The State of Auckland: Its productivity problem is holding back NZ

Tuesday, 15 July 2025

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Auckland is falling behind its international peers because of poor planning, inadequate innovation and a weak economy, says a new report.

It’s the base of fewer millionaires, its productivity has flatlined, it has an inequitable jobs market and requires urgent action to fix its systemic woes.

The warnings are contained in the third annual State of the City: Benchmarking Tāmaki Makaurau Auckland’s international performance report.

The report was commissioned by the Committee for Auckland and uses public reports to measure the city’s performance against Austin, Brisbane, Copenhagen, Dublin, Fukuoka, Helsinki, Portland, Tel Aviv and Vancouver - which are all rated as “highly liveable” cities with similar governance and institutional contexts.

The report compares Auckland across 10 pillars and paints a picture of stifled opportunity with it remaining one of the world’s top 10 cities for balanced quality of life with one of the most open and diverse societies.

But its systemic issues are acting as a handbrake on progress and risked a sustained leakage of talent, opportunities and even confidence.

One of Auckland’s biggest struggles is its productivity problem. It is ranked 99th - dead last - among its peers for productivity and this is hampering prosperity.

This is a concern for the rest of the country because Auckland’s the engine of the national economy with a nearly 40% share of national GDP.

The report calls this a “productivity puzzle” and blames inefficient land use which leads to more car dependency which causes traffic and housing affordability which then limits the city’s ability to attract and retain talent.

Other causes of its lagging productivity are that it relies on a domestic market of just 5 million people and has a low rate of exports, low levels of management capability and low rates of capital investment.

It also needs a more resilient sector mix so it can better withstand global shocks, competition and obsolescence.

In 2023, about $16.5 billion – roughly 11% – of Auckland’s GDP was attributable to the entire technology and digital sector. This sector mix means that 31.6% of Auckland jobs are currently also rated at risk of generative AI.

Director of Committee for Auckland, Mark Thomas, said weak economic performance, inadequate skills and innovation development, and disjointed and delayed planning are causing Auckland to lose ground, with the risk of falling further behind.

“We must fix the productivity problem, back high-growth industries and innovation, actually deliver better transport and housing, and rebuild Auckland’s reputation.”

The report identified a deep-set perception of unaffordability despite the situation. Rent as a share of average incomes has improved in Auckland in recent years yet the share of people who say they can find somewhere affordable to rent is still among the bottom 25% of cities.

And the mood about future prospects was grim.

Auckland is only 37th among more than 50 global cities for what overseas workers feel about job opportunities, well down on most of its peer group. Perceptions of salaries and job security are in the bottom third at 38th.

People needed to be able to see how they could move up the ladder. The report said the city needs to widen access to education and fulfilling, higher-paying jobs for all Aucklanders, especially Māori and Pacific peoples. This was essential to facilitate social mobility, reduce inequalities, and meet the needs of a diverse workforce, the report said.

Auckland has also become less attractive to the wealthy with a weakening luxury property market and a tax environment, with the report saying its tax environment is in the bottom 20%. The city has fallen outside the global top 50 for its base of millionaires, overtaken by cities like Lisbon and Manchester.

Some of the structural changes currently under way across the Auckland Council group may provide a renewed platform for action, including the reintegration of economic and urban development activities into core council business.

Auckland mayor Wayne Brown said more action was needed and pointed to his Manifesto for Auckland calling for a focus on growth across three key areas: innovation, housing and tourism.

“In partnership with central government, we are also overhauling the Auckland Unitary Plan to unlock significantly more housing where people want to live and work, helping to reduce costs and shorten commutes. These changes will lift productivity by improving housing affordability, reducing travel times, and making it easier for businesses to operate near their workforce.”

Auckland Minister Simeon Brown said the Government was committed to driving growth for all New Zealanders, including Aucklanders.

The city is set to be one of the first to partner with central government in a City and Regional Deal that will unlock funding resource opportunities to support councils to make improvements in their region, for example to roads, infrastructure, and the supply of quality housing.

Report recommendations: How to Fix Auckland

• Address structural challenges to productivity – focus on fixing long-standing systemic issues that hinder productivity, especially in land use, housing, transport, and regulatory settings. This requires coordinated public sector action and a shift from strategy to delivery.

• Invest in catalysts for growth – prioritise initiatives that can reignite momentum—such as attracting major investment, growing high-potential sectors, accelerating innovation, and strengthening sustainability and inclusion efforts.

• Elevate the quality of place through partnership – improve urban experience by enhancing transport connections, raising development standards, diversifying housing formats, and celebrating local identity. Collaboration with mana whenua and communities is essential to maintaining Auckland’s liveability and appeal.

• Craft and promote a strong global narrative – develop a compelling story about Auckland’s past, present, and future that communicates its values, culture, and ambitions to the world. This will help improve its global visibility, attract talent and investment, and strengthen “Brand Auckland” in alignment with “Brand New Zealand”.

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