Let's talk about our cities, and how we make them more productive

Thursday, 29 April 2021

More than two dozen shops are empty on Auckland's Queen Street as the economic effect of Covid-19 begins to bite. (April 2020)

OPINION City councillors seem to be drowning in disagreements about parking, with the occasional housing stoush thrown in for good measure. But the public debate about our cities needs to be about more than that.

In case you missed it, there’s been a lot of bluster about livelihoods threatened by pedestrian improvements. In Auckland a group of businesses have taken the council to court over them, further south in Hamilton there's similar dismay at plans to make an inner-city street more pedestrian-friendly.

Meanwhile, the capital’s perennially troubled Let’s Get Wellington Moving project seems likely to cause similar aggravation as it moves forward with plans to remove carparks to make way for mass transit and greater pedestrianisation.

To be fair, one of the concerned businesses in Hamilton is a car tyre shop, so their fear of pedestrianisation is probably understandable.

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All of this pedestrian versus parking talk is predictable but what’s missing from this whole debate is the role of cities as engines of economic growth and the question of why ours aren’t following through on this promise.

Infometrics has been collating numbers on productivity in different city regions. Wellington is our most productive, then Auckland. Our second-largest city, Christchurch, is even less productive than New Zealand as a whole.

Yet all of these cities are not as productive as their Australasian counterparts or others further afield, according to a report by Koi Tū: the centre for informed futures, released late last year.

Koi Tū director Sir Peter Gluckman says our policy-makers just see cities as big mercantile service centres.

They look at central business districts as places where banks and accountants need to be co-located so the economy can run a bit more smoothly. But he says cities are about more than this.

Business owners on Ward St in Hamilton are angry over the removal of some car parks in the street as part of a trial to make the street more pedestrian-friendly.

“Around the world it’s the cities, not countries, that are actually where innovation occurs, but again our local bodies are not setup to drive decision-making at that level.

“It’s all made at a central government level, which limits what can be done.”

A study is due to be released by Koi Tū in a few weeks and it will touch on some reasons why New Zealand's cities lag in driving productivity and innovation.

However, we got a taste of what some of those conclusions might be when an earlier report was released late last year.

The report says, globally, cities are often hubs of innovation and punch well above their weight in terms of economic output per head of population. London, for example, has 13 per cent of the United Kingdom’s population, but accounts for 23 per cent of its output.

Our largest city, Auckland, doesn’t achieve anything like this level of productivity. Nor does any other large city in New Zealand.

Victoria University of Wellington Chair of wellbeing, public policy and governance Arthur Grimes says a big reason for this is central government agencies like the Ministry of Business Innovation and Employment have traditionally placed more emphasis on distributing research and development talent around the country rather than creating scale in one particular area or city.

Some of the changes to Let’s Get Wellington Moving sound like they’re likely to provoke a similar backlash to that seen in Auckland.

He says cities can’t do a lot to grow their productivity, but they can do a lot to hamper it.

That means part of the blame for the underperformance of our cities must surely be put down to the governance mess in them, with multiple overlapping areas of responsibility between all of these various different agencies. Central government is the only party able to co-ordinate any of them, but it’s almost always reluctant to do so.

Take migration, for example. Cities can’t really thrive without it. This doesn’t just mean people from overseas but new people relocating from other regions.

City economies are built on talent, but why would talent move from the regions and live in some dungeon in central Wellington when it can just stay put?

Until relatively recently, city councils have been reluctant to zone for more housing, or pay for the infrastructure required to create enough surplus housing. It was all too expensive.

Between 2013 and 2018 the population of Auckland increased by 11 per cent, but there was only a 5.7 per cent increase in the number of dwellings that were built.

A Koi Tū report says Auckland is the only city big enough to compete on a global stage.

That causes major issues when it comes to trying to make our cities knowledge hubs. As the Koi Tū report from last year makes clear: “Unaffordable housing also erects a wall between Auckland and the rest of the country by denying households from the regions the opportunity to seek employment in the main centres.

“In order to create a knowledge hub in Auckland, we will need to draw, in part, on our own home-grown talent from around the country, necessitating access to affordable housing in Auckland for people moving from the regions.”

The Koi Tū report zones in on Auckland because it views it as the only city big enough to compete with other international cities when it comes to becoming a hub for innovation.

This debate on cities and what we can do to help them enable more innovation is even more important to have post-Covid.

Many of the things we relied on to drive our economy before the pandemic are slowly being written off.

Tourism, for example, looks like it might not return at the same scale, even when borders re-open.

Yes, vaccinations might open international travel back up, but even if it does, we will probably still have to work hard to convince people to travel again at the rates they did before the pandemic. Export education looks like it is a write-off too, at least at its previous scale.

That makes cities, and the innovative ideas they generate, more important – not less, if only to fill the holes left in our economy.

One common factor running through productive cities overseas is the ability of the city or regional governments that govern them to co-ordinate policies within their city area.

This allows them specialise in particular things or work at leveraging multiple policy levers so they can attract and train enough talented people to fuel their economies.

More people in a city or region can mean a stable supply of labour, and it can also mean more local demand for some of the innovative products that might be produced.

The level of co-ordination and agreement required to achieve all of this is difficult to imagine within our current system. And it’s painful to imagine us starting this kind of discussion now.

Then again, we’re already having it.

We’re discussing the joining up of the polytechnics, the abolishment of the district health boards, the combining of water authorities, and the potential amalgamation of various councils.

Why not make all of this part of a wider discussion on regional governments too?

Maybe then we’ll enable our cities to finally deliver on more than just parking and pedestrianisation.