Infrastructure: Can Auckland be a major hub?

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NZ could be a connector of China and Latin America, but it’s not without its challenges, writes Tim McCready

Developments in air travel are making longer non-stop flights possible and commercially viable. Currently, the longest distance flight is Singapore Airline’s 15,300km between Newark New Jersey and Singapore — not quite reaching the distance to fly direct to South America from China.

The Herald’s aviation editor, Grant Bradley, says new aircraft technology could allow load restricted non-stop flights from Southeast Asia to South America — but those departing from China must still stop along the way.

“By stopping over in New Zealand (or Australia), airlines do get the opportunity to tap into more passenger and freight markets,” he says.

“But in saying that, Auckland Airport’s aim of being something of a mini-hub for Southeast Asia — South America flights could be some way off too; the demand isn’t there yet.

“And worryingly for Auckland, Latam airlines will overfly the city with some of its flights from Sydney to Santiago from the end of the year, instead of calling here.”

The Building the Southern Link conference, held in Auckland earlier this year, sought to leverage the opportunity, suggesting that New Zealand’s place in the world as a major and natural connection between China and South America is an idea whose time has come. It brought together more than 200 international experts and key stakeholders, to discuss the opportunity, and develop recommendations to move forward.

“New Zealand is either first cab off the rank, or the last,” former trade minister Tim Groser told attendees.

He says that for a small country, you must have the wherewithal to not wait for good company, but to get ahead of the queue and move swiftly. This is a central lesson if you survey the history of New Zealand’s relationship with China in particular. China attributes “five firsts” to New Zealand:

  1. In 1997, New Zealand became the first country to agree to China’s accession to the WTO by concluding the bilateral negotiations component of that process.
  2. New Zealand was the first country to recognise China as a market economy in 2004.
  3. New Zealand was the first developed country to commence free trade agreement negotiations with China. In November 2004, New Zealand and China launched free trade agreement negotiations.
  4. In April 2008, New Zealand became the first country to successfully conclude free trade agreement negotiations with China.
  5. In November 2016, New Zealand and China jointly announced the launch of negotiations to upgrade its bilateral free trade agreement, a first for a developed country with China.

Groser says New Zealand has been an outlier in that respect. “Traditionally foreign ministries look for good company — political safety,” he says. “The tendency is to join queues, not to form them. If we’ve had some success, it’s because we’ve taken well calculated risks — because if we don’t, we end up at the back of the queue.”

Trade and Export Growth Minister David Parker says New Zealand’s geographic location — which was once considered a disadvantage — was now a development opportunity. He says the idea of the Southern Link is one that the Government is behind — it fits with their objective of diversifying our economic linkages further.

“What do we need this southern hub to do?

“At the simplest level, the hub should facilitate seamless and convenient exchange of goods and travel for people between the eastern and western sides of the Pacific Ocean,” he said.

“In this sense, New Zealand offers a clear alternative to crowded northern hemisphere airports.”

At the conference, Chinese Ambassador to New Zealand Wu Xi said: “The key features of the Belt and Road Initiative are connectivity, openness and inclusiveness. In many ways, it is like a modern version of the ancient Silk Road.”

She said it has created new energy and momentum for global economic growth, and a framework for ideas like the Southern Link to take shape.

Groser agreed — saying the Belt and Road Initiative, first described in 2013 by Chinese President Xi Jinping (and at that time known as One Belt One Road), is a “mother of a plan — you don’t get bigger vision than BRI”.

New Zealand is a small, sophisticated country — and well organised. The conclusion of working groups at the conference agreed that the potential exists to make the Southern Link a reality, but there are issues that will need to be addressed.

These include political complications, transit visas, air services, customs and biosecurity regulations, trade facilitation and border policies.

Many of these are a lot more complex than they might appear. Stephen Jacobi, executive director of the New Zealand China Council, told the conference that the Southern Link must be a partnership between government and business.

He says we need to convince government that the changes to public policy and regulation are worth making, “because the prize — in terms of increased trade, travel and tourism — is high”.

Groser wrapped up the conference by throwing down a challenge:

“A plan not backed by a vision is a nightmare. But a vision without a plan is hallucination,” he said.

“We have a big idea. I think it’s on the move — and I think we should seize the time.”

Infrastructure: Mayoral motivations

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Tim McCready put these questions to mayoral hopefuls Phil Goff and John Tamihere

  1. What are your top three priorities for Auckland’s infrastructure?
  2. How would you fund Auckland’s infrastructure requirements?
  3. What needs to happen to improve the quality of water and make Auckland’s beaches swimmable?
  4. What is your expectation for the Ports of Auckland? Should it be sold, shifted, or are there other solutions?
  5. Queen St is considered by many to be the heart of Auckland City, yet it has growing homelessness and safety concerns. What is your vision for it?

Phil Goff

Building a transport network to cater for population growth and ease congestion, infrastructure to allow home building to meet demand and cleaning up our environment are my top infrastructure priorities.

Working with Government I have increased investment in transport to a record $29 billion in our 10-year Budget. Housing consents are now running at a record 14,000 a year (3500 in 2009) and we have brought forward an end to wastewater overflows on beaches by 20 years.

Ultimately all of us as ratepayers and taxpayers meet the cost of infrastructure. We have pushed for, and got, more central government funding, and the regional fuel tax has replaced rate increases to meet our share of  building a new transport network. We are looking to use third party funding such as Special Purpose Vehicles and PPPs to meet capital costs.

I will not sell Watercare — a monopoly operation providing an essential service. That would add $200-$300 a year more to every household’s water rates, hurting most low-income people and those with children. To improve water quality, we have this week started the $1.1 billion construction of a huge interceptor from Grey Lynn to Mangere and are separating stormwater from wastewater. Together those measures will substantially stop pollution of our harbours within 10 years, 20 years ahead of schedule.

The 77ha of port land will remain owned by Auckland Council, but our goal is to shift the port operation when a suitable alternative site can be found, and the government commits to meeting the infrastructure costs of the new port. We will free up our waterfront for public access and for other uses which will make it a vibrant and interesting place to enjoy, work and live. Selling the port company now doesn’t make sense when nobody currently knows what the future holds for it. That would be a fire sale.

With light rail and the City Rail Link meeting transport needs, Queen St should be pedestrianised and become a great place to visit and enjoy. It will be people-focused, catering for a huge increase in resident population, workers, students and visitors. It will be well lit with more cafes and places to eat and drink.

John Tamihere

My top three priorities for Auckland’s infrastructure are transport, housing, sanctity of water supply and disposal of waste water.

Multiple tools will be required to fund Auckland’s infrastructure requirements, including: rates congestion charges, sale of the Ports of Auckland business — retaining the 77 hectares in citizen ownership, public — private partnerships — such as the NZ Super Fund funding CRL, releasing 49 per cent of the equity in Watercare.

Releasing the 49 per cent of equity of Watercare releases up to a minimum of $4 billion, to ensure that the work programme in treating the disgraceful sewerage outflows will be curved within the next five years. Ownership/control of Watercare will remain with the citizens.

The Ports of Auckland will over time shift from their historic 77ha on prime Auckland land.

The site of the opera house in Sydney is a case in point, given that site was Sydney’s port.

Accordingly, as the port business winds down, it is imperative that we sell the port business at the top end of its business cycle and separate the land which will return a lease stream of income back to the citizens.

Ultimately, infrastructure linking North Port and the Port of Tauranga to Auckland will occur and we anticipate both ports serving an enlarged cosmopolitan city.

In order to transform Queen St, I want to house the homeless and ban begging with compassion. This is an area where I have significant management experience, housing over 200 homeless people in the past 18 months in West Auckland.

It requires central government to ensure that social housing, mental health services and welfare services are made available to this growing group of citizens. Begging often progresses to demanding with menaces; in addition, begging teaches co-dependence and entraps a person to continue to beg.

Giving to beggars is one of the worst forms of charity known to mankind.

The present mayor has capped social housing on council land and has thereby increased homelessness. That cap will be removed.

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China Business: Why you can’t contain China (NZ Herald)

We’re in the midst of important structural shifts, says former World Bank President Robert Zoellick. Tim McCready reports

“China has had enormous progress over 40 years. It has had the most historic reduction of poverty in humankind,” says former World Bank President Robert Zoellick.

Zoellick, who led the World Bank through the global financial crisis and served as a US trade representative under President George W. Bush, points out that while Asian growth rates have been healthy, they have not been able to return to the levels they had before the 2008 financial crisis.

At the recent Asian Financial Forum he sent a message that the Asian growth model that was so successful for many decades would need to change.

Zoellick says  Asian economic policymakers have traditionally had a longer time-horizon.

“The old model began by relying on manufacturing at the low end of supply chains. It then integrated upward — adding efficiencies, learning, productivity — but relied on the assistance of exports to developed economies.

“I think that perspective is especially valuable today because we’re in the midst of some very important structural shifts.”

Though Asia has accounted for two-thirds of global growth in recent years, markets are nervous as major shifts are taking place: the end of the quantitative easing experiment and transition to a tightening cycle, slower growth in real trade over the past decade compared to the 20 years before the financial crisis, productivity increases in Asia, and the ongoing trade dispute between China and the US.

“Trade policies and rising economic nationalism around the world have disrupted commerce and created a great deal of uncertainty,” says Zoellick.

“Traditionally, governments put tariffs on final goods, but from 2010 to 2016 they focused on temporary trade barriers, targeting cross-border supply chains for raw materials and components.”

But while President Donald Trump’s hefty tariffs may have been intended to help US manufacturers by making foreign goods comparatively more expensive,  in reality, import taxes imposed on intermediate goods like steel and aluminium are pushing up prices of products manufactured in the US.

Belt and Road part of a new era

Zoellick says Japan, South Korea and Taiwan all offer cautionary tales — a bias towards incumbency and instrumentalisation has slowed the innovation process — and a rapidly ageing population and lower population growth are changing the dynamics. “We can see some of those trends in China today as well.

“One of the main challenges is: will Asia grow old, before it grows rich and wealthy?” he asks.

He says the new Asian model will need to focus on new and different types of supply chains, to meet the changing needs — first off — of the region itself.

He points to the Greater Bay Area as an example of how this transformation has already started in Hong Kong and China.

The Greater Bay initiative, established by the Chinese Government, links Hong Kong, Macau, and nine other cities within the Guangdong Province into an integrated economic and business cluster.

The 11 cities have a combined population of close to 68 million people — greater than the world’s largest city cluster of 44 million in Tokyo — and a GDP of around US$1.4 trillion (NZ$2.06 trillion).

The 55km Hong Kong-Zhuhai-Macau bridge-tunnel system which opened last year cut the drive time between the cities from up to three hours, down to just 30  minutes.

Zoellick sees the Greater Bay Area as a huge opportunity, but says the challenge for Hong Kong will be not only the hard infrastructure — railways, bridges, roads — but some of the soft connectivity to move capital, information, and people.

“Policies will have to focus on new cross-border logistics networks and the barriers that impede them, such as new infrastructure to facilitate trade, services, environmental conditions, energy access, standards, rules and a whole series of soft infrastructure issues, such as customs and tax procedures,” he says.

Zoellick says China’s Belt and Road Initiative could be an important part of the new Asian model — if it is correctly developed.

“Frankly, the world is still unclear about the real purpose of Belt and Road. Is it a move for geopolitical dominance across Asia?

“Is it a plan to export overproduction from some of the materials industries in China? Or is it a new corridor for development? How will other countries benefit?”

He says although it is important to focus on the new regional opportunities and obstacles of the Belt and Road Initiative, Asia must stay global in outlook. “For example, even with President Trump’s protectionism, consider the US economy.

“The private sector will continue to be the engine for innovation in the United States — whether it is big data, different business models, or biologics in medicines — Asia must keep linked into that to remain competitive and adaptive.”

A trade leadership vacuum

Zoellick says another important factor shaping trade in Asia is the way President Trump has seen the US abandon its previous role as a key player developing new rules for global trade.

“After some 70 years of a US-led system, I suspect that much of the world has taken the public good aspect for granted,” he says.

“People sometimes reacted against US behaviour and didn’t always agree with it, but because the United States is an innovative economy working at the cutting edge, US officials had to press for new norms and rules to help adapt the international system — in areas such as services, intellectual property rights, transparency, anti-corruption, investment, and even currency manipulation.

“When you consider developments in big data, along with things like personal sensors and innovation in medicines, they can have huge effects on health and are significant business opportunities — but only if the world develops the appropriate legal framework.

“Traditionally, the World Trade Organisation could help do this. But today the WTO is adrift.

“It will not be able to negotiate new rules unless the United States, European Union, China and others can reinvigorate the WTO.”

Zoellick says China might offer an alternative system, but if they do, the world is more likely to end up with a managed trade system.

“The big powers will emphasise national champions, political priorities and sovereign protections over a rule of law framework in which markets will operate relatively freely,” he says.

“That has very large implications for the small and medium-sized economies that have benefited enormously from a rules-based system over past decades.”

The ongoing trade war

Zoellick says that for the near term, he expects to see friction, accusations, and negotiations between China and the US become a fact of life and add to ongoing uncertainty.

But some of the tensions between the two economic giants go beyond Trump and are concerns held across the American political spectrum and among voters.

“A transactional deal would not address the fundamental issues which are causing widespread concern in the United States — including questions about the Belt and Road Initiative and the ‘Made in China 2025’ strategy, which has created anxiety that China intends to dominate advanced technology.

“These concerns are part of the political debate in the US,” he says. “The US cannot decouple from or contain China, but it can work together with China to make sure the rules are followed.”

Zoellick says that although Trump is a protectionist by nature, he will be sensitive to the market.

As he begins to think about his re-election — and particularly if the US economy slows down — he is more likely to do a deal.

“However, if there is a deal, I think we have to recognise that it is more  likely to be a truce than a solution,” Zoellick says. “Part of my concern is that I’m not sure President Trump thinks in systemic terms.  He thinks in deal-making transactional terms.”

Project Auckland 2018 event MC (video)

Project Auckland: 2021 — a city transformed (NZ Herald)

2021 is a chance to set a target for some of the things we can do around the city, Auckland Mayor Phil Goff tells Tim McCready.

Auckland Mayor Phil Goff says the big events of 2021 will not only put Auckland on the world stage, but will provide the impetus to expedite Auckland’s transformation into a truly international city.

He likens the programme of events — including the America’s Cup, Apec, the Women’s Rugby World Cup, the men’s Softball World Cup, the Women’s Cricket World Cup and the kapa haka Te Matatini Festival — to royal visits of the past:

“People would get out and cut their hedges and paint their fences. This is a chance for us to set a target for some of the things we can do around the city — particularly our interface between the city and the waterfront.”

Goff says the events provide an opportunity for Auckland to show itself off to the world.

Apec will receive massive international attention, with global superpowers and representatives of the largest economies expected to attend — including leaders from China, the United States, Russia and Japan. An expected 10,000 visitors will arrive for the Leaders’ meeting over the Friday, Saturday and Sunday (Nov 12-14, 2021).

“We’re probably going to have to encourage a few institutions to close for the day on the Friday to compensate for the congestion that is going to occur,” says Goff.

Echoes of 1999

Goff has been to many Apec meetings in his time as Minister of Foreign Affairs and Trade.

“They are unique opportunities to get key people together in one place, and in 2021 Auckland will be the focal point of extensive media coverage that will go right across the world,” he says.

Reminiscing about the last time Auckland hosted Apec in 1999, Goff acknowledges that while he thought it was a big event then, it was only a fraction of what Apec has become.

His standout memory from 1999 was meeting with then-US President Bill Clinton. Goff briefed him on what was happening in East Timor, where he had been an international observer of the vote for freedom, where the so-called referendum disintegrated into violence throughout the country, with anti-independence militants creating chaos.

“It was a chance — even as an opposition MP at that time — to meet some of the key world leaders, because of the unique role I had in relation to East Timor which was at the forefront of that particular gathering,” says Goff.

He notes the world has changed a lot since 1999 — and so has New Zealand. “Auckland is now projecting New Zealand onto the international scene as a really global city. One that is high-tech, moving ahead, one that people want to do business in.”

A packed schedule

Goff says that 2021 will provide a platform for Auckland to impress the people that are visiting — and all those watching from afar — that New Zealand is a small but highly competent, efficient country with high-tech innovation and a high quality of life.

“The America’s Cup will showcase the beauty of our environment with the broadcasting of the harbour, as well as our sporting skills and cutting-edge technology in yachting,” he says.

And while the Men’s Softball World Cup and the Women’s Rugby World Cup won’t be as big as the America’s Cup in terms of audience numbers, he says they are international events that will play to different markets: “Different people will pay attention to different aspects of what Auckland is doing that year. The Te Matatini Festival will be a great chance to showcase Auckland as the world’s largest city for Māori and Pasifika people — something that gives Auckland its identify.

“Our ability to leverage off the events in 2021 for investment, tourism and human capital is very important.”

One of Goff’s slogans for Auckland is ‘the place where talent wants to live’.

“That means retaining and attracting talent, and to do that, you’ve got to look like an international city humming with action.

“The centre of the city will epitomise that for Auckland — but with impacts across the whole city.”

According to the Rider Levett Bucknall Crane Index, there are 90 cranes in Auckland — an increase of 8.4 per cent over the past six months. Construction of new apartment towers, hotels, and shopping centres are contributing to the count.

“We’ll see a transformation of our skyline in Auckland, and we’ll start to look much more like a global city than a traditional New Zealand city,” says Goff.

He is looking forward to that growth, and seeing the city merge with the waterfront precinct.

“For most of this city’s history, we’ve had the red fence along the waterfront. The public have been separated from it, there is no public access.”

Goff’s eyes light up as he talks about his vision for downtown Auckland, as it begins its transition into a place where people want to go, relax and enjoy the surroundings.

Quay Street will be reduced to two lanes of traffic — with plans for wide footpaths, trees and plazas — connecting to a car-free lower Queen Street, the first part of Auckland’s “golden mile” to be pedestrianised.

The tanks at Wynyard Point, which have held a variety of hazardous substances and been a longstanding feature of Auckland’s skyline since the 1980s are being removed.

“The America’s Cup will use this area for bases in the first instance, and start to open that area up.

“You’ll see further developments of Wynyard Quarter and Britomart that will make them fantastic places to be,” says Goff.

“These are all places that will make our city a destination, not just a place to pass through.”

Smart cities

Goff sees technological solutions as a key component of Auckland’s transformation into an international city.

He points to the Safeswim programme as an example, which earlier this year won the Smart Water category of the IDC Smart Cities Asia/Pacific Awards 2018. A joint initiative between Auckland Council, Surf Lifesaving Northern Region and Auckland Regional Public Health Service, Safeswim provides up to date information to the public about Auckland’s beaches — including water quality, safety, and long-term health warnings.

“We’re the first city in New Zealand that can tell you — in real time — what the water quality is in beaches this morning, this afternoon, and tomorrow morning,” says Goff.

“We’re world-leading in that area, and we’re using it for the benefit of the people in Auckland.”

Other smart technologies are quickly — and dramatically — revolutionising transport in Auckland, including electronic scooters and the dynamic lane trial in Whangaparāoa.

“Twelve months ago, if you had asked me whether scooters could be a form of transport around Auckland I’d have said ‘I don’t think so’, but you see how quickly that technology changes.”

The Whangaparāoa Road Dynamic Lane project uses LED lights embedded into the road surface to mark traffic lanes instead of painted lines.

Changing the lights, along with traffic control gantries that display lanes, creates temporary lanes during heavy congestion to ensure free-flowing traffic. The project won Best Technical Solution at the Association of Local Government Information Management Awards.

Similar systems are used in Auckland along the Panmure Bridge and Auckland Harbour Bridge. The system is quick to build and around one-tenth the cost of alternative solutions.

“Auckland Transport is going to use that same technology in probably another half a dozen sites around the city,” says Goff.

“We can use technology to improve our transport systems. We can predict when something is going to happen or is starting to happen, and make changes that make it easier to get around the city.”

Goff says technology can be used to make every aspect of life better for Aucklanders:

from biological nutrient removal plants for more environmentally friendly wastewater treatment, to automatically resettable possum traps, to online resource consent filing, dog registration and rates payments.

“Council is tapping into innovations which enable us to do more for less — providing better services at a lower cost,” he says.

“It means we’ve been able to have a city that is growing by 30,000 — 40,000 a year, but we haven’t had the growth in staffing that is proportionate to the growth in population.

“Our per capita staffing levels are actually dropping — we’re providing better services at a lower cost to our rate payers.”

Goff drops hints on Mayoral race

“I am thinking seriously of running for the mayoralty again,” says Auckland Mayor Phil Goff. “I don’t want to go into a job and leave it partly completed.”

Goff says he will make a formal decision on whether to run again for mayor early next year. But he adds that three years is a very short space of time to change a city in the way he’d like to see it happen.

“Particularly with our 10-year budget, it has been transformational, with the biggest ever level of capital investment in our infrastructure. But that’s time-lagged.

“To actually see things you have put in place develop, takes longer than a three-year term.”

Goff talks about the significant progress that is being made towards Auckland infrastructure: the City Rail Link, Skypath along the Harbour Bridge, Seapath between Takapuna and Northcote Point and cycleways.

Other initiatives he wants to see progress further include cleaning up Auckland’s harbours, making Waiheke predator-free and saving the kauri from dieback in the Waitakere Ranges.

“When you come into a job like this — depending on the electorate’s willingness to re-elect you — you don’t want to say ‘I’ve done a stint there, that was nice, now I’ll move on.’

“You want to say: ‘this transformation is critical — not just for me, but for my kids’ generation, for my grandkids’ generation’.

“You want to see that through so you feel that you have been part of something that has made Auckland a better place to be in.

“So that gives you a bit of a hint of the way I’m thinking,” he says.

Based on previous years, Goff expects there to be around 12 other people vying for the mayoralty.

So far only John Palino — a two-time mayoral candidate — has formally announced his candidacy. National MP for Tāmaki Simon O’Connor is contemplating running, and has said he will make a formal decision in the New Year. Property developer and brothel owner John Chow as well as Waipareira Trust chief executive John Tamihere are also considering a tilt for the mayoral chains.