New Zealand can’t put the urban genie back in its bottle

Although the majority of New Zealanders have lived in towns and cities for almost a century, it sometimes seems like we’re in denial that we live in an urban nation. This unease came to the fore during the debate over the Auckland Plan and the Unitary Plan. As it turns out, some people are uneasy about Auckland’s emergence as a large and increasingly sophisticated city.

At that time, the NZ Herald published several articles calling for a “national population strategy” to forestall further growth in Auckland. Here’s one example from May 2013:

Redirecting people away from settling or living in Auckland would be a positive step. A good example is in Invercargill where students pay no fees. The fees at Auckland learning institutes should be increased and those elsewhere removed or reduced significantly.

[...]

As so much of the population increase is likely to come from an increase in births, a decrease is urgent. Incentives need to be provided such as free contraception, especially to those under 20 years of age. The provision of family benefits regardless of whether you have two or 10 children should be looked at.

Here’s another one from June 2013:

Short of putting contraceptives in the water supply we are unlikely to do much about our rate of natural increase – so realistically any policy needs to focus on migration patterns, particularly within New Zealand – the so-called “northward drift”.

Realistically we cannot talk about Auckland in isolation from the rest of New Zealand. We have no national population strategy – though some useful work has been done in the past. Neither do we have a regional development strategy, an essential mechanism for achieving a more equitable sharing of economic and population growth.

This is a seductive idea, but it won’t work. Developing policy to redistribute growth is bloody hard without spending massive amounts of money and tightly controlling economic activity. If we seriously tried to subsidise or regulate growth away from Auckland, we’d probably just end up misallocating resources and reduce our wellbeing. As urban economist Edward Glaeser is fond of pointing out, good policy should aim to help poor people rather than poor places.

Fortunately, we don’t have to speculate about the consequences of regional growth policies, as we have a real-world historical example to draw upon. From the 1930s to the 1980s, NZ tried a massive policy experiment – it invested heavily in regional development and used regulatory controls to spread investment and employment around the country.

Looking back on it, the reach of these regulations and investments is extraordinary. So, for example, you had:

  • Economically costly production and export subsidies for farmers were propping up uneconomic farms. By 1984, subsidies accounted for almost 40% of the average sheep and beef farmer’s income.
  • The Transport Licensing Act 1931, which banned trucks from moving goods more than 150 kilometres before its repeal in 1982. This imposed high costs to distance, encouraging small-scale local production rather than centralising plants.
  • Regulations that virtually prohibited the opening or closing of meatworks and other rural processing plants between the 1930s and 1980s. When the Patea meatworks closed in 1982, they were the first meatworks to close in half a century – which is bizarre when you realise how much cheaper refrigerated shipping got over this period.
  • A policy of distributing major industrial facilities around the country – an aluminium smelter for Bluff, a steelworks for Glenbrook, a pulp and paper mill for Kawerau, etc.
  • The use of the Railways Department and Forest Service as rural employment schemes.

So it’s worth asking whether these policies worked. We know that they were economically costly – but did they actually succeed in redistributing growth from Auckland to the regions?

The data suggests that the answer is no. Here’s a graph of population growth in New Zealand’s major cities from 1926 to 2006 from Grimes and Tarrant (2013). As it shows, Auckland’s population growth began diverging from Wellington and Christchurch early on – probably after World War II.

NZ city population growth 1926-2006

Furthermore, the almost total removal of rural subsidies during the 1980s doesn’t seem to have accelerated Auckland’s divergence. In fact, Auckland’s annual per capita growth rate seems to have fallen after deregulation, although growth slowed more in other places.

In short, we should accept the reality of urban growth: People want to live in Auckland and start businesses here for good reasons, and we can’t (and shouldn’t) try to stop them. The idea that we can put the urban genie back in its bottle is sheer fantasy. If we try, we’ll only make ourselves worse off.

Our only choice is whether we will have a good city – an interesting and prosperous place – or a crippled, unsuccessful city. Given that, our focus should be on making the best urban places we can. We need Auckland to be a dynamic and liveable city rather than an overgrown small town. And that means investing and planning in a city-like way: getting ambitious about rapid transit, celebrating our mixed-use public spaces, and accepting that density and amenity aren’t mutually exclusive.

Is this Auckland 2040?

Is this Auckland 2040?

 

Mayor’s Long Term Plan proposal released

This morning the mayor released his proposal for the Long Term Plan, which outlines the 10 year budget for the city. This is the first stage in a 9 month process.

Long-term Plan timeline

  • August 2014 – Mayor’s LTP proposal
  • December 2014 – Auckland Council adopts draft LTP
  • January and February 2015 – Public consultation on the draft LTP
  • April 2015 – Public hearings
  • June 2015 – Local boards adopt local board agreements and governing body adopts final LTP.

The proposal is available on the council website here. The proposal does not have a huge amount of detail, and more based around funding outlines with some major projects mentioned. Today I will just do a quick outline of the document, and we will follow up with more analysis tomorrow.

Screen Shot 2014-08-28 at 11.42.39 AM
Rates increases are 2.5% for the first two years, and 3.5% after that.
Screen Shot 2014-08-28 at 11.44.35 AM

Screen Shot 2014-08-28 at 12.29.40 PM Screen Shot 2014-08-28 at 12.29.56 PM

 

Here is what the document has to say about transport. Note that capital expenditure of $469 million, compared with $826 million in the 2014/15 Annual Plan. However this is going to be cut back by $150 million as we noted yesterday. This seems to be a mixed bag. Great to see City Rail Link still included. On the positive side good to see Penlink, other arterial roads and most of the oversized Park and Ride strategy cut back. However difficult to see how Lincoln Road is such a priority for upgrading, it is hardly lacking traffic lanes at the moment! Disappointing to see the North-Western busway pushed back even outside the 10 year timeframe. I’m sure this can be staged appropriately so we can see some good progress over the next few years.

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Transport represents the most significant proportion of our total budget – almost a third of our operating costs and over 40% of our capital budgets. The funding envelope in the baseline budget is a significant reduction in the capital programme in the current LTP and has an even more significant shortfall on the aspirations reflected in the Auckland Plan.

This baseline proposal includes major projects such as:

  • The City Rail Link
  • North Western Growth Area projects
  • Warkworth SH1 intersection improvements
  • The East – West connections
  • Lincoln, Te Atatu and Dominion Rd upgrades.

The full detail of the list will be the subject of discussion between Auckland Transport and ourselves over the next couple of months as part of fleshing out the draft LTP for consultation. The basis of that discussion will be the criteria by which we rank projects and getting a shared level of comfort with that process. Naturally I would want to see our strategic shifts towards public transport active modes strongly reflected in those criteria. However, the basic transport option is not what I believe Auckland wants or needs. It is an investment programme that will not solve our existing transport problems and in fact will see them get worse. Under current funding arrangements what we can afford involves foregoing a significant amount of transport investment that Aucklanders have told us they wanted through the Auckland Plan. We wouldn’t be able to deliver a range of projects including:

  • A majority of local and arterial roading projects across the region
  • Almost all of the park and ride projects currently programmed
  • The North-Western busway
  • Strategic projects such as Penlink and rail electrification to Pukekohe. I beleive Aucklanders want all of these projects and have an expectation that the entire transport programme contained in the Auckland Plan be delivered in the 30 year timeframe.

 

The plan also outlines a number of projects that will proceed as are needed to support growth including Special Housing Areas. That is something we have noted previously so is good to see this mentioned. Seems to be a little bit of a grab bag of projects though. Will need more than the Te Atatu busway station to support growth in the North-West, and not sure Drury station is a priority amid other capital cuts as will only be served hourly when Papakura station is so close and will have 10 to 15 minute frequencies.

Some examples of these projects are:

  • Watercare’s central interceptor project
  • Grade separation at Avondale
  • Tamaki Drive shared walking and cycling path
  • Work with mana whenua on redevelopment of Ruapotaka marae
  • Otahuhu aquatic centre and library
  • Improved public transport between Mangere/Otahuhu/Sylvia park
  • New Takanini library
  • Grade separation at Walters Road, Takanini
  • Te Atatu bus interchange
  • Westgate stormwater ponds
  • Lake Road, Takapuna streetscape
  • Train stations at Drury and Paerata
  • Manukau transport interchange
  • Ormiston library and community centre. 

Grade separation at Walters Road has been the hold up for Addision/Glenora station so hopefully that should allow that station there to proceed.

Overall I think need to wait for more detail to see effect of transport projects, and it will be interesting to see if Auckland Transport prioritises public transport within this reduced spend or keeps building lots of lower value roading projects.

Deferring Transport Projects

So what do you do when you’re told you have to cut some of your $826 million budget for capital projects and that in choosing what to cut it can’t apply to public transport projects?

Well it seems if you’re Auckland Transport you start by cutting PT and active mode projects.

Back in May when the council was discussing their budget for this year it was decided that Auckland Transport should reduce capital expenditure spend. At the time Chris Darby managed to get this amendment passed saying that the cuts won’t impact on PT.

MOVED by Cr C Darby, seconded by Cr PA Hulse:
Cr Darby moved by way of amendment, seconded Cr Hulse.
That the Budget Committee:
i) agree that the $5.1 million transport opex increase is dedicated to public transport and the $50 million reduction in transport capex will not be applied to public transport.

But it seems the $50 million isn’t enough if the council wants to keep to Len Brown’s goal of having rate rises next year average 2.5%.

  • On 26 March, staff provided the results of financial modelling in response to the mayoral direction for the LTP 2015-2025. One conclusion from this analysis was that it is not possible to reduce the average rates increase for 2015/2016 down to 2.5 per cent solely by reducing or deferring capex in that particular year.
  • The lagged impact of changes in the capital programme on operating budgets means that reducing or deferring capex in 2014/2015 will have a greater impact on rates for 2015/2016. The Budget Committee therefore agreed on 8 May 2014 to request the Chief Executive undertake an immediate review of 2014/2015 capex programme with a target of reducing or deferring $300 million of capex.

The cuts mean Auckland Transport has to find $100 million (which goes up to $150 million once NZTA subsidies are included). They don’t say all the items they’ll cut but the ones named are all PT projects.

The targeted reduction can be achieved via the reduction of budget across all transport activities. Projects such as Parnell Station, the Pukekohe Station upgrade and bus and transit lane improvements may have to be deferred to the LTP period. The Auckland Transport Board will consider the current capital programme to confirm which projects may be stopped, reduced or deferred to the LTP in order to minimise negative impacts on Auckland Plan outcomes. An updated 2014/2015 capital programme will be provided to the CCO Governance and Monitoring Committee in November.

It seems the only projects specifically named as being deferred are those that PT projects which goes against what the council asked for in the first place. Further projects like bus and transit lane improvements are often some of the cheapest and highest benefit projects. An example of this is the recent extension of the Fanshawe St bus lanes resulted in lots of full buses being sped up in the evening for what I understand was a fairly minor cost. In saying that I can live with the Silverdale Park and Ride (which is having issues of it’s own to sort out first) and can also live with Parnell to a degree.

Here’s the total list of capital projects in the current annual plan.

AT Funding - 14-15 - PT

AT Funding - 14-15 - Parking

AT Funding - 14-15 - Roads 1

AT Funding - 14-15 - Roads 2

It seems to me there are a lot of other projects on the list that should be being cut before $2.5 million bus lane improvements, for example Lincoln Rd or Penlink.

For their part the council passed a (much weaker) resolution saying that AT should take into account the councils priorities around PT and active mode outcomes however based on past performance I wouldn’t hold up hope of AT actually listening to that.

Labour announces transport policy

The Labour party released its transport policy yesterday and it’s one that has some really good aspects to it but that also leaves a lot of questions. Here are what they say are the key points.

Labour will:

  • Build a 21st century transport system that provides choice and is cost effective
  • Rebalance the transport budget away from the current government’s exclusive focus on motorway projects towards a more rational investment in the most efficient and sustainable combination of transport modes. For freight this means investing in roads, rail, our ports, and coastal shipping. In our cities it means a greater emphasis on public transport, and walking and cycling
  • Invest in the Congestion Free Network for Auckland
  • Reduce congestion in Auckland by building the City Rail Link immediately, funding it 50:50 with Auckland Council
  • Eliminate an unnecessary hassle by removing the annual registration charge for light trailers and caravans
  • Reduce congestion and make the roads safer by requiring trucks to not drive in the fast lane on three and four lane motorways
  • Reduce costs for motorhome and campervan owners by reversing changes made by the current government that have doubled their Road User Charges

The last three points were announced back in April and frankly they seem like tinkering around the edges to keep a few people happy. Today’s announcements were obviously more substantive.

For Auckland they say Labour will:

  • Build the City Rail Link immediately, funding it 50:50 with Auckland Council. We won’t wait until 2020 and hold back Auckland’s growth and prosperity for another five years.
  • Negotiate with Auckland Council a 30 year transport plan for Auckland, including funding, with our starting point being the Congestion Free Network. As well as the City Rail Link, this includes giving priority status to rapid transit busways in the North West and South East, electrification of the rail to Pukekohe, rail to the airport, and ensuring the next harbour crossing includes rail to the North Shore.
  • Integrate transport infrastructure with residential and urban development

For me it’s fantastic to see that Labour are backing the Congestion Free Network. We put a lot of time and effort into creating it and so it’s great that we now have two parties that have adopted it as part of their official strategy. Of course we’d love it if National also adopted the CFN but we’re I’m not holding my breath on that one.

CFN 2030 South-Grafton

What’s not clear as part of this policy is just how much Labour would contribute towards the CFN. The Greens have said they would fund everything bar the CRL at 50% with the council needing to pick up the tab for the rest (CRL is at 60%). Labour on the other hand has said they would fund the CRL at 50% but not how much they would provide for the other projects that make up the CFN. As I mentioned with the Greens policy, why pick such an arbitrary amount of funding as 50%. The rapid transit investments are really more akin to state highways which enjoy 100% funding from the government and so I think there’s at least an argument to be had over what’s the right level of funding.

I also like that they have singled out the need to integrate transport infrastructure to with land use planning, something the government doesn’t seem to worry about when making their decisions.

The CFN isn’t the only plan adopted by Labour with them also agreeing to Operation Lifesaver as part of their official policy. It’s included of the State Highways section under which they say they’ll review all of the other RoNS projects too.

Labour will

  • Prioritise highway investments that stack up economically and environmentally.
  • Review RoNS projects that are under construction, and look to modify negative impacts. Where construction is not underway, we will consider affordable, safe and environmentally friendly alternatives.
  • Require heavy trucks to not use the fast lane in multi-lane roads.

However it’s here where I have the first major concerns. They single out each of the remaining RoNS and what they would to do and that includes leaving some of the worst performing ones on the books, projects like Transmission gully which I can only assume is for political reasons.

When it comes to walking and cycling they say they will improve it by significantly increasing the budget. They don’t specify just how much they would spend other than to say that it’s higher than the $100 million National have proposed. They also say they’ll say they’ll require all future roading projects make provisions for a cycling.

Scattered throughout the policy document are a number of other interesting and potentially important changes. These include:

  • Giving local communities more of a say on how the money is spent in their areas.
  • Re-opening the Napier to Gisborne rail line.
  • Looking into building a rail line to Marsden Point to allow imports/exports to use rail to get their goods to the wharf.

Overall the policies seems fairly solid however in my opinion there are some significant issues to be addressed. The biggest of these is that there are elements of Labour having just added to what’s already happening in a bid to keep everyone happy rather than making some tough calls and cutting the projects that have poor business cases. The outcome of this likely to be an over-commitment of our transport funds unless or they will need to scale back what they promise. That is made harder to see as the costings for what is proposed is completely missing from the policy document.

One last point, to both the Greens and Labour. One of the key drivers behind the CFN was to create a vision that people could quickly and easily understand and that’s why we went with the network map. It’s a core part of the CFN message so how about putting the map/s on your websites or in your policy documents themselves. Also I would expect a lot of people don’t know what the CFN actually is, how about a link to www.congestionfree.co.nz

Long Term Plan and Transport

Yesterday I looked at the numbers behind council’s Long Term Plan, the first version of which is being worked on by the mayor for release next Thursday.

As well as the all the numbers regarding the potential funding gap, there were a number of fascinating slides about transport.

Firstly the background documents gave an overview of the key Auckland Plan transformational shifts. The Auckland Plan outlined 7 transformational shifts-

  • Move to outstanding public transport within one network
  • Radically improve the quality of urban living
  • Significantly lift Maori social and economic well being
  • Substantially raise living standards for all Aucklanders and focus on those most in need
  • Dramatically accelerate the prospects of Auckland’s children and young people
  • Strongly commit to environmental action and green growth

The documents show that the first two shifts, regarding public transport and urban living have been identified as the “key drivers of transformation”. Of course these are also the area the Auckland Council has the most control over.

The background information includes this slide describing what is planned over the next 10 years. Is nothing new but helpfully puts the key information in one place.

Auckland Plan

 

The most interesting information comes from the Auckland Transport presentation given to the workshop on July 7. This outlines for the first time 2 alternative transport networks that are being investigated.

The Auckland Plan Transport Network involves $16b of AT investment in new capital projects over 30 years – funded from Auckland Council, NZTA and Central Government. In addition, AT renewals are estimated at $10b over 30 years.

The Basic Transport Network involves $8b of AT investment in new capital projects over 30 years – funded from Auckland Council, NZTA and Central Government. In addition, AT renewals are estimated at $7.5b over 30 years.

Auckland Plan Map Basis Network Map

 

We all know the Auckland Plan included a wishlist of pretty much every transport project that had been proposed in recent years. The existence of the “Basic Transport Network” seems to be new though, and this appears to be a severely stripped down version written to fit in with the proposed 2.5% rates rise. I assume these 2 networks have come about in the process of reviewing the rubbish Integrated Transport Program that came out in March last year.

Auckland Plan vs Basic

The description of projects does seem to sound a lot like our Congestion Free Network, which was sent from the Council Transport Committee to AT for modelling as part of their ITP review in August last year. For example we see Mt Roksill Rail spur mentioned for the first time in official documents, as previous documents had referred to the full length Avondale to Onehunga/Southdown project. We also see North Western, South East busways and Upper Harbour busways mentioned.

Also on the positive side The City Rail Link will still proceed under any scenario, which suggests is still seen as the most important project which is of course correct.

It does seem to show though that a wide range of projects are cut under the basic network, which is a mixed blessing. On the negative side this would mean no rail network extensions to Roskill or the Airport, electrification to Pukekohe, no North Western busway and even no Parnell Station for which enabling works have already been done. This would also see the Regional Cycle Network to continue to proceed at a snails pace. Another interesting point is that reduction in road renewals would lead to higher maintenance costs.

However on the other hand, a large number of low value roading projects are also cut or delayed. This includes projects we have often noted are overblown in their current form such as Penlink and Mill Road as well as totally pointless upgrades like Great South and Great North Road. I have no idea what could be achieved  by expensive upgrades of these roads as they are already 4 lane arterials parallel to motorways.

Figures are also shown that highlight what effect the Basic Transport Network would have on the transport budget over the next 4 years, and next year in particular.

4 Year CAPEX 2014 2015 impacts

The effects of sticking to this Basic Transport Network over the next few years would be unacceptable if we wanted to transform our public transport and cycling networks. The long term effects of a lack of investment would lead to ever increasing congestion and ineffective public transport, exacerbating the many problems our city already faces from transport. One example of the effect of these cuts would be on the new bus network. This is currently being rolled out and needs a substantial amount of supporting infrastructure to be successful. This includes suburban interchanges as well as the CBD interchanges and busways that we outlined last week. If funding is cut we will end up having to run inefficient and less frequent services, and passengers will not like to transfer is they are left on the side of the road with no shelter or security.

If the Auckland Plan goal of “Moving to outstanding public transport within one network” were followed then surely investments in quality public transport should be prioritised. Truly transforming our public transport network would mean that over the next 10 years we should move forward with the City Rail Link, North Western, Upper Harbour and South-Eastern Busways and Rail to Roskill, as proposed in the Congestion Free Network. Also at the end of the period we should be starting on airport rail, potentially staged such as first double tracking to Onehunga, and then building towards Mangere. Cycling is also a great way to improve the quality of urban living, so that should also be essential. On the other hand low value roading projects like Penlink have nothing to do with outstanding public transport, and are not in one of 10 priority areas that I outlined yesterday. They also have nothing to do with the quality of urban living given they are located on the fringe of the city. Some arterial roading projects could also undermine quality urban living by turning local streets into major highways, so we should be careful about which of these we fund.

It would be hard to believe that this level of funding cuts would be acceptable overall to the council. We have already seen suggestions that the 2.5% rates rise cap from the election campaign seems to have widened to become 2.5% to 3.5% which may allow a more acceptable range of projects to proceed. Even within this band the council will still have to prioritise projects to fit within a tighter budget. However the exclusion of low value roading projects and the prioritisation of an outstanding public transport network would help us get the right outcomes. Whatever happens we are in for a fascinating 6 months as the mayor and councillors find an acceptable way through, for the future of our city lets hope they do.

 

ACT promises to abolish helmet laws

Cycling seems to be the issue of the week so far. We’ve had Skypath and the Northcote cycle routes followed by National then announced an urban cycling policy which finally seems them agree that urban cycling improvements are needed. Now ACT have joined in on the debate by promising to abolish compulsory helmet laws.

ACT’s plan to double cycle use without spending taxpayers’ money

“The National party yesterday announced a $100 million cycle-way that just happens to go through the marginal seat of Hutt South” said ACT Leader Dr Jamie Whyte.

“The Greens want to spend many hundreds of millions on cycle-ways. ACT’s contribution to this bidding war for the cyclist vote would double cycle use and cost nothing” said Dr Whyte.

“We need only abolish the law that makes wearing a cycle helmet compulsory. Since 1994, when Parliament established an instant fine of $150 for failing to wear a helmet, cycling has declined by over 50%. Overseas experience also indicates that laws making it compulsory to wear a helmet dramatically reduce cycling. This nanny state law does not even save lives” said Dr Whyte. “On the contrary, it costs lives. Before the legislation, few people died from cycling accidents and, of those who did, only 20% died from head injuries alone.”

” Research reported in the New Zealand Medical Journal (see http://journal.nzma.org.nz/journal/125-1349/5046/) shows that, over a 10 year period, only 20 Aucklanders were killed in cycle accidents and only 4 might have been saved by wearing cycle helmets. This same New Zealand Medical Journal article concluded that life years gained from the health benefits of cycling outweighed life years lost in accidents by 20 times” said Dr Whyte.

“The diminished health resulting from the reduced cycling caused by compulsory helmet-wearing costs 53 premature deaths a year. ACT would simply abolish the $150 fines for not wearing a helmet. That would save $100 million on cycle-ways in marginal seats, double cycle use and save 53 lives a year” said Dr Whyte

I don’t think that removing the helmet laws would see a doubling of cycle use primarily because it won’t do anything to address the reality that our roads aren’t safe to use. The perception of roads being unsafe is often cited as the biggest reason why people don’t cycling despite many people having bikes in their garages. That doesn’t mean I don’t think removing the helmet law shouldn’t happen, in fact quite the opposite. This post a few months ago looks at some of evidence mounting against requiring mandatory helmets.

Now if only we could pick and choose individual policies. A big step up in cycle infrastructure funding along with removing the helmet requirements would be a great combination.

Auckland property revaluations

The council is required to revalue every property every three years and the valuations are used in the setting of rates the council charges. The last revaluation was in 2011 which means a new one is due this year. The council have announced some early results and they present an interesting picture and show why home owning affordability is such an issue. Across the whole region property values are up by an average of 33% which is a massive increase over just three years. Here’s the press release:

Auckland’s three-yearly general property revaluation is well underway, with indicative data showing significant value movements across the region.

A report is going to Thursday’s Finance and Performance Committee:
http://infocouncil.aucklandcouncil.govt.nz/Open/2014/08/FIN_20140821_AGN_4759_AT.PDF

Auckland Council’s Registered Valuer Peter McKay says: “At this stage we are looking at an upward movement for the Auckland region of an average 33% since the last revaluation in 2011, which is broadly in line with expectations.

“Local board areas with the largest movements – of over 40% – are Kaipatiki, Maungakiekie-Tamaki, Puketapapa and Whau, reflecting a general value increase in the more central suburbs.”

“Average movements within the remaining local boards (excluding the Hauraki Gulf islands) range between 22% and 44%, with the larger movements generally due to proximity to central Auckland, with lower increases found in outer suburban and rural areas.”

“Local value movements will vary due to the type of property, its quality and condition, zoning, views and other factors.”

Property owners receive their notices in the mail in mid-November 2014.

“It’s very important to remember that Auckland’s property revaluation doesn’t determine the total amount of rates collected by the council – rather it helps determine each ratepayer’s share of rates.

“The revaluation exercise is used by the council to determine the allocation of rates, and doesn’t affect the overall amount of rates collection.

“Capital value, or CV, used as the rating valuation, is the likely price the property would have sold for on 1 July 2014. Its new value will be used to help set rates for the three year rating period beginning next year, 1 July 2015.”

All councils are required by law to revalue every property in their region every three years. Over 525,000 properties are being revalued in Auckland.

Council’s team of experienced, qualified valuers work closely with independent organisation Quotable Value Ltd. Before valuations are finalised, they have to be approved by the Valuer-General, who’s responsible for authorising rating valuations for the Government across New Zealand.

and they’ve provided this map showing the average change by local board area.

2014 property revaluations by local board

What’s most noticeable is the strong growth in values on the areas just outside the inner suburbs while the urban fringe and rural local boards are seeing much smaller average increases. This suggests people are moving as close to the city as they can currently afford and that would fit with other trends both locally and internationally we’ve seen over the last decade or so.

In addition the council have provided some notes about some of the influences in each local board area

Albert-Eden (37%)
Value growth in this central area is strong, particularly in the Grammar Schools zone with very strong demand for properties offering redevelopment potential.

Devonport-Takapuna (37%)
Demand is strong across all housing types in this established and sought after residential area.

Franklin (22%)
Demand is increasing in Pukekohe but is slightly more subdued in Waiuku. Remote areas and rural settlements are showing modest increases over 2011 levels in comparison to other areas. Development at Beachlands is continuing with a large volume of sections coming to market at present.

Great Barrier (-12%)
Value levels have declined since 2011 and sales volumes are low. There are a large number of properties available for sale and marketing periods of 12 months or more are common. Factors associated with remoteness and a decrease in demand for coastal properties is driving value levels.

Henderson-Massey (39%)
The Proposed Unitary Plan is influencing buyer expectations particularly in areas identified for more intensive land use, such as Te Atatu Peninsula and Westgate. Demand is strong for housing in all areas. Ranui, Massey, Henderson and Glendene are seen as affordable options for first home buyers.

Hibiscus & Bays (29%)
A consolidating residential locality characterised by homes dating predominantly from the early 1980s through to more recently constructed houses of above average quality, to executive style. Growth areas include Orewa and Millwater where average lot sizes are smaller. Weathertightness issues are still a factor in the market with housing that is subject to known weather tightness issues selling close to or in some instances below the 2011 roll values.

Howick (35%)
The market has moved fairly consistently throughout, with strong growth in the area of Flat Bush driving value levels.

Kaipatiki (41%)
A diverse area including character homes with views south towards the Waitemata Harbour, with easy access to motorway connections at Northcote and Birkenhead through to the more affordable housing areas of Beachaven and Birkdale. This area is showing an above average increase, especially properties with further development potential.

Mangere-Otahuhu (37%)
Buyers are actively seeking larger sites with further development potential in this area pushing value increases. Otahuhu provides relatively central but affordable housing compared to the inner city. Mangere Bridge has seen some of the strongest growth in values across the region since 2011, which is in part attributed to the community feel of the village, enhancement of waterfront areas with views to the Manukau Harbour, and the continual development of State Highway 20.

Manurewa (32%)
The introduction of the LVR is linked to a lower increase in this area, which predominately comprises a market for first home buyers and investors.

Maungakiekie-Tamaki (44%)
Value growth has been strong as the area is seen to be relatively central. Transportation and roading including recent rail development in Onehunga and new rail station in Panmure, as well as AMETI in the east and SH20 to the west, are also drivers towards value increases.

Orakei (35%)
These central suburbs have seen strong value growth; however growth has been weaker for high value coastal land and properties at the top end of the market ($4million-plus).

Otara-Papatoetoe (35%)
Buyers are looking to this area as being relatively central but affordable compared to the inner city. Demand is particularly strong within Papatoetoe for sites with development potential.

Papakura (26%)
While the area provides a range of housing for first home buyers and is one of the most affordable areas of the region, Papakura value movements are more modest than other areas, with travel times of 30 minutes to the CBD off-peak.

Puketapapa (41%)
Similar to Mangakiekie-Tamaki, housing in the Puketapapa area is seen as an attractive option for buyers looking to locate centrally and for generally less than $850,000. Transportation is improving as State Highway 20 development continues and the area is seen as more accessible than it was 10 years ago.

Rodney (24%)
Generally residential values increases are modest in comparison to the central suburbs, and land values of coastal sites have increased a slower rate than inland property.

Upper Harbour (31%)
Housing with known weathertightness issues selling close to or in some instances below 2011 values are impacting on overall value movements. Significant development is occurring at Hobsonville, with overall section sizes being relatively small.

Waiheke (10%)
Value levels on Waiheke have seen smaller increases relative to the isthmus with land values generally only showing modest increases.

Waitakere Ranges (32%)
The overall demand is weaker than in central locations with accessibility issues and development difficulties, such as steep bush clad sites, which can impact on desirability and value levels.

Waitemata (29%)
Waitemata has two distinct markets – CBD apartments and secondly, traditional inner city housing areas such as Freeman’s Bay, Herne Bay, Ponsonby and Grey Lynn. Value movements for traditional housing areas is similar to Orakei and Albert/Eden, while average movements for CBD apartments is lower.

Whau (41%)
The Proposed Unitary Plan is influencing buyer expectations, particularly in areas identified for more intensive land use such as New Lynn. The extension of State Highway 20 and the Waterview connection has contributed to increased interest in the area, and significant value growth has occurred over the last three years

We’ll have to wait till November before the details are available for each individual property.

Council Budget Documents

Currently the Auckland Council is going through the process of setting their Long Term Plan, which sets out the councils budget for the next 10 years. This is the timeline from the council’s website.

Long-term Plan timeline

  • August 2014 – Mayor’s LTP proposal
  • December 2014 – Auckland Council adopts draft LTP
  • January and February 2015 – Public consultation on the draft LTP
  • April 2015 – Public hearings
  • June 2015 – Local boards adopt local board agreements and governing body adopts final LTP.

The first step is when the mayor presents his budget proposal on August 28, which is then discussed and amended by the councillors before a draft is released for public consultation.

Back in June some information about the Auckland Council’s budget was released to the media, and of course the Herald’s Bernard Orsman used this is say the world was going to end with threats to parks, libraries and a variety of projects. However their was no actual numbers released by the Herald or the council at the time. So I thought it would be great to get the information into the wider public domain. Therefore I decided to send a LGOIMA request into the Auckland Council to request the documents that were presented to the council and media.

The Auckland Council media team were happy to supply the details, and there is a wealth of fascinating information in these documents. Today I will focus on the wider issues around funding, and tomorrow the specifics about transport.

The following slides all come from a workshop held on June 7 where information was presented by council staff and CEO’s to councillors and local board chairs.

Firstly attendees were given a document that gave a number of key figures.

Making Choices

Current Plan

The document also included some useful background on the challenges faced, which was expanded up on later.

Opportunity to Create Capacity

The current LTP assumes an average 4.9% rates increase from 2015/16 onwards. In order to reduce this average to the 2.5% to 3.5% range – significant reductions in operating costs will be required. A 2.5% rates increase would require $90 million to be taken out of 2015/16 rising to $630 million by 2024/25. At 3.5 % the reduction is $75 million in 2015/16 and by 2024/25 rises to $430 million. To achieve reductions of this magnitude a range of options will need to be considered. Below are some indicative opportunities which could be considered and developed further.

This suggests the council is rather flexible on the 2.5% target, that was announced by Len Brown during his reelection campaign. This is good news, and not sure enough analysis was done around the effect of that target at the time.

The first presentation was the council CEO speaking on on the topic “Transforming Auckland”.

This largely focussed on how to implement the Auckland Plan, and how to prioritise projects within this.

Prioritisation

The main new information is the ten “Spatial Priorities” which are on this map below.

Spatial Priorities

The Spatial Priorities seem to be:

  • City and City Fringe
  • Takapuna
  • Avondale/New Lynn
  • Westgate/Hobsonville
  • Tamaki
  • Otahuhu/Middlemore
  • Manukau
  • Manurewa – Papakura
  • Flat Bush
  • Pukekohe

However this now means the council has a number of competing priorities, and the announcement of Special Housing Areas has confused this even further. They seem to have so many priorities that too few areas are not priorities.

Next there was a presentation by the Chief Financial Officer titled “Opportunities to create capacity and deliver better value”.

Where we start from

This slide shows where rates money is accounted for, divided between Depreciation (red), Interest (green) and Other (blue).

Rates perspective

This slide is one of the most interesting as shows the scale of savings or efficiencies that need to be achieved by 2024/2025. Which is up to $630 million if rates are kept to 2.5% and still $430 million with 3.5%. However this also does show that the issues are not urgent (as in this years budget) but are cummulative over the next decade.

Current Position

Efficiency savings targets

So what does it mean

How to resize

This highlights that while savings can be made from services and efficiencies, a large portion of the spending reduction requires cuts in capital projects.

Defer or reduce capital programme

 The capital programme is a major driver of the operating costs in the current LTP. Each new asset adds costs for depreciation, operation of the asset and, when funded by debt, interest. One way to reduce the operating costs is to defer or reduce the capital expenditure programme.

The capital programme based on the current LTP assumptions is $21 billion. Of this 50% is transport, 23% is water supply and wastewater. The next largest group is Parks, Community and Lifestyle. Water and wastewater are funded by user charges so do not impact on the rates.

In order to get a rates reduction of $350 million per annum by year 10, the capital programme would need to reduce by approximately $3.7 billion.In order to get a rates reduction of $250 million per annum by year 10, the capital programme would need to reduce by approximately $2.7 billion.

As the two biggest rates funded areas this would have the most impact on Transport and Parks, Community and Lifestyle.

Significant savings can be achieved through standardised design and a regional approach to managing renewal priorities and budgets.

The cuts suggested for transport could either be a disaster for public transport, or a great way to get rid of those useless and oversized roading projects we have been arguing against (like Penlink and Mill Road). Tomorrow I will look at transport and especially Auckland Transport’s presentation that was given to the workshop which sheds some light on the discussions surrounding this.

National’s Cycling policy

Some great news yesterday with the National Party releasing one part of the transport policy which is actually semi decent. They’ve said they will invest an extra $100 million into building urban cycleways over the next four years.

Prime Minister John Key has today announced $100 million in new funding will be made available over the next four years to accelerate cycleways in urban centres.

Transport Minister Gerry Brownlee says an Urban Cycleway Investment Panel will investigate opportunities to invest in urban cycleways that would expand and improve the cycling network.

Mr Brownlee says National recognises that commuting by bike has health benefits and takes pressure off other transport networks, but says cycleways in our largest centres are fragmented and offer varied levels of service.

“This funding builds on significant investments the government is already making, with projects in Hastings and New Plymouth showcasing how cycling can be a safer, more reliable and realistic transport option.

“Many people cite safety concerns and a lack of infrastructure as reasons for not cycling, so we’re going to begin building cycleways to a standard that delivers real incentives for commuters to make a change.

“Building more comprehensive cycling networks will require new infrastructure to connect existing routes and expand the network into wider urban areas.

“And as these connections will be a mix of local roads and State highways, we’ll need a strategic approach and collaboration at central and local government level.

“Some councils are well advanced in planning and constructing local cycleways, and we want to ensure we do what we can to complement them and make them capable of being used by the widest number of people possible.

“This funding package also strongly complements other aspects of the government’s ambitious transport infrastructure programme, which is designed to ensure people and freight can reach their destinations quickly and safely,” Mr Brownlee says.

The Urban Cycleway Investment Panel will include representatives from central government, local government and other organisations. Draft terms of reference for the panel will be presented to Cabinet by 31 October 2014.

National Party Cycling Policy

I think this is fantastic news and In my view the most important thing about the announcement isn’t so much the amount of money being spent – as the Greens propose to spend more – but that we now seem to have an acknowledgement from all sides of the political spectrum that improving cycling in our cities is a worthwhile thing. Getting that agreement is the key first step and addressing the level of funding can happen separately.

One other aspect I like is the comment that they’re “going to be building cycleways to a standard that delivers real incentives for commuters to make a changeI can only hope that means building infrastructure to the 8 to 80 rule which basically means designing it so that an 8 year old child or 80 year old adult cycle can feel comfortable to cycle on. It would also be fantastic if this meant requiring the NZTA and local authorities to up their minimum standards for what can be built.

One aspect I do find puzzling is the creation of an Urban Cycleway Investment Panel. I would have thought decisions on which projects should get funding would be best handled through the existing NZTA/local government processes. The only advantage I can see is if this group is intended to be some sort of advisory group for smaller councils who don’t have the experience needed to develop better cycling networks. In our large cities in particular there are already lengthy lists of projects just waiting to be funded.

As a comparison with existing spending, according to the draft 2015 GPS, over the next four years approximately $100 million is expected to be spent. As such this investment represents a doubling of existing spending although it won’t be spread out evenly over that timeframe with this new money estimated to be split out as

2014/15 – $10 million
2015/16 – $35 million
2016/17 – $30 million
2017/18 – $25 million

All up it seems like a fairly decent policy for National and it’s one that hopefully represents one small step towards a more balanced transport policy in the future.

It’s also possible we might hear more transport announcements from the government today with John Key talking at an NZCID conference ominously titled “Mega Projects: From Vision to Reality”.

Anyone remember global warming?

As an economist, I get a bit annoyed about inefficient spending (which the Roads of National Significance are), and frustrated at the lack of economic thinking that goes into party policies (all political parties come out badly here – e.g. Labour’s Working For Families seriously messed up marginal tax rates and incentives to work more for mid-income earners). But I’m deeply troubled by the dismissive attitude displayed by the current government towards what I see as the biggest challenge of our time, and probably the biggest market failure the world has ever experienced. I’m talking about climate change, by the way.

Climate change isn’t really getting a lot of coverage these days. It’s not forming a big part of the media debate, or political conversations, or everyday conversations from what I can see. One of the few people who has been writing about climate change is Brian Fallow, the Herald’s economics editor. In 2013, he wrote that “the Government’s refusal to do much of anything to curb New Zealand’s emissions is as economically myopic as it is morally contemptible”, but he’s written a number of other insightful articles. Unfortunately, those who don’t read the Business section of the paper may have missed them.

Someone shared a link on my Facebook a couple of weeks ago – it was an image from Generation Zero, our collaborators on the Congestion Free Network. It reads: ‘Last night, we asked Bill English: how will you act to prevent the impacts of climate change?”‘ The reply reads: “it’s a non-issue because there are more pressing concerns”.

I wasn’t at the event where this question was asked, and I’m not sure if it’s a quote or paraphrased somewhat, and at any rate the Minister of Finance probably isn’t the best person to field this question. Nonetheless, the exchange above is a pretty accurate summary of National Party policy on climate change. Essentially, there isn’t one, except to ease back on the schemes put in place under the previous Labour government, which weren’t sufficient anyway.

Unfortunately, it seems that climate change is much less of a pressing concern for people these days. Unfortunate, because it continues to happen whether we’re thinking about it or not. Thanks to a Google tool called Google Trends, you can actually look back and see how interested in climate change people were, based on their Google searches. The following graph shows indexed interest in the terms “climate change” and “global warming”, compared to each other and over time, worldwide:

Google Trends Results - Worldwide

 

In 2007, the IPCC Fourth Assessment Report was released, everything was going pretty swimmingly in terms of the economy, and it seemed like global warming was always in the news. Environmental stories started to get crowded out in 2008, when the world recession hit, and haven’t really made a comeback – the IPCC Fifth Assessment Report, being released over 2013-2014, was barely a blip.

The graph below shows the same stats for New Zealand, from 2007 onwards – the data before that is patchy. The results are similar to the worldwide graph:

Google Trends Results - NZ

 

These trends fit with some Gallup poll results which show that, around 2008 and once the recession hit, Americans became generally less concerned with global warming, and more inclined to think it was exaggerated or made up altogether. I’m sure I’ve seen similar results for New Zealand in a report done by Roy Morgan or someone, but I can’t lay my hands on it right now.

I heard Simon Bridges (the Minister of Energy and Resources, and Associate Minister for Climate Change Issues) speak at the NERI Energy Conference in March. His keynote address was filmed (I don’t recommend watching the whole video – skip to the questions from 22 minutes in; the speech text is here but not that interesting), and Professor Ralph Sims later pulled out some of Simon’s key quotes for use in his own presentation:

“Our mixed and balanced approach to energy means that I am motivated by the opportunities petroleum development presents for New Zealand socially, economically and environmentally.”

“But remember, New Zealand is only responsible for 0.14% of global greenhouse gas emissions”.

Simon was also asked about the “90% renewable electricity by 2025″ target, which was initially set by Labour but also supported by the current government. I never got round to writing the follow-up post to the one where I talked about the technical feasibility of getting to 100% renewables, but long story short, there’s wide agreement that the 90% target won’t be reached without government intervention, which National has not been willing to provide so far. Simon made some valid points in his reply, but again long story short, the government isn’t likely to change anything. In fact, the one thing it has done in this area is lift the moratorium on new thermal (non-renewable) generation, so if anything that would make the target harder to achieve.

Similarly, Simon didn’t have much to say on what the government planned to do on climate change in NZ, and again I note that they have eased back some of the measures set in place by the Labour government. Simon said there would be an announcement on the subject later this year, and we still haven’t seen anything on this, but presumably there will be something announced before the election. Since the government has gone all in on the “more roads” approach to transport, I’d imagine any policy would involve electric vehicles.

The thing is, we can’t go on just ignoring climate change, wondering whether it’s still an issue, or putting it in the “too hard” basket. We need to take steps to reduce our climate impact and figure out ways to transition our economy appropriately. For New Zealand, that means concentrating on transport and agriculture. Building more motorways is clearly not going to help us reduce our transport emissions. And subsidies for electric cars won’t help much either. We’ve got to invest in public and active transport, and allow our cities (especially Auckland) to intensify. There are so many good reasons to do this; the climate is just one of them.

The government needs to show some initiative on this, and overhaul its transport policies. But we, the public, have to make this a talked-about issue again. Tell the politicians, the MPs and the political parties that climate change is an issue we care about. Tell them that they need to change their policies if they want to earn our votes. Whoever you’re voting for this election, or whether you’re voting at all, tell them what you think, and if they hear enough people talking about it, climate change will be back on the agenda.