7.1 The importance of Auckland as a driver of New Zealand’s prosperity is recognised by the Government. It was one of the primary reasons why the previous Government decided to set up this Commission. In its terms of reference, the Commission is invited to consider
what ownership, governance, and institutional arrangements and funding responsibilities are required to ensure the effective, efficient, and sustainable provision of public infrastructure, services, and facilities to support and enhance— …7.2 This chapter surveys current economic development structures and activities in local government, and identifies shortcomings, mainly at regional level, which are having a negative impact on the city’s economy. It then sets out the Commission’s recommendations for changes that will better position Auckland to shape its economy “so that it builds on our strengths, takes advantage of our social, cultural, environmental and economic particularities and creates comparative and competitive advantages”.2(ii) the performance of the Auckland region as a growth engine in the New Zealand economy and in its role as a key transport hub for New Zealand and the Pacific region; and (iii) the ability of the Auckland region to compete internationally as a desirable place to live, work, invest, and do business; and (iv) the ability of the Auckland region to respond to economic, environmental, cultural, and social challenges …1
7.3. The present economic downturn is recognised as providing both risk and opportunity for New Zealand. A joint paper produced by the New Zealand Institute and The New Zealand Stock Exchange in October 2008 commented,
The risk is that the economies of our trading partners will slow, and stay that way for a while. The opportunity is the quick delivery of strategies that increase investment in New Zealand over this period and have us emerge stronger and much more competitive relative to peers who have surged ahead of us in most economic indicators over the last decade.3
7.4. This observation is particularly relevant to Auckland given that it is the focus of immigration and new, particularly high-tech, development. Auckland has the necessary scale, density, and “agglomeration” potential to lift New Zealand’s productivity. In the New Zealand context it has a specialised economy and it attracts global talent.
7.5. To realise this opportunity, Auckland must capitalise on all four dimensions of well-being identified in the Local Government Act 2002.5 This chapter is focused primarily on economic well-being, but it is important to remember that all four dimensions of well-being (social, environmental, cultural, and economic) are interlinked. The quality of Auckland’s environment is a key attraction to visitors and new migrants, as is the culture of the city. Auckland’s social well-being is arguably the city’s area of greatest need and must be a key focus. For example, it will also be important to ensure that the skills of those temporarily out of the workforce are maintained and the workforce nurtured so that labour shortages do not constrain the economy when recovery begins.
7.6. Maximising Auckland’s contribution to New Zealand’s recovery from the current economic crisis will, in large part, depend on central and local government working together to create an environment that allows businesses to become productive and competitive.
7.7. The Brookings Institution, a highly regarded US think tank, argues that effective policy alignment and cooperation between national and local governments is essential for metropolitan success.5 It calls on central government to take the lead in addressing the key global challenges facing cities such as international economic integration, migration, and global climate change, which are beyond the scope of metropolitan governance to tackle alone. At the same time, it asserts that cities should be empowered to address local needs and to “unleash the potential for innovation and experimentation that resides closest to the ground”.6
7.8. The Commission is aware that the Government is contemplating major infrastructure investment across New Zealand.7 Auckland’s local government needs to be an effective partner with central government in this process – presenting proposals for projects that fit into the bigger picture of national infrastructure development, prioritising projects, packaging projects across local and regional boundaries where there are strategic or cost reasons to do so, and outlining how it intends to fund projects, including options such as raising debt or public-private partnerships (“PPPs”).
7.9. Given that central government is currently revisiting its funding and roll-out strategy for ultra-fast broadband, the time is ripe for close collaboration between central and local government to ensure coordinated, region-wide development of a broadband network for Auckland. In the medium to short term, this could result in significant benefits in employment creation, council service delivery, and business productivity. Post-recession, Auckland could be well placed to compete internationally in the high-growth “knowledge” economy for online goods and services.
7.10. Looking ahead, the 2011 Rugby World Cup also provides an opportunity to boost economic performance through enhanced domestic economic activity associated with servicing the event, tourism arising from it, and potential longer-term legacy gains such as improved transport infrastructure. It is a matter of urgency for Auckland’s needs and priorities to be clearly enunciated to Government so that central and local government can work together on these issues.
7.11. The Commission is also conscious that a return to strong economic growth is not achieved within local and central government offices. However, local and central government can, through their policy setting and activities, create an enabling environment and build partnerships for growth to occur. In this regard, it would be the Commission’s expectation that Auckland’s local government should set high standards for itself. The Commission envisages focused, efficient, and productive local government, which ensures public spending is directed to the best possible use. This would entail funding only high-quality services, achieving value for money, and demonstrating and measuring performance in a transparent way. In the current environment, businesses and individual ratepayers do not need unjustified rates increases or overly onerous and costly regulatory compliance costs.
7.12. Strong visionary leadership is essential to the fulfilment of the necessary changes and this will need to come from both central government and the Auckland Council. The Commission refers in various places throughout this report to the importance placed on a cooperative relationship between these parties. In particular, in Chapter 14, “The Auckland Council: Key Features”, the Commission has recommended that a senior Cabinet Minister be appointed as Minister for Auckland, supported by a Cabinet committee made up of the Ministers holding budgets for significant expenditure in Auckland.8 A key role of the committee would be to set priorities for Government spending in Auckland and to decide the allocation of discretionary spending.
7.13. In the case of economic development it is crucial that this relationship extend beyond central and local government bodies to key organisations in business, educational institutions, not-for-profit organisations, and the creative sector. The Auckland Council should provide a hub for collaboration and co-investment involving multiple stakeholders, in both developing strategic direction for the region’s economic development and in working together on its implementation.
7.14. Given the present economic difficulties, the Commission considers that it would not be appropriate to wait until the Auckland Council is formed to begin a new era of coherent and constructive interaction between central and local government, and other sectoral groups. There is particular urgency in areas such as preparations for the Rugby World Cup event in 2011, infrastructure (particularly broadband), creating a more business-friendly environment in New Zealand, and ensuring value-for-money public spending on economic development. The Commission recommends therefore that the Cabinet Committee for Auckland and the Minister for Auckland be appointed immediately, and that the committee work with the Establishment Board (recommended in Chapter 33, “Managing the Transition”) to prepare the ground for the Auckland Council’s work in these areas.
7.15. The Commission wishes to highlight two areas for immediate action:
7.16. Chapter 2, “Auckland Now”, identified areas in which Auckland needed to lift its performance to become a leading international city. These are summarised below:
7.17. Addressing these performance gaps will require a broad-based approach to economic development. Aside from direct business and investment promotion, local government has a leadership role to play in place-shaping. High-quality amenities and infrastructure, sustainable environmental and resource management, and a well-functioning society create a lifestyle and cost structure that attracts businesses and workers.
7.18. Promoting economic development in large, diverse cities such as Auckland poses particular challenges. On the one hand there is the need to meet local, often small-scale needs – supporting main-street business organisations, enhancing skills in disadvantaged areas, or promoting a competitive advantage that might occur in a specific part or parts of the city. An example of the latter is Auckland’s boat building industry, which has clusters of specialisation in central Auckland, Waitakere, and North Shore. While their primary beneficiaries are local communities, some of these initiatives make significant contributions to regional (or even national) development, or can be scaled up to do so with the right support. On the other hand, at a regional level, cities and their businesses need to operate cohesively and with sufficient scale to compete internationally.
7.19. Both uniform strategic approaches to city-wide economic development and tailored local initiatives need to be accommodated. In terms of local governance structures to effect this, “The regional level is where top down and bottom up strategies combine to give greater effect to regional impact and competitiveness”.10
7.20. In advice received by the Commission, international cities expert Greg Clark identifies two roles for public sector organisations and local governments in promoting economic development:
7.21. A number of organisations, through their plans and strategies, are currently involved in delivering economic development activities in Auckland. Most have come into being since 2000 when central government policy began actively identifying and funding the role that specialised regional economies play in the national economy.
7.22. The Auckland Regional Economic Development Strategy (“AREDS”) was established in 2002 “to elevate Auckland to global entrepreneurial city status”.11 Its primary objectives were to better connect Auckland to the world (through regional promotion activities, encouraging innovation, developing overseas markets, and supporting exports), and to build a platform for improved regional performance based on a high-quality living environment, entrepreneurial culture, skilled labour force, and high-quality, responsive local government. Its make-up was broadly based, involving the territorial authorities and economic development agencies, business, and other private sector partners.
7.23. AREDS was largely motivated by central government’s Regional Partnerships Programme, which required regions to develop strategic plans on which to base applications for economic development funding of major regional initiatives. According to research by the Auckland University of Technology, all the original major regional initiatives that came from Auckland could be seen as local rather than regional clusters (film, marine, and food and beverage). This reflected the difficulties of coordinating regional approaches in Auckland and diversity in economic development needs within the region.12 The policy was subsequently adjusted to better align with Auckland’s needs but the underlying structural problems with local government functions and responsibilities, as outlined elsewhere in this report, continued to undermine the achievement of a regional economic development approach.
7.24. By 2006, it had become clear that more needed to be done to address key regional issues that were hampering Auckland’s economic development including
7.25. The Metropolitan Auckland Project (“the Metro Plan”) was convened to move AREDS from strategy to action.14 It identified a number of work streams ranging from broadband to skills development and set up well-qualified, cross-sectoral groups of experts to manage them known as the Champions for Auckland, a representative group of mainly chief executive officers of large businesses, non-governmental organisations, and the tertiary sector.15
7.26. Although the actions required are relatively well articulated, in practice dependence on voluntary collaboration between territorial authorities and various agencies of local government has resulted in limited systematic implementation in many key areas.
7.27. At regional level, a cross-sectoral committee of the Auckland Regional Council (“ARC”), the Auckland Regional Economic Development Forum (“AREDF”), has overall responsibility for economic development strategy.16 AREDF oversees AREDS and its implementation vehicle, the Metro Action Plan.
7.28. A regional economic development agency, Auckland Plus, which is part of the ARC, is directly responsible for investment promotion and is the lead organisation for some work streams of the Metro Plan including establishing a regional brand, and visitor and events strategy. In many areas, its role is primarily strategic and it relies on voluntary cooperation with the territorial authorities to ensure local implementation. Auckland Plus reports to AREDF but has its own advisory board of high-calibre business leaders who assist it in setting actions and strategic direction and maintaining partnerships with a wide range of private sector organisations.
7.29. Various groups are leading other parts of the Metro Plan, including the ARC, the Regional Sustainable Development Forum, Auckland Regional Holdings, central government agencies, and Auckland University. For example, Action 5.4.1 of the Metro Plan (identifying the next Centres of Research Excellence to be funded in Auckland) is led by the Ministry of Economic Development, Auckland City Council, and Auckland University.17 The private sector “Champions” are closely involved in some work streams such as broadband, but there is a lack of coordinated and systemic involvement of the private sector in delivery of the Metro Plan.
7.30. Territorial authorities also undertake their own economic development activities in line with what they see their community’s priorities to be.
7.31. Five of the territorial authorities have economic development agencies (“EDAs”) – Enterprise Franklin, Enterprising Manukau, Enterprise North Shore, Waitakere Enterprise, and Rodney Economic Development Trust. These are structured as trusts or council organisations, with mandates ranging from investment promotion to providing skills training, and undertaking direct investment in the local economy and liaison with local business groups.
7.32. Other territorial authorities manage economic development directly within council structures. Papakura District Council operates a business promotion unit and Auckland City Council has an economic development group with much of its specific economic development activity carried out on a project basis.
7.33. These local economic development organisations focus primarily on economic development in the area of their territorial authority, but with wide variation in the resources at their disposal and the types of activities they undertake. For example, the goal of Waitakere Enterprise is to reduce from 58% to 40% the percentage of Waitakere’s workforce leaving the city each day to work elsewhere.18 Most undertake investment promotion activities such as Enterprise Manukau’s “investment champion” service, which aims to get relocating companies installed as quickly as possible by helping to identify property and establishing zoning, obtaining building and resource consents, and sourcing and training staff. Business facilitation can also be a key role. For example, Waitakere Enterprise operates a comprehensive “one-stop shop” application and approval service for any filming in a public space (including parks, roads, and beaches) in the area of Waitakere City. Other EDAs have accessed central government resources to invest in local businesses, such as Enterprise North Shore’s delivery of Foundation for Research, Science and Technology investment programmes.
7.34. Territorial authorities have also invested in various economic development projects such as Waitakere City’s 40% interest in a joint venture with private interests in a film studio, and Auckland City Council’s $72.5 million investment in the development of Vector Arena on land leased from Ngāti Whātua o Ōrākei.
7.35. Broadly speaking, the territorial authority governance structures for economic development operate independently of each other. They are each accountable to their own territorial authority and the incentives for maximising synergies between them are weak. However, they do interact through a voluntary network, Auckland Regional Economic Development Association (“AREDA”), comprising the five Auckland economic development agencies in strategic partnership with AucklandPlus, AUT University, and Auckland City Council. Substantive collaboration between AREDA members is in its infancy, but the group does coordinate regional delivery of the Foundation for Research, Science and Technology’s central government programme for technology development.19
7.36. Tourism effectively sits outside this framework. Tourism Auckland markets the Auckland region as a tourist destination, including running five visitor centres, promoting conference and business incentive travel, and representing 130 schools, tertiary institutions, and private education providers which enrol international students in the Auckland region. It is not funded regionally, however; most of its budget comes from the Auckland City Council, Manukau City Council, and the ARC, with contributions by the private sector on a project-by-project basis. It is a charitable trust.
7.37. Central government agencies are involved in economic development activities at many levels of local government in Auckland. Various programmes fund activities undertaken directly by territorial authorities and the ARC.
7.38. Recently, central government has also attempted to gain a better understanding of Auckland issues and establish a closer dialogue with local government through the Government Urban Economic Development Office (“GUEDO”). GUEDO was originally established in 2005 as a shared policy presence in Auckland for central government agencies involved in sustainable urban and economic development of the Auckland region. Its primary role is to provide Ministers with advice about central government’s decisions and investments in Auckland. Its key functions are to develop Auckland-specific policy initiatives that will make a significant impact on Auckland and national economic growth; to manage and work with Auckland partners/stakeholders; to offer a source of intelligence about Auckland issues; and to identify the interconnections between Auckland and other cities in New Zealand and Australasia.20
7.39. On the face of it, all these structures seem to provide a basis for addressing economic development at local and regional level, with links into national policy through GUEDO. In practice, however, there is no guarantee of coordinated effort to address strategic goals. AREDF, while a commendably inclusive body, lacks teeth and funding. Adherence to the Metro Plan is voluntary, and there is no one body responsible for managing its implementation. Nor is there a hierarchical or directive relationship between AREDF and Auckland Plus and the various local development agencies funded by territorial authorities, or much incentive for local agencies to cooperate between themselves. Tourism sits to one side, funded by some but not all territorial authorities.
7.40. The Commission considers it is essential to have governance structures that can preserve and enhance the local economic development activity that provides the foundation of Auckland’s prosperity while minimising the fragmentation that currently undercuts the region’s ability to perform nationally and internationally as an effective city-region. These issues are developed further in the next section of this chapter.
7.41. To be effective, local government’s economic development activities need to be shaped by the economic realities on the ground. The territorial authorities or their EDAs operate programmes targeted to the skills, business needs, and opportunities in the areas they cover. Cross-regional economic requirements such as ongoing calls by business for a rail link from the central business district to the airport, economic relations with other regions of New Zealand, and the economic development needs of the Auckland region as a whole are not well served, however.
7.42. Economic activity occurs across territorial authority boundaries. The consequences of this in terms of the need for coordinated economic development activities are not always appreciated by individual local authorities. As a pan-regional, cross-sectoral body, AREDF should be well placed to take the overview that can marry national policy with local and regional priorities. Yet its authority rests on voluntary agreement of those involved, and as identified in research by AUT University it “has no direct control over budgets or resources”.21
7.43. In the Commission’s view, this situation seriously undermines Auckland’s ability to marshal resources and concentrate the efforts of the region’s government, business, and communities to compete and operate as a highly successful international city. The consequences can be seen in the following examples:
7.44. As outlined in Chapter 1, “Why Auckland Matters”, successful cities have a strong and consistent image and identity both internationally and in the minds of their residents; for example, New York is the Big Apple, Paris is the City of Love. The Commission notes the example of Wellington’s “Absolutely Positively Wellington” brand in dramatically transforming how that city is seen. Its image has changed from being a somewhat staid, windy national capital dominated by public servants to a vibrant, creative community with a thriving arts scene, and a great nightlife, public architecture, and amenities.
7.45. In 2008, Auckland Plus led the development of a brand for Auckland, which involved the territorial authorities and local EDAs and was underpinned by considerable local and international research. The brand is accompanied by an implementation strategy, much of which is dependent on the territorial authorities and EDAs for delivery. The fact that local councils can directly promote and independently brand individual parts of Auckland in an uncoordinated way undercuts any regional brand. An example is the “Welcome to Manukau” sign outside Auckland International Airport – confusing to international visitors who thought they were arriving in Auckland! To be effective in creating an international reputation for Auckland, the regional brand needs to be used consistently in all contexts where Auckland interacts outside New Zealand – under the current structures there is no guarantee this will happen.
7.46. “Bringing the World to Auckland”, a widely consulted strategy for the visitor economy, was developed in close cooperation with the tourism industry and released in 2007 by Auckland Plus.22
7.47. A significant portion of the report and its recommendations related to correcting structural problems with local government’s visitor promotion work – namely, improving coordination between territorial authorities and regional local government, the establishment of a regional tourism agency, and gaining agreement between central government and the various parts of Auckland’s local government on a long-term, public sector investment programme for the visitor economy. These issues are consequences of the lack of regional focus and intra-regional rivalry between territorial authorities identified in Chapter 11, “Defining the Problems”. Implementation of the substantive aspects of the strategy such as developing a portfolio of attractors to the region including conferences and major attractions, major events, hinterland precincts and signature experiences, has been hampered to large degree by the inability to address these structural problems.
7.48. Cities clamour to host major international sporting events, largely for the long-term legacy benefits that accrue from them. Legacy benefits identified by the International Rugby Board from hosting Rugby World Cup events in 2011 include
7.49. A recent report to the London Assembly discussed strategy for achieving such legacies from the 2012 Olympic Games, and reviewed outcomes from the Barcelona, Atlanta, Sydney, and Athens Olympics.24 As a result of the 2000 Olympics, Sydney achieved significant infrastructure development (including a centralised intelligent traffic-management system),25 business relocation, and improved international status, with the tourism economy receiving a major boost owing to an extensive rebranding exercise. Of particular interest to the Royal Commission, in the context of its efforts to promote integrated regional governance, was the assertion by the former chief executive of the organising committee for the Sydney Games that a key requirement of success was the ability to forge alliances to get the job done.26 For example, the police and traffic management authorities had to work together to manage huge traffic flows, and those organisations valued the development of ongoing relationships as their greatest legacy from the 2000 Olympics.
7.50. The 2000 and 2003 America’s Cup defences drove the redevelopment of the Viaduct Basin area and were estimated to have generated around $472 million for the Auckland economy.27 The 2011 Rugby World Cup is predicted to generate $500 million in additional GDP, of which almost half will go into the Auckland economy.28
7.51. Although an Auckland regional Rugby World Cup steering group is in place involving the key local government agencies, stadiums, and rugby unions, the Commission is of the view that publicly stated outcomes and objectives for the group, strong regional political leadership to drive them, and relationships with central government and the private sector will be essential for the event’s success. As outlined in Chapter 11, the inability to agree on a regional response to the central government offer of stadium funding was an early indicator that Auckland’s handling of the Rugby World Cup needs urgent attention if the city is to gain maximum benefit from the event.
7.52. The Commission contrasts this with London’s preparations for the 2012 Olympics, where the Mayor is taking a highly proactive role, committing in 2008 to securing legacies ranging from employment to urban redevelopment, appointing a specialist board of advisers to assist him, and examining options for innovative partnerships to secure development and investment (in particular from the private sector) in high-quality regeneration in and around the Olympic Park. The Mayor also chairs the Board of Transport for London, which is developing the light rail network to meet the needs of the Olympic Games.
7.53. The Commission is concerned that Auckland is not managing or developing the city centre and the waterfront in a coordinated or strategic way. Despite the importance of these areas in terms of land value, tourism, volume of economic activity, location of key infrastructure (Ports of Auckland, Britomart) and livability/attractions for workers and businesses, they are often subject to ad hoc, disjointed decision making by various bodies and stakeholders.
7.54. The Commission’s recommendations for the city centre and waterfront are outlined in Chapter 17, “City Centre and Waterfront”, and its views on the waterfront are outlined below.
7.55. Internationally successful waterfront developments have added significant social, economic, and environmental value to their communities. Despite natural advantages in terms of accessibility and beauty, Auckland’s waterfront is not being managed to its full potential.
7.56. Analysis submitted by the Committee for Auckland suggests that successful developments have occurred, but in isolation – in response to the need to be ready for specific events (the Viaduct Harbour for the America’s Cup) or where there is single-party ownership and control (for commercial projects such as the Bluewater urban renewal project at Britomart).29
7.57. Less successful outcomes include the lack of forward planning for a major regional stadium and/or an international conference centre, lack of development of the Old Railway Station and Quay Park precinct, and the lack of planned, clear transport corridors and allied infrastructure. These are characterised by a multiplicity of mandated entities, lack of connection between each part of the waterfront, the high level of political and popular interest not matched by momentum, and the absence of an agreed long-term plan resulting in stop/start investment direction as politicians and owners change.
7.58. The Commission agrees with the Committee for Auckland that the following elements are required for a successful waterfront development:
Some cities, such as Melbourne, have used development authorities vested with full planning and development management powers to achieve these objectives.
7.59. Auckland’s stadiums are another key asset that could be better managed. Although Auckland’s territorial authorities have worked successfully with the private and philanthropic sectors to build five stadiums/arenas, there is no focus on a system or network of facilities across Auckland. As a result, Auckland’s ability to cater for major events has been found wanting. The Commission sees a need for stadiums to be managed at a regional level with clear regional powers and accountability for decision making on major event and visit facilities. This should include the development of a clear plan and a funding strategy.
7.60. Planning costs, delays, and duplication resulting from local government consent processes were identified by many submitters as a constraint on economic activity. At a practical level, a number of submitters expressed frustration at the impact the current planning processes had on business, particularly those operating across different parts of the city with differing planning rules. The Auckland Regional Economic Development Association outlined its concern as follows:
Consents are needed from different Councils for the same activity (for example an ARC Resource Consent for earthworks and a Local Authority building consent to build a property at the same site). This does not provide for a coordinated and consistent decision making process. The rules change for local authorities – this can happen on two sides of the same street in instances where city borders cut through a street. Consents are delayed for long periods of time causing significant opportunity costs ...30
7.61. Although the streamlined Auckland Council (described in Chapter 14) with its single district plan will address many of these issues directly, the Commission wants Auckland’s local government to place priority on ensuring that its regulatory processes, decisions, and operations fulfil their objectives with the least obstruction to economic activity, and where possible on facilitating the city’s growth and productivity. For example, as outlined in Chapter 27, “Information and Communications Technology”, local government can reduce the costs of cable installation by coordinating timing with scheduled road works.
7.62. Problems with regional coordination of infrastructure priorities are outlined in other parts of the report. But it is worth highlighting that the lack of strong links between councils undermines the ability to work as a region when it is advantageous to do so for economic development purposes. For example, with the improvement of broadband services, the Auckland Broadband Regional Initiative (under the auspices of AREDF) is trying to maximise the scale and other advantages of taking a regional approach, yet the territorial authorities are continuing to act autonomously in implementing broadband initiatives. Compare this with the Wellington region where territorial authorities have partnered to apply for Broadband Challenge funding from central government.
7.63. The Commission notes the example of Seattle’s regional planning body, the Puget Sound Regional Council, which has taken a “conjunctive” approach producing interlinked plans for transport, land use, and economic growth. The Executive Director of the Puget Sound Regional Council has commented that he felt this should also be done at a structural level, with a single regional agency replacing a multitude of implementing bodies and taking responsibility for decision making on all these issues.
7.64. The distinctiveness of different communities in Auckland is an asset in terms of economic development, offering scope for developing the regional economy on the back of local specialisations and comparative advantages. In the words of Enterprise Franklin’s submission, the role of local economic development is
one to one work with businesses (such as business support services, business retention and expansion programmes, training and advice etc), endogenous development opportunities (such as building on natural, cultural and social capital inherent in the locality to provide economic opportunity), working with communities to mitigate structural problems within, and improve access to, the labour market and local economies, making the necessary local business connections to embed exogenous investment in local economies, building and supporting clusters, supply chains, local innovation with global opportunity or significance, entrepreneurship and so on.31
7.65. The Commission has no argument with this. But given the current fragmentation of economic development governance outlined above, it is unclear whether Auckland’s economic development activities are being carried out in the most cost-effective way. AREDA members deliver $10 million of economic development activities to the Auckland region and further funds are spent directly by councils or through their council-controlled organisations as outlined above.32 In the current economic climate, Aucklanders must have confidence that this money is well spent.
7.66. Activities may be duplicated and compete intra-regionally, leading to reallocation of existing resources rather than creation of new business opportunities. Also, local economic development programmes could be delivered more efficiently and effectively by cooperating, for example sharing skilled staff and best-practice information or undertaking joint activities.
7.67. Following large expenditure (and in some cases large losses) by local authorities on economic development activities, the Auditor-General in 2002 reviewed local authority involvement in economic development activities throughout New Zealand.33 The Auditor-General’s report highlighted the need for careful management of the risks, particularly with projects that used large sums of public money for investment or service provision. The Commission recommends that the Establishment Board review whether the existing local economic development programmes are delivering value for money. The outcomes provide a basis for considering how economic development activities might best be delivered at local level.
7.68. The Commission considers it essential to build on the strengths of existing local EDAs and economic development programmes, knowledge of local economies and links to local businesses, and the ability to foster small businesses and innovations at local level and then scale up. However, it also sees a need for much greater coordination between them, a closer assessment of the effectiveness of local programmes, and a stronger overlay of regional priorities. Obviously, the economic development priorities and needs in semi-rural Franklin will differ considerably from those in central Auckland and these must be addressed. But there is a need to build clearly identified local needs into a strategy that will also benefit the region as a whole.
7.69. Some territorial authorities have been effective in translating regional economic development strategy to the local level, incorporating broader objectives such as sustainability and infrastructure development alongside more specific, localised economic development activities. As an example, Waitakere City Council has developed a complex that combines a transport hub, council offices, and council chamber in central Henderson. Designed to showcase modern sustainable architecture and engineering, the complex is also intended to revitalise downtown Henderson by moving nearly 700 council staff and 50,000 visitors into the area and providing efficient public transport links to get them there.7.70. In other instances economic development activities are not well integrated with social and environmental activities. For example, the Commission was told that the Talbot Park community renewal project in Glen Innes undertaken by the Auckland City Council and central government agencies, although well designed in terms of social and environmental criteria, was less successful in addressing the residents’ employment needs (specifically the need to involve local employers and businesses in developing the area’s economy and job opportunities for its residents).
7.71. As identified in Chapter 15, “The Elected Auckland Council”, partnerships between government and other sectors are an important aspect of effective governance. This is even more true of economic governance, where local government facilitates rather than causes economic growth. A report done for AREDA on governance for economic development in Auckland noted,
initiatives at a [middle] level between local and national are necessary to help bring otherwise disparate efforts closer together, and make best use of resources and assets … co-ordination and collaboration is required vertically between different spheres of government, horizontally between neighbouring municipalities, and between urban and rural initiatives, and organisationally between public, private and NGO [non-governmental organisation] sectors.34
7.72. The focus for central government’s policy and funding for economic development is at regional level. As outlined in the Regional Economic Development Policy Update of August 2008,
Government’s regional economic development policy encourages broad-based economic development strategies at the regional level. Projects, investigative studies, business case development and other actions that are part of implementing the strategy can be focused at the regional, ‘sub-regional’ or local level.35
7.73. Auckland’s current economic development structures are not set up to deliver this. Territorial authorities have no requirement to implement AREDS or align their activities with regional priorities. In fact, territorial authorities can apply directly for central government funding, undercutting a regional approach altogether as has happened in the case of broadband. Despite the significance to Auckland (and to New Zealand as a whole) of implementing fast broadband in Auckland, central government funds have not been earmarked for Auckland. The Commission considers that a strong regional development agency will be well placed to identify Auckland’s regional economic needs and negotiate funding with central government agencies. It would also have the ability to play a clearing-house role, identifying sources of central government funding to promote local-level development.
7.74. Central government’s recognition of the Auckland region as a key component of its economic development policy, the establishment of the GUEDO office and the active role it plays in a variety of regional forums, are evidence of the importance with which it views Auckland. Chapter 25, “Transport”, discusses the case for joint decision making on transport, a key infrastructure asset for Auckland’s economic development. As noted earlier, the Commission considers that there is also a need for high-level partnership between central and local government on economic development issues. The Cabinet Committee for Auckland would interact with the Economic Committee of the Auckland Council, and the chief executive of the regional economic development agency (proposed and described above) would interact with the CEOs of the Government departments involved in regional economic development.
7.75. Links to the private sector provide information on business priorities and plans and, potentially, opportunities to partner on projects such as infrastructure development. Also, relations with educational institutions are important for supporting innovation and skills development. An example of this is the New Zealand Innovation Centre project announced in 2008. Central government has pledged $25 million and Auckland City Council has earmarked $20 million worth of land for the New Zealand Innovation Centre at the University of Auckland’s Tamaki Campus. The centre’s aim is to create a cluster of companies and support organisations that will foster growth of high-tech research and development companies.
7.76. Various mechanisms can be used to promote partnerships with groups outside government. EDAs operate as the cog between the public and private sectors, and play a particular role in bringing the two together to address market failures or build capacity in the local economy. They also play a role in forming new partnerships and institutions that bridge sectors (whether public, private, or not-for-profit sector) to take on particular developments.36 Other options include “made for purpose” organisations such as development authorities or PPPs for particular projects.
7.77. The proposed Auckland Council with its strategic focus and streamlined structure will be better placed to address many of the key economic development issues facing Auckland, such as coordinating key regional functions like transport and simplifying planning and consent processes (as outlined in Chapter 12, “Guiding Principles for Shaping Auckland Governance”). This section outlines particular structures for governing economic development.
7.78. The proposed local government structures for economic development should provide for
7.79. The Commission envisages planning and structures for economic development that will mirror those of the Auckland Council. A regional economic development agency will undertake economic development activities at the regional level, while at the local level staff of the agency will work in conjunction with the local councils to implement programmes tailored to the needs of local communities.
7.80. The Commission recommends that one clear regional plan with an associated funding plan and implementation mechanisms be developed for Auckland’s economic development. It would be developed in conjunction with, but will be subsidiary to, the regional spatial plan outlined in Chapter 24, “Planning for Auckland”.
7.81. Lack of such a comprehensive plan currently hampers Auckland’s ability to represent its interests and engage the various stakeholders (central government, business, and the public) and ultimately capture their support. In particular, this will illuminate the contribution that the city makes to the wider New Zealand economy and facilitate a new level of agreement between local and central government on how Auckland can best be supported. AREDS and the Metro Plan should provide the starting point for developing this plan.
7.82. The plan needs to be comprehensive and integrated, addressing all the long-term issues that will improve the way Auckland functions to support
7.83. The plan’s overall aim should be to support regional economic development objectives, local specialisation where appropriate, cross-boundary economic geography, and Auckland’s international competitiveness.
7.84. The Commission intends that the regional economic development agency will develop the plan for consideration by the Economic Development and Tourism Committee of the Auckland Council (both structures are described below) and approval by the Auckland Council.
7.85. The Commission recommends that a regional economic development agency be established within the structure of the Auckland Council. The Economic Development and Tourism Committee of the Auckland Council will manage the work of the regional economic development agency, including that of the local EDAs described below.
7.86. The agency will be responsible for developing the regional economic development plan for consideration by the Economic Development and Tourism Committee of the Auckland Council. It will also implement the regional economic development plan, including sub-regional plans for local implementation developed in consultation with local EDAs.
7.87. The Commission recommends that a high-level advisory board be appointed comprising representatives of central government, the local councils, business, education, and not-for-profit organisations. It would be available to work with both the Economic Development and Tourism Committee of the Auckland Council to assist with developing strategy, and with the regional economic development agency to assist with implementation.
7.88. The Commission notes that this type of cross-sectoral approach was successfully undertaken in developing AREDS and Metro Plan, as outlined above. It sees merit in embedding a cross-sectoral partnership arrangement into the Auckland Council, not only to assist in developing a regional economic development plan that accurately represents the region’s economic development needs and marries them with national priorities, but also to facilitate ongoing, cross-sectoral cooperation and collaboration in carrying out the Auckland Council’s economic development activities.
7.89. The functions of the regional economic development agency will include
7.90. The regional economic development agency will resource, coordinate, and drive business development programmes at regional level, including delegating implementation to local economic development agencies to meet local needs as required. This will include facilitating and coordinating successful local innovations and initiatives and expanding them to a regional level if appropriate.
7.91. The agency will ensure the sub-regional components of the Auckland economy are understood and supported, for example identifying the patterns of industry, employment, and residential clustering occurring in the city and advocating for the required links between them, such as transport access. Similarly the agency will hold responsibility within the Auckland Council for economic relations with other regions of New Zealand where cross-boundary economic issues arise.
7.92. The regional economic development agency would hold a mandate to integrate economic development priorities into other areas of local government activity, such as infrastructure development, land use planning, consent processes, environmental management, culture and recreation, and social issues. This will involve close coordination with and providing strategic input to the relevant functional areas of the Auckland Council and the entities that manage transportation services, urban development, city centre and waterfront development, and major events facilities.
7.93. As a long-term undertaking to be shared between the public and private sectors with the involvement of all levels of government, the agency will compile an inventory of regional economic assets and develop an investment and management plan for them.
7.94. The regional economic development agency will support the Economic Development and Tourism Committee’s advocacy to central government on Auckland’s economic development needs.
7.95. This would include working with central government agencies operating in Auckland and businesses in order to address cross-cutting issues related to economic development (for example, low-cost housing for low-income workers in areas of high employment, innovation centres).
7.96. The regional economic development agency will also play an important role in coordinating Auckland’s access to the wide range of sources of regional economic development funding available from different Government departments, which are currently accessed by some but not all local EDAs.
7.97. The agency will also develop Auckland’s regional positions on central government policy in areas that directly affect Auckland and its economic development, such as immigration and tax.
7.98. The regional economic development agency will be responsible for building partnerships with the private sector to both develop and implement economic development initiatives. It will also liaise with non-governmental organisations that contribute to economic development such as the Committee for Auckland. The agency would also have the ability to recommend to Auckland Council the establishment of special-purpose entities to manage and engage with the private sector on projects such as the Rugby World Cup.
7.99. In the longer term, the regional economic development agency would undertake research and data collection to underpin Auckland’s economic development policy, including skills needs across the region, regional export and import breakdowns, inward and outward foreign direct investment sources and destinations, regional services, trade, and regional weightless economy (economic activity not involving transaction of a physical product).
7.100. The specific programmes of the regional economic development agency will include
7.101. To be effective, the regional economic development agency will need a dedicated and consistent funding base. The Commission envisages that it will take an innovative approach to developing long-term funding relationships wherever possible, drawing funds from the regional budget, central government economic development programmes, and the private sector on specific projects (for example, joint tourism promotion).
7.102. The Commission envisages that while the regional economic development agency will be effective in obtaining funding and assembling resources, much of this will in practice be devolved to local EDAs to fund implementation.
The Commission envisages that local EDAs will report to and be funded by the regional economic development agency. They will be obliged to cooperate and coordinate where it provides more efficient and cost-effective service delivery. Where appropriate,
7.103. and taking into account the proposed review of the activities of Auckland’s local economic development activity outlined above, existing EDAs may be retained in order to maintain existing expertise and contacts. Local EDAs will be advised by a local advisory board comprising representatives from the regional economic development agency, local councils, business, education, and other groups.
7.104. At the local level the functions will be
skills development and education
business growth support (training, advice, networks, connection to capital).
7.105. Although the Commission emphasises the importance of establishing a regional economic development agency, it remains essential that local development needs also receive attention. Reflecting this, the Commission envisages that
Auckland needs governance structures for economic development capable of working effectively with central government to address major regional issues as well as meeting the localised needs of Auckland’s communities and businesses.
7A A partnership should be developed between central government and Auckland’s local government to address the region’s long-term economic development and to formulate immediate responses to the current economic conditions.
7B The Auckland Council should adopt a comprehensive regional economic development plan and an associated funding plan.7C The Auckland Council should establish
7D The regional economic development agency should take an innovative approach to developing long-term funding relationships, drawing funding from the regional budget, central government economic development programmes, and the private sector on specific projects.
7E The Cabinet Committee and Minister for Auckland should begin work immediately with the Establishment Board to lay the ground for the Auckland Council’s work in priority areas, including the Rugby World Cup 2011 and broadband.37
7F As a basis for future decision making by the Auckland Council, the Establishment Board should review whether existing local economic development programmes are delivering value for money.
1. See Appendix A: Terms of Reference.
2. Governance for Economic Development in Auckland, Institute of Public Policy, AUT University, Auckland, April 2008, p. 16 (available at www.economicdevelopment.org.nz , accessed February 2009).
3. Economy on the Edge: Swandive or Belly Flop? A Draft Strategy for Coming out of the Crisis Stronger, The New Zealand Institute and New Zealand Stock Exchange, 10 October 2008, p. 7 (available at www.nzinstitute.org, accessed February 2009).
4. Local Government Act 2002, section 3(d).
5. MetroPolicy: Shaping a New Federal Partnership for a Metropolitan Nation, The Brookings Institution, 12 June 2008, pp. 4–9 (available at www.brookings.edu, accessed February 2009).
6. Ibid., p. 8.
7. Hon Bill English, Minister of Finance, Budget Policy Statement 2009, 18 December 2008, p. 7 (available at www.treasury.govt.nz/budget/2009/bps, accessed February 2009).
8. For example, the Ministers of Infrastructure, Transport, Social Development, Economic Development, Local Government, Health and Education; see Chapter 15, “The Elected Auckland Council”.
9. Central government’s 2006 Economic Transformation Agenda set a similar context for local government economic development activities, focusing on growing globally competitive firms, world-class infrastructure, innovative and productive workplaces, Auckland as an internationally competitive city, and environmental sustainability. Specific objectives for Auckland set by this agenda included transforming Auckland into a home for globally competitive and innovative firms supported by a first-class pool of skilled labour, with a reputation as one of the best places in the world to live, do business, and visit.
10. Governance for Economic Development in Auckland, Institute of Public Policy, AUT University, p. 3.
11. Ibid., p. 54.
12. Ibid., p. 53.
13. Ibid., p. 54.
14. Ibid., p. 54. It involved local government, economic development agencies, AUT University’s Institute of Policy Studies, Committee for Auckland, and the Auckland Regional Council.
15. Ibid., p. 56.
16. AREDF draws membership from the Auckland Regional Council, territorial authorities, economic development agencies, business, education, labour organisations, infrastructure providers, and Māori and Pacific peoples (see www.arc.govt.nz/economy).
17. The Metro Project – Action Plan Framework, Action 5.4.1 (available at www.arc.govt.nz, accessed February 2009).
18. Waitakere Enterprise website at www.waitakereenterprise.co.nz/Information-Centre/About-WE (accessed February 2009).
19. TechNZ is the business investment programme of the Foundation for Research, Science and Technology, which funds business to discover and develop new technology and build skills and knowledge to carry out leading-edge research and development. Lead delivery agencies for the region are Enterprise North Shore and Enterprising Manukau (see Enterprise North Shore website at www.ens.org.nz, accessed February 2009).
20. GUEDO’s membership includes the Ministry of Economic Development, Ministry for the Environment, Ministry of Transport, Ministry of Agriculture and Forestry, Department of Labour, Department of Internal Affairs, Department of Prime Minister and Cabinet, Treasury, and the State Services Commission. Representatives of the first six agencies listed are permanently located in the Auckland office (see Ministry of Economic Development website at www.med.govt.nz , accessed February 2009).
21. Governance for Economic Development in Auckland, Institute of Public Policy, AUT University, p. 58.
22. Bringing the World to Auckland, Auckland Plus, November 2007 (available at www.aucklandplus.com, accessed February 2009).
23. Potential Economic Impact of the Rugby World Cup on a Host Nation, Deloitte report for the International Rugby Board, September 2008, pp. 6–7.
24. A Lasting Legacy for London? Assessing the legacy of the Olympic Games and Paralympic Games, Report to the London Assembly, May 2007, pp. 1-2 (available at www.london.gov.uk/assembly/reports, accessed February 2009).
25. “Secrets of Sydney 2000”, 15 March 2004, Beijing This Month, p. 3 (available at www.btmbeijing.com, accessed February 2009).
26. Ibid., pp. 4–5.
27. Comparison of America’s Cup Economic Impacts 2000 – 2003, Market Economics Ltd, 17 October 2003, p. 3 (available at www.tourismresearch.govt.nz, accessed February 2009).
28. “Briefing for the Incoming Minister 2008: Rugby World Cup”, Ministry of Economic Development, November 2008, p. 3 (available at http://beehive.govt.nz, accessed February 2009).
29. The Auckland Waterfront Case Study, Committee for Auckland, in a report and submission to the Royal Commission on Auckland’s Governance (available at www.royalcommission.govt.nz).
30. Submission to the Royal Commission on Auckland’s Governance from Auckland Regional Economic Development Association, p. 9. (All submissions are available at www.royalcommission.govt.nz.)
31. Submission to the Royal Commission on Auckland’s Governance from Enterprise Franklin, p. 9.
32. Submission to the Royal Commission on Auckland’s Governance from Auckland Regional Economic Development Association, p. 1.
33. Local Authority Involvement in Economic Development Initiatives: Choices for Successful Management, Report of the Controller and Auditor-General, August 2002 (available at www.oag.govt.nz/2002, accessed February 2009).
34. Governance for Economic Development in Auckland, Institute of Public Policy, AUT University, p. 24.
35. Regional Economic Development Policy Update – August 2008, Ministry of Economic Development and New Zealand Trade and Enterprise, p. 1 (available at www.med.govt.nz accessed February 2009).
36. Governance for Economic Development in Auckland, Institute of Public Policy, AUT University, p. 26.
37. See Recommendations 15K on Minister and Cabinet Committee, and 33B on the Establishment Board.
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