Friday, April 21, 2017

Auckland's Dispossessed Generation

This post/essay is really about New Zealand's dispossessed generation - and while the issue is most keenly experienced now in Auckland it is increasingly manifest in New Zealand's other cities.

The dispossessed generation is the millenial generation - the generation of children and families born to the baby-boomer generation - to me and my generation.

We have and are failing to provide for and to protect the urban future of our children and their children. We are dispossessing our children.

We are allowing their urban future to be purchased by the families and the children of entrepreneurs, adventurers, opportunists, explorers and settlers from other countries. We are also allowing our children's urban future to be used and exploited as a financial instrument by investors - including ourselves.

That is our legacy - if current policy settings remain unchanged.

Housing is just the tip of this dispossession iceberg. Available statistics show that first time buyers account for just 17% of Auckland house sales now, while investors account for 43%. Housing demand by new settlers accounts for a further - contested - proportion of house sales.

However it's not just access to housing that this Auckland generation is losing. They are also losing access to a place for their children in Auckland's most popular high decile schools whose rolls and spare desk capacity are being filled by the children of immigrant families who can buy into those suburbs and all of the amenity that goes with it just by investing in a house.

Easy accessibility to all sorts of amenity including education, entertainment, parks, community, heritage, neighbourhood, and employment is what attracts people to urban living - to living in a city. And as a city's population grows so does the city to accommodate the next generation. All of those amenities - many of them public goods - needed and will need public investment to plan, create and maintain. All of those amenities have some sort of design capacity - how many people they can provide for. All of those amenities (social infrastructure) have been built and funded over time - much of it by the baby boomer generation and their parent generation - planning and thinking about their needs and those of their children.

This planning and preparation was for the next generation and has been based on natural population increase - our children and their children. But that's not what is now happening to Auckland whose population is growing at unprecedented levels because of the level of immigration that has been accepted by central government in the last few years.

These sharp increases in resident population have increased the demand for housing and more houses are being built - some in existing areas of urban Auckland (especially apartments) - and some in the greenfield peri-urban edges of Auckland.

Auckland's dispossessed generation are being pushed out to peri-urban areas of Auckland to find rentals and houses they can afford and here is where the challenge of accessibility to amenity really bites. Access to amenity from low price and low rental housing areas is almost always by private motor vehicle because it's too far to walk or bike, and because these homes are the furthest from good public transport. Greater separation or removal from handy amenity costs time and money to gain access.

Not only is this generation being dispossessed of a home they can own, they are being dispossessed of easy accessibility to urban amenity as the roads they must use fill with the additional cars of the rapidly increasing population. This is another part of the dispossession iceberg that Auckland is being made painfully aware of. Those of us within easy reach of good public transport, or within a short walking distance of urban amenity can thank our lucky stars. But it's not going to be the experience of our children unless we can keep them at home.

And this is really the heart of the matter. Do we want to retain urban neighbourhoods and communities? Or are we content to dispossess much of this generation of any tangible material connection with the communities they were born in? Auckland's mature urban communities are being re-settled by a new wave of immigration. This will have effects on urban Auckland culture - some good, some unpredictable.

Good things generally take time though and require thought.

When a city population grows through natural increase - leading to annual increases in population of less than 1% typically (German and Swiss city growth average is less than 0.5%) - there is an inbuilt tendency for the city administrations to provide and plan for its own growth.Growth consequences are accepted by the existing population for their children. But when additional population growth is imposed on a city by forces outside a city's control, and the city is expected to adapt to, and absorb the economic externalities imposed by those new residents - no matter how wealthy they might be and no matter how good their wealth may be for the national economy - that feeling or threat of dispossession will develop among those who consider they built and paid for the city they live in.

With 39% of its citizens born outside New Zealand, Auckland is part of a growing club of cities (including Brisbane and Sydney) which have become popular as the next home for wealthy Asian and Indian families. Federal Government in Australia and Central Government in New Zealand both value the increase in GDP figures that are directly associated with high levels of immigration. Both country's national economies have been affected by vagaries in commodity markets (dairy and minerals) and increased immigration has become the go-to option to plug the gap.

Is this the best we can do? We could be throwing the baby out with the bathwater.


2 comments:

Larry Mitchell said...

Yes ... for the price of a Kiwi house, outsiders (immigrants and others of the "investor class" principally) ... get more than just the house.

With few if any other "Charges", by purchasing a property, investors buy into existing (largely paid for") infrastructure, they join a highly desirable society that provides for their children's (hugely subsidized) education, they gain personal security assurances both civil and national, they can look forward to retirement benefits, they gain publicly provided health care and accident compensation.

All of these benefits spring from just the one transaction, they are conveyed courtesy of the one trade-able purchase involved ... that is, acquisition of a home.

Is it any wonder then that "housing:" here is so costly?

No ... absolutely not, for priced into this one trade are the many benefits (above) that the home's ownership and NZ residency convey.

Time then for a full forensic economic dissection of these costs and benefits so that policy makers can separately price them and recover the costs via other specific transparent charging mechanisms ... instead of via the surrogate whipping boy of misleadingly labelled .... unaffordable "housing".

Bruce Rogan said...

Your article could easily have been written by Karl Marx or Friedrich Engels, which is not for one moment to be taken to mean that I dispute your analysis. What you have chronicled here is simply one of the mechanisms that have evolved for the purpose of polarising wealth. It was inevitable. After Prebble/Douglas and their successors transferred all of the publicly owned infrastructure into private hands, the gnomes in Treasury had to look round for other ways to enrich generation Key.
Once you have come to the conclusion that pretty much everyone needs somewhere to live, it makes sense to ensure that they don't do that living for nothing. And if the community has paid out of its collective pocket to pave St Stephens avenue and line it with deciduous shade trees, nothing could make more sense than to ensure that future access to it is restricted to those who appreciate its sylvan setting. Only those with very large amounts of money have the time to breathe in the scent of the Rose Gardens, the rest are occupied patching the roof of the polyhouse with duct tape.
Bruce Rogan.

Friday, April 21, 2017

Auckland's Dispossessed Generation

This post/essay is really about New Zealand's dispossessed generation - and while the issue is most keenly experienced now in Auckland it is increasingly manifest in New Zealand's other cities.

The dispossessed generation is the millenial generation - the generation of children and families born to the baby-boomer generation - to me and my generation.

We have and are failing to provide for and to protect the urban future of our children and their children. We are dispossessing our children.

We are allowing their urban future to be purchased by the families and the children of entrepreneurs, adventurers, opportunists, explorers and settlers from other countries. We are also allowing our children's urban future to be used and exploited as a financial instrument by investors - including ourselves.

That is our legacy - if current policy settings remain unchanged.

Housing is just the tip of this dispossession iceberg. Available statistics show that first time buyers account for just 17% of Auckland house sales now, while investors account for 43%. Housing demand by new settlers accounts for a further - contested - proportion of house sales.

However it's not just access to housing that this Auckland generation is losing. They are also losing access to a place for their children in Auckland's most popular high decile schools whose rolls and spare desk capacity are being filled by the children of immigrant families who can buy into those suburbs and all of the amenity that goes with it just by investing in a house.

Easy accessibility to all sorts of amenity including education, entertainment, parks, community, heritage, neighbourhood, and employment is what attracts people to urban living - to living in a city. And as a city's population grows so does the city to accommodate the next generation. All of those amenities - many of them public goods - needed and will need public investment to plan, create and maintain. All of those amenities have some sort of design capacity - how many people they can provide for. All of those amenities (social infrastructure) have been built and funded over time - much of it by the baby boomer generation and their parent generation - planning and thinking about their needs and those of their children.

This planning and preparation was for the next generation and has been based on natural population increase - our children and their children. But that's not what is now happening to Auckland whose population is growing at unprecedented levels because of the level of immigration that has been accepted by central government in the last few years.

These sharp increases in resident population have increased the demand for housing and more houses are being built - some in existing areas of urban Auckland (especially apartments) - and some in the greenfield peri-urban edges of Auckland.

Auckland's dispossessed generation are being pushed out to peri-urban areas of Auckland to find rentals and houses they can afford and here is where the challenge of accessibility to amenity really bites. Access to amenity from low price and low rental housing areas is almost always by private motor vehicle because it's too far to walk or bike, and because these homes are the furthest from good public transport. Greater separation or removal from handy amenity costs time and money to gain access.

Not only is this generation being dispossessed of a home they can own, they are being dispossessed of easy accessibility to urban amenity as the roads they must use fill with the additional cars of the rapidly increasing population. This is another part of the dispossession iceberg that Auckland is being made painfully aware of. Those of us within easy reach of good public transport, or within a short walking distance of urban amenity can thank our lucky stars. But it's not going to be the experience of our children unless we can keep them at home.

And this is really the heart of the matter. Do we want to retain urban neighbourhoods and communities? Or are we content to dispossess much of this generation of any tangible material connection with the communities they were born in? Auckland's mature urban communities are being re-settled by a new wave of immigration. This will have effects on urban Auckland culture - some good, some unpredictable.

Good things generally take time though and require thought.

When a city population grows through natural increase - leading to annual increases in population of less than 1% typically (German and Swiss city growth average is less than 0.5%) - there is an inbuilt tendency for the city administrations to provide and plan for its own growth.Growth consequences are accepted by the existing population for their children. But when additional population growth is imposed on a city by forces outside a city's control, and the city is expected to adapt to, and absorb the economic externalities imposed by those new residents - no matter how wealthy they might be and no matter how good their wealth may be for the national economy - that feeling or threat of dispossession will develop among those who consider they built and paid for the city they live in.

With 39% of its citizens born outside New Zealand, Auckland is part of a growing club of cities (including Brisbane and Sydney) which have become popular as the next home for wealthy Asian and Indian families. Federal Government in Australia and Central Government in New Zealand both value the increase in GDP figures that are directly associated with high levels of immigration. Both country's national economies have been affected by vagaries in commodity markets (dairy and minerals) and increased immigration has become the go-to option to plug the gap.

Is this the best we can do? We could be throwing the baby out with the bathwater.


2 comments:

Larry Mitchell said...

Yes ... for the price of a Kiwi house, outsiders (immigrants and others of the "investor class" principally) ... get more than just the house.

With few if any other "Charges", by purchasing a property, investors buy into existing (largely paid for") infrastructure, they join a highly desirable society that provides for their children's (hugely subsidized) education, they gain personal security assurances both civil and national, they can look forward to retirement benefits, they gain publicly provided health care and accident compensation.

All of these benefits spring from just the one transaction, they are conveyed courtesy of the one trade-able purchase involved ... that is, acquisition of a home.

Is it any wonder then that "housing:" here is so costly?

No ... absolutely not, for priced into this one trade are the many benefits (above) that the home's ownership and NZ residency convey.

Time then for a full forensic economic dissection of these costs and benefits so that policy makers can separately price them and recover the costs via other specific transparent charging mechanisms ... instead of via the surrogate whipping boy of misleadingly labelled .... unaffordable "housing".

Bruce Rogan said...

Your article could easily have been written by Karl Marx or Friedrich Engels, which is not for one moment to be taken to mean that I dispute your analysis. What you have chronicled here is simply one of the mechanisms that have evolved for the purpose of polarising wealth. It was inevitable. After Prebble/Douglas and their successors transferred all of the publicly owned infrastructure into private hands, the gnomes in Treasury had to look round for other ways to enrich generation Key.
Once you have come to the conclusion that pretty much everyone needs somewhere to live, it makes sense to ensure that they don't do that living for nothing. And if the community has paid out of its collective pocket to pave St Stephens avenue and line it with deciduous shade trees, nothing could make more sense than to ensure that future access to it is restricted to those who appreciate its sylvan setting. Only those with very large amounts of money have the time to breathe in the scent of the Rose Gardens, the rest are occupied patching the roof of the polyhouse with duct tape.
Bruce Rogan.