Richer than Australia by 2025? Really……

I opened the Dominion-Post this morning to find this story, reporting the aspiration of the new Wellington Regional Economic Development Agency (WREDA, mostly a Wellington City Council agency) that Wellington should be, by 2025, “the most prosperous, liveable and vibrant region in Australasia”.

Memories of an earlier 2025 goal flooded back.  I helped the government’s 2025 Taskforce with their reports, which outlined policy proposals for how New Zealand might catch up with Australia economically by 2025.  But that was 2008/09, and for a whole country.  At the time, the Taskforce concluded that New Zealand could catch up with Australia over 16 years, with the right set of policies, but it required a fairly major reorientation of policy, across numerous fronts, pretty quickly.

But now there is only 10 years until 2025, and the Wellington City Council (with a bit of help from the Regional Council) wants to make Wellington not just as prosperous as the average Australian city, but more prosperous than any of them.  The Tui billboards spring to mind.  Even one of the more sensible regional councillors agrees the timeframe is unachievable.

In search of any substance behind this ambition, I dug out WREDA’s Statement of Intent.  But there was no substance.  There was:

  • No quantification of any of these goals, or any attempt to illustrate how large the gaps are now.
  • No analysis of the economics of cities.
  • No analysis of the sorts of policy tools that are, and are not, available to local councils, and how much difference they have ever made to regional per capita growth.
  • No analysis (or links to other analysis) of the costs and benefits of the grab-bag of policy ideas they do list.
  • No analysis of what has been done in the past, and what has worked and what has not.

At one level it is just a bureaucractic/political feel-good document.  But these sorts of agendas, together with an ambitious new CEO, tend to become the basis for new council spending proposals –  the commitment of real resources that belong to citizens, with little effective accountability.

I’m all for ambition.  Sadly, I think many of New Zealand’s elites have been too willing to settle for the mediocre economic performance New Zealand has achieved over the last 25 years.  But to the extent that governments can change medium-term economic outcomes, it is mostly central government that matters.  If Wellington is ever the most prosperous city in Australasia, it will be because of choices central government has made, and how the private sector has responded to that improved environment.  Central government controls taxes, most regulation, immigration, education, and so on.  Relative to that list, the difference any council can make is very small – and the track record (sports stadia, street car races, application of land use restrictions, and so on) seems pretty poor.  Of course, central government does lots of crazy stuff too (in a Wellington context, film subsidies), but at least they have the potential to make a lot of difference for the good.

This story, small in itself, is just another reason to be wary of seeing local councils as the solution to problems.  In discussions around housing, for example, some, including the Productivity Commission, have argued that a big part of the problem is councils held back from doing “the right thing” by the lobbying and votes of citizens.  Personally, I reckon that the problem is more likely to be one in which councils pursue their own interests and ideologies with little effective check on those activities by citizens.  Strengthening the property rights of citizens, and reducing what damage councils can do, seems a more promising, and economically efficient, way forward.

In the meantime, perhaps the Wellington City Council could get on with stuff we must actually look to councils to do.  The seawall at Island Bay was badly damaged (photos here) in a storm more than two years ago.  Since then, we’ve had a long consultative process, but there has been no progress in actually fixing it up.  Simple really.  They can do it. It will make a material difference to people living here now.  But instead we get this pie-in-the-sky aspirational stuff, with little or nothing behind it.

4 thoughts on “Richer than Australia by 2025? Really……

  1. Unless they can also change the Wellington weather, they are doomed to fail to make the city “liveable” Michael (just being provocative – spoken like a true ‘naturalized’ Aucklander!).

    But seriously….I despair at the wastage at council level, especially here in Auckland where my rates bill has just gone through the roof.

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  2. So very true, so very sad.

    When I was about 11 or 12, my school appointed me to the Junior City Council of New Plymouth. (Quite what the purpose of this institution was, I don’t recall). The Junior Council was very keen or organising some kind of bus excursion for teenagers up Mt Egmont on a Saturday morning. I reasoned that nobody I knew had any trouble thinking of fun stuff to do on a Saturday rather than go to school, so it wasn’t a problem we needed to solve. Of course I was the only councillor to vote against it.

    Not much changes.

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  3. It looks like the real story is that this is Amalgamation-Lite (TM). WREDA may have been set up in anticipation of getting a green light to put regional amalgamation to a poll. The main arguments in favour of amalgamation from WCC and GWC were mainly on the need to “progress” the region and develop it so WREDA may have been the vehicle for that activity alongside the unified Council.

    The key thing in this arrangement is that it a joint subsidiary of those two councils. It will be constituted as a company with it own board and its only public accountability will be via that Statement of Intent. Amongst its streams of funding will be contributions from both councils. So, not only Wellington City rates but regional council rates (presumably extracted from all four cities and all four districts in the region) will be used tund WREDA projects.

    Take for example a convention centre. You may recall that WCC were proposing to subsidise the estimated losses of such a centre to the tune of $2m p.a. I don’t know what came of the proposal but imagine the same proposal with WREDA in the picture. Once the WREDA Board, in a private meeting with no papers publically available, determines that this loss-maker will be essential for the “prosperity” of the Wellington region it can opt to provide that subsidy itself. At its annual budgeting round it can request more funding from the two owning councils to cover this new expenditure stream. If they both provide it then the residents of Masterton will find they are paying for the Wellington white elephant through their regional council rates. And it will be perfectly legal for this whole process to be almost invisible to the public until it is too late.

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  4. I do now remember the convention centre: we had to waste our money on it because the govt was wasting its money on one in Christchurch and (indirectly, thru the gaming machines deal) in Auckland. I think they couldn’t buy the site they wanted, and I last read of a proposal to put in on one of the wharves.

    Good points about the governance issues.

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