Earlier this year I travelled to the United States as part of an Infrastructure New Zealand-led study tour, looking at how infrastructure is planned, funded and delivered.
We visited four large, fast-growing cities, Portland, Denver, Dallas and Houston, which face similar challenges as New Zealand, but are handling growth in a different way. We wanted to understand what these cities are doing differently, and what needs to change in New Zealand to enable our cities to grow affordably and faster than they currently are (read the full Infrastructure New Zealand report on our learnings here).
The challenge that most growing cities face is a complex one. How do we provide affordable housing at a rate needed to meet demand while keeping a liveable city. What resonated with me the most was America’s positive, flexible and can-do attitude when it comes to growth. Local and regional authorities and developers collaborate together to achieve objectives for their city. Their long-term planning is regional and a change in government doesn’t mean a drastic change in direction. They don’t politicise transport and housing decisions.
Their cities and local government also have more tools in their toolboxes to meet growth demands. Property taxes, sales taxes, income taxes, increment financing and road tolls all give local councils multiple flexible funding options. And they are incentivised to grow; they need to in order to attract state and private investment.
By comparison, our government are often the only investor in major infrastructure in NZ. It collects the majority of all tax revenue, leaving local councils to fund our cities largely from rates. Councils’ low debt ceilings constrain funding further and what we are left with are houses not being built fast enough, costs increasing due to resource constraints, and slow decision-making on where to invest in infrastructure.
However, by no means does the United States have it all figured out. While they are equipped with the tools to grow, Portland and Denver still struggle with housing unaffordability like us. What we found was that constraining land availability forces house prices up, whereas unconstrained sprawl enables low land prices but adverse liveability outcomes. All four cities struggle to achieve high liveability standards. There isn’t a single United States city that makes the Mercer Top 20 most “liveable cities” list. Auckland comes in at number three and Wellington at 15. Our cities are lively and cosmopolitan, we have great health and education systems, we take care of our environment, and generally we feel much safer.
But we do risk going backwards with our current housing and infrastructure crisis. New Zealand needs legislation and policy changes that enables councils to focus on growth rather than cost, with flexibility and incentives. Third party entities also need access to alternative financing.
Our government needs to equip local authorities to use alternative funding and financing mechanisms for the construction of infrastructure for now and our future. More responsibility, funding and decision-making ability needs to be given to councils and other third party entities to improve our cities. Only then will we see the changes we need to enable the urban growth required. I believe changes will come, but not as quickly as we desperately need as a country.
Since becoming Managing Director in 2012, Glen has been steering our 133-year old company through significant transformation and growth.
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