Big city life? Challenges and trade-offs for Auckland city - NZIER Public Discussion Paper 2014/02

08 May 2014

New work just released by the New Zealand Institute of Economic Research (NZIER) shows priming Auckland for ambitious future growth requires change on many policy fronts.

Auckland is starting to swell. Rapid population and income growth are occurring, but Auckland’s narrow geography – with harbours on both sides of the city – limits land availability.

Without change Auckland cannot reap the benefits of a growing population. Expect lower living standards from longer commute times and rising housing costs.

“The outcomes we want from Auckland, and the outcomes we should expect given Auckland’s narrow geography, are two very different things.” said Dr Kirdan Lees. “That heightens the need to get infrastructure and other urban policies right”.

Policymakers have generally identified the right set of levers – including extending the urban boundary, reducing urban planning restrictions and improving productivity in the housing sector.

But improving transport infrastructure to reduce the cost of land, making it cheaper to build and buy housing for families, is an option that looks a little underdone in the public debate.
NZIER recommends:

  • Taking a closer look at the benefits of transport infrastructure projects that reduce the cost of well-located land, reducing the cost of housing.
  • Keep grinding away at construction productivity – a 15 percent improvement makes the largest gain to the welfare of Auckland families compared to other policies.
  • Extend the urban boundary to include 25 percent more land by 2031. Our framework suggests that policy would make each family $860 a year better off.
  • Implement change over a full range of policies: our work suggests leaving the heavy lifting to a single policy makes achieving the kinds of living standard untenable.

The report, Big city life? Challenges and trade-offs for Auckland city”, was funded by the Reserve Bank, New Zealand Treasury, the Ministry of Transport and NZIER’s public good programme, which supports research into areas of general interest to New Zealanders.

For further information please contact:

Dr. Kirdan Lees
Senior Economist
Ph 04 494 7960, mob: 021 264 7336