Auckland is growing because this is a great city to live.
In fact, over 50% of New Zealand’s total growth is happening here.
What that means is an extra 800 people a week or more than 40, 000 people a year are coming to Auckland.
With growth at this level but without the extra infrastructure needed to meet the demands of growth, we risk undermining some of the basic things about Auckland that make us want to live here.
Rapid growth has, for example, far exceeded the ability of our transport system to cope. Our roads and motorways become daily more congested and the economic costs and frustration over grid-locked roads are soaring.
You do not have to be a rocket scientist to know that if new car numbers coming into the city are rising by 800 a week, things are just going to get worse.
Likewise, with housing. Each year, on current population growth we need 13,000 extra homes. Last year, we consented 9000 new homes but managed to build only 6500. That shortfall is the main explanation for house prices going up by $3000 a week, rents soaring and more and more people unable to find a home at all.
One solution is to ease back on the rate of growth until we have the infrastructure in place that we need to cope with it. The government, however, has refused to intervene to slow record levels of net migration growth despite the Reserve Bank of New Zealand and others pointing out that in the short term, it is important to do so.
We could also try to divert more of the growth in New Zealand’s population to other areas. However, I cannot think of any example of regional development that is successful in doing this. Job growth, particularly for skilled work, is happening here in Auckland.
There is not much use sending people to areas where there are no jobs for them.
What we really need therefore is to find the resources to provide the infrastructure the city needs and to get on with the job of building it.
Auckland has limited access to those resources. Rate increases can’t do it. A one per cent increase in rates provides only $14 million and just one new infrastructure project, the City Rail Link, is estimated to cost over $2.5 billion!
Further, Auckland has practically borrowed to the limits imposed by rating agencies and government. Even though borrowing is justified to pay for long term capital assets, Auckland doesn’t have the means to keep borrowing. What it comes down to then, is the willingness of central government to provide the capital and Auckland to raise funds to service the debt.
Infrastructure bonds provide a long term, low interest and a secure investment.
They are used by many countries. They seem to be the best way to invest in critical infrastructure. Central government can raise capital more cheaply than anyone else. Its proposed Infrastructure Fund of $1 billion to be on-lent to high growth cities at no interest is a good idea. However, even if all of that went to Auckland it would meet only one twentieth of what we need in just the next 10 years alone.
As Mayor, I will be pushing for this fund to be increased to a realistic level.
Auckland is having to pay for needs generated by having more than half of the country’s growth. The government gains from that growth more GST and more income tax. As Auckland is meeting the costs generated by growth, it needs to get its fair share of the income growth generated back from central government. Aucklanders will need to pay our share as well. Some form of user pays road tax is probably the best way to do that.
What I know is that doing nothing is the worst of all options.
Road congestion alone is costing us up to $3 billion a year in lost productivity and other costs, and we get nothing back from that. It is wasted money.
If we do nothing, we undermine the very things that make this city a good place to live. We need bold solutions, and cooperation between central and local government and the private sector to deliver them.
Phil Goff is a candidate for Auckland Mayoralty.