Wednesday, 15th July, 2015

Auckland is well placed to take advantage of growing global economic uncertainty to accelerate the city’s big projects, writes MICHAEL BARNETT

With China’s economy slowing, uncertainty in Europe over Greece increasing and dairy returns likely to be lower for longer, it would be easy – as some have – to paint New Zealand (and Auckland) as entering a doom and gloom cycle.

But that would be the wrong response, especially in Auckland. We are the luckiest of cities. As life gets tough elsewhere, Auckland’s attractiveness as a place to live and work increases. More people are shifting to Auckland from Australia – expat Kiwis and Australians – than for a long time. On some data, around 100 new citizens are arriving every day, adding around 30,000 new Aucklanders a year. They are also coming from North America and Europe as well as Asia.

But it is not just people that are finding Auckland an attractive city option. Auckland’s property market is attracting significant investment, especially from China. The concerns of many over Auckland’s rocketing house prices are constantly in the news.

But we need to get a few things straight. Auckland’s real problems and opportunities are in a word, supply – we are short of houses and the infrastructure needed to support our fast growth.

For at least 5 years, we have known we should be building 13,000 houses a year for the next 30 years. We are slow, very slow in getting up to speed. Two years ago we built around 5,000, last year around 7,000 and this year we are getting closer to 13,000. I suggest we are far from having a regulatory and consent system that will ensure that 13,000 new houses can be delivered next year, the following year and every year for the foreseeable future.

It’s a similar story in Auckland’s central city property development market. The private sector is signaling $1.5 billion of new office development adding 170,000sqm of office space in central Auckland alone between 2015 and 2022. It will create around 8,000 new jobs. But added to these projects are hotels, the New Zealand Convention Centre and the Central City Link (CRL) and the Aotea Station, which is expected to be a tower block of similar scale to the proposed Down Town Shopping tower.

Much of this investment is from offshore. Make no mistake, as global turmoil increases, Auckland becomes an increasingly attractive world city to target – both to live and invest! It is understandable that people in China and parts of Europe are looking to invest in an attractive, fast growing city like Auckland.

On the other hand, for Auckland to get the infrastructure it needs to keep ahead of the population growth curve there are other big projects that need to be accelerated but aren’t for lack of best practice process and ready funding.

There is also a significant skills shortage in critical area such as construction, trucking, ICT and services.

The point: both central Government and Auckland Council have recently announced plans to organize themselves better to attract more investment. The target areas include high quality foreign direct investment in area embracing ‘innovation enhancing’ sectors and infrastructure.

But in my view these government-led initiatives will only provide long-term success if the private sector is brought to the table.

Everyone agrees. Auckland’s big joined up painful problems are affordable housing, transport and other infrastructure, and skill shortages. But most of all we need to improve how we co-ordinate public and private sector input and management of these problems.

On critical issues, Auckland Council and Government have a reputation for ‘talking past each other’. They have no shared, agreed agenda on the actions needed and the pace of investment to address the key issues

For the private sector, there is considerable frustration at the regulatory hoops businesses are expected to jump through, whether Council and Government.

At the core of my beliefs is that for Auckland to step up and make rapid progress on solving its big issues, government – local and central – must actively partner with the private sector.

The private sector housing and other commercial developments in outer Auckland need to be co-ordinated with provision of transport and other critical infrastructure. Similarly, the private sector developments in the inner city, especially Albert Street, need to be aligned with nearby public projects such as CRL and street improvements.

At least two major private sector developments in Albert St, the Mansons Tower on the bungy jump site and NDG on the Herald site, want to commence construction next year and complete by the early 2020s. With CRLs main tunnel project not scheduled to start until the 2020s, Albert St faces 10 years of disruption if these projects are not aligned, and also with the convention centre build. There also should be alignment with the early CRL construction to begin in lower Albert St and around Britomart later this year.

There are other projects we could bring forward. The strong interest from the private sector to accelerate its city centre projects and others around Auckland has been fuelled by our fast growth curve, reinforced by the Government announcement in mid-2013 to give support to critical infrastructure projects such as CRL, the East West Connection and the next Waitemata Harbour Crossing.

As global turmoil increases and Auckland become even more an attractive world city bolt hole, accelerating these and others big projects would seem the common sense thing to do. They are all needed, and they are all major opportunities to attract skills and provide jobs. So let’s work together to attract the investment needed so we can get on with them.


For more information contact Michael Barnett, mobile: 0275 631 150.
Michael Barnett, Chief Executive, Auckland Chamber of Commerce.