Wellington: not doing amazing things

This rather saccharine picture turned up in my lettterbox yesterday on the back of a publicity (for the mayor and councillors) pamphlet from the Wellington City Council.

WCC

The picture was actually part of an advert for the coming local body elections, but I thought it quite nicely encapsulated what is wrong with the mindset of so much of local government, including the Wellington City Council.

Many people would settle for local government doing the basics well. In Wellington, we are living with the ongoing disaster that is the new bus schedules and bus contracts.  It should really be pretty basic stuff – not as if running or contracting bus services is a new activity for local government – but they can’t even manage that.   That particular failure is the responsibility of the Wellington Regional Council (and you have wonder whether any sitting councillors will be re-elected in October).

What of the Wellington City Council?  In a post a couple of months ago, I noted a little example of ongoing incompetence –  the month it took, after several reports, to get them to fix a water leak in the middle of the road at the end of a quiet no-exit street, defended by a council officer on the grounds that they had needed to put in place a “traffic management plan”.

That’s a small item, and perhaps my experience was unrepresentative. A bigger example was the debacle of the Island Bay cycleway: never mind that it wasn’t wanted by residents, and is now facing a multi-million do-over (and a court case for judicial review): it was an “amazing thing” championed by the Mayor and his colleages.

But there are plenty of really big items too –  both actual failures, and grand schemes (“amazing things” probably) that typically involves plans to spend tens of millions of dollars of ratepayers’ money with little serious scrutiny and evaluation.   The biggest failure of course is house and urban prices: not as bad as Auckland, but certainly getting up there.  Buying a house in Wellington city in your 20s –  the sort of thing that was a normal expectation just a few decades ago –  is quite out of the reach of any average earner now.  And whatever overarching failures of central government in permitting this, the actual choices around land use regulation are made by local governments.  High house and urban land prices in Wellington City are almost totally the responsibility of the Wellington City Council.  An “amazing thing” no doubt.

Then, of course, there are the schemes championed by the Mayor to spend lots of money on a Wellington airport runway extension, even though the owners of the airport don’t regard such an extension as economically viable for them. At present, that one is tied up in courts, but it is another “amazing thing” they are keen on.  Or the planned convention centre?   A mere bagatelle at $180 million, and never a reasonable explanation for why –  if this was such a good idea –  no one in the private sector was rushing to build it.   Or the ever-escalating cost of fixing Wellington’s Town Hall (well over $100m and rising).  Another “amazing thing”?

And this week, residents suddenly found that the Central Library has been closed down indefinitely.  I’m a bit of a sceptic on public libraries, but my kids (and many other people) use them a lot.  According to the mayor, it wasn’t a legal obligation to close the building –  a new seismic report –  but a “moral obligation”.  No hint as to when library might re-open, let alone of the cost of fixing this council-owned building.   Too bad about the lost revenue (the closure meant closing down yet another car park), or the people who will lose their jobs (from the cafe inside the library –  the public servants are protected).   Like so many councils, Wellington can’t get the basics right but is only to happy to burble on about doing “amazing things”.

Okay, so that was the rant bit of this post.  I had been planning anyway to follow up on my brief reference to Wellington’s (greater Wellington this time) economic performance in my post the other day on regional GDP.   Over the period for which we have data (starting in the year to March 2000), Wellington has had the slowest growth in average per capita GDP of any region in the country.   I might almost have expected that if the starting point had been 1980 –  before the economic liberalisation that (a) slimmed down central government, and (b) meant many few companies were motivated to have head offices in Wellington.    From a starting point of 2000 –  and being anything but a Wellington booster – I was more surprised.

Of course, it is only fair to point out that average per capita GDP in Wellington is the highest of any region in New Zealand (Taranaki was higher for several years after 2007, after new oil production came on stream but it dropped back to second a few years ago now.)

wgtn GDP pc

For the last 10 years, Wellington has grown only a touch more slowly than the nation as a whole, but none of the lost ground has been recovered.   (Recessions tend to be relatively good for Wellington, as the public sector lays off staff –  or stops hiring –  much more slowly than the private sector.)

There are various reasons why Wellington’s average GDP per capita might be higher than that in the rest of the country.  One factor is that the share of the working age population employed is higher here (70.1 per cent last year in Wellington, 67.7 per cent in the country as a whole).   Some of that –  but not much –  is because Wellington has a smaller than average share of population aged 65 and over (13.2 per cent in 2013, vs 14.4 per cent nationally).  Wellington also has a slightly smaller (than average) share of the population in the under-15 age group.  So there is something –  but perhaps not much –  to the old story about Wellington that it was where young people came, but as many as possible later left.

I suspect that the biggest part of the story  –  say, why average per capita GDP in Wellington is materially higher than in (similar population) Christchurch – is simply that Wellington is “dominated” by head office functions of the biggest entity in the country, government.   “Public administration, defence, and safety” makes up about 4.5 per cent GDP nationwide, and 10.4 per cent in Wellington, and the overwhelming bulk of the well-paying jobs in that sector will be in Wellington head offices.   And it isn’t just activities that are captured in that “public administration etc” component of production GDP.  Like any head office (or, in case, system of head offices) there is a myriad of specialist functions – in private sector services businesses –  that are in Wellington because the public sector head offices are here (consultants, lawyers, lobbyists etc).

(You can have arguments, if you like, about whether these public servants etc are in some sense overpaid –  which, if true, would also inflate Wellington’s nominal GDP.  Since I was a head office public sector functionary for decades and my wife is a senior public servant now I’m not even going to try to offer a detached perspective on that one.)

Of course, no city of 400000+ people is ever just about one industry, even indirectly so.   As I noted in the earlier post, there is lots of hype at times about the Wellington tech sector, the Wellington film sector etc  I’ve written previously about the film and related industry, which may well have a range of high-paying jobs, but is –  on their own telling –  totally reliant on central government subsidies for their survival here.  The presence of that industry isn’t a sign of a city/region with an economy on a robust long-term footing.

In the regional GDP release, SNZ includes tables showing a breakdown by sector of each region’s GDP (although with another year’s lag, so the new data in that area are for the year to March 2017).    I showed a chart the other day on the share of the “information, media and telecommunications” sector component of Wellington GDP.   Here is a slightly revised version of that chart (this time as share of the total GDP of all industries, without the GST etc correction). I’ve also shown the share for public administration etc.

wgtn GDP 2

Without further digging it is nothing more than correlation, but do note that Wellington’s greatest relative regional decline (see previous chart) was over the period when the share of public administration etc was rising quite strongly.

There has been a decline in the nationwide share of GDP accounted for in that “Information etc” category, but it is nothing like the magnitude of the fall experienced in Wellington.   That’s a relative decline.   (The regional numbers include “other services” under that same heading, but nationwide – where a more-detailed breakdown is available –  the share of “other services” has changed little over the period since 2000.

Perhaps all the good and exciting Wellington tech stuff is lurking under other headings?  Glancing through the table the only obvious other category is “Professional, scientific and technical services”.   But even add them together with the “Information etc” category and you still get a significant drop in the combined sector’s share of Wellington GDP (albeit in the first half of the period, the combined share has been fairly flat for the last decade).

And which sectors have grown strongly in Wellington since 2000?  The three fastest growing sectors were  –  in first place –  “rental, hiring and real estate services”  (a corollary of the decline in owner-occupancy rates?), and then “electricity, gas, water, and waste”, and “food and beverage services”.   It reminded of a recent conversation with someone who immigrated to New Zealand a few years ago and holds a high level head office job, and who really really loves Wellington.  When I pushed him on why, a lot seemed to come down to the coffee.  Nothing wrong with that I suppose, but hardly a successful outward-focused economy.

There aren’t really any policy lessons I want to draw from these data.  In fact, the worst thing I could imagine would be the Wellington City Council –  and its peers in the rest of the region –  deciding they needed to “do something”, flinging more money at more wasteful proposals or the so-called economic development agency.  Of course, they could –  and should –  fix up the housing and urban land market, and that might actually do a little¹ to boost the attractiveness of Wellington, boost average productivity, and do something to reverse the relative income decline.  But there is less than no chance of such sensible policy emerging from the Wellington City Council –  they’d rather carry on with their version of “amazing things”.  Wellingtonians live with the results –  and (in fairness to the the mayor and council) I fully expect my fellow citizens to re-elect the cheerleading incumbents come October.   Just as New Zealanders keep electing governments that preside over our ongoing economic decline relative to the rest of the advanced world.

  1.  I had an exchange with a reader in the comments section of Wednesday’s post as to why I’m not persuaded that the best housing (and transport) policies in the world would make much difference in closing the nationwide gaping productivity gaps.  Perhaps if Wellington alone were to fix these things, it might make more difference. But location is, powerfully, against us.

 

21 thoughts on “Wellington: not doing amazing things

      • I think Auckland is fortunate to have Phil Goff. Without him to spell out the real facts about Auckland’s infrastructure requirements of $30 billion to enable the sort of building activity that Phil Twyford lied that the Labour government would undertake, we would still have more of the same lies that got us this very corrupt Labour/Greens/NZFirst government.

        At least now we have a more sensible approach, ie where is the $30 billion infrastructure spend going to come from to enable the 10,000 a year Kiwibuild on top of what the private sector is doing and do we import more builders?

        Like

  1. Interesting viewpoints Michael and thanks for mentioning our Wednesday’s discussion about implementing some best practice/evidence based approaches to transport and land use for our urban areas -Wellington in particular which is suffering terribly from rampant rental inflation. Even if you think there is a less than no chance of them ever being implemented. Pessimist 😉
    https://croakingcassandra.com/2019/03/20/looking-at-the-regional-gdp-numbers/

    Although I don’t agree with your exact policy prescription for local government Michael I do think the proclivity of local government politicians to seek out subsidies for various grand schemes is a problem.

    I advocate for integrated housing and rapid transit as a solution for our urbanisation woes -in particular the housing crisis and chronic traffic congestion. One of the principles of my advocacy is that the housing growth pays for its own infrastructure -including its rapid transit infrastructure.

    There is plenty of evidence this is doable -Japan manages it.
    View at Medium.com

    My proposed Wellington housing and rapid transit scheme could do it
    View at Medium.com

    Christchurch could do it.
    View at Medium.com

    Liked by 2 people

    • Japan also manages its 5 million dementia patients on a ratio of 1 nurse to 90 patients using high tech tools like nylon ties to beds and sedatives administered to patients liberally. It reduces the need for younger help care migrants. Doubt our Bill of Rights would allow that sort of high tech savagery.

      Like

  2. “”I’m a bit of a sceptic on public libraries””. Two ways of interpreting that statement (a) an unfortunate decline in library usage is inevitable since the introduction of reading online. (b) The author is an idiot who should listen to his kids.

    It has just crossed my mind that for an atheist the public library is my equivalent of a church.

    Like

    • I’m puzzled by your final sentence? What do you mean by it?

      On the first para, there are multiple ways to respond. My main one is to note that I have no problem at all with libraries – which seem a perfectly rational response to issues around (a) storage, (b) cost, and (c) lack of desire often to reread. But I wonder why user pays shouldn’t be the predominant approach – as it is for Netflix, or newspapers, or even food and housing. My daughter tells me she has read about 130 books so far this year (i’m only up to 25) and so I’d perfectly happily pay a subscription fee to have her use a library (on top of the school library and our home library). One can argue that books are some sort of merit good – we believe it is good for others if they have access to them – but, actually, food and housing are even more so, and mostly we respond to issues in those markets with income support.

      My impression is – and happy to be proved wrong – is that educated middle classes and their kids are by far the biggest users of libraries (and yet everyone pays the cost). Actually, as an example of this – and heading back to your church point – when I was doing part-time theology study with long reading lists they pointed out to us that Wgtn Public Library was often happy to buy books people suggested (and often didn’t know what to buy in specialist areas). I didn’t avail myself of that option – I like to keep books and to underline them – but it did strike me as strange that someone on my income should be asking ratepayers generally to cover the cost of books I might be one of the few to use.

      Like

      • I take it from what you say that you are not a big user of your local library. I am a frequent user of our central library service, mainly for books. But they have a huge DVD collection of historical stuff. Haven’t used that section myself.

        But from my observations during my visits there, the biggest users would be back-packers and tourists doing it on the cheap, mainly to re-charge their digital devices and napping on the bench seats along the outside walls

        Like

      • Well without a belief in a supreme being I guess I do believe in rationality and knowledge. A public library provides a social space for both. I am cheered up when I pass a library even if I don’t enter it. It is a symbol of my beliefs.

        Your economic argument is difficult to refute. Why doesn’t the taxpayer provide betting shops and off-licenses? However I still approve of libraries so I will have to rustle up a supporting argument. I suspect there is a correlation between quality of libraries and economic success. But before you pursue that I will admit Auckland has the best public library service I’ve ever encountered and we concur that Auckland is a significant economic under-performer.

        If we only read books we purchased we would be less adventurous and I would have missed Bellos’s “Is that a fish in your ear”.

        Like

      • Actually quite a large proportion of the books I read are ones i’ve bought at wgtn library sales! And only this week i’ve been reading – and strongly disagreeing with the second half – that latter day “religious” (secular humanism) text, Pinker’s Enlightenment Now (spent real money buying it too).

        Sadly, people not interested in challenging themselves will manage to do so whatever info/ entertainment options they use!

        Like

      • Enjoyed Pinker’s previous book “The Better Angels of Our Nature: Why Violence Has Declined” and had assumed “Enlightenment Now” was a rewrite. I do not share his optimism but do enjoy the way he writes – whenever I am mentally building a decent objection his next chapter destroys it. He did the same with another book that I’d never have risked buying “Words and Rules: The Ingredients of Language”.

        A second plug for “Is That a Fish in Your Ear? Translation and the Meaning of Everything” by David Bellos.

        As I get older I find long books however good something of an ordeal.

        Like

      • PInker’s latest is much more all-encompassing (progress on every conceivable front – except those he doesn’t deal with).

        You prompted me to look up Bellos. Does look interesting.

        Like

      • I can compare modern western life with the nuclear families of my youth and with my wife’s PNG village society. If he is arguing progress on every front how does he explain this: https://www.tvnz.co.nz/one-news/new-zealand/child-6-getting-support-after-trying-seriously-self-harm-school

        Harari’s book Sapiens made a convincing case that progress for the human species did not necessarily mean progress for individual humans. After the invention of farming the population increased maybe a hundred fold but humans lived shorter more brutal lives of repetitive work and a boring diet. Extrapolating the social credit systems currently being developed in China (but also underlying Uber, AirBnB, etc) leads to a horrific distopian future.

        Like

      • If I recall rightly, I think the suggestion was that the long-term trend for suicide (and related self-harm) was downwards. In fact, checking he has a chart (altho only for 100+ years) suggesting such a fall in England and Switzerland, altho not really in the US).

        Like

      • There are two important things about libraries:

        1) As a literary repository and reference access point it has value in simply being there for when you might want to use it, even if you don’t. Reading and reference services can be provided now on-line for many and as an on-line reader I don’t read physical books or magazines much now, but many do, and so need a local place of access. Some books are still only available in hard copy.

        2) libraries have naturally become more of a community meeting place and facility. Reading sessions, music or art classes etc., for mothers, babies or children – and others – internet access and a “quiet space”, a pick-up place for interloan books, all encourage community use. For many in the community they have replaced the traditional church. Libraries are non-denominational, people of all walks can use them and what better place to gather or visit than a place surrounded by stories – narratives that people have always used to help define themselves.

        For pricing, I support user pays, but for convenience local community users can agree to pay a rate or subscription to have access (both on-line and a library place) in their community. Casual [outside the community] users (for internet or services) should pay for access. For cross-community use, subscriptions for access should be voluntary, not included in rates.

        Liked by 1 person

      • As I noted to Bob, I have no problem with the existence of libraries and agree there is a role. On the “hard copy only” point I’m amazed how many older books libraries junk (and, to some extent, grateful, since I buy many both locally and – more specialist stuff – abroad).

        As I noted to Bob, I was quite surprised to hear that line about libraries replacing churches. Seems odd to me – including because our local branch library is very small – but I guess I’m from another culture (in that respect).

        I’d agree with the idea of a subscription model – as, say, Netflix – and it might even be sensible for different localities to have reciprocal use arrangements.

        Like

      • “”If I recall rightly, I think the suggestion was that the long-term trend for suicide (and related self-harm) was downwards.””.
        Hypothesis: replacing face to face human communication when discussing deeply held beliefs, feelings and emotions with screen time is not good for mental health. That downward trend over a century is being rapidly reversed over a decade.
        At the last election Labour and specifically Jacinda emphasized increased spending on mental health support. A worthy spending of our taxes. However the argument was based on figures that mental health problems had doubled in the last decade. Why it has doubled was never discussed. It could be the internet or immigrants being alientated or Kiwis moving from rural to urban being alienated or a society less tolerant of other people being ‘different’ or something else (contaminated water, lead in paint, etc).
        I guess I will have to read the book but I it will take a lot of persuasion to turn me into Pollyanna.

        Like

  3. The local government sector consists of … 78 councils and have about 1600 elected members and employ around 30,000 staff. Roughly this means there is one person on the public sector payroll as an elected member or employee for every 160 people in NZ.

    This is a huge overhead for what are mainly duplicated services.that could be centralised. Inevitably it is the local elites who are elected to these bodies and those employed by them rely on the elected members for their promotions and pay rises. No wonder we see so many strange planning decisions. Indeed no ordinary citizen can afford to employ a planner or valuer or engineer or lawyer or any of the other specialists feeding of the RMA never mind challenge their local council in the environment court.

    The complete local body sector should be scrapped. For those who scream about local representation and democracy – try being a rate payer disagreeing with the council and see how democratic the system is.

    Liked by 1 person

    • I prefer local democracy and it does keep our local elites busy but you do have a point. Auckland councils seem to have spent more money on lawyers defending leak homes claims than would have fixed the repairs if tackled early.

      Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s