Auckland lobby behind Key’s about-turn

Alignment of central and city leaders on infrastructure projects now needs to happen in Christchurch.
Prime Minister John Key’s decision to suddenly back Auckland on big infrastructure investments wasn’t simply designed to steal a march on his Labour opponents in the country’s largest voting catchment.

Behind the scenes, leading Auckland-based business lobbies – particularly the Auckland Regional Chamber of Commerce and the NZ Council for Infrastructure Development (NZCID) – had a lot to do with persuading Key’s inner circle that they need to get behind game-changing infrastructure developments in New Zealand’s economic powerhouse.

The NZCID has held meetings with Finance Minister Bill English (who holds ministerial responsibility for infrastructure) to emphasise the need to get on with projects that will enable and service business growth in the city.

The lobby had good feedback from English who has been emboldened, not simply by the business case for the projects, but also because the fiscal track is turning positive much quicker than the Treasury has forecast.

The windfall gains from Meridian Energy’s sale of wind farm assets in Australia – which were unveiled this week – have helped.

But that is just one of several factors in play.

The NZCID – led by chief executive Stephen Selwood – has been the leading advocacy group lobbying for investment in roads, public transport, electricity projects, digital infrastructure, social housing and more to close the national infrastructure deficit that National inherited from Labour when it came to power in late 2008.

To be fair to Labour, former Finance Minister Sir Michael Cullen had already begun this process by instituting work on the Waterview project in Auckland, investigating the electrification of Auckland rail, buying back KiwiRail off its Australian owner as well as a range of other projects.

But when National took power it brought forward some projects – particularly the “Roads of National Significance” – to stimulate the economy and keep construction workers employed in the post-global financial crisis environment.

Auckland Mayor Len Brown lifted the tempo when he swept to power in the first elections for the Auckland Super City in 2010 on a platform of introducing three transport projects: the Central Rail Link, another harbour crossing and an Auckland Airport-CBD rail link.

On the Government’s metrics these projects did not stack up – at least in the short term.

But the business cases have been reworked by officials from Government, the NZ Transport Agency and Auckland Transport. If growth rates in the Auckland CBD move faster than projected, then the Central Rail Link in particular may be brought forward according to a pledge Key made on Friday.

The Auckland Regional Chamber of Commerce also alerted the Government – particularly John Key – to the growing concerns in the city that decisions that should be made on Auckland’s big issues were not happening. Key was urged to show some leadership and take the opportunity to put his Government back in the box seat at a time when it was losing its own positioning in New Zealand’s commercial hub.

In April, Chamber of Commerce chief executive Michael Barnett put a case to Key to address four areas: Auckland’s long-term housing shortage, where there was an opportunity for the Government-Auckland housing taskforce to set a game-changing housing action programme; funding the completion of the strategic roading network, in particular the AMETI/East-West Link that is so essential to the movement of freight across the city’s manufacturing and logistics hubs; giving priority to the Central Rail Link to allow a doubling of train services through Britomart station coupled with improved bus services (Barnett stressed the strong public support for the service and the need to realise the benefits of the Government’s investment in rail electrification and loan for new passenger rolling stock); the need for a confirmed agenda to finalise the Auckland Unitary Plan in a way that accelerates the delivery of Auckland’s growth plans; and confirmation that the International Convention Centre would be built as soon as possible.

Both the NZCID and the Auckland Chamber have made strong business cases for the completion of these projects and for the Government to pony up with the billions of dollars necessary for it to pay its part – alongside the council – in bankrolling the projects in future years.

It has not been plain sailing.

Sources suggest Cabinet ministers – notably Transport Minister Gerry Brownlee and his predecessor Steven Joyce – were not easily persuaded to move on Brown’s big-ticket numbers.

The NZCID reckons the proposed route for the Central Rail Link does not take sufficient account of vital traffic nodes such as the Auckland University precinct or Wynyard Quarter.

Given that the project is not slotted to start for another seven years, there is time to investigate further options on the route.

Barnett has also suggested investigating a fast rail link between Auckland and Hamilton. This would enable Hamilton to become a dormitory city for Auckland where workers could commute to the big city in less than an hour’s travelling time either way and live in more affordable housing.

Both ideas are worth pursuing.

What is good from an Auckland perspective is that pragmatism has finally reigned.

Now the same formula needs to be applied in Christchurch so that both the city leaders and central Government are singing from the same hymn sheet.

Bernard Hickey: Bet on Gen Y debt

Bernard Hickey

How will the generations born in New Zealand after 1980 afford to buy their first home?

This is the crucial question for the baby-boomers running the country. It is central to the economic challenge facing the Reserve Bank and the Government.

The answer will decide how many of those New Zealanders born here will stay and start families. The answer will also be an epitaph for a generation who benefited from what now looks likely to be a tripling of house prices between 2000 and 2020.

Prime Minister John Key gave his answer loud and clear this week: load them up with debt and hope very fast wages growth and low interest rates allow the young and indebted to dig their way out over the next 20 years.

The spotlight fell on the problem in an interesting way this week. The Reserve Bank reiterated its plans for “speed limits” on the growth of high loan-to-value ratio loans. This is one of its so-called macro-prudential tools to allow the central bank to slow down Auckland’s housing market without putting up interest rates for everyone. Governor Graeme Wheeler said he hadn’t finalised these limits but was clear they would apply to first-home buyers and rental property investors, because first-home buyers make up almost a third of the growth in new home loans.

This issue has Key’s political senses tingling. He knows it’s not a good look to take away some of the rungs from the steep ladder to home ownership for young buyers. This week he said he was pushing the Reserve Bank to give first-home buyers some sort of exemption or special treatment.

This is the crux of the matter: how does one generation get to sell their houses to the next generation at the toppest of top dollars when that new generation can’t leverage up?

Key sees low-interest debt as the solution to an older generation’s desire to keep house prices over-valued. The irony is painful. His Government has staked its reputation on reducing government debt to keep interest rates low, but his solution to over-valued housing is increasing the debt for young home buyers.

Young New Zealanders are often already heavily in student debt and are on low post-tax income. The only way they can afford to buy a first home in the big cities is by gearing up to their eyeballs. Taking away that ability to leverage up breaks the model and exposes the problem much of the developed world faces.

When assets can only be passed from one generation to the next with the help of obscenely high debt, we need to ask: are those assets over-valued? The Reserve Bank certainly thinks so, and that’s why it is bringing in speed limits.

Key’s opposition to applying these consistently betrays his purpose: to protect the wealth of his fellow baby-boomers. He is betting high growth and low interest rates will solve the problem. That’s a big bet, and only one generation will pay the price if it doesn’t come off: the young.

Herald on Sunday, 16 June 2013
By Bernard Hickey

Submission by Auckland Regional Chamber of Commerce on Auckland Council Draft Unitary Plan

Auckland Regional Chamber of Commerce CEO Michael Barnett

Auckland Regional Chamber of Commerce CEO Michael Barnett

The Auckland Chamber of Commerce has made submissions to the Auckland Council regarding the Draft Unitary Plan representing Auckland business interests.

The Chamber shares the widely publicised concerns as well as a number of others about the draft Unitary Plan, and which have resulted in an overall lack of confidence that the document is anywhere near being a fit for purpose set of rules suitable to ‘give effect to’ and enable the timely implementation of the Auckland Plan, and especially the fast and bold action required on the big transformational issues facing Auckland.

For the full submission click here or visit our website

Yet another Report, but where’s the real action?


The latest regional economic update report provides a useful summary of how well the regions are performing, but once again it shows how poorly we are at taking ‘game changing’ decisions to get action on the big issues.

With reference to the section on Auckland, Michael Barnett, head of the Auckland Chamber of Commerce, noted that the report claimed that the government and Auckland Council “are working together” to:

  • Improve infrastructure and urban amenities;
  • Develop education and labour opportunities for Auckland’s youth and migrant populations; and,
  • Help the region become more innovative and export driven.

“Here is yet another report setting out Auckland’s growth agenda, but pulling its punch when it comes to spelling out the urgency of decisions that need to be made on Auckland’s big issues,” said Mr Barnett.

For the Chamber and to give the business community some certainty that we are moving past the global financial crises into a period of sustained growth, there are four big game changing announcements that are needed NOW:

  • A ‘game change’ housing action programme target to identify 30,000 – 40,000 new sites in 2013-14 – to show a real response to the need for 13,000 new homes a year against the fact we are only building about 4000 new units a year;
  • Completed business cases for seeking the funding to build the AMETI-East/West Link (critical to Auckland’s freight sector going forward) and Central Rail Link by 2021 – given both projects are substantially unfunded yet have a ‘highest priority’ ranking in the Auckland Plan.
  • A confirmed agenda to finalise the Unitary Plan in a way that enables accelerated delivery of Auckland’s/Government’s growth plans.
  • A confirmation that the International Convention Centre will be built ASAP – given the case for the Centre was made 10 years ago, and with SkyCity offering the $700 million needed to build, “we have run out of excuses for the lack of action,” said Mr Barnett.

For more information contact Michael Barnett, mobile: 0275 631 150.
Michael Barnett, Chief Executive, Auckland Chamber of Commerce.