Draft Domain Master Plan

The council have released a draft 20-year master plan for the Auckland Domain that if enacted would see some major and positive changes to how people access and use Auckland’s oldest and one of its largest parks. The purpose of the master plan is described as:

The purpose of the Auckland Domain Masterplan is to identify all the various projects and work streams impacting on Auckland Domain, and to create a coordinating plan that consolidates its position as Auckland’s premier park. The masterplan is a twenty year aspiration for how the park can develop and help to achieve the Auckland Plan’s vision to make Auckland the world’s most liveable city.

The implementation of the Auckland Domain Masterplan will help to realise the particular Auckland Plan outcomes of:

  • A fair, safe and healthy Auckland
  • A green Auckland
  • A well connected and accessible Auckland
  • A beautiful Auckland that is loved by its people
  • A Maori identity that is Auckland’s point of difference.

There are seven key principles behind the master plan and for each the draft plan lists observations and key proposals.

  1. Enhancing the Domain for peaceful respite.
  2. Enhancing the role of the Domain as an important cultural and heritage site.
  3. Creating safe, people friendly places and routes with high amenity.
  4. Improving connectivity to the Domain and to the key features within it.
  5. Improving the Domain as a recreation and event destination.
  6. Enhancing and maintaining the amenities and facilities within the Domain.
  7. Creating an environmentally sustainable park that is an exemplar on the world stage.

Of those number 3 and 4 are ones that will have some significant implications, especially on transport. The observation for number 3 says:

Since the introduction of motor vehicles to New Zealand, Auckland Domain has catered for their use, enabling vehicle access to the doorstep of the Auckland War Memorial Museum and throughout the park. This philosophy of a carfriendly park has carried on unchallenged for almost a century and even the Auckland Domain Management Plan 1993 is permissive of continuing their dominance of the park. The car and tour bus domination of Auckland Domain detracts from the safety and amenity of pedestrian and cyclist experiences.

Further, it prevents the full potential for creating high quality pedestrian environments in key areas of the park, such as those adjacent to the Museum. Cars and buses also detract from significant and important views from within the Domain, such as those to the Museum.

As part of the plan the council are proposing to close some of the roads within the park, upgrading and turning them over to people and bikes. This includes all of the roads currently circling the museum and the surface carpark at the southern entrance. Where vehicle access is retained it’s also suggested reduce the dominance of it by narrowing roads and reducing the numbers of carparks. The image below shows where they plan to improve walking and cycling options with the lines in red roads that will be closed. As you can see there are a lot of interesting projects on the list.

Draft Domain Plan - Walk cycle improvements

The map below shows more explicitly the areas that vehicles will have access to if this plan is approved.

Draft Domain Plan - Vehicle Access

Here are a few impressions of what the changes could mean.

The surface level carpark at the Museum could become a people space – although it looks like it needs some more activation to ensure it isn’t just an expanse of unused paving.

Draft Domain Plan - Museum Carpark

The Crescent would be narrowed and a shared path added.

Draft Domain Plan - Cresent western end

The Grandstand Road would also become a shared path.

Draft Domain Plan - Grandstand Road

Through parks shared paths probably aren’t too bad but it does seem odd that they’re suggested to be so narrow at only around 3m in width and slightly less on the Grandstand Road one. Given how popular the Domain is, they would be used by a lot of people on foot and on bike. At the very least wider paths are needed.

Here is a list of some of the other amenity improvements that are included in the plan.

Draft Domain Plan - Amenity improvement

Overall there looks to be some good ideas in the draft plan that will make the park even better. Submissions are on it are open till the end of the month and there is an open day on Saturday February 13 at the cricket pavilion from 11am to 2pm.

Apartments: The solution to Auckland’s housing affordability issues?

Disclaimer: I own an apartment in Auckland, which generates excessive rents that inn turn help fund a lavish overseas lifestyle. My pecuniary interest in maintaining policies that reduce the supply of apartments in Auckland has not influenced this post in any way.

This post from a few months ago explained how apartments (even expensive ones!) can improve housing affordability. The same is true for housing generally: Provided that developments make a net positive contribution to the housing stock, then houses will become more affordable. So new housing is generally a good thing, and should be viewed as such. Despite the efforts of the anti-housing brigade, such as Bernard Orsman at the Herald and Auckland2040, we seem to be moving towards consensus on many issues. It was encouraging, for example, to see Phil Twyford and Oliver Hartwich collaborate on this recent article about housing in Auckland.

In this post I want to focus on the relationship between apartments and affordability. The reason I focus on apartments is because I consider them to be the *only* viable solution to Auckland’s housing issues. Why? It’s a numbers game. No other housing typology appears to have the ability to scale up to meet the demand for new dwellings in Auckland, especially in central areas. The figure below illustrates trends in consents for different housing typologies in Auckland.

Auckland Dwelling Consents

To illustrate my point, I think is instructive to consider the example of Hobsonville Point. This often-touted greenfields development has been 10 years in the baking and will ultimately deliver 3,000 new dwellings. That’s all good, and the development itself has many commendable attributes. But what impact does Hobsonville Point have on the wider housing market in Auckland? As it turns out, not much.

While we’re currently consenting about 8,000 new dwellings per annum, most commentators believe Auckland needs to average 12,000 – 20,000 new dwellings per annum. This means we need to increase the number of dwelling consents by around 50% from the current level, or 4,000 dwellings per annum. If we are to achieve this increase by building detached dwellings, then we would need an extra 1-2 “Hobsonville Point scale” greenfield developments ready every year.

It’s difficult to see how this could be achieved, for the simple reason that detached dwellings are resource intensive. Not only in terms of the land they require, but also the materials and labour involved in their construction. Even at present levels of activity, Auckland’s construction industry is approaching short-term capacity, most notably in terms of skilled labour. Meanwhile the infrastructure required to support an additional 2 Hobsonville Point developments per annum would likely stretch the public sector. And investment in public infrastructure would of course compete for resources with private sector construction, adding inflation fuel to the construction/housing cost fire.

If you’re interested in these issues more generally, then I’d suggest reading this report by Auckland Council’s Chief Economist, Chris Parker. It’s worth the effort …

Let’s now consider trends in Auckland’s apartment market. The previous figure illustrates how attached dwellings constitute approximately 40% of new dwelling consents. However, as discussed in this post on Australia’s apartment boom, 40% is relatively low compared to cities Sydney, Melbourne, and Brisbane, where attached dwellings represent more than 55% of new consents. And compared to what Auckland achieved in the recent past, 40% is definitely on the low side, as shown in the graph below.

What caused the big drop-off in apartment consents in Auckland circa 2005? This article from June 2005 provides some hints (emphasis added):

The Auckland City Council is continuing its attack on sub-standard apartments with the introduction of new design controls that spell the end for “shoe-box” sized dwellingsThe new controls stipulate a minimum studio apartment size as well measures to improve poor ventilation and sound-proofing. Cheek-by-jowl apartments and ugly concrete towers also will be banned. The moves are the second council initiative aimed at improving the standard of Auckland apartments, following its earlier decision to score all new buildings on their design merits and to reject developments that do not come up to standard and fast track those that do. Deputy Mayor Dr Bruce Hucker said the latest moves “sounded the death knell of the pokey apartment, ugly building era”.

The above quote is instructive for planners and policy-makers everywhere: The last comment by Dr Hucker (who was both a planner and a councillor) suggest that “pokey” apartments and “ugly” buildings go hand-in-hand.

Is the external appearance of a building defined by its internal configuration? No, obviously not. There are many examples of fine-looking building which house small apartments, and vice versa. This statement conflates two rather distinct issues, namely 1) the external appearance of apartment buildings and 2) the internal configuration of apartments. Nonetheless, Auckland City Council’s “attack” on apartments was “successful” at achieving its objective: The number of consents for new apartments in Auckland dropped off rapidly following the drafting and adoption of these policy changes circa 2005.

Fast forward 10 years and Auckland is now experiencing a positive demand shock caused by strong net migration, which in turn has seen prices rise rapidly. Unfortunately, our apartment market is less able to respond to this demand shock. I appreciate that it is all very easy to criticize policy decisions with the benefit of hindsight. The main point, however, is to observe that policies were implemented which made it harder to develop apartments in Auckland. These policies do appear to have reduced the supply of new apartments, and Auckland now lags behind comparable Australian cities in terms of rates of apartment development.

In a city that is experiencing considerable growth and house price pressures, I think this is undesirable. That’s all there is to it.

Given this recent historical experience, one might think Auckland Council would now be looking to enable more apartment development. Unfortunately, planning policies in Auckland remain somewhat hostile to apartment development. Consider the following figure, which shows the proportion of land assigned to different zones under the proposed Unitary Plan, as well as the Preliminary Position ultimately adopted by Council (NB: The latter made a slight shift towards enabling more intensive development).

PAUP zoning changes - Dec 15 2

The preliminary position would zone only 6% of Auckland’s urban land for “Terrace Housing and Apartment Buildings”, while another 17% is zoned as “Mixed Housing Urban”. Put another way, more than 75% of Auckland is zoned as being off-limits to apartments. I’m interested to know if anyone has data for other cities.

Zoning is of course not the only regulatory barrier to apartment development. There are a number of regulations which apply to the apartments that are constructed, including minimum apartment sizes, minimum balcony requirements, and minimum car-park requirements. The general effect of these regulations is to increase the cost of apartments. While estimates of the costs of these regulations vary between study, but the general range is illustrated in the figure below (NB: Ignore the Demographia numbers; their analysis is bollocks).

In percentage terms, these additional costs will have the largest impact on the cost of small apartments. That is, not only have apartments become more expensive generally (and hence we have less of them), but low-cost apartments are likely to have become proportionally more expensive. Research by the Productivity Commission shows that Auckland’s house price distribution has indeed shifted up in the last two decades or so, i.e. there’s a lack of affordable houses in the Auckland region, as illustrated below.

House price distribution auckl

At this point I hope all of you are screaming “eeek”: Our housing policies appear to be screwing over the people who can least afford it. I don’t think it’s too much of a stretch to suggest that the escalating costs for low-cost housing in Auckland has contributed to worsening child poverty statistics. Yup, it’s that serious. Regulations like minimum apartment sizes and minimum balcony sizes are that serious.

What do you think? Is it reasonable for more than three-quarters of Auckland’s metropolitan land area to be zoned off-limits to apartments? Is it reasonable to impose regulations that increase the cost of small apartments by around 50-100%? When these costs are being borne by the households which can least afford it? When the purpose and benefits of these regulations don’t seem to be well-understood by the people who advocate for their adoption?

It all seems a bit naff to me.

Discuss.

Unitary Plan zone changes part 2

Last week the council released its preliminary position on zoning changes to for the Unitary Plan. The focus has predictably been on the changes to residential areas with those opposed to providing housing claiming high rises are about to sprout across the suburbs. Despite the noise the changes allowed are actually fairly minor with over 77% of Auckland still limited to two storeys and another 17% limited to three storeys.

Looking at the maps over the last week I’ve noticed a couple of other interesting changes.

The addition of Light Rail

Light rail was only announced by Auckland Transport at the beginning of the year and it seems the council have been quick to add it to the maps but interestingly not all of it. AT’s current light rail plans would over time see tracks laid down Sandringham Rd, Dominion Rd, Mt Eden Rd and Manukau Rd with the first two using Queen St and the latter two using Symonds St.

The new maps show light rail but most interestingly not all of it. Only the route down Dominion Rd then Denbigh Ave/Stoddard Rd (to a depot) is shown in full. In addition is a spur down New North Rd to Kingsland train Station but the rest of Sandringham Rd along with Mt Eden Rd and Manukau Rd are not shown. The Queen St and Dominion Rd to Stoddard Rd sections line up with the first two stages AT list on their website however the section to Kingsland is only included with the whole Sandringham Rd line.

My understanding is AT are looking at bringing forward the extension to Kingsland as a way of mitigating some the impact that will be caused by CRL construction works and full trains that may otherwise be leaving people behind.

I’m not overly worried about some lines being missing as due to them being in the road corridor I imagine it’s much easier to add light rail than it is other changes.

UP Light Rail Dom Rd

You may also notice the CRL doesn’t seem to show the connection from the east although again that may just be an error as we know it’s consented and AT’s train plans show it as essential.

A much bigger change from a land use perspective is a large extension of industrial land around Manukau. In the original plans the land to the west of SH20 and along SH20B is listed as Rural Production as shown below.

UP Manukau Zoning Old

In the new maps this land has been changed to light industry as you can see.

UP Manukau Zoning New

I wonder if this will foreshadow the NZTA claiming they suddenly need to spend hundreds of millions upgrading SH20B

There’s also an extension of Light industry to the north of Ascot Rd and west of Kirkbride Rd. In the original plan only the area bordering Kirkbride Rd was listed as Light Industry. The black dotted line is a revised Rural/Urban boundary.

UP Mangere Light Industry

In the North there is a lot more Future Urban land around Dairy Flat that has been zoned for as the two maps below show (Future Urban land is Yellow while the brown is Countryside Living.

Original Zoning

UP Dairy Flat Old

New Zoning

UP Dairy Flat New

Any other big changes you’ve noticed?

2015 – Auckland’s Watershed Year

The more I look at the events and data of 2015 the clearer it becomes that this has been a profoundly significant year for Auckland. It is my contention that this year the city reached a critical turning point in its multi-year evolution back to true city pattern. I have discussed this change many times before on this forum, most notably here, as it is, I believe, an observable process that has been building for years. Generally it has been gradual enough, like the growth of a familiar tree, as to easily pass unobserved, but now I think it has passed a into a new phase of higher visibility. The group who see it most clearly are people returning from a few years overseas. Many ex-pats express surprise and wonderment at the myriad of changes in quantity and quality they find here on returning.

HOPETOUN_6234

Changing City: New apartments with views over the city and harbour, a Victorian school and park, 20thC motorways, and the new LigthPath.

Below is a summary of evidence for 2015 being the year Auckland returned as a city, in fact the year it crossed the Rubicon onto an unstoppable properly re-urbanising path. Later I will add another post on how 2016 and beyond is certain to see the city double-down on these trends, and why this is very good news. This transformation is observable in all five keys areas:

  • Demographics
  • Transport
  • Development
  • Economy
  • Politics

DEMOGRAPHICS. New Zealanders returning in big numbers are one of the key metrics of 2015. Along with new migrants and natural growth, the other change driving Auckland’s demographic strength is fewer people leaving, all of which, of course, are a vote of confidence in the city as a place to want to live and to likely fulfil people’s hopes for a better future. Population growth for the year was at 2.9%, the strongest rate since 2003, the strongest in the nation, and biggest raw number on record. See here for Matt’s [Population Growth in 2015] and Peter’s [Why is Auckland Growing?] posts on these issues.

Auckland LB Population Change - 2015 2And importantly for my thesis many more people are moving into the centre, particularly into new apartments. This is a evidence that the The Great Inversion is happening in Auckland as it is all over the developed world; the return of vitality to centre cities all over. Auckland’s urban form is reverting to a centred pattern; with proximity to a dense centre as a key determinant of value.

City Centre Population - 1996-2015 2

TRANSPORT. The huge and sustained boom in rail ridership way in advance of population growth is the headline transport news of 2015, and is the result of the upgrade in quality, frequency, and reliability of the service brought by the new electric trains. Sustained growth of over 20% is very strong; this year every four months an additional million trips have been added to the running annual total; 13 million in March, 14 million in July, 15 million in November. I am not overstating it to say that these numbers change a great deal: They change the argument for further investment in rail systems in Auckland, and significantly they change growth and development patterns across the city:

2015-11 - Rail Patronage

BRITOMART JULY 15_3388

Elsewhere on our Public Transport systems the news is great too; The New Bus Network is just beginning, and is already showing huge growth in the few areas it is in effect. This year we have also seen new ferry services, including a new private Waiheke service that means there is much more like a real turn-up-and-go service there [started late 2014]. Ferry modeshare is holding its own at 7% which is a strong showing given the explosion in rail and bus numbers.

Importantly AT is now routinely rolling out long overdue bus lanes across the city. And now that they are doing this confidently and more consistently, surprise and anguish about this more efficient re-purposing of roadspace by car drivers has fallen away to nothing- there surely is a lesson there.

So total PT ridership cleared 80 million annual trips this year, for an overall growth of 8.1%, a rate running at nearly 3x population growth, evidence of a strong shift to public transport at the margin. Growth that is certain to continue despite capacity issues becoming pressing at peak times on both buses and trains.

2015-10 - Total Patronage

HOP card use also became strongly embedded this year [except on the ferries] which is another sign of a maturing system.

2015-09 - HOP Use

More population and a growing economy of course means more vehicles and more driving on our roads, [see: What’s Happening to VKT?] but because of the powerful trend to Transit outlined above the per capita number is flat to falling. This is a historic shift from last century when the two tended to move strongly in lockstep.

2014 VKT - AKL VKT + Pop

Another discontinuity from last century is that GDP and employment growth have also separated from driving VKT, as shown in the following chart from Matt’s post linked to above. Another sign that the economy too is shifting on the back of public transport, and not driving as much as it was last century:

2014 VKT - AKL Econ 2

So whereas investment in the rail network has been answered by an extraordinary boom in uptake the multi-year many billion dollar sustained investment in driving amenity has not led to massive uptake. It is hard to not conclude from this that 1. We are far from discovering the latent demand ceiling for quality Transit; only the degree of investment will limit it. And 2. Driving demand in Auckland is saturated; this mode is mature, well served and not the area to invest in for new efficiencies or growth.

2015 also saw the launch of the Urban Cycleways programme; a multiyear government led investment in infrastructure for walking and cycling. This, like the Transit boom is another shape changing departure from the past. Although the active modes are not well counted [what a culture counts shows what it values] it is clear that the shift back to the centre is also accompanied by a growth in active mode transport. This is one of the great powers of Proximity; the best trip is the one that isn’t need because the potential traveller is already there, or near enough to use their own steam:

LightPath_5971

DEVELOPMENT. All over the city investment is going into building projects of various kinds, the retirement sector is particularly strong, as is terrace house and apartment buildings, all three at levels not seen for a decade and together support the argument that Auckland is not just growing but also changing shape into a more more city-like pattern, as John Polkinghorn has kept us up to speed on all year on the Development Tracker:

Auckland Dwelling Consents to Sep 2015

Significantly there is also renewed investment into commercial projects especially in the City Centre, led by Precinct Property’s 600 million plus Downtown rebuild and tower, and Sky City’s massive Convention Centre and Hotel project between Hobson and Nelson. Additionally Wynyard Quarter is also moving to a new level soon with a mix of Hotel, Residential, and Commercial buildings. Somewhere in the region of 10 billion dollars of projects are underway or close to be in the City Centre. And as Peter clearly illustrated recently this is in no small part due to improved regulatory conditions [The High Cost of Free Parking].

ECONOMY. Cities exist simply because of the advantages for humans to be in close proximity to each other for transactions of all kinds; financial, cultural, social, sexual. And Auckland is beginning to show real possibility of opening up an agglomeration advantage over the rest of the country now that it is really intensifying. The latest data on Auckland’s performance shows a fairly consistent improvement over the last five years

GDP Growth Dec 2015 AKL

POLITICS. Two major political programmes begun this year will have profound impacts on Auckland for decades to come. The first is the Auckland Transport Alignment Process. Something we haven’t discussed on the blog because we are involved in it and are awaiting the first public release of information which will be soon. Then we will certainly be discussing the details of this ongoing work. But the importance of this process is already clear; it is a reflection of a new found acceptance but the government that Auckland’s economic performance matters hugely to the nation and that transport infrastructure investment is, in turn, critical to that performance. We are of course striving to make the case for a change in the balance of that investment in Auckland away from a near total commitment to urban highways now that motorway network approaches completion [post Waterview and Western Ring Route] and that the evidence of success from recent Transit improvements, particularly to the Rapid Transit Network, is so compelling. There are hurdles here in the momentum and habits of our institutions and politics but also huge opportunities to really accelerate our cities’ performance across a range of metrics through changing how they are treated.

The other political shift is another we are yet to cover in depth but soon will, and that’s the agreement in Paris on Climate Change. This does indeed change a great deal. The city and the nation will have to ask the question of all decisions around urban form and transport how they fit with the new commitment to reduce our carbon intensity. This will clearly lead to a further push for higher density and greater emphasis on Public and Active Transport, as these are current technology and long term fixes to this global challenge. Unleashing further the urban power of proximity and agglomeration economies. So much of the conversation around New Zealand’s carbon intensity is around the agricultural issue and this tends to ignore the opportunities our cities offer, particularly Auckland, and particularly the Auckland transport systems, to this problem.

Cities are emerging as the key organising level that are most able to react to this problem as discussed here in The Urban Planner’s Guide to a Pst-COP21 World:

In many ways, Melbourne’s experience represents a coming-of-age of the urban sustainability movement. The private sector is listening to cities and responding. Now it’s up to cities and national governments to continue the conversations that began at COP21 and continue the evolution.

“The commentary for a long time has been ‘nations talk and cities act.’ We’ve been part of that dialogue too. That’s changing now,” said Seth Schultz [director of research at C40 Cities]. “National governments are coming to organizations like ours and saying ‘help us. We get it.’ I want to change the trajectory of the conversation. Cities are a vehicle and everyone should be getting in that vehicle and joining in for the ride.”

So in summary 2015 has seen:

  • Completion of Electrification of the Rail Network and the New Trains
  • The start of the New Network
  • New Interchange Stations
  • New Buslanes
  • Improvements to Ferry services
  • Start of the Urban Cycleways Programme
  • CRL start
  • ATAP
  • Paris COP 21

I will follow this post with another looking ahead to what is going to be a huge 2016/17. Here’s a short list to start with:

  • Fare Integration
  • Further Interchange Stations
  • Western Line frequency upgrade
  • New Network rollouts
  • Queen St Buslanes [so overdue]
  • More Cycleways
  • SkyPath underway
  • CRL seriously underway
  • Huge city developments begin
  • ATAP concludes
  • Council elections
  • Progress on Light Rail [it could be closer that many expect]

For all the frustrations and compromises that we’ve highlighted over the year I think it’s very clear that there are many very hard working and dedicated people in AC, AT, NZTA, and MoT and their private sector partners and it is their collective efforts in a very fast moving and changing field go a long to making Auckland the dynamic and exciting city it is fast becoming. I am keen to acknowledge their efforts. Onward.

I also want to personally thank my colleagues here at the blog, as it has been another big year for us, Matt, Peter, Stu, Kent and John, from whom I continue to learn so much, it doesn’t look like we are going to be able to give this up anytime soon…

Also I would like to shout out to colleagues over at Bike Auckland, our sister site, they’ve had a fantastic year, so cheers to Barb, Jolisa, Max, Paul, Kirsten, Ben, Bruce and the rest.

And of course to y’all, the reader, you are what really makes this thing work, so if what we do here makes any kind of difference, ultimately that’s because of you.

Kia ora tatou…

WIRI DEPOT JULY 15_6623

Unitary Plan zone changes

In recent weeks the Herald would have you believe that the council bogeymen are about to turn up on your doorstep in the middle of the night and force you to turn your house into a “highrise” three storey terraced house or apartment – note: even just using the terms three storey and high-rise together is utter stupidity. They’ve been ratcheting up the hysteria after they learned the council was looking at making changes to the zonings in the Proposed Auckland Unitary Plan (PAUP) currently being heard by a government appointed independent panel.

Before going any further it’s worthwhile giving a quick recap of what’s been happening.

  • In 2010 the government amalgamated the eight Auckland councils into one body. One of the rationales was to address inconsistencies in planning across the region. The new council was also required to come up with a 30-year vision for the region, which became known as the Auckland Plan and was adopted by the council in 2012.
  • As each of the former councils had their own rules around what could be built, and how, the next step was to turn that long-term vision into reality. To do that, the council needed to shift the city to a single RMA-compliant planning rulebook – a Unitary Plan. Traditionally with district plans councils propose them, get feedback and they then go through a hearings process, with some appeals potentially going to the Environment Court. In early 2013 the council took the step of releasing a draft version of their plan to get early feedback – they had over 21,000 pieces of feedback covering over 100,000 individual points. One of the reasons I think they got so much feedback was that the Herald drove a lot of hysteria around it – much like we’ve seen again recently – through deliberately deceitful and one-sided reporting. This also led to the creation of groups opposing it like Auckland 2040.
  • Following the consultation and analysis of the submissions on the draft plan, the Council made a number of changes before launching the formal PAUP in late 2013. Importantly the councillors who decided on what it should contain did so just a few months before the 2013 local body elections, and as such the original plan was watered down a bit following the hysteria that had been generated. The PAUP was then open to submissions which would be part of the formal hearings process. They received 9,400 submissions and 3,800 further submissions on the plan.
  • The government, through special legislation, allowed for a slight fast-tracking of the normal RMA process which otherwise could have dragged the process out to 7 or 8 years (based on other district planning changes). The process meant that the hearings panel would hear submissions and review the evidence before making recommendations on the plan. Any aspects the council agreed with would be implemented, while any they didn’t agree with would be subject to normal RMA process and appeals.

That brings us up to now. As part of the hearings process the council are allowed to make a final submission in response to the issues raised by the public. They say they are currently confirming their position on a range of topics and one of those is zoning. Taking into account a range of factors, the council is suggesting some changes to the zones in the plan that determine what can be built where. It’s these changes which have had the Herald and a number of councillors worked up. The factors include

  • the submissions and evidence
  • the interim guidance on some topics from the hearings panel – such as on viewshafts and heritage controls
  • further analysis of the zones i.e. fixing inconsistencies
  • amended infrastructure plans such as the addition of light rail on the isthmus

Now you may have seen reports a few days ago that the mayor quashed a motion by Councillor Dick Quax signed by eight other councillors calling for the public to be allowed to submit on the changes the council are making. It’s being presented by some as the council working to some sort of sneaky agenda, but as explained above is actually just the council effectively having their right of reply in the process. To allow submissions on that would not only go against the RMA process, but would only serve to delay the Unitary Plan process, increasing costs and leaving it longer before we have a coherent plan affecting the ability to improve the supply of housing.

So what is the council actually proposing? The reality is there aren’t that many changes overall, and even less when you look at what is allowed in each zone. For housing there are five different zones across Auckland which are briefly explained below.

  • Large Lot zone – As the name suggests this is very large sites, and is often only found near the edge of the city.
  • Single House zone (SH) – Again as the name suggests this is for a single house, up to two storeys, on a site that is a minimum of 600m²
  • Mixed Housing Suburban zone (MHS) – This allows for up to two-storey terraced houses on sites and given some of the other controls means they would tend to have a very similar bulk and scale to the single house zone. It also allows for the likes of granny flats on sites. I’d say a common use theme in these zones will be single houses on ~300m² sections
  • Mixed Housing Urban zone (MHU) – Very similar to above. The main change is that it allows for up to three storey terraced houses; however, importantly, it is is still subject to rules such as height in relation to boundary.
  • Terrace Housing and Apartment Buildings zone (THAB)- This represents a more significant shift than the zones above. Feedback from developers said it wasn’t viable to build four-storey apartments due to the step change in costs (lifts, fire systems etc. become needed), and as such the proposed THAB zones would be ineffectual. As a result, the council are upping the height limit in THAB zones from 4-7 storeys to 5-8 storeys.

All of the height limits are of course maximums, so someone could build a one-storey cottage if they wanted. The changes also don’t have an impact on other controls such as height in relation to boundary, site coverage etc.

A summary showing the impact of the changes to the zoning is shown below. As you can see there’s been roughly a 6% shift in housing now becoming Mixed Housing Urban while there’s a similar shift out of single house. While the numbers are similar, it’s not a case of shifting the Single House areas to MHU. As I understand, for most properties that do have change, it’s just a single step, e.g. some Single House areas have become MHS, and some MHS areas have become MHU.

PAUP zoning changes - Dec 15 2

So based on this around 77% of Auckland’s residential land will be capped at two storeys with another 17% capped at three storeys. That’s hardly turning the city into high-rise Hong Kong.

On to the maps themselves. The changes to the council’s submission won’t be finalised till next month, but they’ve decided to release them now so people can see them. Helpfully they’ve also included the original maps to be able to compare with. It’s worth noting that the new maps haven’t been loaded up to the council’s GIS viewer yet. The city has been split into 43 different areas to make it more manageable for people. I’ll only show a few examples for this post.

You can see the changes made in the ‘Preliminary Position’ maps as they have a blue or black border around them. If I’ve understood correctly, the black borders represent changes in relation to submissions or issues raised during the hearings. The blue borders are where no submission has been received but the council think the zoning needs to change to fix inconsistencies in the map.

Below are a couple of examples from areas where there has been strong opposition to providing a range of housing options.

Western Isthmus

This area was one of the most controversial for us, as despite its relative proximity to town and decent public transport, much of the area was locked up in the single house zone. You can see quite a bit of change along some of the corridors where light rail is planned, especially on Sandringham and Manukau Rds – by and large reflecting some of what’s there now. Another big change you can also see that most of the area to the South West of SH20 has gone from single house to MHS. In some cases I could also see some down-zoning from MHU to MHS – such as along Rosebank (not in this picture).

PAUP zoning changes - Dec 15 - Western Isthmus

Takapuna/Milford

You can see sprinklings of upzoning from SH to MHS or MHS to MHU but nothing significant. In some case the changes in zoning really just reflect some of the built form that’s there now.

PAUP zoning changes - Dec 15 - Takapuna-Millford

I’d urge you to go to the council’s website to have a better look at the maps (at the bottom)

As expected many of the changes seem sensible and nothing to be alarmed about, and the rants of the Herald and others seem to once again be completely misplaced. Rather than scaremonger around the height of buildings (which aren’t even high), it would be much better if the Herald could lead a conversation about how we ensure new buildings have good design that complements the area. A set of well designed three storey terraced houses could have less impact than a poorly designed two storey single house.

Council Caves on Freyberg

Despite over 80% of submissions in support of closing the pointless lane through Freyberg Square, the council have caved to the wishes a few complaining retailers who consistently seem determined to hold the city back – often so they can park outside their shops. They’ve announced that the lane will now be retained while the council spends many more years coming up with a plan for the entire High Street area.

Freyberg Square Proposed Design

The Auckland City Centre Advisory Board (ACCAB) has endorsed a staged approach to improvements for Freyberg Square, with vehicle access through the square retained in the interim to provide more flexibility for future improvements in the wider area.

Upgrades to Freyberg Square and the Ellen Melville Centre in Auckland’s city centre received strong public support when consulted on in September, however some key issues were raised, particularly from local businesses.

The temporary retention of vehicle access – connecting High Street with Chancery Street – is the most significant change from proposals, and follows discussions with Heart of the City and business owners in the area. Other changes include the retention of four large phoenix palms, cycle parking, additional seating and moving some of the trees.

The vehicle access would provide flexibility for potential future improvements in High Street and the wider area, while a precinct plan is developed with the community and businesses. That plan will set out the direction for the area and inform future investment decisions. There are currently no set proposals for what a High Street upgrade could consist of – however $15m has been committed from the City Centre Targeted Rate.

ACCAB Chair Kate Healy said “Having a staged approach to Freyberg Square means we get most of the improvements now, while helping to keep options open for the area’s future development – as well as options for how we might minimise potential disruption. We will also work towards the vision for Freyberg Square, which had strong public support in the consultation.

“Many businesses in this area are excited about what the future will hold, but want to see a holistic approach taken for the district’s development. This underlines the commitment of the ACCAB and Auckland Council to listen to stakeholders and work together with communities to transform our city centre.”

It is expected that access through the square would be generally open but able to be closed for events. This would evolve over three to five years to become generally closed to vehicles, but able to be opened when needed.

The ACCAB advises on city centre projects and spending of the City Centre Targeted Rate. The rate raises about $21m annually – of which 96% comes from city centre businesses and the rest from residents. It will fund the improvements to Freyberg Square and is also set to fund improvements to High Street.

The full feedback report of the consultation on the square and the community centre is available online at here.

I agree that there needs to be a plan for High St but at the same it seems like the decision completely undermines the council’s consultation processes. It raises the question of why even bother going to the effort of submitting and engaging with the council if they then ignore the vast majority of responses which in this case actually supported them.

I guess the only positive is there now seems more impetuous to actually do something about High St and that hopefully means an upgrade of the street from its currently pedestrian unfriendly design. The counter to that is the retailers who have managed to hold up improvements to Freyberg Square are just as likely to keep doing the same thing with any plans for High St as they will be emboldened by this decision meaning the council will likely delay improvements even further.

Freyberg Pl

The lane will remain

Perhaps instead of spending time on a plan that will likely be delayed further the council should instead just pull all money from the area and instead spend it on areas that may support improvement. For example I’m thinking of more shared spaces on other parts of Federal St. In the mean time High St, Aucklands former high street, will no doubt continue its slide into relative obscurity and businesses and customers flock to those streets that haven’t fought against the spirit of the times

Phil Goff: For a better Auckland?

On the weekend Phil Goff announced his bid for the Auckland mayoralty. Several interesting articles on Goff’s bid have been published, for example ones by the Herald and Radio NZ here and here respectively. A more recent article by the Herald is available here, which suggests Goff may be the favourite and exhorts him to “exert control”.

eight_col_PhilGoff

In this post I’ll discuss and interpret some of Phil Goff’s comments on local government in Auckland. The post is split into three juicy topics: 1) Rates; 2) Asset sales; and 3) Intensification. I should note that it’s relatively early on in the campaign, so in some ways this post raises more questions than answers. I hope you enjoy it nonetheless.

1. Rates

So what is Goff’s position on rates? Well, for starters at least Goff has his figures right: He notes that rates for the average household increased 3.5%, while also observing that some households experienced increases of up to 10%. Basic data analysis is something that seems to escape some journalists.

Now don’t get me wrong: 10% increase in one year is a big jump.

However, one of the things that got lost in the recent clamour is that some of the increase in household rates was associated with adopting single rating system for all of Auckland. This required harmonizing quite disparate rates across Auckland. Naturally, some people found their rates went up, while others found their rates went down.

The good news for Goff, and any other mayoral candidate, is that the difficult process of harmonizing rates is now largely complete. Len Brown has borne the brunt of that central government hospital pass. As such, the incoming mayor – whoever they are – will benefit from this issue dropping off the radar. So how will Goff seek to keep rates under control in the future?

Well, in his interview on Radio NZ Goff talked “prioritizing” projects, i.e. less important things give way to more important things. This really was the thrust of this recent post which I wrote on the effectiveness and efficiency of local government in Auckland.

Unfortunately we don’t know yet what Goff’s priorities are, so it’s hard to assess the size of the potential savings. There are however a number of poorly-performing transport projects which could be ditched, such as PenLink and Mill Rd. Right there Goff could save the mighty taxpayers of Auckland several hundreds of millions of $$$.

One issue Goff didn’t discuss is Auckland Council’s desire to shift the burden of rates away from businesses and onto residents.

This shift, as I understand it, is designed to reduce the costs faced by businesses, so as to 1) reduce prices for goods/services and 2) increase employment, both of which ultimately benefit residents. While this is a policy direction that I happen to support, it has also contributed to some of the recent increase in residential rates. We don’t yet know where Goff stands on this issue, but it’d be interesting to find out because it is one factor that will cause residential rates to rise faster than inflation.

2. Asset sales

Now we start to get into the nitty gritty about how to keep rates under control. One of the more controversial ideas that has been in the media lot lately is the subject of asset sales. It’ll be interesting to see where the mayoral candidates fall on this issue, because it really is the primary opportunity to find more money to invest in things that will make the city better.

In his interview on Radio NZ Goff distinguishes between what he calls “strategic” and “non-strategic” assets. He says no to the latter, especially in the context of Watercare. Auckland Council’s shares in Ports of Auckland and Auckland Airport, for example, also appear to be in the “not for sale” basket.

Now I can appreciate the need to distinguish between strategic and non-strategic assets, where the former are deemed to provide efficient support to Council’s strategic direction and the latter do not. However, I think there’s a need for Goff to outline not only which assets he considers to be strategic, but *why*. This would help shed light on his underlying values, and mitigate against the “slippery slope” arguments that are advanced by some people in discussions of asset sales.

On the other hand, it should be noted that from the interview it seems that Goff’s views on golf courses are relatively well-aligned with our own views here at TransportBlog. I’ve paraphrased the most relevant parts of the Q&A as follows:

  • Interviewer: What about flicking some of the golf courses?
  • Goff: Remuera golf course is worth $560 million and the subsidy for every golfer is $11,500 per year.
  • Interviewer: So we could expect some golf courses to be sold for housing?
  • Goff: I’m going to look at the facts before I make a commitment on that. But I don’t think it’s fair for Aucklanders to be subsidising those people who are lucky enough to be members of a golf course …

FYI here’s what a subsidy of $11,500 per golfer per year buys them.

img_9212

Or here’s another fact just to ram it home: The annual subsidy for golf courses in Auckland is approximately equivalent in value to the annual cost of operating Auckland’s rail network. So when someone tries to tell you that asset sales will not have a meaningful impact on Council’s ability to deliver other goods and services, you should tell them they’re dreaming.

Personally, Goff’s views on rates and asset sales seemed fairly reasonable to me, even if more details are needed (NB: The same goes for all the mayoral candidates of course).

3. Intensification

Now let me present one psuedo-question in the Radio NZ interview and the subsequent response from Goff:

  • Interviewer: There’s more talk today about intensification in some of those inner-city suburbs, such as Mt Eden.
  • Goff: I don’t see us putting up tower blocks in some of those really nice areas. What I see us doing is working down the main arterial transport routes, looking at places like New Lynn and Panmure. Those are the ideal places where you might want to put 3-4 storey intensive housing, plenty of public open space and making sure it’s good urban design. I don’t think that you start to encroach on the most beautiful parts of the city, before you, say, let’s follow the transport routes so that people can be close to where they are moving to.

There’s some good stuff in what Goff says, e.g. on concentrating development in areas where transport infrastructure exists and the need to focus on urban design, both of which have been somewhat lacking in earlier iterations of Auckland’s development.

There are also, however, some very unfortunate words and attitudes underlying Goff’s comment. Here’s the part I was most concerned by: “I don’t see us putting tower blocks in some of those really nice areas“.At this point my little red alert warning signals started to go whoop whoop. More specifically, in this comment Goff strays into very dangerous territory my friends.

Let me explain why.

First let’s consider what Goff is trying to say. From where I’m sitting, it seems that Goff is saying let’s not intensify in areas that are “nice”. Why? Well, the obvious implication is that intensive development is not nice?!? Goff meet Ockham. More specifically, if Auckland is to progressively change the discourse around housing, and thereby lance the housing boil that threatens our entire economy, then we need large numbers of apartments and town houses to be built. And we need them to be built all across Auckland’s central suburbs, where people want to live, not just in a few places like Panmure and New Lynn.

Second, in this sentence Goff implies that he will seek to undermine normal market forces. More specifically, if an area is “nice” then people are going to want to live there right? Goff seems to be saying that as soon as an area becomes “nice” then Council is not going to allow development there. By extension, Council will presumably only allow intensive development in location that are not nice? Where there is no demand to live? Great, Council can zone away its heart’s content, but it won’t ultimately change anything, all we’ll get is higher property prices in areas that are unable to be developed further.

Which brings me to the third issue with Goff’s seemingly innocuous statement: Goff’s use of the word “nice”. What does this imply for the areas of Auckland that are not like Mt Eden? Goff seems to think Council can identify a couple of not nice places and direct all the “poor” people (who can’t afford to buy a nice big ol’ villa on a large section in Mt Eden) to live there. Think again. Question: What if people all over Auckland come forward and argue their neighbourhood is nice just the way it is?

Answer: Goff either has to 1) tell them that they’re wrong or 2) roll back the intensification planned for those areas. That’s right: In arguing that we shouldn’t intensify certain areas because they’re “nice”, Goff has unwittingly created a rod that any NIMBY anywhere can use to beat back proposed intensificatio – on the grounds that their area is already “nice”. End result? Whole-sale down-zoning in response to self-interested parochial interests.

Now, in Goff’s defence, he is not alone in slipping down this slippery slope.

In fact, the interaction between planning regulations and political economy has been studied elsewhere. This interesting article from Los Angeles, for example, discusses how their planning regulations prevented intensive developments from occurring in areas where there was demand. Sound familiar?!? These regulations were found to have a massive negative impact on development capacity in Los Angeles, as illustrated in the figure below.

FrameWORK_Housing_ZoningCapacity

For this reason it is not surprising that Los Angeles has had the “fastest increase in home values since 2000” and “has become the least affordable major city in the country“.

In a nutshell: The more Goff is inclined to pick “winners” and “losers” when it comes to what types of housing can be developed in which areas of Auckland, then the more expensive and segregated Auckland is likely to become. Personally, I struggle when residents and politicians effectively say “we want the kinds of people who live in apartments to live over there, because this area is too nice for them“. That’s the definition of snobbery.

The discourse surrounding this issue is even more farcical when you realise that many of Auckland’s older suburbs are already peppered with 3-7 storey apartment buildings. Like my apartment building, which is over 100 years old. Like many apartment buildings in Auckland that were built before regulations and locals made it too difficult.

And let’s be honest: The debate we’re having is not about “tower blocks”: It’s about whether you should be able to build a 3-7 level building in Auckland’s extremely valuable and desirable central suburbs. You know, like the kinds of development that one finds Sydney and Melbourne. To which I say abso-bloody-lutely.

End result? I think Goff needs to think more subtly about intensification.

4. Conclusion

Overall score for Goff’s initial foray into local government issues? Well, I’d give him a 2/3. When it comes to rates and asset sales, Goff stated some reasonably coherent positions, while also appearing open to debate and discussion. Which is good, because after all he’s only one vote on Council so at the end of the day we shouldn’t overstate his importance.

While Goff is shaping up to be a good centrist mayoral candidate, it looks like housing and intensification may be areas for improvement.

At this point it’s worth mentioning that Goff naturally wants to win, and winning involves appealing to people from across the political spectrum – many of whom like Auckland the way it is and don’t want it to change. But allowing more housing, and more intensification in particular, is the single most important issue facing Auckland right now (yes bigger than transport).

For this reason, Auckland’s next mayor needs to champion Auckland as an integrated city, not a collection of self-interested suburbs.The reason we should sell Remuera golf course is the same reason we should allow for more development in Mt Eden: Because it’s in the best interests of Auckland as a whole. Both now and into the future.

I would like to elect a mayor who doesn’t apologise for the need for intensive development in central areas. A mayor who engages with the concerns of existing residents, but doesn’t compromise on the underlying reality facing Auckland and the city’s growth. Development is not a disease that needs to be quarantined in not so “nice” places. Multi-storey buildings already exist in Auckland’s inner-city suburbs, like they do in Melbourne and Sydney and almost any city of similar size.

Indeed, I’d personally argue that Auckland’s lack of density, and the consequences for civic life, is a primary reason why Auckland struggles to retain its young people. The life of cities like Melbourne, Sydney, London, and Amsterdam is what attracts young peolpe like me. I think our approahc to housing needs to be framed in that context: If you want your grandchildren to live in this hemisphere, then you’ve got to allow for more intensive development in Auckland.

Goodbye, goodluck, and godspeed to you my fellow Auckwooders. May Goff be with you.

Auckland Rapid Transit Network

This is AT’s official future vision for  the Rapid Transit Network in Auckland. I feel the need to show this again in the context of a number of uninformed views about the CRL popping up again, as one of the chief misunderstandings is to treat the City Rail Link as a single route outside of the network it serves.

All successful transport systems are designed through network thinking and not just as a bunch of individual routes, this is true of our existing and extensive motorway network just as it is true for our rapidly growing Rapid Transit one. The Waterview tunnel is not being built just so people can drive from Mt Roskill to Pt Chev, and nor is the CRL just to connect Mt Eden to downtown.

The CRL is but one project on the way to a whole city-wide network, as is clearly shown below, and as such it doesn’t do everything on its own.

But then having said that because it is at the heart of  the current and future city-wide network it is the most crucial and valuable point of the whole system. That is true today and will continue to true for as long as there is a city on this Isthmus. In fact it is hard to overstate the value of the CRL as by through-routing the current rail system it is as if it gives Auckland a full 100km Metro system for the cost of a pair of 3.4km tunnels and a couple of stations. This is simply the best bargain going in infrastructure in probably any city of Auckland’s size anywhere in the world and is certainly the best value transport project of scale in New Zealand. Because it is transformational* for the city and complementary to all our existing systems, especially the near complete urban motorway network.

Additionally the capacity it adds to the region’s whole travel supply is immense: taking up to 48 trains an hour this can move the equivalent of 12 motorway lanes of car traffic. All without flattening any place nor need to park or circulate those vehicles on local roads and streets. And all powered by our own renewably generated electricity. This is how the city grows both in scale and quality without also growing traffic congestion.

AT Rapid Transit Network - 2041

This map will evolve over time as each addition is examined in detail. For example I expect the cost-effectiveness and efficiency a rail system over the harbour, up the busway and to Takapuna to become increasingly apparent well before this time period. In fact as the next harbour crossing, so we are likely to see that in the next decade, otherwise this is that pattern that both the physical and social geography of Auckland calls for. Additionally Light Rail on high quality right-of-ways, although not true Rapid Transit, will also likely be added in the near term.

Welcome to Auckland: City.

* = transformational because it substantially changes not only our movement options, the quality of accessibility between places throughout the city and without the use of a car, but also Auckland’s very idea of itself; we have not been a Metro city before: It is doing things differently.

UPDATE:

Matt suggested adding this more recent version. I agree this is a good idea, it shows just how quickly ideas are changing in Auckland right now. This is a very fluid and exciting time for the city as the new possibilities are becoming acknowledged by all sorts of significant players. It remains my view that extending our existing rail system is better for Mangere and the Airport, but that taking AT’s proposed LR across the harbour in its own new crossing is a really good option:

RPTP potential LRT + RTN Map

And just this morning we get wind of these very big changes for those making plans for Auckland. It looks like the funding roadblocks [pun intended] for the necessary urban infrastructure that the growing and shifting Auckland needs may be melting away….?

Treasury Tweets

 

Effectiveness & Efficiency == Abundance?

In the last few months we’ve published several posts which have, in various ways, touched on some important issues facing local government in Auckland. In this post I seek to summarise some key concepts that have emerged in these posts, and consider some broader implications for Council policies, especially relating to transport.

For a self-confessed policy wonk it’s been heartening to see posts on seemingly arcane policy matters such as ratestransport levies, golf courses, and heritage policies attract passionate and oftentimes informed debate. This is not to say we’ve been able to reach agreement on the issues. Indeed many people disagree, for example, on whether Auckland Council should continue to own golf courses.

In the face of such disagreements should avoid posts on these topics? Should stick to puppyhood and apple pie posts about Amsterdam, which everyone can either get behind or comfortably ignore – by virtue of the fact that it doesn’t challenge anyone’s pre-existing notions? I don’t think so. To do so would be to rest lazily back in incomplete hammocks haphazardly woven from our own subjective experiences.

Rather, it is primarily through debating controversial issues that we can begin to understand our own values, and those of others. Even if we don’t start with the same values, we might reach agreement on relative priorities. This post is written in such a spirit. Or at least that’s my intention.

Of course the “DNA” of the post was born from my own incomplete hammock. For this reason I encourage you to tear it apart and splice it back together. Democracy often works best when people with different values work together to breed superior mutant hybrid policies.

Just so we’re on the same page: I define “policies” as things that local government either invests in and/or or regulates. And when I say “invest”, I am referring both to operational investment, e.g. public transport subsidies, as well as capital investment, e.g. owning golf courses. Without further ado …

Opportunity costs. The issue of opportunity costs has popped up frequently in our posts on rates and golf courses. That is, when Council decides to invest in something, then this will reduce the money available to invest in other things, i.e. investment has an opportunity cost in the short-term.

Some Council assets, such as Ports of Auckland, generate a direct income stream. Moreover, this income can be generated at a rate that is higher than Council’s “cost of capital”. Such investments actually increase Council’s ability to invest. Other assets, e.g. golf courses, do not generate (net) positive revenues. By continuing to own golf courses, Council’s has less ability to invest in other things, including public transport and walking and cycling.

Now, many people have argued Council’s investment in golf courses is worthwhile despite their (high) opportunity costs. I’m OK with this provided people are clear about the fact that maintaining investment in golf courses will reduce Council’s ability to invest in other areas. Put another way, I want the opportunity cost associated with golf courses, and all other Council investments, to be made explicit – so we can formulate some relative priorities.

As I discuss in more detail below, Council’s ability to increase rates to fund improvements in services is constrained by our democratic “willingness-to-pay”. Opportunity costs are important and they are not something we can simply sweep under the carpet.

opportunity cost

In Peter’s last post on golf courses, for example, it was suggested that the opportunity cost of Council’s investment in golf courses amounted to mere “pennies”. My quick back of the envelope calculation suggests Council ownership of golf courses amounts to an additional ~$100 in rates per household per annum (NB: This primarily reflects their capital value). This cost arose simply because Council has debt, on which it must pay interest. Hence owning golf courses increases the debt, and by extension the amount of interest that must be paid. This is the opportunity cost of owning golf courses.

Now, $100 per household per annum may not sound like much to some people, but it is worth keeping in mind that it’s approximately equivalent to the temporary transport levy that was recently adopted by Auckland Council (to howls of outrage from some quarters). Moreover, in just 3 years the revenue from this transport levy will enable Auckland to pursue a much more ambitious transport investment programme, especially for public transport and walking/cycling.

This is all just to highlight the importance of opportunity costs, and the potential gains that might follow from optimising Council’s investments. Which brings me onto the topic of …

Level of investment. It is useful, I think, to think about the “level”” of Council’s investment somewhat separately from the “mix” of investments.

In my previous post on rates I suggested that we should measure the level of Council investment in terms of $ per capita. The figure below highlights some broad possibilities in Council spending. We can either increase, maintain, or reduce government expenditure. Those are your options – and your homework for next week is to find out where your local Councillors stands on these issues.Level of investment

Notwithstanding what you hear in the media, Council is currently holding rates constant in real terms. But because the population of Auckland is growing, holding rates constant in real terms equates to less spending per person, i.e. we’re in the blue box in the above figure.

The blue box requires either 1) cutting services and/or 2) improving productivity. If Council wishes to hold services per capita constant, then productivity improvements will need to be equal to or higher than the rate of population growth. In Auckland, the latter is humming along at 3-4% p.a. That gives you a feel for the scale of the fiscal challenge Council is currently operating under.

Productivity improvements are one area where the public sector may be able to learn a bit from the private sector. For example, Air New Zealand has committed to identifying cost savings that are sufficient to offset inflation. This is discussed in the slide below (NB: Source).

Air New Zealand savings

It’s key to note that Air New Zealand are, in general, looking to realise these savings not through one-off “slash and burn” type changes, but instead through sustained, incremental improvements that are made across all areas of their business, i.e. they seek to leave “no stone unturned”.

I think Council needs a similar approach. It’s better to identify efficiencies consistently, rather than wait until major cuts are required. In this context, I think it’s reasonable for people, like Peter, to identify areas where savings might be made, such as golf courses. Other people may disagree. That’s fine, provided they have alternative ideas on how to either 1) find savings and/or  2) increase revenues.

Finally, I should say that I place “user charges” under the general rubric of “cutting services”. This is because if something was previously provided free, and we change it such that people now have to pay, then this is effectively a cut in service. This is *not to suggest* that user charges are necessarily a bad thing. I support, for example, user charges for things like wasterwater, parking, and development where they encourage the right kind of efficiencies. Which brings us nicely to the next topic …

Effectiveness and efficiency. This is an important distinction, which I think is frequently conflated – probably because the concepts are not always easy to separate.

From a public policy perspective I think of “effectiveness” as a question about whether a policy contributes to wider strategic objectives, including consideration of (potentially unintended) consequences. Efficiency, on the other hand, considers whether policies are well implemented. It may be, for example, that a particular policy supports strategic objectives, i.e. is effective, but nonetheless is implemented in an inefficient manner, such that the benefits are not as high as they could be.

While I tend to despise wish-wash diagram spam, I do think the following figure illustrates the distinction between effectiveness and efficiency quite nicely for y’all.

veranderen-eff-vs-eff-en-515px

Let’s say, for example, that Aucklanders collectively decided that Council ownership of golf courses was an “effective” policy, insofar as it contributed to wider strategic objectives. The next question people like Peter and I would ask is whether Council was delivering golf courses in the most efficient manner?

We might then put forward questions such as:

  • Do we own the right number of golf courses and are they in the right location?
  • Are Council golf courses priced/sized appropriately? E.g.:
    • Should we increase green fees so that the users covered not just operating costs but also some of the opportunity costs?
    • Should we convert 18 hole golf courses to 9 hole golf courses? And If so then should we create public parks and/or residential/commercial development?

So even if we conclude that continued Council investment in things like golf courses is effective, we might still want to consider ways to make that investment more efficient. And that latter in turn would realise savings to invest in other Council services, and/or lower rates …

Focus on public transport. How might these concepts relate to public transport? Most Aucklanders, myself included, appear to be of the view that public transport is “effective”, i.e. our aspirations for the city see a larger role for PT.

But is Auckland’s public transport system efficient? Well, no not really. Or at least not yet.

It is true that sustained capital investment in public transport has started to flow through to “the bottom line” in terms of higher farebox recovery. For the uninitiated, farebox recovery measures the percentage of operating costs which are covered by fare revenues. Recent trends in Auckland’s farebox recovery over time are illustrated below.

2015-09 - Statement of Intent result

You can see that in the last year or so it’s increased from ~46% to ~48%. This is heading in a positive direction, but is still quite low in comparison to many high performing cities overseas (with the notable exclusion of Australia – which is something of an outlier in terms of its operating costs, mainly for rail). Amsterdam, for example, achieves 75%, while Edinburgh, London, and several German cities achieve closer to 100%. The implication? All other factors being equal, these cities will have more money available for other things.

So how might we improve the efficiency of public transport in Auckland?

Well, the first thing I think we should do is to remove subsidies for cars where it is effective/efficient to do so. Cars are currently subsidised in terms of the parking they use, as well as the externalities they generate, such as congestion, noise, and air pollution. By charging people more to use cars, we would increase demand for public transport and hence generate increased revenue from the existing system. Such actions are, however, relatively slow to bear fruit, so we need to also look elsewhere.

In terms of the public transport system itself, we know AT is currently working on a range of things like growing HOP uptake, implementing PTOM (i.e. new bus contracts), rolling out bus lanes, reducing rail dwell times (and possibly staffing), the New Network, and the CRL. I am optimistic about these changes and their collective potential to improve the efficiency of our PT system. For those who are interested, my colleague Jarrett Walker has written some interesting stuff about making PT more efficient.

As mentioned above, improving the efficiency of PT is a means to an end, not necessarily an end in itself. More specifically, reducing PT operating subsidies frees up money within the existing PT budget to invest in efficiency-enhancing infrastructure, such as more bus lanes. In this way, improving the efficiency of our PT system gives us the opportunity to reinvest in the system, and thereby make it more useful and more abundant.

Key message? Operating PT efficiently allows us to provide it more abundantly. And abundant PT is what many of us want. For this reason, if you’re keen for PT to become more widely available and/or more widely-used, then you should also support initiatives that seek to make it more efficient. These measures may make trade-offs that involve cutting services in some areas, simply because the “opportunity cost” attached to those services is too high. I don’t think we should shy away from such decisions; we can’t make a great PT omelete without throwing away some bad PT eggs.

In short, if we can improve the effectiveness and efficiency of Council spending across all areas, then we can all look forward to more abundant public goods and services. This applies to golf courses, public transport, libraries, and indeed everything else that Council invests in.

Now I think I’ve said enough and it’s time to hear what others have to say …

“Is the Auckland super city out of control?” Computer says “no”.

Many journalists and central government politicians (mainly the ones who sleep in blue or yellow pajamas) have recently promulgated the view that local government rates in Auckland are “out of control”. In the video below, Paul Henry gives you a flavour for the fervour emanating from these corners.

Capture

Henry’s video segment contains a lot of heated rhetoric, but precious little data. Like Henry, I am also a rate-payer. And I was genuinely interested in what the data says about historical trends in rates in Auckland. In this post I consider Henry’s central claim, i.e. that rates are “sky-rocketing”, and try and hone in on some interesting questions relating to local government rates, and in particular what people mean when they talk about trends in local government expenditure. I finish by discussing my preferred measure of local government expenditure, and also provide some comments on some interesting issues that Paul Henry does not discuss – but which underpin many of the issues he is interested in.

Now, from Henry’s segment it’s not immediately clear to me how he defines “rates”, so let’s approach the topic using a couple of indicators.

In the figure below I have plotted total rates (indexed to 1996 levels) collected per annum for the period from 1996-2014. This figure illustrates trends in Auckland versus other local governments in New Zealand (NB: Data on local government expenditure and consumer prices is sourced from Statistics NZ). Note that because the local government definition of “Auckland” changed in 2010, I’ve followed the convention of defining “Auckland” prior to this point as the seven TAs plus the regional bodies (ARC and ARTA).

C1 Total rates collected

A couple of things emerge from figure C1. First, we find that the total amount of rates collected in Auckland has declined in real terms since 2011, i.e. about the time that Auckland Council was formed. The total amount of rates collected in 2014, which is the last year for which data is available, was approximately the same as that collected in 2009. Second, the flat-lining in total rates collected since 2011 is in stark contrast to trends for the 15 years prior to this point, in which time rates increased in real terms by approximately 75%. Third, during the last five years local governments elsewhere in New Zealand have increased their rates by about 10%, while rates in Auckland have declined.

Conclusion #1: The amount of rates collected by Auckland Council in 2014 was 5% lower than when the super-city was first formed, i.e. total rates have reduced in absolute terms since Auckland Council was formed.

The previous figure considered total rates collected. However, in this period the population has generally been increasing, both in Auckland, in particular, and New Zealand, in general. To control for this fact, in figure C2 I have plotted rates collected per capita per annum.

C2 Rates per capita

Factoring population growth into our analysis accentuates the trends identified in figure C1 . First, we see that in 1996 rates per capita in Auckland were at a level that was very comparable to the rest of NZ. Since 1996, rates per capita have increased more slowly in Auckland than elsewhere in New Zealand. We find Auckland’s per capita rates peaked in 2010, since which time they have declined by approximately 8%, or ~2% p.a. In contrast, during the last five years other councils in New Zealand have increased rates per capita by approximately 9%. To put it another way, had rates in Auckland risen at a similar rate to the rest of the country since Auckland Council was formed, then they’d be approximately $200 per capita per year higher than what they actually are.

Hmmm. The “super city” appears to be at least as effective as local government in the rest of New Zealand. It’s not looking very good for Mr Henry?!?

Conclusion #2: Rates per capita in Auckland peaked in 2010, and have since fallen by 8% to now be 20% below the New Zealand average. Both local and central government expenditure is lower in Auckland than the New Zealand average.

Not only have we found no evidence to support Henry’s central claim, but we have actually found evidence to the contrary: Rates in Auckland have declined in both absolute and per capita terms, such that rates in Auckland are now 20% below the New Zealand average. Why did this freely available and highly relevant data did not feature in Paul Henry’s 10 minute segment? It’s notable that in this same segment, Paul Henry claims that rates under Auckland Council are “sky rocketing” and goes on to accuse Len Brown of being a “liar” for not keeping rates increases in line with inflation. Claims that are made without presenting any data, and which contradict the data that I have been able to find.

From what I can tell, Henry’s claims about rates are incorrect (NB: Some might use the phrase “shitistics” to describe Henry’s analysis).

More generally, the data suggests Auckland Council has maintained rates at or below historical levels. And in amidst all of Henry’s operatic soap-boxing about rates rises, he seems to have overlooked some interesting questions that are worth discussing. The first is that the increases in rates that are levied on residential activities (which I think is actually what he means when he refers to “rates increases”) has come about because of a strategic decision by Auckland Council to reduce rates levied on businesses. The rationale for what effectively amounts to a ‘rates switch’ is discussed here on Auckland Council’s website. This important issue does not feature in Henry’s segment.

Rates differential

Put simply, it’s important to remember that the rates collected by Auckland Council is sourced from both business and residential activities. Moreover, Auckland Council has previously made a strategic decision to shift the burden of rates away from businesses and instead onto residents (NB: Arguably residents end up paying for the rates levied on business activities anyway, through either 1) higher costs for the goods and services that they consume and 2) reduced employment and/or lower incomes).

Nevertheless, it is important that conversations about residential rates in Auckland are considered within the broader context of reductions in business rates. Now Henry may think businesses should pay higher rates, and I’m interested in having that debate. But it doesn’t change the fact that rates (by both aggregate and per capita measures) have fallen since Auckland Council was formed. Which brings me to my final point …

Conclusion #3: While total rates and rates per capita have decreased by 5% and 8% respectively since Auckland Council was formed, the rates paid by residential activities have increased so as to fund even larger reduction in the rates paid by business activities.

I’ll say from the outset that this policy direction is one that I support at least on a high level, for reasons that hope to discuss in more detail in future posts. In my opinion, such a move is not just desirable because it is likely to promote “business and employment growth”, but also for creating a level playing field for land use investment decisions, as well as more direct democratic accountability. However, I’m interested in other views on the topic …

I’m also interested in a wider discussion on how we measure relative levels of government expenditure.

Personally, I’m a fan of per capita per annum metrics. This applies to both local and central government, where the latter has been previously analysed by Brian Fallow at the Herald. In a country with a growing and ageing population, such as New Zealand, maintaining total government expenditure at or below inflation effectively amounts to spending cuts for the average person. In my view, the default position would be for government spending per capita to remain constant over time, with deviations from this level then being justified by whoever is in government at the time. I note that even this more mild type of fiscal constraint would likely result in government expenditure as a proportion of economic activity reducing over time, as real per capita GDP increased in response to productivity growth.

Finally, this discussion of rates in Auckland is all the more interesting given Peter’s recent post on central government expenditure, which showed that – compared to other regions in New Zealand – Auckland receives slightly less central government expenditure per capita than what you’d expect based on its proportion of the population and GDP. I’m personally comfortable with this transfer because the Auckland population is, on average, wealthier, healthier, younger, and more productive than New Zealand as a whole. However, given the relative lack of expenditure by central government you might expect Auckland Council would need to spend more than average. But the reality is quite the opposite: Total government expenditure per capita is significantly lower in Auckland than the NZ average.

To sum up: In response to the question of whether Auckland Council is “out of control”, this computer says “no”. And in the eloquent words of hospital receptionist Carol Beer, I hope people like Paul Henry would rate this information as “ff’ing helpful“. Perhaps next time Henry feels like doing a hatchet job on Auckland Council, he might first spend at least five minutes doing some elementary research. Like, you know, finding at least one reliable piece of data that doesn’t contradict his claims.