Project Auckland

Project Auckland

| Tuesday, November 6, 2012

Tuesday, December 9, 2014 Section D

Fonterra HQ leads commercial building upturn Fonterra’s new head office is set to provide “a massive economic and visual injection“to the whole of Auckland and particularly the Viaduct Precinct.

The Fonterra HQ is part of a swag of new projects worth at least $10 billion — infrastructure, education, roading, commercial, retail, housing and prison projects — in Auckland.

It has been designed to reflect the farming co-operative’s close links to the land and values including its “environmentally conscious and sustainable approach to business”.

But crucially it is also a bellwether project signalling that the Auckland commercial construction market is rebounding from the Global Financial Crisis slump which brought commercial construction to a halt.

Notably, Singapore sovereign wealth fund GIC recently bought a half stake in some of Auckland’s newest commercial buildings via the Goodman Property Trust which retains a 51 per cent stake in the $313 million partnership. The projects show that Auckland is in “catch-up’’ mode. But they also pose growth challenges.

Inside

Growing pains Michael Barnett: We need skilled workers to deliver on our potential D4 Big job prospects in construction and ICT sectors D5 Getting youth into jobs and maximising our labour market

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Construction job gaps D15

Push for closer ties Minister of Local Government Paula Bennett wants to see central government work more closely with Auckland, reports Alexander Speirs

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ocal Government Minister Paula Bennett wants central government to have a stronger presence in Auckland to make sure the Super City meets its growth challenges.

“I think there is a real merit to central government having a bigger presence in Auckland,” says Bennett.

“We have a role to play in making sure that more senior people are based in Auckland more often.”

She says the model is already in place with the NZ Transport Agency (NZTA) which is Auckland-focused in some respects. It has senior people on the ground, and is able to make decisions there. “Central and local government working together is in the best interest of the residents in Auckland. I’m not one who’s going to go out and take sideswipes and that sort of thing, but that doesn’t mean I won’t be challenging.”

Bennett’s comments come in the wake of a report by former Auckland Council chief executive Doug McKay on how central government can improve its ties with Auckland.

The McKay report recommended that “stewardship responsibilities for Auckland should sit at the executive table and at the heart of central government decision-making“.

Says Bennett: “Cabinet has discussed the possibility of holding meetings in Auckland many times and I know that the Prime Minister does have an interest in that

happening. Realistically, it’s about the logistics of it — so I certainly wouldn’t rule it out but ultimately that’s a conversation for the Prime Minister to have.”

Since resuming the local government portfolio after the election, Bennett has been “digging in deep” and is “heartened” by progress.

“I think Auckland is in really good shape. I see the developments that are going on and the way they’ve gone through the Unitary Plan process has been impressive.

Local Government Minister Paula Bennett.

Picture / Alexander Speirs

‘‘I think that Auckland Council have recognised some of the things they could and should do better and that’s positive.”

But having another million people in Auckland by 2040 poses challenges in key areas like jobs, housing, transport and infrastructure.

Bennett points to central government’s billion-dollar investment in transport initiatives in Auckland.

“That is about taking responsibility for the major routes . . . you can see it with Waterview, the work continuing on the Panmure Highway.”

“We have, in principle, signed on with the Mayor’s City Rail Link too, with further questions to be asked.

We see ourselves having a commitment there, what we’re working through is around the timing of it and then making sure that there is the population to sustain it and sufficient people working in the city.”

Innovation Brett O’Riley: Ateed’s strategy to make Auckland a crucial innovation hub D8 Capitalising on our region’s rising food and beverage sector D12

Funding debate Finding the finance needed to move Auckland forward D9

Waterfront The next chapter for Wynyard Quarter D10-11

Single agency CCO will achieve change for Auckland Stephen Town

A major step change in Auckland’s ability to deliver quality urban redevelopment is gathering momentum with the prospect of a new single agency CCO that will enable faster, better quality urban redevelopment across the region.

As the city grows, regeneration of

brownfield areas is critical so that Auckland doesn’t sprawl.

It’s not efficient to keep stretching infrastructure networks farther and farther when we have the ability to make better use of what is already within our urban footprint.

We require a new way of ensuring we can deliver speedy, high-quality redevelopment of these areas.

The Governing Body of Auckland Council last month authorised continued detailed investigation into the creation of the new CCO — tentatively named Development Auckland — that will have a broad mandate to stimulate urban regeneration in partnership with both the public, philanthropic and private sectors.

Development Auckland will be a

‘‘one-stop shop’’ taking a holistic view of everything that is required to enable speedy quality development of brownfield locations where ownership of land is fragmented, making it difficult for developers to deliver.

Transport continued on D2

Getting Auckland moving

D17-19

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nzherald.co.nz | The New Zealand Herald | Tuesday, December 9, 2014

Project Auckland

Joint agency will achieve change Auckland Council boss Stephen Town looks at the rationale for the development of a new ‘super’ development agency continued from D1

While these areas for rejuvenation would ultimately be determined by the Council’s governing body, town centres such as Avondale, Otahuhu and New Lynn appear to be obvious candidates for such renewal.

Development Auckland will have the ability to leverage the scale of the wider Auckland Council Group, giving it the capacity to undertake comprehensive redevelopment of suitable locations. For example, Development Auckland would co-ordinate the amalgamation of a councilowned but not well-used property, such as a car park or council building with, perhaps, adjacent land owned by another interested party. Taken together these larger blocks of land would make sites significant enough to allow quality redevelopment such as apartments with shops and other community amenities to be built.

Development Auckland would also ensure that the infrastructure provided by the rest of the Council group (such as transport and water services) could be delivered on time to allow development to go ahead.

We’re not proposing that the council gets into the business of property construction. Rather, we will put underutilised land and new infrastructure alongside another partner’s land (Housing Corp, iwi, private developer) to give enough scale so that well planned town centres could be created. We will work with developers and other parties to ensure quality housing for a range of households.

Practically, this means Development Auckland will take charge of the master-planning process in redevelopment areas agreed by Council, ensuring land is available for redevelopment, seeking development partners and co-ordinating programmes

Auckland Council CEO Stephen Town.

Picture / NZME.

CCOs on track A review of Auckland’s Council Controlled Organisations (CCOs) found they are generally well aligned with the Council’s priorities and are delivering the right outcomes for the region. This exercise has also brought sharply into focus the exciting possibility of a new CCO to streamline, accelerate and speed-up the region’s ‘‘brownfield’’ development potential to cope with the growth of the region. of public infrastructure and helping streamline the consent process.

Additionally, Development Auckland could be a “patient” investor where it was contributing underutilised land, and this would help reduce risk and overcome the current financial barriers many developers face.

For example, the developer may not be required to pay for the land until the joint venture project is complete.

This would generally be on the basis of a minimum pre-agreed value for the land, plus holding costs and a profit share, all payable on completion or in stages of a development, subject to the approval of the Development Auckland Board.

Focusing public sector effort in these locations provides developers and their investors with much needed assurance that regeneration will go ahead.

Such arrangements would foster long-term relationships between Development Auckland and development companies, building confidence within the sector to progress different increasingly diverse housing types.

Bringing together the existing

Change agent Stephen Town's priorities for the first three years are encouraging better cohesion within the council family of organisations and building partnerships with central government, business and our communities. Town is working towards developing and supporting a positive culture within Council, dedicated to serving citizens, ratepayers and customers. A key operational focus is continuing the drive for efficiency in everything Council does.

CCOs Auckland Council Properties Ltd (ACPL) and Waterfront Auckland, Development Auckland will utilise the expertise and skills within the council’s land holdings managed by ACPL and the highly successful and proven development expertise of Waterfront Auckland to provide a total urban redevelopment package.

We’ve had outstanding success with the development of the Wynyard Quarter, so we’re asking how can we do more of that in other town centres? How can we do it

faster and maintain good quality community facilities and housing?

Auckland has around 80 special housing areas and, in addition, 10 spatial priority areas, all of which are candidates, over time, for some sort of regeneration stimulus. So the potential is there and we believe Development Auckland is the mechanism to help us achieve our urban regeneration and development goals as identified in the Auckland Plan.

The Council’s governing body is supportive of the concept as are

many local boards who can see the potential to become involved in regeneration in their areas. We see the Local Boards leading the community’s wishes with regards to masterplanning.

We have briefed the Government and it is very supportive of the proposal. ● Stephen Town has been Chief Executive of Auckland Council since January 2014. He was previously the Regional Director for the NZ Transport Agency in Auckland

Mayor Len Brown: Auckland means business For the first time in Auckland’s history we have the unified vision and plans in place to both accommodate and capitalise on growth.

We are home to a third of New Zealand’s population, a third of the country’s paid workforce, and more than 60 per cent of New Zealand’s top 200 companies. Auckland generates 35 per cent of New Zealand’s GDP and accounts for 41 per cent of foreign direct investment. More than 75 per cent of all visitors to New Zealand arrive at our airport and 40 per cent of all exports and imports pass through our airport and seaport combined.

Auckland is rapidly maturing as the international city New Zealand needs it to be, a city that can compete on an equal footing with cities like Sydney, Los Angeles, and Singapore.

Domestically, we can and must complement New Zealand’s other main centres, and provide the economic gateway, drive and connections that the rest of the country needs.

Unifying Auckland has not been without its challenges, but it offers all New Zealanders vast opportunities, and Auckland is finally wellpositioned to realise those opportunities.

First off the bat, we created the Auckland Plan — a shared vision for what we need to do to make Auckland a success for our people, our businesses and our environment.

Following on from that is the

Proposed Auckland Unitary Plan, which when completed, will be New Zealand’s biggest resource management plan. It will be the main regulatory tool to implement the Auckland Plan.

We have got the Government to agree to a fast-tracked process, because the speed of growth in Auckland doesn’t allow us 10 years to set rules that are needed right now.

We are also well underway implementing the Auckland Economic Development Strategy, taking its lead from the shared vision, and driving a greater degree of cooperation between the council, Government, industry, commerce and community organisations.

Auckland is finally getting the joined-up, long-term planning it needs in order to succeed. Part of that joinedup thinking is recognising the critical importance of strong partnerships with the Government, private and community sectors. Those partnerships are showing results in areas such as housing, transport and youth employment.

What we need to do to

keep Auckland moving — our workers, students and tourists, our commercial vehicles and our strategic freight — and how we are collectively prepared to fund the solutions to our transport woes are questions we will be asking Aucklanders in the New Year.

Another important proposal we will be putting to Aucklanders is the new urban development agency, Development Auckland, to be created by combining Waterfront Auckland and Auckland Council Properties.

The new agency can build on recent group successes, like models and partnerships forged for the redevelopment of Auckland’s waterfront, and its international connections.

Auckland’s growing global profile and its increasing investment appeal are becoming more and more evident.

Three of China’s ‘‘big four’’ banks are establishing themselves in Auckland, and we are seeing largescale investment like the $250m commitment from the Beijing-based Fu Wah Group, working with Waterfront Auckland and Hyatt Hotels to

create a five-star hotel at Wynyard Quarter.

The world-first tri-city Tripartite Economic Alliance will forge closer links with two Asia-Pacific economic giants, sister Super Cities Los Angeles and Guangzhou, which both boast city GDPs larger than our national GDP. This is the calibre of the international partners that are looking at Auckland, our future plans, and the business support our agencies, like Ateed, can provide.

The importance of our global position lies in the need to internationalise the Auckland economy. This means a fundamental shift from a domestically focused Auckland economy, towards an export focused economy.

Currently, Auckland largely produces goods and services for its own internal consumption, as well as for the wider New Zealand economy.

This limits Auckland’s growth to New Zealand’s growth rate. If we want to go faster and truly lead the New Zealand economy, the only realistic answer is to export and couple Auckland to faster growing international markets.

Becoming export focused requires a fundamental change to the structure of Auckland’s business structure. That requires investment in people and plant. New Zealand’s relatively low savings rate means that much of this investment needs to be funded from overseas and that is what we are chasing through

initiatives like the Tripartite Alliance.

The resulting challenge is ensuring our local business community takes advantage of the international connections and partnerships that are being forged.

We are safeguarding existing business land, securing new land for business growth and planning for transport links that help supply chain efficiency and help make businesses more accessible to their customer and employees.

We are committed to reducing the proportion of rates paid by business, with the business sector share of rates set to fall to 25.8 per cent by 2025/26 (down from the current contribution of 33.3 per cent).

The Proposed Auckland Unitary Plan will provide business and the development community with greater certainty as well as smarter digital tools that are faster to use.

We are streamlining consents, standardising bylaws and fees, and changing the way we collect development contributions to more accurately reflect the costs of additional infrastructure and the size of the homes within a given development.

I am determined that the council remains absolutely focused on ensuring Auckland is a city that means business. It will continue to lead the vision, provide appropriate regulation, plan and invest in infrastructure to enable Auckland’s businesses, landowners, institutions and people to do what they do best.

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Desperately seeking capital Funding transport infrastructure is Auckland’s No 1 growth pain, writes Fran O’Sullivan

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uckland City’s two major business lobbies are agreed: Funding transport infrastructure is Auckland’s No 1 growth pain.

Lobby leaders Michael Barnett and Kim Campbell — like many Aucklanders — are opposed to major rates rises in Auckland to help underpin the investment deficit gap for big ticket transport projects.

In separate articles for Project Auckland 2014 — Barnett, chief executive of the Auckland Chamber of Commerce, and Campbell, chief executive of the EMA — have proposed a range of funding options including selling down shareholdings in Auckland Council-owned businesses.

This would provide much needed capital towards funding costly projects like Auckland Mayor Len Brown’s City Rail Link (CRL). The project faced a new hurdle last week when Auditor-General Lyn Provost refused to sign off the council’s 10-year budget while funding for the $2.4 billion project remains uncertain.

Brown has said he will put up an amended budget to councillors this week. The Herald reports that the mayor’s compromise plan will still see $280 million of “enabling” works over the first three years of the plan.

That involves digging “cut and cover” tunnels west from Britomart and then through Albert St to Wyndham St, to

clear the way for a major redevelopment of the Downtown Shopping Centre in the path of the 3.5km rail link to Eden Tce. The two-year delay, to 2018-19, for the start of the main tunnelling and construction of two underground stations — would push the completion date to 2023.

The issue has the potential to spark new conflict between Brown who wants to make good on his 2010 mayoral election pledges and Transport Minister Simon Bridges, who is holding firm to the Government’s 2020 start date.

Bridges said the Government will consider an earlier start date “if it becomes clear Auckland’s CBD employment and rail patronage are growing faster than expected”.

Brown’s desire to step up the project timeline is supported by a number of councillors and Labour.

The issues from Provost’s perspective are: The significant forecasting assumptions associated with funding for the CRL and “the significant level of uncertainty” associated with the Government’s half share of $1.2 billion and locking down “alternative funding sources to raise $344 million, from particular types of user charges or regional taxes, many of which would require legislative change”.

As Provost earlier said, “the main risks to the CRL are that central government will not agree to provide direct funding nor enable the Auck-

Project Auckland 2014 Executive Editor: Fran O'Sullivan Writers: Bill Bennett, Greg Hall, Graham Skellern, Alexander Speirs Sub-editors: Shandelle Battersby, Isobel Marriner Design/layouts: Shandelle Battersby Advertising: Sandra Evans, Nancy Dudley nzherald.co.nz

Selling down share-holdings in Auckland Council-owned businesses such as the Ports of Auckland is one option to help fund transport infrastructure.

land Council to access alternative funding sources”.

Fundamentally this is absurd. Both sides need to show flexibility.

Brown needs to show he is able to look at new funding options which don’t drive the Super City too much further into debt. The Government should also be prepared to have a much more open debate on funding models. This step is necessary to show good faith given Local Government Minister Paula Bennett’s aim for central government to have a bigger presence in Auckland.

Simpson Grierson’s Earl Gray stresses comprehensive funding is essential for Auckland’s development, pointing out that without it, any plans will be compromised.

“Rates alone cannot provide the level of finance needed for many of the key projects vital for the city.

Alternatives need to be found,” writes Gray in Project Auckland 2014.

Barnett points out that Transport Minister Simon Bridges has welcomed Auckland having a debate about future transport infrastructure investment plans but has stated that the Government remains “sceptical” about the two current options: a toll for motorway users or a package involving increased rates, a regional fuel tax or an increase in national fuel tax. Barnett agrees with Campbell that hiking Auckland rates is a non-starter.

“It is hugely unfair that Auckland’s 525,000 rate payers fund the $300 million a year of additional revenue needed to benefit Auckland’s 1.5 million people plus some 2 million visitors to travel around Auckland.”

Says Campbell: “We could pay through a low per entry road toll. Or, we could pay by investing the pro-

ceeds of an asset sell down in new infrastructure.”

In an abridged article on D19, Barnett argues an “open debate” on transport funding could canvass other options such as a partial selldown of Ports of Auckland shares. Or for Council to leverage property developments on top of Auckland’s transport hubs.

On D17, Campbell notes one of Auckland’s largest assets are the AECT’s $2 billion shares in Vector.

“They should be handed over right away to invest in the infrastructure the city urgently needs now.”

It’s a timely debate. And it’s time for action.

Funding Auckland’s transport conundrum D17 Other options for transport funding D19

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nzherald.co.nz | The New Zealand Herald | Tuesday, December 9, 2014

Project Auckland

Dealing with Super City’s growing pains Auckland needs skilled workers to deliver its potential, writes Michael Barnett

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t a recent Perth Job Fair I discovered the need to have a two-minute Auckland “elevator” pitch that was a compelling story for potential job seekers in Auckland and which would encourage them to share their aspirations with me.

In telling our story I felt a sense of pride that the Auckland story is one of a successful and growing economy that is not a one-minute wonder but has life and legs and desperately needs skills in order to deliver on its potential.

When we looked at Western Australia we saw the results of Australia’s mining recession and the growing unemployment of people who have the skills that New Zealand needs.

In contrast, the Auckland story we were telling was a story about a wall of work arriving and bringing an estimated 30,000 jobs over the next few years in the construction and infrastructure industry sector alone.

Of the major projects on the horizon we talked about — the City Rail Link, the East-West Connection, and a third harbour crossing — two major hotels, a downtown shopping centre tower, a convention centre with 1500 construction jobs, and the fact that our city needs 18,000 more houses now and, to meet expected population growth, another 61,400 houses by 2018.

On top of this, Auckland has an increasing tier of innovative, energetic small to medium enterprises (SMEs) expanding their businesses

internationally. The ICT sector has been growing at about 6 per cent a year for the past decade (compared to 2.4 per cent a year for Auckland’s overall economy).

Currently there are around 1500 ICT-related job vacancies in the city.

They range from highly skilled — programme writing and website creation — to basic but critical roles like word processing and data entry.

Overall, the Chamber of Commerce Quarterly survey and others indicate that around 40 per cent of Auckland firms are having difficulty recruiting workers with the skills and attitude they require to grow their business.

We returned from Perth with some 400 resumes of skilled workers ‘‘interested’’ in moving to Auckland.

Yes, we have a good story to tell — a growing and vibrant economy in Auckland and we need to be aware of the effect this will have on our businesses and on our city.

On the other hand, we are a new city — just four years in the making — with lots of growing pains.

Some of our pain is a reflection of how our single so-called Super City was established. The logic of Auckland’s seven councils joining together was driven by calls to achieve economies of scale in services, to eliminate duplication, and to operate more efficiently as one economy — to better reflect the reality that in generating around 34 per cent of NZ’s GDP, Auckland is New Zealand’s only city of global scale.

Michael Barnett says Auckland has a growing and vibrant economy but is not making the progress it should be.

Picture / NZME.

But was Auckland established in a democratic way? Whether you agree or disagree, the Auckland “solution’’ was imposed on Aucklanders and it was rushed. Some of our growth pains reflect the forced way Auckland Council was established.

After four years, it continues to be a work in progress, for example: ● Local boards have not been encouraged to embrace their part in the collective responsibility for the Council’s decision-making.

Instead, they tend to be seen as ‘‘outsiders’’ with a role that restricts

CONNECTING

AUCKLAND Simpson Grierson is helping to build Auckland’s future.

them to a limited advocacy, often after key decisions have been made. ● The same with the business relationship. The mantra of the new Council being ‘‘business-friendly’’ and easy to do business with is buried in its economic development strategy.

It should be up-front in the Auckland Plan and an operating principle that pervades the whole of Council in everything it does. ● Day-to-day expectations and communications reflect an operating style more concerned with process than progress.

All of these early-birth pains mean that Auckland is not making the progress we should be. To move Auckland forward requires firstly recognition that it has real issues. The Council needs a decision-making culture and structure that embraces continued engagement with stakeholders going forward. Local boards need to be brought in from the cold.

Everyone agrees. Auckland’s big three joined-up painful problems are affordable housing, transport and inequality (aggravated by our high rate of youth unemployment).

None of these problems could be solved by the old councils — which is partly why the Super City was formed. But, as we are witnessing, none can be solved by the Auckland Council alone.

A very robust partnership relationship is required between the Super City, central government and business. It’s about shared leadership — where there is recognition that we have limited resources but with the right prioritisation we can still move ahead in a way that sees us compete internationally with our rivals, attracting investment and creating jobs and opportunity for all of us.

In one respect, we can be positive about our ‘‘new city’’ growth pains.

Most are self-made, unlike some of the painful issues perhaps facing other cities. But on one point I am certain: without a deliberate effort to step outside our comfort zone and traditional way of doing things, Auckland’s big and painful issues won’t be dealt to. That is unacceptable to me, and is also of great concern to many Aucklanders. ● Michael Barnett is chief executive of the Auckland Chamber of Commerce

www.simpsongrierson.com

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Big job prospects in building sector Auckland is poised for a major construction push, reports Graham Skellern

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ll eyes are on the Christchurch rebuild, but Auckland is getting ready to pump out more than $10 billion worth of building and infrastructure projects over the next five to 10 years.

An industry working group has calculated that 32,000 more workers — an impressive 21 per cent increase on the present number — will be required by 2018 to meet the building demand in Auckland. The building activity will be bigger than Christchurch in terms of value and number of projects.

The new jobs will appear in all areas of the construction industry.

The numbers required are broken into: ● 11,050 engineers, architects, planners, project managers and project builders, all degree-qualified or equivalent experience. ● 8000 carpenters and joiners, electricians, plumbers, painters, bricklayers, drain layers, gasfitters, insulation installers and motor mechanics. ● 4650 truck drivers, logistics clerks, machine operators and structural steel workers including scaffolders. ● 5850 commercial cleaners, plumbing and building labourers. ● 2450 architectural building, survey and engineering technicians, and contract administrators, all New Zealand diploma qualified or similar.

At present, 162,000 people work in the construction and infrastructure sector in Auckland with 49,000 directly employed. The number is expected to soar to nearly 200,000 based on the pipeline of new projects.

The working group, sponsored by Fletcher Building, Hawkins Construction, Naylor Love Construction and Dominion Constructors, says in its Workforce Skills Roadmap report: “Unprecedented levels of growth in building and construction are forecast in the immediate future in New Zealand, dominated by Auckland.’’

The construction activity will peak in 2018/19 and increase 44 per cent on the work completed in 2013. New house building will more than double over the next decade, with an in-

We have to raise the awareness of the opportunities and explain to the school leavers and university students the type of jobs available.

Geoff Hunt, Hawkins Group (pictured)

crease in apartments and townhouses — and 70 per cent of all residential growth will take place by 2018.

The construction and infrastructure sector contributed $7.9 billion to the Auckland regional economy in 2012/13 and is expected to rise to $11.4 billion in 2018/19.

The “wall of work’’ will include the Downtown Shopping Centre redevelopment (worth more than $400 million), SkyCity’s $500 million international conference centre, Wynyard Quarter residential and commercial development, Quay St and waterfront upgrade, three new luxury hotels in the Wynyard Quarter, at SkyCity and in the $350 million, 52-level NDG Auckland Centre tower building, the University of Auckland’s Newmarket campus on the old Lion Breweries site, new combined international and domestic terminal at Auckland Airport, the $2.4 billion City Rail Link and $1.5 billion Auckland Manukau Eastern Transport Initiative (Ameti).

Auckland Council has struck an accord with central government to fast-track the building of 39,000 new homes in 17 Special Housing Areas over the next three years.

Wynyard Quarter is set for more residential and commercial development, including a luxury hotel.

Wynyard Quarter will take 1500 apartments housing between 2500-4000 residents.

Knowing they will have to employ or contract more staff, the major construction firms operating in Auckland are gearing up by: ● Organising in-house training programmes. ● Promoting the wide-ranging construction opportunities to students and supporting tertiary education institutes. ● Attracting talented staff from overseas.

Geoff Hunt, chief executive officer of Hawkins Group, says the next decade is an exciting time for the construction industry in Auckland. “It presents great opportunities for people to enter the industry at all levels. The sector is not just about hard hats, orange vests and hammers — it is very professional.

“We have to raise the awareness of the opportunities and explain to the school leavers and university students the type of jobs available.

We need engineers, project managers, planners and architects just as much as project builders and subcontractors,’’ he says.

“There are concerns about the trades, particularly electrical, heating and ventilation, and if there’s not enough locally, then we will have to bring in people from offshore. But that’s more expensive.’’

Hunt says the volume will pick up in Auckland over the next two years when the work flattens out in Christchurch — so there will be a labour supply from the south.

Hawkins, like other major construction firms, is running a management training programme and upskilling staff in new 3D build-onscreen technology.

Hawkins will also form joint ventures with overseas firms for appropriate projects that require additional skills and technology.

Graham Darlow, chief executive officer of Fletcher Construction, says his company is planning to increase recruitment over the next two years — both locally and internationally.

The number of new positions will be dictated by the results of tendering for projects.

The Fletcher Group, which has a training and development budget of $6.6 million, is launching a new twoyear employment programme for

graduates. This year its established training and development programmes involved 6875 employees.

Fletcher has partnered with Ministry of Social Development, Te Puni Kokiri, Department of Corrections, The First Foundation and Limited Service Volunteers to provide employment opportunities for youth.

Fletcher is also a founding partner on the Auckland Council’s mayoral task force to reduce youth unemployment.

Derrick Adams, chief executive officer of HEB Construction, says the industry has under-invested in trade skills.

“There is an issue around foremen and supervisors. They are all good guys but they are getting older. We have to invest in internal training so new ones become foremen and the older ones supervisors.’’

He says there is never a great dollop of highly skilled, really employable people available for every position advertised. “But I’m confident that with internal training and graduate programmes, and a degree of recruitment — especially people returning to New Zealand — we can meet the expected demand.’’

Wanted: More smart technology graduates Graham Skellern

Technology and innovation has been targeted as a high-growth sector that will contribute significantly to the national and local economy — particularly Auckland. But the growth spurt has to be supported by a bigger pool of talented IT workers.

New Zealand Technology Industry Association (NZTech) recently surveyed its 100 member companies and they reported a need to hire an additional 10,000 people over the next three years. A majority of those positions would be based in Auckland.

“Technology companies have a substantial and growing need for skilled staff and they have to pull in talent from overseas,’’ says NZTech chief executive officer, Graeme Muller. “If you have a child who wants to get into technology, then he or she is set up for life.’’

He says skills such as programming have gone past the ‘‘geeky’’ stage and they are now just as important as mathematics. “Students should learn to be creative with technology and it should be part of the schools’ curricular because working in the technology sector is a sustainable career.’’

Fisher & Paykel Healthcare managing director Mike Daniell says it takes at least five or six years to train local young people in the technology field.

The new roles required over the next three years will be largely sourced offshore — or by the most recent graduates. “We are keen to see more technology students coming through the education pipeline. New Zealand has half the number of tech grads, as a proportion of population, compared with other OECD countries.’’

Muller says NZTech supported initiatives such as attending job fairs

to attract talented technology workers to New Zealand. “But we have to educate more of our own people. We have to increase the awareness of technology and the importance it will play in the national economy.’’

Local technology companies are particularly facing a shortage of software developers. Fisher & Paykel Healthcare is sponsoring the VEX Robotics competition in a bid to get more young people interested in software development.

Fisher & Paykel has a research and development (R&D) staff of 400 and it now expects to grow that number

by 10 per cent a year. The global heathcare innovator employs about 30 local graduates a year but it will continue to hire talented people from overseas.

Newly-listed Orion Health is planning to double its R&D staff to 700 over the next two years “to try and get a jump on the market’’. Most of the new R&D staff will be based in Auckland but many will need to be recruited offshore.

Orion chief executive Ian McCrae reckons that the schools and universities are not training enough people and securing top talent was a major challenge.

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nzherald.co.nz | The New Zealand Herald | Tuesday, December 9, 2014

Project Auckland

Giving our young people a helping hand

There are some young kids that come from families where no one is employed. So for us, it’s about discussions that need to happen about just what going to work is.

The city is working hard to maximise the potential of its youth, reports Greg Hall

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uckland is heading for a really strong economic boom, and the only thing holding it back is businesses feeling that they can’t get the workers, says Deputy Mayor Penny Hulse.

Says Hulse, “Hang on a minute, 23,000 unemployed young people seems like a solution to that problem.

It’s just a case of saying to employers that hiring young people isn’t as scary as it seems.

“To that end, we provide an open front door — a conduit — through our youth employment summits, where young people can go, meet employers and the employers can feel they’ve met this really great young person and give them a go. It’s nothing more complicated than that,” she explains. “When you’re young and you don’t have a job or money, and you don’t have a lot of self confidence, getting on a bus and going half way across Auckland to put yourself in front of someone for a job interview can almost be a step too far, whereas with the summits, it’s youthfocused, and you can suddenly go with a group of your friends and engage with local employers.”

The Youth Connections programme, spearheaded by Mayor Len Brown and Hulse, looks to connect young Aucklanders with job, education and training opportunities. The latest summit hosted over 200 young people. The next summit, planned for February is expected to draw over 1000.

Gael Surgenor is acting general

Penny Hulse, Deputy Mayor of Auckland

Youth employment

27

per cent of young Aucklanders are unemployed

23,200

young Aucklanders are not involved in any form of education, employment, or training manager for the Southern Initiative, Auckland Council’s program for improving South Auckland. She is also a member of the Youth Connections leadership team.

“Employers tell us that if we can find them 100 young people with a drivers’ license that are willing to work, we’d hire them all. The summits are our way of helping that.”

In addition to acting as a conduit between youth and prospective Auckland employers, the Youth Connections programme helps them to construct CVs, organise drivers’ licence training and prepare them for the process of getting a job.

“There are some young kids that come from families where no one is employed,” says Hulse. “So for us, it’s about discussions that need to happen about just what going to work is.”

The growth of the program since its inception in 2012 has meant that the need to measure the programme’s successes has grown also.

Because of this, Youth Connections is looking at launching a web-based tool for young people to better engage with the initiative. It will enable young

people to create online work profiles where they can upload their CVs and seek out and receive information about job openings to which they may be suited.

“Young workers find jobs through our program, but it’s difficult to track the successes of the placements once they find a job. This will be a useful tool for that. It is going to be piloted next year for use in a number of schools and districts. From there, we’ll see how it grows and then adapt and refine it,” Surgenor says.

Fletcher Building became Auck-

land Council’s first Youth Employment Pledge Partner earlier this year, pledging effort to increase the number of opportunities for youth offered by the company as well as a commitment to implement processes which engender a supportive working environment for young employees.

“Fletcher Building needs good people and we are passionate about working with people at the beginning of their career,” explains CEO Mark Adamson. “We are committed to diversity and value the contribution young people can make to an organ-

isation like ours.”

As for the Council, a commitment to work in this area is a no-brainer.

“You might get your cynics saying, ‘Why is the Council involved with this?’” says Hulse. “But the reality is, we’re under the pump to get houses built, under pressure from the Government to get houses coming up out of the ground, getting consents, working with developers. And the gap?

Having the hands physically working on the buildings. So for us, the logical thing is to say, ‘How about we fill those gaps?’.”

New golden age in sight for region’s economy Tony Garnier

Auckland has recently joined a select group of world cities with a knowledge and service-based economy generating the wealth and living standards on which respective nations depend.

However, little noticed or debated

by Auckland Council is that the city continues to fall well short of achieving its Auckland Plan and Economic Development Strategy (EDS) targets.

Why? Are the targets considered irrelevant to what’s happening in the economy, or too high? What’s holding Auckland back?

Set in 2012, the targets include increasing annual GDP growth from an average 3 per cent per year in the previous decade to 5 per cent per year for the next 30 years. The strategy sets a goal of “growing skills and the local workforce”.

Yet October’s Auckland Economic Quarterly (AWQ) report indicates Auckland’s GDP growth in the previous year was 2.4 per cent against the rest of New Zealand’s 2.9 per cent.

And Auckland’s unemployment rate sits at 6.2 per cent compared to 5 per cent for the rest of New Zealand.

There is also a target to increase annual average productivity growth from the 1 per cent a year achieved in the previous decade to 2 per cent a year for the next 30 years. In Auckland, patchy progress is apparent. Against the New Zealand average annual productivity increase of 1.1 per cent per year, Auckland’s overall rating is estimated at about 1.4 per

Auckland’s CBD is disproportionately more productive than the rest of the country.

Picture / NZME.

cent, though the CBD’s is at least twice that of the rest of New Zealand at more than 2 per cent.

So why is the CBD doing so well?

What lessons can we learn that might help unlock and spread the new golden age for Auckland heralded by this success?

According to economists, Auckland’s CBD is disproportionately more productive than the rest of the country because of “agglomeration effects”. That is, the concentration of firms and workers in one place increases the thickness of the labour market and effectiveness of connections between firms and workers, making them and the economy more productive.

Auckland’s future prosperity depends on its labour market — the firms and skills inherent in it, the pipeline of new skills from the education and migration systems, and the nature of jobs it both demands and creates. Businesses and jobs need

to be highly accessible, which in turn has important implications for how Auckland’s transport system and property development strategy is developed and allowed to operate.

The larger and more concentrated our labour market becomes, the more innovative and productive Auckland will become and the more successful New Zealand will be.

Auckland is consistently ranked in the top 10 cities with a high quality of life but is a work in progress on accessibility, ranked between 40 and 60 for infrastructure performance.

To make sure our city is attractive and accessible enough to attract firms and knowledge workers, our transport and other critical issues holding Auckland back must be fixed. If this were to happen, the EDS real GDP target of 5 per cent annual growth could be very achievable.

As well as a knowledge and service-based city centre economy, a second characteristic Auckland

shares with other fast-growing international cities is the growth in outer urban areas of wholesaling, warehousing, assembly, transport logistics, ICT and other smart manufacturing firms and workers geared to develop and distribute goods and service “hardware”.

The Auckland Plan anticipates around 70,000 new jobs to be created in suburbs south of the CBD, including Southdown, Penrose, East Tamaki, Auckland Airport, Wiri, Takinini and Pukekohe by 2041, compared to the 140,000 projected for the city centre.

A draft 10-point high-level action plan is being developed to support business and employment growth in these areas. It aims to: ● Address the shortage of industrial land. ● Improve transport access. ● Develop partnerships with the business community and education providers. ● Better align land and infra-

structure planning to support growth.

To get faster momentum on both the city centre and industrial area growth initiatives, and help Auckland move into the second phase of economic development, Auckland Council has recently proposed creating a new development Council Controlled Organisation (COO) by merging Waterfront Auckland and Auckland Council Properties. The role of the new CCO in the transformation of the city’s economy may become clearer when the proposal goes out for consultation in the draft Long-Term Plan 2015-25.

Equally critical will be what is in the draft Long-Term Plan to get action on the agenda created in association with Greg Clark, the London-based OECD guru on world cities.

Clark has identified that moving Auckland successfully into the second phase of economic development requires, critically, a reorganisation to make the Council more business-friendly and open.

He says the high-level action required to become branded an international business-friendly city of scale is for the Auckland Council to seek out a better understanding of the real needs of business, and use this to inform policy development, implementation and monitoring across the whole council organisation.

This ideal is also set out as an action in the EDS, but continues to be a work in progress ● Tony Garnier is an Aucklandbased business commentator and consultant

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Finding solutions across all sectors We must advance Auckland’s identity as an easy place to do business, where funders want to invest.

A forward-thinking strategy is vital for Auckland’s success, writes Heather Shotter

G

rowing cities like Auckland offer an increasing range of choices — more exciting things to do, more diverse places to go, diverse jobs, diverse ethnic and cultural groups, more creative and cultural pursuits, sports events and so on. Large global cities bring all kinds of benefits.

But development and growth inevitably bring challenges.

A forward-thinking strategy is vital for Auckland’s success and its goal to become “the world’s most liveable city”.

However, finding visionary solutions to complex issues that reach beyond the immediate horizon is often difficult when set against frameworks of short-term political cycles.

The Committee for Auckland was established to provide the connections where business, government and non-government organisations, as well as community groups, can come together to promote crosssector engagement around key issues. Members are among New Zealand’s leading business and academic experts as well as service providers and local and central government representatives.

We work on developing ambitious, long-term solutions that bring about change for a range of complex issues that affect the progress of the region — transport and congestion, infrastructure and housing, the maritime environment and how to balance commercialisation with environmen-

tal and recreational concerns, and maximising investment, trade, tourism and education opportunities.

We’ve helped make significant advances towards realising the city’s vision to make Auckland a more globally competitive region that will retain and attract the talent and skills required of a truly great economic powerhouse.

But a missing chapter in the Auckland Plan is the funding issue. How do we provide a new investment framework less reliant on rates? Enabling “Future Auckland” has been a real focus for the Committee.

Exploring the mechanisms and policy changes needed for sustainable, diverse investment and funding capacity to finance the infrastructure needed to achieve Auckland’s 30-year vision of becoming the world’s most liveable city continues to be central to our purpose.

In February this year, the Committee brought together a panel of experts in a symposium to discuss the financing of Auckland’s ambitious goals. From that came an understanding the key to progress is collaborative ownership between business and local and central government, to create a more positive climate for investment.

We need to identify, promote and secure momentum on large scale capital-investment projects that could be joint ventures between local and central government.

But before we do so, we need to make the case for and build an appe-

Heather Shotter, Committee for Auckland

tite for growth — a much higher density city is crucial to enhancing infrastructure in a viable way. And we must advance Auckland’s identity as an easy place to do business, where funders want to invest.

The Committee for Auckland has long advocated that a share of this responsibility should be undertaken by an Urban Development Authority.

The Committee is still working on initiatives designed to advance Auckland’s economic growth for the future.

We see many opportunities we’d like local and central government to investigate more thoroughly, for example, selling valuable assets the Council no longer needs to own. We might also consider our CBD waterfront real estate and whether we have the best ownership structure in place.

And what about creating partner-

ships to build attractive residential and commercial development around transport systems to combat the city’s congestion issues and expand the city’s rates base? Many of the world’s great cities encourage transit-oriented development, contributing to important public policy objectives, such as rejuvenating inner-city neighbourhoods and addressing funding gaps.

Then there are value capture strategies — recovering some or all of the increments in land value resulting from the investment through fiscal mechanisms such as land value finance — tax incentives and development agreements. These can be applied to developers or landowners before or after a public improvement is built.

The Committee is keen to open up the funding debate to fully explore

some of the most creative ideas designed to progress Auckland’s economic growth.

In the meantime, the Committee will launch a report on Thursday which makes recommendations to maximise value from Auckland’s cultural and creative industries, called the Auckland as a Creative City report.

Never before has anyone drawn the cultural and creative industries together to consider an overarching strategy to ensure their development and funding occurs in an integrated manner.

Internationally, investing in the creative and cultural industries is proven to have significant benefits helping to attract talent and diversity to spur innovation and generate wealth.

The report outlines lessons from international creative cities with specific initiatives Auckland could emulate for better economic and social outcomes.

Then, early next year, the Committee will release the China Project. As New Zealand’s economic engine and the primary destination and gateway for Chinese tourism, education, trade and investment, Auckland needs to play a leading role in developing and strengthening ties with China.

While we have achieved significant milestones on the road to becoming a successful global city, there is still much to be done.

The Committee for Auckland continues to confront the challenging questions to find innovative long term solutions that will ultimately make Auckland a great place in which to live, work and play. ● Heather Shotter is Executive Director of the Committee for Auckland

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nzherald.co.nz | The New Zealand Herald | Tuesday, December 9, 2014

Project Auckland

Rich ideas flourish along the city’s innovation corridors Auckland is making inroads in its bid to be a crucial innovation hub of the Asia-Pacific, writes Graham Skellern

A

uckland’s drive to become an innovation hub of the Asia-Pacific region — and subsequently export more value-added, technology-based goods and services — is gaining momentum.

The city has taken crucial steps to build a culture of innovation and entrepreneurship and the results are seen in an exciting innovation corridor from Albany to Mangere — all facilitated by the region’s economic growth agency Auckland Tourism, Events and Economic Development (Ateed), which recently released The Auckland Innovation Plan.

Ateed chief executive Brett O’Riley says innovation is at the core of economic growth in Auckland.

“The city has matured to the point where we are recognised for our hightech sectors and locally-born global companies. Our economy is well past being overly influenced by milk fat prices set in overseas markets.

“An innovation-led economy means businesses grow quicker, employ more skilled staff and engage with international markets faster,” says O’Riley.

“We can have more Fisher & Paykel Healthcares, Orion Healths and Booktracks bursting on to the global stage.”

The latest Innovation Cities Index, released in May this year by influential agency 2thinknow, placed Auckland 106th globally and 20th in the Asia-Pacific sub-region. Auckland is well-placed to rapidly climb the rankings.

The Auckland Innovation Plan sets a goal of generating an additional $8 billion a year into the local economy by 2025, through increased research and development and innovation activity.

Innovation is developing new goods and services that create value and enhance business performance.

By 2025 Ateed wants to see 60 per cent of businesses in Auckland participating in this activity — up from 42 per cent in 2011.

Key actions outlined in the plan: ● Build strong connections and working practices, both nationally and internationally, with public and private sector partners to promote and enhance the value of innovation and entrepreneurship in the Auckland economy. ● Ensure innovative businesses are aware of the range of support and resources available such as Ateed’s delivery of the Government’s Regional Business Partners programme across Auckland. ● Work with partners to address skills shortages and attract new qualified people to Auckland, as well as supporting the development of the local workforce. ● Encourage more investment into growth sectors such as Information and Communications Technology (ICT) and digital media.

Ateed will help implement a new innovation mentoring programme; it will identify and support innovative businesses with high growth potential; and it will work with partners to support Maori and Pacific peoples’ economic development, innovation and investment.

These actions, to be well under way by the 2016/17 financial year, will create an environment in which innovation permeates throughout all sectors and businesses.

Research and development Plenty of research, development and

Ateed boss Brett O’Riley says Auckland has matured to the point where it is recognised for its high-tech sectors.

The Icehouse turns focus to local iwi Two young entrepreneurs from Auckland business incubator The Icehouse are taking an innovative approach to working with local Maori.

Shay Wright and Travis O’Keefe are working with Maori to improve capabilities and generate better returns from the assets held by Auckland iwi. Wright explains, “There are 18 iwi who have mana whenua (authority status) over certain parts of Auckland and we’re working with several of them in an advisory capacity in order to produce better outcomes for their people.”

“They have interests in fishing, forestry, farming, property, tourism, social contracts for Government — brainstorming is taking place from Albany to Mangere. Massey University’s Albany campus runs the bustling ecentre, an incubator offering training, angel investment and business mentoring for entrepreneurs and start-up companies.

The university also operates the Auckland Knowledge Exchange Hub, an innovation portal for sharing information with organisations and businesses, and it is planning a new science, technology and business innovation centre on its campus.

Ateed’s Constellation Drive hub has developed two Information Technology Export Clusters (iTECs) which regularly meet to share business intelligence. The clusters help North Shore companies tackle one of their biggest challenges — their relatively small scale — with many having to break into export markets earlier than their global competitors.

Nearby Takapuna is now being called Techapuna after becoming home to a growing cluster of smart,

there’s a real wide range of business interests there and Maori want to be involved throughout the process,” adds O’Keefe.

The process began when a handful of iwi signalled their interest to become more involved in innovation and entrepreneurship.

The Icehouse is now partnering with iwi to leverage the mainstream system and all of the knowledge and expertise locked up inside it, and to make it appropriate for Maori organisations to grow.

Wright says a key point to make is that the Maori leaders are not traditional entrepreneurs and generally aren’t from the business world. “They happen to be in charge ambitious technology companies including Snapcomms, Diablo, AFT Pharmaceuticals and Unleashed Software.

The businesses meet monthly at the Techapuna High-Tech Entrepreneurs club to share experiences and swap ideas.

In downtown Auckland, The Icehouse, GridAKL, The BizDojo, Astrolab and powerHouse — hosting nearly 100 early-stage companies in total — are providing incubation, coworking innovation spaces and acceleration programmes to increase the pool of successful high-tech businesses.

Auckland University’s UniServices, employing more than 700 people and managing 1500 projects at any one time, and AUT University’s Enterprises are intent on turning its intellectual property and research into commercial goods and services.

Unitec’s The Mind Lab gives teachers and their students the ability

of huge amounts of assets and have got there by being elected through their families — where standing within the iwi and trust is often prioritised over skills and merit.”

“We’ve found the best way to work with Maori and to fit our programme to the way they learn has been through practical measures and case studies — showing what other iwi have done and how the principle can be applied to their own business,” explains O’Keefe.

Hayden Solomon, general manager of Ngati Paoa said the programme had “injected real credibility and objectivity into our strategic planning process, particularly as we engage with our people about how we grow our assets.”

— Alexander Speirs to integrate technology and digital capability into new teaching practices.

Further south near the airport, The FoodBowl — Te Ipu Kai, Ateed’s joint venture with government agency Callaghan Innovation, hosts all types and sizes of food and beverage companies anxious to develop and test new products, and open up new export markets.

The FoodBowl, GridAKL — Auckland Council’s new $20 million innovation precinct at Wynyard Quarter — and the tertiary private sector initiatives form the backbone of the city’s busy and productive innovation corridor.

GridAKL, a high-tech ICT and digital media showpiece for Auckland, has a full house of 15 tenants after opening in the refurbished Polperro Building in May this year.

The precinct will expand by the middle of next year when a further 1800sq m of office space becomes available in the upgraded character

Lysaght Building.

This hub will also house early stage businesses and feature a tech cafe.

GridAKL receives up to five tenancy inquiries a week and has a balanced blend of 12 software and digital start-ups, supported by three service companies — communications agency Anthem, cloud-based video production company 90 Seconds and investor Sparkbox Venture Group.

One of the tenants, APIMATIC, has developed automatic start-up tools for application programming interface (API) developers and has tripled its staff to six.

Its two founders are pursuing opportunities in the United States.

Mobile apps company Cloud M has grown its staff from six to ten and is still recruiting. Cloud M has high hopes for its unique health and safety application called Blerter which tracks workers’ movements in highrisk industries such as construction.

Wellington-based software services company 3months has recently opened an office in GridAKL. With support from Ateed, GridAKL regularly attracts more than 100 people to its innovation and networking events.

From February to April next year It will also host the popular Lightning Lab, in association with The Icehouse — the first time the business accelerator has come to Auckland.

The programme has attracted more than 200 expressions of interest and the applicants will be trimmed to a final 10.

The selected businesses will be absorbed in an intensive, threemonth acceleration programme “to make them international from day one’’.

The programme includes mentoring and culminates in Demo Day where the companies pitch to a packed room of investors and potential partners.

GridAKL hosted the first Summer of Tech programme in Auckland that features technology bootcamps and connects innovative companies with talented students in software development and business analysis.

Fourteen of the 16 interns in Auckland were offered jobs, and Summer of Tech has placed 450 students in the ICT sector over the past eight years.

The FoodBowl has experienced a surge in interest as more and more businesses take advantage of the state-of-the-art equipment and hire the processing halls to develop valueadded products.

Its chief executive Sarita Males says The FoodBowl’s involvement in projects has doubled in the past year.

“We are dealing with more larger and medium-sized companies [such as Comvita and Manuka Health], as well as the early stage businesses.

“The great thing is a lot of the companies are looking at us for longer term projects,” she says.

“They will do their development work and early commercial production over the next year or two before building their own processing plant.”

Innovation is alive and well in Auckland.

“We have a rich innovation ecosystem,” says Ateed general manager economic growth, Patrick McVeigh. “Our role is to stimulate and facilitate connections in R&D, investment and markets, and up the game in the innovation space to add value to the economy.”

D9

Finance debate warms up Rates alone will not provide the the level of funding needed to move Auckland forward, writes Earl Gray

A

uckland in 2014 is a city with a bright future ahead of it. But, as any Aucklander will tell you, there are still issues that need to be addressed. To make the Auckland of 2024 an even better city, our current funding difficulties need to be solved, and the social problems faced by many of our citizens require tackling.

I’m a director of the Committee for Auckland and an Aucklander. I’m keenly aware of the issues we need to focus on. I’m also an intellectual property lawyer and this has helped me to see Auckland as a brand — a brand with the potential to become “the world’s most liveable city’’.

When looking at the Auckland of today, it’s worth revisiting the Royal Commission on Auckland Governance. The report, released in March 2009, instigated the streamlining of Auckland’s governance and management. In this sense, the report has been a success. The machine that governs Auckland is a simplified one and more cohesive. However, the report’s terms of reference meant it didn’t confront one of the key issues for the future — funding.

Comprehensive funding is essential for the development of Auckland.

Without it, any plans will be compromised. There are real infrastructure needs, and a number of investment initiatives have been

suggested to help achieve Auckland’s potential. Rates alone cannot provide the level of finance needed for many of the key projects vital for the city.

Alternatives need to be found. Central government is also absolutely critical to those funding alternatives.

The recent announcement that Auckland Council Property and Waterfront Auckland will be merged to create a new urban development agency is also significant. The new entity, Development Auckland, in our view will need to look at alternate funding mechanisms, particularly through private sector alliances.

In February this year, the Committee for Auckland held a symposium titled Enabling Future Auckland. The symposium broached Auckland’s funding problems. International cities expert Greg Clark spoke of the need to make better use of assets, revenues and programmes, raise additional resources through new instruments and deals, and become more attractive and visible to external capital.

These alternatives need to be investigated to achieve growth and economic prosperity, with an open mind from central and local government and citizens. A lot of progress has been made, and a lot said about the various funding options so I don’t need to go into detail. All I would say is that it is easy to find reasons not to do things and to say “no’’. A better

approach is to embrace the possible, work from there on detail and ensuring fairness, and communicate in a way that creates momentum for success.

Alongside governance, the Royal Commission’s report highlighted the issue of ‘‘social well-being’’. It recognised that the social make-up of Auckland is significantly different from the rest of the country. It is the most culturally diverse city in New Zealand

“If I have a problem ATEED can join the dots and connect me with people who’ll know the answer.”

Comprehensive funding is essential for the development of Auckland.

Earl Gray (pictured)

Regional Business Partner Auckland

and the place where most immigrants settle. Areas of considerable deprivation exist.

The report indicated that if the issues of social cohesion and poverty were addressed it would enhance the success of the city: “Every citizen must have the opportunity not only to reach their potential and to lead a fulfilling life, but also to contribute to Auckland’s growth and prosperity.”

The report included recommendations aimed at dealing with these concerns, for example, establishing a Social Issues Board specifically designed as a governance body for social issues. This would have been a joint local and central government initiative, responsible for developing a social well-being strategy and an implementation/funding plan. This board, however, was never progressed. Some of the combined local and central government initiatives currently underway do deal with the social issues identified by the Commission. For example, the Tamaki Regeneration Plan and the Southern Initiative will impact historically deprived areas.

In some senses, Auckland is the engine of New Zealand. As the Committee for Auckland has observed, “It is difficult to imagine how New Zealand can succeed economically unless Auckland does.”

To get the most effective and efficient outcome for the city, both funding and social inequality need to be addressed. ● Earl Gray is an intellectual property partner at Simpson Grierson and a director of the Committee for Auckland

together with New Zealand Trade and Enterprise and Callaghan Innovation

Gareth Berry CEO / Unleashed Software

ConneCted

Business “We facilitated funding, helped overcome roadblocks and networked Unleashed with other IT companies.”

Chris Lock Business & Enterprise / ATEED

Ready to unleash your business?

Connect with us today CORP72

09 365 0510 aucklandnz.com/business

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nzherald.co.nz | The New Zealand Herald | Tuesday, December 9, 2014

Project Auckland

The next chapter in Wynyard

When the regeneration of Auckland's waterfront began eight years ago, Wynyard Quarter was a rough and neglected part of town. Now it is a beacon for urban regeneration across the city.

A commercial office building proposed as part of the Grid Akl innovation precinct on Halsey St in Wynyard Quarter.

Plans for apartments and townhouses in the area.

Building liveable cities Tomorrow’s successful cities are making their biggest – and most difficult – planning decisions today.

AECOM supports Auckland’s vision to be the world’s most liveable city, as ranked by The Economist Intelligence Unit.

We’re helping deliver city-shaping projects – like the electrification of Auckland’s metro rail network – that enable economic growth, connect communities and enhance Auckland’s liveability; number 1 here we come.

aecom.com

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Quarter’s rejuvenation

Mews to get Living Building treatment Greg Hall

Planned laneways for the centre of Wynyard Quarter.

An artist's impression of housing on Daldy St.

Penny Hulse, Len Brown, Madam Chan Laiwa from Fu Wah International Group and Bob Harvey with the model of the new Park Hyatt.

The Living Building Challenge is an international performance standard for building projects of all scales, and calls for the completion of projects that operate as cleanly and efficiently as the natural world in which they are built. Waterfront Auckland is looking to step up to that challenge.

“It’s a commitment to good design and excellence in building quality, and these are the key ingredients for ensuring that people can occupy a space in the most healthy and sustainable way,” explains John Dalzell, Waterfront Auckland CEO. To achieve certification under the programme, projects must satisfy performance requirements organised under headings of Site, Water, Energy, Health, Materials, Equity and Beauty.

One such requirement is a net zero of energy, waste and water over the first 12 months of occupancy. More than just a set of requirements to be adhered to, the Challenge is a design philosophy and an educational tool for the development of cities around the world.

To date, six international buildings have been certified under the scheme, one of which is New Zealand’s Te Uru Taumatua, which serves as the headquarters for Tuhoe.

Waterfront Auckland met with Jason McLennan, Executive Director of the Living Building Challenge, and last year collaborated to host a workshop on the program. Now, the Waterfront development project is keeping the Challenge at the heart of its efforts, and is set to produce a number of Living Buildings. Part of the development — a block of mews housing being constructed in partnership with real estate developer Willis Bond — is set to get the Living Building treatment.

“Internationally, this is where the market is moving,” explains Dalzell.

“In terms of creating more sustainable apartments and office space, it’s about starting to measure them across a broad spectrum of sustainability build criteria, but also deeper than that — measuring them across all aspects of health and wellbeing as well.”

Waterfront regeneration is just the beginning

M

John Dalzell

uch has been said about the waterfront’s role in the revitalisation of Auckland in recent years. The opening up of Wynyard Quarter and Queens Wharf with new public spaces, bars, restaurants and commercial spaces has transformed Aucklanders’ connection with the water’s edge.

When you factor in this is just the start of a 25-year project, we’re looking at a level of urban regeneration not seen before in the central city.

This requires robust planning and stakeholder engagement, smart investment in public infrastructure, strategic land and asset ownership, and harnessed private sector investment, with a goal of building one of the world’s best urban communities.

The ability of our organisation to span public and private sectors has been instrumental to the work achieved thus far. The quality of plans, the sustainability and design elements of the proposed development and the public’s support, are all far higher than would have been the case if either the public or the private sector alone had been tasked with

developing the waterfront.

The strategic use of public investment in infrastructure has played a critical role in this regard. By establishing public spaces and streetscapes to an outstanding level of design, sustainability and excellence, we have signalled to the investment market the type and quality of development we are seeking. Projects such as Jellicoe St, North Wharf, Westhaven Promenade, Karanga Plaza, and Daldy St Park are demonstrations of how we envisage the entire Wynyard Quarter and waterfront developing.

The financial leverage of these investments in infrastructure is tangible. We have carefully structured partnership arrangements with our lead investors and developers in a way that will ensure Auckland’s ratepayers have a share of the value uplift as the surrounding sites are developed. Equally important are intangible benefits in how the public and private spaces will knit together.

That has not happened in isolation, as right from the start, it’s been recognised that activity makes a community as much as the hard infrastructure.

That is why we emphasise placemaking — ensuring that well-planned

When you factor in this is just the start of a 25-year project, we’re looking at a level of urban regeneration not seen before in the central city.

John Dalzell, Waterfront Auckland

activities and events activate the wonderful public spaces that we are designing and developing.

This lays the groundwork for the community we are striving to attract and from that point it has been all about a preparedness to look at a new way of partnering with the private sector. This requires an allocation of risk and reward relative to the set of development tasks the partnership entails to ensure there is a fair and equitable return for the parties involved. That approach enables us to look at areas of innovation in the progression of a more sustainable

and liveable approach to the next phase of development which will include a new Park Hyatt Hotel, a range of residential living options and a commitment to a vibrant and growing hub of commercial space.

The new development partnership agreements include not only “essential outcomes” that developers must adhere to but also stretch targets. This results in developments that provide better liveability and sustainability than other comparable developments across the city. An independent design review process and new tools such as a custom

Wynyard Quarter Green Star Rating tool have been developed to support this progressive approach.

A quality assurance mechanism is critical too and as developments get underway, we will work with our investor/development partners to monitor their performance in achieving both the essential outcomes and the stretch targets.

To achieve the above requires strong leadership with vision at a governance and management level playing a critical part in building community participation and partnerships with business and stakeholders.

A commitment to international relationship-making to foster and open and collaborative exchange have helped in this regard by providing access to the best international thinking. A string of awards both locally and internationally in recent years has been a testimony to this.

There is immense interest and the potential now to reframe the Auckland Council’s role in urban regeneration for the region in the future, building what has been delivered on the waterfront in the last eight years. ● John Dalzell is Chief Executive of Waterfront Auckland

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nzherald.co.nz | The New Zealand Herald | Tuesday, December 9, 2014

Project Auckland

Making a meal out of region’s strong growth opportunity Our city’s rising food and beverage sector is at the heart of New Zealand’s future wealth, writes Mark Hiddleston

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uckland is well known as New Zealand’s growth engine, but it’s time to focus on the growth that really matters for future wealth: the growth of long-term productivity.

Auckland’s growth story is compelling at many levels. The region is already home to one in three New Zealanders and its population is expected to swell by 40 per cent to around two million by 2030. It is the engine of the New Zealand economy, accounting for 35 per cent of national GDP. The region’s economy is growing at over 3 per cent per annum, and this growth is creating opportunities across a range of sectors.

Auckland’s rapidly changing ethnic face means the city is increasingly diverse and outward-looking, particularly towards the growth markets of Asia-Pacific. It is considered one of the best places in the world to do business — but that business activity is not yet producing world-class productivity. GDP per capita, while higher than other New Zealand

To make the most of our potential we must focus closely on the consumer. People at every stage of the value chain, including producers, processors and marketers, need to understand the preferences of our new customers and where and how they get their food.

Our exporters stand to gain most if they target the wealthiest 10-20 per cent of urban households — where people not only consume more of New Zealand’s major exports, but will pay a premium for the privilege.

For example, we know the wealthiest Chinese households spend five times more on dairy and seafood, and twice as much on meat, than those on the lowest incomes. And they will pay more per unit for quality, such as better cuts of meat, more premium varieties of seafood, branded, packaged or processed food, or upmarket beverages.

The people and businesses of Auckland will be centre stage in delivering on this opportunity.

And the city stands to gain a great

Growth targets for Auckland

Mark Hiddleston (above) says Auckland is in a prime position to draw on worldclass ingredients.

Picture / NZME.

transport and logistics hub give the city a unique status as a crossroads between New Zealand’s primary producers and sources of ingredients and the dining rooms, restaurants and supermarkets of the world.

Auckland’s sea and land ports handle nearly two-thirds of New Zealand’s imports, by value, and a third of all exports. Its airport handles three-quarters of international

world-class quality, safety and clean green production.

All of this means Auckland is the logical place to add value to our exports before they leave our shores.

The region’s growing food and beverage sector can then add value — processing, packaging, marketing and exporting products to consumers around the world.

If New Zealand is Asia’s farm, Auck-

Auckland food processing sector

6% 5% 2% Export growth per annum

GDP

per annum

regions, is low compared with many other global cities ranked by the OECD. With New Zealand’s economic growth now among the strongest in the developed world, the question many are asking is: can we convert this to greater productivity and wealth for the long term?

A key part of the solution, for Auckland and New Zealand, lies in adding value to our exports and lifting our focus on premium products.

There is a massive opportunity for our region if we can deliver into the soaring demand for these products from wealthy consumers in the growing cities of our export markets.

As Asian markets expand and modernise, vast numbers of people are migrating to cities. The population in urban areas in China alone has soared to 700 million, outnumbering rural dwellers for the first time. Another 200 million will join them in the next 20 years.

City life means greater spending power, which many direct towards more upmarket and sophisticated products.

When it comes to dining, they want food and drinks that are safe, highquality and convenient. Many are turning to a diet richer in protein and vitamins, including seafood, meat and dairy, along with fresh fruit and vegetables.

It’s not hard to see the close match with the food and beverages New Zealand produces. Global demand for these is soaring, but we are not the only country to see the opportunity.

We’ll only stay ahead if we’re smart and quick on our feet.

Productivity per annum

Vision for the food and beverage sector

The high growth processing sub sector

$6.37 billion Exports by 2025 Source: Ateed’s Food and Beverage Sector Action Plan

deal from the benefits.

Auckland’s opportunity to drive this export-led growth stems from its strengths, not only as New Zealand’s largest city and business centre, but its gateway to the world.

Our infrastructure and role as a

arrivals and 85 per cent of airfreight.

Auckland is in a prime position to draw on world-class food and beverage ingredients from across New Zealand, including dairy, meat, grains, seafood, fruit and vegetables — along with their associated reputation for

land is its pantry.

The region’s food and beverage sector has critical mass, with a 40,000-strong workforce offering a wide pool of skills, experience and expertise. Two-thirds of New Zealand’s top 50 food and beverage

companies have their head office in Auckland, including household brands such as Fonterra, Sanford, Sealord, Tasti Foods and Hubbards, and the industry contributes around $3 billion a year to the local economy.

The opportunity for the region’s businesses is embodied by rising stars like 8 Wired Brewing, a craft brewer turning top quality New Zealand hops into award-winning beers which are now enjoyed by consumers across five continents.

The Freshmax Group has built up one of the largest fresh produce marketing and distribution operations in the Pan Pacific region — partnering with growers and exporting to all corners of the world.

As the largest bank in New Zealand, and the one with the largest presence across Asia, ANZ can draw on its experience and networks to help connect local businesses to opportunities in Asian markets.

We regularly take companies to Asia to identify business leads and potential partners and network with other firms. Success stories include Marisco Vineyards, which signed a distribution deal with Dynasty Wine Company in China after taking part in an ANZ-led tour in 2010, and The Wine Portfolio Ltd, which built valuable new connections via the ANZ network on a food and beverage sector trip to Hong Kong last year.

Another field with great potential is nutraceuticals, where Aucklandbased Vitaco Health, one of Australasia’s largest manufacturers in its field, is producing world-class health food, supplements and sports nutrition which can be found in supermarkets, pharmacies and health food stores in over 30 countries.

As with other industries, capital is a vital ingredient in fully unlocking the sector’s potential. In this field too, Auckland is well served, with major investors such as NZX-listed Veritas Investments supporting the growth of key food, beverage and hospitality businesses. ANZ is pleased to be working with Veritas as part of its growth strategy for the sector.

Companies like these across the food and beverage sector are leading the way and showing what is possible if we harness Auckland’s domestic and global connections to add value and drive growth.

The challenge for our city is to follow their lead and renew our focus on producing premium exports to target high-end consumers in growing markets. Only then can we secure Auckland’s place as New Zealand’s productivity engine, building longterm prosperity for our city, our businesses and our people. ● Mark Hiddleston is ANZ’s General Manager, Commercial and Agri, for Auckland and Northland

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Tourism key to visitor economy Auckland is growing its reputation as a travellers’ mecca, writes Alexander Speirs

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uckland is already on the map as a “destination” not simply a “gateway” for New Zealand tourists.

It seems that proposals to develop Auckland’s visitor economy are on track which is a factor which has increased optimism at the city’s economic development agency Ateed and also at the Committee for Auckland.

The region’s status as an attractive destination for tourists — particularly for the rapidly increasing numbers of Chinese travellers — has been helped by the announced expansion into New Zealand by China’s big three state-owned airlines.

The surge in flights this will create is projected to push annual spending

by Chinese visitors past the billiondollar mark, with the number of Chinese visiting New Zealand expected to double to over half a million within a decade.

Such compelling metrics are also part of why Auckland International Airport is looking at a proposal to create an “aeropolis” at the airport in its 30- year vision.

Auckland Airport’s $2.4 billion “air-

port of the future” includes a sweeping crescent-shaped domestic and international terminal on one site. Its 30-year vision entails an integrated terminal, two runway systems, and a modal transport system which can deliver an efficient airport for airlines and better experience for travellers.

Under this vision Chinese “premium” visitors travelling in new 787s, will enter New Zealand through the “aeropolis“, staying in the 5-star hotels and enjoying a superlative experience — all part of the future face of New Zealand tourism.

Growing the visitor economy has been a key pillar of Mayor Len Brown’s plan to make Auckland the “world’s most liveable city”.

As part of that, Ateed released a 10-year plan to grow the value of the visitor economy to $7.2 billion annually by 2021.

Ateed chief executive Brett O’Riley says, “Four years into the visitor plan we are seeing very significant growth in our visitor economy and we’re on target from an Auckland perspective.

“What the visitor economy does is give us the opportunity to showcase the city and the country to people

which will hopefully leave them with an experience that is going to create a long-term relationship between them and New Zealand.

“What’s important about what we’re seeing with the demand today is that it’s sending the right signals to the private sector to invest in the visitor economy.”

Committee for Auckland chief executive Heather Shotter adds tourism is climbing the ladder of success.

“I think that we’ve now moved forward from the stage where we were purely seen as a gateway to the rest of New Zealand as we’ve taken a more confident attitude towards our offerings.”

“The visitor economy underpins the amenity of the city,” says O’Riley.

“It isn’t just about the direct benefits derived but the amenity created for Auckland and momentum generated across different sectors.”

Auckland Airport’s $2.4 billion “airport of the future” includes the domestic and international terminals on one site. Left, China Southern is one of three Chinese airlines expanding services into Auckland.

O’Riley said that since the inception of the Auckland Visitor Plan, “we’ve discovered a lot more about the dynamics of the visitor economy and where particular growth opportunities exist”.

While China is a major growth market, Australia remains the largest source of visitors to Auckland and New Zealand generally. The Austra-

lian outbound market grew at an average of 9 per cent in 2014 and New Zealand is getting between 3 and 4 per cent of that.

A strategic partnership between Ateed and Flight Centre Australia has reeled in more than 15,000 Australian visitors and pumped $12.9 million into the Auckland economy.

— Additional reporting: Greg Hall

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nzherald.co.nz | The New Zealand Herald | Tuesday, December 9, 2014

Project Auckland

Infrastructure key to liveability investments are critical. They have the ability to lift Auckland and national GDP”.

Rising up the international liveability list is a challenge worth achieving, Aecom’s John Bridgman tells Bill Bennett move five or so places up the table pushing Auckland well ahead of Perth.

When measuring infrastructure, the EIU scores cities on the quality of their road, public transport and telecommunications networks along with the international links. It also looks at the availability of good quality housing, energy and water provisioning.

Bridgman says Auckland has the ability to improve most of these areas.

“The things that will shift that dial are the City Rail Link, freight transport and resilience in our water and electricity supply. Also housing affordability.

These are all things people are trying to address”.

He says though others might see infrastructure as Auckland’s vulnerability, it is an opportunity.

“The Super City has done some great things. It’s allowed us to get some forward momentum on these areas.

“The fear is that we think we’ve solved it: putting in the Western Ring Rd means we’ve fixed things, whereas we need to continue the momentum.”

Continuing the momentum is partly about being able to provide funding and partly about our ability to allow projects to get up from a planning perspective.

Economic value Bridgman says being recognised as one of the world’s most liveable cities is so economically valuable that we shouldn’t let debates about funding

and other matters that slow the infrastructure build get in the way of maintaining momentum.

“It’s right to have debates about funding, but they need to support the goals rather than becoming the key issue. Debates about resource management and planning are also important but they need to support the major tenet, which is making the city a much better place”.

He says the message about the importance of a city’s infrastructure in the context of creating a liveable

city has yet to resonate with Aucklanders: “Discussion tends to be about how we have a cafe society or how the waterfront is nice”.

Building infrastructure makes a city liveable; it also underpins economic development. Bridgman says the Western Ring Rd has already done a lot for development, with more to come when it is completed.

He says: “Other projects now need to happen: the East-West Link and Ameti [the Auckland Manukau Eastern Transport Initiative]. The

There’s no denying Auckland has come alive in 2014. With the transformation of Auckland’s waterfront, residents and visitors can now enjoy a renewed sense of energy on the water’s edge. Waterfront Auckland is leading the revitalisation of Wynyard Quarter by creating a strong sense of community, harnessing innovative sustainability, and incorporating spaces and design elements with people in mind. And the best part is, it has only just begun.

wynyard-quarter.co.nz

★44013

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uckland already ranks as the world’s tenth best place to live according to the Economist Intelligence Unit’s Liveability Index.

John Bridgman, managing director of Aecom New Zealand, a professional technical services firm, says with the right infrastructure in place, Auckland could go further up the list.

He says that’s a challenge worth meeting because the top ranked cities attract high quality investment, immigration and interests in the products they sell. Together these will boost the city’s economy and create more jobs.

The EIU’s index covers 140 cities around the world and ranks them based on the quality of life. Melbourne tops the list with Vienna in second place. Australia has four of the top 10: Sydney and Adelaide also feature, while Perth sits at nine, one place ahead of Auckland.

To create the index, the EIU looked at 30 factors, including things like stability, healthcare, culture, environment, educational resources and infrastructure. These are crunched down to a single score out of 100: the ideal.

Auckland’s score is 95.7.

Bridgman says Auckland ranks well in each individual department, but is weakest in infrastructure, scoring 92.9.

The Australian cities are on 100. He says if the city could lift its infrastructure ranking to the Australian level it would

Funding When it comes to funding, Bridgman says we need to recognise the value the private sector can bring through its investment. He quotes the report back from a recent New Zealand Council for Infrastructure Development study tour to Britain which found a much greater acceptance of private sector investment in infrastructure, leading to a far quicker time to market. There’s evidence of the same results coming from Australia.

Bridgman says there are ways to get that private investment in infrastructure: PPPs (public private partnerships) like with the Transmission Gully road project in Wellington are one approach.

New Zealand’s consultation processes remain a barrier to getting the necessary infrastructure built quickly. Bridgman says here the emphasis is on letting all parts of the community comment on a project and that process tends to shape the end result.

He says overseas the emphasis tends to be more on shortening the process and then finding ways to mitigate the problems.

He would like to see New Zealand move to a model where public debate centres on the overall plan, not project detail.

He says Auckland’s infrastructure planning has to align better with central government; this is a matter of leadership on both sides and that is now improving, but there’s still scope for better alignment.

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Solving the housing crisis Super City’s property problems require a multi-pronged approach by several players, reports Alexander Speirs

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uckland faces a shortfall of 18,000 homes at present — a situation projected to further deteriorate if productivity levels cannot improve substantially. That’s according to a newly released document from the Ministry of Business, Innovation & Employment (MBIE) prepared for the incoming Minister of Building and Housing.

The report warns against the boom/bust nature of the building sector, whose swings are felt more strongly by the New Zealand economy relative to international standards, and called on the Government to utilise its role as a major construction client to help ease pressures in the sector.

“Through a focus on facilitating large-scale development in Auckland, the Government can assist in smoothing construction cycles as well as provide opportunities for the sector to deliver innovation and scale economies,” MBIE says.

It picks up on a theme which Labour ran during the election campaign, where their KiwiBuild proposal would have seen a Labour-led Government take a hands-on approach to the housing crisis and build 100,000 new homes over 10 years for firsthome buyers.

National rubbished the policy at the time, with Prime Minister John Key commenting “It will either fail miserably, deliver dwellings that people don’t want to live in, or require massive taxpayer subsidies.”

The MBIE report not only spelled out the opportunities, but also provided a draft proposal for progressing down that path — however, this information was withheld from the final report which was delivered postelection to the returning National-led Government.

Labour housing spokesman Phil Twyford says the only realistic solution to improving issues with supply remains for the Government to roll up its sleeves and utilise economies

Minister of Building and Housing Nick Smith (left) remains confident the Government is progressing in the right direction to fix current housing shortages.

of scale to the country’s advantage.

“The problems in the Auckland housing market are so intractable that only a government-backed building programme like KiwiBuild can break through and deliver the houses which can make a dent in the shortfall of supply.”

Supply issues in Auckland find their roots in the Global Financial Crisis — when the number of new dwellings being built dropped well below historic levels while demand levels remained steady throughout.

In the aftermath of the GFC, demand was bolstered by increases to New Zealand’s inwards migration — almost half of new immigrants settle in Auckland.

The net effect is a continuing drop in cumulative supply, which from 2008 onwards has resulted in a growing deficit and surging house prices.

In August of this year, the median house price in Auckland reached

$614,050 — and while the growth rate is slowing — the price has continued to soar.

Minister of Building and Housing, Nick Smith however remains confident the Government is progressing in the right direction.

“House price inflation in Auckland has slowed from 14.8 per cent to 7.9 per cent over the past year. Our goal is to rapidly increase supply and to contain ongoing house price increases across the city,” Smith said.

“Building activity is at the highest level since 2006 and $20 billion of residential building work is projected over the next three years.”

Despite the improvements, building levels remained well below the targets set out in the Auckland Plan, with MBIE reporting a shortfall of 30 per cent between projected and actual levels.

With a starting shortfall of 18,000 dwellings and Statistics NZ projecting

Auckland to require an additional 10,000 new homes for each of the next five years — Twyford says the Government’s plans will fail to have an impact.

“Even if the Government’s projections come to fruition — which I regard as supremely optimistic, quite heroic even — it still will not put a dent in that 18,000 shortfall. That’s why officials are continuing to predict that house prices in Auckland will keep on rising and that’s a real problem.

“We’re just not building enough.”

It’s clear that any solution to solving the housing crisis in Auckland will require a multi-pronged approach from a number of players — a challenge which Minister of Local Government, Paula Bennett is confident in the Government’s ability to tackle.

“There are multiple pressures and levers that all need to be pulled in unison for us to get ahead of the game

in Auckland. I think the pipeline looks encouraging, you just need to look at a 31 per cent increase in building consents and the special housing areas,” she said.

“I’m really excited about what’s already in the pipeline and some of the initiatives which the Government have up their sleeve which will progress in the New Year.”

Bennett says that rather than Government searching for a silver bullet solution, it was about making smart decisions to push the market in the right direction.

“Look at where we are as Housing New Zealand, we own 32,000 houses in Auckland which makes us 7 per cent of the market. We’re the biggest player in the market and we can be much smarter with the land that we own to create more houses. Some of those can be affordable homes, others can be social houses and some for profit so we can pay for that.”

Labour: Take offshore buyers out of the property equation Phil Twyford

If we talk about what’s happening now, there’s no doubt the housing market is a mess. It’s essentially a failed market which is certainly not delivering what we want — affordable, decent-quality housing — and that’s apparent right through the market.

Auckland is basically a speculators’ paradise, so buying and selling property for capital gains is one of the major, if not the defining feature of its real estate market.

There are lots of causes, the chief one of which is the tax treatment that essentially encourages speculation.

You end up with a fire hose of credit from the banking system pouring into property speculation.

Added to that is the growing interest by international investors in New Zealand property and the lack of any kind of restrictions and controls means that the effect of offshore speculators buying our houses is a contributory factor, particularly in Auckland.

Labour doesn’t think there’s any advantage for New Zealanders to

have our little residential property market as part of the international market, where cashed-up speculators with access to cheaper finance can buy and sell our properties for capital gain.

Overseas buyers are not the biggest influence on our market, with estimates that 8 per cent of houses are being bought by offshore speculators, but it’s the quantum of demand over supply that is the important thing.

We know that demand outstrips supply in Auckland already, so when you add 8 per cent of purchases that wouldn’t be there if adequate controls existed, it becomes a significant increase to the excess of demand over supply.

What we’re left with is a situation where the only people doing well are speculators and the well-off — people who are mortgage-free homeowners.

Everybody else is hurting — firsthome buyers have been locked out of the market by these escalating prices, renters are finding it increasingly difficult and people at the bottom end are really struggling.

What we’re left with is a situation where the only people doing well are speculators and the well-off — people who are mortgage-free homeowners.

Phil Twyford, Labour

We’re just not building enough, and the houses which are being built are at the top end of the market.

Thirty years ago, roughly one third of our houses were at the affordable end of the market, now it’s more like 5 per cent.

Because of Auckland’s very high increases in residential land price, builders have been basically choosing to only build high-end houses — and you can’t blame them.

That’s a commercial decision and it’s just not profitable for them to build cheap houses on expensive land.

Trying to understand how we got ourselves into this mess, one of the key things is the planning roles and system.

There’s no doubt in my mind that the effect of the old Auckland Regional Council’s metro-urban limit around the city — which was designed to limit urban sprawl — combined

with a whole lot of rules that restrict density and intensification, had the effect of stopping the city from growing out and up. Effectively, that’s created a pressure cooker system which has driven land prices through the roof.

The effect of the Auckland Unitary Plan, which creates and replaces the old fixed metro-urban limits with a rural-urban boundary will help. The new system progressively brings out new land, and combined with the effect of Special Housing Areas has brought a lot of land into the system.

There is quite a large area of agreement between Labour and National on this issue.

We need fundamental reform of our resource management and planning rules in order to ensure that we don’t get into the situation again.

The Government is saying they want to reform the RMA, so it’s going to be very interesting to see how willing it is to confront the issues, and whether it can spur real reform of the system. ● Phil Twyford is Labour’s spokesperson for Housing and Auckland Issues

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nzherald.co.nz | The New Zealand Herald | Tuesday, December 9, 2014

Project Auckland

Alliance will reap dividends Auckland now has its own version of a free trade agreement with two of the world’s most influential cities

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Graham Skellern

uckland has created a huge opportunity to expand its economy by strengthening business relationships with two powerhouse cities in the AsiaPacific region.

The mayors of Auckland (Len Brown), Guangzhou (Chen Jianhua) and Los Angeles (Eric Garcetti) signed a ground-breaking Tripartite Economic Alliance on November 16 — taking existing long-term sister cities relationships to a new level.

They have moved the traditional sister city focus from civic and cultural to “fostering economic development, innovation and collaboration”.

The three-way agreement — understood to be the first of its kind in the world — opens up doors to substantial economic, trade and investment opportunities for Auckland businesses, entrepreneurs and investors.

It is expected to lead to more multinationals opening offices in Auckland, and increase the flow of highvalue visitors (both tourists and business guests), fee-paying students and skilled workers.

It also improves Auckland’s global profile and visibility because of its stronger ties with the two Asia-Pacific heavyweights, which have a combined population of nearly 27 million.

Guangzhou, third largest city in China, has 14 million people, and the Greater Los Angeles area has 12.8 million people.

Brown says Guangzhou and Los Angeles are Auckland’s most wellestablished and economically important sister cities. “This alliance teams us with two influential economies and is great news for Auckland business. The initiatives, projects and opportunities outlined in the Memorandum of Understanding will add value to our economy and lead to job creation.

“The alliance will boost our efforts of meeting the Economic Development Strategy target of increasing regional exports by 6 per cent a year), real gross domestic product by 5 per cent) and productivity growth by 2 per cent),” Brown said.

New gateways Auckland’s economic growth agency, Auckland Tourism, Events and Economic Development (Ateed), will use the agreement to create new gateways into the California and South China markets for its targeted growth sectors of tourism, international education, screen and digital, innovation and food.

Auckland companies with bases in Los Angeles include Mainfreight, Fisher and Paykel Appliances, Vista Entertainment Solutions and Orion Health.

Other initiatives driven by the agreement include collaborating on air quality solutions, waterfront regeneration, ports partnership, transport management, high-end retail marketing and branding, and strengthening the relationship between the cities’ chambers of commerce.

The alliance also provides Auckland with an opportunity to promote the World Masters Games 2017, which is expected to attract at least 25,000 athletes and deliver $36 million to the city’s economy.

The agreement is expected to open up significant opportunities to develop tourism packages and business events that align with the World Masters Games and other activities in Auckland. Over the next three months the cities will draw up a work programme to implement initiatives — and progress on securing business opportunities will be reviewed at an

The mayors of Guangzhou, Auckland and Los Angeles (from left, Chen Jianhua, Len Brown and Eric Garcetti), are committed to making their cities world leaders in economic co-operation after signing the Tripartite Economic Alliance.

Big city allies

14m 12.8m people in Guangzhou, third largest city in China.

people in the Greater Los Angeles Area.

Guangzhou (above) and Los Angeles are Auckland’s most well-established and economically important sister cities.

annual Tripartite Summit.

The first will be held in Los Angeles in June next year, followed by Auckland in 2016.

Already, the Port of Los Angeles is organising a ports’ partnership function during next year’s summit and 20th Century Fox Studios will host an entertainment and innovation event.

Ateed chief executive Brett O’Riley, who attended the Tripartite signing in Guangzhou, says it was powerful to see the three mayors committed to leading the charge.

“They are determined that the new alliance will generate measurable economic outcomes and they are ambitious for their cities to be seen are world leaders. All three cities are going through a revitalisation, have similar challenges, and are very much

focused on the environment.”

O’Riley was involved in wideranging, high-level economic growth discussions in Guangzhou — as well as making significant progress in other China-focused programmes to market Auckland as a premium destination for high-value visitors.

He says there are a lot of ideas on the table as a result of the agreement.

“Now we have to get on and prepare the work programmes to take advantage of the new opportunities.

“Take innovation — Guangzhou has multiple innovation precincts and tech parks, and Los Angeles has as much innovation intensity as San Francisco and Silicon Valley, if not more. Both cities are interested in screen and digital technology, and represent alternative landing points for Auckland and New Zealand high-

tech firms.

“There are opportunities for clean tech and environmental management companies to partner with local firms in Guangzhou.

“The same exists in Los Angeles but there is a bigger focus there on water management.”

Tourism boost On the tourism front, the three cities will work towards sharing market intelligence and promotional activities to increase the number of visitors.

Ateed’s tourism team will look to promote Auckland to Guangzhou and Los Angeles residents through targeted advertising channels, and build stronger relationships with travel agencies.

Ateed has targeted China as a key tourist market for Auckland — last

year the number of Chinese visitors increased 16.3 per cent to 210,000.

There is also similar growth in visitors from United States.

All three cities have world-class universities and are keen to share educational expertise and best practice including innovative teaching methods, and connect students to funding, scholarships and degree courses.

One proposal is to launch sports academy programmes which include study — and an industry-driven project for an Auckland-based rugby academy has been discussed.

Auckland hopes to benefit from the New Zealand-China Television Co-Production agreement, recently signed by the NZ Film Commission.

The agreement gives film-makers access to funding and incentives in each country including a $1 million China Co-Production Fund for investment in one or more official feature films.

A big percentage of movies made in China are never screened because of problems with film quality and distribution — and with the likes of the Media Design School, Digital Design at AUT University and Film School at Unitec, Auckland can become a training ground for Chinese film-makers.

Auckland is the centre for New Zealand’s food and beverage industry and in consultation with The FoodBowl — Te Ipu Kai, the sector can share its expertise and technology that leads to the commercialisation and distribution of quality food products across all three markets.

There’s plenty to work on. But Auckland has welcomed the chance to play an active and important role in setting a new benchmark for how global cities engage, collaborate and create mutual economic growth opportunities in the 21st century.

D17

Funding Auckland’s transport conundrum

Auckland is going to have to invest in roading infrastructure or our gridlock problems are just going to increase, says the EMA’s Kim Campbell (above).

Many options have been considered to solve our traffic issues, says Kim Campbell

N

obody wants to pay more for anything but it’s either that or everyone in Auckland will be struggling with traffic gridlock within 10 years.

That’s the stark choice highlighted by the modelling on Auckland’s transport future. If we keep on the present business-as-usual track, slowly building more roads and adding more public transport, by 2021 the time we take to get to work and deliver goods around Auckland will have become untenable.

All the interests represented on the Alternative Funding Group set up by Mayor of Auckland Len Brown agreed with the recommendations put forward. These interested parties included: ● Auckland Business Forum ● NZ CTU ● Walk Auckland ● Campaign for Better Transport ● National Road Carriers ● Child Poverty Action Council

● Cycle Action Auckland ● Environmental Defence Society The group was tasked to find the best way to get the money to develop Auckland’s transport networks so we didn’t end up not going anywhere.

The funds needed for a transport package that will keep up with the ongoing crowds of people coming here is estimated at $12 billion over 30 years — an extra $400 million a year.

Over two years of work the group exhausted all options of possible funding sources. They examined many things such as visitor room taxes, parking levies, road cordon charges, property betterment taxes, a regional sales tax, regional fuel tax, even a regional lottery.

The problem was few of these raised much money, and when we focused on the things that would raise large sums, some of them were not very fair. For example, there’s already a lot of pressure on rates revenues

to be spent on other things, and to raise them for transport purposes affects people who may not use the roads much.

In the end, the group agreed its main recommendation was for a toll on the existing motorway network.

Auckland Council politicians will be left to decide whether to advance this, but the group considered it held several compelling advantages over other options, including: ● A toll can act as sort of regional tax where “if you don’t buy you don’t pay”. ● Though such a toll is “another tax” it would convey to central government that Auckland is genuinely prepared to pay its way for a more successful city. ● In the short term it could help manage traffic congestion. ● Over time it will encourage people to organise themselves so they live nearer where they work. There’s a real, very large cost to the community

having people travel all over the city every day.

Of course we have no law in place to enable such a toll, and neither do we have adequate governance arrangements to administer it and invest the proceeds to the public’s satisfaction.

To do this we would need a Greater Auckland Transport Authority to combine the transport resources of Auckland Council, the NZ Transport Agency, Auckland Transport and the Ministry of Transport. By bringing these agencies together we could expect far better integration of the development, funding and administration of our transport systems.

Before going there Auckland has another elephant in the funding room — we really need to sell some of our publicly owned assets.

There’s a lot to choose from: a partial sell down of Auckland Airport shares; the Ports of Auckland business, though certainly not the land

the port operates on; and numerous properties.

One of the largest assets is the Auckland Electricity Consumer Trust’s $2 billion worth of shares held in Vector. These are Auckland Council property that the Council won’t control until 2073. They should be handed over right away to invest in the infrastructure the city urgently needs now.

Asset sales could delay the need for tolls but Auckland will end up paying regardless. Either we’ll pay by suffering traffic congestion and higher personal transport costs, along with the higher costs we pay in the goods freighted around the city.

Or we could pay through a low per entry road toll. Or, we could pay by investing the proceeds of an asset sell down in new infrastructure. The choice is ours to make. ● Kim Campbell is chief executive of the Employers and Manufacturers Association

The

connected network.

2014 – 2016

New electric trains.

Smarter, better, quieter.

New bus network.

Simple, frequent, connected. By 2016.

Smart ticketing.

Ferries.

More frequent, more connected.

ATHOP1053

Connecting Aucklanders.

For more information visit AT.govt.nz @AklTransport or phone 09 366 6400

You can read the full terms of use of the AT HOP cards, the registered prospectus relating to the AT HOP cards and other information regarding the AT HOP cards on our website or at the Transport Information Centre, Britomart. The obligations of Auckland Transport under the AT HOP cards are unsecured. AT.govt.nz/athop

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nzherald.co.nz | The New Zealand Herald | Tuesday, December 9, 2014

Project Auckland

Let’s do whatever it takes

As we enter the new year, funding constraints make it inevitable the tempo of Auckland’s endless highly charged and emotional transport debate will increase even further, says Tony Garnier

A

uckland’s newfound single transport focus is starting to reap a dividend for the city’s attractiveness as a world-scale, progressive but pleasant city to live and work in.

The last four years has seen a concentrated effort by Auckland Transport (AT) to improve bus and rail services, introduce integrated ticketing and timetables, new busways, rail electrification and new trains. There is a possibility that work will start next year on joining up our 19th century disconnected Western and Eastern rail routes by turning the dead-end Britomart Station into a through station; a stop on what will become an integrated rail network, giving commuters a turn-up-and-go train service and a much shorter and more reliable commute — similar to what the completion of Spaghetti Junction some years ago did to give Auckland a joined-up motorway system.

On the New Zealand Transport Agency’s (NZTA) strategic road front, with the completion of the Waterview tunnels in a couple of years, Auckland will almost have a completed basic city-wide motorway network with options — an idea first proposed in the mid-1950s.

The last four years have also seen NZTA and Auckland Transport establish a culture of working together, and having a “one network” approach which is starting to see progress on projects to join up disparate sections of the strategic road network: linking the Northwestern and Northern motorways at Constellation Drive, improving access to Auckland Airport, and a group of projects to improve transport choices and connections for the southeast Auckland known as the Auckland Manukau Eastern Transport Initiative (Ameti).

Central government has also made it clear that it wishes to see accelerated delivery of the East-West Connection between Onehunga, Penrose and Southdown on the northern shore of Mangere Inlet, a longstanding proposal to provide an efficient link for the 6000 heavy freight trucks that each day service the upper North Island, either by rail or road from distribution centres located in the area.

Says David Warburton, Auckland Transport chief executive: “In the four years Auckland Transport has existed, we have worked to bring fundamental change to the total Auckland Transport system.

“We [Auckland Transport] and

BUSINESS

SERIES

Our key challenge in the period ahead is to achieve the balance between looking after what we have and building for the future.

David Warburton, Auckland Transport

Auckland’s new electric trains form part of a longer-term plan to get the city’s transport issues ironed out.

Could light rail be an option for our city centre?

When Prime Minister John Key confirmed support in principle for the City Rail Link (CRL) last year, he also made reference to the need to address conclusions of Auckland Transport’s City Centre Future Access Study (CCFAS) showing bus crowding and congestion coming into the CBD as a priority issue, and promised to make funding available for projects to deal with it.

In particular, the CCFAS identified that the city centre is facing access capacity issues across all road entry points which would worsen from as early as 2021, particularly from the central and southern isthmus not

served by the rail network including: ● Key arterials with major bus routes are already near capacity and will be significantly over capacity in the future, even with the CRL and surface bus improvements. ● If not addressed now, there will be area-specific problems, including the impact of a high number of buses on urban amenity in the medium term, and acute issues on key corridors in the longer term.

To address these issues, Auckland Transport has work underway to provide an effective public transport solution for those parts of inner Auckland and the city centre that

cannot be served by the heavy rail network once the CRL is operational.

A range of options that supports growth requirements in a way that maintains or enhances the quality and capacity of the city centre streets are being explored, including light rail.

Auckland Transport’s Strategy and Planning manager, Peter Clark, confirms that the programme benefits being sought include: ● Improved transport access into and around the city centre from areas not served by the rail network in a way that is best able to satisfy immediate needs and the long term, rapidly growing customer demand in

NZTA are working in partnership on a single, integrated transport solution for Auckland, by looking at Auckland as a whole to come up with an overall network solution for all modes, and

not just having a collection of projects that are planned and programmed separately.

“The mindset and culture within Auckland Transport is built around

delivering a customer-sensitive transport service. This means providing services that are responsive to customer groups — from freight operators to pedestrians, from rail and bus

2014 Business Series Project Auckland is the final report in the New Zealand Herald Business Report Series for 2014.

The Business Report team thanks all editorial contributors and sponsors of the series. We look forward too presenting a new range of in-depth reports in 2015.

Fran O’Sullivan Executive Editor - Business Reports fran.o’sullivan@nzherald.co.nz

Sandra Evans Sales Manager - Business Reports Series sandra.evans@nzme.co.nz

the city centre and approaches. ● Improved efficiency and resilience of the transport network of the city centre by improving journey time, frequency and reliability of transport access into and within the city centre and city fringe; improving the linkages and service of key destinations — particularly those not served by the CRL, notably the university campuses and the Wynyard Quarter; maximising the benefits of existing and proposed investment in transport; and releasing the capacity constraints around the city’s most important approach routes and nodes.

— Tony Garnier to cyclists and our ferry services, as well as the private vehicle commuters.”

At the same time, AT’s long-term plan objectives, he says, are to

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to get this city moving maintain existing assets, manage growth, support a liveable city — environmental, health and urban form — through public transport, active modes, roading improvements and intelligent transport systems.

“Our key challenge in the period ahead,” he says, “is to achieve the balance between looking after what we have and building for the future.”

But maintaining Auckland’s shared desire for increased momentum won’t be easy.

Auckland’s rocketing population growth — projected at around 825,000 over 30 years — and an economy firing on all cylinders, has not only decoupled Auckland from the rest of New Zealand in the way it is growing but, according to a 2013 Government Growth Agenda report, tipped Auckland into the top 10 fastest growing cities in the OECD. We are living at a time when Auckland needs a higher level of transport investment to address both current issues and to get in front of Auckland’s growth curve, as well as some smart, innovative thinking and initiatives to improve the efficiency performance of the existing network and services.

As well as the Auckland Plan’s highest priority projects — East-West, Ameti, the City Rail Link and next Waitemata Harbour crossing — Auckland’s cityscape faces big but necessary change from rapid transit connections needed to eastern Auckland, the southeast (Mangere), Auckland Airport and the northwest (towards Waimuku and Helensville); local feeder bus services connecting to trunk rail and busways, especially at peak times; and, public transport

Other options available for transport funding Michael Barnett

Auckland wants accelerated action to fund the full Auckland Plan transport network. I suggest we need to go back to the start gate and have an ‘‘open book’’ debate in which every practical option is put on the table.

I have been concerned that at a cost to Auckland Council of around $5 million, the Alternative Transport Funding group didn’t have a brief to seriously look at options such as asset sales or property development.

For example, Auckland Council is the ultimate beneficiary of the $2 billion assets of the Auckland Energy Consumer Trust (AECT), an asset that attracts an annual dividend of just

over $100 million. Without any sell down we are one-third of the way to solving the $300 million transport funding shortfall.

In an open debate you could also discuss the cost benefit of selling down some of the AECT’s assets, or look at a partial sell down of Ports of Auckland – another multi-billion dollar asset. The Port of Tauranga enjoys the commercial tension benefit of an ownership shared by the workforce.

Many Aucklanders, I am sure, would jump at the chance to take a shared ownership of our port, or our airport (which council partly owns) or the AECT. A shared ownership structure could help keep the commercial operators on their toes.

As in cities like Hong Kong, Tokyo and elsewhere, another fundraising option open to Council to consider is based on leveraging property developments on top of Auckland’s transport hubs.

Commercial tower blocks built over Hong Kong’s train stations generate around 60 per cent of the railway system revenue against 40 per cent from ticket sales.

My point is that there is money available for Auckland to solve its transport funding problem without too much pain. It is available in options that won’t require Aucklanders to go through the painful process of increasing their rates or dipping into their pockets every time

services to the new housing areas.

Without this level of comprehensive public transport service in place, Auckland will stay on the back-foot in getting commuters to abandon their cars.

To improve the management of the existing network and services, Auckland Transport proposals include greater use of new technology and applications, route optimisation, CCTV and Analytics and Network Operating Plans.

Given the distance Auckland has come in the recent years to overcome decades of underinvestment and slow decision-making, maintaining a ‘‘catch-up’’ momentum through better use of the network is a logical step.

Together with the next generation of transport projects listed above, as other world cities have done to improve their liveability, what we do next on transport will be pivotal to the success of Project Auckland — critical for helping Auckland lift its game to meet employment demands and retain talent, support urban development, enable freight and distribution competitiveness, attract investment from offshore, and enhance the brand of Auckland as a great place to work and live.

But that’s far from guaranteed.

To accommodate funding constraints signalled in the preparation for the Long-Term Plan (2015-25), AT has prepared what it has

termed a Basic Transport Network investment proposal (i.e. no alternative funding in place) that includes only the highest-priority projects and constrains public transport spending to 2016 levels, provides minimal improvements for local and arterial roads, walking and cycling and defers new capital works and renewals of infrastructure. Predictably, local boards whose pet projects are set to be chopped are threatening to revolt.

A second investment proposal — the Auckland Plan Transport network (i.e. with alternative funding) — has also been prepared which includes all the projects in the Auckland Plan, optimised to meet strategic directions for transport and provide

they travel on the motorway.

Given Simon Bridges, the Minister of Transport, has welcomed Auckland having a debate about future transport infrastructure investment plans, I am asking whether he might welcome Aucklanders having an open discussion that brings other options to the table.

It would allow Auckland to understand the costs and benefits of ownership and demonstrate a greater Auckland willingness to find solutions to its growing pains and show it is prepared to take greater charge of its own destiny. ● Michael Barnett is chief executive of the Auckland Chamber of Commerce best value for money.

Together with Auckland Council’s Long-Term Plan (2015-25) with respect to addressing the “funding gap”, AT’s 2015-25 Regional Land Transport Plan will be going out for public consultation early next year.

With the final plans due for adoption in June, the scene is set for a highly charged and emotional transport debate with potential to make or break political aspirations is set to be played out in the first half of next year.

For some, Auckland’s growing pains will inevitably get personal. ● Tony Garnier is an Aucklandbased business commentator and consultant

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nzherald.co.nz | The New Zealand Herald | Tuesday, December 9, 2014