[This is a repost]
All Kiwis have an interest in the economic success of Auckland. For those living here, the reasons are obvious. But even staunch mainlanders, who know in their bones that Auckland sucks, would get more of that wonderful solitude if more of its residents were attracted north by better prospects. So lets assume it’s a common goal. How do we get there?
Many trees have died to produce the reams of reports and submissions addressing this question over the years Mostly it comes back to the same basic prescription: create an environment that attracts highly skilled workers and entrepreneurs. But its much less clear how that should be done.
Agglomeration has become pivotal to this question, mainly because there is empirical evidence that productivity is higher in densely populated areas. So there is now something of a (publicly funded) industry investigating this stuff (example, example, example), and transport infrastructure projects that push people together can get extra points (pdf) in the battle for funding. Even the Royal Commission tipped its hat to agglomeration.
While I am fully on board the productivity express, I have severe reservations over the policy implications that might emerge from the agglomeration industry. To me, the public money being poured into this industry has the look of an ex-post rationalisation of the ‘compact urban form’ notions that have dominated planning documents in Auckland for at least the last decade. Agglomeration is mentioned in passing just once in the regional growth strategy (1999) that underpins regional land-use policy.
Auckland has pursued a compact urban form by preventing development beyond the metropolitan urban limit (MUL), in the hope that doing so will force intensification along corridors and in centres. That outcome would economise on infrastructure and make public transport more viable. But what about the costs: congestion, higher land prices, shortages of industrial land? Are we ever going to have a serious debate about this?
Agglomeration is a by-product of urbanisation, not a reason to force it. Apart from anything else, the productivity benefits are modest and linked to the population of cities more closely than population density of cities. The literature suggests that doubling the population of Auckland would increase productivity by between 3% and 8%. Not huge, and not obvious how much the MUL will influence the outcome.