Business leaders have welcomed the cornerstone of the Government’s “once in a generation” Budget – the unprecedented $50 billion Covid-19 Response and Recovery Fund – rating it at 3.75/5 on an effectiveness scale.
The 52respondents to the Herald’s business leaders post-Budget survey were asked to rate some big spending initiatives – such as the Covid-19 fund, health and education spend-ups, and investments in tourism, environmental and home building programmes on a scale of 1=5 where 1 equalled very poor and 5 equalled very effective.
The $50b fund was set up by Cabinet on April 6 and some $14b of initiatives, including the massive wage subsidy scheme, had already been spent before Finance Minister Grant Robertson unveiled last Thursday’s Budget.
The Budget included a further $16b from the fund to extend the wage subsidy, provide free trades training and boost infrastructure among other initiatives.
A further $20.2 left unallocated drew the ire of the National Opposition, who have called it an election bribe. “My only concern is the $20 billion slush fund,” Simplicity CEO Sam Stubbs said. “Unless this is spent quickly, it should more rightly belong in next year’s Budget and be the subject of better-costed policy announcements going into the election.”
A key part of the Government’s Covid response has been the wage subsidy scheme which provided companies $585.80 weekly for fulltime employees for 12 weeks, and, $350 weekly for part-timers. This was extended in the Budget for a further eight weeks at a cost of $3.2b. But conditions have been tightened so it is only available to businesses who have lost at least 50 per cent of revenue in the month preceding application.
A large fashion retailer boss said the 50 per cent loss threshold is too low, noting: “many businesses will perform better than that, but will still have significantly impaired performance and have to lose staff as a result.”
Spark CEO Jolie Hodson said it was positive to see $1.6 billion earmarked for trades and training and part of this should be directed to digital skills.
“It is important that we are thinking about the future of work in New Zealand and recognizing the need to build the capability of New Zealanders to be able to participate and thrive in an increasingly digital world,” said Hodson. “Covid has highlighted how critical this is, and we already know the productivity benefits it brings.”
Chapman Tripp Nick Wells said all the initiatives were stimulus of one sort or another. “We need to recover in a way that is fit for the future, learning from all of the benefits we have seen from the lockdown such as being more environmentally friendly, increased flexibility and ability to work from home being more digitised and having a much more weightless economy.”
The $400m domestic tourism sector relief package announced in the Budget was panned by many from a sector that directly employs over 229,000 people. Auckland Business Chamber CEO Michael Barnett said tourism was a $40b contributor.
“It deserved more and would have created employment.”
An agriculture boss added, “the investment in tourism needs to be seen for what it is – a start. This is one area where some reimaging would be good for the industry and New Zealand.”
The Government also revealed it would borrow $5b over the next four to five years to build 8000 state and transitional houses in partnership with housing providers. Business leaders scored the initiative 3.4/5.
“As long as (Phil) Twyford stays very far away from the project,” cautioned a wine exporter. A retail chief added: “Unsure on state house builds – there has been no tangible evidence of having good execution with KiwiBuild etc.”
The $1.1b package to create 11,000 jobs in the environment sector – from pest control to wetland restoration – received a score of 3.27/5, with some sceptical of its merits: “It is worthy but unlikely to attract the numbers of unemployed workers to make a difference,” suggested a food producer boss.
The $1b allocated to support education services received a score of 3.83/5 from respondents.
An executive in the transport industry says the package is worthy, but is missing “any mention of digital technology, which seems a missed opportunity following the recent experience of remote learning.”
Perhaps unsurprisingly, the $6.3b investment in health received the highest score from executives of all the Budget areas surveyed with 3.98/5.
“Covid-19 showed that our health system was not up to responding which was one of the reasons for the severe lockdown,” said independent director Cathy Quinn. “The money needs to be spent wisely so that in another pandemic our system is better able to respond.”
“Health needs much more than money, without a complete review and overhaul how much of the $6.3b will be wasted?,” asked a banking boss.
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Phil Goff speaks with Tim McCready about the impact of Covid-19 on Auckland’s infrastructure plans.
In February this year, Auckland Council was focused on the challenges ahead of a city enjoying relentless growth: building transport infrastructure to relieve traffic congestion, coping with the highest ever level of building consents, and dealing with environmental issues including water quality and climate change.
Just two months on, those issues haven’t gone away, but Auckland Council is now facing additional challenges in the wake of Covid-19.
Financially, there will be an unprecedented loss of revenue in the coming financial year of between $250m and $450m. Much of the lost revenue is not through rates, but from the loss of its dividend from Auckland International Airport, reduced fare revenue from Auckland Transport, lower regional fuel tax and less development contributions.
Auckland Mayor Phil Goff says the depression in the 1930s saw the Government pull spending back so much that while it balanced its books, “the cure killed the patient”. He is determined to keep Auckland’s infrastructure projects going as much as possible:
“There will likely be a reduction of infrastructure projects in the coming year, maybe $300m worth, but we will still be spending a whole lot more than we have on average over the last five years on an annual basis,” he says.
“We want to make sure that we’re still creating that infrastructure that the city has been waiting so long for, that it so desperately needs, and which is going to be a core part of actually stimulating the economy, getting jobs going, getting income going and helping to secure recovery.”
Here’s what Goff had to say on a few big issues facing New Zealand’s biggest city:
Work has started back on the City Rail Link now, but we’ve heard that the cost is likely to blow out – do you know what the scale of that will be?
The month-long closure of the CRL is likely to cost probably around, or something in excess of $30m. That’s never welcome, but we had no choice in the matter.
We have a new challenge now – getting some of the specialist staff that we need to do the work internationally, at a time when our borders are closed. I’ll be making submissions to Ministers – obviously we’d need to follow a quarantine process, but we really need that international staff in to not further delay the project.
There is an opportunity here to potentially speed up the CRL project by starting work at multiple sites. We are already doing that to a certain extent now – working on Aotea Centre, working on Karangahape Road, Mt Eden and continuing with the tunnel. If the Government is able to bring some of its capital from its shovel-ready project into CRL, then rather than this being a setback, it could be a chance to advance our programmes.
Auckland Council has submitted 73 priority ‘shovel-ready’ infrastructure projects to the Government’s Infrastructure Industry Reference Group. What do you hope they will achieve for Auckland?
It enables us to create the infrastructure that we desperately need as a city, so that’s something that’s worthwhile in its own right. But we have premised these projects around projects that are ready to go, we’ve consented them, we’ve often done the procurement for them, and we can get them up and going as quickly as possible to create jobs, generate income and help stimulate the recovery that our city and our country desperately needs.
Auckland is uniquely well-placed to assist the recovery of New Zealand in that regard. We’ve been professional in the way that we’ve put the projects up, there are 73 projects, we’ve said 30 are priorities. We know that we can expect a fair share of the money, we are ready to go and we can assist the Government with its recovery objective.
There has been some criticism that the projects put forward haven’t been transformational enough and don’t represent the once-in-a-generation opportunity that this situation has provided. What would you say to that?
We followed the Government criteria – the Government provides the money, they set the criteria. But I reject the criticism anyway – there is a whole lot in our submission which is about mode shift. It’s about bringing forward projects that will assist public transport, that will assist walking and cycling, that will get busways underway. Those are projects that meet our environmental and our transport objectives – reducing traffic congestion, reducing carbon emissions. These are the sort of things that we need to do for the long-term future, as well as needing to deal with the immediate ramifications of Covid-19 and the recession it’s causing.
Will Council be looking at ways to speed up projects – expediting things like resource consent?
There are things we have changed already. For example, noise controls have been lifted – maybe to the detriment of people who live in hearing distance of some of these construction projects, but it means they can work a slightly longer day and a longer working week. We will all have to give up something in order to achieve the wider objective. That is an example of how we have already changed the resource consent requirement to try to facilitate the construction industry getting back on its feet more quickly. The noise might go on a bit longer, but it means the project will be done more quickly, and that disruption will end more quickly, so there is a benefit there as well.
Compulsory water restrictions for Auckland are almost certain with the region’s storage dams dropping below 50 per cent. Around $2.3 billion is due to be spent over two decades on capital works to accommodate Auckland’s growing water consumption – should Council be doing more now to future-proof Auckland’s water supply?
The potential necessity for water restrictions in Auckland is due to the significant lack of rainfall we have experienced since summer. Rainfall levels in January and February have been the lowest on record. Coupled with the very long hot summer and higher demand, the water supply lakes have fallen below 50 per cent full compared with an historical average of around 75 per cent. In addition to this, the long-range weather forecasts do not predict any significant rainfall. Watercare is running a public media campaign to encourage people to reduce usage and are maximising the take from the Waikato River.
In terms of infrastructure, Watercare is continuing to upgrade the Waikato water treatment plant so it can process an additional 25 million litres per day —this work is deemed an essential activity and is due to be complete in around three months. Watercare has also submitted a project through the “shovel-ready” process which proposes the construction of a second water treatment plant and new boost pump station that will increase water treatment capacity by 75 million cubic metres a day and increase pipeline conveyance capacity from 150 to 225 million cubic metres per day.
This project is worth around $300 million to $350 million and will be critical in addressing long-term water resilience in Auckland.
2021 was shaping up to be a banner year for Auckland – with the America’s Cup, Apec, and many other international events. What impact will Covid-19 have on this?
I’m not sure yet what impact this will have on Auckland 2021 – we don’t know yet when our borders will be opened up. We’re hopeful that with the success of New Zealand and Australia, maybe we can open a trans-Tasman border, maybe we can get those tourists back in at least from Australia and maybe the Pacific.
But you take something like the America’s Cup, it’s due to start with the Christmas race in December of this year – will we be ready to have an influx of tourists from around the world? I don’t know the answer to that.
We are keen to see the race and we do want those superyachts here – they bring a lot of money to the country. But we’re also keen to get the economic benefit that covers the cost of the infrastructure that we’ve built to enable to race to take place. We want the tourists to come and enjoy the race and enjoy New Zealand. At the same time, there will still be the benefit that we will be projecting our city and country to the world if the race takes place. That is important as well.
I’m not pushing the Government to do anything that is against health advice. The health and wellbeing of us as New Zealanders comes first. But when we can reopen those borders, having those events in our city, and in New Zealand will give the boost that the tourism and the accommodation sectors need to recover from what has been a bruising period for them.
It feels a little like Apec has been doomed from the start – with the convention centre fire and now Covid-19. What do you think the appetite will be for people to travel – particularly for the Leaders’ Week in November next year? Will we see a mass delegation of world leaders emerge in Auckland?
The leaders won’t want to put themselves at risk. Covid-19 makes no exceptions – we’ve seen prime ministers – Russian and British – come down with the disease. We don’t want people coming to the country to put us at risk if Covid-19 has not been properly dealt with by that time.
Apec in Chile was put off last year, I suspect it’s in real doubt for this year in Malaysia. I think the leaders, if it’s safe to do so – for them and for us – will be ready to come together and have that interaction face-to-face which has been an important aspect of Apec.
Is there anything you’ve seen from the alert level four restrictions that you might like to retain? Personally, I have enjoyed the fact that Cornwall Park has closed its gates to traffic – there has been plenty of space to spread out.
Can we learn things from it? Of course. In every crisis, there is a threat and there’s an opportunity. I think we will see opportunities out of this, things that we can do better.
One of the things we saw was that when you get cars off the road, the air quality is probably the best that Auckland has seen in a generation. And the quietness of the city – we won’t get back to that, but people are saying, gosh, I can hear the birdsong again.
One of the things we can keep is the flexibility around working. If it is possible for people to work effectively from home, why not give them the chance to do that, maybe several days a week? People want to have the social interaction, but they can spend time at home, as well. They can work more flexibly, and that more flexible working I think will be great for things like traffic congestion, efficiency, and people being able to enjoy their working week more.
A bit more amorphous but nonetheless important – He waka eke noa – we are all in this together, and being kind to people, being considerate. We probably haven’t seen this since the war, when people said: “hey, we’re in the same battle together and we are looking after each other.” I hope that we can retain that sort of sentiment going forward.
https://www.timmccready.nz/wp-content/uploads/2020/05/Phil_Goff-Tim_McCready-1.jpg5761024tim.mccreadyhttps://www.timmccready.nz/wp-content/uploads/2024/03/TimMcCready_banner.pngtim.mccready2020-05-04 18:35:592020-05-04 18:35:59Auckland’s infrastructure projects must go on: Phil Goff Q&A (NZ INC.)
Non-essential business has taken a hit over the past month, but innovative New Zealand companies are finding the silver lining.
Restrictions imposed by the Covid-19 lockdown have caused some businesses to consider closing up shop for good. While some have taken this route, others have used the restrictions forced upon them to pivot into areas they hadn’t before – either because they had never needed to, or they had never considered it.
One of the best examples of this is Nanogirl Labs, run by one of New Zealand’s best-known science communicators, Dr Michelle Dickinson. It was quickly apparent to Nanogirl Labs that its “old” business – live stage shows and performances at schools around New Zealand – was not viable in the near future.
“I looked at our staff, I looked at my husband and business co-founder and we knew there was a big decision to be made: accept defeat and wind the business up, or fight for something we believed in,” said Dickinson.
Within three days her team developed an online learning platform for those same kids they would normally reach through their shows who now needed to stay home. Each weekday, a “science adventure” is delivered to teach STEM (science, technology, engineering and mathematics) to New Zealand’s next generation using common household items. On top of that, Nanogirl Labs maintained its “buy one give one” model – meaning those who wouldn’t have been able to afford to take part can.
Waikato brewery Good George moved early to produce 1,000 litres of hand sanitiser from a distillery it had been using to make spirits. Co-founder Brian Watson says they had the idea after having trouble sourcing the liquid gold for its own staff: “We had our whisky and gin programme going for a while and we thought: the world needs hand sanitiser more than it needs gin and whisky right at the moment,” he said.
Similarly, dairy giant Fonterra made 250,000 litres of ethanol available to companies making hand sanitiser and has also increased the production of ethanol at one of its plants. Chief executive Miles Hurrell said in a webinar this week that this came at “a significant cost to our business, but we knew it was the right thing to do”.
Steve Nathan, chief executive of timesheet company TimeHub, says he was inspired by British technology company Dyson, which repurposed some of its production from vacuum cleaners to ventilators. He said it made him wonder, “How can we not pivot, but rather repurpose what we have for our new normal?”
His team created MyVisitorLog, an online service that allows customers to use their own device to record when they visit a business. This will be a long-term requirement for contact-tracing purposes – particularly for restaurants, cafes and bars – and this tech will allow it to happen contactlessly.
Responsive retailing
Supermarkets were among only a handful of retail outlets allowed to open during the alert level four restrictions and as such have been innovating since the beginning of the lockdown.
Foodstuffs has been trialling a virtual check-in for customers, where shoppers text the supermarket to be put into a queue and are sent a reply when it’s their turn to shop. This has made social distancing easier – customers can queue in their car – but has also meant that shoppers like me who live close to one of the supermarkets participating in the trial can queue virtually from home (and then get to the supermarket at pace to meet the 10-minute allowance!).
Clickandcollect, set up by George Czabania, automatically collates click-and-collect slots for all supermarkets across New Zealand, allowing customers to more easily hunt out available times (which have been incredibly scarce during lockdown).
Another website, How Long is the Line, built by developer Gareth Hayes, crowdsources queue times at supermarkets, helping customers avoid an unnecessary two-hour wait in their attempt to locate flour (often unsuccessfully). Customers feed data into the site to approximate the number of people waiting in the queue – the more people who update the site, the more accurate it is.
Countdown opened New Zealand’s first dedicated online store in Auckland to respond to the massive 300% surge in online shopping demand. The 8,800-square-metre store is located in Penrose, and is operating 24 hours a day, seven days a week to fulfil more than 7,500 orders per week.
The shift to alert level three has spurred on further innovation in retail, as brick-and-mortar stores look for ways to adapt that will allow them to continue to trade when restrictions won’t allow foot traffic.
New Zealand Made launched a custom website to help New Zealand retailers that have inventory ready but haven’t been able to open to take orders until now. These retailers were ready and waiting to send orders out at 11.59pm on April 27, as soon as the level four restrictions end. #ShopKiwi, New Zealand.
The Warehouse Group recently announced it is allowing contactless click-and-collect from The Warehouse, Warehouse Stationery, Noel Leeming and Torpedo7 outlets from this week.
“We wanted to offer Kiwis another way to shop safely as we transition into alert level three,” says The Warehouse Group chief executive Pejman Okhovat.
“While we can’t open our stores during this time, we can offer another safe and secure way for Kiwis to shop our complete online range that’s free, except for oversize items, and easy to use.”
It’s also trialling drive-through shopping at four of its Auckland outlets, which will also allow access to orders made through online retailer TheMarket. Bolstering its online offering, TheMarket has partnered with grocery and ready-made meal businesses Foodbox, HyperMeat and Jess’s Underground Kitchen for this initiative.
Meals on wheels
New Zealand’s largest online restaurant table booking website, Restaurant Hub, has launched a new service to enable customers to order click-and-collect meals from restaurants. The service has had a huge amount of interest, with 140 restaurants and cafes opting in over the first weekend.
Uber Eats’ refusal to reduce its standard commission charge of 30-35% has caused public outrage. Responding to this, prime minister Jacinda Ardern encouraged New Zealanders “who may be looking forward next week to accessing takeaway food to look at your favourite local eatery – and I do encourage you to support local businesses – and just look at whether or not they offer delivery directly themselves”.
Tim McLeod says the desire to help his favourite cafes and restaurants caused him to “pivot away from my day job” as a digital tech consultant and create Eat Local NZ as an Uber Eats alternative. He says the platform will charge restaurants just 5% commission and will pay drivers more than Uber Eats.
Car rental business Snap Rentals pivoted by bringing its usual services to a complete standstill. It launched an app that pairs its rental cars with its staff to perform personal grocery shopping services for customers. Chief executive Jamie Bennett says the delivery service has been so popular that he has had to take on new staff. He expects the service to continue even after restrictions ease up, in parallel with its car rental business.
The era of the webinar
A plethora of webinars have been set up to help New Zealand businesses use the time they may not be able to work for their businesses to instead work on their businesses. The Icehouse, NZTech and many others have created great resources. I have curated a list of upcoming webinars (using the help of crowdsourcing) here.
My favourite has been a series being run by the Trans-Tasman Business Circle, which has attracted fantastic speakers to discuss “resilient leadership in challenging times”, ranging from ANZ’s Antonia Watson to the Reserve Bank’s Adrian Orr and Auckland mayor Phil Goff.
In a similar vein, Manaaki has tapped into a network of successful New Zealand business experts – both local and offshore – and paired them up with New Zealand businesses needing help and advice, all for free.
Manaaki released a video love letter to small businesses featuring prominent New Zealanders including Jacinda Ardern, Stuart Nash, Stan Walker, Joseph Parker, UFC world champion Israel Adesanya and New Zealanders of the Year Jennifer Ward-Lealand and Lance O’Sullivan – all showing support for the platform and small business owners.
“We will not stand by and watch it happen. We are Manaaki – your support network of business experts. Give us your questions and frustrations, opportunities, fears. Share your burden, and together we will find solutions.”
We’ve got to think
While not strictly business-related, this deserves an honourable mention simply because of its mental health benefit.
I live close to Auckland’s best (personal opinion) and largest park: Cornwall Park. While the park is usually open to traffic and acts as a reluctant thoroughfare between two busy suburbs, for the duration of the lockdown the entry gates have been locked to cars and the gates throughout the park left open to minimise the need to touch anything.
This has created a huge open space with roads, footpaths and the many fields available for pedestrians, runners and cyclists to spread out and physically distance themselves – a much-needed reprieve for those of us subjected to hours of indoor Zoom conference calls.
A team of five million New Zealanders has united against Covid-19 and made it through level four with amazing levels of compliance. As we transition to level three, it’s my belief that many of our businesses will come through stronger than ever – because they used the time provided by the lockdown to work on their businesses.
In almost any New Zealand business presentation, there are two phrases that are commonly used.
One is the Māori proverb: “He aha te mea nui o te ao? (What is the most important thing in the world?). He tāngata, he tāngata, he tāngata (It is people, it is people, it is people).”
Another is one made famous by the father of nuclear physics, New Zealander Ernest Rutherford: “We haven’t the money, so we’ve got to think.”
Covid-19 is testing all businesses, but over the course of New Zealand’s lockdown, the spirit behind these two quotes has really shone through.
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Miles Hurrell, chief executive of Fonterra, gave a Q&A through the Trans-Tasman Business Circle on resilient leadership in challenging times. Tim McCready gives an overview of what was discussed.
Fonterra started to become aware of the escalating Covid-19 situation in China in January, says chief executive Miles Hurrell. Fonterra mobilised its team to consider the impact Covid-19 would have on the cooperative’s business – including a large piece of work early on considering the New Zealand context.
“That is where it ramped up, as we started to see that the impact on New Zealand was going to be real,” he says.
“We really mobilised our crisis team – about a dozen people across our entire business came together.”
Hurrell says Fonterra responded quickly to the Covid situation, moving most of its workforce to Level Four working arrangements well ahead of government requirements.
“We decided to get people working from home early. Everyone is mobile now with communication.”
That was relatively straightforward with the corporate office and with farmers who are easily able to work remotely and often already operate in a situation where self-isolation is not much different – but a little harder for those working in Fonterra’s factories.
“Since we are making food, all our facilities around the world already have stringent food safety and quality controls in place. It was just a step up to add a two-metre separation and record the temperature of staff.”
It was these strict measures that Hurrell attributes to keeping cases within Fonterra’s workforce low. There has been less than ten Covid cases across its global network of 21,000 staff, with most cases being the result of people returning from an overseas holiday.
“The early intervention by Fonterra, and making sure that people come nowhere near a factory or office, meant that there was no cross-contamination,” he says.
Regardless of any shift in Covid alert level from the Government, Fonterra will continue to operate as if under Level Four conditions.
“We can’t have risk of disruption. We will stay with Level Four for quite some time,” says Hurrell.
Dealing with crisis
The crisis team is well versed. Hurrell says as unfortunate as it sounds, Fonterra has two or three significant events on an annual basis – although most of these do not hit the media.
“We see an emerging issue, we get on top of it, and we manage it 99 out of 100 times. The way the team is geared up now, it is almost second nature.”
One of the early risks identified early on from a New Zealand context was the impact on shipping containers and space availability through the ports. But Hurrell says Fonterra’s long-term relationship with Maersk and the Port of Tauranga meant they were able to get a commitment they wouldn’t be impacted.
Hurrell and the senior management team at Fonterra works alongside the crisis team to clear the runway – allowing them to make decisions on behalf of the business. Hurrell says that although he wouldn’t call work right now ‘business as usual’, there is a sense of calm whenever he goes down to visit the crisis centre.
Weathering the storm
Fonterra has been through a rough couple of years, with billions of dollars of shareholder capital wasted on its failed transformation strategy under the leadership of former chief executive Theo Spierings.
Hurrell says Fonterra got “a bit ambitious”, and under his leadership has reduced debt significantly and changed to be more targeted in what it does and focused on taking New Zealand’s goodness to the world.
He says this will help Fonterra weather the upcoming storm, and will put it in good stead as it refines its strategy.
“We’ve just started to look at what Fonterra looks like on the 5-10-year horizon,” he says. “That has completely changed. Some things will still be there, but Covid has made us recognise the world will be different.”
Hurrell says despite some commentators saying Fonterra should only be in a single category or in single markets – it is this spread and diversity that has helped it. He points to restaurant trade, and says if Fonterra was solely focused on those businesses it would now be in significant strife:
“But because we are in base ingredients, advanced ingredients that go into medical foods, retail products, as well as those food services that are now starting to come back on in China, we have had the flexibility when we see something fall over and that has really helped us.”
Hurrell says his main role in navigating New Zealand’s largest organisation through Covid is providing a sense of calm across the business – giving commitment and confidence to the team that although there will be bumpy roads along the way, Fonterra is well placed to get through the crisis.
He says that providing that sense of calm is important. “But you also have to let your hair down and have a Zoom call with your mates on a Friday and Saturday night – you need that outlet.”
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Infrastructure NZ’s Paul Blair tells Tim McCready that infrastructure investment and construction will play a major role in New Zealand’s economic recovery programme – but central and local government collaboration is required to make it happen.
Infrastructure NZ – New Zealand’s peak infrastructure body representing 140 public and private sector industry members – says the Government’s response for the infrastructure and construction sector has been quick, clear and commendable, but says now is the time for regional and central government to collaborate and tackle projects that will improve outcomes for the bulk of New Zealanders who live in major centres.
In a letter sent to infrastructure minister Shane Jones earlier this month, Infrastructure NZ chief executive Paul Blair recommends the Government establishes a $20b ‘national recovery programme’ of funding, over and above identified projects able to be accelerated by the Infrastructure Industry Reference Group.
It suggests that this programme of work – as yet undefined – could be rapidly co-designed and funded using rapid deployment techniques used post the Christchurch and Kaikoura earthquakes. The North Canterbury Transport Infrastructure Recovery (NCTIR) alliance and the Stronger Christchurch Infrastructure Rebuild Team’s (SCIRT) were award-winning, speedy and well-regarded programmes. It would allow the Government to have flexibility and co-design for the ‘new normal’, as opposed to only accelerating existing shovel-ready projects.
Blair says the priority for the national recovery programme long-term is to establish a “North Star” against which immediate and intermediate options can be assessed to ensure they align with a longer-term strategic direction. The letter outlines five components that will be critical to the strategy:
A vision for where the Government sees New Zealand’s future, especially with the significant Covid-19 changes
Long-term strategic planning to achieve the vision
Funding and finance
Regulations and incentives
Delivery capability and capacity.
Partnering with councils
Blair says one of the ways this strategy could assist, is by partnering with councils which have a significant need for infrastructure investment but face substantial funding issues.
Rates provide an average of only 60 per cent of council revenues – which some councils are already choosing to freeze or cut. The rest comes from more commercial sources like developer contributions, fees for public services, or dividends from airports, ports, or stadiums. These too are being severely hit by Covid-19.
“Hard-hit councils require financial support from central government that is tied to shared priorities through urban growth partnerships,” says Blair.
To put the challenge they face into context, he explains that individually, New Zealanders pay roughly $1125 per year to council, but $15,250 to government.
“It’s easy to see that is not equitable when local government owns roughly 40 per cent of the country’s infrastructure – the same as central government – but only has about a tenth as much money to maintain and upgrade it.”
He says the growth councils – Auckland, Wellington, Tauranga, Queenstown, Hamilton – make up a majority of our population, and should be expanding their operations at this time.
“Under an all-of-government approach, councils should be the very definition of shovel-ready. But instead their revenues are going down, and unlike central government they can’t go and borrow more.”
He points to Tauranga City Council as an example, which recently announced that its revenue would be reduced by between 15-25 per cent.
The looming funding issue for Tauranga could see some $300m of housing-related infrastructure stopped. It cannot fund long-term planned capex due to cost increases, population growth and leaky building claims that would mean it would breach its debt cap without politically unachievable rates rises.
An NZIER report shows the 10-year impact of Tauranga City Council’s failure to invest in local pipes and roads could be:
a housing shortfall of 8,436 units
cumulative GDP foregone of $2,547 million
1,580 – 2,320 construction jobs lost, worth an additional $118-$174 million of GDP foregone
house price rises of $702,082.
“If you give $1 of new income to a council, they can go and borrow $2.50. But if they lose a dollar, they also lose the ability to fund $2.50,” explains Blair.
In addition, the loss of this infrastructure would see significant lost opportunity for Crown revenues, impose further costs on the Crown (assuming accommodation supplement and other housing-related costs rise) and would lead to spiralling wellbeing losses.
Blair says the counterfactual is that if Crown gave $100m of new income to TCC, it could borrow an additional $250m, creating enough headroom for the capex to continue. The cumulative GST on $2,547m of GDP is $382m – significantly exceeding the Crown’s initial $100m investment.
He says that while central government funding is urgently required, this shouldn’t be seen as a ‘free lunch’ for councils. As with all good partnerships, both the government and councils will need to show partnership behaviours, and rapidly align on win-win national, regional and local objectives and outcomes.
“We all share a common goal to re-inflate the economy and adapt to the new normal. Urban growth partnerships are a core part of the Government’s urban growth agenda, we now call for these to be funded and delivered at pace.”
Infrastructure NZ says if the Government can replace, or even enhance, lost council revenue, then local works in local communities can restart at great speed.
“Local government is where some of the greatest need is and where the greatest leverage can be exerted,” says Blair.
“In these times partnership will be essential. Central and local government need to be working together, not at cross-purposes – he waka eke noa.”
Auckland Mayor Phil Goff says although you can mitigate against disruption, you cannot “do” construction without it being in some sense disruptive.
“Of course it is going to be disruptive if you’re ripping out the intersection between Wellesley St to Albert St. Of course it’s going to be disruptive if you’re ripping up Quay St,” he says. “But disruption is also progress.”
Goff admits there is a part of the community that will complain, saying the only way to get around is by car and any construction is too disruptive. But he says that attitude is not going to work as Auckland’s population rises by 40,000 a year and roads can’t get any wider.
He says the city does have to upgrade roads for cars — and disagrees with people who complain about the upgrade programme the Government recently announced as part of its infrastructure package.
“But actually, the big changes are things like the third main trunk rail line so we can increase the capacity further on heavy rail, and SkyPath and SeaPath. They will produce massive transformational change for Auckland — and for the better.”
Goff reckons the average person understands you can’t rip up a road to put a tunnel underneath it, or create a cycleway or widen the pedestrian footpath without having an impact.
“It is a signature of a city that is going places and we should be pleased about that,” he says.
And it is clear he is pleased. He talks animatedly about cycleways, the developments to pedestrianise areas, and public transport that will make the central city more environmentally friendly and accessible.
“It’s a way of giving people the choice and alternative ways of getting around the city in a way that doesn’t add to congestion, is low on carbon emissions, and is a fun way of getting around.”
Goff says there has been a long period where “bugger all infrastructure was being created” and we are paying the price for that now.
“The trouble with the City Rail Link (CRL) is that we shouldn’t be doing the sod-turning at Mount Eden now — we should be opening it.”
Goff says the CRL will double rail capacity and bring more people into the CBD by public transport.
“That was needed five years ago, and the reluctance of the government of the day to participate in that and then putting half the cost on Auckland … almost everybody can now see it was a bad mistake.”
The number of pedestrians on Queen St has roughly doubled in the past five years, the imminent opening of Commercial Bay is going to bring around 10,000 workers into one block, and we are seeing increasing numbers of cruise ships arriving into the city.
Goff asks: “How do you have all of that and have access by people to actually enjoy the city if it is still going to be a place that you drive through, rather than come into?”
A city under the spotlight
Adding to Auckland’s disruption is the preparation for 2021. It is shaping up to be one of Auckland’s busiest and most visible years ever — with the America’s Cup and Apec headlining the year, and other large major events including kapa haka festival Te Matatini, the women’s cricket world cup and the men’s world softball championship.
There is a lot of preening to be done in our largest city before the spotlight comes on.
The America’s Cup will be first up, and Goff says projects are on time and within budget for all of the infrastructure for the event.
“The development around Quay St and the new harbour park will be completed,” he says. “Commercial Bay and the Park Hyatt hotel will be up and running — but construction across the city doesn’t stop because we have international guests here.”
He says as well as the excitement and vibrancy the America’s Cup brings to the city, it also leaves some valuable legacy products — including the strengthening of the wharf, the removal of the hazardous substance tanks, installation of breakwaters, and replacement of the Daldy St stormwater outfall.
New Zealand’s hosting of Apec will involve a full year, with clusters of meetings held over 12 months from December 2020, culminating in the Leaders’ Week and CEO Summit in November 2021. For that, around 10,000 attendees will descend on Auckland, with leaders from most of the 21 economies expected to attend.
The CEO Summit was intended to be held in the brand-new New Zealand International Convention Centre (NZICC) — until the fire last October put that in doubt.
From his office, Goff has an unparalleled view of the NZICC construction site. He was one of the first to break the news of last year’s fire and gave regular updates of what he could see live through his Twitter account.
He is disappointed Auckland now won’t be able to show off its glitzy new hosting venue to the world.
“When we watched the fire start and then just run on for day after day, it was pretty clear that this meant the centre wasn’t going to be ready for Apec, notwithstanding the fact it’s still 21 months away.
“But we did have a contingency plan between government and council, and we have alternative options including the Aotea Centre and others. We won’t have the brand new built-for-purpose convention centre, but Apec will be a success and it’s not the end of the world.”
Goff says preparations have delivered a lot of new hotel beds, including the 300-room Horizon Hotel being built alongside the convention centre.
“We’ve been building 1000 hotel rooms a year. That means we’re much better set up to cater for an event the size of Leaders’ Week.”
Beyond 2021
Asked about the future of the city, Goff shares Sir Paul Callaghan’s vision for New Zealand — of Auckland being “the city where talent wants to live”.
He says our natural environment is an important part of what makes the city an attractive place to be.
“The Central Interceptor will be huge progress in stopping the high level of wastewater overflows into the harbour every time it rains,” he says. The $1.2b wastewater tunnel will run 14.7km long and 4.5m wide from Grey Lynn to the Māngere Wastewater Treatment Plant.
It is due to be operating by 2025 and will help make Auckland’s waterways cleaner by cutting overflows by up to 80 per cent.
Goff frequently talks about his desire to increase Auckland’s resilience to climate change in order to “ensure a better world for our children and grandchildren”. It was one of the major platforms he campaigned on during last year’s election, along with clean transport and protecting the environment.
He says climate change is the biggest environmental threat the world faces, though he admits there is a stark difference between Auckland’s contribution to water quality and climate change.
“The difference is that while the steps we take on water quality immediately act to remedy the problems, the steps we take on climate change are simply our contribution to what needs to be an international effort in order to stop global warming and sea-level rise.”
Auckland Council is developing a Climate Action Framework to outline a path to reduce emissions and prepare the region for the impacts of climate change. But Goff says while Auckland wants to be at the cutting edge of making the changes needed, it is important that other countries take it seriously as well.
One example of the changes being made is the recent announcement that all the red CityLink buses will become electric this year.
Goff says the move will help improve air quality by reducing pollution from black carbon and nitrogen oxide emitted by the current diesel vehicles.
“Black carbon is associated with health problems and has been found in Queen St at levels higher than in some major European and US cities, so it’s a priority for us to address this issue.”
In November 2017, Auckland joined 11 other cities in signing the C40 Fossil-Fuel-Free Streets Declaration, committing Auckland to buy only zero-emission buses from 2025.
But Goff says he’d like to bring that commitment forward.
“The capital cost of an electric bus is much higher. But the advantage is that over the lifetime of the bus, the running costs are half and it pays for itself over that time.”
He says the capital constraints of council means he is talking to the Government about the possibility of extending the feebate scheme to buses.
“Feebate is great for electric cars. I drive an electric car. But these buses are on the road for 18 hours a day — why wouldn’t you want to bring forward that conversion?”
https://www.timmccready.nz/wp-content/uploads/2020/03/2020-03-PhilGoff.jpg730495tim.mccreadyhttps://www.timmccready.nz/wp-content/uploads/2024/03/TimMcCready_banner.pngtim.mccready2020-03-06 17:48:002020-03-12 11:43:35Project Auckland: A city that is going places (NZ Herald)
World War II acted as a catalyst for town planning.
One of the solutions to the overcrowded, polluted and bombed areas of Britain was to get people out and into new town developments.
The “new towns” were conceived by the post-war Labour government, and built between the 1940s and 1960s with the New Towns Act of 1946 giving the Government the power to designate areas of land for new town development.
Now home to 2.7 million people, they are situated 30 to 70 kilometres from big cities and close to motorways and railway lines. Most are the very definition of a concrete jungle — monolithic brutalist architecture with myriad concrete underpasses and walkways.
The first new town developments — such as Harlow and Stevenage — only allowed for social housing, which limited the diversity of residents. Milton Keynes was in the third and last wave of new town developments and included semi-detached housing that was offered for private sale.
It is the largest of the new towns, and is considered one of the most successful — it had the fastest-growing economy outside London between 1997 and 2011.
The new towns were guided by several fundamental planning principles, including economic self-containment with a drive to attract industry and employment, and the creation of socially mixed communities.
One of the important lessons from the developments is the links to bigger cities that foster growth.
Key to Milton Keynes’ success is its links to central London — the trip takes under an hour with an average of 224 trains making the journey on a weekday.
But some 70 years on, the legacy of new towns is mixed.
Though they had been economically successful and are recognised to have made a significant improvement in the housing shortage, some are now experiencing major problems.
The new town master plans resulted in low-density housing with large amounts of open space and residential areas segregated from jobs, shopping and businesses services.
Low-density infrastructure is expensive to maintain, and has created a car dependency which is now not considered sustainable.
Since infrastructure within the new towns was constructed at the same time, it is now ageing at the same rate.
Similarly, the rapidly built housing developments are approaching the end of their design lives and give the towns a tired look.
Some local authorities do not have the capacity to resolve the problems and have had difficulty agreeing on the detail.
Today’s housing shortage makes new developments in Auckland an attractive option.
Taking lessons — good and bad — from last century’s new towns will ensure we create residential areas that Aucklanders will want to live in now, and in the future.
https://www.timmccready.nz/wp-content/uploads/2020/03/2020-03-new-towns.jpg227507tim.mccreadyhttps://www.timmccready.nz/wp-content/uploads/2024/03/TimMcCready_banner.pngtim.mccready2020-03-06 17:46:002020-03-12 11:43:26Project Auckland: Lessons from ‘new towns’ of the past (NZ Herald)
Auranga is a master-planned community being developed in Drury West, situated on the edge of the Manukau Harbour’s Pāhurehure Inlet.
It is the flagship project of Ma Development Enterprises (Made), and one that founder and chief executive Charles Ma has been working on for over six years — initially buying 4ha of land and then subsequently raising the capital to acquire a further 80ha.
Ma was born and raised in Auckland, and is a graduate of civil engineering and commerce from the University of Auckland — along with an impressive string of professional courses from Stanford, Harvard, Oxford and London business schools.
He is listed on the University of Auckland’s 40 under 40 list, having already racked up an impressive resume in private equity and development.
Ma says the Auranga master plan will deliver 3000 homes, with future growth in Drury West allowing for over 12,000 homes and up to 50,000 residents.
Though his financial backers prefer to stay anonymous, he says Made has the capital available to continue to grow the project and see his vision realised.
A master-planned community
Ma has a clear vision for what he wants Auranga to achieve:
“My vision is an intensely personal one, emanating from my desire to add to human worth by creating places that foster and share social equity.”
What he says may sound idealistic, but it is obvious in the way he is designing Auranga that he truly believes it is possible. He says developing communities that have a positive impact on people’s sense of belonging, and that connect people, place and purpose, is at the core of his urban design philosophy.
“I’m a believer that we need to rethink the concept of property development and the role of the developer in society.”
Auranga’s master-planned community consists of the initial 3000 dwellings, a village centre and a retirement village. Other amenities include exercise spaces, playgrounds, a 5km coastal walkway and vast tracts of open space.
Ma’s passion for developing an ecosystem is evident in the detail. Auranga will have narrow single-laned roads, with median strips that are planted with trees. “We’re trying to create streets for people — not roads for cars,” he says, pointing to the wide footpaths, dedicated cycle ways and limited parking on streets.
“There are certain things you can do to make streets far more attractive to walk on. One of the things we struggle with in most subdivisions is you see a lot of metal — cars moving at high speed. We want it to be effortless for you to be able to walk in the space and feel safe.”
Ma says 75 per cent of residents at Auranga will live within 500m of local shops, and the “serious open space we have committed for public space means people will be able to get around without ever seeing a car”.
Creating culture
Ma says countering fragmentation is a major goal of the Auranga development.
“While others talk about affordable housing, we’re talking about affordable living: how do people get around and have an affordable mortgage and an affordable life?
“Otherwise you can have an affordable home but you’re struggling to make life work.”
In order to build that lifestyle and culture from the outset, Auranga completed extensive developments before the first residents moved in. These include 3.5km of coastal walkway (of a planned 5km), pedestrian and bike walkways, a coastal jetty for swimming and kayaking, exercise park, playground and a dog park. Auranga’s retirement village is now open, and toward the end of this month the first KiwiBuild residents are due to move in.
Ma says that usually in these sorts of developments you would expect affordable housing to be the last housing available.
But Made is rethinking this notion — even by name.
“We call it champion housing, not affordable housing,” he says. “We want to have champions living in Auranga from day one — building the community, and creating a resident’s association.”
Housing at Auranga starts from $599,000 up to around $2m.
“We like diversity, and we think diversity is essential for culture building — both in terms of ethnicity as well as income background.”
An inbound destination
Ma says the location of the project — close to State Highway 1, State Highway 22, Auckland Airport and with connections to Britomart and Manukau by rail, Auranga is well-placed to support full job sufficiency within the precinct.
He predicts Drury will play a significant role as a regional centre, serving southern Auckland, northern Waikato, Hauraki, and beyond, including key commercial, retail and public services.
“What we need to consider is that Drury will end up being a massive job centre — it is not a typical sprawl development where you will need to travel somewhere else.”
He believes Drury will inevitably become an inbound destination, where people come in to work, rather than needing to leave for the Auckland CBD or elsewhere.
Planning for the future
Over the next five years, additional infrastructure projects planned for Auranga include a pre-school and primary school (2022), secondary school (2026), eco-islands (2023) and new railway stations (2024).
Ma says collaboration and openness with central and local government, iwi and communities has been key to bringing together and advancing the development. He says bringing everyone on board so that they buy into the vision he has for the development has been critical, and describes iwi as one of the project’s greatest champions.
Ma reckons if you start a project well, you have a greater chance of it ending well.
“For me, I’m passionate about starting well. After that, people just follow the culture.”
He hopes that Auranga will set the tone for what future developments in Drury, Auckland — and even around the world — could look like.
“I want to create a place that is so good, that it becomes a blueprint for future communities.”
https://www.timmccready.nz/wp-content/uploads/2020/03/2020-03-Drury.jpg728496tim.mccreadyhttps://www.timmccready.nz/wp-content/uploads/2024/03/TimMcCready_banner.pngtim.mccready2020-03-06 16:55:002020-03-12 11:41:30Project Auckland: Charles Ma: Eco islands just part of his plan at Drury West (NZ Herald)
