Phil Goff hopes Auckland gets a good share of the Government’s $1b housing fund, writes Tim McCready
Auckland Council has put in an indicative bid for the $1 billion housing infrastructure fund, and Mayor Phil Goff hopes New Zealand’s largest city will gain a significant share of the investment.

“Done right, that will enable us to do a whole lot more,” he says. “We could build 36,000 more houses with the Government’s assistance. That’s an offer I don’t think they would want to refuse.”

The Government is making the fund available to local councils in high growth areas — Christchurch, Queenstown, Tauranga, Hamilton and Auckland — to assist them to establish “substantial new infrastructure investments” that are crucial to increasing housing supply.

At the time of the announcement, then Finance Minister Bill English said the fund will help bring forward the new roads and water infrastructure needed for new housing where financing is a constraint.

“The Government will invest up front to ensure the infrastructure is in place,” he said. “But councils will have to repay the investment or buy back the assets once houses have been built and development contributions paid.”

English acknowledged that infrastructure and its financing is one of the three key constraints to building more houses, alongside land supply and consenting requirements.

“Councils have strict debt limits which means some lack the headroom to invest in infrastructure now and then wait for future development contributions to recover the costs. The fund will help provide more infrastructure sooner by aligning the cost to councils with the timing of revenue from development contributions.”

Building and Housing Minister Dr Nick Smith stressed that the fund is available only for substantial new infrastructure investments that support more new housing, not to replace existing infrastructure. “To access the fund, local councils must outline how many new houses will be built, where they will be built and when they will be available,” he said.

“Ideally, they will have agreements with developers on these issues.”

Auckland has clearly been struggling to deal with the housing crisis. In order to meet the demand over the next 30 years, the council predicts Auckland will need more than 400,000 new residential homes.

Goff agrees with the Government — in order to build more houses, the city must put more money into infrastructure. “I welcomed the housing infrastructure fund when I was still a Labour MP and my party was opposing it,” he says. “That’s because I knew it was important symbolically. The Government knows that with a fast-growing population, it is a cost not a benefit to a council.”

It is that pragmatism that saw many of New Zealand’s top CEOs in the New Zealand Herald’s Mood of the Boardroom survey — held before the mayoral election — agree that Goff’s connectivity to Wellington is a capability that will help things get done.

But will a portion of $1 billion be enough to break the logjam when it comes to housing Aucklanders?

Stephen Selwood, chief executive of Infrastructure New Zealand, thinks that even if Auckland were to get the entire $1 billion, it would only make a small dent in the infrastructure funding deficit. “New Zealand has a legacy of investing too little too late,” he says. “Even though investment has increased significantly in recent years, it is not keeping pace with growth. The reality is that we need to increase investment with urgency and consolidate growth by lead investment in infrastructure.

“This would enable us to develop residential and commercial development at scale integrated with transport investment and make maximum use of limited dollars.”

Selwood says the current plans allow growth everywhere. The infrastructure providers, especially transport providers, can’t keep up, even if they had the budgets to do so.

Goff agrees that even the entire infrastructure fund wouldn’t be enough for Auckland — let alone being spread around all five centres it is being offered to.

The Auckland Transport Alignment Project, presented in September by outgoing Mayor Len Brown and Minister of Transport Simon Bridges, revealed an extra $4 billion must be found over the next decade to fund transportation projects.

“That means we have to find $400 million a year extra to fund even a modest growth in infrastructure that will only slow — and not reverse — the level of congestion,” says Goff.

He is considering alternative funding tools to supplement above and beyond the housing infrastructure fund, one of which is the adoption of a fair level of user-pays for roading infrastructure.

“I have never understood why rates should fund infrastructure, when a significant section of our population who are retired, or who hardly use the roads or public transport, are paying the same as those of us who are working our roads and transport system to death,” he says.

While there are many different mechanisms that could be used to implement a user-pays system, Goff favours a fuel tax for its simplicity to implement. “A 10 per cent fuel tax would probably provide about $150 million per year. I have been a convert to user pays for quite some time — it would make a direct connection between utilisation of the roads and paying for transport infrastructure. It’s simple, cheap, easy to administer — and interim.”

The chart above, produced by Branz and Pacifecon, projects the value of all construction nationally (historic and forecast), and shows the increasing gap between projected investment in residential construction (in blue) vs infrastructure (in green).

Tim McCready

Auckland Mayor Phil Goff has expressed a strong desire to see “assets sustained and protected for generations to come”.

In line with this, many of his campaign policies in the lead up to the election were environmental, including protecting Auckland’s marine environment and the Waitemata Harbour, planting a million additional trees in three years, reducing the city’s waste, addressing global warming, and reducing carbon emissions from transport.

The new council may have only been in place for a couple of months, but many of these policies are already underway.

Reducing waste
Goff wants to increase the city’s recycling efforts, implementing initiatives that will work towards an aspirational goal of zero waste to landfill by 2040, set out in the Auckland Council’s Waste Management and Minimisation Plan.

Of the initiatives, one expected to pass fairly quickly is a charge on plastic bags.

“The truth of the matter is that we all know we shouldn’t use them. But we are all lazy,” says Goff.

“Unless we’re pushed, we won’t do it. We could probably cut 500 or 600 million plastic bags a year out of the waste stream in Auckland when we do it.”

Governments around the world have been taking action to ban plastic bags or charge customers for them, beginning with Bangladesh in 2002.

Even some supermarkets in Myanmar are now promoting “No Plastic Bag Day Fridays”, and instead pushing reusable and recycled bags.

California is one of the most recent regions of the world (and the first US state) to ban all retailers from handing out single-use plastic shopping bags at the checkout.

California Proposition 67 — or the “Plastic Bag Ban Veto Referendum” — was included on the ballot in the United States election last month, and passed with 52 per cent of votes.

But rather than an outright ban, a more likely model for Auckland is a plastic bag charge similar to that implemented in Britain in 2015.

British retailers with more than 250 full-time employees are required to charge 5p per plastic bag, which has resulted in a reduction of around 80 per cent.

There is an exemption on certain products (such as uncooked meat, poultry or fish), and small business in England are also exempt as the administrative burden is considered too high for them to manage.

“It’s simple,” says Goff. “Focus on your supermarkets — New World, Countdown, Pak’nSave, which already does it, as does The Warehouse.

“We would allow exemptions for meat, fish and vegetables, and encourage people to use reusable bags.”

Goff has two options for implementing charges on plastic bags.

“I can get an agreement from the supermarket chains to do it voluntarily,” he says.

“I have ready talked to both Foodstuffs and Progressive Enterprises.”

Alternatively, legislation could be passed through a local bill in Parliament.

Outgoing Prime Minister John Key was ambivalent about introducing any national policy to force a behavioural change.

But assuming New Zealand is serious about living up to its “100 per cent Pure New Zealand” tourism slogan, rolling out a policy throughout not only Auckland but the rest of the country must surely be just a matter of time.

Goff points to a 1 NEWS Colmar Brunton poll conducted last month, which found that 78 per cent of those polled thought it was a good idea to charge for plastic bags, and use the money raised to go towards reducing plastic’s impact on the environment.

“It’s a no brainer. I’ll be pushing hard on it,” says Goff.

A Million Trees programme
On the campaign trail, Goff announced an urban forestation programme for Auckland, aiming to plant a million, predominantly native, trees and shrubs across the region during his first term with council — in addition to those already being planted.

His goal is to “green our city”, offset carbon emissions, protect Auckland’s water quality by planting along rivers and coastlines, and improve our living environment.

The transformation of Te Auaunga Awa (Oakley Creek) is already underway. It is Auckland’s longest stream, and is undergoing a transformation to replace the concrete channel and underground pipes with a wider, natural flowing stream with cycle paths, walking trails — and 50,000 new trees.

Goff wants a formal plan for the Million Trees programme to be in place in autumn, in time for the start of next year’s planting season.

The programme has a budget of $1 million a year, which will fund practical support and help provide an overall strategy around which tree species to plant and where.

Local boards, schools, service and social sector groups, private entities, farmers, the Department of Conservation, New Zealand Transport Agency and developers are among the organisations which already plant trees and shrubs around the region. Council will work alongside all of these groups, and offset costs through partnerships.

“We have also got the potential to use nurseries within prisons and those used for training purposes,” Goff says. “Things are underway.”

Addressing global warming
Reducing carbon emissions from transport was a key priority on the campaign trail for Goff’s mayoral bid. Extending beyond an ambitious tree planting exercise, Goff plans to increase public transport use with non-polluting electric trains and light rail, and by building more walkways and cycleways.

“We’re more than a third of the country’s population, we have to demonstrate that we can pull our weight as well,” he says.

Interestingly, in the lead up to the byelection to appoint his Mount Roskill successor (which Labour’s Michael Wood won convincingly), Goff wouldn’t commit to paying half the $1.36 billion cost for Labour’s pledged light rail service from Mt Roskill to the CBD — instead disclosing he would negotiate hard to protect ratepayers.

“It will be carrying far more passengers than many other roads around New Zealand that are funded 100 per cent,” he said.

“We’d want to negotiate between the Labour Party position of 50 per cent funding and what would currently be paid for a road of national significance by central government, which is 100 per cent.”

Goff has said he would like to reduce the council’s 800 cars, and convert those that remain over time to electric vehicles.

Changing his own car has been something he’s quickly acted on.

“I don’t believe that council needs 800 cars, just like I didn’t believe the Mayor needed two chauffeurs and a big Holden — I have neither of those things now.”

Goff is now driving a Toyota Prius, and makes use of an electric bike.

“It’s fantastic because I can peddle up Albert St and look like I’m really fit — and it’s quicker.”

Tim McCready

Maintaining a balance between economic and social progress is a key part of investing in our country

Should businesses provide more opportunities for employees to share in their firm’s governance, and ensure communities benefit more from their profits? These ideas appeared briefly on the radar in Britain recently.

British Prime Minister Theresa May appeared to suggest employee representation on company boards may be mandated while campaigning for the Conservative leadership, and mooted the idea of lump sum payouts (thought to be up to 10,000 ($17,746) per household) to communities affected by fracking.

The commercial end of town might also reconsider hiring policies.

Much resentment arises from a sense that upward mobility is limited for the working class. A significant driver of this is the growing norm that a university degree is essential to gain a corporate job. In the past, aspirational individuals from low income backgrounds could pursue an apprenticeship at prestigious firms in financial, administrative, or legal areas. Now they cannot without taking on three years (or more) of university fees and foregone income.

EY have already removed their GPA-threshold for screening university graduates in the UK, stating their research had “found no evidence to conclude that previous success in higher education correlated with future success in subsequent professional qualifications undertaken.”

It would also be helpful — though, granted, high risk — for some businesses to enter the political sphere when it comes to issues that affect their bottom line and, in turn, their workers. Being willing to more staunchly defend out-sourcing and its benefits — both to foreign workers and domestic consumers — would be helpful. Radio silence on globalisation implies shame about globalisation, and allows its opponents to steal the narrative.

This isn’t limited to the Trans-Pacific Partnership (TPP) debate.

Before New Zealand signed the much lauded China free trade agreement in 2008, protests were held up and down New Zealand, with claims that “so-called free trade with China has cost tens of thousands of skilled jobs in New Zealand manufacturing industries” and “under such an FTA the negative impacts will be felt by working New Zealanders and their families while the profits of transnational corporations will soar”.

The outcome was benign.

New Zealand’s trade relationship with China has nearly tripled over the past decade. Two-way trade has risen from $8.2 billion in the year ended June 2007 (the year before the free trade agreement was signed), to $23 billion in the June 2016 year.

At Apec last month, New Zealand and China announced they will upgrade the historic agreement to ensure it remains one of the highest standard agreements ever negotiated — particularly now that e-commerce has become increasingly significant for bilateral trade.

Like the Trans-Pacific Partnership, this deal received much support within the business community. Yet most businesses remain silent on why they think it is good for New Zealand. Some will argue it is for selfish reasons — that it allows the rich to get richer — but these arguments will be levelled by opponents regardless.

And very few business leaders actually made the argument for why the TPP could benefit their workers, New Zealand consumers, and citizens overseas (who, yes, are deserving of our consideration).

This will become more important as the negotiation of the Regional Comprehensive Economic Partnership (an Asia-Pacific agreement that includes China instead of the US alongside a range of other countries), gathers momentum after the breakdown of TPP.

Opposition may become vehement, with widespread public scepticism of Chinese trade potentially dwarfing that of the US, making the political cost of New Zealand’s participation high. Unless the success story of the China free trade agreement is told — and not just by politicians — our participation in this key part of the region’s future trade architecture may be hindered.

It may also be prudent for businesses to bear the costs of retraining when jobs are displaced.

Maintaining a balance between economic and social progress is a key part of investing in the future. Building strategies to invest in society will create better, brighter and stronger communities. What’s more, an investment in social change is difficult to reverse — once it takes root, it can only grow.

It is more important now than ever that New Zealand’s top businesses take a serious role in this, and consider whether certain protection measures are necessary to minimise disruption. What these companies say and do could ultimately help — or hinder — New Zealand’s ability to solve those issues that will impact the future of the country.