.

    My main problem with small places in New Zealand is economic. New Zealand struggles to rebuild Chrustchurch, so we’re obviously drowning in cash.

  • Brendon Harre

    Phil I have no doubt a car based urban area can be affordable in the way you describe. But many good folk here at Transportblog want a different type of lifestyle. They want to walk/bike to their local school, shops, daycare and even workplace. Others would like to use public transport in their daily lives, maybe it is less stressful, maybe it is to use their smartphones. PT doesn’t have to be the last choice.

    So is it possible to develop an urban area on affordable basis where there are choices for walking/biking/PT? Cars are still an option but do not dominate? Obviously not what we are doing now with UGB’s as that is not affordable. Maybe something like I described above with European style New Towns, cycle centric subdivisions and ‘eco’ villages?

    • Phil Hayward

      Brendan, you are one of the most open minded, willing to consider evidence, participants on forums like these that I have ever encountered.

      I have made a comment here, answering a similar question from DaveB.

      http://transportblog.co.nz/2014/07/11/how-crl-benefits-different-parts-of-auckland/#comment-118310

      I believe that what I am saying is the truly pro-choices position. The problem is that the policy settings we are now under go way beyond “increasing choices” – massive expense is being imposed on the public under policies that are more about creating wealth transfers than they are about actually achieving results in the ultimate objectives like energy use, and even in “choices”. The only cities in the world where you can say “car free lifestyle” and “low rents” in the same breath, are the ones where car-dependent McMansions are also cheap. One of the biggest ironies of all is that Auckland’s housing choices are now more expensive than New York’s, when you compare like for like. I mean, say, the price of a family home 40 minutes PT ride from the very city centre, and the price of a row-house 20 minutes PT ride from it. Even the price of a CBD apartment. And people who excuse this by claiming Auckland is up there with New York, are suffering from a Walter Mitty type complex.

      Ed Glaeser complains about the cost of rent in Manhattan but he doesn’t know he is alive. New York is what it is because it was a big city even before the automobile, besides being lucky with what industries settled there, and in modern times it was allowed to sprawl for dozens of miles, and option values in land have kept the locations nearer the centre cheaper than otherwise. It is far preferable as a global city, to London, Hong Kong, or even Vancouver. And something like 85% of the urban areas jobs are outside Manhattan anyway, and it has all sorts of employment that are nothing to do with what goes on in Manhattan, which is something London lacks – i.e. options for people who can’t be a merchant banker or a bureaucrat, and want to do something other than live in a loft and work as a waiter or a cleaner.

Leave a Reply