Auckland Transport Blog

The Local Government Commission has today released its finalised findings for what the details of the boundary of Auckland’s Super City should be, the boundaries for the various wards and the boundaries of the various local boards. Back in November their draft plans got absolutely panned for being unfair, unrepresentative and – at worst – appeared like blatant gerrymandering.

The main cause of all this angst was that the Local Government Commission were meant to ensure that no ward boundary was over or under represented by any more than 10%. This means that in determining the make-up of the future Auckland Council, whether my vote living in one part of the city was worth approximately the same as someone’s vote living elsewhere in the city. At their first crack, the LGC did a shocking job, and a huge number of the wards were vastly over or under represented. Submissions hammered them for this, as they acknowledge themselves:

We received a number of submissions on councillor representation and particularly the variation in fair representation ratios between the proposed wards. We agree that fair representation is very important. Consequently, while still providing for effective representation of communities of interest, we have made adjustments to ensure wards now more closely comply with the ‘+/-10% fair representation rule’. We believe this will assist achievement of our objective of public understanding of representation arrangements and help promote effective community engagement.

But have they really made things that much better? I don’t think so, and if you have a look at the table which details how under of over-represented each place is, there are still a large number of areas that fall outside that 10% threshold.

March 2010 final version:

The important column to look at is the one on the right, showing the deviation from the average population per councillor. Out of the 13 wards to be created, no fewer than six have a deviation of greater than 10%. That’s almost half of them. The table below shows the November proposal, and you can see that there have been some improvements, but really it’s still outrageous that 80,000 people in the Waitemata and Gulf Ward are only represented to the same extent that 54,000 people in the Rodney Ward are. That’s not fair democracy.

November 2009 draft version:

Some of the other changes that have been made make some sense. Orakei has been split off from Tamaki-Maungakiekie, and thankfully the central Auckland ward has been renamed from Mangawhau to Waitemata and Gulf. It seemed insane for it to be called Mangawhau (Mt Eden), when Mt Eden wasn’t even in it!

However, in general I still think the LGC have done an incredibly lousy job here. How hard can it be to ensure equal and fair representation across the different wards? What’s stopping them from shifting another 5,000 people from Manukau into Manurewa-Papakura to even up those two wards? What’s stopping them shifting more of Waitakere into Albany (some has been shifted) to ensure that those match up more evenly. I realise that some effort has gone into ensuring that the boundaries match “communities of interest”, but I actually think that’s far more important for the local boards than for the wards. The ward boundaries are about democratic equality, and the way they’ve been established is not fair.

Furthermore, if you look at the areas that are over-represented and under-represented it would seem there’s quite a political bias (Orakei excepted). Which is very worrying and suspicious.

Auckland’s Super City is being established through three different pieces of legislation. Two of those – the Local Government (Tamaki Makaurau Reorganisation) Act and the Local Government (Auckland Council) Act – have already been passed into law. The third piece of legislation, the Local Government (Auckland Law Reform) Bill, is currently open for submissions, until February 12th. Making a submission is actually really easy, as you can now do it online. I’m not sure whether I will end up making a submission, but I do certainly have a few issues with the legislation as it currently stands – particularly in terms of the details about how it establishes the “Auckland Transport Agency”, which will be the successor to ARTA and the transport departments of the various current councils.

Part 4 of the Bill creates the Auckland Transport Agency as the “Council Controlled Organisation” (CCO) that will manage quite a lot of the transport system within the Auckland Region, once the Super City is established in October this year. Perhaps the key statement there is “quite a lot” of the transport system, rather than “all of it”. As I explained in a previous post, there’s actually quite a lot that the Auckland Transport Agency will NOT manage. This is outlined in section 37 of the Bill:

Perhaps what is most critical here is that the transport system under the management of the Auckland Transport Agency will not include railways or state highways. It’s not necessarily surprising that the government has refused to give up sole control of the railways and state highways, but I think it undermines attempts to create a truly “integrated” transportation system. I would have perhaps preferred some sort of “joint venture” agency to manage everything the Auckland Transport Agency will, plus the state highways and railways (jointly with NZTA & KiwiRail). Such an agency would have allowed for true integration, but instead we’re still going to have a variety of different agencies and entities managing transport – unfortunately losing much of the benefits that the Super City could bring.

I suppose that the obvious result of creating the Auckland Transport Agency is that they are doing this job rather than the Council. To ensure that Council can’t get involved in transport matters, we have section 43:

Now obviously we wouldn’t want the Auckland Council to establish their own “rival” transport agency, so this section is necessary. However, it just hammers home how this Act takes transport out of control of the Auckland Council and into the control of an agency that is quite separate from the Council. At first I thought this was a good idea, but now I’m worried that this might just be a way for the government to get around the current difference of opinion between itself and many local politicians on where the focus for transport spending should be.

The Green Party appears particularly suspicious about what this decision to put transport into a “CCO”, rather than leaving it in the hands of the Auckland Council means, with Sue Kedgley making the following comments in her original speech on the Auckland Law Reform Bill:

If members look at the Auckland transport one [agency], members will see that it will run every aspect of Auckland’s transport. It will run the electrification of the Auckland rail network and integrated ticketing. The only aspect left for the Auckland Council to manage is off-street parking facilities owned by the council. The Auckland Transport Agency will have the powers and functions of a local authority. It is to act as if it were a regional council. It can make by-laws, it is a requiring authority, it can seize property, and with all of these functions, it will be run by unelected and unaccountable directors.

One of the most critical aspects of this bill is a clause that states that councillors are prohibited from exercising any powers or functions that the Minister has conferred on to the council-controlled organisations. So councillors will be prohibited under this bill from exercising any of powers or functions that are being undertaken by, for example, the Auckland transport council-controlled organisation.

We have these mayors running around Auckland saying they want to be elected as mayor to fix Auckland’s transport problems. The only trouble is they will have virtually no powers to do anything to influence Auckland transport. All they will be able to do is bang the table in frustration because they will not have the powers to make the changes they want.

If they want to get involved in the debate on electrification of rail or on integrated ticketing, which are some of the most important issues facing Auckland, all they will be able to do is sit around banging the table in frustration and impotence because the Crown-owned companies will have all of the authority to implement policy in every aspect of water, of transport, and other issues.

I guess it’s worthwhile to point out that the rail electrification project isn’t actually something that would be under the auspices of the Auckland Transport Agency, but rather KiwiRail/Ontrack – as it’s a government project. However, much of the rest of what Sue Kedgley says is very true – that there is going to be such a divide between the Auckland Council and the Auckland Transport Agency that even though future members of the Council, including the quite powerful mayor, are likely to want to “do something about transport” as a matter of urgency, it seems fairly likely that they will struggle to do so.

The main way in which the Auckland Council will be able to affect what the Auckland Transport Agency does is through the fact that the Council is the sole shareholder of the Transport Agency, and has the ability to appoint all its voting directors. The board of the Auckland Transport Agency is supposed to make all the important decisions the Agency will have to make, as outlined in section 45 of the Act: Schedule 2 of the Act outlines the process for the appointment of the directors, and does indeed state that the Auckland Council will appoint these directors. However, there’s an interesting part of an earlier part of the legislation which details how the initial directors of the Auckland Transport Agency will be appointed. The very lengthy Clause 24 makes changes to the Local Government (Tamaki Makaurau Reorganisation) Act 2009 includes one part that gives the Minister of Transport and the Minister for Local Government the opportunity to appoint the initial directors of the Auckland Transport Agency:I must say it is difficult to work out why this is necessary, other than to ensure the Auckland Transport Agency reflects the government’s, rather than Auckland Council’s, wishes for at least the first three years of its existence. I suppose that we do need a board to “hit the ground running”, but surely the Auckland Council should have the ability to appoint all the directors within 6 months of taking office?

Another aspects of this bill that I find concerning is the fact that it completely repeals the 2004 Local Government (Auckland) Amendment Act, known as the LGAAA. While a large part of this Act was dedicated to the establishment of ARTA – so therefore kind of has to be repealed, the LGAAA also is very important in providing some legal “teeth” to the 1999 Auckland Regional Growth Strategy, by requiring that council plans be consistent with this strategy. It seems as though repealing those aspects of the LGAAA have been simply designed to undermine the Growth Strategy, and in particular the metropolitan urban limits that it created.

Perhaps the plan is for the Regional Growth Strategy to be effectively replaced by what Part 6 of the Auckland Law Reform Bill focuses on – the spatial plan for Auckland. This is definitely one part of the legislation that I wholeheartedly support, although it is definitely necessary that we get this plan right, as it seems as though it will be fairly powerful in guiding Auckland’s future development. Here’s what the legislation requires of this “Spatial Plan”:

This is certainly the kind of plan Auckland needs, and it will be interesting to see how it is developed over the next few years.

In terms of what others are saying about this legislation, ARC Councillor Joel Cayford has made a couple of excellent posts on it here and here. He points out a few of the more difficult to find consequences of the legislation. The Green Party have also put together a guide for submitting on the bill, which is quite useful once again in terms of digging into some of the potentially hard to understand bits of it.

Overall, I am really starting to think that this whole “Auckland Transport Agency” concept is potentially a big mistake. Originally I had supported it, because I figured it would largely be an “empowered ARTA”, and ARTA seems to have done a reasonable job over the past 5 years. Yet as time has gone on, and I have seen more of the details about the Auckland Transport Agency, it really seems as though we’d probably be better off with transport simply being a part of the Auckland Council. Transport is a big political issue in Auckland, with local politicians just about always putting transport matters at the top of their priority lists. Given the level of discontent with Auckland’s current transport system, it seems very silly to effectively “lock away” transport into an agency that is really only very indirectly accountable to the people of Auckland for the decisions it makes.

So while you submit ways in which the Auckland Transport Agency could be improved (which I think it most definitely can be), I do think it might also be worthwhile mentioning that, ideally, transport shouldn’t be locked away from the Auckland Council.

One of the most interesting aspects of following transport this year has been the emerging divide between what central government in Wellington wants to be the direction for transport to take, and what the Auckland Regional Council – and increasingly other local politicians – want. Perhaps most obviously, this difference shows up in the respective transport strategies of the two parties – the Government Policy Statement and the Regional Land Transport Strategy. Let’s compare paragraphs from their respective introductions to get an idea of the gap we’re talking about here.

First, the Government Policy Statement:

The GPS closely reflects the modal choices that are realistically available to New Zealanders. Approximately 70 percent of all freight in New Zealand goes by road, and 84 percent of people go to work by car, truck or motorbike, so we need good roads to move freight and people. The government supports some mode shift over time, especially in our major cities of Wellington, Auckland and Christchurch, but considers that this should not be accelerated to the point where the outcomes are economically inefficient.

And the Regional Land Transport Strategy:

There will inevitably be scepticism over perceptions that this is a ‘green’ transport strategy because it places increasing importance on developing public transport and anticipating and responding to sustainability challenges such as ‘peak oil’ and climate change, despite the Government’s priority of developing national roads. Roads have their place in any transport system as do trains, ferries and buses particularly in urban areas. A balanced investment is needed to ensure Auckland and Aucklanders are able to achieve their full economic and social potential with minimised environmental costs.

So yeah, quite a difference there. At times this difference has led to quite heated debate between Auckland and Wellington – particularly over the prioritisation of the Puhoi-Wellsford Road, known to most as “the Holiday Highway” (credit to Mike Lee for that name).

With Auckland becoming a “Super City” next year, the potential for this battle between Auckland and Wellington to intensify seemed to me as a fairly likely outcome. For as long as Auckland has been the biggest city in the country, yet Wellington remaining the capital, I think central governments have been quite happy to “divide and rule” over Auckland, to ensure that no Auckland local government would be strong enough to be a viable “counter-point” to what happens in the capital. The Super City is effectively an end to that tactic, as there is little doubt in my mind the future Auckland Council will be a very powerful body, and its future Mayor a very powerful person.

Bringing that same logic to transport matters, I would say that central government would have been pretty freaked out by the possibility of Auckland becoming a more powerful entity, particularly because of the diametrically opposed transport strategies that we have seen emerge over the past year. This would have presented a huge problem for the Minister and for NZTA, who are dead keen on spending around $11 billion on new state highways over the next decade, while Auckland’s local and regional politicians seem more focused on things like the CBD rail tunnel, rail to the airport and other public transport improvements. It would have been a pretty ugly and messy battle.

So what to do about this situation? Clearly there was a lot of discussion between those setting up entities such as the future Auckland Transport Agency, the drafters of the third Super-City bill, and others who find themselves involved in transport/local government matters. This is where ARC Councillor Joel Cayford, who has looked into the details of this bill in far greater depth than I have, provides some excellent analysis on his blog:

What Auckland Transport is, and how it differs from other CCOs

According to the Bill, this entity is “a body corporate with perpetual sucession” and “a council controlled organisation of the Auckland Council”.

But – and it’s a big “but” – various Local Government Act provisions relating to CCOs will not apply to Auckland Transport.

For example, Auckland Transport, does not have to comply with ss. 59, 60, 64 and 74 of the LGA. This means:

a) (s 59 does NOT apply) Therefore the principal objective of Auckland Transport is NOT to achieve the objectives of its shareholders (in this case Auckland Council), as specified in the statement of intent; and it is NOT to exhibit a sense of social and environmental responsibility by having regard to the interests of the community in which it operates….; (My interpretation: Auckland Transport does NOT have to deliver the objectives of Auckland Council – which might be embodied in annual plans, policy statements, spatial plans.)

(b) (s 60 does NOT apply) Therefore decisions relating to the operation of Auckland Transport DON’T have to be made in accordance its statement of intent; and its constitution…; (My interpretation: Even if Auckland Transport has a Statement of Intent – or Constitution – its Board can make decisions that are not consistent.)

(c) (s 64 does NOT apply) Therefore Auckland Transport DOESN’T have to have a statement of intent that complies with the detailed information requirements set out in clause 9 of schedule 8 of the Local Government Act…; (My interpretation: The SOI requirements for Auckland Transport are totally undefined. It appears to be able to decide its own direction, with little reference to Auckland Council. Strangely, however, s34 of the Bill requires that Auckland Transport “must have a statement of intent that complies with the LGA” – so – I don’t know. Can’t have it both ways…)

(d) (s 74 does NOT apply) Therefore the usual official information provisions of the Local Government Official Information and Meetings Act DON’T apply to Auckland Transport. (My interpretation: Auckland Transport will NOT be publicly accountable in the same way other CCO’s have been. However this is qualified by a specific provision which DOES make Auckland Transport subject to parts of LGOIMA.)

Those are important, although relatively technical matters, the real crunch is a bit harder to find:

One of the key functions of Auckland Transport is to “prepare the regional land transport programme for Auckland in accordance with the Land Transport Management Act 2003…”.

This is the area – as former chair of Auckland’s Regional Land Transport Committee, tasked with establishing Auckland’s Regional Land Transport Strategy – that I wanted understand. Took a little time to unwind. Not a happy experience….

The difference between the requirements for preparing the RLTP under the current system (on the left below) and the proposed system under “Auckland Transport” (on the right below) take a bit of analysis to figure out, but are quite telling:

You’ll see that s15(b) has gone. The key thing here is the loss of the power or influence of the Auckland Regional Land Transport Strategy to drive transport investment in Auckland. Previously, ARTA was required to “give effect to the RLTS”. Under these changes, the RLTS and the GPS are on the same policy level. Who knows how the Board of Auckland Transport will resolve any differences?

I think I know.

Once it’s all pulled together the consequences of this potentially minor difference in wording become clear:

What does it all mean?

Auckland Transport is not your usual “Council Controlled Organisation”. Because there are so many exceptions (noted above), and exemptions (noted above), and freedoms (noted above), really, Auckland Transport is a Crown Entity.

It is a Government Controlled Organisation.

If Auckland Transport is established as proposed, Auckland will lose something significant. It will lose its ability to determine its transport future. Auckland Council will become little more than an entity set up to extract rate revenues from Auckland ratepayers, and these revenues will then be directed to Auckland transport investments that central government considers are priorities in delivering its objectives, and not Auckland Council objectives.

So I guess that’s how central government has worked out how to avoid battling with regional and local councillors over transport matters. It will simply bypass them through the establishment of Auckland Transport, and the legislation which requires Auckland Transport to take into account central government’s policy directives as what the Auckland Council wants to do.

When we remember that Auckland Transport won’t have any say over what happens to state highways and railway lines anyway, it’s starting to become pretty obvious that the future Auckland Council won’t have much power at all when it comes to transport matters.

When I look back at this year, from a transport perspective, I guess overall the feeling is that “things were turning into a mess, but largely they’ve been sorted out”. Electrification’s still happening, integrated ticketing’s still happening, there’s an investigation into the CBD Rail Tunnel underway, funding for Project DART is continuing, and so forth. That’s not to say it’s been a particularly great year for public transport – and there are two issues in particular that stand out as particularly worrying for any public transport advocate:

1. Changes to the Government Policy Statement that shift money from public transport into building motorways (happened back in May).
2. Changes to the Public Transport Management Act (hasn’t happened yet, but is on the cards).

The first of these two matters is a complex one, that I will need to put quite a lot of research into writing about (although this article last week gives a reasonable overview of the implications of the GPS changes) so I will save that one for later. For this post I am going to focus on the second matter – the possible changes to the Public Transport Management Act (PTMA), or more specifically I plan to outline what that Act is, why it was necessary, why it was introduced and what the implications of messing with it might be.

Reading through the legislation itself is quite a challenge for this particular Act (although to be honest legislation is always pretty difficult to make sense out of) as a lot of it is very technical, and very procedural. The purpose of the Act is a reasonably good place to start in terms of making sense out of it:

As we will find out later, it’s sub-section (c) which is particularly controversial.

To make a little bit more sense out of what this all means, I guess it’s necessary to look at how the public transport system worked before this came along (which actually is generally still in effect as the PTMA hasn’t really had much impact yet as contracts largely haven’t come up for renewal). Basically, as far as I know, under the old system all public transport services fitted into one of the following two options: either commercial services or contracted services. Commercial services are those the operator (such as NZ Bus) considers that they can run at a profit – so they don’t need subsidising. Contracted services, on the other hand, are those which do receive a subsidy – from the Regional Councils and the national land transport fund (NLTF). Generally what would happen is that the different operators would choose the best and most profitable routes, and then operate them as commercial services, with the remainder of public transport route being subsidised contracted services.

Now if that sounds complicated enough, what made this situation even messier was the fact that a ‘route’ didn’t actually constitute a service, in fact by the sounds of it every single different ‘run’ made by a bus, train or ferry was a distinct ’service’. Therefore, you could have bizarre situations where the 8.20am Sandringham Road bus would be a commercial service, whereas that 8.30am Sandringham Road bus would be a contracted service – one that ‘filled in the gaps’ in a sense. Once a particular operator had registered commercial services along a route, it generally made sense for them to be awarded the contract to run the contracted services – as (without integrated ticketing) the last thing we wanted were two different bus companies operating the same route. This led to rather bizarre situations where operators would register every second service as a commercial service, or all the services going one way as commercial services – so they’d have their ‘foot in the door’.

This situation, and the lack of controls over commercial services, led to a wide variety of negative effects on public transport since the split between commercial and contracted services was established by the 1989 Transport Licensing Act. These problems are outlined below:

1. The ‘cherry-picking’ of high patronage routes. Of course, commercial services ended up being those with the highest levels of patronage or those where profit could be best made. This made it not possible for the regional councils and ARTA to use these routes to help cross-subsidise less profitable routes. In general, this has increased the amount of subsidies that need to be contributed to running public transport.
2. Operators never had to provide any information on their commercial services. This meant that transport planners have found themselves playing rather crude guessing games in terms of patronage on these routes, while the level of profitability of these routes is also generally not known.
3. Once a route no longer became profitable for operation as a commercial service, the operator could give fairly short notice of cancelling that service unless ARTA or the regional councils stepped in to ‘contract’ it. Effectively that resulted in a ‘privatise the profits, socialise the losses’ situation where the private operators enjoyed all the benefits of the good times, but as soon as things started to go wrong for them they could simply abandon that route as a commercial service and then start enjoying having it propped up with subsidies. Furthermore, the operators were not even required to prove that the service was no longer profitable – they effectively had the ability to beg for subsidies without having to prove they were necessary.
4. The lack of control over commercial routes made it impossible for an integrated ticket to be implemented. As we’re seeing now with the acrimonious Snapper/Thales debate, different operators are incredibly jealous in their guarding of having to share information, ticketing and the redistribution of revenue. It is my understanding that ARTA could have forced the contracted services to accept an integrated ticket, but what’s the point when there’s the possibility that the 8.30am bus along Sandringham Road would accept your integrated pass, but the 8.20am bus wouldn’t? That would have been an even more infuriating outcome than having no integrated ticketing at all. So in that respect, the PTMA was essential for integrated ticketing to happen.
5. The dichotomy between commercial and contracted services meant that they often ended up competing with each other, or you had buses competing against trains, or different routes from different companies competing against each other – all the while structuring which routes they declared as commercial and which ones as contracted to extract the maximum profit out of the system (which generally included a significant subsidy). The fact that we have many bus routes completely following train routes (such as the 135/136 buses following the Western Line quite closely) seems to me like an incredible waste of scarce resources.

Probably the biggest problem with the old system was simply that it actually didn’t encourage people to use public transport at all. The lack of co-ordination, the messy dichotomy between commercial and contracted services, the inability to get integrated ticketing up and running, the extraordinary waste of resources in duplicating services and the inability for higher patronage services to cross-subsidise lower patronage services very much contributed to the massive decline in per capita public transport use we saw in the late 1980s and the early 1990s. Although undoubtedly things have improved since that time, that is really only the result of a very strong political and financial commitment from the ARC to public transport – and even then it is arguable the results have been relatively disappointing compared to the amount of money invested. So I think it’s fair to say that it was clear the old system wasn’t working. It wasn’t providing good value for money in terms of ratepayer and NLTF contributions, and it certainly wasn’t helping to provide anything like a world-class public transport system for Auckland. The old legislation was alsoactively preventing integrated ticketing from happening. So it had to go.

In terms of developing a replacement for the old system, it was clear that the main necessity was to give regional councils and ARTA some level of control over commercial services – so that they could be integrated into a co-ordinated system and so that we could actually achieve many of the things the old system had prevented from happening.

Three options were looked at when developing the PTMA – known as Options A, B and C. These are detailed further below:

• Option A: preserving the status quo. Obviously this would have been an incredibly stupid option to pursue, but somewhat unsurprisingly most (although not all) of the public transport operators were keen on this particular option.
• Option B: empowering regional councils to achieve their objectives mainly through two planning mechanisms —regional public transport plans, and controls imposed by councils on commercial services to implement these plans—and a compliance and enforcement regime.
• Option C: enabling regional councils to require all services to be contracted (should they choose to do so).

Throughout the select committee process Option B was generally favoured by the politicians – although somewhat unsurprisingly it left nobody being particularly happy. ARTA was incredibly keen on Option C – as it was really the only option that could eliminate the dichotomy between contracted and commercial services that created all the problems detailed further back in this post. The select committee’s report detailed that: “ARTA asked the committee to  recommend a redrafting of the bill in favour of Option C, which would have given ARTA the option of a fully contracted public transport system.” Labour members of the select committee were also generally in favour of Option C, although they couldn’t get a majority to vote for it.

However, as the parliamentary process for enacting a piece of legislation has a rather large number of steps, eventually ARTA did manage to convince enough MPs that Option C was in fact the best way to go – and interestingly enough that is the piece of legislation that we now find ourselves with. Of course, Infratil (owners of NZ Bus) bitterly opposed the legislation – particularly the final decision to go with Option C – and eventually managed to convince the Minister of Transport to look into changing this piece of legislation.

The general feeling is that the PTMA will change back to “Option B”, which wouldn’t be a complete and utter disaster, as regional councils would still have some ways to impose controls on commercial services through their regional public transport plans and the controls that the Act allows them to have. However, Option B still results in a dichotomy between commercial and contracted services. It still means that we’ll have cherry picking of routes, it still means that we’ll find it very difficult to ensure co-ordination of services so that your feeder bus arrives at the train station just before, rather than just after, the train leaves. It also means that we’ll probably still have stupid and pointless duplication of services where buses effectively follow train route – competing for passengers instead of working together to encourage more people onto public transport.

While Option C sounds harsh, in that it effectively prohibits commercial services, in reality if we want a properly co-ordinated public transport system history tells us that that’s really the only path that is likely to work (the alternative certainly hasn’t worked). While one would imagine that Option B would still ensure integrated ticketing takes place, in my opinion Option B would not provide for the most efficient use of resources and will probably result in a continuation of the same process we’ve seen over the past decade of heaps of money being shovelled into public transport, but with rather disappointing results.

That is why I think the PTMA shouldn’t be changed. Unfortunately, we are yet to see the real benefits of what Option C would provide, as there are only a few routes in Auckland whose contracts have “ticked over” recently enough for them to be caught by the PTMA (such as Mt Eden Road services), so I do worry that it’s a situation of us not knowing what “might have been”, as the benefits of Option C will perhaps never eventuate before such a time as it is repealed in favour of the less effective (in my opinion at least) Option B.

I know it’s not exactly transport-related, but it is pretty big news today that the future structure of the Auckland Super City has been released. Well, by that I mean the boundaries of the different wards have been released, as have the boundaries of the local boards, and how they will be comprised. The southern boundary of the region has also been finalised.

At a basic level, the 20 councillors will be elected from 12 wards. Eight wards will have two councillors and four will have one councillor. The full report is available here, and the associated maps can be downloaded here.  The population, names, number of councillors and so forth are included in a useful diagram below: Probably the most interesting column in this table is the one on the far right – which effectively shows the level of ‘unfairness’, or deviation from the idea of everyone having their votes count equally. Some level of discrepancy is to be expected, as the ward boundaries have been generally aligned with the local board boundaries – which need to take into account ‘communities of interest’. Plus the legislation required that Rodney and Franklin would have their own wards, with one councillor each.

However, despite this, I really think there’s a problem here. Some discrepancy is not the 24% under-representation that we’ll get in the Mangawhau-Hauraki Ward (which just happens to be where I live, which probably explains part of my annoyance) or the 24% over-representation in Rodney District. This basically means that someone’s vote in Rodney counts almost the same as two votes in my ward.

In terms of the local boards, things are a bit fairer. The Mangahwau-Hauraki ward gets split into three wards: one for the central area, one for Waiheke and one for Great Barrier Island. I guess the gulf islands are different enough to warrant a local board, but once again the central area seems particularly big to be one single local board. However, this is nothing compared to pretty much all of existing Waitakere City – which gets lumped into a single local board. One last thing that’s strange, is that the Central Auckland Local Board will be called Mangawhau. Mangawhau is the Maori name for Mt Eden, which is fine, but really the central part of Auckland isn’t Mt Eden. In fact, the suburb of Mt Eden is not even in the Mangawhau local board area, while the mountain itself is only just within the local board area. What’s wrong with “Central Auckland”?

I think I’ll be making a submission on this. Submissions can be emailed to info@lgc.govt.nz

I can’t say that I’ve been particularly generous in my opinion of Steven Joyce over the last 10 or so months since he became the Minister of Transport. But perhaps I was starting to feel a bit less grumpy about what has happened to transport matters – as a lot of the mess he created in March has subsequently been cleaned up. As long as he confirms funding for electrification in the next week or so (not via a PPP please) and the NZTA confirm that they will provide the necessary subsidy for the integrated ticketing project, we will basically be back where we were a year ago – with the added bonus (I suppose) of not having to be lumped with a 9.5c a litre regional fuel tax (just a 6c a litre national one for more roads, sigh, but anyway).

There is still, of course, the GPS problem. But perhaps the current increase in public transport patronage and lower levels of car use might result in public transport expenditure being at the maximum of the ‘band’ that the GPS outlines. Maybe Joyce will start to realise that Aucklanders want more and better public transport – and are voting with their feet.

However, an interesting blog post by Auckland Regional Councillor Joel Cayford indicates that such a change in thinking is unlikely. As will become obvious, unfortunately it seems like our transport minister lives on another planet when it comes to his thinking into transport matters. Joyce visited the Regional Transport Committee on Friday to talk to them for an hour – half the time outlining his transport priorities and half the time answering questions. I do kinda wish I could have been there, but thankfully Joel Cayford gives a very good recollection of what went on:

I noted a few points as he addressed us. These don’t encapsulate what he said. They probably say more about me – than they say about him. But anyway:

1) He said that Auckland spent $1.6 billion on transport last year. He didn’t say what that was on, but I imagine it will be everything: construction, maintenance, running costs, fuel …. unsure whether it will include the amount of money citizens put into buying and running their cars… A hell of a lot of money though. Confirms my concern about the % of Auckland GDP that does go into transport. It is not an end in itself – we can’t export it…

2) He stated very clearly that Govt was focussed on immediate transport projects and growth. This is not a surprise. It is part of the mantra. Part of recession-busting…

3) He spoke of the new toll road being built at Tauranga. 24 kms long. He emphasised the travel time savings it will bring. This sort of comment is a real throw back to the bad old days – everybody knows you can’t build your way out of congestion. Travel time savings are typically very short-lived. Induced demand sucks up the new capacity very quickly. The value of the long term benefits cited for new roading projects (due to travel time savings) – is almost always overstated. These benefits disappear very quickly. They rarely justify the cost of such projects. The Minister needs to show a healthy skepticism about travel time savings benefits. They are ephemeral.

4) The Minister ended with an informal set of comments about where the Government is going with Auckland Transport Planning and service delivery: he characterised the options – something like ARTA?… or a committee within Auckland Council? He indicated there seemed to be good support for an RTA (Regional Transport Authority) rather as recommended by the Royal Commission. Interestingly he suggested it would be likely to include ALL ROADS. Including local streets. It would NOT include rail or state highways though. All of the above is subject to Cabinet approval.

Well in terms of the good news, I will be happy to see a Regional Transport Authority – largely similar to that recommended by the Royal Commission – happen in Auckland. I think ARTA have done a pretty good job in the time since they were formed, and effectively retaining ARTA but giving it the extra responsibilities that the transport departments of each of the councils will result in far better transport planning integration. I think it’s worthwhile pushing for the RTA to have at least something of a say into state highways and railways – something for my future submission I think.

In terms of the bad news, it’s frustrating (but not surprising) how much emphasis is placed on time savings benefits. I’ve said it before, and I’ll say it again – most time savings benefits will simply be to those travelling outside work hours, so therefore they will simply get more leisure time. And if providing leisure-time based time savings benefits was so important, the government should buy everyone a dish-washer. Crikey I could use one at the moment!

Nothing too horrific in what’s said above, however it is actually in the answers to the various questions posed to Steven Joyce by members of the Regional Transport Committee where we start to see the real problems:

Cllr Chris Darby of North Shore City Council asked the Minister about how transport policy and spending plans would respond to the warnings that have been given by the International Energy Agency (as reported in NZ Herald 4th August), which has highlighted the tight link between economic growth and oil price when an economy continues to depend on petrol and diesel.

The Minister dismissed the question by saying he believed that oil prices were set politically, and were variable, and that fuel users were not sensitive to price. (Comment: This answer would not be any comfort to Auckland households on a budget, reliant on a car to get to work. We know there are households which spend – now – 40% of household budget on transport. We also know that travel plummeted when crude oil prices doubled eighteen months ago….)

Ummm… what the hell? It seems like he’s denying the existence of peak oil  and saying that no matter how high petrol prices get, people will keep on driving. On the first issue, he should listen to the IEA a bit more – as they know what they’re talking about. On the second issue – does he never talk to NZTA? If he did, they would tell him how traffic levels have fallen in almost direct correlation with rising fuel prices. I know he’s a multi-millionaire and doesn’t care much about the price of petrol, but the rest of the country certainly does!

Things don’t get better:

I asked a question about New Zealand Energy Efficiency & Conservation Targets (Government Policy), which this government is in support of when it comes to EECA’s Warm Homes:Clean Heat program, but does not take a consistent view of when it comes to transport. I noted the multiple objectives in the Regional Land Transport Strategy (these include: public health, gas emissions, economic efficiency…), and those in EECA’s program (which include: employment, improved health, reduced energy use)… I suggested that transport policy needed to internalise energy costs rather than just assume that energy will always be available for transport – no matter the demand.

The Minister made a number of points in answer: that short term projects were necessary, otherwise people will not be able to afford the things they want in life; that Auckland does not need anymore transport projects (after Victoria Park and SH20); he stated that roads – more than any other mode – pay for the full costs of roading; he attacked the NZEECS transport energy target that calls for a reduction by 2015 (I think) of single occupancy vehicle travel – he said he thought that was unattainable, unrealistic, and repeated a comment he has made many times before – that there are dangers in too speedy a transition to change…

I guess he doesn’t talk to Nick Smith very often about how the transport sector can reduce its CO2 emissions. In fact, I do wonder what his views of climate change are (as he denies peak oil he seems pretty ‘out there’ in comparison to mainstream scientific evidence).  Interesting that he doesn’t think Auckland will need any more transport projects after SH20 and the Victoria Park Tunnel – what about electrification? What’s the plan when the rail system hits capacity in 2015? Oh, and roads don’t pay their full cost – half of local roads are paid by councils, while the hidden subsidies in the form of minimum parking requirements  and so on are a huge cost to society. International evidence actually shows that the most auto-dependent cities spend more of their wealth on transport than transit-oriented cities. And regarding the final sentence, what are the dangers to a too speedy transition I wonder? I can certainly see many dangers from a transition that goes too slowly – like our city being completely screwed if/when petrol gets to $3 a litre.

This bit I find kind of funny actually:

He defended the Wellsford motorway project by talking about Whangarei and what Northland needs. He needed to be reminded that already – even in the crappy state it is – that 8% of Northland freight gets down to Auckland by rail. It is disappointing for a Minister to bang on about a $3 billion project (like Wellsford SH), without at any time indicating its relastive priority to other projects (if you have $3 billion to spend on transport – where is the best bang for those bucks). And also to not take his own advice and conduct a comprehensive benefit-cost analysis of this and other wish list projects….

So he’s really into getting value for money from transport projects – except when they’re his pet projects. Somewhat hypocritical I think.

And finally:

But the statement he made that really brought me up short was toward the end of the Q&As. I think it was in answer to a question from Kathleen Ryan who represents Environmental Sustainability on the RTC. She asked about risks because of fuel price hikes. The Minister stated: “… off the top of my head… that the credit crunch was a much bigger issue than fuel price rises…”. He appeared to believe that fuel price changes were exacerbated by the credit matter – and that it was the credit crisis that was the cause of the fuel price shock. This is completely contrary to my view of what has happened, and what the cause and effect relationship is. My understanding is that what happened was that what has underpinned global growth over the past few decades has been land development and city building – based on the availability of private transport powered by cheap fuel. In other words the wealth generation the world has seen has been built on cheap and continuous supply of fossil fuel. Suddenly that assumption was challenged, and the attractiveness and certainty associated with funding arrangements for land development – derivatives, hedge funds, loans, the whole nine yards – stopped.

My understanding of things is quite similar to Joel Cayford’s: oil prices peaked in July last year, which (along with other things) led to the credit crunch and the financial meltdown. It was the meltdown that caused oil prices to collapse. Can he really not know this? Is he just playing dumb?

This is really depressing. The guy just doesn’t have a clue.

I’ll be up front about my past voting in general elections. In 2000 I turned 18, so I’ve voted in three different elections. In 2002 and 2005 I voted for Labour, while in 2008 I voted for the Green Party. Probably the most significant factor in my change of heart was the respective transport policies of the Greens and Labour. While I still definitely support the general centre-left political ideology of Labour, I was frustrated that it took them so long in government to actually do anything about improving public transport. It wasn’t until last year that they got around to passing legislation for the regional fuel tax to fund the electrification of Auckland’s rail network (they never actually felt generous enough to fund it from general taxation), to sorting out the management of public transport through the PTMA and buying back the rail network.

Throughout Labour’s time in government we see the following type of exchange when the Green Party questioned them on projects such as the electrification of Auckland’s rail system:

JEANETTE FITZSIMONS (Co-Leader—Green) to the Minister of Finance: Is he satisfied with the Auckland Regional Transport Authority’s business case for the electrification of the Auckland passenger rail system; if not, why not?

Hon Dr MICHAEL CULLEN (Minister of Finance) : A case has been put forward that sets out plans and justifications for electrification. There are still a significant number of issues surrounding that—in particular, the issue of funding.

Jeanette Fitzsimons: Why does Land Transport New Zealand require the use of the Treasury discount rate of 10 percent to evaluate major passenger transport investment, while countries like the UK, the USA, Canada, and Australia use 3 to 6 percent, thus valuing future benefits more highly; and does he agree that the 5 percent discount rate used in the New Zealand Energy Strategy draft for energy-efficiency investments is also appropriate for rail electrification, which both increases energy efficiency and uses renewable energy?

Hon Dr MICHAEL CULLEN: To some extent, discount rates are arbitrary, whichever ones are used. I would have thought a discount rate of 3 percent would be exceptionally low if it applied to almost any project, particularly given the structure of New Zealand’s interest rates, which have a bearing upon an appropriate discount rate. One could use a somewhat lower discount rate, but it would not make as big a difference to total cost-benefit ratios as the member might think.

Jeanette Fitzsimons: Does he agree that if we are attempting to move to a quality public transport system that is used by not just low-income people, it is appropriate to value the time saved by commuters who choose trains at the same rate as we value the time saved by car drivers commuting, in evaluating the benefits of public transport investments?

Hon Dr MICHAEL CULLEN: Again, one could argue a great deal around that. I notice that the valuation of both is at a very low level, given what wages are. But, of course, one of the essential differences is that if one is driving a car, one cannot be doing anything else; if one is in a train, one can. Therefore, the value of time lost when in a car is more than that lost when on a train.

Jeanette Fitzsimons: Does he agree that the economics of rail change if rail rolling stock is regarded as having a life of 40 years—which it does, in fact, have—rather than the 25 years that the Land Transport manual directs?

Hon Dr MICHAEL CULLEN: If rail rolling stock is to last 40 years, usually a great deal of work has to be done to it in the interim; often, there are two or three rebuilds during that period of time. The point I am trying to make is that one can fiddle the figures as much as one likes to produce the answer one wants, but I do not think that is the best way of making rational decisions around these sorts of issues.

Jeanette Fitzsimons: Why is he happy to fully fund State Highway 20 when the benefit-cost ratio is 1.2 and falling with the increase in construction costs, but not at this stage to even partially fund the Auckland rail electrification, with a benefit-cost ratio of between 1.5 and 2.34, if we use even a conservative discount rate of 7 percent, an assumed life of 40 years, and the same value for travel time saved; and when will he make a decision to electrify now?

Hon Dr MICHAEL CULLEN: Well, I am never going to make a decision to electrify now—I am quite sure of that. It would be a sheer physical impossibility to engage in that. I think the member needs to consider that we have to work through this process carefully, and one of the key issues in any such decision is who pays what. She might find that if her local motorists in the Coromandel are paying the full cost of Auckland’s electrification, it might not be wildly popular.

An interesting question to ask now would be: “has Labour changed?” As much as I berate the National government, and Steven Joyce in particular, at least he has said he’ll commit government funds to electrification. I am still awaiting to see him carry through that promise, but that’s irrelevant to the point. If Labour hadn’t farted around back in March 2007, when the above discussion took place, it’s highly likely we’d be halfway towards having electrification complete by now, and we’d probably have it up and running by the time of the Rugby World Cup.

There are signs that Labous is waking up the need for a more sustainable transport system. A good post on their blog, Red Alert, asks “Why do the Nats hate rail?” I’ve certainly been pretty busy in the comments section there, both hassling National’s transport policies but also voicing my disappointment at Labour’s past transport policies, and their need to support more balanced and sustainable transportation policies. Labour still support spending a huge amount of money on the Waterview Connection, and I just wish Darren Hughes would critique transport policy more – the only thing I’ve heard from him on the matter seems to be him pushing for Transmission Gully. An insanely expensive motorway with a cost-benefit ratio of 0.3-0.5. He needs to do better in my opinion.

For example, Labour should be asking when we’re going to find out how Auckland’s electric trains will be funded. They should be asking why it will take so long to implement integrated ticketing in Auckland. They should be criticising the embarrassing lack of analysis Steven Joyce did when coming up with his roads of National (big N) significance and so forth.

Which way are they going to go?

I must say I am a big fan of Labour’s blog – Red Alert. It provides a great way of having some interaction with a number of MPs that normally just wouldn’t be possible. While I hope Labour don’t rely on it too much when putting together policy initiatives, it seems like the blog is a good way to get some feedback on ideas. Trevor Mallard has taken to it quite fondly, and seems to be the main person running the place. And he’s doing a pretty damn good job of it too.

Often the topics are about stuff that I can provide a reasonable opinion on, but not really ones that I consider myself to be a particular expert upon. Well, until today – when interestingly enough Trevor Mallard has done a post on Auckland’s integrated ticketing contract, which was awarded to Thales earlier this week. It reads as follows:

Transtasman reports that the Auckland Regional Transport Agency has rejected the Infratil led bid for their integrated ticketing system.They have chosen Thales a french company.Insiders (not Infratil) tell me that ARTA was conned by consultants into a highly overspeced solution which will be a fresh build rather than the alternative, an extension of the snapper solution currently in use in Wellington.Extra cost $30 – $50m. IT jobs exported. Potential for NZ wide solution gone.Just stupid.

Now it just so happens that I disagree with Trevor’s opinion on this completely, as I detailed in a post earlier this week.

So here’s my reply:

Sorry Trevor but Infratil have really misled you here.

Infratil and Thales were the two main parties tendering for ARTA’s smart-card integrated ticketing solution. As I imagine you know, Infratil owns NZ Bus, which operates about three quarters of all the buses in the Auckland area. They also operate Go Wellington buses and have rolled out their “Snapper Card” system over the past year or so. The Snapper Card was what Infratil wanted to extend to Auckland.

Maybe that would have been a bit cheaper for ARTA, but it would have been inferior to what Thales can offer. Thales have an internationally proven track record for installing and operating smart-card integrated ticketing systems. They even did an integrated system that covers every town and city in the Netherlands.

In my opinion, ARTA chose Thales for two excellent reasons:

1) Internationally proven company. The last thing we want is to see what has happened in Sydney happen here. I think Sydney has spent close to a billion dollars trying to get a smart-card integrated ticketing system but it still didn’t work.

2) The potential for a conflict of interest between Infratil operating the ticketing system and Infratil running 75% of Auckland’s buses. This means that in a system where it will be necessary for operators to reimburse each other according to some sort of formula (as not necessarily the same operator who gets paid for the ticket actually provides the ride) you would have had one of those operators owning and running the ticketing system. If I were Howick and Eastern buses for example, I would certainly not want NZ Bus (Infratil) to have all powers over collecting the money for me. Too much potential for it to go wrong.

ARTA have made and excellent choice here. This means we will end up with a world-class smart-card system – like London’s Oyster Card. I just hope that NZTA stumps up the required money so we can get this project going. National’s stupidity in getting rid of the regional fuel tax has already delayed this project by about a year and probably meant it won’t be ready for the World Cup. Which is unbelievably annoying.

I look forward to seeing what he comes back with.

Update: Trevor’s reply

Jarbury – it is not hard to design a system to avoid actual conflict of interest. Lots of lawyers have expertise and while we don’t see it often enough so does the Commerce Commission.I suppose we will have to absorb the cost and wait and see.

And then a couple of replies by me, firstly:

I think that it would incredibly messy though – to have part of Infratil delivering the ticketing system and another part running buses. However, I don’t think that was the main reason ARTA went with Thales, I think the main reason was simply that they could offer a far better service.Snapper has been derided by many as a pretty “dumb” Smart-card. Furthermore, it certainly hasn’t been rolled out to other bus companies or the trains in Wellington. While Auckland needs a smart-card, we need integrated ticketing MORE.

And then I really get the knives out:

While I usually post on this blog in favour of Labour, I have to say that this kind of post reminds me why I didn’t vote for them last year. What’s $30-50 million extra to spend on making Auckland’s ticketing system world-class and not just a half-ass job that will have problems for decades into the future due to Infratil’s conflict of interest?Surely if Labour were concerned about money being wasted on transport then they would be questioning why National is spending $10.7 billion on new state highways over the next decade even though petrol prices are likely to increase significantly over that time, even though we need to reduce our transport sector CO2 emissions and even though traffic on state highways has been falling for the last couple of years.

So why doesn’t Labour do that? Why does Labour focus on what’s really a tiny amount of money being spent on making Auckland’s ticketing system world class? It’s hard not to think that it’s because Labour’s transport policies are stuck in the 1960s almost as much as National’s.

Sigh.

While I have little hope of National “seeing the light” when it comes to public transport, I do expect Labour to be better in the future. Their transport policies over the past decade have been pretty rubbish, and are only just starting to improve. If public transport is to be the way forward for a city like Auckland in the future, which I believe it has to be, then Labour needs to have their transport policies join the 21st century.

It seems timely to talk a bit about carbon dioxide emissions, as the government is currently undertaking consultation on what New Zealand’s 2020 target should be in terms of reducing our CO2 emissions when compared to 1990 levels. There has been a big push for a dramatic 40% reduction target, as that is what is considered necessary to avoid the worst effects of climate change, although it is likely the government is going to end up on something a bit more modest. While having a more modest target would be a disappointment, I think in some ways a more critical question is “how are we going to achieve any reduction?”

Since 1990 New Zealand’s gross CO2 emissions (that is, everything we pump out) have increased quite significantly. However, due to a lot of tree planting in the 1990s our net emissions (gross emissions minus the amount of CO2 trees can suck out of the atmosphere) is about level. However, to actually decrease our net emissions by anything substantial in the longer-term, it will be necessary to reduce our gross emissions. And this is where things get tricky. New Zealand’s CO2 emissions largely come from three sources: agriculture, power generation and transport. It is notoriously difficult to reduce CO2 emissions from agriculture without reducing food production – certainly something we wouldn’t want in a world with a growing population. Steps will have to be taken to find ways to reduce agricultural emissions, but they are a while away yet. Regarding power generation, while we can certainly do more to reduce these emissions by investing in renewable energy generation and taking pressure off our backup coal and gas stations, we actually do pretty well when comparing with other countries internationally. This means that our ability to significantly reduce emissions from power generation are somewhat limited (as already 70% or so of our electricity is renewably generated).

Which leaves transport. Over the past 18 years emissions from transport have gone horribly in the wrong direction. According to the Ministry of Economic Development:

“Emissions from national transport continue to account for the largest share of total energy emissions. National transport emissions have grown by 64% since 1990 at an average growth rate of 2.8% per annum, although this has slowed in recent years. Emissions from road transport account for the largest share of national transport emissions at 90%. This represents 38% of the total energy carbon dioxide equivalent emissions for New Zealand.”

So transport is a significant problem. But short of completely overhauling our entire transport system, what can we actually do about this? Well, trends in the last year provide some interesting insights into that:

Road transport emissions, however, dropped in 2008 for the first time since the energy greenhouse gas emissions series began. This is likely to be due to high petrol and diesel prices in 2008 and the beginning of the global recession.

While obviously we don’t want to encourage recessions as ways in which to reduce transport-sector CO2 emissions, the telling aspect is that to reduce our emissions we need to get cars off the road, and that pricing (in the form of higher fuel prices) is a way in which to achieve this. Now obviously it would be enormously unfair to simply price people off the road without providing them with alternatives – which is why it is so essential for public transport to be heavily invested in over the next few years in particular. We will end up with some sort of emissions trading scheme to provide incentives to reduce our emissions and encourage planting forestry. This scheme will add to the price of petrol, potentially quite significantly in the longer term. Therefore, we need to provide people with effective alternatives to driving so that we can reduce our transport sector emissions without having enormous social inequity outcomes of people simply not being able to afford to undertake their daily activities.

Of course this goes against absolutely everything Steven Joyce has said about transport since he became the Minister. I wonder if he ever does talk to Nick Smith, the Minister for Climate Change Issues?

One particularly interesting aspect of the transport sector emissions is the significant contribution that diesel makes – even though the number of petrol cars on the road is hugely greater than the number of trucks. This is evident in the picture below:

Just one more reason to focus on shifting freight to rail, which is far more efficient, rather than allowing even bigger trucks on our roads.

This post is a bit different to a lot of what I have posted on in the past few months on this blog. It isn’t a bunch of photos from a trip around Auckland showing some latest public transport development, it isn’t an analysis of some transport policy document, or another rant against Steven Joyce. It’s going to be (I hope) a bit of a stream of consciousness that will relate back to transport on a few occasions, but will probably be largely a chance for me to put my thoughts together into something fairly coherent on the matter.

Basically, this is about housing affordability in Auckland. Most Aucklanders have a good understanding of what has happened to house prices here over the past decade – in that they have increased quite dramatically. Over the last year there has been somewhat of a correction, due to their extremely high value at the November 2007 peak, but also due to the wider effects of the worldwide recession. However, signs seem to be emerging that the housing market is likely to pick up again in the future, and that perhaps we’ve ‘hit the bottom’ of this particular downturn. Perhaps in the next few months we will see prices head back up again, and – as hoped for by real estate agents – the last year will just be a blip on a long-term trend of increasing house-prices. And we’ll all just pretend that 2008 and 2009 didn’t happen.

While that may be a good outcome for real estate agents, and for those who bought during the boom times (particularly at the end of those times), I do question whether a return to the housing boom times of the last decade is really in the best interests of Auckland as a whole. Perhaps my opinion on the matter is slightly biased, as someone who doesn’t currently own their house and who would benefit greatly from a significant decrease in house prices, but I can’t help but feel that I do have a justifiable gripe. My gripe is that in just two years time I will be at the age my parents were when they bought the house that I currently live in – and they didn’t even need a mortgage. Now I am sure they saved incredibly hard over the few years before they were able to buy that house, and I am forever grateful that they did, but the fact of the matter is that housing was just so much more affordable then than it is now. I am not quite sure what the comparison of average wage level and average house price back in 1980 would have been, but I am absolutely sure it would have been significantly less than it is today.

It does seem rather strange, unfair even, that even though I have a pretty good job, no student loan, no other large debts or anything of that kind, I really can’t consider actually being able to afford to buy a house any time in the next decade or so. On the up side, renting definitely has its advantages at this stage of my life – it means I can fairly easily hop from place to place, checking out what various parts of Auckland are like to live in. It also means that I’m not hugely in debt and at risk of being totally screwed if I was to lose my job or if mortgage interest rates were to skyrocket (anything is possible in current economic times in my opinion). However, being locked out of home ownership also has some significant disadvantages. I am excluded from the significant wealth gains that occur when house prices go up, the rent I pay each week is just money the disappears into paying for someone else’s mortgage rather than me slowly acquiring my own asset, while there are a whole bunch of other things like the chance I will have to find another place to live if the landlord wants to renovate and that I can’t choose what colour to paint the bedroom if I so pleased. Continue reading Housing affordability and inter-generational inequity