Saturday 7 October 2023

Additional Waitemata (dis) connections



Consultation on additional Waitemata harbour crossing options occurred earlier in the year. I had no time to get a submission in. The ‘emerging preferred option’ is two, three lane road tunnels and one tunnel for light rail, while the existing bridge gets reconfigured including separate walking and cycling lanes and one for buses. You could say: “everyone gets a lane”. 

The Auckland mayor has said that the government's plans for a second harbour crossing are a "pipe dream".

It is interesting to see what role spatial planning has played in determining the options for  new crossings and what may end up being the final project. Spatial planning is supposed to deliver us from the quagmire of multiple plans and strategies and set clear priorities for infrastructure projects. The  Spatial Planning Act says that a regional spatial strategy must support a co-ordinated approach to infrastructure funding and investment by central government, local authorities, and other infrastructure providers. The regional transport committee under the Land Transport Management Act 2003 must be satisfied that its regional land transport plan is consistent with the relevant regional spatial strategy.

Can such a big decision about future transport connections be made in the absence of an agreed spatial plan? Auckland council is busy developing its next Future Development Strategy (aka spatial strategy). The Strategy is to replace the existing Auckland Plan 2050 and  is supposed to set out the big picture vision for how and where we should grow over the next 30 years to achieve the best outcomes for Tāmaki Makaurau. 

The Future Development Strategy has little to say about another harbour crossing, apart from stating the obvious: Projects such as Auckland Light Rail and the Waitematā Harbour Connections have region wide potential to change and improve people’s travel to work choices.

A bit later on in the draft Strategy there is the interesting observation: "Whether the Waitemata Harbour Connections project unlocks development on the eastern or western side of the (northern) motorway, or both, is a perquisite for determining which locations may be prioritised for further investment in the future". 

So is transport shaping land use decisions, or should land use decisions shape transport decisions?

Back to the harbour crossing options. 

Firstly, why additional transport connections north (rather than south or west) are getting so much attention is a bit hard to fathom. The northern urban area (or at least the 5 northern Local Board areas) represent about 24% of the region's population, up from 23% in 1996.  South Auckland has grown much faster (from 32% of regional population in 1996 to 35% in 2022). Logistically, a business location in South Auckland makes more sense, and so too population growth will follow.

The draft 2023 Tāmaki Makaurau Future Development Strategy says that over the shorter term (next 10 years) the Auckland Housing Programme in Mt Roskill, Māngere and Tāmaki, an identified live-zoned area within Drury-Ōpaheke, and the Westgate and city centre nodes as the spatial priorities for council investment. In other words, the northern area is not a priority.

The future Harbour Crossing is noted as a mega project that could upset these priorities. The Strategy states the obvious:  that the project will have transformational, city-shaping impacts on Auckland’s urban form and the way people and goods move around. However, these projects are currently unfunded and details such as routes and timeframes are not yet known. This uncertainty means "forecasting more location-specific impacts and market responses remain highly speculative at this stage, making longer-term prioritisation equally speculative".

So how do you decide what infrastructure is best when there is little clarity on how and in what way  the northern urban area should develop? 

The Business Case makes much of the danger of meeting demand for travel in and out of the northern area in one corridor - in particular its vulnerability. Whether this reliance on one main corridor is a reason to further boost the growth of the Northern area is not really discussed. Two ‘pipes’ in and out of the northern urban area may be more resilient than one pipe, but not by much.

Reading the Business Case does suggest that land use futures should be a critical element in determining the form of the best infrastructure option.    The Business Case says that Waka Kotahi follows an ‘intervention hierarchy’ approach, with land-use planning and demand management the starting point, followed by network optimisation. New infrastructure initiatives are the last option. The Business Case says that there is a need to further investigate the potential for land-use planning and demand management (e.g. road pricing) to optimise existing infrastructure and delay the need for major investment.

These interventions are likely to delay the need for road investment but bring forward the need for public transport investment. Actions could cover:

  • Addressing the  link between the timing of greenfield urbanisation around Dairy Flat and the need for high-cost rapid transit and road investment. 
  • Focusing growth in and around major centres (especially Takapuna and Albany) will help reduce travel demand and support mode shift to public transport. 
  • Employment growth on the North Shore will ease pressure on the harbour crossing part of the corridor and potentially delay the need for major investments. 
  • Road pricing can help reduce congestion on the corridor, potentially delaying the need for road investment. However, it will increase public transport demand and potentially bring forward the need for rapid transit upgrades. 
  • City centre plans will reduce road capacity, discourage people from driving there, and increase public transport demand.

The Busibess Case says that these interventions are important ‘foundation’ elements of the investment programme and will play an important role in the timing (both delaying and accelerating different capital investments) of more infrastructure focused investments.

Sounds good. 

But do the inputs into modelling of future transport demands reflect the above ‘foundation moves’?

What about the expected growth of jobs in the north, Will the new tunnels help or hinder more jobs on the Shore?

The Business Case says employment and population forecast ratios suggest that the 2016 jobs/population ratio of 0.4 will drop to 0.37 in 2048. In other words the level of self containment of work related trips in the northern urban area will drop, not increase.    

Total travel originating on the North Shore in the AM peak of 145,000 trips in 2016 is projected to rise to 190,000 by 2048, an increase of 31%. Internal trips within the North Shore in the AM peak increase by 25%, while trips from the North Shore to the City Centre increase by 44%

The modelling is based on the city centre having a high and growing level of reliance on the North Shore’s pool of labour. The North Shore contributes 15% of the city centre’s workforce today, and this is expected to increase to 19% by 2048; making the North Shore second only to the Isthmus in terms of labour contribution. "This confirms that the North Shore’s access to the city centre is important to its potential performance. This is significant in the strategic context given the productivity of the city centre and its important role in realising Auckland’s land use objectives for a quality, compact city as expressed in the Auckland Plan". So much for working from home! 

Should the modelling start with land use options and demand management actions that help achieve the wider goals set out above about more jobs and intensification around centres; with the residual demand served by new infrastructure. But it is new infrastructure that gets all the attention in the Business Case. If you are going to build some expensive infrastructure, then you want lots of users to help justify the large investment  (and perhaps help pay for the new connection). So the residual demand after land use changes and demand management is not enough.

Looking more closely at jobs versus population, the ratio of people to jobs has improved over the 20 years 2001 to 2020 from 310 jobs per 1000 residents to 378 jobs per 1000 residents. 

Figure 1: Jobs versus Population 

This is a positive trend. Restricted cross harbour access may well have spurred on this trend. 

Taking a closer look , the working age population (well, 15 to 65 year olds) has not grown much since 2018, but employment has slowly stepped up.




The Business Case says both an enhanced busway and an additional rapid transit connection are required to meet future demand. Upgrading the busway to light-rail results in a relatively small ‘net’ increase in overall corridor capacity (from around 10,000 to just over 14,000 people per hour). So  a new light rail route is needed - but which way to go - east or west? 

The modelling outputs indicate that the public transport improvements primarily result in more people being able to cross the harbour, rather than reducing the number of vehicles crossing the harbour (aside from a small southbound AM peak reduction). This means that there are still inefficiencies and unreliability in moving goods and services. Has enough attention been paid to business needs, if the prime objective is to support more local employment and less travel out of the sector? 

Is it time for a bit of a rethink about urban form on the Shore? North Shore is a series of beach side settlements, hugging both east and west coasts. Not surprising that most people want to live close to the coast, even if that means extra travel to get to the central motorway spine.   It is an attractive place to live, but what about a place to work? Whether the North Shore is a resilient area to house a lot more people has to be questioned, with restricted transport links, coastal focused communities and limited business land. Perhaps the North Shore’s future is best as one large retirement home, with a decent sprinkling of “work from homers” clustered around the many small centres and neighbourhoods? With that type of future, is there a need for such big investment in so many new cross harbour lanes?

Monday 19 December 2022

Natural and Built Environment Bill: Where is the urban bit?

What does the Natural and Built Environment Bill (the ‘NBEB’) have in store for urban planning? Is planning going to go upstairs and concentrate on spatial planning, or is it also going to stay downstairs and find new ways to address old problems in the nitty gritty of developments? 

It is hard to understand the implications of the Bill for urban environments - environments that house, entertain, protect and sustain over 85% of the population. The short answer to the question of what does the Bill mean for the future of towns and cities is ‘not much’.  Gone are any references to amenity and the quality of the environment. Along with that goes character and identity. Even health and safety is a tenuous reason to manage land uses and development. There are still effects to be managed- one of the purposes of NBE plans is to manage adverse effects. Urban areas are hot beds of small scale spill over effects (externalities), many of which generate adverse effects on others,  but it is unclear what effects are to be managed. At least we know that scenic views are out. Will references to promoting outcomes for the benefit of the environment provide a rock to anchor urban design? 

In come references to responsive urban environments, housing choices and ample supply of land. All worthy goals, but somehow the Bill has lost focus on the wider purpose of urban environments - not just to house people but to also foster social, economic and cultural exchange. Read the Bill and the impression is that urban planning is no more than a handmaiden to urban development. The desire to free things up so as to generate housing supply remains the dominant theme, yet should this be the only or at least main objective for an urban environment? If you are central government under pressure to build more public housing, address emergency accommodation and help support middle class families to own a house, then yes it is the main (only focus). Don’t let infrastructure, NIMBYs or amenity get in the way!  

The statutory recognition of spatial planning is helpful, and hopefully with this comes some real commitment by  central government to implement the results. But history tends to suggest that spatial planning is more of a process, rather than a fixed product that endures. There are signs of the emergence of a new economic order —a shift the Economist suggested that may be as consequential as the rise of Keynesianism after the second world war, and the pivot to free markets and globalisation in the 1990s. This shift will play out in urban areas and may be disruptive of many current trends and patterns. We are already seeing a decline in the relevance of large, central office buildings.  

Spatial planning is not new - the Bill codifies current practice. Links to infrastructure funding and finance are made, but at a general level.  These are always the weakest link and unless strengthened, then spatial planning will founder in the gap between meeting today's needs versus developing cities that can meet future challenges.  

It is at the level of day-to-day development that the NBEB is unclear as to its intentions for the urban environment. At what point and in what way should private development be modified to respect the public good and to ameliorate effects on other activities? These tricky questions are left unanswered.  

Look at the first objective of the National Policy Statement on Urban Development - a well-functioning urban environment that enables all people and communities to provide for their social, economic, and cultural wellbeing, and for their health and safety, now and into the future. There is reference to health and safety and to the well beings.  Turn to the NBEB and all the fluffy stuff gets trimmed back - the ‘system’ outcome for urban environments is well functioning urban and rural areas that are responsive to the diverse and changing needs of people and communities.  Even the Randerson report - which is apparently the basis of the NBEB - said that for the built environment there should be a general requirement to enhance features and characteristics that contribute to quality built environments. This reflects the broad role of the proposed Natural and Built Environments Act in managing the use and development of resources. 

It feels like that too much has been stripped out in the mad dash to promote housing construction; that any reference to amenity will be hijacked by existing residents, so best avoid saying anything. But there is a distinction between public amenity and private amenity. The public - private interface is critical to whether urban environments sustain safe, resilient communities that can be enjoyed by its inhabitants. Even the basic Medium Density Residential Standards have a nod to  public amenity with the standards relating to windows on street frontages and landscaping  and scope for related controls on front fences. Does the new NaBEB support the outcomes sought by the MDRS? 

We need responsive urban environments, but not just ones responsive to housing supply and demand. The 1980s book Responsive Environments (Ian Bentley and co) attempted to demonstrate the specific characteristics that make for comprehensible, friendly and controllable (safe) urban places -'Responsive Environments' - as opposed to the alienating environments often then built in the name of housing supply. 

So many important community outcomes are tied to the functionality and quality of the public-private interface - crime and feelings of safety, propensity to walk and cycle, mental health and well being to name a few. 

Could the quality and safety of the public environment at least be added to the system outcomes for urban areas?


Wednesday 24 August 2022

How do you reduce vehicle kilometres travelled by 20% by 2035?

The recent National Emissions Reduction Plan - Te hau mārohi ki anamata Towards a productive, sustainable and inclusive economy – has a number of targets to reduce greenhouse gas emissions from the transport sector.

The first target is:

Target 1 – Reduce total kilometres travelled by         the light fleet by 20 per cent by 2035 through         improved urban form and providing better            travel options, particularly in our largest                 cities.

This target sits alongside other targets about EV take up, and more walking and cycling. It is good to see that cutting emissions is not just about switching to electric vehicles and planting some pine trees to offset the non-EV emissions. Less use of cars is also important.

However….

It is not totally clear from the target if the 20% reduction is to be based on 2022 emissions or what may be the 2035 figure, if no action was taken. 

The 20% is also a total, national figure. If the population grows between now and 2035, then on a per capita basis the reduction would need to be larger. Others have pointed out that achieving a 20% reduction in VKT across the whole of New Zealand will require more aggressive reductions in some parts of the country – notably Auckland – to ‘offset’ the difficulties in achieving much change in smaller towns and rural areas. Furthermore, even in Auckland, some people are unlikely to be able to cut back travel by 20% so some people will need to reduce travel by more than 20%. 

So the 20% reduction rapidly turns into a 30% to 35% reduction in VKT for an ‘average’ Aucklander. In fact, Auckland Councils Transport Emissions Reduction Plan says that VKT should drop by half, by 2030!

How do we do that? Does anyone have any idea? 

The national ERP says that a specific plan needs to be developed, starting with the main cities. A Light vehicle kilometres travelled reduction programmes for Tier 1 urban areas is proposed.

So we have a plan for a plan. Understandable perhaps, but after lots of investigation of various budgets and pathways, action still seems long way off. 

Auckland Council's recent transport emissions reduction plan is also a bit vague about how to do it, apart from the normal recipe of lots more public transport , walking and cycling, plus congestion charging. 

While reducing VKT may be difficult and nobody seems totally clear how to do it, it’s more a matter of having to do it and having to find a way to do it, rather than argue if 20% or 30% is too much or not enough. We are, after all, in a climate emergency. 

The interesting planning question is the role of urban form and urban design in helping to achieve the target.  

But first some numbers. Per capita vehicle kilometres travelled in Auckland is around 9,500 kms per person, per year. Each car, on average, travels 14,000kms in a year.

So a 30% reduction is about 5,000kms less travel per year for each car – or 13.69 kms per day. 

How easy will that be? 

An often-quoted statistic is the large percentage of short trips – 50% of car trips are less than 6kms in length.   

2011 data on trip lengths is:

  • 17% (one-sixth) of driver trip chains are less than 2km long. 
  • 43% of driver trip chains are less than 5km long. 
  • 48% of driver trip chains are less than 6km long. 
  • 53% of driver trip chains are less than 7km long. 
  • 65% are less than 10km long.

However 50% of total VKT is not comprised of short (less than 6km) trips.  

More than likely, to reduce VKT by at least 30%, some longer trips will need to be not taken, or else undertaken by public transport. So a mix of short and long trips will need to be switched from car to walk, bike or public transport or not taken at all. 

So what type of trips could be diverted?

Household travel survey data for 2018 suggests the following share of VKT by trip purpose. Data on trip length is not easy to find. 

Trip Purpose

Share of total KMs

Driver

Passenger

 

Went home

37%

42%

Went to work

15%

3%

Shopping/personal business

19%

20%

Social visit/entertainment

10%

17%

Made a trip for work

8%

1%

Completed study/education

1%

4%

Accompany someone/dropped someone off/picked someone up

7%

9%

Sport and exercise

3%

4%

Total

100%

100%

Not surprising the two big trip purposes in terms of distances are work and shopping.  

Work-related travel accounts for one-third of all household driving time and distance, most of which is commuting to and from work. The mean distance for journey to work in Auckland (one way) is around 11kms.

Already, due to Covid, many commuting trips are not being taken as work from home takes hold. But not all jobs can be undertaken remotely. 

The journey to and from work has been the big focus of transport and land use planning to date, with congestion being the problem, not VKT The planning response has been trying to confine jobs to a number of larger centres that could be effectively served by public transport. 

But has the time come to reduce the emphasis on the work trip as being the target of emission reduction? Has fibre and digital technology reduced the benefits of being in a large central spot anyway? 

Shopping trips are the other big source of kilometres travelled, and perhaps more able to be combined or avoided (visit the supermarket every second or third day, rather than every day, or perhaps every day if on foot or bike).

Both the national and region emissions reduction plans see a role for urban form to help shape transport choices, with the emphasis on developing land use patterns that help reduce the need to travel. 

Auckland refers to building up, not out and developing / encouraging more local shops and services. 

Similarly the national plan refers to identifying ways to incentivise developments that avoid/reduce the need to travel and encourage travel by public transport, walking and cycling. 

In Scotland, to take a different example, reducing people’s need to travel with more local access to goods and services is seen as the first priority. Likewise, digital connectivity and flexible working approaches will play a key role. 

Sounds good, but as also often noted, land uses are slow to change – as a climate change commission report notes:

There are numerous studies examining the emissions reduction potential from compact urban planning and design. For example, the Productivity Commission notes that higher density urban centres can reduce vehicle kilometres travelled per capita by between 5 and 12%. A study by the Stockholm Environment Institute highlights that urban planning for compact urban form can reduce emissions by 5% by 2030 and 6% by 2050. However, the potential to achieve emissions from land use change is slow, buildings typically last between 50-100 years and infrastructure lasts for at least 100 years. Therefore, we need to ensure a stronger and more deliberate relationship between urban planning, design and transport immediately. Ensuring this happens at planning stage is more effective than retrofitting transport needs

So all too hard to achieve a high density compact urban form in 8 years? Probably. But can we at least enable more mixed uses in neighbourhoods? As cars become more costly to use, and people have to walk or cycle more, then demand will come on for more services close by.  

Talk of mixed uses may mean a jumble of industrial and service activities interspersed with apartments. Noise, lights, late night activity can be expected.  But what if the aim was more local, small retail uses and services? 

If you map the location of supermarkets (as determined by Open Source Maps) and apply a 1.2km buffer around them, then large areas of the city are relatively close to supermarkets, but there are also areas with no coverage


What are the conditions for more local activities? We can speculate that things like the following will help:

There are more people living in the catchment

There is a mix of customers 

There are cheap options to rent space

The NPS-UD / MDRS has kicked along the intensification aspect, but should it be more targetted? Should the areas with limited coverage of supermarkets be prioritised for more housing (to help build up the catchment). But the areas with limited coverage tend to be on the edges and probably also have more limited public transport options.

Covid has helped with a wider range of customers as more people work from home. Anecdotal evidence: my barber says that their busy time is now during the week when many at home workers drop in for a haircut, in contrast to pre covid when the weekend was their busy time. 

What remains is the cost of finding and renting non-residential space in residential areas. 

Most neighbourhoods will have a small neighbourhood or local centre zone that may be accessible by foot or bike. But often rents are high and expansion options are limited. Sometimes the shops may look a bit run down, and there is some hope that by concentrating retail into the centres, demand will be higher and with it more likelihood that shops will be occupied.  But as we know, keeping a tight rein on supply of floorspace pushes up rents and land values. 

There may be concern that opening up more retail options will just see more cheap liquor stores, fast food joints and vap shops. 

Then there is a dreaded car orientated strip mall development along main roads – the disjointed collection of cheap box-like buildings with prominent parking lots visible from the street, with multiple driveways, large signs and a few sad looking trees. 

But is it time to set these concerns aside and expand out beyond the centre? To allow for a wider range of compatible activities in residential areas.  More fundamentally, should the concept of a retail / centres hierarchy be set aside. The concept of the central city as the main hub and a pattern of strong sub regional hubs was a response to a car centric transport system. Likewise town centres anchored on a ‘drive-to-supermarket’ to drive foot traffic and cross over shopping trips. Is the need now to enable dispersion of retail rather than their concentration? 

In the revised version of the Auckland Unitary Plan’s Residential Mixed housing Urban zone (a zone that now covers the better part of the urban area thanks to MDRS), dairies up to 100m2 gross floor area per site and restaurants and cafes up to 100m² gross floor area per site are restricted discretionary activities. The revised Residential Terrace Housing and Apartment Building zone is pretty much the same.

What about offices, small workplaces and other forms of retail?  These all require discretionary resource consent. 

The range of compatible uses in residential area needs to be managed, but more options need to be enabled than current.  

But there are some issues to work through. Perhaps most important to safe, convivial street environments that support walking, cycling and public transport is how to activate ground floors to create pleasant, safe streets for pedestrians and to support the local economy. More specifically, should there be minimum ground-floor heights or minimum ground floor spaces for new developments so that active, street-facing uses at ground level on every neighbourhood’s main street are supported. Again, this requires an adjustment of planning rules.

The 3-storey format of the Mixed Housing Urban zone does not suit mixed uses with buildings, but some form of horizontal mixed use is likely to emerge as some sites redevelop for housing and some residual sites get taken over for commercial and service activities.

The multi-storey Terrace Housing and Apartment Building zone is more adaptable for mixed uses. But vertical mixed use is not easy to achieve – there will be uncertainty about whether ground floor commercial spaces can be let; while owners and tenants of upper floor apartments will be worried about what activities may operate downstairs. Demand for more local services will build over time, but there is likely to be a lag between demand and supply. In the interim, new development may foreclose future, better options.  

I think there is a need for some RNAS to go alongside the MDRS – Residential Neighbourhood Activity Standards to go with the Medium Density Residential Standards.  


Tuesday 17 May 2022

Is it housing then transport, or transport then housing?

 The decline of housing supply in New Zealand: Why it happened and how to reverse it Te Waihanga Research Insights series March 2022

Another report on the failures of planning contributing to today’s housing crises. This time from the Infrastructure Commission. 

The report says that in the space of a generation, housing has gone from being abundant and reasonably affordable, to being scarce and prohibitively expensive. 

First up, is housing more scarce? In 1971 the country had a population of 2.8m and 882,000 dwellings, or one dwelling per 3.23 people. By 2021, the population was 5.1m and the housing stock stood at 1.95 m, or one dwelling per 2.62 people. So, housing has become more abundant, not less abundant.  What has changed is our desire to consume housing resources (whether that be as a place to live or as an investment). 

Setting aside the numbers, the Commission’s report explores how the relationship between land use and transport costs has determined urban form (and with it housing choices and costs). But is it transport leading land use or land use leading transport? 

On the transport side of the equation, the report makes that valid point that the creation of Auckland's motorway network in the 1950s onwards saw rising travel speeds which facilitated housing supply by increasing the area where new homes could be built. Auckland’s built-up area expanded rapidly during this period. When growth in travel speeds slowed in the 1970s and then began to reverse in the 1990s, urban expansion also slowed down as it became less attractive to build at the edge of the city. Changes in urban travel speeds between the 1970s and 2010s increased demand for housing in inner suburbs that were less affected by rising congestion.

On the land use side, between the 1930s and 1970s, planning rules made it easy to build new houses or apartments in existing suburbs and to build new suburbs on the fringes. In Auckland, plans provided enough capacity for central suburbs to triple in population.  However, planning rules became more restrictive and more complex over time. Central Auckland’s capacity for new housing was cut in half in the early 1970s – a change that was partially reversed in the 2016 Auckland Unitary Plan.

Did planning fail to foresee the drop in travel speeds that heralded intensification rather than expansion? Perhaps not, since there is plenty of evidence of planning trying to facilitate urban redevelopment. Perhaps more relevant is the narrative of residents of established suburbs clearly foreseeing the growing pressure for redevelopment of their neighbourhoods and seeking to put the brakes on this process through controls on density and infill. 

But what of the infrastructure to cope with the pressure for infill and redevelopment? Did the slow supply of infrastructure to support a more intensely developed city also contribute to the reluctance to open the zoning door more fully to redevelopment? Mid 1990s and there was serious consideration being given to the closure of Auckland’s suburban rail network. Trains were going to be replaced by buses. Buses were cheaper to buy and run and more flexible, especially given the low density, dispersed land use patterns generated by the post war motorway driven suburban expansion. The 1999 Auckland Regional Growth Strategy placed a heavy emphasis on urban consolidation. Central government and major infrastructure providers refused to sign up to the strategy – they didn’t think it would be implemented.

What to make of the Commission’s contention that planning was slow to respond to congestion and higher transport costs, resulting in the housing crises we face today?

Let’s start with house construction. The Infrastructure Commission’s report doesn’t actually have any tables or graphs on new house numbers; rather a graph of percentage increase in dwelling numbers over a 10-year period, compared to the stock of dwellings at the start of the 10-year period. For some reason the data stops at 2018, rather than 2022, when all the evidence is that house construction has accelerated quickly over the past 4 years.   A bit strange for a report that is supposed to be about housing supply. 

The figure below is the relevant graph from the report.  I guess the idea of the percentage change over the previous decade is to get a sense of how much resource was devoted to house building. In the 1950s, housing stock increased by over 30%. In actual numbers, 30% may not be that much if the starting point was low. But nevertheless, a 30% increase must have occupied a large part of the national economy. 


I don’t have the numbers but presumably at the time the government had more ability to plough a large part of its expenditure into housing as other calls on its resources like health and social welfare were probably more modest than they are now. 

In terms of actual numbers, the last four years have seen a massive upswing in building consents issued. The graph below is building consents issued for new dwellings, across New Zealand.



As for floor space consented, larger homes mean more resources are being consumed by each dwelling, so it’s not a straightforward comparison between a house built in the 1950s and a house built in 2022. 

Below is the total floorspace consented per decade. The amout of floorspace consented in 2010 to 2020 was similar to that of 2000 to 2010, so pecentage wise no difference between the two decades, but in absolute terms, a large amount of floorspace was consented in both periods.

 


Both the number of units consented and floor area consented shows a pretty strong picture of the housing market responding to growth pressures and rising prices. All this in what is supposed to be an environment of limited housing capacity. Perhaps the response was not fast enough, and more capacity would have enabled faster building, leading to less stress on the system. But housing markets are notoriously slow to respond to demand shocks, and now building material and labour supply constraints are present. 

Let’s take a closer look at the capacity side of the equation. 

The Commission’s report says that 2006 is seen as the low point for capacity enabled by district plans, after a high point in the 1970s.  

In Auckland, the 2006 capacity for growth study states that the (old, pre 2010 amalgamation)  Auckland City District Plan of 2005 had room to accommodate about 70,000 more dwellings on top of the 144,000 already present. So, about a 1.5 ratio of capacity to current stock. The break down is as follows:

Existing Dwellings: 144, 285

Potential dwellings vacant land: 7,058

Potential dwellings redevelopment: 18,376

Potential dwellings business areas: 44, 480

Total potential 69,914.

Is this enough capacity?

The Commission’s report shows that a 50% buffer of capacity was maintained through the 1980s and 1990s, so the planning system was not static in its approach to capacity. Housing capacity continually expanded during this period. Expansion of capacity was incremental, but in the face of a sceptical government, cautious infrastructure providers and restless residents, what other strategy was to be pursued? 

Business areas took on more of the role of providing for housing capacity. The early 1990s saw the emergence of Mixed-Use zones in the inner Isthmus area. Maybe there wasn’t enough attention paid to capacity in residential areas (where most people would likely look to live), but nevertheless the concept of redevelopment was part of the planning approach.

The question not asked by the Infrastructure Commission is whether debates and uncertainties over the upgrade and replacement of old infrastructure to support infill and redevelopment of existing urban areas slowed down the response of the land use planning system. 

For example, there has been a huge lag in transport investment switching away from road-based projects that serve suburban development to public transport-based projects that support intensification. Even the 2013 Auckland  Integrated Transport Programme (ITP) devoted the vast bulk of future spending on new infrastructure over the 30 year span of the ITP on new roads. 

By my calculation the headline split between roads and PT is something like 70/30:

Roads $22,287 million

PT $8,476 million. 

Some roads spending benefits buses, but nevertheless there is a significant bias towards roads and cars. 

Public transport has always faced the problem of who pays for it? Roads get paid for by motorists who pay petrol tax (and often the environment that has to put up with pollution); public transport gets paid for by a messy mix of users, motorists, ratepayers and taxpayers.

Water, wastewater, and stormwater infrastructure in brownfields areas is often near its capacity or in need of repair and renewal. Who pays for this? Existing ratepayers? Not likely. 

We may decry NIMBYs, but whether infrastructure will be upgraded as the city intensifies is a legitimate question to ask, and often the reply back is murky. No wonder the planning response to the changed urban dynamic of transport costs favouring infill and redevelopment over expansion was modest and half hearted.

So is the slow response to infill and redevelopment pressures to changing transport costs the result of land use planners, or uncertainty over infrastructure? Read the Commission’s report and the urban expansion of the 50s and 60s was fuelled by transport investments cannily matching consumer preferences supported by lots of greenfields capacity; but come the 90s and onwards, consumer preferences are stymied by slow planning, rather than insufficient infrastructure. 

At least the report doesn’t pin the blame of high house prices and slow supply responses on urban limit lines and the like. There seems to be a tacit acknowledgement that by the 1990s, transport costs were seeing rates of greenfields growth slow, at least in Auckland. Yet so much of the debate in the 2000s was about dismantling the urban fence as the way to tackle the housing crises, not how to support redevelopment. 

Now the wheel is turning again, and again there is the potential for a miss-match between land use and transport infrastructure to emerge. Has covid and technology accelerated a trend away from the monocentric city with its radial transport routes and its rings of land values and density diminishing as distance from the centre increases. Is a new neighbourhood-centric city emerging?  

The report concludes that urban housing markets will continue to change, and we may need different infrastructure to facilitate those changes. Carrying on with a ‘business as usual’ approach can limit housing supply. 

Hopefully that last sentence is directed at infrastructure as much as it is to land use planning. 


Thursday 20 January 2022

The benefits of urban intensification


The Housing Supply Act (see November's post on the '3x3' Bill) has a cost-benefit study (note 1)  that helps to justify the changes to the RMA set out in the Act. These changes enable intensification through the medium density residential standards - or MDRS. The standards permit 3 dwellings on all residentially zoned sites, subject to meeting the standards. 


Benefits of applying the MDRS are seen as:

  • Consumer surplus - $1.018B
  • Agglomération - $5.487B. 

These benefits compare with costs of $3.250B. These 'costs' include reduced infrastructure costs from more urban intensification compared to greenfields growth (a saving of $237m - something to be looked at in another post)

So a clear winner. 

The stand out benefit is agglomeration (consumer surplus relates to reduced house prices - or at least house prices that do not go up so fast). 

The report is very opaque as to how it has calculated the agglomeration benefit. It is hard to marry up the figures in Table 16 of the cost benefit report with those in Table 2.

So how do you get such a massive benefit from 75,000 more dwellings across 6 cities? 

First up, the following additional dwellings are assumed to be generated by the new MDRS rules, in  the medium term, over and above the status quo.

Auckland

39,200

Hamilton

8,300

Tauranga

5,800

Wellington

9,800

Christchurch

11,500

Total

74,600

Remember, the status quo already provides considerable capacity for more dwellings.  

Whether this level of additional growth eventuates is hard to judge, especially at the moment with international migration slowed and Auckland actually losing population. But perhaps possible, once we are free of the pandemic and things get back to ‘normal’. 

The report notes that the extra supply of housing enabled by the Act, if the growth materialises, might be occupied by:

  • Existing residents from within the cities (adult children leaving home early for example, single adults / couples moving into their own home, rather than renting with others);
  • New residents attracted to the big cities from elsewhere in NZ;
  • Overseas residents. 

It is not clear which scenario is used to calculate the agglomeration benefits, but a good place to start would be a combination of the first and second scenarios. Lets assume existing residents who form new households occupy half the new dwellings, while the other half of the new dwellings get occupied by ‘new residents’ attracted by the (somewhat) less expensive housing from elsewhere. To make it simple let's assume that the new residents are all sourced from within  NZ. 

For Auckland, this means as a rough guess that of the 39,000 additional dwellings over the medium term ( next 10 years), 19,600 dwellings will house - say - 58,800 new residents (over and above the without housing Act scenario). 

If we stick to today’s numbers, an extra 58,800 people represents an increase of 3.4%, or a regional population of 1.76 million, rather than 1.70 million. 

How does this change translate into increased productivity and hence regional economic growth of about $2.5B? About half the $5B agglomeration benefit across the 5 cities. 

Agglomeration benefits arise from the capacity of dense concentrations of workers to enable ‘economies of sharing, matching, and learning’ (or knowledge spill overs and dense labour markets). In New Zealand, it is stated that doubling the number of jobs within commuting distance of a person’s home is associated with a 6.5 percent increase in that person’s productivity.

Elasticities are therefore said to be in the order of 0.065. This means a 10% increase in employment density should see a 0.65% increase in regional product. So our 3.4% increase in population  should translate into a 0.22% increase in regional product.  Doesn’t sound very big, but that increase is spread over a large population. 

It is noted that Auckland may have a higher elasticity - at around 0.0768 - than the national average. But it may also be lower, at 0.056.  The higher figure is from the cost benefit analysis for the NPS-UD. That analysis apparently used elasticity rates based on a 2009 report (that also had the lower figures in it - see Note 2). 

Taking an elasticity of 0.065; in today's terms, per capita regional product for the Auckland Region is $71,800 per person or $122B for the region. Increase that by 0.022 and you get a per capita increase of $1,637 per resident (new and existing). Regional GDP goes up by $2,883 million. 

This is about 50% of the $5,487m estimated for the country as a whole, so the number in the cost-benefit study may be about right, as Auckland has about 50% of the extra dwellings. 

But what about the regions that lost people to Auckland, would their productivity go down a notch?

The 2009 report noted that the high density regions of Canterbury (elasticity of 0.048), Wellington (0.063) and Auckland (0.056) have lower agglomeration elasticities than less dense regions, consistent with decreasing returns to agglomeration.

And can it be assumed that the extra dwellings will increase urban density? The new houses may be located on the edge of the region, in a low density format. Alternatively, they may be located in central areas. The cost-benefit study seems to assume the latter.

But based on Stats NZ definitions of urban areas (combining the relevant main, large and medium urban areas in Auckland, Wellington and Canterbury regions), Auckland's gross population density hasn't gone up much since 2018. 



The flattening of Auckland's density curve over the last few years is a bit hard to understand. The land area that the calculation is based on is Stats NZ's 2018 definitions of urban areas, which remains constant over the time periods. The flatter curve looks like it is a result of more growth in lower density areas (eg small urban areas on he edge of the main metro area), and a small loss of population within the main metro area.  The Housing Supply Act / MDRS may turn around this trend, or it may exacerabte it. 

Will the extra houses and people increase ‘employment density’, as it is employment density that is the basis of improved productivity? 

Whether urban productivity is increased by proximity these days is a bit of a moot point. With the growth of remote working spurred on by the pandemic and the loss of populations in large cities, it may be that productivity is now powered by virtual connectivity, rather than physical proximity.   

As we don't know what settlement or employment patterns will result from the additional capacity enabled by the new rules, we need to look elsewhere for data on agglomeration benefits. 

Regional level data on gross domestic product (GDP) does demonstrate that per capita gross domestic product is higher in Auckland than elsewhere. The table below is sourced from Stats NZ data. Since 2000, the Region’s population has increased by 43%, while per capita GDP has grown by 112%.

Auckland region 


2000

2020

Increase

% increase

Population

1,193,800

1,702,700

508,900

0.43

GDP per capita ($)

$33,958

$71,978

$38,020

1.12

If we account for inflation over that period (based on the Reserve Bank’s inflation calculator) and reset the 2000 GDP figure into todays dollars, then GDP per capita grows slightly slower than population growth - a 39% increase as compared to a 43% increase in population.

AK

2000

2020

Increase

% increase

Pop

1,193,800

1,702,700

508,900

0.43

GDP per capita 

$33,958

$71,978

$38,020

1.12

GDP per capita, constant prices

$51,956

$71,978

$20,022

0.39


For the rest of NZ, growth in GDP per capita has exceeded population growth.  

NZ

2000

2020

Increase

% increase

Pop

2,654,800

3,340,200

685,400

0.26

GDP per capita

$27,381

$60,052

$32,671

1.19

GDP per capita constant prices

$41,892

$60,052

$18,159

0.43


While GDP per capita is growing faster elsewhere than Auckland, Auckland’s per capita GDP is still quite a bit bigger than elsewhere. So transferring a household from out of Auckland into Auckland should lead to increased GDP, even if new (additional) agglomeration benefits are not present. 

The table below looks at a "with and without" scenario for Auckland - with the extra population and without the extra population.  The increase in per cpaita GDP is based on the trend between 2000 and 2020.

Scenario

Start Population 

Start per capita GDP ($)

Population increase

New population (10 years +)

% increase

% increase in GDP per capita

Increase in GDP per capita

GDP per capita 

Without

1,702,700

$71,978

306,486

2,009,186

18.00%

0.163

$11,713

$83,691

With 

1,702,700

$71,978

364,486

2,067,186

21.41%

0.194

$13,929

$85,907

So what happens to other cities under the 'with' extra population scenario? 

If we zero in on Wellington and Christchurch as being the two likely donors of new households shifting to Auckland, then we start with the following ‘baseline’. data.


Wellington / Christchurch

2000

2020

Increase

% increase

Population

930,400

1,179,700

249,300

0.27

GDP per capita

$32,623

$68,011

$35,389

1.08

GDP per capita adjusted

$49,912

$68,011

$18,099

0.36

If we increase Auckland’s population by 20,000 households but reduce Wellington’s and Christchurch’s growth by a similar amount then we get the following ‘with’ and ‘without’ figures. 

The without scenario does not involve 20,000 households shifting to Auckland. The ‘with’ scenario involves the extra 20,000 dwellings being built and occupied in Auckland, and Wellington  and Christchurch growing slower than they otherwise might be the case (the without scenario). That is, there is a net loss of households to Auckland, even with the extra dwellings enabled by the new policies. 


Current regional GDP ($m)

Regional GDP Without ($m)

Regional GDP with ($m)

Difference ($m)

Auckland 

$122,557

$142,500

$146,274

$3,774

Well/Chch

$80,233

$91,091

$88,620

-$2,471

Total

$202,790

$233,591

$234,894

$1,303

In the without policy case, Auckland’s GDP grows from $122,557 to $142,500. With the additional households, regional GDP goes to $146,374. This is a bigger increase in GDP than using the employment density elasticity approach (of about $3.7B). 

However counterbalancing that increase is a smaller increase in Wellington and Christchurch under the with scenario, compared to the without scenario.

The net agglomeration benefit for the country of the 'with' scenario is $1.303B. 

There may be a small increase in GDP from the growth of Hamilton and Tauranga. 

So is an ‘agglomeration’ benefit of $5.487B credible? 

Seems a bit of a stretch to me. 

Are the estimates all a bit too 'elastic'?


Note 1:

Cost Benefit Analysis of Proposed Medium Density Residential Standards. PWC and Sense Partners, October 2021 

Note 2: 

Agglomeration elasticities in New Zealand David C. Maré Motu Economic and Public Policy Research Trust Daniel J. Graham Centre for Transport Studies, Imperial College, London