Wednesday, August 22, 2012

What Infrastructure to Invest in?

NZ Herald, Tuesday, August 21, carried an "Infrastructure" supplement. With pieces from Stephen Selwood, Michael Barnett, Gerry Brownlee, Fran O'Sullivan and Tony Garnier....

It comes hot on the heels of Government plans to take out loans to fund its flagship "Roads of National Importance" projects - in the face of declining revenues from other sources (fuel taxes, tax revenues....) symptoms of the economic slowdown being experienced in New Zealand. 

But do we really believe that building more roads, and even taking out loans in desperation, is the answer to the questions now in front of NZ's economic planners? With new figures out about NZers moving across to Australia - and most of us have family members doing this - or talking about doing this - is building more motorways the best use of public money? Are people going to live and work in Australia because New Zealand doesn't have enough roads?

And - if we as country worry about the fact that property prices are still going up (some say it's because property is the only thing you can reliably invest in NZ) - why would you spend public money on an activity which is only going to fuel that fascination? One of the immediate effects in NZ of new roading projects is a proliferation of new subdivisions, property development projects away from existing urban environments (ie not for those looking for affordable housing near employment opportunities). So. We have a government which is keen to deal with the issue of affordable housing on the one hand - going ahead with infrastructure investment which is simply fanning the flames of NZ's love affair with property development and land speculation.

On the left: Wynyard Quarter, Auckland (referred to as Auckland's new social centre - in Ideolog Magazine). On the right the new motorway north out of Auckland (which various Ministers would like to extend to Whangarei.) The question: where do you get the best economic bangs for your public infrastructure bucks?

The  public investment in Wynyard Quarter came from Auckland City Council and Auckland Regional Council - and the land came from Ports of Auckland Ltd. It is difficult to quantify the overall public investment. There is also private investment in the shape of heritage buildings being retained. There is the loss of private property rights by agreeing to keep below certain height limits and in developing a high quality relationship with the public realm. I estimate that planned public money investment in waterfront infrastructure is in excess of $300 million - if you include the Viaduct Event Centre (top left on the image above). Considerable public investment is in the public spaces, public artwork, playgrounds and the like.... it's all infrastructure...

And what are we reaping down there. For a start there is a massive real estate boom going on. The anchor tenant is in effect the public investment and the public space quality. The most obvious private sector anchor tenant is the ASB bank HQ. That's the tip of the real estate economic iceberg.

But there's a whole lot else happening which has economic value down there. I challenge you to go down and sit at a table outside the old netshed on North Wharf about 5pm on a balmy sunny afternoon, Saturday, Sunday, Friday - whenever - and watch the promenading that's happening here in Auckland. You could be on the Mediterranean. Auckland has style and they like to show it, given an opportunity. Photos of this new phenomenon are getting around the world. People are wanting to visit. Businessses are wanting to invest. It's the new creative centre of Auckland.

In the NZ Herald article, Christchurch features strongly. Makes me grumpy everytime I hear how NZ's GDP is "strong" because of what's happening there. Takes an earthquake does it? Problem with GDP is it can be just a 3 month assessment, or 6 months - so the enormous economic losses that occurred a couple of years ago are not added in to the reported GDP figures. Bit of a nonsense really.....

I am impressed with the outline urban plan that has been developed for Christchurch - the green frame shaping a more compact centre, the emphasis on walking and cycling infrastructure, and the idea that a key piece of public infrastructure is the multi-sports centre there. Yes - business are calling for a convention centre. Calls for another one of those in Auckland have been around for a decade or more. However. In my experience it is not the lack of a convention centre that makes Auckland less attractive for business conferences - it has been because Auckland is basically not a very nice to visit. And with Wynyard Quarter that is changing. Fast.

If Government wants to stimulate private sector investment in New Zealand, and bring business into our existing urban centres, and attract high value business into urban centres, and make NZ cities as attractive and brimming with creative high value employment opportunities as Australian cities - then it needs to find ways of investing in those cities (learn from Welllington's waterfront and Wynyard Quarter), and do more of that, and stop throwing money at roads that pale into insignificance when subject to a modern economic comparison.

2 comments:

Graham Bush said...

Joel,
Your observations about What Infrastructure to invest in? are spot on.

Graeme Scott said...

Thanks Joel, well said. The failure of the current government to understand the potential of cities in general, and Auckland in particular, to lift national economic growth is condemning us to a slowly declining 'business as usual' future, just when the time is ripe for thinking differently.

Wednesday, August 22, 2012

What Infrastructure to Invest in?

NZ Herald, Tuesday, August 21, carried an "Infrastructure" supplement. With pieces from Stephen Selwood, Michael Barnett, Gerry Brownlee, Fran O'Sullivan and Tony Garnier....

It comes hot on the heels of Government plans to take out loans to fund its flagship "Roads of National Importance" projects - in the face of declining revenues from other sources (fuel taxes, tax revenues....) symptoms of the economic slowdown being experienced in New Zealand. 

But do we really believe that building more roads, and even taking out loans in desperation, is the answer to the questions now in front of NZ's economic planners? With new figures out about NZers moving across to Australia - and most of us have family members doing this - or talking about doing this - is building more motorways the best use of public money? Are people going to live and work in Australia because New Zealand doesn't have enough roads?

And - if we as country worry about the fact that property prices are still going up (some say it's because property is the only thing you can reliably invest in NZ) - why would you spend public money on an activity which is only going to fuel that fascination? One of the immediate effects in NZ of new roading projects is a proliferation of new subdivisions, property development projects away from existing urban environments (ie not for those looking for affordable housing near employment opportunities). So. We have a government which is keen to deal with the issue of affordable housing on the one hand - going ahead with infrastructure investment which is simply fanning the flames of NZ's love affair with property development and land speculation.

On the left: Wynyard Quarter, Auckland (referred to as Auckland's new social centre - in Ideolog Magazine). On the right the new motorway north out of Auckland (which various Ministers would like to extend to Whangarei.) The question: where do you get the best economic bangs for your public infrastructure bucks?

The  public investment in Wynyard Quarter came from Auckland City Council and Auckland Regional Council - and the land came from Ports of Auckland Ltd. It is difficult to quantify the overall public investment. There is also private investment in the shape of heritage buildings being retained. There is the loss of private property rights by agreeing to keep below certain height limits and in developing a high quality relationship with the public realm. I estimate that planned public money investment in waterfront infrastructure is in excess of $300 million - if you include the Viaduct Event Centre (top left on the image above). Considerable public investment is in the public spaces, public artwork, playgrounds and the like.... it's all infrastructure...

And what are we reaping down there. For a start there is a massive real estate boom going on. The anchor tenant is in effect the public investment and the public space quality. The most obvious private sector anchor tenant is the ASB bank HQ. That's the tip of the real estate economic iceberg.

But there's a whole lot else happening which has economic value down there. I challenge you to go down and sit at a table outside the old netshed on North Wharf about 5pm on a balmy sunny afternoon, Saturday, Sunday, Friday - whenever - and watch the promenading that's happening here in Auckland. You could be on the Mediterranean. Auckland has style and they like to show it, given an opportunity. Photos of this new phenomenon are getting around the world. People are wanting to visit. Businessses are wanting to invest. It's the new creative centre of Auckland.

In the NZ Herald article, Christchurch features strongly. Makes me grumpy everytime I hear how NZ's GDP is "strong" because of what's happening there. Takes an earthquake does it? Problem with GDP is it can be just a 3 month assessment, or 6 months - so the enormous economic losses that occurred a couple of years ago are not added in to the reported GDP figures. Bit of a nonsense really.....

I am impressed with the outline urban plan that has been developed for Christchurch - the green frame shaping a more compact centre, the emphasis on walking and cycling infrastructure, and the idea that a key piece of public infrastructure is the multi-sports centre there. Yes - business are calling for a convention centre. Calls for another one of those in Auckland have been around for a decade or more. However. In my experience it is not the lack of a convention centre that makes Auckland less attractive for business conferences - it has been because Auckland is basically not a very nice to visit. And with Wynyard Quarter that is changing. Fast.

If Government wants to stimulate private sector investment in New Zealand, and bring business into our existing urban centres, and attract high value business into urban centres, and make NZ cities as attractive and brimming with creative high value employment opportunities as Australian cities - then it needs to find ways of investing in those cities (learn from Welllington's waterfront and Wynyard Quarter), and do more of that, and stop throwing money at roads that pale into insignificance when subject to a modern economic comparison.

2 comments:

Graham Bush said...

Joel,
Your observations about What Infrastructure to invest in? are spot on.

Graeme Scott said...

Thanks Joel, well said. The failure of the current government to understand the potential of cities in general, and Auckland in particular, to lift national economic growth is condemning us to a slowly declining 'business as usual' future, just when the time is ripe for thinking differently.