Friday, May 17, 2013

Beware of Auckland Growth Engine

Leave no stone unturned in pursuit of economic growth.

Could be the epitaph of several recent New Zealand Governments.

Consider the low hanging economic fruit of dairy farming irrigated by waters mined from rivers and underground reserves. Not a lot of local opposition. Some inconvenient pollution science from Regional Councils to be dismissed and shelved. And there's fossil fuel mining onshore. But the Forests and Birds of this world have made this a tough one to bring to market. Not forgetting the odd mining accident making the safety rules more expensive. And off-shore oil exploration and mining. Again - not a lot of local opposition - but Greenpeace and Maori interests have resisted.

And now it's Auckland that's being opened up for mining.

Auckland is the latest target for central government driven plans to pump-prime the growth engine by deregulating the development of Auckland's rich urban and rural landscapes.

Make no mistake. This is planned. Might be a bit lumpy - the planning that is - but it's part of the market-led economic growth plan that began with the Resource Management Act, was consolidated in the Local Government Act, and has been institutionally put in concrete with the establishment of the Super City.

Those who dismiss planners as those who do urban design, grant resource consents and sign off building permits are wide of the mark. The real planners in New Zealand are those designing the policies and the legislation that open up New Zealand's resources for development by private sector investors.

Most Urban Planners in Auckland are fighting a rear-guard action now, trying to manage the destruction of communities and neighbourhoods that is often associated with unregulated and careless development.

When the natural resource being developed is a river on the Canterbury Plains, or a coal reserve in native bush, the environmental effects are largely felt by natural ecosystems - though sometimes interconnected human activities can be affected - such as recreational fishing and tourism.

But when the receiving environment for development is a piece of city, a piece of urban landscape, it is not ecosystems that are affected - it is local communities and local neighbourhoods and long term residents. Ecosystems that have survived urbanisation are also affected of course - such as bird populations when trees are removed, freshwater ecosystems when more sediment is discharged into healthy streams, and inshore marine ecosystems.


Central Government has more or less come to the end of its strategic plan to enable the development of more diary farms. It is also between a rock and hard place when it comes to more fossil fuel mining. The new frontier for development and economic activity now are New Zealand's cities - especially Auckland.

Auckland is being readied for mining, and the pathway is being cleared. That is an essential part of the plan. Obstacles need to be legislated away, inconvenient institutions and regulations removed, political deals done, so the road is clear for investors and developers.

The Sky City Convention Centre project is an outstanding example of this.

Forcing the release of greenfield land to enable quick and easy profits at the edge of Auckland, quickly gobbling up infrastructure capacity funded by ratepayers, is another example. The argument that this will produce affordable housing has always been unfounded. :Living on the edge of a city, far from schools, shops and employment, is not where people on low incomes would choose to live given a choice.

Government is determined that Auckland's greenfields be opened up for mining by property developers and speculators. They will erect buildings, but they won't lay the foundations for a community or a neighbourhood. This is what the much denigrated urban planners would like to see, and strongly believe should be provided as part and parcel of any land development. Not so the free market planners in Council and Government. Their focus is feeding the growth engine.

The most vulnerable resource that is being laid open for urban mining is Auckland's existing urban landscape. I do agree that parts of Auckland's sprawling urban landscape - and the communities and people that live in those areas - would benefit from some intensification that delivers a greater variety of housing types and sizes and also additional amenity like a cafe and a corner shop. But that is not of interest to the growth engine.

The impact of urban mining in Auckland comes in two parts: foreign investment and unregulated development.

We have just sold our family home in Devonport. Down-sizing. Want to live closer to the Devonport village. So we've been in the market for a while. Talking to real estate people. They want to talk about intensification plans, but what they talk mostly about is the number of buyers from China attending auctions, making cash offers, and snapping up homes in the $700,000 to $1,000,000 price range. This phenomenon has accelerated in the past couple of months they tell me. While some families from China will live in these homes, many are simply land-banked - confirm the real estate people. Two of these are next door and have been empty for a year. There is no obstacle to this investment. In fact it's Government policy.

My experience and advice suggests foreign investment in Auckland houses is the single biggest driver for recent house price increases on the North Shore of Auckland.

Releasing land at the edge of Auckland may increase housing supply, but it will not slow demand from foreign investors for existing houses within good school zones.

On budget day we heard that Government will intervene in Auckland's urban development market if Council doesn't make it easier for urban mining. This statement follows hard on the heels of the so-called Auckland Housing Accord. I think the Accord is a bad joke because there is not a cat in hell's chance of Auckland Council getting its act together to open up Auckland's urban landscape for the sort of developer-led mining and redevelopment that Central Government has in mind.

Why? Because the community will revolt and rebel that's why. The tip of the iceberg is revealing itself. Nimbyism some say. Wrong. Sleeping giants in Auckland's tranquil suburbs are being awakened. Much as the greenies awake when they see bulldozers gather to divert rivers for irrigation or clear-fell bush before mining. Developer led infill and speculative intensification scares the hell out of the locals.

The free market planners will laugh over their lattes. They saw it all coming. Auckland Council will look feeble and its unitary plan for urban intensification crumble as the peasants revolt. The bulldozers might not roll in the suburbs, but the growth engine will roar and be fed because the Accord will force Auckland Council to release more greenfield land anyway.

If Auckland Council stands for the people it won't sign the Accord as it stands, and it will recognise that the Unitary Plan provisions for compact city development need the support and buy-in of communities.

Otherwise it's another win-win for developers and investors.

No comments:

Friday, May 17, 2013

Beware of Auckland Growth Engine

Leave no stone unturned in pursuit of economic growth.

Could be the epitaph of several recent New Zealand Governments.

Consider the low hanging economic fruit of dairy farming irrigated by waters mined from rivers and underground reserves. Not a lot of local opposition. Some inconvenient pollution science from Regional Councils to be dismissed and shelved. And there's fossil fuel mining onshore. But the Forests and Birds of this world have made this a tough one to bring to market. Not forgetting the odd mining accident making the safety rules more expensive. And off-shore oil exploration and mining. Again - not a lot of local opposition - but Greenpeace and Maori interests have resisted.

And now it's Auckland that's being opened up for mining.

Auckland is the latest target for central government driven plans to pump-prime the growth engine by deregulating the development of Auckland's rich urban and rural landscapes.

Make no mistake. This is planned. Might be a bit lumpy - the planning that is - but it's part of the market-led economic growth plan that began with the Resource Management Act, was consolidated in the Local Government Act, and has been institutionally put in concrete with the establishment of the Super City.

Those who dismiss planners as those who do urban design, grant resource consents and sign off building permits are wide of the mark. The real planners in New Zealand are those designing the policies and the legislation that open up New Zealand's resources for development by private sector investors.

Most Urban Planners in Auckland are fighting a rear-guard action now, trying to manage the destruction of communities and neighbourhoods that is often associated with unregulated and careless development.

When the natural resource being developed is a river on the Canterbury Plains, or a coal reserve in native bush, the environmental effects are largely felt by natural ecosystems - though sometimes interconnected human activities can be affected - such as recreational fishing and tourism.

But when the receiving environment for development is a piece of city, a piece of urban landscape, it is not ecosystems that are affected - it is local communities and local neighbourhoods and long term residents. Ecosystems that have survived urbanisation are also affected of course - such as bird populations when trees are removed, freshwater ecosystems when more sediment is discharged into healthy streams, and inshore marine ecosystems.


Central Government has more or less come to the end of its strategic plan to enable the development of more diary farms. It is also between a rock and hard place when it comes to more fossil fuel mining. The new frontier for development and economic activity now are New Zealand's cities - especially Auckland.

Auckland is being readied for mining, and the pathway is being cleared. That is an essential part of the plan. Obstacles need to be legislated away, inconvenient institutions and regulations removed, political deals done, so the road is clear for investors and developers.

The Sky City Convention Centre project is an outstanding example of this.

Forcing the release of greenfield land to enable quick and easy profits at the edge of Auckland, quickly gobbling up infrastructure capacity funded by ratepayers, is another example. The argument that this will produce affordable housing has always been unfounded. :Living on the edge of a city, far from schools, shops and employment, is not where people on low incomes would choose to live given a choice.

Government is determined that Auckland's greenfields be opened up for mining by property developers and speculators. They will erect buildings, but they won't lay the foundations for a community or a neighbourhood. This is what the much denigrated urban planners would like to see, and strongly believe should be provided as part and parcel of any land development. Not so the free market planners in Council and Government. Their focus is feeding the growth engine.

The most vulnerable resource that is being laid open for urban mining is Auckland's existing urban landscape. I do agree that parts of Auckland's sprawling urban landscape - and the communities and people that live in those areas - would benefit from some intensification that delivers a greater variety of housing types and sizes and also additional amenity like a cafe and a corner shop. But that is not of interest to the growth engine.

The impact of urban mining in Auckland comes in two parts: foreign investment and unregulated development.

We have just sold our family home in Devonport. Down-sizing. Want to live closer to the Devonport village. So we've been in the market for a while. Talking to real estate people. They want to talk about intensification plans, but what they talk mostly about is the number of buyers from China attending auctions, making cash offers, and snapping up homes in the $700,000 to $1,000,000 price range. This phenomenon has accelerated in the past couple of months they tell me. While some families from China will live in these homes, many are simply land-banked - confirm the real estate people. Two of these are next door and have been empty for a year. There is no obstacle to this investment. In fact it's Government policy.

My experience and advice suggests foreign investment in Auckland houses is the single biggest driver for recent house price increases on the North Shore of Auckland.

Releasing land at the edge of Auckland may increase housing supply, but it will not slow demand from foreign investors for existing houses within good school zones.

On budget day we heard that Government will intervene in Auckland's urban development market if Council doesn't make it easier for urban mining. This statement follows hard on the heels of the so-called Auckland Housing Accord. I think the Accord is a bad joke because there is not a cat in hell's chance of Auckland Council getting its act together to open up Auckland's urban landscape for the sort of developer-led mining and redevelopment that Central Government has in mind.

Why? Because the community will revolt and rebel that's why. The tip of the iceberg is revealing itself. Nimbyism some say. Wrong. Sleeping giants in Auckland's tranquil suburbs are being awakened. Much as the greenies awake when they see bulldozers gather to divert rivers for irrigation or clear-fell bush before mining. Developer led infill and speculative intensification scares the hell out of the locals.

The free market planners will laugh over their lattes. They saw it all coming. Auckland Council will look feeble and its unitary plan for urban intensification crumble as the peasants revolt. The bulldozers might not roll in the suburbs, but the growth engine will roar and be fed because the Accord will force Auckland Council to release more greenfield land anyway.

If Auckland Council stands for the people it won't sign the Accord as it stands, and it will recognise that the Unitary Plan provisions for compact city development need the support and buy-in of communities.

Otherwise it's another win-win for developers and investors.

No comments: