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Source: New Zealand Government

Speech to Building Nations 2019

[Slide 1: Cover]

Introduction

Tēnā koutou, good morning and thank you for the opportunity to speak to you today.

I’d like to acknowledge Chairman Andrew Stevens, outgoing Chief Executive Steven Selwood, and new Chief Executive Paul Blair.

I’d also like to acknowledge Rotorua Mayor Hon Steve Chadwick.

There’s a lot going on in infrastructure and urban growth.

I want to update you on some key initiatives, like urban rapid transit, our work on infrastructure funding and financing, reform of the planning rules, and the establishment of Kainga Ora – homes and communities, our new housing and urban development agency.

But mostly I want to use my time today to tell you about what I think is an exciting new development in our approach to urban development.

And that is the Hamilton – Auckland Corridor Project.

Light rail

Before I begin, I’d like to address an issue that I know there is a lot of interest in.

I have heard loud and clear from Infrastructure NZ and others that we need to look at new funding and financing models to enable infrastructure projects to be delivered.

This is especially important for large scale projects.

One such project is Auckland light rail.

Light rail will be a game-changer for Auckland.

It will be a magnet for private investment in urban renewal and will be able to carry 11,000 commuters per hour – the equivalent of four lanes of motorway. A vital next step to build the rapid transit network which alongside our City’s mature motorway network will the backbone of the transport system.

We have to make sure that it will be fit for purpose for generations to come, that’s why we’re taking the time to examine the different proposals in detail and get it right.

The NZ Transport Agency and NZ Infra, a joint venture between the New Zealand Super Fund and Canada’s CDPQ Infra group, will further develop their proposals for Government to consider early next year.

What NZ Infra is proposing has never been considered before in New Zealand, based on a public-public investment model. This includes co-designing the asset with the Government and its partners, with the majority of financing and risk transferred to NZ Infra. 

There are significant differences in how the two options would be financed and delivered. The NZTA is exploring a range of procurement, financing and delivery models, including alliances and public-private partnerships, and will continue to develop these.

Both of these options for delivering light rail are credible, but need further work so we can assess them fully. 

That step is critical for the Government if we are to make the right decision on how best to deliver light rail for Auckland.

It will provide us with the certainty we need to progress a multi-billion dollar project which will transform Auckland.

 [Slide 2: Our approach to growth management has been a failure] 

I think we all know our cities are performing poorly.

Land prices are too high

  • House prices in Auckland are now nearly three times their fundamental cost.
  • There is a $ in value for 600m2 section in Auckland either zoned urban or rural.

Housing costs are rising

  • The median price of a residential dwelling sold in Auckland up from $598, 160 in December 2013 to $854, 579 in December 2018. 
  • Wellington City* has seen an increase from $523, 876 in December 2013 to $713, 855 in December 2018

Productivity is flat

  • Our cities are not optimising their potential productivity.  While faster growing and more productive than NZ average, our major cities are not as productive as cities in other countries.
  • Auckland alone loses $1.3 billion a year in productivity to congestion.

Traffic congestion is getting worse, in large part due to decades of underinvestment in public transport – and the fact that road networks on their own are inherently unable to deal with peak demand driven by population and economic growth

  • Peak period congestion has increased significantly.
  • In Auckland, 33 percent more of the arterial network is now congested during the morning peak hour than in 2014

Income is not growing as it should

  • KPMG report showed household income is down $100 per week over the last decade.
  • Auckland’s median household earnings have grown at the lowest rate of all NZ Growth Cities since 2000, averaging just 0.8 per cent per year (in real terms), compared to 1.4 per cent in Christchurch.
  • Over the last decade Wellington and Christchurch experienced weekly increases in discretionary income of $137 and $124 respectively, compared to Auckland which experienced a weekly decline of $96.

 [Slide 3: Kay changes are needed] 

Key changes are needed to how we manage growth

We think there are three key shifts we need to make to improve the performance of our cities.

  1. Making room for growth, and removing unnecessary constraints while protecting areas of special value,
  2. Making growth pay for itself through new mechanisms for funding infrastructure and identifying and allocating the costs of growth,
  3. Investing in modern transport systems that give people and firms the mobility they need so that markets can work properly and that cities can thrive.  

To deliver on this urban growth agenda, we have five streams of work –

  • Infrastructure funding and financing: Enabling a more responsive supply of infrastructure through alternative financing approaches
  • Urban planning: Enabling the system to plan for and respond to growth through better use of spatial planning, land use regulation, and other tools like National Policy Statement on Urban Development. Enabling the provision of housing variety and choice by removing constraints to quality intensification and expansion. Developing approaches to identify, measure and attribute the costs and benefits of growth
  • Legislative reform: Ensuring the system’s legislative settings support a more responsive approach to urban growth and development
  • Transport pricing: Using demand management tools to promote efficient use of infrastructure networks
  • Spatial Planning: Developing stronger partnerships between central and local government on spatial planning and growth management.

Today I would like to focus on spatial planning, a mechanism for making room for growth, and one that works in tandem with the other Urban Growth Agenda interventions, including strong links to ground-breaking legislation is now before Parliament to create an urban development authority: Kāinga Ora – Homes and Communities, that will be up and running October 1.

[Slide 4: Applying the new approach: new regional growth management partnerships]

Applying the new approach and tools: examples of new regional growth management partnerships

One of the most exciting ways we are acting on this new approach to urban development is through six regional spatial planning partnerships in Auckland, Hamilton, Tauranga, Wellington, Christchurch and Queenstown.

Central government has never before partnered like this with councils and mana whenua.

We are making thirty year growth plans that join up transport, housing, infrastructure, planning, land-use and investment.

Without the involvement of central government, key investment decisions are often made in an ad hoc way, and strategic land use and transport decisions disconnected. Further, land supply and intensification opportunities are often constrained by restrictive zoning. 

 [Slide 5: Case study: Hamilton-Auckland Corridor]

Case study: Hamilton-Auckland Corridor

The most advanced and most ambitious of these partnerships is the Hamilton-Auckland corridor. We started with two observations.

Firstly, that this powerful corridor around the mighty Waikato River, the Main Trunk Line and Waikato Expressway has significant underused capacity, especially rail.

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Secondly, that there is significant unrealised development potential along this corridor that under existing approaches would be unlikely to be fully realised.

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The Government and Councils have at the same time received numerous proposals for innovative new transport…

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… and urban development solutions along the corridor.

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These needed to be brought together into a fully integrated package, and the solution was to initiate New Zealand’s first inter-regional, corridor-based growth plan.

[Slide 6: Why focus on the Hamilton-Auckland Corridor?]

Why focus on the Hamilton-Auckland Corridor?

  • In terms of size, volume and value, this is New Zealand’s most significant inter-regional road and rail traffic.
  • The corridor connects two of New Zealand’s largest and fastest growing urban areas along a corridor with high natural and cultural importance and value.

 

  • In the high-growth scenario the population along this corridor is expected to increase by around 300,000 in the next 30 years.  
  • There is significant housing and employment growth potential in the Drury-Paerata-Pukekohe-Tuakau-Pokeno cluster in the north, and in the greater Hamilton area that stretches from Ngaruawahia in the north to Cambridge, Te Awamutu and Hamilton airport in the south. 
  • Existing corridor management issues – such as congestion on the Southern motorway and water discharge quality – have wide-reaching impacts across the Upper North Island and limit current and future potential unless addressed.

And equally importantly, Councils and mana whenua along the corridor have a history of being willing to collaborate on land use and infrastructure planning.

 [Slide 7: Focus Areas]

Focus Areas

The work programme has five areas of focus:

First, there is the river which is of central importance to Waikato-Tainui and the Tainui Waka Alliance who have become a very important partners on this project. Then there is the work on water infrastructure.

[Slide 8: Stronger Corridor Connections]

Second, there is building stronger connections through the corridor.

This time next year, the start-up rail service between Hamilton and Auckland will be operating.

We are also underway with a cabinet mandated initial business case for rapid inter-city rail between Hamilton and Auckland.

160kph tilt trains that would get you to Hamilton to Britomart in an hour, effectively uniting these two labour markets.

And now I want to talk in detail about each of the three geographic areas that make up the corridor.

 [Slide 9: Papakura-Pokeno]

Auckland’s southern growth corridor from Papakura south through Drury, taking in Pukekohe and down into the northern Waikato towns of Pokeno and Tuakau is experiencing some of the strongest growth pressures anywhere in the country.

With its access to electricity and water and proximity to the golden triangle, it is the part of Auckland that will inevitably accommodate much of the city’s growth in the coming decades.

The strategic challenge is to deal with the bottleneck that is the southern motorway.

New development will have to reduce car dependency, not make it worse.

The Southern growth corridor is ripe for the making room for growth approach: protecting areas of special value like the Pukekohe growing soils, setting aside open spaces for future generations, and acquiring land for network infrastructure.

We have to invest in the critical enabling transport infrastructure like Mill Road, new rail stations at Drury, electrification to Pukekohe and onto Pokeno and Tuakau, and of course the third and fourth main.

The aim then is to allow people to develop as long as they can carry the costs of their infrastructure.

This is a great moment to let you know that since I spoke to you last year we’ve made great progress and I hope we will soon have legislation before the Parliament to establish a new framework for private investment in urban infrastructure and the use of a targeted rate to service the debt.

 [Slide 10: River Communities]

River Communities

The beautifully located river communities between Pokeno and Taupiri are communities that need careful development.

None of them have the typography to support large scale urban development but with some good planning, a bit of love and investment, they all have the potential to grow well.

 [Slide 11: Hamilton-Waikato Metropolitan Area]

At the southern end of the corridor is what we now call the Hamilton-Waikato metro area.

Hamilton has the potential to be a thriving, high growth but affordable urban centre.

It is so well positioned between the port in Tauranga, and Auckland with its huge labour market and huge international airport.

It has superb road connections thanks to a decade’s investment in the Waikato Expressway.

And it services the richly productive Waikato heartland.

What’s more, it has vast amount of flat, developable land to grow into.

Perhaps more importantly its local government leaders – not only Hamilton City, but Waipa, Waikato District and Waikato Regional Councils – along with Waikato Tainui who are major asset owners, investors and guardians, are ambitious for change and reform.

Together we are exploring whether we can retro-fit Hamilton’s heavy rail network which already serves the city as well as radial corridors reaching out to Te Awamutu, Cambridge, Huntly, with a modern suburban rail service.

Hamilton has several candidates for large scale urban development.

And we are discussing radical zoning reform that would lift height and density restrictions in the urban core and around the rapid transit corridor; as well as boldly extending urban zoning beside the rail line out into the surrounding countryside.

This would dramatically increase the quantum of development opportunities in the market and set Hamilton up to be NZ’s first major urban centre with high growth and affordable urban land and housing.

These principles: reforming the planning rules to allow the city to grow up and out, and joined up spatial planning that includes transport are at the heart of the draft National Policy Statement on Urban Development that David Parker and I released yesterday.

The NPS which we are consulting on for the next two months would direct councils to take this making room for growth approach.

[Slide 12: Conclusion/3-part partnership approach]

I think the Hamilton to Auckland corridor project has extraordinary promise as…

  • A new approach to partnership that is already enabling…
  • Bold new spatial planning, which plays a key role in unlocking the full potential of…
  • Transformative infrastructure and development programmes.

Alongside our other initiatives –

  • David Parker’s comprehensive reform of the RMA
  • Our new National Policy Statement on Urban Development which aims to set Council planning departments on a new course
  • Infrastructure funding and financing reforms
  • The establishment of Kainga Ora – a new urban development agency with the tools to undertake large scale projects
  • A commitment to ensuring our transport policy is fully integrated with the plans to develop our cities and regions

… the six growth management and spatial planning partnerships including the Hamilton to Auckland corridor, together are an opportunity to finally turn around the urban dysfunction that is holding our cities back.

They are an opportunity to model a new collaborative approach that may help us to overcome some of the institutional misalignment Infrastructure New Zealand’s latest report points to.

They foreshadow an end to the hands-off effects-based approach to planning under the RMA that has not served New Zealand well.

They offer opportunity to put infrastructure and economic growth into a bigger better conversation about wellbeing, the natural environment, and the legacy for future generations.

And for all those reasons, they may well demonstrate an approach that could that could inform the bigger reform of the Resource Management Act, Land Transport Management Act and Local Government Act.

Thank you again for having me along today and again, let me acknowledge the thoughtful and challenging advocacy of Infrastructure NZ.

MIL OSI