1. Why Auckland Matters

“The future of humanity lies in cities: in good urban governance and sustainable urban development.”

Kofi Annan, former Secretary-General of the United Nations.

1.1. The terms of reference of the Royal Commission on Auckland Governance (“the Commission”), set out in Appendix A, provide that an aim of local governance reform is to assist Auckland become, and to be recognised as, a “successful, sustainable city in the Asia Pacific region”. They include provision for the Commission to investigate what is required

to support and enhance … the performance of the Auckland region … and in its role as a key transport hub for New Zealand and the Pacific region; and … the ability of the Auckland region to compete internationally as a desirable place to live, work, invest and do business;¹

1.2. This chapter explores why cities such as Auckland are important, how they contribute to national prosperity, what makes a successful city, and what greater success might mean and look like for Auckland.

Why are cities important?

1.3. Kofi Annan, the former Secretary-General of the United Nations, summed it up when he said,

We have entered the urban millennium. At their best, cities are engines of growth and incubators of civilization. They are cross-roads of ideas, places of great intellectual ferment and innovation. …
[But] cities can also be places of exploitation, disease, violent crime, unemployment, underemployment and extreme poverty. …
… we must do more to make our cities safe and liveable places for all.²

1.4. Over half of the world’s 6.8 billion people and over 70% of New Zealand’s population currently live in urban areas.³ Globally, there are 450 so-called “city regions” with million-plus populations. Auckland is one of them. These cities form the peaks of the world map of population density and stand out as the primary power points of the global urban age.⁴

1.5. Successful international cities are more productive and innovative, grow faster, have higher wages, and attract people, capital, and economic activity.⁵ Businesses cluster together and benefit from economies of scale in terms of production, marketing, sales, and access to infrastructure. Co-location of people, activities, and skills stimulates knowledge and idea transfers, prompting innovation. Concentrations of workers provide both a pool of labour and ready consumer markets. These cities can develop strong financial markets, which provide the capital that businesses need to grow. This process is known as agglomeration.

1.6. In a highly competitive global economy, it is individual cities that attract (or do not attract) skilled people, investment, and high-value economic activity. Cities have therefore become the key actors in the global economy, forming hubs of specialised economic activity within value chains that span the world.

1.7. A city that can maximise both the benefits of agglomeration and become an international competitor will play a key role in its national economy. The result is a large dynamic urban area of national importance. Like London and Stockholm, Auckland is one of a small group of cities producing a high proportion of its country’s income – in Auckland’s case 34% of gross domestic product.⁶

1.8. Cities like Auckland will be at the forefront of national efforts to cope with the present global economic crisis. Auckland houses the financial capital markets on which New Zealand businesses depend. The city is likely to be the site of significant amounts of infrastructure spending contained in the Government’s recently announced financial stimulus package. As home to much of New Zealand’s business activity, the social impacts of the downturn resulting from unemployment and reduced incomes will be strongly felt in a city that already houses large pockets of deprivation. Enabling Auckland and its local government to respond effectively to these challenges in partnership with central government will be central to the nation’s economic recovery.

How Auckland contributes to New Zealand

1.9. The need to improve Auckland’s governance is as much about New Zealand as it is about Auckland. New Zealand’s success in achieving national and international economic goals depends on the ability to effectively plan and manage the development of Auckland.

1.10. Auckland has a close relationship to the rest of New Zealand. Different parts of the country contribute differently to the national economy. Auckland, with its large concentration of people and businesses, tends to specialise in tertiary and service-based production. Other regions favour primary production and secondary processing or manufacturing.

1.11. For the nation to prosper, the components of the economy, be it Southland’s dairy industry or the Auckland-based financial specialists managing forex transactions, must be in a position to do their job with excellence. Local government has a key role in optimising, where it can, the conditions for high performance as discussed later in this report.

1.12. Auckland provides a set of unique services that are utilised by people and businesses all over the country. These include the specialised business, professional, and financial services, distribution (wholesaling, transport, and storage), and the tertiary education sector, which educates 40% of New Zealand’s university students.⁷

1.13. Auckland is the country’s major international gateway, bringing in immigrants, tourists to travel throughout the country, and trading exports and imports, both those produced in Auckland and the specialist output of regional economies. Seventy percent of all international visitors pass through Auckland’s airport.⁸ The city attracted 42% of the country’s skilled migrants in 2005/06.⁹ Fifity-nine percent of New Zealand’s imports and 33% of exports pass through either the Ports of Auckland or Auckland International Airport.¹⁰ If this and the rest of Auckland’s transport network operates poorly, it impacts on the rest of the economy.

1.14. Auckland’s large population also provides a significant domestic market – the city is a net importer of goods and services from the rest of the country.¹¹ It has its own rapidly growing sectors of specialised economic activity including specialised manufacturing and technology, the marine industry, creative industries, and information and communication technologies.¹² Significant facilities for innovation and entrepreneurship exist with tertiary, research, major Crown research institutes, and other organisations all operating in the city.

1.15. Auckland contributes slightly more to government revenue (35%) than its share of national population (33%).¹³ This is typical of major metropolitan areas in other OECD countries.

What would make Auckland more successful?

1.16. A primary determinant of a city’s success is the features that attract people to it. Why do people come to Auckland and continue to choose to live and work here?

1.17. When people think of cities such as New York, Shanghai, or Sydney, certain features of the city and the people who inhabit it immediately spring to mind. For New York it might be Central Park, skyscrapers, museums, and Broadway. Sydney could be described as a lifestyle – confident people, beaches, harbour, and the Opera House. The business opportunities and excitement of an exponentially growing economy would exemplify Shanghai.

1.18. When asked, Aucklanders and visitors are fairly consistent about what they like and dislike about Auckland. Employment opportunities, vibrancy of the big city and its surrounding environment, beaches, parks, the weather, open space, trees, and the Hauraki Gulf are Auckland’s most popular assets. The biggest dislikes are traffic congestion and the lack of good public transport, with crime and urban expansion also mentioned as concerns.¹⁴

1.19. Many submitters also commented on the city’s cultural diversity and its unique environment, history, and traditions including the identities of the city’s constituent communities. “A city with 1000 year old Pohutukawa trees in its streets, a city with a shoreline with a mix of industrial and recreational zones. A city with volcanic cones. A city not powered by nuclear power!!”, one submitter enthused.¹⁵

1.20. This enviable lifestyle is Auckland’s core asset. Properly fostered and promoted internationally it can attract what regional economic development expert Richard Florida calls the highly mobile, lifestyle-driven “creative class” of individuals, with the ability to innovate to create the new business opportunities that drive a city’s prosperity. Florida identifies a particular set of city characteristics – diversity, openness to newcomers, and a richness of experience ranging from vibrant nightlife to active outdoor recreation as such key attractors.¹⁶ The highly regarded Monocle survey of 20 top cities worldwide provides another perspective, identifying that urban dwellers want a mix of shops and services within walking distance, a good transport interchange close by, green space as part of their residence, a good park with a swimming pool nearby, independent businesses as a key feature of the community, a sense of security, “excellent coffee and a bit of grit and surprise”.¹⁷

1.21. Auckland ranks close to the top of a number of international lists of best places to live, which cite its spectacular natural setting, relative affordability, and peaceful, tolerant, multicultural population. The 2008 Mercer Worldwide Quality of Living Survey ranked Auckland fifth out of 215 cities.¹⁸ In short, there is much that is right about Auckland most of the time. Yet at the same time the Commission’s terms of reference recognise there is potential for Auckland to do better.

1.22. A number of internationally recognised models seek to identify the world’s most influential cities and rank them according to criteria such as the provision of advanced business services such as accounting, or the role they play in the media industry or hosting international institutions.¹⁹ In this context, Auckland displays some characteristics of such cities but clearly does not influence world events to the same extent as cities like New York or London. Given Auckland’s size and location, it is probably unrealistic to expect it to do so.

1.23. Yet there are many lessons for Auckland in the body of international and theoretical research on the features that underpin the economic growth of successful cities.²⁰

1.24. Growing cities have businesses that are continually innovating, producing new products, and increasing the efficiency of their services. For example five of the seven international entrepreneurs recognised in the 2009 World Class New Zealand Awards are, or have been, Auckland-based.²¹ Strongly performing universities and research facilities, underpinned by a good general education system, stimulate innovation and produce highly skilled labour.

1.25. Infrastructure, a core responsibility of local government, integrated into a well-planned, attractive urban form, is key. Well-functioning transport links and electronic communications enable the movement of people, products, and information to, from, and within the city. If Auckland is to enjoy the full benefits of agglomeration it will need to address transport, communications, and connectivity in particular. A reliable, competitively priced supply of key utilities such as power and water provides stability of essential inputs. Business infrastructure, such as finance and venture capital markets and business services (accounting and legal services), supports well-functioning business. The built form of a successful city provides for a mix of heritage and quality new development, and recreation opportunities; it reflects the lifestyle values of its inhabitants and promotes interaction between them.

1.26. Underpinning economic success are strong communities bound together by collective values, social linkages, and a sense of unity and harmony. Economic growth relies on attracting people to live in the region, and maximising the potential of the whole population by supporting them to be healthy, housed, educated, safe, and socially connected. An OECD review found that this “social capital” contributes to personal health, productivity improvements, increased regional innovation, and helping people find jobs.²²

1.26. The communities of successful cities are able to adjust to the types of societal changes encountered by Auckland in recent years including immigration, other demographic shifts, and the challenge of maintaining the affordability of a decent standard of living, including housing. The Commission observed in the cities it visited that local governments often play a facilitative role, spearheading acceptance of the benefits of diversity, proactively addressing developing social problems, and factoring the needs of communities into decisions about urban form and public transport planning.

1.28. Despite their prosperity, cities can also fall victim to the “urban paradox” – alongside high concentrations of wealth and employment, cities also tend to concentrate a high number of unemployed and marginalised people and significant deprivation. Cities have to deal with the challenges of economic adjustment, poverty, and developing social cohesion, and in many cases, with higher criminality.²³ As the Commission elaborates later in its report, these are all matters that Auckland needs to address if it is to be a leading city.

1.29. Broadly speaking, a successful city is one that achieves a balance between the benefits and challenges of economic growth and social cohesion. Cities must be dynamic and constantly changing in order to survive. Economic prosperity alone is not enough if a city no longer functions for the people and businesses that live and work in it. For example, research commissioned by the Commission suggests that land shortages (showing up as high property prices, the cost of commuting, and congestion) may be a key factor in decisions by older workers to move away from Auckland, trading off income for an improved lifestyle.²⁴

1.30. Ensuring the long-term viability of a city is as important as ensuring short-term growth. On one hand the strains on modern cities are greater than ever as growth puts pressures on biodiversity, land, air, and water quality. Yet on the other hand, city densities and scale are associated with more efficient use of resources. Growth provides opportunities for more sustainable models of development and servicing, including public transport, apartment living, or community infrastructure. In addition, knowledge-intensive, “weightless” economic activity (such as the creative industries, research-based activity, financial services, contact centres, and software development) tends to locate in cities facilitating sustainable business opportunities including electronic exports or adding knowledge-based value to physical products.²⁵

1.31. Sustainable development, as defined by the United Nations, is development that meets “the needs of the present without compromising the ability of future generations to meet their own needs”,²⁶ and is increasingly promoted as a key reference point for cities. As discussed in Chapter 8, “Environment, Urban Design, and Heritage”, the North American cities the Commission visited are much further ahead than Auckland in making the necessary transition from liveability to sustainability.

1.32. There are a number of areas where Auckland can realistically expect to improve its performance:

• Actively safeguard the city’s enviable lifestyle. Key to this will be sustainability – integrating economic, social, and environmental objectives so the city has the resilience to maintain long-term viability.
• Better articulate Auckland’s identity internationally. In a highly competitive international market, tourists, migrants, and business people need consistent, reliable information about what the city has to offer.
• Improve the quality of road, rail, electricity, and broadband infrastructure, including the development of a multimodal integrated transport network.
• Better harness the benefits of agglomeration to increase Auckland’s per capita contribution to national GDP growth. In particular transport infrastructure must be improved so that it does not undercut the benefits of agglomeration.
• Continue to improve the education and skill levels of Auckland’s population. It is important to rely not only on skilled migration, but to ensure that the skills of migrants are identified and fully utilised, and to influence the policies of Auckland’s quality tertiary educational institutions to ensure that the skill mix better meets the requirements of employers.
• Improve Auckland’s levels of research and development and innovation.
• Ensure that the cost of living, especially housing affordability for lower-paid workers, does not impact negatively on the city’s quality of life, or discourage workers from coming to Auckland.
• Increase efforts to improve social outcomes in the face of pressures resulting from population growth, diversity, inequality, and the current economic recession.

1.33. These are dealt with in more detail in Chapter 2, “Auckland Now”, which looks at Auckland’s economy, social landscape, and environment in comparison with other international cities.

The Commission’s definition of a successful Auckland

1.34. The Commission has detected a strong sense that Aucklanders feel their city and region is at a crossroads. The past few years have seen significant economic and population growth, which is starting now to place pressure on the city’s potential for further expansion, the city’s social fabric, and many of the lifestyle qualities that Aucklanders value. External pressures such as climate change and fuel prices are also causing many Aucklanders to rethink the future of their city. This is consistent with the findings of international economic research on successful cities – creating and maintaining success is a dynamic process, with a constant need to manage the pressures caused by growth.

1.35. The Commission has therefore elected to take a broad definition of success, taking into account the need to build on Auckland’s uniqueness, the need for prosperity, and the need to ensure that prosperity continues into the future. A successful Auckland will have the following characteristics:

• Strong economic performance. Auckland is an essential component of the national economy and needs to be at the forefront of New Zealand’s recovery from the global economic crisis. Supporting agglomeration will be key to this.
• A well-planned urban form, including infrastructure. Planning processes should ensure that the city’s identity is reflected in its open spaces and its buildings, and that the urban form promotes human interaction as well as the exchange of goods and services. World-class infrastructure for transport, water, and broadband, and security of energy supply, must be assured.
• Social cohesion. A city that bonds people together, particularly in the context of cultural diversity, will be better placed to integrate newcomers, minimise crime, and provide housing, education, and work opportunities that underpin the well-being of the city as a whole. Auckland should be a place where communities are recognised and their contribution to governance welcomed. Widespread social well-being, including the ability to afford a decent standard of living, particularly housing, contributes to social cohesion.
• High-quality lifestyle and amenities. People want to live in a pleasant, safe environment with easily accessible cultural and sporting facilities. Auckland’s quality of life consistently rates highly for both current Aucklanders and those looking from afar. Commentators on cities now characteristically emphasise the importance of arts, recreation, and diversity.
A strong identity and international reputation.
• Auckland’s physical characteristics, the attitudes of its people, and the mix of cultures that shape the city are unique. Guarding and promoting these internationally in a strategic way will strengthen the city’s presence.
Sustainability.
• Integrating economic, social and environmental issues is critical to our city’s long-term viability. Doing so will build resilience to deal not only with the challenges of economic growth but also with global forces such as population pressure, resource shortages, and climate change.

The role of local government

1.36. Auckland’s success rests in large part on the quality of its lifestyle. Local government plays a direct role in this area, through functions as diverse as parks and reserves management, urban design, public space, public facilities such as the Aotea Centre and stadiums, public transport, health inspections of restaurants, building standards, and rubbish collection.

1.37. Similarly, local government is involved in many of the areas where Auckland needs to do better; for example, it is responsible for providing key infrastructure such as local roading and water and has a critical role in promoting social cohesion and well-being. In a mixed economy, the private sector clearly is the most important driver of Auckland’s economic growth, but local government can do much to support it.

1.38. Effective regional leadership and strategic decision making by local government are required to achieve this. As outlined above, Auckland needs to meet the challenge of balancing its success with the pressures of growth in a way that provides for long-term sustainability. Achieving this will require the involvement of the multiplicity of stakeholders with an interest in the city’s success and must be done in active partnership with central government. Local government institutions must be capable of bringing together different points of view, reaching points of agreement, and ensuring that the resulting decisions are implemented.

1.39. Good governance (how we make decisions) and good government (the structures within which decisions are made) are both crucial to Auckland’s success. In Chapters 6–30, this report analyses the effectiveness of Auckland’s current local government in terms of its ability to enable the city to achieve success according to the criteria defined above by the Commission.

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