Tag Archives | Auckland Council

Council accounts show revenue & assets up, net debt below forecast

Auckland Council released its unaudited financial results for the June year to the NZX yesterday (because the council has listed debt securities), with more detail to come in 4 weeks.

The deputy auditor-general will complete the audit and issue an audit opinion on 28 September.

Group highlights include:

  • Revenue up 11% ($424 million) to $4.129 billion, ($3.705 billion in 2016), including
    • Rates $1.641 billion ($1.564 billion)
    • Fees & user charges $1.193 billion ($1.083 billion)
  • Operating surplus $340 million before gains & losses ($250 million)
  • Net debt (after cash on hand) up $486 million to $7.969 billion, but $467 million lower than forecast
  • Surplus after tax $640 million ($231 million deficit)
  • Total assets up $2.7 billion to $47.36 billion ($44.68 billion)
  • Net assets $35.78 billion ($33.65 billion).

Auckland Council Group acting chief financial officer Matthew Walker said the group’s financial performance “shows it is balancing the need for prudent financial management with the investment required to address the growth challenges Auckland faces.

“As a successful & increasingly global city, Auckland’s population is growing rapidly. This continually adds to the demands on our transport, 3 waters & community infrastructure such as libraries & parks. Yet the group results show the council is on track to deliver its largest programme of investment ever over the next decade, based on the adopted 2015-25 long-term plan.

In the last year, the council group (including council-controlled organisations such as Auckland Transport & Watercare Services Ltd) delivered $1.66 billion of investment, including its share of the city rail link, now co-funded by Auckland Council & the Government.

Mr Walker said the council sold down part of its diversified financial assets portfolio in August 2016 and issued debt in $NZ, Euro, Norwegian kroner & $A. Meanwhile, it continued to raise debt through the Local Government Funding Agency. He said low interest rates had contributed to a lower cost of funds during the course of this financial year.

“The council maintained its credit ratings of AA (stable) from Standard & Poor’s, and Aa2 from Moody’s Investor Services, confirming our prudent fiscal management and strong debt-servicing capability. These continue to remain among the strongest credit ratings in New Zealand.

“The council has begun the development of its long-term plan 2018-28. While group debt is projected to reach $11.6 billion by 2025, it will remain at a prudent level relative to our income.
“The group’s asset base is expected to grow from $45 billion to $60 billion over that same period to 2025.”

Capex highlights:

  • $310 million on water & wastewater infrastructure
  • $200 million on parks, sports facilities, libraries, community centres & facilities
  • $430 million on roads & footpaths, and
  • $288 million on public transport.

Link: Auckland Council 30 June 2017 accounts (on NZX)

Attribution: Council accounts & release.

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Matching infrastructure to population explosion a key Goff plank

Auckland mayor Phil Goff laid out his vision yesterday to build infrastructure at a rate that would match the region’s unprecedented population growth.

Some funding mechanisms are in place, and the council & Government have agreed bigger funding streams for some areas such as transport, but their budgets still show a $5.9 billion shortfall over the next decade.

The mayor said he would seek staff advice on options for broadening the council’s revenue base, which currently relies on rates to generate almost 50% of its funding. Other options include:

  1. the further development of special purpose vehicles funded by growth infrastructure targeted rates
  2. the application of the targeted rate on accommodation to the informal sector (eg, Airbnb)
  3. the sale of non-strategic assets, and
  4. likely proceeds from various road pricing options & practicality of implementation.

The mayor wrote his 8-page report to set the process going for the council’s 10-year budget (otherwise known as its long-term plan) for 2018-28.

The process now is for the council to run political workshops through September-November, finishing with a more concrete mayoral proposal which will go to more workshops in December, then out to public consultation in March and adoption of the plan on 27 June next year.

Mr Goff wrote in his release presenting the report:

“Our vision for Auckland is a world-class city where talent wants to live. It must be the city which can keep the best & brightest of our young people in New Zealand while competing globally with other cities around the world for skills, entrepreneurship & investment.

“My key focus is to build infrastructure at a rate that matches unprecedented population growth to maintain our quality of life and make it easier to do business in our city.

“Auckland grows by 45,000 people/year and is clearly a desirable place to live. This growth creates opportunities, but it also presents challenges in housing shortages & affordability, growing traffic congestion & pressure on our environment.

“The key to tackling these issues is our ability to lift investment in our infrastructure.

“Investment in public transport, including light rail, in active transport modes like cycling & walking, and optimising our road network is critical.

“That’s why, under our latest Auckland transport alignment project, we have set aside $27 billion for capital investment in the next decade. Currently, $5.9 billion of that is unfunded and has to be found.

“I welcome the Government’s commitment to meet the larger share of that, but Auckland will also need to contribute more.

“The 10-year budget needs to consider where we source our share of the funds.

“The interim transport levy is not user-related and does not raise sufficient funds. We can’t simply impose huge general rate increases to pay for infrastructure, so some form of road pricing will be essential.

“We need to build more houses more quickly. The mayoral housing taskforce makes recommendations which we need to move to implement.

“The unitary plan enables land development, but we need to invest in infrastructure to allow houses to be built. This will involve intensification of houses, as well as new developments under the future urban land supply strategy.

“Use of targeted rates as well as special purpose vehicles through Crown Infrastructure Partners will be essential. That also applies to protecting & enhancing our environment.

“Water quality is a top priority. We need to reduce wastewater overflowing into our streams & harbours. Building new water infrastructure will be our focus, including new wastewater interceptors & green infrastructure.

“While the council is looking for new sources of infrastructure funding, we must also get better value for the ratepayers’ dollar.

“It is time to realise the benefits of amalgamation to deliver further efficiencies & economies of scale made possible by the super-city.

“Findings from our group-wide section 17A value-for-money reviews will be critical, and I want the council to develop group-wide shared services.

“APEC [Auckland will host the Asia-Pacific Economic Co-operation forum leaders’ week from 8–14 November 2021] and the America’s Cup defence add impetus to our planning and provide the opportunity to create a lasting legacy for Aucklanders.

“We have the opportunity to make Auckland more prosperous, smart, innovative, inclusive & culturally rich, with a beautiful environment and choice & opportunity for all.

“With this as our vision and the investment we need in infrastructure, we will make Auckland a world-class city.”

Image above: Auckland mayor Phil Goff, on site shortly after his election as mayor last October.

Mayoral intent for the 10-year budget (long-term plan) 2018–28
10-year budget 2018-28 road map

Attribution: Mayoral release & plan document.

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Councillors air their views, oh, and agree to housing taskforce steering group

It could have taken Auckland Council’s governing body a couple of minutes yesterday to tick off the appointment of a 10-member steering group to ensure the efforts of the mayoral taskforce on housing isn’t lost.

But that’s not the way councillors work. Their habit is to talk about what they want to talk about, not deal efficiently with the business in front of them.

Their questions & debate, for a couple of hours, had nothing to do with who would be on the steering group, didn’t get to grips with the roles of either the steering group or the taskforce, but did venture near some of the direction mayor Phil Goff wants to lead the council on housing issues.

The steering group members, all but one from with the council & council-controlled organisations, will be: The mayor, Phil Goff, deputy mayor Bill Cashmore and 2 councillors, planning committee chair Chris Darby and regulatory committee chair Linda Cooper; council chief operating officer Dean Kimpton, strategy chief Jim Quinn, finance & policy director David Wood from the mayor’s office, Independent Maori Statutory Board chair David Taipari, and 2 senior managers from Auckland Transport & Watercare Services Ltd.

The targets: council process, and central government

The taskforce, on the other hand, drew a wide range of participants from the private sector who identified 2 council-related issues and another which would take considerable negotiation with central government.

The mayor said that if he’d led the taskforce off on some of his pet housing subjects he would have got nowhere: “I had some battles with the minister of housing development [I think that means minister of building & construction, Nick Smith], he didn’t want people there, but we were able to turn him & the Government around, they were able to attend as active participants and they were very active.”

There was a time when relations between central & local government were abysmal, but since the late stages of the last council term Auckland & Wellington have (almost) stopped talking past each other and have jointly confronted a number of issues – though still with a long way to go before regular sensible discussion & resolution occurs.

For instance, Mr Goff said: “Because we don’t have independent revenue, I keep having to go cap in hand to the Government. But the last council, getting the unitary plan through – that gives us credibility to say we’ve got the planning, let’s get on with the infrastructure.”

Topic was steering forward, but talk was about taskforce

The original recommendation before the council yesterday was for the steering group to report to the governing body “periodically”. This was changed to 6-monthly. The mayor talked about the taskforce being brought together again, which he said participants were enthusiastic about. However, that wasn’t up for debate.

The talk yesterday should have been about the taskforce’s recommendations, and who would be best to advance work on them. Instead, councillors commented on taskforce points – fine, but ultimately useless.

The steering group’s primary tasks will be to lead change in council processes that affect housing, ensure the zoning changes resulting from the new unitary plan are effective in opening up more scope for housing development and – the biggest task – negotiating change with the Government.

Jared Boow, housing portfolio manager in the mayor’s office, said in his report to the governing body on the taskforce, it identified 3 key areas where changes are needed to deliver more homes in Auckland:

  1. Remove impediments to the construction sector developing at scale, including identifying investors who can build through the dips to lift construction in the peaks
  2. Unlock the availability of land with appropriate zoning & infrastructure, at the right price, to enable more development, faster, and
  3. Deliver efficient & certain planning, consenting & risk management to reduce costs, enable innovation in construction & delivery and create communities with high quality built & urban form outcomes.

Tactics & systems

Within each category, he said, the taskforce identified a mix of ‘tactical’ interventions that could be done soon, without significant legislative or policy change, and ‘systemic’ interventions that participants believed might take longer to deliver but which would have the potential to have a large & long-term impact on housing supply outcomes.

“In their view, ‘delivering these interventions will require partnership & collaboration between Auckland Council (and its wider family of organisations such as Auckland Transport & Watercare), central government and the development sector’.

“They also point out that focusing on short-term interventions without addressing systemic challenges will not fully address Auckland’s housing supply challenges. They note that their recommended ‘tactical’ changes ‘can help create the platform for deeper policy changes, but are not a substitute for more fundamental change in a market that has not built enough homes for several decades’.”

The taskforce’s report contains 33 recommendations. Mr Boow said 16 of those recommendations were aimed at the council, and work was underway on two-thirds of them.

Among councillor comments & responses:

Cllr Cathy Casey looked for innovative ways to build cheaper housing: “I don’t see that in here [the taskforce report]. My worry is there’s an awful lot in here to do and no prioritising.”

Mr Boow: “One of the first tasks for the steering group is to prioritise.”

Former deputy mayor, Cllr Penny Hulse: “Is the list of to-dos to be done by the taskforce?

Mr Boow: “One thing we didn’t want to do was reinvent the wheel. 16 of the 33 recommendations are aimed at council, two-thirds are work that’s underway.”

Mr Goff said there were 2 fundamental points: “What we didn’t want to happen was to have a report that came out and everyone said, ‘Yep, great ideas’, and then it sat on the shelf. And 2, to ensure there is advocacy to central government. This was a high-powered group and they have said, can we reconvene in 6, 12, 18 months.”

Cllr Hulse: “The missing piece of the puzzle is still the Government & private sector response to this. Was any thought made to appoint an inter-party group?

Mr Goff: “We have asked the Government to appoint a points person to be responsible for liaising with us, and that should be the minister in charge of MBIE (the Ministry of Business, Innovation & Employment). The private sector is a little harder because there aren’t always organisations available. I think the value of the taskforce is the followup that we have agreed to do.”

Cllr Wayne Walker was concerned at the limited nature of what’s on the table: “’Meets the demands of the rate of population growth’ – what are the demands? What hopes do we have of influencing that? Very long-term assets that are normally funded intergenerationally… I don’t know if we’re going to get anywhere, so I endorse the comments Cllr Hulse made about the involvement of the Government in this.”

Mr Boow: “A role of the steering group would be advocacy to government.”

Cllr Walker: “Is this taskforce going to be making some observations around population growth, because you don’t know what you’re going to be responding to?”

Mr Goff: “I’ve got views on demand management & tax, and I wouldn’t have got anywhere with those because they’re not views shared by the Government. We decided to concentrate on things we could get movement on.”

Cllr Richard Hills: “Greenfield tips the balance away from the unitary plan. I think we need to be a little more creative. How are we going to be able to use the Panuku developments better? What can we do to make sure it’s first-homebuyers or affordable housing only, to make sure it’s not just investment properties?”

Council executive officer Megan Tyler on greenfields: “This report doesn’t sit in isolation of any other work you are doing. Rebalancing will be part of the work you do through the long-term plan. I see a great opportunity for you over the next 12 months to decide where the funding of infrastructure is best put.”

Cllr Casey: “One recommendation I don’t think is housing at all and that’s to implement congestion charging. That’s a long way away from affordable housing.”

Mr Goff: “That’s a recommendation of the taskforce. They are what they are. There was broad support for a fuel tax, broad support for a congestion tax. So the reason that it is in a housing report is to enable affordable housing, you need decent transport. There is currently a joint working group between council & government on transport charging.”

Cllr Casey: “This is a wide-ranging remit for a taskforce. The taskforce wasn’t a council report, even a mayoral report.

Mr Goff: “I wasn’t in the position to say no, you can only recommend what we like. It’s not for us to say what should or should not go into this report.”

Casey: “How do we get involvement?”

Cllr Alf Filipaina: “The governing body will end up deciding what we will be pushing for.”

Cllr Bill Cashmore: “We’ve done some of the work already – the unitary plan, the infrastructure shortfalls have been identified and the highlight numbers have been worked through by our staff.

The insufficient builds for many years have probably created a 30,000 shortfall, and that is causing stress. Immigration has also caused stress. We need to know the tools in the toolbox. What we do know is the investment needs to increase if we are to provide more affordable housing and more housing in this city. The financial arrangements we’ve announced in the last 2 weeks I’m not going to take a set position, I want to understand what all the tools are and what the options are. But the decisions to be made by this council? We will make.”

Cllr Hulse – “having lived & breathed housing for the last 6 years and being somewhat jaundiced” – supported putting the mayoral stamp on the taskforce and said it was well overdue: “What I’m hoping is we might end up with a more sophisticated approach. Deputy prime minister, now prime minister Bill English has had reports like this over the last 2 years and there’s been not a lot of action. What are the key changes that would actually change the central government approach to this? The council has almost wrung the cloth dry. But without the Government agreeing to put some serious building targets in place, and what I think is a seriously marginal Housing NZ building rate, if the Government are to make a serious difference they need to make the funding available for infrastructure.

“If we’re going to get houses built we’re going to have to fund infrastructure. We need to change some of the banking methodology and the structure to do that. Developers – how fine many of them are – are there to make money, and good on them. But if the banking sector will not allow that to happen, actually the banking sector needs to assist with that and the Government needs to assist with that.

“But the bit I’m interested in is, who’s going to be sitting around the tables in Wellington. I hope that is what the taskforce is focusing on.”

Attribution: Council governing body meeting.

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Council agrees to sell rest of its financial asset portfolio

Auckland Council’s finance & performance committee agreed yesterday to sell the final $130 million in its diversified financial asset portfolio, but it’s a decision with potential adverse consequences.

The council sold $100 million of the portfolio in May 2016, will sell a further $100 million by the end of the June 2018 financial year and agreed yesterday to sell the balance by June 2018.

The council intends to use the proceeds solely to fund public transport & stormwater infrastructure.

However, turning liquidity to use in developing hard assets could take the council closer to a net debt:total revenue ratio of 270%, and at that point the council would face a ratings downgrade.

Council treasurer John Bishop said in his report a one-notch downgrade would cost $12 million/year in extra interest costs.

Committee chair Ross Clow said the decision to divest the portfolio would help tackle Auckland’s growth: “The fund was originally set up with the express purpose of funding infrastructure across the region when needed. Given the unprecedented challenges Auckland faces, divesting of the remainder of the portfolio and using it to help fund our infrastructure programme is a prudent & sensible financial decision.”

Mr Bishop said in his report the investment fund wasn’t regarded as a strategic asset, and divesting it would give the council the opportunity to repay debt to enable additional investment in infrastructure. “However, replacement liquidity may be required to meet treasury operating limits.”

The Auckland Regional Council established the portfolio, which originally contained its stakes in Ports of Auckland Ltd & Auckland International Airport Ltd, along with an investment portfolio of New Zealand & global equities, bonds & cash. It was used it to establish Infrastructure Auckland, providing seed funds for projects that included the Britomart Transport Centre and the Northern Busway.

It’s been managed recently by 8 external fund managers, with oversight from National Australia Bank subsidiary JANA Investment Advisers Pty Ltd.

Mr Bishop said in his report: “If the portfolio was liquidated to fund a wider Auckland or New Zealand event, it is likely that financial markets would also be negatively impacted. Therefore, when the funds are needed the most, there would be likely downward pressure on the value of the portfolio, meaning the portfolio is a less preferred form of liquidity when compared to cash or committed bank lines.

“Its specific investment objective was to achieve a net return exceeding the consumer price index plus 4% over rolling 10-year periods. JANA estimates an average annual 7% return over rolling 10-year periods. The portfolio has returned 9.1%/year since November 2010, in line with benchmark & ‘market’ returns. The return for the financial year to 31 March 2017 is 5.8%.”

Both EY & Cameron Partners identified the portfolio in their reviews of council funding in 2015 as a commercial rather than strategic asset, meaning continued ownership wasn’t required to ensure delivery of key services or outcomes.

“It was noted that the rationale for holding the portfolio is weak, and it is unusual for an organisation with the objectives of Auckland Council to hold such an asset.”

Mr Bishop said alternative uses for the portfolio funds included repaying debt and accelerating infrastructure investment. However, additional liquidity support might also be required if the portfolio was divested.

“Selling it to repay debt will reduce the risk of a downgrade to the council’s credit rating profile. Under the council’s long-term plan, the ne,t debt:total revenue ratio reaches 265%, meaning little available capacity to undertake further capital investment other than what is already in the long-term plan without breaching this ratio.

“The council’s credit rating agencies have indicated downward ratings pressure if this ratio approaches 270%. Therefore any unforeseen changes to planned operating results, such as a reduction in revenue or increase in debt, could lead to a lower credit rating.

“A one-notch downgrade is estimated to cost the council a minimum 0.15% in higher interest costs, while a bigger downgrade will result in a greater increase. On the council’s current debt portfolio of $8 billion, this results in an additional $12 million/year expense once existing debt is refinanced, more than offsetting the positive return from the portfolio over time.”

Mr Bishop said that as the investment portfolio was reduced, the overhead costs (both internal & external) of administering it became more significant: “Current external overhead costs are about $1.5 million, largely represented by fees paid to JANA & the fund managers. The refined responsible investment policy also requires significantly more oversight of the portfolio, adding additional cost and diverting council staff focus away from more material matters such as managing the council’s debt portfolio, interest rate expense & credit rating profile.”

Earlier stories:
4 April 2008: Auckland Regional Holdings’ “satisfactory” half sees revenue up 45%, profit up 55% to unstated figure
2 March 2004: Auckland gets Infrastructure Auckland $45 million for interchange

Attribution: Council committee agenda & release.

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Hamilton-Auckland commuter rail service wins support “in principle”, Panuku gets more tools

Auckland Council’s planning committee voted more strongly yesterday in favour of investigating a regular commuter rail link between Auckland & Hamilton than the tone of the debate indicated.

The committee had before it a position paper prepared last year after multiple-agency collaboration and received brief input from a lobby group chair, Rob Weir, who’d come up from Hamilton for the meeting and was invited by committee chair Chris Darby to speak.

Auckland Council staff sought committee support for a high level review to identify opportunities & constraints, but there was more debate on the value of such a study if it was unlikely to lead anywhere.

The way forward was determined by an addition by Cllr Cathy Casey to the recommendations for the committee to support the provision of a passenger rail service in principle.

While some thought it ought to be a low priority against a stack of other multi-billion-dollar infrastructure confronting the council, the “in principle” tag worked, the additional clause was supported by 18-1 and the amended recommended was approved unanimously.

That means the proposal will be studied, not necessarily resulting in a regular service.

Extra acquisition tools for Panuku endorsed

The committee also endorsed a proposal that its regeneration arm, Panuku Development Auckland, be able to use – “prudently” – statutory tools such as designation & compulsory acquisition in the areas around the region marked as “unlock” or “transform”.

  • Both the commuter rail proposition and the extension of Panuku’s ability to advance regeneration are worth a lot more attention than the few words above. I’ll write more about both in the next few days.

Attribution: Council committee meeting.

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Transparency campaign gathers some ears

Transparency campaigner Penny Bright took her message to Auckland Council yet again yesterday.

Yet again, in a campaign that she’s fought for 2 decades, resulting in multiple arrests for her (some of those arrests spitefully contrived but not, subsequently, resulting in convictions), but over the years not too much improvement in transparency.

But it was notable at yesterday’s meeting of the council’s finance & performance committee that fewer ears were deaf to her message, and this time Ms Bright actually had some positive words to say about the opening up of council information.

The need for a change in attitude was reinforced in February with the sentencing on corruption charges of former Rodney District Council & Auckland Transport senior manager Murray Noone to 5 years’ jail, and engineering firm Projenz Holdings Ltd director Stephen Borlase to 5½ years’ jail over roading contracts.

Mr Borlase was found guilty on 8 corruption & bribery charges and Mr Noone was found guilty on 6 charges of accepting the bribes. Projenz also paid for overseas travel for Mr Noone and another senior roading engineer, Barrie George, who was sentenced last September to 10 months’ home detention.

Ms Bright told the committee she wanted to see all council-controlled organisations providing the same details of contracts as Auckland Transport now does, and she wanted subcontracts included.

She told the committee: “The court case proved you have 2 levels of corruption, public to private and private to private where back-end subcontracts are placed.

“The court showed the collaborative model was not working. That must also be reviewed because the proven corruption risk – we have the evidence for that.”

Ms Bright said the Public Records Act had been law since 2005 – created, according to the Government summary, “to support the effective management of records in the public sector… to promote government accountability through reliable recordkeeping, enhance public confidence in the integrity of government records…”

She said more recent guidelines from the Office of the Auditor-general on transparency were very clear and added: “I believe those guidelines have not been enforced.”

She also asked when the council would look at council officers holding private consultancies that dealt with the council.

Council chief financial controller Sue Tindal said the committee would have an opportunity to raise questions about these issues at its second meeting of the week, on Friday, when the quarterly reports of council-controlled organisations are presented.

However, that’s an unnecessarily tortuous process. The council could simply revert to the practice used at the former Waitakere City Council of presenting all details from tenders online when a tender was approved, which wasn’t followed at other councils around the region and wasn’t the practice put in place when Auckland Council was formed in 2010.

Office of the Auditor-general guidelines

Attribution: Council committee meeting, public forum presentation.

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Council-Selwyn housing joint venture to start in July

The housing for older people limited partnership between the Selwyn Foundation charitable trust & Auckland Council has changed its name, confirmed the appointments to the board of its general partner and appointed a general manager.

The limited partnership will take over operations of the council’s Housing for Older People portfolio on 1 July.

The limited partnership, formed in December 2016 as the HFOP LP, has been renamed the Haumaru Housing LP, and its general partner Haumaru Auckland Ltd.

Its role will be to undertake comprehensive tenancy & asset management services associated with the council’s stock of 1452 rental units for senior citizens, which are in villages in south, north & west Auckland. 1412 are existing & 40 are committed to being built in Wilsher Village in Henderson.

As a 51% shareholder, the Selwyn Foundation has appointed 3 directors – Selwyn board members Helen Melrose (who will be chair) & Vicki Sykes, and Selwyn chief executive Garry Smith. Auckland Council has appointed Matthew Harker & Kerry Hitchcock following an external selection process.

Gabby Clezy.

The board has appointed Gabby Clezy as the partnership’s general manager. Ms Clezy has been chief executive of aged residential care service provider TerraNova Homes & Care Ltd since 2014 and has extensive leadership & operational experience in social services & aged care in the UK & New Zealand. She’s worked for not-for-profit organisations in the healthcare arena, such as Bupa Care Services and specialist addictions mental health trust Odyssey House, and has also held senior roles in the UK tertiary education & national health sectors.

Attribution: Joint release.

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Start with a figure you don’t know, then plan accordingly….

How many people will migrate to New Zealand this year, and over the next 5 years? Nobody knows. The Government might – ought to – have a very good idea but hasn’t been telling anybody. Immigration is a very good tool for economic uplift and therefore supports central government political incumbents – albeit this can get out of hand, as it did in 2003-04 under Labour and again in the last 4 years under the National-led government, and it has an array of mostly bad side effects that our politicians and also bureaucrats have proved they are not skilled at grappling with.

The influx – a spike in population growth – is at the heart of land planning complications.

The Government sought an answer from the Productivity Commission in 2015 and the commission responded last August with a draft report which I thought was perceptive.

The commission has released its final report today. It runs to 498 pages and I haven’t read the whole document. After I have read it all, I’ll write more about it.

But a quick read through the main points, the summary of what the commission believed it should be looking for and some of the recommendations leaves me uneasy.

The central issue

Our central issue – a migrant spike 12-13 years ago and a second spike this decade, which was stretched out as Kiwis came home from the first seriously prolonged downturn in the Australian economy in nearly 50 years – is one that can be handled better in future but is causing ongoing problems of land supply, affordability & infrastructure demand in Auckland.

It’s been exacerbated by the low cost of debt and very ready supply of credit, both locally & internationally. Without being brought under some restraint, virtually free credit will continue to thwart financial & economic planning by concentrating investment in certain assets, such as housing.

The first planning question

In planning, the first question to be resolved is the accuracy of population growth projections. That’s mostly a question for the Government, but Australia’s economy is also relevant. Australia will start to grow again in a couple of years, and the reversal of migrant flow could be very quick.

Second is the immediate supply issue. Auckland Council’s unitary plan, post-independent hearings panel input, mostly provides for improved supply of residential land and partly provides for more business land, special housing areas are a further response to the residential issue and supply ought to improve over the next couple of years.

But availability doesn’t automatically lead to development. Developers get defeated by cyclical downturns which always start the day before they’ve cemented their financial position in place, without needing politicians to stare them down, demanding development on slimmer margins going into a period of great international uncertainty.

The public sector ought to have been involved for the whole of this decade in assisting the supply of truly affordable housing – not the piecemeal supply of “affordable” houses in a range of $6-700,000 on small sections (allowing for no extension).

The third issue is longer-term

And the third issue is the longer-term handling of community creation – not rushed suburbs, not long commutes by car, not “town centres” which are only shops.

The original Auckland Plan completed by the new super-city Auckland Council in 2012 went some way towards envisaging more & better communities, and the new one which has been in front of the council’s planning committee since shortly after last October’s elections will improve the focus.

Even so, too little work has been done on stopping Auckland from being the city of the long commute.

Today’s stories – and for the next week

Today’s story on the Productivity Commission’s final report highlights points the commission believed it should work on, from a ‘first principles’ basis, and changes it’s suggested.

While I was at the Town Hall for Auckland Council’s planning committee meeting yesterday, I spent a large amount of my time trying to digest a huge volume of documentation on a range of topics relating to both the unitary plan and the “refresh”, as it’s been called, of the council’s umbrella planning document, the Auckland Plan.

Today’s story on that will be extremely brief, pointing you to content and ignoring the questions & points made at yesterday’s meeting.

The full version will take several articles over the next few days.

Productivity Commission, 29 March 2017: Better urban planning, final report
Productivity Commission, 19 August 2016:
What would a high-performing planning system look like?
Urban planning: What’s broken and how to fix it
Better urban planning, draft report

Related stories today:
Start with a figure you don’t know, then plan accordingly….
Productivity Commission goes back to first principles on urban planning

Earlier stories, 22 August 2016, on draft report:
Productivity Commission urban planning report blunt, measured & perceptive
Commission sees government change as essential for urban planning
Commission says everything English wanted on planning

Earlier story:
11 December 2015: Planning system is next Productivity Commission target

Attribution: Productivity Commission report, Auckland Council committee meeting & agenda.

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Council value for money review gets tick tomorrow

Auckland Council goes to the basics of the super-city tomorrow when its finance & performance committee will formally institute a “value for money” programme review aimed at lifting efficiency savings from $183 million in 2014-15 to $300 million/year by 2025.

The cost-effectiveness review programme also lifts the supervision of council-controlled organisations – particularly the big ones, Auckland Transport, Watercare Services Ltd & Ateed (Auckland Tourism, Events & Economic Development Ltd) – from sniping when one of those organisations steps out of line, to a closer performance audit.

When the super-city council was formed at the 2010 council elections, the new council had a number of key tasks to do, all at once: rationalise services & expenses, equalise costs to ratepayers across all the old 7 territorial council areas, and establish what the new council should & shouldn’t do. On top of that broad equalising, the council had major plans to create for specific areas and, for the whole region, the unitary plan that would combine regional policy statements & district plans in one document.

Given tight timeframes for everything it was doing, the new council didn’t try to go back to ground level in 2010 and decide then exactly what it should be doing across the whole region but, naturally, chose to work with the previous councils’ programmes and whittle them down to a consistent presentation.

Now, the work starts in earnest.

Section 17A of the Local Government Act requires councils to review “the cost-effectiveness of current arrangements for meeting the needs of communities within its district or region for good quality local infrastructure, local public services and performance of regulatory functions”. A review must consider options for the governance, funding & delivery of infrastructure, services & regulatory functions.

The review laid out for the finance & performance committee by value for money programme manager Sally Garrett introduces “a framework to evaluate expenditure and to provide greater accountability to the governing body & the ratepayer on what is being achieved with public expenditure. The objective of the programme is to analyse cost-effectiveness in a systematic manner across the Auckland Council group and to provide a basis on which more informed decisions can be made on long-term planning priorities.”

The first 3-year review programme starts with 2 phases, initially focusing on activities & services considered high priority to assist in the development of the 2018 long-term plan. Ms Garrett says in her report to the committee it’s assumed each review will take 2-4 months and that up to 4 reviews can be run at the same time.

The first 4 reviews will be:

  • 3 waters – water, wastewater & stormwater budget categories
  • Domestic waste – domestic waste services including refuse, recycling, inorganics & organic services
  • Organisational support – communications & engagement services across the council group, followed by a rolling series of reviews including transactional services, payroll, finance, information systems, procurement, human resources, customer services & legal functions, and
  • Investment attractions & global partnerships – how investment attraction & global partnership services are delivered across the group.

Under the programme, expert panels will be appointed in April-May, data for the first 4 reviews will be collected & analysed from May-August, and conclusions & recommendations will flow from July-September.

The woman managing the programme, Sally Garrett, has a long history in this type of work, first in her 5 years as a principal in Ernst & Young’s management strategy group, then for 6 years as Watercare’s business services general manager. During 3 years as an independent consultant, Ms Garrett assisted the royal commission on Auckland governance and put together the programme for Auckland City Council to manage the transition to the super-city council, including overseeing the due diligence phase and the migration of staff & assets.

She joined Auckland Council in 2012 to manage the finance transformation programme and was appointed to run the value for money programme in 2015.

Attribution: Committee agenda.

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Updated: Bob Dey Property Report diary, week 20-26 February 2017

Update: Auckland Council begins its process on Thursday for the appointment of new batches of resource management commissioners and licensing committee members.

The appointment process is on the agenda for the council governing body meeting on Thursday (agenda added Tuesday).


Auckland Council:

Governing body:
Governing body, Thursday 9.30am, Town Hall

Finance & performance committee, Tuesday 9.30am, Town Hall

Local boards, advisory panels:
Auckland city centre advisory board, Wednesday 3pm, 135 Albert St
Devonport-Takapuna Local Board, Tuesday 4pm, Takapuna council service centre, 1 The Strand
Waitemata Local Board, Tuesday 2pm, local board office, 52 Swanson St

Stonefields, 80 Korere Terrace, application by Todd Property Group Ltd to construct 3 apartment buildings containing a total 90 units, 11 townhouses & associated subdivision, hearing Wednesday-Friday 9.30am, Town Hall

Barfoot & Thompson, commercial & apartments, Thursday 10am, residential Wednesday-Thursday 10am & 1.30pm, 34 Shortland St
Bayleys, residential, 2pm, Sofitel Hotel, 21 Viaduct Harbour Avenue
Ray White City Apartments, Thursday 12.30pm, 2 Lorne St

Business price indexes, December quarter, Monday
Population, sub-national projections, 2013(base)–2043 update, Wednesday

Mt Albert by-election, Saturday

Securities NZ:
CBL Corp Ltd, annual result, Friday
Fletcher Building Ltd, interim result, Wednesday
Heartland Bank Ltd, interim result, Tuesday
Summerset Group Holdings Ltd, annual result, Thursday
Trade Me Group Ltd, interim result, Thursday
Vital Healthcare Property Trust, interim result, Thursday

The diary – it’s comprehensive

The diary is updated weekly and contains main Auckland Council agenda items, hearings & submission closing dates, plus auctions, economic & property-related events, property- & finance-related bills before Parliament and securities information.

Council links

All Auckland Council agendas can be reached via http://infocouncil.aucklandcouncil.govt.nz/. You can view the agenda headings separately from content, and click through to the content you want to see instead of having to open a whole large document.

You can also check full local board agendas through http://infocouncil.aucklandcouncil.govt.nz/.

The council livestreams (and archives) Town Hall meetings and some other meetings. You can check those at http://councillive.aucklandcouncil.govt.nz/.

Auckland Council

Governing body:

Governing body, Thursday 23 February at 9.30am, Town Hall:
11, Point England Development Enabling Bill, council submission
14, Recruitment process for independent district licensing committee members and resource management commissioners in 2017 
17, Accountability of Auckland council-controlled organisations, recommendations from the appointments & performance review committee
18, Statement of proposal: Draft air quality bylaw for indoor domestic fires, recommendations from the regulatory committee


Auckland Domain committee, Tuesday 28 February at 9.30am, 135 Albert St
Civil defence & emergency management group committee, Wednesday 22 February at 10.30am, 135 Albert St

Finance & performance committee, Tuesday 21 February at 9.30am, Town Hall:
6.1, Disposal of land at Constellation Reserve to NZ Transport Agency and negotiation of a compensation agreement
15, Constellation Reserve agenda item
9, Disposals recommendation report
13, Re-establishment of the quality advice political advisory group
14, Funding for high performance & community sailing centre
16, Completion of a statutory land exchange process – Rosedale Park 
17, Committee forward work programme to June
18, Information report

Forums, panels & boards:

You can check council meeting agendas through this link: http://infocouncil.aucklandcouncil.govt.nz/

Auckland city centre advisory board, Wednesday 22 February at 3pm, 135 Albert St:
5, City centre progress update
7, Review of the 2015-25 city centre programme of work 
C1, City rail link, urban realm update (in confidential agenda, includes material relating to procurement)

Devonport-Takapuna Local Board, Tuesday 21 February at 4pm, Takapuna council service centre, 1 The Strand:
11.1, Notice of motion from George Wood, seeking report on wastewater discharge into the Waitemata
13, Greater Takapuna Reference Group, February report
15, Takapuna Beach Reserve Holiday Park – update
Flowchart: In-house vs. External lease options
External lease options: 10 / 20 year lease scenarios
16, Response to notice of motion – public workshops, council legal advice is that the board can hold workshops in public, in which case council staff will work through with the board how it wishes to schedule & operate these forums most efficiently & effectively; the super-city council has held all its workshops behind closed doors ever since it was formed in 2010, although I have argued that for many workshops it would be better to open the doors to get wider understanding
17 Exchange of parts of Northboro Reserve for other land and vesting of additional open space
18, Milford centre plan, monitoring report
19, Takapuna centre plan, monitoring implementation of the Takapuna strategic framework
Takapuna reference group lodges ideas on how to upgrade
Next Takapuna Beach reserve decision – how to run a camping ground

Hauraki Gulf forum, Monday 20 February at 1pm, Town Hall

Waitemata Local Board, Tuesday 21 February at 2pm, local board office, 52 Swanson St:
8.2, Deputation: Mik Smellie, Splice, on discussion document, Building neighbourhood in the city centre; Splice says of itself: “We practice radical hospitality & inclusiveness as a core function”
Discussion document – Building neighbourhood in the city centre
Website: Splice
17, Symonds St Cemetery, programme update, recommendation that the board not proceed with the path connection from Karangahape Rd to the Grafton Gully cycleway through Symonds St Cemetery, and confirms that the $180,000 capex budget can be reallocated to another local board project
18, Proposed Uptown Business Association, business improvement district expansion boundary map, voting on the extension will continue until 31 March
Story: Uptown BID expansion scheme moves to final stages


Avondale, 25 St Jude St, St Jude’s Anglican Church, hearing Tuesday 14 March at 9.30am, Town Hall

Epsom, 22 Kipling Avenue, application by Kipling House Ltd to demolish a 27-bedroom boarding house on a 1249m² section to make way for a healthcare facility specialising in screening for & prevention of bowel cancer, hearing  Tuesday 28 March at 9.30am,  Town Hall

Henderson, Lincoln Rd, notice of requirement by Auckland Transport for road improvements including widening along 1.3km, both sides, from Te Pai Place & Pomania Rd to the intersections of Triangle Rd & Central Park Drive, hearing Wednesday-Friday 22-24 March at 9.30am, Henderson, council service centre

Manurewa, 30 Rothery Rd, application by Philip Zhang & Alice Zhu to demolish dwelling and replace with 3 new standalone dwellings, hearing Wednesday 8 March at 9.30am, Manukau, civic annex building

Northern interceptor stages 3-6, notices of requirement by Watercare Services Ltd, hearing Thursday-Friday 23-24 March at 9.30am, Takapuna, council service centre

Stonefields, 80 Korere Terrace, application by Todd Property Group Ltd to construct 3 apartment buildings containing a total 90 units, 11 townhouses & associated subdivision, hearing Wednesday-Friday 22-24 February at 9.30am, Town Hall

Warkworth-Snells Beach, wastewater treatment plants, hearing Thursday-Friday 9-10 March, Auckland town hall


Auckland Council annual plan, public consultation will run from Monday 27 February-27 March


Barfoot & Thompson, apartments & commercial Thursdays at 10am, residential Tuesday-Friday at 10am & 1.30pm, 34 Shortland St
Bayleys, Wednesdays at 2pm, in February at Sofitel Hotel, 21 Viaduct Harbour Avenue; from 1 March at new Bayleys House, Wynyard Quarter, 30 Gaunt St
City Sales, apartments, Wednesday 1 March at 12.30pm, 445 Karangahape Rd
Colliers, commercial, Wednesday 1 March at 11am, Takapuna, 129 Hurstmere Rd; Tuesday 7 March at 11am, SAP House, 151 Queen St
Ray White City Apartments, Thursdays at 12.30pm, 2 Lorne St


Births & deaths, December 2016 year – cancelled, data will be available in the year ending March 2017, Infoshare release on 16 May
Business price indexes, December quarter, Monday 20 February
Migration, international travel, January, Monday 27 February
Population, sub-national projections, 2013(base)–2043 update, Wednesday 22 February
Trade, overseas merchandise, January, Tuesday 28 February


Reserve Bank, official cashrate announcement, Thursday 23 March
US Federal Reserve, open market committee, Tuesday-Wednesday 14-15 March


Mt Albert by-election, Saturday 25 February

Property Council breakfast, address by mayor Phil Goff, Wednesday 1 March at 7am, Pullman Auckland

Prefab NZ, CoLab conference, Tuesday-Wednesday 21-22 March, AUT, Sir Paul Reeves Building

Constructing our world, Wednesday-Friday 22-24 March, Auckland, Pullman Hotel, hosted by NZ Institute of Building in collaboration with the Australian & Singaporean Institutes of Building

Property Council, outlook breakfast, Wednesday 22 March at 7.30am, Grand Millennium Auckland, 71 Mayoral Drive

World masters games, 21-30 April, Auckland & Waikato

World sustainable built environment conference, Sunday-Tuesday 5-7 June, Hong Kong Convention & Exhibition Centre

Property Council awards, awards dinner Friday 16 June

HotelsWorld, Tuesday-Thursday 25-27 July, Sydney, 4 consecutive events for hotel, resort & serviced apartment operators, investors, developers, lenders & industry professionals

Building for better lives, Australian national housing conference hosted by Australian Housing & Research Institute, 29 November-1 December, Sydney, International Convention Centre


Parliament resumes sitting on Tuesday 7 March

Securities – NZ

CBL Corp Ltd, annual result, Friday 24 February
Fletcher Building Ltd, interim result, Wednesday 22 February
Heartland Bank Ltd, interim result, Tuesday 21 February
Metlifecare Ltd, interim result, Monday 27 February
Summerset Group Holdings Ltd, annual result, Thursday 23 February
Trade Me Group Ltd, interim result, Thursday 23 February
Vital Healthcare Property Trust, interim result, Thursday 23 February

You can help fill in the gaps – Got an event you want to tell the world about? Click the email tab – [email protected].

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