The Government and the Auckland Council have signed a Terms of Reference on a project to come up with an agreed long term transport plan for the region. It’s been given the imaginative name of the Auckland Transport Alignment Project and will be worked on by officials from the Council, Auckland Transport, the NZTA, Treasury and the State Services Commission. There’s no firm time-frame for this to be completed with the Minister and Mayor just saying the work is expected to take about a year.
Here are the press releases from both Simon Bridges and Len Brown below with perhaps the most interesting quote being from Len calling out the time wasting that has gone on for so long with Auckland
“The signing marks a new dawn in our relationship with the government ending decades of disagreement and time wasting,”
The council and the government have been talking about getting alignment for some time and the cynical side of me suspects there’s some quite different motivations at play. Len wants an agreement however the government will be acutely aware that a year from now we’ll be right in the middle of a council election cycle. Transport is always much more of a local government issue and as such has played a massive part in Auckland since amalgamation in 2010 with it being recognised as one of the key reasons Len became Mayor. The threat of an imminent agreed strategy will probably be enough to take transport off the agenda – or at least reduce it significantly and allow the focus to go on issues such as rates. Any agreement itself would also likely hamstring any future council who may want to advocate for more visionary outcomes.
As with anything, when it comes to this alignment project the devil will be in the details. Helpfully the Terms of Reference have been published so we can at least see what has been agreed so far. There are some good things in the ToR but also a few things that concern me.
On the good side the project isn’t just about confirming either the government or council’s objectives – both of which we’ve criticised in the past. The ToR states project needs to assess alternative packages of transport interventions and recommend the preferred indicative package(s). The scope goes further saying that consideration needs to include issues such as changing travel demand. Hopefully that means those working on the project will not just look at growth but also changes in behaviour – like we’re seeing with many younger people deciding not to even get their drivers licences. One aspect that I think is missing is the
7 Project scope
7.1 The project will test options, seek alignment on, and make recommendations in relation to a strategic approach to the development of Auckland’s transport system over three ten-year bands from 2018.
7.2 The project will include consideration of:
i. likely long term changes in demand for travel
ii. all land transport interventions, including roads, rail, public transport, personal mobility services, walking, cycling, technology, network optimisation and demand management (including pricing for demand management purposes)
iii. alternative combinations of these interventions and their broad timing and scale
iv. costs and benefits
v. the nature, scale and timing of any funding gap for the recommended strategic approach and its alternatives.
I think that one possible package that they should test is this
One aspect that I think is missing is the scope is the consideration of the potential to shape demand. Travel demand is often seen as a fixed outcome i.e. we’ve got XX widgets to move and how can we do that. Shaping demand is effectively coming at the problem from the opposite angle, for example perhaps the best long term outcome from an operational perspective is to have a public transport and/or cycle mode-share to 15, 20%, 25%. 30% or even higher across the region. What projects would be needed to achieve that outcome – I gather it would be quite a different list to one that just responded to predicted demand.
The part of the ToR that concerns me the most are the objectives that have been listed. While access is mentioned in point 1, a lot of emphasis seems to be put on reducing traffic congestion rather than focusing on improving accessibility and efficiency of the transport system. For example it seems to suggest that public transport investment is only useful if it addresses congestion.
5 Objectives for the Auckland Transport Alignment Project
5.1 The Parties broadly agree that the focus of the project is to test whether better returns from transport investment can be achieved in the medium and long-term, particularly in relation to the following objectives:
i. to support economic growth and increased productivity by ensuring access to employment/labour improves [relative to current levels] as Auckland’s population grows
ii. to improve congestion results [relative to predicted results], in particular travel time and reliability, in the peak period and to ensure congestion does not become widespread during working hours
iii. to improve public transport’s mode share [relative to predicted results], where it will address congestion
iv. to ensure any increases in the financial costs of using the transport system deliver net benefits to users of the system.
Those issues aside, overall it seems that the agreement at least is pretty good and should hopefully enable both parties to finally agree on something to do with transport in Auckland.
One positive outcome not listed above that I’m hoping for is that it might finally get the government and some of the Wellington based bureaucrats to understand that perhaps they don’t know everything. For a long time Auckland has suffered from being treated like some small rural council that doesn’t know what it’s talking about compared to the government’s “experts”. There are a lot of people within those AC/AT who know what they’re doing – not just on issues of transport – and hopefully this alignment project will show them that.
Lastly the Ministry of Transport are hiring for a Project Director and Project Coordinator for the alignment project.
This is a guest post by Warren Sanderson; regular reader, occasional poster, and seasoned traveller.
Hamburg, Bristol, Cardiff & Zurich
Bahnhofstrasse, the main shopping street of Zurich, is kept free for just transit [trams] and people, as Queen St should be.
In August last year I wrote a guest post for Transport Blog commenting on my wife and my experiences utilising public transport in the cities of Gothenburg, Hanover and Hamburg. I don’t normally like to revisit the destination cities we explore a second time until some years have passed, but we came away from Hamburg thinking we hadn’t done everything we would like to do. It is a good base to make day visits by train to the architecturally appealing and adjacent north German towns of Luneburg, Bremen, Stade, Lubeck, Schwerin and Wismar.
So back to Hamburg we went, to our favourite boutique ‘Henri Hotel’ located in reasonable proximity to the Hamburg Main Railway Station.
The very busy Hamburg Hauptbahnhof can be a little confusing at first but the staff in the Tourist Information, the Regional Trains Office and the DB Bahn ticket office all speak English and I found them most helpful. The DB Bahn people will work out a programme for you, with departure time, train changes and gleis (platform) No’s clearly set out, all of which enabled us to easily visit those towns.
Transport Blog commentators last year had drawn our attention to and recommended visiting ‘Miniatur Wunderland’ which we had not visited previously. It is the largest model railway in the world; incorporating roads, towns, port facilities and so on. Furthermore, it has a model airport, which has aircraft taxiing along the runway and even taking off into the air.
Note as in real life, that on the elevated motorway, the road traffic has ground to a halt, but the trains still get through on their own dedicated tracks.
Miniatur Wunderland is located in Speicherstadt, the old dark brick warehouse district. It is very popular so allow plenty of time if you visit.
Monckebergstrasse is the city’s main shopping street. It is the Oxford Street of Hamburg rather than the Regent or Bond Street – see the picture below which is getting toward the bottom of the street and with the magnificent Rathaus in the background.
Monckebergstrasse is a very wide street with very wide pedestrian areas on each side and a busway lane in each direction in the middle which can also be accessed by taxis and cyclists but apparently not by private cars. The pale yellow cars on the left are taxis at their taxi stand. Pedestrians cross easily and dominate the whole street – not vehicles.
In my post last year, I referred to the booklet I had obtained from the Rathaus which was the approved vision for Hamburg, available in both German and English, entitled ‘Perspectives on Urban Development in Hamburg’. One of the proposals to improve urban quality was to roof over the A7 Motorway cuttings northwards to reconnect severed suburban parts of the city.
This year I noticed a few of these road signs (below) which obviously have relevance to the proposal but because I don’t understand German, I am not sure what the message is, so if there is a German reader out there who can translate the message please comment……….
I have wanted to visit Bristol ever since I first read my father’s copy of Robert Louis Stevenson’s ‘Treasure Island’ with its wonderful original engravings by Wal Paget:
And now I have walked on the same quay as illustrated and found the same Inn where Stevenson found inspiration for the story.
In terms of pedestrian friendliness Bristol did not disappoint. Although quite hilly generally the central old town is quite flat with the many walkers and cyclists able to get about easily away from major arterial roads.
The town is big on Isambard Kingdom Brunel (1806 – 1859), engineer extraordinary and designer of the SS Great Britain and the Clifton Suspension Bridge – both worth visiting. He also designed Temple Meads Station as terminus for the Great Western Railway and many other transport projects in London and elsewhere.
During our week in Bristol we made a day trip to Cardiff. I had not visited Cardiff previously and was interested to find that the whole of the central shopping area was car-free. The streets, though often irregular, were quite wide, and busy. What I thought was important was that two larger modern type shopping malls were within and part of the central shopping area and could draw on the same public transport. Thus they contributed to the central areas vitality.
The obvious comparison is with our Hamilton where the Te Rapa development has resulted in the decline of the former ‘golden mile’ of Victoria Street and to me is an abject lesson in bad town planning.
Zurich was the last city we visited before departing for home – yes, wealthy Zurich where it is so easy to get to the airport. My little timetable shows that there are 158 trips from Zurich HB to Zurich Flughafen each day from 5.02 am to 11.17 pm. Sometimes they will be on a regional train and sometimes on an intercity with the latter continuing on to Winterthur and St Gallen. The journey to the airport takes about 11 minutes.
Zurich still has a tramway system which appeared to enjoy good patronage. I noted a couple of acute angled intersections where the plethora of intersecting rails could have been a bit of a hazard for crossing pedestrians but elsewhere the rails were straight and hazard free. I wouldn’t foresee any problems in this regard if a tram system for Auckland went straight up Queen Street and out the length of Dominion Road. And in Zurich the tram goes the length of the Bahnhofstrasse – one of the most elegant shopping streets in the world.
The whole point in writing this post is to indicate to readers that many cities are moving quite rapidly into the 21st century by turning back the motor vehicle tide to make their cities more people friendly.
For instance, the extent of Cardiff’s pedestrian (and bicycle) emphasis really surprised me.
We only spent a short time in London on this occasion but we were close to Paddington so it was an opportunity to get some idea of the extent of the construction needed to incorporate Crossrail’s station requirements into Paddington Station. It was also announced that Britain’s Chancellor George Osbourne has earmarked more than 100 million pounds in his latest budget to develop the Crossrail 2 proposal for rail between Hertfordshire and Surrey.
All this underground rail activity is happening under the aegis of a Conservative government, so it is hard to understand why our ‘conservative’ government is so opposed in principle to investment in Auckland’s public transit, when usage is increasing so rapidly and all the evidence so clearly supports a move away from spending solely on roading.
To make this work Auckland really needs to have a clear vision as Hamburg does, together with a better say in the best way of using our share of the contribution Auckland makes to national taxation coffers. In transport matters Auckland is being poorly served by national government at present.
I am sure that Hamburg’s vision was not reached without much discussion but I believe the ‘Free and Hanseatic City of Hamburg’ may have one advantage over Auckland and that is, that it is a ‘Land’ (i.e. Province – effectively a city state) with maybe less conflict than Auckland has with central government. It seems that our government are pursuing short term political goals which are to the detriment of a rational long-term plan for New Zealand’s largest city.
It is quite evident that New Zealand’s transport policies and spending pattern needs reforming and we can only hope that our current government is big enough to realise this and take appropriate action.
Like the CRL, only at a much bigger scale, Crossrail is a relatively short underground link between existing surface routes designed to unlock existing potential capacity.
The advertisement below is from the last local government elections. Here Councillor Denise Krum rallies against the draft Unitary Plan, especially the degree to which it enables “intensification”. Denise’s advertisement claims the draft Unitary Plan is “too intense” and will “change our streets forever”. Instead, Denise advocates for greater restrictions on the degree to which property owners can develop their property in the urban area, and more expansion of the city. Denise was subsequently elected.
Denise is particularly critical of 3 storey height limits, and goes to the trouble of hoisting herself up (some might say by her own petard) in a scissor-lift so as to highlight differences in building heights.
From this advertisement it seems clear Denise does not support the draft Unitary Plan and instead considers restrictions on intensification as being necessary to preserve community well-being. It is notable the advertisement does not contain any references to any research or surveys which support the positions Denise adopts on these issues. Is it too much for me to expect political advertising to include references to evidence supporting the positions being advanced? Perhaps.
When it comes to planning, however, evidence matters. Recent 2013 amendments to the RMA increased the burden of proof with regards to S32 reports, especially in terms of the economic analysis that should be undertaken to support proposed policy provisions. For those who are not familiar with planning jargon, a “S32 report” attempts to evaluate the effectiveness of proposed policies in comparison to potential alternatives. The 2013 RMA amendments requires S32 analysis to identify, and where practicable quantify, the economic benefits and costs of proposed policies. Some smarty-pants lawyers had this to say about the RMA amendments at last year’s NZPI conference (source):
“Arguably the most significant and material change is an expansion and detailed elucidation of the reference to “benefits and costs”, in the context of assessing efficiency and effectiveness … Post 2013s 32(2) requires, in much more detail, the following:
An assessment under subsection (1)(b)(ii) must—
(a) identify and assess the benefits and costs of the environmental, economic, social and cultural effects that are anticipated from the implementation of the provisions, including the opportunities for—
(i) economic growth that are anticipated to be provided or reduced; and
(ii) employment that are anticipated to be provided or reduced; and
(b) if practicable, quantity the benefits and costs referred to in paragraph (a).
The task of complying with these requirements is not insignificant. A systematic approach will need to be taken in preparing s32 reports to ensure that they are compliant and address environmental, economic, social and cultural effects, including opportunities for economic growth and employment.”
Ever since the RMA amendments came into force I have pondered how they might impact on the proposed Unitary Plan, especially with regards to density controls? I have also been wondering how the strategic direction established in the Auckland Plan, which I think was developed under the auspices of the LGAAA, would be relevant to the Unitary Plan?
My interest was further piqued when councillors, such as Denise, dramatically reduced the level of intensification that could occur in metropolitan Auckland, since which time house prices have soared. The differences between the draft and the proposed Unitary Plans is highlighted in the map below. Areas of red show areas where down-zoning occurred, which includes most of the isthmus. These are the areas where property prices are high (and increasing), i.e. where market-driven intensification seems most likely to occur.
From this it seems fair to say that proposed Unitary Plan imposes tighter density controls. The question is whether these controls are supported by economic evidence that meets the requirements of the (amended) RMA? And, moreover, how apparent tensions between the strategic direction of the Auckland Plan and the approach adopted in the proposed Unitary Plan would play out in a hearing context?
The economic costs of density controls are relatively intuitive: They forgo and/or displace land use development. This means we get less of it, especially in higher In terms of the economic benefits of density controls, those who are opposing intensification, such as Denise, will need to present evidence to show that levels of density which are common-place elsewhere, e.g. cities in Australia and Europe, will cause significant harm to communities should they be replicated in Auckland.
I’m skeptical as to whether this evidence exists. Most of the research I’ve read, such as this review by UNSW for Queensland Health, finds no conclusive evidence that higher density development has negative impacts on well-being. In fact, there’s evidence it’s beneficial to many outcomes, such as childrens levels of physical activity and obesity rates. So much for the meme that children need a big backyard to stay fit and healthy!
In my experience living in Auckland and overseas, buildings of approximately 6 storeys seem to have relatively negligible negative impacts on well-being and/or amenity. The photos below illustrate two buildings from Amsterdam and Auckland, but I could have easily added many more photos of multi-storey buildings from Brisbane, Sydney, and Stockholm. While there are large differences in style, I find both buildings quite attractive (the first photo is used under license from myself; the second photo belongs to Ockham).
For these reasons, I have been somewhat heartened to read the interim guidance on view shafts that was issued by the Commissioners who are overseeing the Unitary Plan hearings process. In this guidance the Commissioners note “the objectives, policies and rules in relation to viewshafts do not meet the s32 requirements of the Act” for several reasons, most notably “amendments were made to s32 in 2013 to require employment and economic growth opportunities (including lost opportunities) to be taken into account and these post-date many if not all of the legacy plans.” The Commissioners go on to note the “PAUP is the first substantive planning process to propose increased levels of intensification to achieve a quality compact city so it is appropriate that the viewshafts are now re-evaluated within that strategic context” and more importantly “… if it is possible to quantify those costs of the viewshaft provisions, then that would assist in decision …”
I want to emphasise from the outset that I don’t have a strong view on the relative merits of view shafts. This post is less concerned with the nitty-gritty of viewshafts than it is with understanding how the 2013 RMA amendments and the Auckland Plan may impact on the Unitary Plan, most notably:
- First, the presence of planning provisions in legacy plans is not strong evidence (in of itself) that those provisions should be retained in the Unitary Plan, mainly because the legacy plans pre-date both the 2013 amendments and the Auckland Plan. Hence, they have not been tested under the current legislative and strategic context.
- Second, the Commissioners appear to consider that the strategic context provided by the (non-statutory) Auckland Plan, in addition to the Regional Policy Statement, is relevant to the provisions of the Unitary Plan, especially with regards to the development of a quality compact urban form.
- Third, in light of the 2013 RMA amendments the Commissioners appear to place a higher expectation on economic analysis, especially where proposed provisions do not appear to align with the aforementioned strategic direction of the Auckland Plan.
The Commissioners thus seem to be attempting to strike a balance between strategic outcomes and economic analysis, and do not seem to be placing too much weight on legacy plans. This is heartening because, frankly, the legacy district plans contained many provisions that are of dubious value. Moreover, where provisions proposed in the Unitary Plan run contrary to the Council’s stated strategic direction, then there seems to be an expectation from the Commissioners that this misalignment is supported by robust economic analysis.
Of course, whether this preliminary guidance on view shafts is indicative of the Commissioners’ ultimate position and/or whether it apples to other topics, e.g. minimum parking requirements, is something that will only become clear in the fullness of time. In the meantime, I’d be interested in hearing your thoughts.
Professional and personal disclaimer: The views expressed in this post represent the theoretical and philosophical musings of a not quite defunct economist. This economist is not a planner nor is he a lawyer (so don’t expect to be able to sue me for much money). The views expressed herein should not be construed to represent the views of my colleagues, clients, friends, or pets. They do represent the views of my Mum, whom I love very much. Nor do they necessarily represent my own views in the future – at which point my views may have changed in response to further evidence and information.
In which Councillor Cameron Brewer tries extremely hard to find a possible cost to ratepayers in a privately funded and user pays addition to our transport networks, while ignoring the real cost of $13m to ratepayers for a free-to-use walking and cycle project in his ward [just one example].
Here at transportblog we are very keen on value for money for all publicly funded projects, which means every single transport project in the land. Except one. The SkyPath. To campaign that this project is some kind of burden on ‘the poor suburban ratepayer’ is so silly as to be beyond parody.
Ratepayers’ watchdogs play a potentially valuable role. But they need to be coherent and consistent, oh and factually accurate. Especially when they are taking a ratepayers salary to do it. Here Brewer is complaining about a user pays route but ignoring the fully subsidised one that happens to run through his ward. So either he really has no idea what’s going on or is being more than a little deceitful in order to score some kind of political point.
Don’t get me wrong, I am entirely in favour of both the taxpayer and ratepayer funding of the Eastern Connections route, but also think the SkyPath should be so funded. And it is also clear which route costs ratepayers more. A certain $13 million versus a possible future liability.
Basically the people of Auckland are getting a huge bargain with the SkyPath. Either it costs nothing, or a much lower sum than it would if funded like every road, bus lane, train station, or cycleway in the city. And this doesn’t even begin to calculate the years of free work contributed by those who have made it happen. And all to make up for what is essentially an institutional failure in transport provision. SkyPath is listed as the region’s most import Active route yet our current institutions weren’t able to get started on it themselves, somehow.
Perhaps it really is time Councillor Brewer took his financial expertise into the private sector…?
Gotta start with the local this week, as local news has been been interesting, and though not without struggle, generally very positive. Not that the coverage has been good, a notable exception is outgoing Metro Editor Simon Wilson’s summary here:
Councillors – the slimmest majority of them – have voted for long-term strategic planning, not short-term political expediency. Good on them. Theirs is just about the only example of such political bravery we’ve seen in this country for years.
Which, of course, is not how the New Zealand Herald sees it. You might think our local paper would campaign for a better deal for Auckland on issues like this. But no. Why bother, when it’s easier to rouse a rabble with invective against Len Brown and rates?
And, in a Sunday Reading first, here’s a plug for getting out of bed and nipping down to your cafe or magazine retailer to pick up a copy of the fresh-off-press latest Metro for my article on the history and possible future of Light Rail in Auckland:
For those who want to stay put, here’s a lesson for the NZ Herald from the Sydney version for how to cover good infrastructure projects, ‘Sydney’s Light Rail…’:
The Herald does not support any one mode of transport over another. In a metropolis like Sydney, trains, buses, the private car, light rail, cycling and walking all obviously have their role to play.
But the government should invest money in the mode of transport that fits the particular need of a particular space and of a particular travelling public.
This is an extremely important point. ‘Fitness’ in a Darwinian sense does not mean strength or stamina, it means appropriateness for a particular niche; how well a thing fits; its fitness. How well an organism fits in its ecological niche determines its success. So it is with transport modes, what a city needs will not be the same as what a provincial town needs, and even in certain parts of a city different options and services will be more appropriate than others. Getting the mix right will influence the performance of that place, its efficiency and productivity. In the competitive ecology of cities the ‘fitness’ of a place’s infrastructure and systems really does mean survival or not.
And on that issue of right mode for the job, here is this week’s summary of why more traffic lanes in urban areas simply leads to more driving and more congestion, via Grist:
We’ve said it before and we’ll say it again: Adding more roads — and more lanes on those roads — does absolutely nothing for gridlock. It’s counterintuitive, perhaps, but it’s true: Five years, $1 billion, and at least one new traffic-hell moniker later (“Carmageddon”), L.A. drivers on the 405 freeway actually added a minute to their daily commutes, in spite (or because?) of a snazzy new carpool lane.
via Guardian Cities: Dublin becomes the latest city to see its future with fewer private vehicles dominating its streets:
A car-free Dublin?
As we recently explored, some cities, especially in Europe, are starting to discourage or even ban private car use. Now Dublin is poised to become the latest city to join the fray. Next City reports that Dublin’s City Council and Ireland’s National Transport Authority have proposed to ban private cars in sections of the city centre, in order to ease traffic problems and make Dublin a more pleasant place to live. The reduction of cars will also free up room for a new tram line, planned for 2017.
Returning to the local the Salvation Army has thoughtfully entered into the development discussion with a new report: Mixed Fortunes:
Geography matters in the real world, although it is often not that important in the worlds of economic theory and public policy. At the beginning of a seminal paper for economic geography Nobel Laureate Paul Krugman remarked that, ‘It seems fair to say that economic geography plays at best a marginal role in economic theory… On the face of it this neglect is surprising. The facts of economic geography are amongst the most striking features of real-world economies, at least to laymen’1.
Based on current trends it is apparent that New Zealand is on a divergent growth path and that this path risks the creation of two New Zealands – Auckland and the rest. Recently released population forecasts suggest that over the next 25 to 30 years Auckland may account for over 60% of New Zealand’s population growth and that Aucklanders, in time, will make up about 40% of this population. In general, Aucklanders will be younger, wealthier, better skilled, and more ethnically diverse than the rest of New Zealand. Within such differences are the seeds for a growing divide in values and expectations.
One for the map and data nerds: Who owns the digital map of the world? asks Citylab:
Google Maps defines the way we navigate from A to B, for free, and it does so extremely well. It also sells its API to its a number of businesses. As of 2012, Apple, Foursquare, Craigslist, and Wikipedia (to name just a few) all built their maps using the Google Maps API.
But today, none of those companies are using Google—partly because of how much Google started to charge for its services and data, and because of the limitations it draws around what companies can do with them.
All four of the aforementioned companies moved to using OSM (partially, in Apple’s case) because it’s free, and often as good as Google. And because the value of proprietary map data is rapidly plummeting as OSM gets better and better.
On the subject of maps, here’s something I thought I’d never agree with: A New London Tube Map. Not just an update but a redesign, and by an amateur too. The rightly famous Harry Beck map from 1931 has been much updated and is unrivalled in the way it quickly came to symbolise the city itself. Now as London rides the global urban rail boom with a huge addition of new services, Beck’s model is coming under enormous strain. ‘SameBoat’, a Hong Kong resident, has made the best new iteration I have seen. Even if it does turn the famous bottle into more of a bed-flask:
Lastly, here’s a unique urban highway, also via Grist: Oslo builds a its bees a highway of flowers.
Oslo is transforming a strip through the city into a series of bee pastures — parks, and green roofs, and balcony flower beds — each a short flight from the next. I like to imagine that from the air you could look down and see ribbon of blossoms, stretching from one side of the city to the other.
Yesterday was really a day of funding news with the other big talking point being the Council finally adopting the Long Term Plan. The budget agreed yesterday is significant as for transport it represents probably the biggest single shift in funding priorities in many generations. Unimaginable just a few years ago, over half of the council’s transport funding (if you exclude renewals) is going towards public transport combined with around 10% going to walking and cycling – not including projects funded as part of other road projects.
The step change in funding has come about in part due to the transport levy now agreed – $99 for households and $159 for businesses. The impact the levy has is shown below as it enables the Interim Transport Programme.
*some of the figures might have changed slightly from when this table was produced
In many ways I think Auckland has not been served well by it’s councils (and governments) who for decades have been too scared to make some tough choices and as such failed to invest enough in transport. The budget passing at 10-9 (two who most likely would have voted for it were away) shows that a large number of councillors wanted to continue this trend.
While I understand that people don’t want to pay more rates, the fact the money is going towards significantly investing in modes that we’ve neglected for decades and that are growing strongly is a positive thing. I suspect that if measured based on a return on investment metric we’d be getting a pretty good deal.
We and future generations should thank the 10 councillors from across the political spectrum who were brave enough to look to the future when making this decision. Those that voted for the budget were:
- Len Brown
- Arthur Anae
- Bill Cashmore
- Linda Cooper
- Chris Darby
- Alf Filipania
- Mike Lee
- Calum Penrose
- Wayne Walker
- Penny Webster
Of course the Herald ran with the story that many would see rates were going up over $1000. The council clarified that today with the following figures.
If there’s one area I think people should be upset it’s that the they have to pay GST on top of the transport levy. With around 454,000 households that’s almost $7 million a year extra going to the governments coffers that could be spent elsewhere. It perhaps wouldn’t be so bad if the government would promise to invest that GST back in to Auckland, that’s potentially a lot more cycleways or bus lanes.
I was a bit surprised to hear the Property Institute of New Zealand warn of an “apartment bubble” in Auckland earlier this week. I was even more surprised when I read their press release. The CEO, Ashley Church, is predicting a bubble as a response to 1) banks being likely to decrease their deposit thresholds on apartments from 20% to 15%, and 2) the Reserve Bank potentially bringing in “loan-to-income restrictions”, where mortgagees would then only be able to borrow X times their income.
The press release then gives a hypothetical chain of events:
1. The Reserve Bank restricts mortgage loans to a percentage of household income – effectively making the purchase of freestanding residential homes almost impossible to all but the very wealthy.
2. With median household incomes of just $76,500 – home buyers flock to the apartment market to find properties which comply with the new rules.
3. The relaxed deposit rules, by the major banks, allow buyers to borrow a little more if the apartment is new – (on average, a little over $400,000 if we adopt the Brit formula) – and this combination fuels a new wave of apartment building and streamlined marketing programs designed to entice buyers.
4. Property Investors – many of whom have also been caught by the new rules – also start buying apartments in large numbers.
5. The combined effect of this new wave of buyers quickly pushes up the price of apartments – fuelling an ‘apartment bubble’.
6. Perversely – the quality of new apartments suffers as developers focus on the ‘low-end’ of the market so as to appeal to as wide a range of potential buyers, within the Reserve Bank rules, as possible.
7. Meanwhile, the cost of renting free-standing homes in Auckland also increases as demand outstrips supply due to the absence of traditional property investors buying these types of properties.
8. Within 7 to 10 years Auckland becomes a highly ‘intensified’ city with large numbers of low quality apartments dotting the landscape and free-standing residential homes becoming the preserve of the well-off and wealthy renters.
However, this chain of events misses out half of what defines a bubble. He’s postulated a rise in prices, sure. But where does the subsequent decrease happen? To me, this sounds like a recipe for a one-off, permanent increase in apartment prices. A permanent shift in the demand curve, as it were. I’m not making any predictions on apartment prices, I’m just pointing out that the chain of events here doesn’t actually include a drop in prices, and therefore isn’t a bubble.
Moving on from that (rather important) point, there are a lot of other strange things in this press release. Firstly, it seems a bit far-fetched that the Reserve Bank would impose harsh restrictions to the extent that only “the very wealthy” could afford freestanding homes, and the press release also ignores the price response (i.e. prices would drop, and many people would still end up in those homes – there aren’t enough “very wealthy” people to fill them all up).
Secondly, if the Reserve Bank is going to clamp down on Auckland home loans, it’ll be because they’re worried about a city-wide bubble. I’d say this is a much bigger concern than an apartment bubble – it’d affect a lot more people.
Point 7 is one I’ve been reading a few variations of recently, which doesn’t follow from economic intuition. If landlords drop out of the market, do rents to rise? Given that each landlord dropping out of the market means there’s an owner-occupier there instead – and therefore a smaller rental market on both sides – the effect on rents might go either way.
Points 6 and 8 in the chain of events are odd too, essentially scaremongering about large numbers of low-quality apartments. The press release continues in a similar vein:
Mr Church says that he is aware that a focus on ‘intensification’ through building more apartments is consistent with the Auckland Unitary Plan and that some might see this outcome as a good thing – but he notes that this provision is also strongly rejected by a large number of Aucklanders and shouldn’t be forced on the city by the Reserve Bank.
“The drive for Intensification is based on a political ideology and is rejected by a large number of Aucklanders. It should only happen if Aucklanders want it”.
It’s a strangely political statement itself, coming from an organisation which began as the professional body for valuers. The PINZ’s statement in March that “the Reserve Bank Governor needs to “stop chasing shadows and stick to his knitting” seems a bit ironic.
As an aside, I think it’s great that the banks reviewing their lending policies on apartments; after all, it’s a more established market now than it was ten years ago, and there’s (hopefully) a lot less speculation going in that market than there was in the mid-2000s boom-bust. The banks will still be cautious about lending for leaky or leasehold buildings, and perhaps shoeboxes, and once those are taken out of the equation the apartments that are left should have a manageable level of risk.
On the whole the government’s new policy of opening up excess land in Auckland for development is not a bad one. As I mentioned when it was announced, the devil was always going to be in the details and on that front the government hasn’t been doing so well. The two most prominent issues that have emerged have been:
- The dispute with local iwi over whether they should have the first right to buy the land. Interestingly the iwi have noted that they support the policy and actually want to be involved in the development of housing. They are heading to court today over the issue.
- That the vast majority of the first piece of land the government showed off turned out not be owned by the government but instead by the council. The site is shown in yellow below.
Combined the issues suggest an element rushed policy making where the details simply haven’t been thought through. In my view, of the two the first is by far the most serious issue and one probably best left with others to talk about. The second one raises some additional questions – some of which have been highlighted well by Deputy Mayor Penny Hulse.
First and foremost, as part of the Unitary Plan the site is zoned as part of the metropolitan centre as shown below.
The zoning means it’s possible to build mixed use and up to 18 storeys on the site although it feels like it has mixed potential. It’s sandwiched between the motorway and some large, not overly pedestrian friendly roads – Manukau Station Rd should have scaled down after the motorway was finished. It kind of has the feeling of being land in the middle of a motorway interchange.
The image below shows the intersection of Manukau Station Rd and Wiri Station Rd/Davies Cres. As you can see it looks like a traffic engineers dream with slip lanes on all corners and extra lanes for those turning right
On the plus side it is just across the road from the Manukau Train Station and new MIT campus while obviously a short walk to the rest of the Manukau city centre. That alone makes it odd that the government suggest only putting around 60 terraced houses on the site. This isn’t to say the site should have to be developed to 18 storeys but given its location and the demand for housing it seem insane to only think about putting 60 dwellings on it.
The situation raises two questions in my mind.
- First why is the government aiming so low. Is it just that they simply don’t get the urban reality and think that everyone only wants low rise? Some government ministers – such as Bill English – have at least acknowledged that intensification is needed and issues such as NIMBYism need to be addressed. This is one of the locations that such intensification can easily occur without any issues from surrounding neighbours. Bernard Hickey had a good piece in the Herald yesterday suggesting that the council and government need to do more to show that density isn’t bad, this is just one of many easy opportunities to do so.
- Secondly one of the reasons this hasn’t been a bigger issue is the council have said they’re keen to work with the government on developing the site (to a higher density). Given this is the case then what have the council and its CCO’s being doing just sitting on the land for so long. Surely if they were concerned about it they should be getting on with developing the land rather than just sitting on it, effectively land banking.
Contractor Magazine have run an article on the CRL early works, here.
Here is an update on projects underway or planned to start soon on the northern part of the route.
How Auckland’s transport system develops and how it is paid for is probably something that will be debated until the end of time. That doesn’t mean we should just sit back and endlessly debate it though. Almost everyone agrees that something needs to be done to and it seems many are even prepared to pay extra for it.
If there’s one thing that’s been clear for many years now it’s that Aucklander’s want more choice in how they get around. Many have either travelled to, lived in or come from other cities around the world that provide residents with greater transport choices and have therefore seen first-hand the benefits greater options provide residents. However in Auckland they primarily turn to the car as for most that’s the only realistic option for getting around. The car might be preferred by many but a lot of people would love to have options and that’s come through in survey after survey. The most recent case of this was the Long Term Plan where the feedback was overwhelmingly in favour of focusing more on public transport and cycling. The desire for more transport choice was something the AA noted too in their survey.
It’s this strong feedback that is almost certainly a factor in the majority of the council’s Interim Transport Programme – which is possible due to the new transport levy – going towards PT and active modes.
However the transport levy is only meant to be an interim step until a longer term funding solution can be found. During the LTP the council consulted on taxes and rates or tolls on motorways. I was quite surprised that just over half supported the tolling options in some manner – although that could also be an outcome from the binary choice that was presented.
To be honest I’m not a huge fan of motorway tolling – or at least not what was proposed. That’s because I feel that just targeting motorways is likely to have a number of large side effects such as pushing a lot traffic that would otherwise be on the motorway onto arterials and then making it more difficult to roll out PT and cycling initiatives. A road pricing scheme that was more focused on getting the most out of our entire road network by better managing demand rather than a scheme focused primarily on raising revenue seems like better option to pursue.
Unfortunately it doesn’t seem like any kind of alternative funding method is going to get much support from the government. They’ve previously signalled they don’t like the idea of tolling or other ways of raising taxes which is why the council adopted a transport levy. Now it seems they are ruling out the toll idea completely with Radio NZ reporting that Transport Minister Simon Bridges has written to Mayor Len Brown saying the government is unwilling to even consider the idea.
This stance is really quite absurd. It’s not like Auckland was just asking for a huge wad of cash the government but instead just to be allowed to raise funds in a new way to pay more projects itself and the political risk in doing so sits firmly with the council, not the government. It makes me wonder what the government is so afraid of, that it will be so successful that Auckland improves faster and better than they’d like.
I’m not sure if this is just the reporting or if it actually reflects Bridges/the government’s views however if it’s the latter it’s concerning that he seems to be suggesting that the only role in PT is in reducing congestion rather than it enabling greater access to the wider city. It reflects that the government seem to see PT only as an option of last resort for the poor or those that can’t stand congestion rather than it having the ability to be a mode of choice. One such example is the Northern Busway which now gets high usage all across the day thanks to the investment to give it a congestion free and therefore a time competitive route.
He’s proposing a year-long negotiation with the council on an agreed 30-year programme focusing on reducing congestion, and boosting public transport where that reduces congestion.
Of course Len Brown seems to be acting like nothing’s ever happened with Radio NZ reporting that he still thinks the government might eventually change their mind and approve it. I think he’s dreaming if he thinks that and also if he thinks the government is going to respect the council’s transport plans. In fact given the time-frames involved it seems more like the transport accord is more of a way to buy some time on making a decision.
This news comes hot on the heels of a report from the OECD suggesting that Auckland/the government needs to consider road pricing but to help manage the congestion. They also note that more PT would be needed to give people more options and the ability to avoid the costs. Note: there’s quite a number of concerning aspects of the OECD report which I’ll cover in a separate post.