6. Auckland - an Internationally Competitive City
Key Points
- Large, outward-facing, global cities play an increasingly important role in economic development.
- Auckland's gross domestic product (GDP) per capita is lower than all but one of the international benchmark cities chosen, but only slightly so in most cases. However, it is substantially lower than the cities (predominantly large) with the highest GDP per capita.
- Importantly, Auckland is also assessed as offering a high quality of life by international standards, offsetting to some degree its lower GDP per capita.
- Auckland's productivity levels (GDP per worker) are lower than the average of a sample of 78 metropolitan regions in the OECD and below most comparator cities.111
- The difference in productivity between Auckland and New Zealand as a whole - the Auckland "premium" - is in the middle of the comparator cities, suggesting that, in the New Zealand context, Auckland is contributing normally to economic growth.
- Auckland's population growth rate is very high by international standards. This is driven by high levels of inward international migration. Within New Zealand, Auckland has experienced low net population outflow over recent years relative to the region's population.
- With regard to the underlying factors that influence productivity growth, Auckland's performance is mixed:
- Auckland's levels of patent applications per capita are relatively low by international standards, as is its share of the working age population with a tertiary education.
- Auckland City's share of employment in high-tech services and goods manufacturing is broadly in the middle of the international comparator cities.
Introduction
International evidence suggests that large, outward-facing, global cities are playing an increasingly important role in driving economic development.112 113 Successful cities allow greater levels of specialisation, and thicker and deeper markets, attract highly skilled workers, and are centres of innovation and entrepreneurship. They are therefore competitive locations for global and regional company headquarters. The proximity of universities to research and production facilities means cities are often the places where new products are developed and commercialised.
Cities are not automatically synonymous with success, however. OECD analysis shows that cities such as Berlin, Fukuoka, Lille, Naples and Pittsburgh perform below their respective national averages for income, productivity, skills and employment. There is also some evidence that mega-size cities - those with more than 7 million people, such as Seoul, Mexico City, Istanbul and Tokyo - have outgrown the economies of scale normally associated with cities.
Auckland is a relatively small city by international standards. In the New Zealand context, however, Auckland is the only city that has the size necessary to provide the benefits that large cities can offer.114
It is therefore useful to assess the extent to which Auckland is acting as an engine of growth for the New Zealand economy and demonstrates the characteristics of a successful global city - such as high levels of productivity, income, specialisation and skills.
This chapter examines Auckland's performance relative to the other regions of New Zealand and to a small number of international benchmark cities - Brisbane, Melbourne, Adelaide, Seattle, Vancouver and Copenhagen.115 These cities are useful comparators for Auckland as they are mostly similar in size, density and economic make-up. The more successful also provide an example of the sorts of results Auckland could sensibly aspire to. Auckland's relative performance will, in part, influence its ability to compete with other cities for resources (such as skilled workers, businesses and investment).
For the purposes of this chapter, the data provided refers to the greater Auckland area, defined as the area within the Auckland Regional Council boundaries, unless otherwise stated.
6.1 Well-being and Prosperity
Measures of well-being and quality of life provide good overall indicators of city performance.
In terms of quality of living, Auckland compares very favourably with most other metropolitan cities internationally. The Mercer Worldwide Quality of Living Survey ranked Auckland 5th equal out of 215 cities, and higher than all of the comparator cities other than Vancouver. This quality of living indicator is a broad-based composite measure, taking account of 39 factors in the areas of: political and social environment; economic environment; sociocultural environment; medical and health considerations; schools and education; public services and transport; recreation; consumer goods; housing; and the natural environment.
While a high quality of life is not in itself sufficient for Auckland to become increasingly internationally competitive, it suggests that Auckland has a foundation to build on.
Auckland's GDP per capita level is lower than that of five of the six benchmark cities discussed above, the exception being Adelaide. Encouragingly, the size of that gap is relatively small for all those cities other than Seattle. Also, the difference in GDP per capita between Auckland and New Zealand as a whole - the Auckland "premium" - is greater than that of all of the comparator cities (relative to their national averages) other than Seattle.
These income statistics suggest that Auckland is more productive than the rest of New Zealand, but is still slightly underperforming relative to the comparator international cities.
6.2 Immediate Drivers of Income Growth
As noted in Chapter 2, improvements in material living standards can be attributed to increases in either labour utilisation (the number of hours worked per head of population, per year) or labour productivity (the amount of output produced for each unit of paid work).
Auckland's labour productivity (output per worker) is below the average productivity of the sample 78 OECD metropolitan regions and in the middle of comparator cities. Auckland's productivity is similar to that of Tokyo, Madrid and comparator city Vancouver. While Auckland's overall economic performance is comparable with that of a number of mid-range OECD cities, it also appears to have considerable scope for improvement.
Auckland's productivity "premium" relative to New Zealand as a whole is in the middle of the comparator cities (and slightly lower than the OECD average). This data again suggests that, while Auckland's productivity levels are low relative to the comparator cities, it is contributing normally to economic growth within New Zealand.
Auckland has experienced very high rates of population growth over recent years. This has been supported by higher levels of inward international migration compared to other New Zealand regions. Within New Zealand, Auckland has experienced a low net outflow of workers over recent years relative to the city's total population.
6.3 Underlying Determinants of Productivity Growth
International evidence suggests that a number of generic factors underpin most successful and competitive cities.116 In this chapter, we focus on Auckland's performance in the areas of innovation, skilled human capital, connectedness, economic diversity and transport infrastructure.
With regard to the underlying factors that influence productivity growth, Auckland's performance is more mixed. Auckland's levels of patent application per capita are in the middle of the comparator cities but relatively low by international standards. Auckland's share of the working age population with a tertiary education is also low. Turning to knowledge-intensive employment, Auckland City's share of employment in high-tech services and goods manufacturing is broadly in the middle of the international comparator cities.
Connectivity both within and between cities is critically important to urban competitiveness. Connectivity takes many forms, including physical road, rail and air connections; electronic communications; and business networks. The available data suggests that Auckland's broadband access is high compared to Australian states and territories as well as New Zealand regions. However, comparisons were only able to be made at the state level and, since Australian states include a larger proportion of rural areas than does the Auckland region, this suggests that Auckland's broadband access may not be as good in relative terms as the figures suggest.
Road congestion rates in Auckland City is less than the Australian capital city areas. The available data suggests that Auckland's road transportation infrastructure is geared towards peak traffic, and public transport usage in Auckland is relatively low.
Figure 6.1 Ranking of metropolitan regions by income (USD GDP per capita in PPPs), 2002
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Source Demographia, Gross Domestic Product Estimates: Metropolitan Regions, April 2007
6.1 Well-being and Prosperity. Auckland's GDP per capita is below that of most of the comparator cities (Brisbane, Vancouver, Melbourne, Copenhagen and Seattle), but higher than Adelaide. Overall, Auckland's ranking for this indicator is 80th out of 116 countries.117 Auckland's GDP per capita is high relative to other New Zealand regions.118
Figure 6.2 Differences in per capita GDP of metro-regions and their national level, 2002
Source OECD Territorial Reviews: Competitive Cities in the Global Economy, 2006 – OECD metropolitan database
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Auckland's GDP per capita is higher than New Zealand's national GDP per capita. This GDP per capita differential is higher in Auckland than all other comparator cities, other than Seattle (we are 27th out of 78 countries).
Figure 6.3 Quality of living, 2007 (base city: New York = 100)
Source Mercer Human Resource Consulting Worldwide Quality of Living Survey 2007
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Auckland's quality of living has been in the top 5 cities in the world in 2007, 2006 and 2004 (we were 3rd out of 215 countries in 2007). It dropped to 8th in 2005, behind Dusseldorf, Frankfurt and Munich. This indicates that, overall, Auckland offers a good lifestyle with high quality amenities, offsetting to some degree its relatively low GDP per capita.
Figure 6.4 Labour productivity (in thousands, USD)
Source OECD Territorial Reviews: Competitive Cities in the Global Economy, 2006 – OECD metropolitan database
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6.2 Immediate Drivers of Productivity Growth. Auckland's labour productivity is lower than the OECD average of a sample of metropolitan regions, and all of the comparator cities other than Vancouver (we are 54th out of 78 countries).
Figure 6.5 Productivity differences between metro-regions and their national level, 2002
Source OECD Territorial Reviews: Competitive Cities in the Global Economy, 2006 – OECD metropolitan database
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Auckland has higher labour productivity compared with other New Zealand regions 119 120 and the New Zealand national average. Internationally, Auckland's productivity relative to the national average is about equal to the OECD average, and in the middle of the comparator cities (we are 38th out of 78 countries).
Figure 6.6 Employment rate of OECD metropolitan regions
Source OECD Territorial Reviews: Competitive Cities in the Global Economy, 2006
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Auckland's employment rate is the 3rd highest in this sample of OECD metropolitan regions. As at March 2006, approximately 638,600 people were employed, and the unemployment rate was 3.6 per cent, slightly below the national average of 3.7 per cent.
Figure 6.7 Annual average population growth rate (sample of metropolitan regions and New Zealand average)
Source Eurostat, 2000–2005 and 2000–2004, General and regional statistics: Demographic statistics; Statistics New Zealand, 2007, Demographic Trends 2006; Australian Bureau of Statistics, 2006, Regional population growth; Statistics Canada 2002–2006, Community profiles; US Census Bureau, 2001–2006; Annual Population Estimates and Estimated Components of Population Change for the United States and States: April 1, 2000 to July 1, 2006; Japan Statistics Bureau, Population of major cities, 2001–2006
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Auckland had the highest average annual population growth rate of this sample of metropolitan regions, at 2.4 per cent. Other Australasian city regions also exhibit relatively high growth rates.
Figure 6.8 Net permanent and long-term migration from overseas, 2006
Source Statistics New Zealand, Tourism and migration 2006
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For the year ended December 2006, the Auckland region had the highest rate of international net permanent and long-term migration of all the New Zealand regions.
Figure 6.9 Proportion of population moving into and out of New Zealand regions, 2001-2006
Source Statistics New Zealand, Census 2006, QuickStats about population mobility
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Auckland had the lowest proportion of population of any New Zealand region moving out of the region. However in absolute terms Auckland had the highest net loss of people moving out of the region between 2001 and 2006.
Figure 6.10 Patent applications per capita
Source OECD Regions at a Glance, 2005; Statlink; Intellectual Property Office of New Zealand, Customised data, 2007
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6.3 Underlying Determinants of Productivity Growth. Auckland is near the lower end of metropolitan regions on number of patent applications filed per capita, with the standout being Tokyo. Auckland had more patent applications filed than other New Zealand regions and was in the middle of comparator cities.
Figure 6.11 Share of population of 15 years and more with tertiary education
Source OECD Regions at a Glance, 2005; Statlink
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Compared with other cities around the world and all but one of the comparator cities, Auckland has a low share of the population with a tertiary education. Despite this, in 2006, Auckland ranked 2nd highest nationally at 17.7 per cent of the population with qualifications at bachelor's degree level or above.121
Figure 6.12 Employment in medium- and high-tech manufactured goods
Source Statistics New Zealand, Number of employed persons by 6-digit industry, 2001; Australian Bureau of Statistics, Number of employed persons by 6-digit occupation, 2001; European Commission, 2003 European Innovation Scoreboard: Technical paper No 3
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Auckland City 122 has higher levels of employment than some Australian and European cities, and the comparator cities in medium and high-tech manufactured goods. However, that city has relatively low levels of employment in these areas by international standards.
Figure 6.13 Employment in knowledge-intensive high-tech services
Source Statistics New Zealand, Number of employed persons by 6-digit industry, 2001; Australian Bureau of Statistics, Number of employed persons by 6-digit occupation, 2001; European Commission, 2003 European Innovation Scoreboard: Technical paper No 3 – Regional innovation performances, Annex Table C
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Auckland City's levels of employment in knowledge-intensive high-tech services (as opposed to goods) is slightly below the median of the comparator cities.
Figure 6.14 Households with access to broadband in Australia and New Zealand, 2005-2006
Source Statistics New Zealand, Household Use of ICT Survey 2006; Australian Bureau of Statistics, Household use of Information Technology, Australia, 2005–06
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Percentage of access to broadband at home is high in Auckland compared with Australian states and territories and New Zealand regions. Some Australian states include a larger proportion of rural areas than the Auckland region, which suggests that Auckland's broadband access may not be as good in relative terms as the figures suggest. In New Zealand, Auckland has the highest access at 43.1 per cent. This does not indicate the quality of broadband or cost effectiveness, which are generally recognised as poor in New Zealand.123
Figure 6.15 Congestion in Australian capital city areas and New Zealand urban areas
Source Austroads National Performance Indicators charts and tables 2004/05; Transit New Zealand: Travel time indicator report, November 2005
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Compared with most Australian capital city areas, Auckland City 124 has fewer travel delays. Auckland has a shorter off-peak delay than all capital city areas.
Figure 6.16 Urban population vs public transport trips per capita per annum
Source Auckland Regional Transport Authority, Public transport procurement legislation review consultation document, May 2006, page 19
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Auckland's public transport patronage is low relative to the comparator cities. Public transport trips in Auckland have declined from approximately 100 trips per capita per annum in 1963 to the current level of 40.125
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