Project
December 15, 2017
AUCKLAND INSIDE
Getting on track Tony Garnier is enthused by the prospect of a light rail network — D4
Firm foundation Steve Evans on Auckland’s pressing housing crisis — D7
LIGHTING THE WAY: From Anniversary Weekend, Vector, in conjunction with Auckland Council, will light up the harbour bridge with about 90,000 LED lights, using solar-generated energy, new battery technology, and peer-to-peer energy trading. — See D7 for an interview with CEO Simon Mackenzie
A world-class city
F
inance Minister Grant Robertson devoted special attention to Auckland’s infrastructure challenges in his speech to the Auckland Chamber of Commerce this week. It was good to hear because, despite some progress in the past year, the city needs more focus from central government. Robertson talked up the cost of gridlock on Auckland roads ($1.3 billion) and the lost productivity cost of an inflated and speculative housing market. Despite being a southern man he clearly understands the economic value of Auckland and sees why the city needs to be functioning efficiently for New Zealand to really fire on all cylinders. He outlined some of the fresh approaches the new Government will be taking. Broadly he talked about “turning on the tap of infrastructure finance”. That will involve innovative funding solutions like “infrastructure bonds serviced by a targeted rate”. He outlined plans for tolls — although he studiously avoided the word. The Government would be “investigating a GPS-based network or transport pricing system. This will allow us to fully internalise transport costs so that roads and motorways aren’t a disguised subsidy for sprawl.” That sounds like tolling to me, but that’s fine. That’s a continuation of work that the last Government was also committed too. Robertson indicated the Government may move soon on legislation to enable new tolls. It has already moved to enable a regional fuel tax.
View from the summits Tim McCready looks at the tripartite alliance — D10
Despite much criticism Auckland gets it right more often than it gets credit for, writes Liam Dann Closer relationship ICBC’s Karen Hou talks infrastructure and investment — D11
Auckland’s cycleways are a pleasure to ride and do away with excuses to be lazy
There are bold plans for rail which will enable the city to leverage the City Rail Link when it is completed The East-West link has been canned but alternative options are being explored. “We will be making an investment in that corridor, but not the $2b option proposed by the previous Government,” Robertson said. It is important that the change in government doesn’t stall the momentum already under way. The problems facing Auckland are too pressing for a stop-start again
approach. And, despite the concerns, some things are working. I’ve written before about the Waterview Connection being an example of planners getting something right — in advance of its opening. After six months or so it’s fair to say it has very much lived up to billing. Having put up with years of traffic disruption while it was being built I now find myself in what is presumably a privileged position as an Auckland commuter with nothing to complain about.
I survived the worst of the build by dodging traffic on a motorbike. But for the sake of my own longevity I’ve switched back to the buses after a decade break. The improvement on the Western routes has been staggering. The biggest improvement in travel time has been achieved by removing the wait at the bus stop. Buses arrive every six minutes during peak times. In most cases they are new double deckers, uncrowded, continued on D2
On the Grid Our city’s innovative corridor
— D18
Taking heart The transformation of Auckland’s urban soul — D20
D2
nzherald.co.nz | The New Zealand Herald | Friday, December 15, 2017
Project Auckland
Living in a worldclass city continued from D1
Our port is a significant economic contributor to the region but it is on the move.
God Save Auckland We need Her to because we’re making a right mess of it, writes Michael Barnett
R
eading the headlines over the past month, we could all be forgiven for interpreting as fake news the horrible headlines describing a litany of unrealised and perhaps unrealisable potential across the region: bloated headcount, salaries and travel expenditure at Council, schools in crisis as teachers quit, unable to afford Auckland’s cost of living, threats of curbing immigration to curb house prices — and further feed the skilled labour shortage; the dismal failure of the so-called affordable housing schemes, sewage in the harbour, and now even our beloved Waitakere Ranges may be off-limits because of the disease threatening to wipe out kauri. What’s happened to the plans, the roadmap, to get Auckland moving, growing, and becoming a great region to live, work, play and invest in? We had ignition. The sign said “Go” and what do you know, we hit a speed bump and had to hit the brakes when we’re still trying to catch up and gain real momentum. Can Auckland, with investment in infrastructure so long overdue, afford to have yet another Stop/Go, Nah/ Yeah — or worse a “nek minnit”; “my way or the highway” rerun of committees, working parties, debates, decisions and consultations? Without wishing to sermonise, the practice of new administrations saying “no go” to projects simply because they were not in their plans cannot prevail, even when there is talk of alternatives. Uncertainty and ambiguity is the enemy of business and investment. Tens of millions of dollars and thousands of hours have been spent by major construction firms on tendering, planning and recruiting skilled labour and other resources to build what were confirmed major infrastructure projects. We also risk losing the thousands of skilled workers who want to make Auckland home to offshore markets where there is continuity and greater security of employment.
We had ignition. The sign said “Go” and what do you know, we hit a speed bump and had to hit the brakes. Michael Barnett
This cancellation game is disdainful. Apart from slowing down the pace of progress at which Auckland can transform into a competitive, appealing and liveable 21st century global city, some of those key players with skin in the game may pull out or pull over into a layby. Ports of Auckland, America’s Cup and cruise ships have all made the headlines. I respect the many views expressed so passionately about our waterfront, including those who want to save the one-kilometre stretch at the bottom of town from boat mooring. It’s a pity their protests do not extend beyond the precincts of the port to the many beaches that are regularly polluted with sewage and waste-water and are screaming out to be saved. Our port is a significant economic contributor to the region. Our city is here because of it, but it is on the move. That is known and accepted. It’s just not known where.
And there certainly isn’t a queue of communities nearby lining up to commit the resources to take on millions of tonnes of product, tens of thousands of containers and thousands of truck movements. On the back of the planned relocation of the port, the city needs to determine whether it wants to retain — or not — the cruise ship visits and continue to reap the benefits of the millions of dollars each visit contributes to Auckland’s economy. We need to do this in an environment of truth, not the poorly constructed myths around alleged pollution and discharges. If the answer is a strategic “Yes” to cruise ships, Auckland will have to be prepared to make concessions that will optimise the decision and confirm our city as a stopover for a long, long time. The same goes for the America’s Cup. We have to think strategically and with an eye to the future. We are
creating a new venue for events in our harbour city and a legacy that we can economically leverage off for decades to come. Saying “Yes” makes sense, saying “No” is an option, but like so many things that happen in Auckland, delaying the inevitable and risking losing the opportunity with yet another referral to a committee or round of consultation is camouflage for a lack of belief, commitment and timely decision-making. My final issue is local government funding. This uses an absurd mechanism that has more to do with the value of a property than the services a council provides — and for it still to be based on a progressive wealth tax in today’s world, is unimaginative at best. I welcomed the advent of the recently approved Long Term Plan and its attempt to address Auckland’s problems. But instead of using it as an opportunity to build confidence in Auckland Council and the value it delivers, they’ve shifted the deck chairs on the Titanic and claimed they’ve fulfilled the election promises of minimal rates increases and going ahead with plans when there really is a gaping fiscal hole, bigger than the one in Birkenhead. Auckland’s story can be so much better than this. There are some fundamentals we expect Council to deliver. We know there is overspending on travel and spin-doctoring and that the size of the beast is inefficient, costly and we’re paying for it. The suggested administrative savings are too low; each objective should have clear KPIs and performance measures; greater transparency in rating fairness and service delivery is a must and, also, we have to see a massive lift in the pace and action to deliver the catchup Auckland needs to be world class. Show us the sign and make sure it says GO. Michael Barnett is chief executive of the Auckland Regional Chamber of Commerce,
with air-conditioning and fantastic views. I also have the option of getting on my bicycle. I’m lazy but it is good for me and the Western cycleway really makes it hard to find excuses. The cycle path is almost door to door from home to work. It is a pleasure to ride. Both the buses and the cycleway are also likely to get better in the next year. New bus stops that keep buses out of the flow of traffic are being added along Great North Rd. The cycle way is being upgraded, to avoid one of the steepest hills up and over Newton Gully. So I’m good. I have access to world class transport options. The point of this positivity is not to imply that Auckland’s gridlock is not a problem. I know I am lucky to live on a major transport route. I recently tried to head south for a weekend away on a Friday afternoon. My frustration during the two-hour crawl out of the city was tempered only by my sympathy for those around me who clearly faced this kind of commute on a regular basis.
Shifts in policy direction may alter the path to a better city. But there is no time to stop and start again. But it is worth acknowledging that there has been good progress made in the past few years — and some of us are seeing it. Critics of the National Government — including many within the business community — felt investment in Auckland infrastructure was too slow and too conservative. The same sentiment surrounds National’s housing policy. But, likewise, there has been progress. There is a wave of residential building under way and Auckland’s housing affordability has actually started to improve. It is vital that momentum is maintained. Shifts in policy direction may alter the path to a better city. But there is no time to stop and start again. The new Government has different priorities and different values about how things should be achieved. We know we can expect more focus on rail. With any luck we’ll see new solutions to the lingering problems that don’t undermine existing work. Listening to Robertson talk about Auckland, it is clear that the long-term goals for building remain much the same. We need more affordable housing, built around transport hubs. And we need to carry residents along on the journey. When Auckland get it right — which it does more often than it gets credit for — it’s a truly world class city. Liam Dann is the Herald’s Business Editor at Large
Project Auckland 2017 Executive Editor: Fran O'Sullivan Writers: Liam Dann, Gabriel James, Tim McCready, James Penn, Graham Skellern Subeditor: Isobel Marriner Layout & Graphics: Isobel Marriner Advertising: Neil Cording nzherald.co.nz
D3
Project Auckland
Twyford’s big challenge C
abinet Minister Phil Twyford holds two powerful portfolios which are critical to Auckland’s success: housing and urban development; and transport. Twyford — a former journalist and union organiser — honed his leadership skills while executive director for Oxfam in New Zealand and later as the NGO’s global advocacy director in Washington DC. He known to be personable, persuasive and has already been marked out as one of the rising stars in Cabinet. But he will have to deliver on some very big challenges — housing Aucklanders (at scale) and ensuring new transport infrastructure is built to a tight timetable — to make the transition from being an Opposition politician to a minister who “gets stuff done”. A key challenge will be to bring the private sector on board when it comes to stumping up funds to underpin Auckland’s growth. Local infrastructure and housing construction firms are keen to dominate this business. But if Twyford wants to mount a step-change in the pace of Auckland’s development he could usefully ensure more international firms, including those from China, are invited to take part. Twyford has indicated the Government has a broad housing reform agenda and is taking the first crucial steps towards “fixing the crisis”. The Government plans to stop the mass sell-off of state housing and wants Housing NZ to be a “world class public housing landlord”. “While there is something deeply unsettling about our country’s current inability to house its own people, I do take courage from what I believe is a widespread view that the current
New minister holds critical portfolios, writes Fran O’Sullivan
Financing Auckland's growth
I do take courage from what I believe is a widespread Paul Goodwin view that the We’re feeling the effects of not having — D5 current built yesterday situation is intolerable and has to be fixed. Phil Twyford
situation is intolerable and has to be fixed,” he said recently. But it is within Auckland that the challenges are particularly acute. In briefings to the incoming Government it is obvious that officials are concerned that Auckland has now reached saturation point when it comes to absorbing growth. “Auckland is not performing as well as expected for its size and in comparison to other primary cities around the world. There are opportunities to increase productivity but only if supply constraints — especially transport and housing — are resolved,” they said. Other ministers including Shane Jones who holds the infrastructure portfolio and Jenny Salesa who holds
building and construction will be strongly involved in solving Auckland’s issues. The National Government suggested the transport funding deficit in Auckland was $5.9 billion. The Ministry of Transport has suggested fuel excise duties and road user charges may have to be raised. Finance Minister Grant Robertson talked up the use of infrastructure bonds on Monday. But Treasury is concerned at the ability of that avenue to fill the gap. Treasury says while public capital has an important role to play, attracting greater third-party capital underpinned by revenue streams would also help to overcome current disincentives to investment
facing current providers. “This also means risks and costs involved are borne by the most appropriate sources, while infrastructure providers are able to get a sufficient return on their investment.” This will be no easy feat given the well-known difficulties some NZ construction firms have faced in recent times. Twyford says the Government’s agenda is also about nation-building. “It recognises we have a crisis, and is bold and broad in response. It has the courage to tackle deeply entrenched problems that have been allowed to fester for too long.” He has three years to make an impact.
Stephen Selwood Tapping into private markets is key — D6
John Dalzell New thinking to solve old problems — D12
D4
nzherald.co.nz | The New Zealand Herald | Friday, December 15, 2017
Project Auckland
Getting back on track Light rail is set to move centre stage in Auckland’s on-and-off fight against worsening traffic congestion, reports Tony Garnier
T
he new Government couldn’t be clearer in showing how determined it is to do what it takes to get on top of Auckland’s deep-seated transport problems — it will use enabling legislation to fast-track the mass public transit projects it has flagged it wants built with speed and urgency. A revised Auckland Transport Alignment Project (ATAP) package is close to being signed off between the key sponsors, Transport Minister Phil Twyford, Finance Minister Grant Robertson and Mayor Phil Goff and deputy Mayor Bill Cashmore. Light rail, or what some cities call a fast tram and others rapid rail, will be at the heart of the transport transformation facing Auckland over the next decade. It will be the most transformational transport project since the building of the Waitemata Harbour Bridge and associated Northern and Southern motorway corridors in the 1960s. Auckland Transport has been assessing routes and undertaking design work, including patronage modelling and traffic-congestion impacts over the past two-three years, which means the project can “hit the ground running”. The network as broadly envisaged is now well known: ● A light rail line from Wynyard Quarter to Mt Roskill completed by 2021 and the America’s Cup and APEC events, then, long-term an extension to Auckland Airport. ● A bus priority route initially from the Airport to Puhinui train station completed within a year and then a rapid transit extension option to Auckland’s south-eastern suburbs. Te Irirangi Drive from Manukau to Botany is designed for a mass transit option to be added. ● A Northwestern line to the western suburbs; and ● A line to the North Shore taking advantage of the long-proposed third Harbour crossing that transport planners agree will be needed from the mid-2020s. Other ramped up improvements to support an Auckland-wide mass transit network include upscaled feeder bus services to the main trunk rail and bus services, and much improved park and ride facilities. Also flagged for inclusion in the upscaled ATAP agenda are the third rail line between Westfied and Papakura and a number of cross-city bus priority routes. That is, it won’t just be a network giving access to the city centre, but provide a transformed public transport system for moving around the whole of Auckland. A key outcome that Auckland Council in particular is wanting is to ensure the new rapid transit network hooks up with the three urban intensification areas set out in the Unitary Plan — Drury, West Auckland and Silverdale and long term Warkworth — where housing developments are already under way to provide 110,000 new homes and 50,000 new jobs over the next 30 years. As every Aucklander knows, the existing transport infrastructure serving these areas is already heavily congested. Light rail or its mass transit equivalent into these areas will be Auckland’s 21st Century transformational circuit breaker! Another key takeaway likely to be broadcast when the package is announced is that the “One Network” or integrated approach Auckland Transport and NZTA are already applying to solving major transport problems is giving Aucklanders public transport options for moving around the whole of Auckland with-
What are we waiting for? Other cities that have successfully adopted light rail Aucklanders need look no further than across the Tasman to Brisbane and the Gold Coast for examples of how high light rail has transformed public transport travel. Opened in 2014, the 14km system attracted 238,000 passenger trips in its first 14 days. Unlike the planned Auckland system which is initially being planned to run in the middle of existing streets, the Gold Coast light rail runs along its own dedicated corridor, greatly reducing its interaction with other road traffic, increasing both safety and speed for shorter journey times. A 7.3km extension is close to completion, with its opening planned ahead of next year’s Commonwealth Games to be held on the Gold Coast. Plans for expanding the network beyond this initial stage are in place for the future, moving towards the 2018 Commonwealth Games, which will be held on the Gold Coast. Like most European light rail systems, the Gold Coast service is hubbed to a station serving heavy rail, bus and park-and-ride and which gives Gold Coast residents a one-change option for travelling to-from nearby Brisbane. The success of light rail has encouraged other cities to follow; examples include:
Artist’s impressions of light rail in Queen St (above) and near Auckland Town Hall.
● Montpellier, France which extended its light rail vehicles from 32m to 42m two years after opening. ● Bergen, Norway which purchased extra vehicles before their first extension to increase service frequency. ● Dublin, Ireland, which experienced greater than anticipated uptake, with vehicles having to be extended within a few years. ● Sydney — planning to build 66m-long vehicles rather than the 45m originally proposed.
out necessarily having to go into central Auckland. Quite simply, encouraging people to use public transport frees up roads for freight and commercial traffic, as well as those who can’t or won’t get out of their private vehicle. A 2012 study showed that Auckland’s growth will outstrip its road capacity and maximising rail — heavy and light — is an essential part of a long-term integrated transport solution. The number of trips to the city centre in the morning peak will increase by about 85 per cent from 70,000 to more than 130,000 over the next 30 years. The City Rail Link helps access to the centre from the south and north, but the study found that increasing the number of buses from areas not served by heavy rail will create significant congestion and be a “drag” on economic growth. A light rail network is the answer. Public transport trips around Auckland — west-to-east — are forecast to grow from the current 90 million trips to more than 230 million trips per year by 2046. A combination of bus and light rail options for getting across Auckland has been flagged by Government as a priority for its transformation package.
Getting to the airport quickly Finding a more reliable, rapid transit option for getting to-from Auckland Airport will be a crucial test of the plan, not just for the more than 10,000 people who work there but the 14 million plus airline passengers and tourists who use it. Passengers come to the Airport from across Auckland. There is a 45-minute bus service from the city centre. The opening of the Waterview Tunnels has helped North Shore travel to-from the Airport. An early aim is to improve bus services from the Airport to connect to the main trunk rail at Puhinui and then extend bus rapid transit to Howick. But long-term a fast, dedicated rapid transit service will likely be needed. London has introduced a rapid train service from the centre of London that takes 15 minutes to Heathrow against the 70 minutes by conventional rail on the Piccadilly Line and hour by bus. EU cities have started building rapid rail services direct to city airports; Bologna in Italy is planning to compliment a 40-minute bus and local rail service that stops along the way with a six minutes rapid rail service direct to the airport. What some cities have discovered is that light rail services to their
airport that stops at street lights and for passengers to hop on and off en route doesn’t cut it for getting to an airport, especially if you have suitcases and the train is packed with commuters. Instead, a fast, dedicated and reliable service for getting to airports is preferred. Melbourne, a city which has traditionally relied on bus to get to-from its airport to the city centre, has started planning a dedicated rapid rail line service to the airport from areas of fast population growth. How will the mass transit network projects be funded? The regional fuel tax (RFT), infrastructure bonds, targeted rates and value capture has been mentioned as part of the package. Funding as usual will be a critical part of the upcoming debate on Auckland’s transformed transport agenda. But if Aucklanders want to be living in a world-class city, a great place to live, as Mayor Phil Goff has put up as his vision for Auckland, finding a way to pay for the privilege and the enjoyment has to be part of the package. There should be no debate about that — surely? Tony Garnier is an Auckland-based business consultant.
There is a message in all this for Auckland — by mid-century Auckland’s population is projected to be between 2.5 million and 3.2 million, depending on which Statistics NZ growth scenario eventuates. If light rail is to be used as the transformation vehicle for Auckland, then a long-term vision, strategy and roll-out would seem to be required. What about the possibility of technology change making light rail technology redundant? Auckland University’s Uniservices Centre for Infrastructure Research has been doing some research for Auckland’s Joint Modelling Application Centre comprising Auckland Transport, NZTA and Auckland Council. In its latest report it concedes that the introduction of connected and autonomous vehicles may affect transit demand in coming years, but is unlikely to be widely implemented for several decades — technological advances are not likely to shift the relative value proposition from light rail transit as the best system on offer to support high peak-hour capacity through high density areas over the next 30-35 years. What are we waiting for? Let’s do it. Let’s get on with it.
D5
Project Auckland
Financing the infrastructure Auckland is feeling the effects of not having built yesterday for today, writes Paul Goodwin
F
inancing infrastructure projects is one of the biggest challenges facing city planners worldwide. In a fast urbanising world, cities are under immense pressure to provide facilities that will ensure their future growth and success — but those facilities have to be paid for. In New Zealand, Auckland is feeling these pressures. With 1.6 million people, 34 per cent of New Zealand’s population and accounting for 38 per cent of its GDP, Auckland is a significant engine of economic growth for New Zealand. Its development and success is in everyone’s interests. One of the biggest challenges is ensuring a lack of infrastructure does not impede growth. Funding tools are critical to this. An inability to fund for future growth can result in housing shortages, transport congestion and water quality issues. Having underinvested and not built yesterday for today, this is the situation Auckland finds itself in. Infrastructure expenditure doesn’t exist in a vacuum, and as well as common funding constraints, the investment landscape including economic, political, social and environmental factors, is constantly changing. This means that in addition to conventional funding streams, local authorities and their partners must be open to creative new approaches. In terms of conventional funding streams, Auckland Council can access
An inability to fund for future growth can result in transport congestion, among other problems.
the debt capital markets, and does so successfully. In order to continue to efficiently access those markets for funding it must retain its credit rating. A key driver of how the credit rating agencies rate councils is the ratio of their debt to their revenues. Keeping debt to revenue under 270 per cent is considered prudent by the rating agencies and though Auckland Council is under that level, it is not massively under it. This therefore constrains how the council can use traditional funding markets to pay for things such as roads for new housing
developments, more public transport and upgrading existing water infrastructure. In recent years several major central government infrastructure projects have been financed by public private partnerships (PPPs). These focused on efficiency of whole of life costs and risk transfer to the private sector. They delivered more private sector learnings into Government’s existing service delivery platforms. While this procurement mechanism has brought the Government and private sector
An inability to fund for future growth can result in housing shortages, transport congestion and water quality issues. Having underinvested and not built yesterday for today, this is the situation Auckland finds itself in. Paul Goodwin
together to deliver infrastructure outcomes, it hasn’t yet been applied to help address the balance sheet constraints local councils face when delivering similar infrastructure. The new Labour-led Government has the opportunity to build on New Zealand’s PPP experience and support new procurement methods at a local Government level. These should retain key PPP learnings, but also shift the financing offbalance sheet, with local council infrastructure delivered through separate Government sponsored or controlled entities, with their own revenue sources. The finance industry must also move to support these new Government off-balance sheet entities through the provision of new financial models, particularly for greenfield projects and the construction phase of infrastructure builds. They should develop accelerated access to longerdated and cost effective infrastructure bonds, acknowledging that this requires a higher level of certainty of long term revenue than may be found in a standard PPP. This will enable 30+ year bond financing by institutional investors such as superannuation and sovereign wealth funds. We look forward to the outcome of the Government’s deliberations on how it might mandate Crown Infrastructure Partners (CIP) to fund horizontal infrastructure (such as roads, sewerage and storm water systems) for new housing developments and the revenue stream it chooses to repay any related funding. CIP, previously called Crown Fibre Holdings, successfully delivered open access national broadband network. We believe CIP can fulfil the role of funding Auckland’s infrastructure
build outside of Auckland Council’s current balance sheet constraints, supported by the domestic and international financial markets. As it’s not burdened by the debt ceilings of councils, this funding method could be made available to local authorities struggling to fund new long-term infrastructure from their own balance sheets. Government would also retain the option to move it from their balance sheet to the private sector as investors gain greater confidence in the projects. In Auckland it is envisioned such a structure may facilitate major projects such as Watercare’s $1 billion Central Interceptor project, a 14km underground waste and stormwater tunnel designed to reduce overflows into the Manukau Harbour. Social infrastructure and public amenities — such as libraries and parks — for new housing subdivisions could also benefit from similar procurement and funding solutions to ensure new communities have the same level of social infrastructure amenities as those enjoyed by longer established suburbs. The Government has a real opportunity to help address Auckland’s current and future infrastructure needs. There are many procurement methods available, so it will be interesting to see what path the Government decides to pursue. It will also need to decide whether to extend an invitation to private sector equity investors to help fund the projects. Signalling a target of Net Crown Debt equalling less than 20 per cent of New Zealand’s GDP will be a strong consideration in this process. Paul Goodwin is Managing Director, Institutional NZ, ANZ
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D6
nzherald.co.nz | The New Zealand Herald | Friday, December 15, 2017
Project Auckland
Big investment in the future A
severe lack of investment sits at the heart of New Zealand’s housing crisis. We’ve underinvested in infrastructure, new homes, in skills and in our future. The scale of investment now required is massive. We will spend as a country about $40 billion on construction this year. In Auckland, just half the number of homes were delivered that were needed. So $40 billion per annum is nowhere close to where we need to be, and on top of that New Zealand needs to build the 70,000 homes the country hasn’t built over the past decade or so. How much are we short? That depends on things like productivity, consenting and how quickly we can get off-site manufacturing under way. But whether it’s $100b or $200b over the next decade, it’s far in excess of what local or central government has available. The only way to source this much money is by tapping into private capital markets. The good news is that trillions of dollars of private money is floating around the world looking for a good home. We have the NZ Superfund, Kiwisaver funds, ACC, iwi and a plethora of global mega-funds eager to invest in New Zealand. But there’s one surprising problem — there’s nothing to invest in. Private capital can’t unlock new housing because there’s no infrastructure and it can’t unlock infrastructure because institutional barriers get in the way. Infrastructure responsibilities concentrated in central and local government agencies that are constrained
The only way to source enough money to solve the housing crisis is by tapping into private capital markets, says Stephen Selwood by debt limits, fixed budgets and political gaming are the roadblock. Frustratingly, there is ultimately someone to repay investors for infrastructure and housing — a new homeowner — but current infrastructure processes actually prevent institutions with money from connecting with families who need and can afford new homes. It’s as extraordinary as it is resolvable. To fix the housing problem, we must bypass the public infrastructure roadblock and enable private capital. We have to create an environment where prospective homeowners (the people who will ultimately pay for homes and the infrastructure which support them) can be connected with the large amounts of money needed to finance development. The key is scale. One home can’t attract private investment in a new road and water system, but 1000 might and 10,000 will. That’s why relaxing metropolitan boundaries is so important. It opens up land holdings big enough and a price that is low enough for large developers to access private capital directly and bypass public financing constraints. Developing at scale is critical to shifting to modern building practices. We can’t double the number of builders and plumbers, but the combination of labour growth and productivity through manufactured
One home can’t attract private investment in a new road and water system, but 1000 might and 10,000 will.
housing could double output. Our big home-builders cannot justify a major transition to off-site manufacturing as long as their order book is a couple of homes here and there. If you’re going to invest $20m in a plant, you need to know that orders for 1000s of homes are on the horizon. Our cottage industry does not achieve this.
Relaxing metropolitan boundaries must come with added protection for sensitive land and productive soil. Luckily there is so much land around our growing cities that we can afford to both strengthen protection for sites of significance and loosen development restrictions elsewhere to facilitate scale. Reducing restrictions to new
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homes is not a panacea. Consenting is going to have to become faster and more supportive. Pre-consented offsite manufacturing processes could dramatically improve productivity. Councils need incentives to be more “pro-growth”. Urban development agencies are needed to cut through obstacles and speed up development. There’s no doubt that there are many challenges that can be solved incrementally. But without private investment scale, we will not build the homes and infrastructure we need at a price that working New Zealanders can afford. Stephen Selwood is Chief Executive of Infrastructure New Zealand.
D7
Project Auckland
Four key challenges ● Land supply ● Infrastructure funding ● Consent times ● Home buyer preferences
A foundation to build on A
s one of Auckland’s largest housing developers and builders, Fletcher Living understands this issue all
too well. We know a lot of Aucklanders want to own their own homes, and we can see the impact that supply issues are having on affordability and the likelihood of these home ownership dreams being realised. New Zealand used to have one of the highest levels of home ownership in the world. Now every second house in Auckland is rented. But we also believe the dream of home ownership is not the only pathway to housing security, and whether it be through ownership, rent to buy, long-term rental or transitional ownership, the one thing people need is a house — and there are not enough being built. For a developer like Fletcher Living to deliver more homes more quickly, we need to address four key challenges — land supply, infrastructure funding, consent times and home buyer preferences. The biggest issue by far has always been land supply. It is incredibly difficult to build affordable housing when land costs what it does in Auckland. Despite the belief by some that house prices have been driven up by the cost of building materials, the cost of land has, and continues to be, the largest and fastest appreciating cost in a home build. Land makes up over 40 per cent of the price of an average new home — that is more than the cost of building materials and labour combined. It is also the fastest growing cost. While labour and building materials have risen steadily and broadly in-line with inflation at approximately 2 per cent per annum, the cost of land has risen rapidly due to high demand and insufficient supply. So the first thing we have to do is free up more land, which is adequately serviced by infrastructure, for developers to build on. This is where the Government can play a critical role. If developers such as ourselves had a long-term view of the housing development pipeline and surety of
Auckland needs housing and it needs it fast, writes Steve Evans land supply, we would be better equipped to scale up, invest and deliver on innovative solutions that can be delivered at pace, and, in time, lower cost. As an example, for the past two years Fletcher Living has been working on an innovative home building solution utilising panelisation and we now have a solution that reduces build time significantly. We build each wall and floor panel, with all the plumbing, electrical work, insulation, and plasterboard fitted, in an offsite manufacturing plant. The quality is then signed off by the Council, the panels are transported to the site and the house is erected in 1-4 days. At that point it’s weathertight, and finishing only takes a further 5-8 weeks. The finishes are exactly the same as for a house that is built conventionally. This is really exciting for a couple of reasons. First and foremost it speeds up build time, which gets more housing into the market more quickly. But secondly, and also importantly, it is a local New Zealand solution — meaning our panelised homes would be built in Auckland for Aucklanders, providing local jobs, investment and ultimately a product built specifically for this market and to high quality standards. At this stage we have only built a small number of panelised homes, because to scale up we need to invest in a permanent offsite manufacturing facility — and to do this we need a secure pipeline that will justify the capital investment. This is where partnerships can play a critical role in enabling innovation. To illustrate the point, Fletcher Living bid for Phase 1 of the Tamaki Regeneration Project — if we are successful, this would enable us to deliver a panelised home manufacturing plant, because we would have long-term security over our pipeline. This is how the public and private sector can work together to speed up housing development. To carve up big regeneration sites into lots of smaller land parcels and not bring
surety of that supply would inhibit our ability to invest in such an innovative solution. The second challenge we have to address is infrastructure funding — because, at the end of the day, land is useless without the infrastructure needed to service it. I was lucky enough to be a contributor to the Auckland Mayor’s Mayoral Housing Taskforce Report this year. Currently Auckland Council’s ability to borrow to finance new transport and water infrastructure is limited by debt-to-revenue caps that are fast approaching. Innovative
If developers such as ourselves had a longterm view of the housing development pipeline and surety of land supply, we would be better equipped to scale up, invest and deliver on innovative solutions that can be delivered at pace, and, in time, lower cost. Steve Evans
approaches are needed now. So we welcomed the Government’s announcement that it plans to use infrastructure bonds financed by targeted rates to fund infrastructure. However, funding should be sourced using Government borrowing rules, where the cost of the capital could be significantly less than that sourced by the private sector. And we shouldn’t stop there — we should continue to think about new ways to build more infrastructure, and incentivise councils to consent more land for development. Which brings me to our third challenge — building and resource consent times. Current delays to consents are well known, but what most people
don’t understand is that for an average Auckland house price, a delay of a month in consenting costs the developer about $10,000. And the delays in certain areas are much more than a month. As such, we are highly supportive of initiatives outlined in the mayor’s report to simplify resource and building consenting, including allowing larger builders to streamline consenting. The Council should be commended for its work on Consenting Made Easy, but now it needs to deliver on it. Our final challenge may be one of the harder nuts to crack, but it does impact housing supply. And that is home buyer preferences. The reality is there is an unhelpful tension between the need to increase housing supply to meet demand, and existing preferences that favour larger land blocks and homes. Entrylevel homes in the 1960s and 70s were no bigger than 110sq m — today’s current average is 190sq m. Given standalone dwellings in the suburbs are strongly preferred, low and medium density continues to be the core product for Fletcher Living — because at the end of the day we need to build what people want to buy. However, higher density housing, when part of a master-planned community, can provide very attractive places to live. When I worked in the UK and was part of the redevelopment of London, we were able to deliver high density tenure blind housing that still provided plenty of open green spaces, cohesive communities and local amenities. And it wasn’t just for private home buyers. It was for state housing, key worker housing, and open market housing, all in the one development. Which is important if we are to create the inclusive, open, diverse culture for which we all aspire. It is possible, and we absolutely have to embrace new thinking here in New Zealand. The challenges may seem plentiful, but positively there is no shortage
of motivated people across the public, private and community sectors who are ready and willing to get it done. And we have a new Government that has put housing at the very core of its policy agenda. The key to tackling this issue is getting all these people to work together effectively. The scale of the issue requires a clear, long-term plan that identifies the next 10 years of housing development, with the infrastructure pipeline aligned to service it. The plan also needs to clearly outline appropriate roles across each sector, which leverage the strengths of each and avoid duplication. The Crown and local governments can set the vision and strategy and provide the regulatory framework to operate in. But ultimately, it is organisations such as ours who need the opportunity to get on with what we do best — designing and delivering new homes and communities. KiwiBuild is a fantastic opportunity to achieve this. It is a galvanising initiative that can unite the homebuilding industry and provide a clear way forward. It also provides an opportunity to put in place new pathways to home ownership — to make sure new homes can be purchased by a broader range of people than ever before. This could, and should, include initiatives such as rent to buy, shared ownership, long-term rent, shared appreciation and so on. It would be a big leg-up to first home buyers and would provide a new opportunity to people who would otherwise be unable to transition out of state housing. It also provides more opportunities for key workers — who are desperately needed in Auckland — to live near their workplace, and not travel extensively to work each day. So, just as the challenges are plentiful, so are the opportunities. We are excited by the new Government’s ambition and we are ready to play our part in delivering the housing, and communities, that Auckland needs and deserves. Steve Evans is Chief Executive, Residential & Land Development at Fletcher Building
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nzherald.co.nz | The New Zealand Herald | Friday, December 15, 2017
Project Auckland
A positive vector for growth “I
t’s almost like we’re back to the future,” explains Vector chief executive Simon Mackenzie as he discusses the energy industry’s shift towards distributed energy systems. It’s a future Mackenzie seems relatively at ease with, despite it completely disrupting the business models of the industry in which Vector operates as a distributor. “The whole investment focus is now turning to: how do we utilise technology in the energy sector to still deliver energy in an affordable, yet renewable, sense?” explains Mackenzie. “We’re seeing a huge tipping point in terms of customers driving what they require from energy.” Where energy is currently generated at a centralised location — say, a dam — and then transmitted via the national grid to distributors such as Vector, increasingly customers are gaining the ability to generate the energy themselves, within — or on top of — their homes. This shift has been driven and accelerated by global initiatives to reduce the use of fossil fuels from transport and energy sources in response to the threat of climate change. And while the lack of international progress on emission reduction targets is often lamented, beneath the surface there has been significant subsidies provided for the development of renewable energy generation and a reduction in the price of technologies, such as solar panels. “The customer has choice and may send energy back out to others, but even in urban environments they still probably need to move that energy around within the urban environments.” In this context, says Mackenzie, “transmission and generation are becoming more and more commoditised. At some point in time it will be there more for a backup, or segmented needs.” The position of Vector as a distribution company — downstream from those increasingly commoditised sectors — appears to be enabling the company to embrace the disruption. “There’s a desire for more physical solutions — things like solar and batteries and the like — but I think one of the other sides is that we’re now seeing the convergence of transport coming into energy with electric vehicles, and that whole infrastructure to support that,” he says. “Essentially, an electric vehicle could also be a mobile battery that you
Tim McCready sat down with Vector chief executive Simon Mackenzie to discuss the future of Auckland’s energy sector, and beyond.
Auckland is of a large enough scale to be globally recognised as an international city. Simon Mackenzie Electric vehicles can become mobile batteries connected into homes.
connect into your home, so we’ve got technology that enables that.” And to complement the physical technologies being developed and deployed, Vector is heavily invested in software and digital innovation too. Data analytics is increasingly playing a role in how the company makes decisions, for example. “We do a huge amount of work on data analytics, and we’ve worked really well and collaboratively with Auckland Council,” says Mackenzie. “We’ve got a huge amount of data and information with them.” That includes layering data relating to housing construction and demographic trends with behavioural economics insights to generate predictions about future energy and transport usage. Mackenzie says this unlocks “latent capacity” in the market currently; getting more usage hours for less, without necessarily needing to construct new hardware assets. Similarly, giving customers the ability to optimise their energy usage by controlling devices from their mobile phones is another way Vector are hoping to use technology to access efficiencies.
“That’s all centred around decomplicating,” says Mackenzie. “Because we don’t believe customers want to be computer programmers to run their energy lives.” “That sophistication now of being able to co-ordinate and optimise everything, we can provide through technology that we’re utilising.” “That means there will be a lot more customers with those types of solutions either in their homes or on their roofs. Or they could be connected through other community initiatives such as peer-to-peer trading, or a school might have solar and battery in it that’s not used in the weekends or holidays — so then how does that get shared with communities?” “The way we see the overall picture is Auckland becomes more and more self-sufficient, so the remote transmission and generation becomes more of a backup in the long-run, and more of a security layer, as opposed to the primary.” Mackenzie says this vision is one in which Auckland is also a more resilient city, no longer dependent on remote transmission. Interestingly, Vector’s modelling
predicts the primary climate change impact in Auckland to be more high wind events, meaning building resilience and continuity of supply is of heightened importance. The company also wants to raise the awareness on how climate change will differentially impact New Zealand’s various areas — with some areas more susceptible to sea level rises, for example, than Auckland. “From the modelling we’ve done, from the global research, we worry about the fact that things are changing a lot quicker than people think, and I think we need to raise the debate and awareness around New Zealand on that.” A company target of net zero emissions by 2030 reflects that awareness. Another example of how the company is looking to lead the community and shift attitudes about how energy can be generated, traded, and used is the project with Auckland Council to light the Harbour Bridge using smart energy technology. From this coming Auckland Anniversary Weekend, the bridge will be lit by some 90,000 LED lights, utilising
solar-generated energy, new battery technology, and peer-to-peer energy trading. “We saw that as a great fit for us, because it’s really iconic,” says Mackenzie of the project. “For us, it’s a representation of giving back to Auckland but also displaying how we see the future of energy.” The bridge will have static ambient lighting on most nights, but can be programmed with dramatic animated displays for special events, such as Waitangi or Diwali or the America’s Cup. The intention is to have between 12 and 15 of these events over the first year. Partnerships, collaboration, and cross-industry learnings underpin much of how Mackenzie discusses Vector’s strategy in this fast-changing industry. The company has worked with companies such as LG Chem and Tesla to bring their energy storage products to New Zealand consumers, for example. Though there is not a great deal that is fundamentally unique about the Auckland energy market and infrastructure, or the city from an environmental perspective, these are features that has made the city amenable to innovation. “Auckland is of a large enough scale to be globally recognised as an international city,” explains Mackenzie. “It’s got a political and regulatory environment which is seen as pretty conducive to actually adopting these technologies. “For some of the technology companies we work with, they see that as a real positive because it becomes a proving ground for what they want to deploy into markets which are going to be a lot slower to adopt.” Adopting new technologies early is seen as vital given Auckland’s pace of growth. “What we’ve found, is that using technology has enabled us to build a whole new layer of networks internationally — and it’s not all from the energy sector — a lot is from outside of the sector, or from adjacencies,” says Mackenzie. “Although we are small on a global scale, the reality is that doing these deployments or adopting these technologies early is advantageous. “If you’re not an early adopter, by the time technologies gain a lot of interest from other parties, you’ll end up falling right down the pecking order.”
Housing lessons from the United States Stephen Selwood
Infrastructure funding, financing, and governance lie at the heart many of our nation’s biggest challenges, underpinning the housing crisis and land supply, the poor state of our urban waterways, and poor health standards of drinking water. It seems the country is helpless. The Crown is constrained by its commitment to reducing debt, growth councils have no further debt headroom and most developers are capital constrained. Yet capital markets are flush with cash, and property prices signal the high benefits of growth. Where’s the logjam? We’ve taken an interest in the metropolitan areas of the US. As outrageous as it seems, half of them are growing, yet have affordable housing. Their land markets are competitively priced, and houses cost two and a half to four years’ median household incomes — not 10. What’s their secret? Part of the answer might be their heavy reliance on competitive and dynamic local government. Their local authorities operate more like local
urban businesses. They make it easy to constitute new local authorities that compete for property taxes. Pro-growth local bodies like this simply work around councils that fail to meet demand. It’s all about getting the structure and incentives aligned. Their pro-growth councils can create new internal finance arrangements that have their own credit ratings on the common balance sheet. They ring-fence the costs and risks of projects to beneficiaries. Municipal Utility Districts (MUDs) is one of several types of special districts that function as independent, limited governments. The purpose of a MUD is to provide a developer with an alternative way to finance infrastructure, such as water, sewerage, drainage, and roads. Managed by a board elected by property owners within the area, a MUD may issue bonds to reimburse a developer for authorised improvements and will utilise property tax revenues and user fees from water and sewer services it operates to repay the debt. There are three benefits: access to debt finance, alignment of incentives
and risks, and circumventing blockages. Here, beneficial projects that are willing to repay debt cannot be debt financed by our growth councils.
These American metros do a magic trick that has eluded New Zealand’s local government. Although they compete for urban development to keep housing affordable, they cooperate for the common good of economic development. They can’t borrow more than 2.5 years’ worth of repayments. There, they may create a public authority specialised in repaying debt, and borrow some 14 years’ worth of their debt servicing payments.
The market lends to these districts only if they’re judged economically viable. If lenders don’t judge this, then bond insurers may choose to. In New Zealand, infrastructure is paid for and underwritten by all city residents, who don’t benefit and drag their feet by creating red tape. There, beneficiaries pay and take the risk; the other city residents say “do what you like, we don’t care”. Here, council says you can develop where you like, when you like, how you like, as long as it’s here or there. There, communities say “You won’t serve my demands? No problem, we’ll create our own local authority. Oh wait, you’ll serve me after all? That’s more like it.” Key to this is that their councils are urban, not mixed rural/urban like ours. Their territorial jurisdiction is limited to their urban extent. Beyond that, it’s their property-tax hungry counties that serve development. Texas in particular is quite possibly the world’s fastest growing state. Its the only state that forbids its counties from zoning outside riparian areas. These American metros also do a magic trick that has forever eluded
New Zealand’s local government sector. Although they compete for urban development to keep housing affordable, they co-operate for the common good of economic development. How? Incentives. A metro’s various municipal authorities also share in sales taxes, which need to be levied metro area-wide. They co-operate for trunk infrastructure and business development, to promote economic activity. The better they co-operate, the greater the sales taxes they each get. Just like the firms and body corporates of an economy, their local authorities can be created, split, merged, and retired. As terrible as the latter sounds, it seems key to their independent debt-financing and credit rating. They create new forms of institutions, public and private, to ring fence infrastructure projects. Here, Crown Infrastructure Partners is one such novel attempt at doing the same. Given the size of Auckland housing and infrastructure challenges, we need to be willing to do things differently. There is much that we can learn from the US.
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Project Auckland
2018 will be a defining year A
uckland’s still-evolving 2018 Agenda will be shaped by two, not necessarily aligned, agendas. First, mayor Phil Goff’s 10-year LongTerm Plan (LTP) proposal — which Aucklanders will get a chance to comment on early next year — unveils a vision that acknowledges the city needs a higher-performing Auckland Council. He wants Auckland to be “a world-class city, a great place to live and New Zealand’s globally competitive city that attracts and retains talented and skilled people”. There is no agenda for achieving the vision in the long-term plan — that agenda may be in a refreshed, overarching 30-year Auckland Plan soon to be publicised — and where some clarity and joining of the dots is needed with the Auckland Unitary, transport and other plans guiding Auckland’s intensified urban growth development. To see what a world-class city aspiration looks like, we need only look across the Tasman at what Auckland’s sister city Brisbane has achieved — with the help of a single-minded, financially astute Brisbane City Council. Since the Global Financial Crisis ended in 2008, Brisbane has planned itself around an international model of economic development, pursuing a wide range of joint ventures, sponsored business conventions and sporting events, and convinced its state government to prioritise Brisbane for road and rail infrastructure funding. It has also experimented with public-private partnerships including rapid rail and toll roads, with some success. Using a whole-of-government leadership approach linking strategic, tactical, technical and operational partnerships with central government equivalents, business, trade unions, uni-
It is inevitable Wellington will step in to force the pace and help Auckland improve its performance, suggests Tony Garnier
The new Government’s influence is already obvious in sorting out America’s Cup defence arrangements.
versities and community groups, numerous cities — especially in Europe — are undertaking governance reform to improve performance. For many such cities their core services cover water, immigration, economy, land use, waste, housing, transport, education and policing. Watch this space for some of this agenda and approach to move centre stage in Project Auckland 2018. Goff has raised the possibility of finetuning Council’s operational structure,
by reducing the number of CouncilControlled Organisations CCOs, disestablishing council-controlled Auckland Council Investments and indicating a need for continual improvement from other CCOs. Action in this area of the council’s organisational maze is long overdue. In setting up a single council, seven disconnected councils were replaced with a tier of CCOs who operate at arm’s length from council. But the popular view is we are no further ahead.
Another feature of the LTP debate will be what is done to reduce the festering tension among Auckland’s 21 local boards. Reflected in attempts by Rodney and Waiheke to break away from Auckland Council, there is a litany of complaints of not enough budget, little real influence and high overhead cost structures with few tangible benefits. Each local board has been asked to put forward just one initiative they consider to be the priority in their area for the next 10 years. Governing councillors also need to rethink their role. Just about every speech begins with a reference to the ward that elected them. But the oath they swore is to serve the Auckland region as a whole. The heart of the LTP debate will be on funding and what can be done within available constraints. Goff’s big play has been to propose a 10c/litre regional fuel tax to accelerate investment in Auckland’s transport network — 11.5c/litre when GST is added. This will obviously help Auckland’s catch-up agenda to have a transport system that can cope with population growth, but it clearly won’t be enough. Auckland will need a big injection of investment capital if it is to have any hope of getting in front of its interlinked housing, social and environmental problems. The regional fuel tax will likely only be accepted if Aucklanders can see an improved transport system on the scale the Waterview tunnels have delivered. But that won’t happen without the next tier of scaled-up transport investments
— the region-wide mass transit system and the third harbour crossing the new Government is promising. That brings up the second defining force behind Auckland’s 2018 governance reform agenda: How will the new Government decide to play its hand? Our “breath of fresh air” nextgeneration Prime Minister Jacinda Ardern and a tier of new Ministers (Grant Robertson, Phil Twyford, David Parker, David Clark, Andrew Little) want to be a Government of Change — to fix Auckland in a big way. Labour’s DNA in promoting Auckland’s governance reform 10 years ago, coupled with the passion of Aucklandbased NZ First and Green members of Government, indicates a deep desire to do what it takes to help Auckland lift its game. The new Government’s critical Auckland influence is already obvious in sorting out America’s Cup defence arrangements. Coming days and weeks will see a widened, deepened shared action agenda agreed. The previous Government was “hands off” for far too long, and paid the cost. Auckland is 40 per cent of the New Zealand economy. Having a Government that can front foot the city’s transport, housing and urban planning crises, ensure businesses can address chronic skill shortages and start to address social, educational and health gaps will be as crucial to its own future as to that of Auckland. The analogy is of a twin-hulled Council-Government canoe. Unless both groups paddle together the canoe goes nowhere. Predicting the future is a risky business, but evidence suggests Auckland is too important to central Government and the rest of New Zealand to be allowed to fail.
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nzherald.co.nz | The New Zealand Herald | Friday, December 15, 2017
Project Auckland
A view from the summits Auckland, Guangzhou and Los Angeles forged a plan to each host tripartite economic summits. Tim McCready shares his perspective of all three
T
he Memorandum of Understanding of Economic Alliance between sister city triplets Auckland, Guangzhou and Los Angeles was signed in 2014 – and if a week is a long time in politics, three years certainly is. Since then, New Zealand has had three prime ministers. Former Auckland mayor Len Brown “The Singing Mayor” hung up his chains — replaced by Phil Goff, known less for his singing abilities and instead for his prowess in forging New Zealand’s free trade agreement with China. Guangzhou also changed its mayor in 2016, and although Democratic Party superdelegate Eric Garcetti is still mayor of LA, President Obama was replaced by the entirely different Trump Presidency. Over that time, three summits were held to recognise the alliance. And just as with geopolitics, the alliance has come a long way. The first summit, hosted by LA in 2015, was attended by a humble delegation of about 43 Auckland businesses. In 2016, Auckland outdid the council’s own expectations with over 700 delegates and more than 330 formal business matching meetings. Guangzhou’s turn to host took place last month, and saw 70 Auckland businesses take 97 delegates, with around 800 others from LA and Guangzhou. “Auckland companies need to internationalise,” says Pam Ford, General Manager — Business, Innovation and Skills (Acting) at Ateed. “They have to go global from day one — and it’s hard. “That’s why we ran workshops for attendees ahead of this latest summit. They helped to build the capability of businesses to maximise their time offshore, and gave them the confidence to take part.” Alongside business matching, networking events and showcase functions, panel discussions and keynote presenters shared insights and ideas from speakers across the alliance.
Los Angeles 2015: New York is a river, Los Angeles is a lake The first summit saw panellists discuss the cartoonish view of cities that people — including Americans — have about the US, and stressed that the City of Angels should be seen as more than just a gateway to the US, and certainly more than just Hollywood. Hollywood makes up only a fraction of Los Angeles’ economy. As well as tourism, it is the US’ largest manufacturing centre, a hub for aerospace, logistics, clean technology and innovation, and home to the largest port in the Western hemisphere. It is the country’s fastest growing tech start-up region — many arguing it has benefits over San Francisco or Silicon Valley for a tech launchpad. Despite this, there is no denying LA remains the creative capital of the US. One in seven people are employed in a creative field, and it is the top American metro area for art, design and media employment, providing more than US$140b (NZ$203b) of annual economic impact to the city. “One of the things the LA summit did was open people’s minds that it is more than just film,” says Ford. “LA is the place for many of Auckland’s companies that create content. Content now fits across so many more mediums — from gaming and television to social media and particularly the influencer economy.” “But LA is also about cleantech, food and beverage, design and manufacturing. “Because of this three-year relationship, we’ve developed solid partnerships with the organisations for our companies to access — whether that is through the World Trade Center Los Angeles or the Los
Clockwise from top left: Phil Goff, Guangzhou Mayor Wen Guohui and LA Vice Mayor Jeff Gorell shake on it in Guangzhou; LA Council Member Tom LaBonge, former-Auckland Councillor Denise Lee, thenGuangzhou Mayor Chen Jianhua and then-Auckland Mayor Len Brown; a welcome for visiting Mayors to Auckland; Len Brown mixes business and culture in LA with guests including actress Rena Owen (top right) and Tim McCready (on her left).
rely on guanxi — long-term, strong business relationships, based on trust and mutual reciprocity.
Outcomes so far Some of the outcomes from the Tripartite Economic Alliance, as captured by Ateed, include: ● 97 business people attended the 2017 Guangzhou Summit, the largest ever mayoral-led delegation, with an estimated investment by private companies of $500,000. ● The Tripartite Economic Alliance has been renewed for three years, with an increased focus on the cities’ strengths and business outcomes. ● Eight MOUs were signed in Guangzhou, from Methven and Jiangsu Ruizhigang Construction Group, to tourism agreements between Ateed, LA Tourism & Convention Board and Guangzhou Tourism. Angeles Business Council — that we would not otherwise have had.” One panellist — a resident of LA — described how the city unfolds as you spend more time there. “New York is a river, but Los Angeles is a lake. If you step outside in New York you will naturally go somewhere, the city itself will take you and it is simple to navigate. “In Los Angeles, to get anywhere you have to actively swim there — or you risk never getting anywhere at all. But that’s what makes it so exciting.”
● The GALA Urban Design Alliance is providing opportunities for designers and projects across the three cities. ● An Auckland company has gained procurement status with major technology partners. ● A technology company gained a seven-figure sum investment from an LA delegate in 2016. ● Auckland companies have connected to Chinese e-commerce giant VIP.com ● Maori fashion designers shone at the Auckland Showcase and the Guangdong Fashion Week. ● 90 per cent of delegates to Guangzhou said they were likely to recommend participation in future Council/Ateed-led delegations. Auckland 2016: Partnerships, People, and Cross-pollination The Auckland summit saw global heavyweights take to the stage at the Viaduct Events Centre, speaking about the importance of partnerships and collaboration, and the opportunities that arise when you bring people together and ‘cross-pollinate’ ideas. Sunny Bates, a serial entrepreneur and a founding board member of Kickstarter who has served as an adviser to companies including GE, TED and P&G, insisted the economic driver of the future won’t come from
factories, technology, or software — it will be down to the networks of people. “Networks are the structural basis for globalisation and for modernisation,” says Bates. “Networks know no boundaries, and cultural networks are extremely powerful.” Former Nike innovation expert Erez Morag agreed that networks were critical, but said it wasn’t those networks on their own that lead to innovation, but instead the crosspollination of ideas through those networks. “Instead of chasing the competition, chase the insights, listen to everyone, and play bigger than your size,” he says. Morag used jogging as an example of cross pollination. In 1961, Kiwi runner and athletics coach Arthur Lydiard organised the world’s first jogging club in Auckland, promoting the cardiovascular health benefits of easy distance running. Lydiard introduced Nike co-founder Bill Bowerman to the concept of jogging on a chance visit to New Zealand. “[Jogging was] invented in New Zealand and commercialised in the United States,” says Morag — all through the cross-pollination of ideas. Throughout the Auckland Summit, then-Maori Development Minister Te Ururoa Flavell reinforced the importance of trusted partnerships to the Maori economy. “Maori want to hear your heart, not just slick words. “If there is no connection to your heart, then there can be no deal — because it will be doomed from the start” — a message that resonated strongly with Chinese delegates, who
Guangzhou 2017: Leverage our Chinese diaspora Auckland-based Kenneth Leong, cofounder and director at Healthy Breath — an anti-pollution mask using natural New Zealand wool filter media for international markets — spoke about leveraging the Chinese diaspora. “We sometimes forget Auckland is home to a large, wellconnected Chinese business community,” he says. The summit and surrounding events enabled new connections between the business delegates, and deepened existing relationships. “Cross-cultural partnerships enrich all parties, by bringing people with great ideas together with people who have connections, capital and channels to market,” says Leong. “There is a need to accelerate integration between the migrant Chinese and mainstream business communities in Auckland. Everyone is keen to do business together, we just need to create more opportunities for interaction and relationship building.” New Zealand’s connection to Guangzhou goes back a long way — many of the first Chinese immigrants to New Zealand came from the Pearl River Delta region, including Guangzhou. Now, Guangzhou is China’s third largest city, contains seemingly endless skyscrapers, and is considered a manufacturing and commercial hub. It has been consistently ranked by Forbes magazine as the best commercial city in mainland China for ease of doing business, talent, location, and international connectivity, and in many cases, could be a more accessible market for New Zealand businesses than the more recognised larger markets of Shanghai and Beijing.
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Project Auckland
Running the ruler over Goff It’s just over one year since Phil Goff became Mayor of Auckland after a stellar three decades long career in national politics. Tim McCready asked business leaders to rate how Goff is handling the job.
Heather Ash, Partner, Simpson Grierson Overall the council is making good progress under Phil Goff’s leadership. My sense is he is working well with council officers and has a good structure around him. In particular, the proposal for a regional fuel tax is a significant step forward, given the restrictions that local authorities face around alternative funding mechanisms. Funding, or lack of, is the biggest constraint for the council. Mayor Goff understands the importance of investing in infrastructure — transport, water, etc — for unlocking issues like the housing shortage. New solutions will be needed to help pay for this investment. A stronger relationship with Wellington will help create solutions for these strategic challenges. The dynamic on this front seems, as expected, to be in good shape. The new Government has a positive attitude to working with local government. A big issue for the mayor, and council generally, is winning hearts and minds in the community. Progressing the big issues for the city, delivering a great service and keeping control of costs and rates is a major challenge. For local government, managing the entire Auckland region postamalgamation is challenging because people’s expectations on what councils do are very different. Keeping the focus on the big picture and what’s best for the region will mean that local government (the wider Auckland Council group, including the CCOs) does deliver for the city — in particular making the strategic decisions needed to address challenges around growth, transport, infrastructure and housing. Auckland is a stunning city geographically and has such great potential. It’s an exciting time to rise to these challenges as well as plan for the America’s Cup and Apec.
Keeping the focus on the big picture and what’s best for the region will mean that local government (the wider Auckland Council group, including the CCOs) does deliver for the city.
The disruption we’re seeing to the roading network is hurting us, as it is hurting many innercity businesses, but we accept it is critical if we want a vibrant, competitive city in the future.
Coalition Government of the need for a regional petrol tax. While we don’t necessarily see the petrol tax as a solution, we do know that transport is a major issue for businesses and residents of Auckland. Our own research shows that the city loses at least $1.3 billion dollars a year in productivity. The mayor and council in conjunction with Auckland Transport, the New Zealand Transport Agency and central Government must work in alignment on the how the roading and public transport networks will operate. We need to address both short-term bottlenecks and long-term congestion issues that the city’s growing population will put increasing pressure on. The funding mix is crucial, and Auckland business and residential ratepayers cannot be expected to pay more, unless they know what the network looks like and are confident it will reduce or manage congestion. The cross-city tunnel has yet to have a major contract let and the Auckland Transport Alignment Plan (Atap) is still only a laundry list of projects being considered with no clear
governance or pathway to completion. Local body funding is an issue facing every council. In Auckland city’s case this is about growth. The population growth and the growing pressure this puts on the infrastructure, housing, moving around the city and so forth, is a matter the mayor and council are only too aware of, I’m sure. Rates alone will never fund the investment required, and the council is limited in how much money it can borrow. However, public private partnerships, infrastructure bonds or targeted rates (such as a congestion charge) all have a role to play to overcome investing in some of the significant big-ticket items the city faces. We would like to see these options being given more serious consideration. I know the mayor has recognised the delays and other planning system issues residing within council but we have yet to see real evidence that lead times have reduced. It has been a solid start but there is a tidal wave of issues including the America’s Cup and Apec which the city needs to be prepared for.
Heather Ash
Kim Campbell, CEO, EMA Auckland city is facing major challenges. By 2036 its population is predicted to rise by almost 750,000. We’re already lagging behind in infrastructure investment by billions and that will only be exacerbated with the intensification allowed for under the Unitary Plan. Furthermore, there continues to be a disconnect between where people live and work, both now and in the future, that will only add to current congestion woes. Therefore, the mayor’s relationship with Wellington has been constructive and he has a functioning council. After all, he has been successful in convincing the new
Graeme Stephens
Tony Falkenstein, CEO, Just Water The first year has been an opportunity to judge Phil Goff as a leader, and he has failed to lead. He is managing, but not leading this city. If he was a business leader, taking on a company that was spending more than it was receiving, this would have been the first port of call to get those costs under control. Something is wrong with the budget process when the mayor “was surprised” and did not realise that the number of executives earning over $200,000 had increased by 25 per cent in the past year. Either the mayor isn’t getting meaningful information or the CEO is incompetent. Both of them, plus all councillors, should have been all over the staff salaries to see what could have been cut to get the foundation of the council in order. This is the council’s largest expense, with a new mayor the staff would have been expecting change, and it didn’t happen. People want to see “leaders” and the inaction over the first year has been disappointing, and a wasted opportunity. I do not see it happening under Phil Goff, as much as I like him as a person.
All we have seen are meaningless cuts, which have done so much to harm our city. If he had been able to reduce only five of the overpaid executives, it would mean our prestigious Art Gallery would not have to consider closing on one or more days a week. There have been many of these pitiful cuts, which have been overall so small as a percentage of council spending, but so large in terms of those affected. The mayor can talk about visions of the future, but a vision without a plan is just a dream. Get the foundation right first, get rid of the shareholdings in the port and the airport, establish private/public partnerships for long term funding opportunities, and most of all get the organisation structure right to match the costs with income.
Graeme Stephens, CEO, SkyCity I have had a number of positive interactions with Phil Goff and have found him to be highly energised, interested and engaged. When it comes to translating some aspects of our discussions into action I think his team hits up against the somewhat cumbersome bureaucracy and the silos which dictate decision making in Auckland. The long process to get things done must be as frustrating for him as it can be for us. Investment in infrastructure, transport and tourism are critical to ensure Auckland keeps pace with regional competitors. Equally as important, however, is addressing the pressing issue of those with genuine social and financial needs that are not being met under the current system, particularly the homeless. As a large ratepayer with a big footprint in the Auckland CBD, the decisions council makes strongly impact our business. The disruption we’re seeing to the roading network is hurting us, as it is hurting many inner-city businesses, but we accept it is critical if we want a vibrant, competitive city in the future. The council’s vision for a network of laneways, shared spaces and green corridors is also positive, and will ensure the city evolves and responds to community and business priorities. Homelessness is an issue which requires partnerships from central government, local government, businesses and communities if any meaningful progress is to be made. Following conversations with the mayor, SkyCity is considering how we can contribute. Though it does feel as if the city is gaining momentum, with the CRL construction going ahead and the announcement of a regional fuel tax to fund projects like light rail connection between the CBD and the airport, there is still much more that needs to be done, and SkyCity is keen to play a part wherever possible. Auckland needs major events to stimulate the local economy and promote the city. The New Zealand International Convention Centre will play a role, and SkyCity can and will do more, but the America’s Cup provides the mayor and council an enviable platform to cement Auckland’s place as a global city, for major events, leisure and business tourism, and investment. Making sure this event is a huge success is critical.
D12
nzherald.co.nz | The New Zealand Herald | Friday, December 15, 2017
Project Auckland
New thinking to solve old problems T
his is a time of unprecedented change in how we live, how we do business, and what is possible with the clever use of technology. Imagination, and the innovation it brings, is creating enormous leaps forward for every industry. In the world of Engineering, Procurement and Construction (EPC), bold ideas are transforming the cities we build, the transport networks we connect people with, and the infrastructure that keeps everything working. Major infrastructure projects involving transport, housing or the provision of essential services and utilities are typically complex. They are resource-hungry, fraught with risks and subject to cost overruns, timing delays, design compromise and the consequences that result. These problems are particularly acute in markets like New Zealand that don’t have the scale or resources to support the best of contemporary international EPC capability. In today’s resource constrained NZ market, and particularly in high growth locations, we need to think differently about the challenges in front of us. The challenge in planning, and funding growth is multi-faceted. A shortage of houses in Auckland, growing congestion and increasing unaffordability are compounding problems. To successfully deliver infrastructure at greater scale and pace we must take a new approach to procurement, and funding large-scale projects. There are significant opportunities in the form of global EPC best
Bold new ideas are transforming our cities, transport and infrastructure, says John Dalzell There are significant opportunities in the form of global EPC best practice that new market entrants can bring for the benefit of all New Zealand.
John Dalzell
practice that new market entrants can bring for the benefit of all New Zealand. We need access to the latest thinking and innovation in system design if we are going to succeed in the modern age. There is much to learn from those international EPC contractors and consortiums who have successfully delivered some of the largest and most challenging infrastructure projects in China, Asia and around the world. This ability to design and build transport systems, major construction and infrastructure projects can deliver both quality and cost efficiency beyond what we are used to in New Zealand. There are also considerable efficiencies to be gained from alternative funding models. It is no longer
enough (or often possible) to access land at an affordable price. We must also create commercial structures that carefully balance innovation and constructability. This all then needs to be directed by a project management and compliance team that delivers time and cost savings within the confines of approved, safe, environmentally sound, and accurately verified methodologies. Local authorities in high growth areas face the common constraint that their current funding tools do not enable them to keep pace with infrastructure requirements. This results in housing deficits, congestion, and water quality issues. On-balance sheet borrowing cannot provide the full answer because of the debt ratio limits applying to local government entities.
This all means that councils in high growth areas are systematically underproviding growth infrastructure, resulting in an everexpanding range of economic, social and environmental problems. The slope of “catch-up” requirements gets ever steeper. Internationally, there is a trend to alternative, and robust off-balance sheet funding models that maintain high public acceptability. Internationally, there is a plentiful supply of capital so long as an appropriate transaction structure, cashflow model and projects can be found. The ideal operating environment for to attract such international funding includes the following: ● The ability for the structure to be duplicatable and transferrable to other projects of sufficient scale. ● A structure and processes that doesn’t inhibit business as usual for existing Government agencies. ● Compatibility with other programmes of work, and other long-run government (central and local) projects which span the next 30 years. ● Allowing innovation and constructability to be realised early in the planning and development process. It also provides a form of direct foreign investment that is nation-building rather than being more speculative in nature. ● Provides a robust and bankable cashflow to the contracting parties who are procured in a competitive market environment on a level playing field. This enables the Government to draw together all avail-
able funding sources and these must include capturing an appropriate share of the value uplift around the infrastructure project. CadeNZA is an EPC consortium that is able to bring these innovations to New Zealand. CadeNZA is a blend of local New Zealand know-how and experience, with the best international minds, capability and funding to address modern infrastructure challenges. Their strategic partners include companies like CMEC, CTCE, CEC and Chun Wo that have created the infrastructure to facilitate growth in today’s mega-cites in Asia and other parts of the world. Across the group of partner companies CadeNZA has access to vast resources in engineering design, construction capability, transport technology, and funding. This includes world-class performance in zero-harm, health and safety practices, and building information management (BIM) systems that are superior to what New Zealand is used to. We also bring global expertise in operations and maintenance, including whole of life asset management through the advanced use of BIM technology, to provide optimal total lifecycle costs, as well as quality assurance and product traceability. New Zealand’s future is one of growth and prosperity if it is driven by innovative and efficient means. John Dalzell is Managing Director of Silk Road Management
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D13
Project Auckland
Partnerships for growth Tim McCready talks Auckland, infrastructure, and Chinese investment with ICBC NZ chief executive Karen Hou You have been living in Auckland for a while now. How do you see its future? Auckland is a beautiful, attractive city. I have been living here now for three years, and every year it becomes even better. There are signs of growth everywhere. I have lived and worked in a lot of cities around the world, but Auckland stands out because although the city is relatively expansive and feels big, the actual population is very low. This, combined with Auckland’s beautiful weather, climate, scenery and multi-cultural population makes it a wonderful place to live. However, increasingly Auckland’s infrastructure is lacking. As Auckland has grown in population the infrastructure hasn’t kept up. Auckland Council has tried very hard to meet people’s requirements. They have big plans to make the city more usable. More apartments, hotels, transportation links and other infrastructure projects are underway. As one example, the New Zealand International Convention Centre (NZICC) will greatly improve Auckland’s capacity to host world class conferences and exhibitions, which will provide yet another reason to attract people from all over the world. But the key challenge is making sure the required infrastructure developments happen to ensure the city continues to remain as great as it is now into the future. The new Finance Minister Grant Robertson is looking to the private sector to finance major transport and housing projects in Auckland. Do you see an opportunity for Chinese investment? For Auckland, the government or local government can’t possibly fund everything that is needed. For New Zealand to quickly see results from infrastructure projects, it will be important to use public-private partnerships (PPPs) to bring in significant investment alongside the funds of the government. ICBC NZ has been shortlisted several times for recent infrastructure syndication loan tenders, and although we are yet to secure a successful deal, our team has become increasingly experienced in the local market. It takes a lot of time and effort to prepare a bid, but our commitment to this shows our dedication to being involved in successful infrastructure project finance here. Chinese investment presents a lot of opportunity for Auckland. Over the past few years, China has very quickly developed its infrastructure — in areas like energy, telecommunications and water, but also massive transportation projects that link the country together. Where local enterprises in New Zealand are struggling to meet the infrastructure shortage, Chinese companies can help them to increase capital, access high quality materials, and reduce cost. Are Public Private Partnerships popular in China? Yes, one of the most popular PPP models used in China for delivering major infrastructure projects is called a BOT (build, operate, transfer). With this model, the government uses the private sector to design, build and run an infrastructure project. After a period of time the asset is transferred back to the government. This structure relies on the private sector, but the government supports the private sector to help with regulatory hurdles and ensuring the repayment of the investment makes the project worthwhile. As an example, when establishing a subway: the cost is designed from the outset, including how to repay the
Chinese firm China State Construction Engineering Corporation has won several contracts for the expansion of Singapore's MRT.
investment. If there is not enough money to repay the investment through the subway alone, the government can help by using other developments associated with the subway — such as the related commercial areas — to go towards the repayment of the project. That way, getting resources for infrastructure projects is easier because the risk of repayment is lowered. Is ICBC’s client base actively looking to do deals here? Yes. We have already helped Chinese companies come to New Zealand and understand the bidding process for projects. Although there have not been many successful bids, our Chinese customers are increasingly seeking out opportunities here. ICBC is the largest bank in the world, and works with the best companies. This means we are able to ensure the highest standard of Chinese companies enter the market to help with infrastructure projects. We have now been operating in New Zealand for four years. Over this time, we have progressed significantly — we have more than NZ$1.5b of assets in this market — mostly to local customers. We’ve introduced new technologies and products such as an e-commerce platform to make it easier for New Zealand export companies to do business in China, and we help local companies connect with companies in China. We also introduced a dual currency credit card, which can be used locally for New Zealand dollar transactions as well as in renminbi while in China, making visiting China more convenient. ICBC hopes that we can continue to increase the links between the two countries. What can Auckland learn from China in terms of our mounting infrastructure projects? China’s Government plays an important role in the country’s infrastructure. The government considers the future of the country, makes plans, and ensures projects are delivered quickly.
Photo/Shaun Oon
to labour, scale, and the cost of materials. At the same time, Chinese technology, management and safety are world-leading. Should New Zealand take greater advantage of the skilled labour that China can provide? Nearly everyone in the world wants to immigrate to New Zealand — for the reasons I outlined earlier. This provides New Zealand with the rare opportunity to identify the particular skills that are most needed here, and get the right people to match. For this reason, access to labour should not be a problem in this country. Rather than constricting the volume of people that can come and live here, New Zealand should look towards implementing a policy that will select the people that are needed. The use of short-term and special visas can bring skilled workers in that can help with construction. This type of visa is really helpful to fill the labour shortages and rapidly advance infrastructure projects.
To strengthen the local construction capability here, we need more labour and a lower cost of materials, Karen Hou
What people may not realise is that China has become very strong in construction, operating at an interna tional standard. As an example, Chinese companies have played a role in construction projects for the Singapore and Hong Kong subway. To strengthen the local construction capability here, we need more labour and a lower cost of materials. The use of Chinese companies can make the cost relatively lower than others due
China has some great inter-city transportation links, such as the line between Beijing and Tianjin that has cut travel time from three hours to around 30 minutes. Do you think Auckland can learn anything from this? I think that in the long term, it will be good for New Zealand to be more evenly developed, and not just focused on one or two major cities. Imagine if there was a high-speed train connecting Auckland and Hamilton — or other satellite cities. A short commute between the two cities would encourage people to spread out further, and reduce the housing, transport, and other infrastructure pressures that Auckland currently faces. Many cities in China have — or are introducing — high speed rail networks to link them to neighbouring cities. Working with China can give access to not only capital and cost advantages, but also to innovation and experience in projects like these.
D14
nzherald.co.nz | The New Zealand Herald | Friday, December 15, 2017
Project Auckland
The case for slower cities New cookie-cutter trends risk impoverishing our urban landscape say Marcus Foth and Mirko Guaralda
P
eter Jackson employed an intricate approach to the stage design of Lord of the Rings. The people who inhabited Middle-earth for hundreds of generations slowly left cultural traces, alterations, artefacts and remnants of their human existence on the environment. For example, the cinematographic stage set for Rivendell gives the viewer the impression of use and legacy over generations. Stage designers aged artefacts and applied, erased and reapplied cultural marks and insignia to “make” Rivendell the special and legendary place that author J.R.R. Tolkien had intended. Placemaking Urban space turns into place in a similar way. People are natural placemakers. When they live in cities, they create “ livehoods”, build, modify, decorate, expand and renovate. In doing so, they slowly leave their mark on the city. In the 1960s, progressive urban planners and designers like Jane Jacobs and William H. Whyte argued that catering for slow pedestrians rather than fast cars results in better city design. Placemaking can make places sticky, so people dwell longer, customers spend more in retail shops, and students stay on campus. Trying to accommodate sustained high levels of growth, coupled with the need to contain urban sprawl, has led to the rapid gentrification of innercity suburbs. As construction companies are trying to keep up with the mandate to grow Australian cities,
Peter Jackson’s stage set for Rivendell in the Lord of the Rings trilogy, gives the viewer the impression of use and legacy over generations.
they won’t slow down easily. Placemaking is being used to quickly breathe life into new urban developments. Speedy placemaking is of the essence when generic turnkey residential stock is sold as vibrant communities. liveable neighbourhoods and distinctive precincts.
Cookie-cutter cities Accelerated placemaking poses several risks. ● Places come with history and heritage to be conserved and protected. Digital storytelling has been used as a form of digital place-making that not only enables the study of a place’s
history, but also ways of embedding and commemorating historic evidence and artefacts in place. ● To avoid making places that suit the place-makers and their funders more than the current or future occupants, inclusive practices of placemaking are needed.
Introducing CadeNZA. Where global capability meets local responsibility. We are a joint venture comprised of leading Engineering, Procurement and Construction contractors, infrastructure specialists, real estate development and support companies. Our team members have successfully completed some of the largest and most challenging projects around the world. Now, we’re here to deliver on our simple but powerful vision: bring global best practice to local projects for the benefit of all New Zealand. For more detail contact:
John Dalzell at jd@silkroadfunds.co.nz James Leach at j.leach@harrisongrierson.com
Marginalised and economically threatened communities should be enabled to engage with their neighbourhood on their own terms and create their own urban imaginaries. This requires transdisciplinary, continued on D15
D15
Project Auckland
Can a tech company build a city? Ask Google Good cities can’t be built out of a technology mainframe, writes Sarah Burns
S
idewalk Labs, the urban innovation startup owned by Google’s parent company Alphabet, has announced a partnership with the City of Toronto to develop a new waterfront precinct. Time to ask Google: can you build a city? The Quayside precinct, dubbed “Sidewalk Toronto”, is to become a 500-hectare sandpit for testing a suite of new tech products. The aim is to radically re-imagine the way a city is made. Even if only a fraction of the ideas being touted work, Sidewalk Labs will be expanding the possibilities of techenabled urbanism to far loftier heights than many run-of-the-mill smart city strategies. Best take note. Any city mildly interested in using technology smarts to improve cities should be paying very close attention. Learning from smart city failures Sidewalk Toronto plans to grow phoenix-like out of the ashes of failed smart cities. Smart cities are based on the idea that cities can be made more liveable, sustainable and efficient by making better use of information and communications technologies. This idea promises a lot, but so far has failed to deliver much. The biggest failures in the 20-year history of smart cities — notably China’s Dongtan and South Korea’s Songdo — are testament to the hardboiled truth that good cities can’t be built out of a technology mainframe. Even if they have tech smarts, they haven’t been places people have learned to call home. And, as companies like IBM, Cisco and Microsoft have learnt, it’s not easy to redeploy the large-scale operating systems used by big organisations into complex urban environments. Cities are messy places. They’re a heady mix of privatised utilities, legacy infrastructures, resourceconstrained public authorities and opinionated voting publics. These ingredients have made it hard to sell a data platform that can operate at the scale needed to produce any real efficiency benefits. Instead, what has so far been delivered are cities abounding in prototypes of smart parking and smart lights. More were announced under the Australian government’s A$50 million Smart Cities and Suburbs Program.
theconversation.com.au
of American cities it plans to expand its products into.
Canadian PM Justin Trudeau, left, laughs with Dan Doctoroff, chief executive officer of Sidewalk Labs, during an event in Toronto. Picture / Bloomberg
Let’s not forget, Google will own and monetise the data created when people use these products. Re-imagining cities from the internet up We have seen very little of the “gamechanging” disruption spruiked at smart city conferences worldwide. This is also why Sidewalk Labs matters. Led by CEO Dan Doctoroff, who was deputy mayor of New York under Michael Bloomberg, the company is on a mission to “reimagine cities from the internet up“. Crucially, this is Google’s version of the internet — the one you’re most likely occupying most of your waking hours. Instead of trying to sell a clunky operating system that fits legacy infrastructure with new data points, Sidewalk Labs is building products it
thinks will change how citizens use the city. And let’s not forget it will own and monetise the data created when people use these products. Rather than upgrading what we have already, the thinking behind Sidewalk Labs is more focused on the core of how people behave in cities. For instance, its parking app, Flow, isn’t just about helping you find an empty park, as many smart parking systems do. It introduces a new pricing model that lowers the cost of parking for people who have had to travel further. And it penalises those who really should have walked. The point of using sensors to monitor air quality and temperature isn’t just to generate real-time data, which governments may or may not use. It proposes to use the data to create optimised environments that reduce the need for restrictive zoning, allowing for “radical mixed use“ zoning. City Block Health, another startup spun out of Sidewalk Labs, is a personalised health system in the US
for Medicaid or Medicare members. Presumably, though it’s a bit hard to tell, this will allow these people to be supported across many different (data-driven) interactions as they shop, commute and go about their daily lives. This is human-centred product design for an era of not just digitallyenabled but “Google-powered” citizens. The solutions offered here take in the full span of city regulation, pricing, planning, building and human interaction. This is not just tinkering at the edges of urban systems with new technology; this is redesigning the system with the technology at the core. Of course, the scope to experiment with and ultimately reshape Googlepowered urban behaviour is only possible when Sidewalk Labs owns and operates the city space where it can trial its products. This is the premise of Sidewalk Toronto. Sidewalk Labs CEO Dan Doctoroff loves Toronto as part of an “elite class”
No longer ‘us and them’ Sidewalk Toronto is being built as a beacon for other cities to follow. The way Sidewalk Labs sees it, the idea that technologists and urbanists can’t get along has to change. The company is integrating urbanists and technologists into its product planning. It’s including residents and workers in beta testing, with a city government giving it social licence to operate. Instead of a cartel of architects, urban planners, consultants, developers and regulators mapping out the future of the city behind closed doors using the standard master planning process, the company will spend US$50 million over the next year to support an open conversation between citizens, governments, universities and others about what Sidewalk Toronto should be. Sidewalk Labs is building offices across the US. It’s recruiting a cavalcade of new product managers, partnership and business development managers, machine-learning specialists and forward-thinking urbanists. If its aggressive recruitment strategy is anything to go by, Sidewalk Labs is aiming for its tech products — focused on urban disruption, powered by the data it hoovers up from our daily lives — to raise the bar for city-making around the world. Doctoroff describes his desire to expand to other cities as “insatiable”. No doubt there will be lots of ideas that go nowhere. But one thing is clear: Sidewalk Labs is thinking about cities like no other technology company has done before it. Whether it succeeds in actually building one is everybody’s business.
Sarah Burns is an Engaged Research fellow at the Institute for Culture and Society, Western Sydney University. She is also a respected industry and government adviser in the area of smart cities and data-driven city governance, and director of digital place-making studio Esem Projects.
The case for moving to slower cities continued from D14
participatory and action research approaches to place-making. ● Placemaking can fuel further gentrification with its well-known set of associated issues and consequences. Activating places often aims at making nearby retail and residential properties more profitable. Yet genuine and slow placemaking can add further value by unlocking a city’s diversity advantage. ● Many placemaking techniques such as urban hacktivism and urban acupuncture tend to be small and hyperlocal. They have been criticised for being limited in scale and impact. Can placemaking through DIY urban design scale up from subversive citymaking to systemic change? ● Contemporary placemaking reliese more and more on
stereotypes. An example is the iconic architectures of kerbside coffee shops. Christian Norberg-Schulz speaks of the genius loci as a fundamental element of placemaking: the essence of a place that makes it unique. This approach seems currently ignored in favour of a cookie-cutter approach. Copying success stories — Venice in Vegas, for example – is a constant in architecture and urban design. But the trends of tactical urbanism, pop-up interventions and gentrification actually risk impoverishing our urban landscape and our urban ecologies. Slow cities In addition to a set of ongoing challenges, there are exciting opportunities on the horizon for slowing down placemaking and for placemaking to slow down cities.
Our fast-paced world of automation and smart cities prioritises speed and efficiency. Yet the health and wellbeing of city residents can be improved by slowing down. This is about not only a slower pace of pedestrian flow, traffic and life in public spaces. It also relates to appreciating artisan crafts, food provenance, seasonal changes, local customs, and even boredom and getting lost. In Australia, the cities of Goolwa (South Australia), Katoomba (New South Wales) and Yea (Victoria) have joined Cittaslow — “the international network of cities where living is good”. Making cities collaboratively Revisiting Henri Lefebvre’s “right to the city,” we understand placemaking
as a strategy to bring about muchneeded social change and urban renewal through grassroots democratisation. Cities often invite people as participants in urban planning decision-making. Yet why limit people to just providing feedback to city governments as part of conventional community consultation processes? Genuine placemaking regards them as cocreators in collaborative citymaking. The exposure to diverse ideas, places and communities is crucial for innovation and the functioning of democracy. We believe placemaking can help develop a better dialogue between citizens, communities, government, businesses, civic groups and non-profits. Placemaking is meant to provide a close connection between people
and their locale. Placemaking has to be specific and unique to urban space, taking into account its community, environment, culture, food and social practices. Finally, cities certainly need to face up to the challenges of climate change. Placemaking provides opportunities for more sustainable ways of life not only by creating accessible, healthy, democratic and slow cities, but also by imagining the postanthropocentric city. Marcus Foth is Professor of Urban Informatics, Director, QUT Design Lab, Queensland University of Technology. Mirko Guaralda is Senior Lecturer in Architecture, Queensland University of Technology.
D16
nzherald.co.nz | The New Zealand Herald | Friday, December 15, 2017
Project Auckland
2021 shapes up as a big year James Penn looks at the figures behind Auckland’s forthcoming ‘main events’
S
ome say sport and politics should never mix, but they inevitably will when it comes to Auckland’s hosting of both the America’s Cup and Apec in 2021. The two events will require development, particularly of Auckland’s waterfront areas, to cater for yachting fans and political aficionados alike as they descend upon Auckland over the course of the year. After Emirates Team New Zealand’s (ETNZ) America’s Cup win earlier this year, attention almost immediately turned to the question of how and where New Zealand would carry out its hosting rights four years later. Auckland being the obvious choice — as it was previously in 2000 and 2003 — other options mooted included Tauranga and Queenstown. A shortlist of five potential base options for the event was decided upon by Auckland Council in collaboration with central government and ETNZ in mid-November, which was then narrowed down to two approved locations by council on November 23. These included a cluster of bases on Halsey Wharf, Hobson Wharf and Wynyard Wharf East, and a cluster of bases on the Western and Eastern side of Wynyard Wharf and Site 18. “The council has agreed on a preference for the Wynyard Basin option which clusters bases around Halsey Wharf, Hobson Wharf and Wynyard Wharf East to take into further negotiations,” said mayor Phil Goff at the
time. “This option will allow a great village atmosphere, is less intrusive on our harbour, around $40 million cheaper and eight months quicker to construct.” This came after ETNZ announced their original preference of extending Halsey Wharf was flexible, and that they were prepared to support the decision made by council. A report by Market Economics (ME), prepared for the Ministry of Business, Innovation and Employment (MBIE), last month said the expected added value to the New Zealand economy would range between $555m and $977m over the 2018-2021 period. The benefits beyond the hosting of the event itself were also said to be significant. “The long-term impacts of the event and the infrastructure spend relate mostly to lifting Auckland and NZ’s marine industry’s profile,” said the report. “The gain is estimated to lift the size of the economy by $123m (GDP) each year by 2055. “This increase reflects a permanent, step change in the size of the economy and is driven by an increase in the super yacht market (and receiving export receipts).” When all of these benefits up to 2055 were taken into account, the modelling suggested that every $1 invested would generate approximately $7.50 of economic activity. Aucklanders will rightly ask what
Helmsman Peter Burling hoists the America’s Cup aloft during the victory parade along Queen St. Picture / Greg Bowker
that investment will look like. Much of the detail will depend on the decision made between the two options currently available. At the time of writing, this decision had not yet been released but was due to be made by council on Thursday, December 14. In any case, the indicative costs for the original five options were said to range from $140m to $190m. Meanwhile, much of the economic benefit will come from increased super yacht activity as a result of the upgraded wharf berths available.
CONNECTING
AUCKLAND Simpson Grierson is helping to build Auckland’s future.
Another ME study, commissioned by Ateed, stated that on average a 30m to 50m yacht will spend around $1.8m while in New Zealand, while 50m to 70m yachts spend around $3.5m, and those above 70m spend up to $6.3m. This spending occurs in the form of refit work, spending of high net worth guests, and day-to-day crew expenditure and accommodation in the city. A variety of other infrastructure items have been proposed to facilitate the hosting of the event, includ-
ing a centralised village spanning 700 metres across the Viaduct Basin and Wynyard Wharf and a “concert and performance stage and grandstand in the heart of the Wynyard Quarter to showcase New Zealand’s musical and cultural performers”. It is planned that there will be public access to view the daily operations of team bases and the launching and retrieving of the AC75 race yachts. A variety of bars and restaurants are also expected to spring up to accommodate the many visitors expected to arrive. Those bars and restaurants will also benefit from the Asia-Pacific Economic Co-operation forum to be held over the course of the entire year, beginning in December 2020 and featuring 12 different events. The most significant of those is the Apec Leaders’ Week, when the leaders of major economies including the United States, Canada, and South Korea are expected to arrive in Auckland for negotiations. “Apec 2021 will be the largest event ever hosted by the New Zealand Government and is a wonderful opportunity for New Zealand to shine on the international stage,” said thenForeign Minister Gerry Brownlee in a press release earlier this year. Around 22,000 attendees are expected to be brought to Auckland by the events, including 10,000 attendees expected for Leaders’ Week, which will be held in November 2021. Hospitality providers will fortunately have had some time to recover from the surge of activity driven by the America’s Cup by that point, with the Cup to be held some time in March.
www.simpsongrierson.com
D17
Project Auckland
Transportation transformation
A
ttentive urban Aucklanders will have noticed a fleet of “shareable” cars and bikes spring up around the city in recent months. Whereas driving or cycling previously required ownership — and often a sizeable investment — of a personal vehicle, Cityhop cars and OnzO bikes are hoping to popularise the concept of “transport as a service” (TaaS) in Auckland. Cityhop’s fleet of cars has doubled in the past 10 months and is expected to double again over the next year. The big, long term vision of TaaS advocates is a world where the majority of urbanites never have to own a vehicle. Instead, they pay hourly rates to access a communal vehicle fleet. The idea makes intuitive sense. Given most vehicles sit idle for the majority of the day, why not share a car among those who need it at different times? Transport experts estimate cars are parked for over 90 per cent of the time. And in a world where urban space is increasingly at a premium, the cost of parking a car overnight or while working during the day is difficult to justify. Founded a decade ago by former Auckland councillor Victoria Carter, alongside JUCY Rentals, Cityhop now has more than 60 cars placed in Cityhop-owned parks around Auckland and Wellington. Their 2000 members subscribe to vehicle “plans” using a model similar to that of mobile phone network plans. Carter says the move from councillor to entrepreneur was driven by a desire to “start a business that fitted with my social and environmental goals. “Cityhop is disrupting the private vehicle ownership market and is offering consumers and firms a flexible, affordable and sustainable alternative.” Arguably a fork has been reached in the shareable transport road. The question is: do we replace our cars with on-demand taxis like Uber or Zoomy, or borrow the cars from companies like Cityhop and drive ourselves? Uber is certainly the more wellknown name, owing to its rapid global rise and displacement of traditional taxi services. But Cityhop predates the multinational taxi app and has local origins. Carter says it is a false dichotomy, “Our competition is people who own a car and don’t want to consider the cost of car ownership.” Convincing those people of the benefits of car-sharing, she says, is the key to CityHop’s success. The company is currently registering more than 60 new drivers each month. As membership grows, the fleet can expand, offering more flexibility and availability to its members — a virtuous, self-reinforcing cycle. The company offers three different plans. They include a subscription fee (from $29 per year to $10 per month), an hourly rate (from $9.50/hour to $13/hour), a distance fee (40 cents per kilometre across all plans), or a flat maximum daily rate for those who rack up more significant distances (between $65/day and $75/day). Once signed up, members book a car for their preferred number of hours online. Cars are unlocked by holding a membership card on the windscreen, and users can then drive the car as much as they please during their booked period, before returning to one of the company’s designated parking spots across the city. Though the fees are nothing to be sniffed at, car-sharing proponents point to the costs of individual ownership as being far higher. “When most people look at what their car actually costs them, they are a bit surprised,” says Carter. And the spillover benefits for cities such as Auckland are arguably even greater. “Every car-share car takes
Social and environmental goals are driving a network of communal vehicles, writes James Penn
Mercury CEO Fraser Whineray, Auckland Mayor Phil Goff, and Cityhop founder Victoria Carter at the launch of Cityhop’s PHEV (plug-in hybrid electric vehicle).
Bicycles built to share For those travelling not quite as far or operating on a smaller budget, OnzO Bikes may be a welcome alternative. Appearing out of nowhere in late October, the bikes were scattered at racks across the central city. Riders can download the OnzO smartphone app and pay 25 cents per 15 minutes to ride the bikes wherever they want around the city. Originally launched as a trial until the end of November, the company posted on Facebook last week confirming its intention to continue the service into the New Year. “We will continue to provide the service and will try our best to improve it,” said OnzO. “More bikes are on the way and will be available after Christmas.” Unlike car-sharing options, there are no strict requirements about where the bike must be parked after use. “(Users) basically can leave the bikes anywhere as long as they are not blocking roads and accessible to other users in a public area,” says the company’s Facebook page. This has raised question marks. Simon Wilson, writing in The Spinoff, originally questioned whether the scheme, which was launched independently of Auckland Transport, was appropriately registered and whether use of public footpaths to dock the bikes by a private company was entirely ethical. “You can also carry the OnzO bikes away, which will almost certainly become a problem for the company and maybe for the city too, once they start appearing in trees in the Domain,” wrote Wilson. “That’s what’s happened in Melbourne lately, where the same MO of sudden unannounced arrival has seen Obikes labelled a ‘shadowy’ business by the city.” 13-15 privately owned cars off the road,” explains Carter. “If we lined up all the cars removed based on our current fleet, there would be empty car parks from the Ferry Building to K Rd! So we are a significant congestion buster.”
car-sharing seems to be securing more car-share car parks, expanding the fleet, and thereby attracting more members. The concept is taking off. Apartment buildings such as The Daisy in Mt Eden have adopted CityHop cars, and businesses are also placing them outside their offices to provide a transport option for employees. Those complement a variety of street parks around the CBD and city fringe. At this stage, Cityhop is a “stepping stone” for many of its customers — not yet getting rid of cars altogether, but decreasing the number they might have previously shared as a couple or a family. “A lot of these people are downsizing from homes where they might have had three or four car parks, and now they’ve gone down to one or two,” says Carter. “And most people’s second or third car is not well-used.” “Our focus is helping people get out of car ownership and reducing the number of cars they own,” she says. The achievement of this vision, and delivering the associated urban development benefits will surely benefit from ongoing support from local government. “It feels like it has taken a really long time to get Auckland Transport on board,” admits Carter. “They’re now on board and they really get it; they really can see the difference that we’re making.” Sydney is already showing the way when it comes to local government championing of shareable transport.
Every car-share car takes 13-15 privately owned cars off the road. If we lined up all the cars removed based on our current fleet, there would be empty car parks from the Ferry Building to K Rd! Victoria Carter
OnzO bikes in Freyberg Place, Auckland (top); shared bicycles piled on a traffic median in Beijing.
In the month or so since OnzO’s launch, users have highlighted the gradual movement of the bikes away from the city centre. This seems like a logical corollary of providing users with the freedom to park almost anywhere: as an abundance of postwork riders or late-night revellers in the CBD use them to get to their suburban homes, there will be relatively few riders in those suburbs inclined to ride them back to the city. Similar schemes are causing controversy worldwide. Ofo, a Chinese operator with more than 10 million bikes across 180 cities and 13 countries, has been on a vicious expansion drive since its launch in 2014. But shocking images have emerged of junkyards full of There are also environmental benefits, with claims that each Cityhop vehicle contributes to 37.83 tonnes of CO2 not being released into the air per year. A quarter of the company’s cars are hybrids, and a joint venture with
abandoned bikes in China this year as streets became overwhelmed with companies competing for market share. Over the course of the year, Chinese authorities have had to cap the number of bikes added to the network in response to the oversupply. Nevertheless, the broad vision seems positive. Says OnzO via its Facebook page: “The main concept of this bike-sharing system is to provide affordable access to bikes for short distance trips in urban areas and as an alternative to public transport or private vehicles. “This not only relieves pressure on our transport networks; it also benefits our environment, and it’s good for health as well.” Mercury Energy this year saw the first electric vehicles join the fleet. From an urban planning perspective, Carter claims Cityhop’s existing network releases an estimated 2.5km of road space and kerb space. The key to further proliferation of
Clover Moore, the Lord Mayor of the City of Sydney, is a self-professed advocate of car-sharing and has encouraged a burgeoning of the industry in the city. The City of Sydney reports some 31,000 business and resident car sharing members as of May 2016. The City of Sydney has the lowest rate of household car ownership in metropolitan Sydney — about 35 per cent of city households do not own a car, compared to approximately 12 per cent of households across greater Sydney. A study commissioned by the International Car Sharing Association estimated the total net benefit of the car-sharing network to the city as $48 million per annum in 2016, with a return of $6.16 for every $1 invested by local government. Other estimates suggest the community benefits outweigh the costs by a factor of 19. Carter says both businesses and council can take the lead by encouraging employees to utilise car-sharing services. Statutory requirements for new buildings to include car-sharing spaces within car parks might also be encouraged. It might be thought that if councils discovered a “magic potion that catalysed mode shift, reduced pollution, reduced the cost of housing and made congestion (both traffic and parking) disappear, they would be united in their determination to sprinkle as much of this magic potion as possible across their municipalities”, the Sydney report concluded. Auckland urbanites may well notice more of that magic potion scattered about the city over the coming year and beyond if recent trends continue.
D18
nzherald.co.nz | The New Zealand Herald | Friday, December 15, 2017
Project Auckland
City’s innovation corridor I
n less than four years the GridAKL innovation precinct has grown from temporary premises in Halsey St to starting to fill three modern buildings in the heart of Wynyard Quarter. GridAKL is now home to nearly 100 smart technology companies aiming to present their innovative products and services on the global stage. The companies, from start-ups to small and medium-sized enterprises and some corporates, are spread over the refurbished John Lysaght and Mason Bros buildings in Pakenham St West and the newly-built, six-level 12 Madden St — after the original 15 resident business “set up shop” in the temporary Polperro Building during the second half of 2014. The Lysaght Building is operating at full capacity with 65 businesses, and a total staff of 225. And the recent opening of Mason Bros and 12 Madden St, owned by Precinct Properties, takes GridAKL’s footprint to 12,000sq m — enough space for more than 300 businesses or nearly 1200 workers, including nomads and hot deskers. The Madden St building is New Zealand’s first and largest purpose-built co-working space designed to give the innovative companies the best possible working environment in which to thrive. The 5-Green Star building has state-of-the-art meeting rooms, a members’ lounge, and events space for 300 people. There are three co-working levels and two of corporate offices. One of the early tenants at Madden St is Zino Ventures, the first Chinese venture fund in New Zealand, and several international tech companies will soon be coming onboard. The operator, Generator, has already run more than 200 events in Madden St including Innovation Day, AI Happy Hour and the first livestream of TechCrunch Australasia. GridAKL has a total of 8500sq m of flexible co-working spaces and serviced offices where the early stage companies collaborate by sharing ideas, solutions and experiences to enable them to grow. They are engaged in accelerator programmes such as Lightning Lab, drop-in sessions on subjects such as accounting, law and intellectual property, Callaghan Innovation workshops, special events with expert speakers and networking functions. They are supported by a network of investors, tertiary organisations, government agencies and other professional services. The businesses cut across a diverse range of technology solutions and platforms — from social enterprise, user experience design, data visualisation and geospatial data to health and safety and financial services. Auckland Council allocated $30 million over 10 years for the development of the GridAKL precinct and Auckland Tourism, Events and Economic Development (Ateed)’s role was to make it happen — including assisting these growth-orientated, technology-focused businesses to commercialise their innovations. Patrick McVeigh, general manager Economic Growth at Ateed, says his organisation partnered with Panuku Development Auckland and Precinct Properties to develop the (precinct) infrastructure and activate the space. “But we took the position of handing the facilities to the private sector to run them on a daily commercial basis and create market opportunities.” With its expansion, GridAKL has become the lynchpin of a vibrant innovation corridor stretching from Massey in the north to Manukau in the south. The corridor, a healthy spine through the middle of the Auckland region, creates a strong ecosystem and paves the way for Auckland becoming a major innovation hub of Asia-Pacific. Along the spine, there’s clusters of shared workplaces (such as GridAKL and Smales Farm at Takapuna); incubators and accelerators (such as the Icehouse); Massey, Auckland and AUT universities and Crown Research
Auckland has taken a big step towards becoming a major innovation hub of Asia-Pacific with the expansion of GridAKL and the concentration of advanced industries along the innovation corridor, writes Graham Skellern
People, both locally and globally, are now aware that the advanced industries are sitting in the innovation corridor. These are the industries that grow quicker and attract a skilled workforce Patrick McVeigh
The interlinking laneways create a campus feel to the GridAKL innovation precinct. Pictured are the Mason Bros (top), and Madden St buildings. The GridAKL buildings (below) provide flexible co-working spaces and a modern, refreshing environment.
Institutes (for research and development); and the professional services and early stage investors. There’s a plethora of technologyoriented companies developing an incredibly wide range of smart new products. They are focusing on scaling as quickly as possible, selling into the international markets, and increasing Auckland and New Zealand’s valueadded exports. Ateed, Auckland’s economic growth agency, is right behind them. McVeigh says the innovation corridor with its linkages and connections provides endless opportunities. “The corridor gives Auckland a rich growth story. A majority of our advanced companies are located along this spine — as are our main tertiary institutions — and the corridor provides a concentration of intellectual capital
and knowledge, and connectivity with talent and skills, and research and development. “People, both locally and globally, are now aware that the advanced industries are sitting in the innovation corridor. These are the industries that grow quicker and attract a skilled workforce,” says McVeigh. “Auckland is now well-placed to attract new businesses, investors and talent, who can all tap into the assets of the innovation corridor. “Ateed’s role is to facilitate and connect the nodes and assets — to ensure that the different industry sectors have the right supply of land, premises and workforce available to support ongoing growth.” McVeigh says since the innovation corridor stretches from north to south, it spreads the benefits of growth across the Auckland region and creates multiple opportunities for companies of all sizes looking to expand or establish operations here. “There is the choice of offices near the downtown waterfront or Smales Farm, industrial and distribution space at the airport and across South Auckland, or new commercial spaces emerging in proximity to new housing developments at Albany and Manukau. The diversity of opportunities is what businesses and their staff are looking for.” Ateed has identified eight sectors of advantage in Auckland: technology, commercial services, food and beverage, advanced materials and manufacturing, screen and creative, tourism, international education and construction. These sectors produce a wide range of high-tech products and services such as ICT, robotics, medical devices, agricultural machinery, financial technology, pharmaceuticals, highvalue food, composite and polymer materials, film production, gaming, engineering and architectural consulting. McVeigh says these competitive sectors provide higher-value jobs, increase productivity and generate wealth. “They are parts of the economy that add most value to the city, and these types of industries are critically important to Auckland’s long term economic growth. “They have performed well since the global financial crisis. “They are research and innovationbased and focused on global exports, providing better opportunities for Aucklanders. “We have the opportunity of looking at how to accelerate and facilitate the growth across the city through the innovation corridor,” says McVeigh.
D19
Project Auckland
Can ‘Auckland disease’ be cured? The city has plans and talented people but why is it going nowhere fast, asks Viv Beck
W
ith so much opportunity around us, why is it that people often talk about things that are not working? Discussions stall, decisions get re-litigated, more reports are commissioned and around it goes ad infinitum. A sure way to kill opportunity, frustrate everyone and cost a fortune in the process. When I raised this with a colleague recently, he said, “You’re talking about the Auckland disease. We’ve had it for years.” Having come from Wellington, which people talk about as a success with its waterfront and cafe culture, I’ve concluded that whatever you call it, we need to find the antidote to this disease — and fast. There are lots of ideas, plans and talented people and yet we are not getting the best return for Auckland. The framework for a supercity is there but the execution is faltering. My theory is that leadership and culture lie at the heart of it. Simplistically, how we do things is as important as what we do to make the most of the opportunities Auckland has at its fingertips. The heart of our city is going through massive change. If you likened this process to a business, you would not expect to get the optimum
result without knowing where you want to take it. But vision and plans will only take you so far — the quality of your leaders and culture is essential. And importantly, taking your team with you and knowing the people you need to work with along the way. Can these principles apply to changing a city? Yes! Our waterfront is a prime example. Aucklanders love it and care deeply about it — that’s gold dust. We can imagine being able to walk or cycle along a beautiful promenade all the way from Westhaven to Mission Bay. We can understand that this might take time and we don’t mind that prospect, as long as we can see where the vision is headed and know the right decisions are being made to get us there in the end. Try taking a walk back through time. Imagine if, after the furore a few years ago about the port encroaching into our harbour, a fully integrated vision of what our waterfront could look like had instead been developed, both with and without a port. The pros and cons would have been clearly outlined and feedback sought. Once the port review had come up with its recommendations, the vision would then have been adjusted to show how the waterfront could
transition to a future without a port. Over-simplified it may be, but this approach would have had some happy consequences. Firstly, by developing the vision for our waterfront in a holistic way, a decision would have been made about the best option to accommodate cruise ships in future. We would not need an ugly dolphin 80 metres out with a matching footpath to get to it. Secondly, provision for hosting marine events would have been included in the vision and America’s
Cup plans would have been able to slot in without upsetting people again about the prospect of a 220m harbour extension. Thirdly, transitional plans for the port would have been developed within this same holistic context and we wouldn’t have had reason to be concerned about them being done in isolation. The moral of the story? We could have saved a lot of time, money and anxiety for everyone if things had been done differently from the outset. This same principle applies across
many other areas and with more and more complexity in the world, we can’t afford inefficiency. Money is tight and there are better things we can do with our time. We have a chance to heal this “Auckland disease” and we must do it now so the next generation doesn’t look back and ask why we didn’t leave the city in better shape for them. How? Here’s my Christmas wish list: We do things differently in 2018 ● We all become part of the solution to achieve the vision of a great city. ● The public, private and not-forprofit sectors all have something to offer and we can’t achieve great things in the silos that have often been a symptom of the “Auckland disease”. ● Major projects have the right mix of skills and leadership ● Big projects are guided by leaders who consider the needs of stakeholders upfront and empower others to make good decisions. The proposed Light Rail project is guided by this inclusive approach, ensuring it’s not developed in a bubble. ● We nail the next three years. ● We make and implement great decisions and turn on the best possible America’s Cup, which Aucklanders can enjoy on our iconic waterfront — a lasting legacy. I look forward to reporting on progress this time next year. Viv Beck is Chief Executive of Heart of the City
Urban moves change city’s heart and soul continued from D20
“We’re even involved in projects around the fact that you’ve got a city centre with limited space, and you’ve got to be thinking pretty innovatively about how you manage things like servicing and loading and rubbish management,” explains Beck. “They’re not our functions specifically — we don’t deliver on them — but we want to be part of those conversations to make sure that the city works as optimally as it can.” Another example is advocacy to ensure minimal disruption to Albert St companies that may be affected by the work on the City Rail Link. Then there is tackling inner city homelessness. “We’re not a social service provider,” admits Beck. “But we can see that there are people homeless on the streets, and we know that that’s not good for the people and it’s not great for a whole lot of other reasons in terms of various other impacts.” Heart of the City have been working with LifeWise and Auckland City
Mission to develop a solution. The result has been the Housing First programme, which received significant government funding in 2017, including a $27m contribution to a $75m housing complex being constructed. “Central government, local govern-
ment, social service providers, and groups like ours have come together to support one internationally proven solution,” reports Beck. “It means that energy is going behind one solution rather than a whole lot of different ones.” In a world where pessimism about
“growth pains” of the city are seemingly omnipresent, those responsible for the development of its core appear palpably optimistic. “There will be massive change in the next 3-5 years,” Beck summarises. “There are a whole lot of people delivering different parts of the physi-
WITH THANKS
cal and social development of the city, and the role we play is trying to make sure that people are collaborating and we’ve got a bit of a burning platform: we want it to be as great as it can be by 2021.” “I must admit, I do get excited about it.”
TO OUR SPONSORS
The choice for cities isn’t between growing or not growing, it’s between having managed growth or unmanaged growth - Greg Clark, Urbanist.
D20
nzherald.co.nz | The New Zealand Herald | Friday, December 15, 2017
Project Auckland
I
n any fast-growing city, visitors and workers flock there for business opportunities combined with enjoying its lifestyle and character; but in doing so, the growth of the city that they drive seems to threaten that very lifestyle and character. Challenging that paradox seems to sit at the core of Viv Beck’s mission as chief executive of Heart of the City. While technically a business association, it appears the goals of Heart of the City are broader. Says Beck, “It’s that growing sense of community . . . not just having a physical heart to the city. It’s that soul. And we’re starting to notice it.” Beck points to Splice community group’s Random Acts of Kindness Day as an example of where Heart of the City has been able to use its network and influence to promote a community-focused initiative that builds a collective culture. “People are interested in that. They’re interested in having a successful business, but in the end, it is about the community we all live and work in,” Beck says. “We saw it with the America’s Cup parade, where businesses that had a particularly good vantage point were making more of an occasion of it. “As people start to move into the city, say from a home in the suburbs, it’s starting to find a new urban form of community that would be different from a house in the suburbs.” Heart of the City describes their role as both amplifying and advocating — particularly as the central city grows. While the geographic size of Heart of the City’s remit is limited (around 0.08 per cent of the Auckland region), the economic scale is much weightier. The city centre generates $16 billion in gross domestic product — which is 20 per cent of Auckland’s GDP; and 7.5 per cent of the entire country’s GDP. This makes Auckland city centre the fourth largest economic region in New Zealand behind only
Heart and Soul
People are interested in having a successful business, but in the end, it is about the community we all live and work in.
restaurants or festivals. In the year to September 2017, heartofthecity.co.nz received 2.3 million visits, while its Facebook page received 700,000 engagements. Restaurant Month saw consumers spend 10.6 per cent more in 2017 than they did during the 2016 campaign, The organisation has developed an “always on” marketing strategy. But while the scale of activity is certainly growing, Beck wants to see the nature of that activity continue to change. “You can see it in Britomart: you might go one day and there might be a fashion show; another day there might be a big screen with a game on,” says Beck. “You think about Federal Square, you think about the Viaduct area, Aotea Square; people are starting to enjoy the city in different ways. We’ve got a very diverse group of people living here now, and looking for different things.” Event-wise, the big ticket items on everyone’s long term agenda in the CBD are the America’s Cup and Apec conference in 2021. Heart of the City’s next three-year strategic plan is currently being developed with a focus on preparing the city for those events. “Clearly what we’ve got to make sure is that the offering continues to expand,” says Beck. “The promise of a unique and world class destination will be on show, and we’ve got to make sure the right things happen over those three years.” “It’s the time we would’ve been doing that anyway, but it is an added impetus that we have got those events — and we’ve got to make sure that the city is as great as it can be at that time.” The less glamorous — but equally important — side of the organisation’s role is advocacy. This includes acting as a conduit between city centre businesses and various other community groups.
Viv Beck
continued on D19
As people move into the city from the suburbs, a new, different urban community is evolving, writes James Penn
Wellington, Canterbury, and Waikato — when it comes to regional GDP. Heart of the City focuses on four visitation pillars in its promotion and events work: dining, events, shopping, and arts and culture. “To be a successful city centre, you want people to know what’s on,” says Beck. “But you want to make sure you’ve got a great offering for them to come in and enjoy.”
Heart of the City is directly involved in the organisation of events — such as Restaurant Month, Artweek, and Four Days of Fashion; helping other events get off the ground and promoting others through digital channels. Most Auckland urbanites will likely have encountered Heart of the City’s website or Facebook page when seeking information about
WE’VE GOT A HEART FOR BUSINESS.
Championing a successful city centre hotcity.co.nz