Some super-sized city issues

I have lived in Auckland all my life, and have travelled NZ extensively. Auckland is in my mind the most disorganised dysfunctional, fractionated and worst presented major city in NZ bar none.

Despite all of that it is still the place where things happen, and despite the loathing of Aucklanders by the rest of NZ, Aucklanders are among the most enterprising of NZers.

All the other great cities of NZ have just one council and one administrative structure, and when you visit these towns it is obvious. Now Rotorua for example has issues, but the structure of the town is worth noting. Well laid out streets, clean, well presented good parks and amenities, Auckland would be proud to have its aquatic centre, sure it can't help the smell

So there is no doubt Auckland needs one governance and administrative structure. The wanton waste of multiple structures is the dead weight its citizens carry and the lack of a common integrated development plan is obvious as you travel through Auckland and try to find its heart.

The CBD of Auckland is a disgrace. Queen Street, where I work, nicely re cobbled is still a waste land.  All banks and offices, the only retail excuse to come into Auckland is Smith and Caugheys, and you can avoid that by going to their store in Newmarket.

Parking is prohibitive, and the public transport to get into town for a park and ride visit to Auckland is totally inadequate. Britomart is a white elephant as is the rail service.

Takapuna and Newmarket are better retail experiences, and commercial activity is spread between Auckland Manukau Takapuna and Albany, with yet more in Henderson.

Industrial pockets are scattered over the region. Penrose, Mount Wellington, Wiri  Mount Roskill, the airport and other areas. No critical mass.

The population is spread over a geographical region the size of Israel and we wonder why every household on average has two cars and is continuously driving them back and forth across a city 100 kilometres long and 50 kilometres wide.

The people of Auckland actually like it this way, they like the space.

They so far are not flocking to intensive housing options, they still like their bit of land and they accept the issues of Auckland as the cost of living in NZ's biggest city.

There are some real major hidden costs. Pumping sewage, storm water, and water over such large distances to such - in global terms sparsely populated urban areas - comes with huge logistics costs.

Likewise power and gas, and likewise rubbish removal. If we packed Auckland's people into an area one quarter the size, the cost of living in Auckland would be considerably less, and we would have better public transport - but likely the current inhabitants of Auckland would not want to live here any longer.

While it is a Wellington initiative to direct that Auckland be super-sized, Aucklanders should grab it with both hands. But there are some serious inequities that will arise, which I don't think the pollies have thought about yet.

And since we have now put local bodies on the political agenda perhaps we should think about the real fundamental issue that we have not had a serious debate on for a very long time. How we fund the things we want in our community. In any event we will have to do this on formation of the new super city as each of the existing incumbents has differing funding models.

The first issue is financial equity. Each of the cities is run differently, some have legacy issues, for example Auckland's $600 million deferred fix for waste water and sewage. Others have managed their balance sheets to effectively tax the current tax base and avoid debt, and others have chosen to finance themselves with lower taxation and higher debt. Others have even retained investments and increased rates to do so - for example the idiots in Manukau where I live. They have kept Auckland Airport shares and have rated their population proportionally higher than most of the other councils.

All of these idiots have built there own little empires, building stadiums and opening parks in the honour of past civic leaders and these assets - if indeed they are assets - have been paid for by the local citizens. All these factors need to be weighed up. What we may well find is that some councils have better balance sheets than others and less legacy issues.

Auckland City has also taken on board the costs of the art gallery, the two museums and the zoo. Its citizens have paid for these for generations and they are regional assets. They should be compensated for this as part of the wash-up. I am an Auckland city ratepayer. and have never had the right to vote.

So, as part of this roll together, each council should have a pre-merger balance sheet prepared, calculating the amount of equity per rate payer. From this a deduction should be made for obvious relative legacy issues, and a net worth per rate payer should be calculated. If one community has a higher equity than another the ratepayers with the higher equity should be compensated.

Now here is an interesting fiscal stimulus idea. Lets say Manukau has $1000 per rate payer more equity than the poorest city, and let's assume Auckland is the poorest city. Then everyone in greater Auckland  other than Auckland ratepayers gets a cheque for Christmas 2010, funded by the issue of a debt instrument that is absorbed by the greater Auckland community.

Now, how should services be paid for and how should this debt be repaid - for example,  how should taxes be collected?

Historically local bodies have collected taxes by taxing land or land and improvements values. The logic for this is that nice amenities are of value to the owners of property and this is clearly a truism. Nice parks and roads will result in people wanting to live in an area and it is good for property prices. But it is also true that the people who live in an area enjoy these things too and get the most utility from the services provided. The rationale for taxing assets was compelling when we were overwhelmingly a home owning society. We are no longer that, we are becoming a predominantly tenant society.

The proponents for land taxing would argue that ultimately the people in the areas pay the tax anyway by way of rent or by way of the price they pay businesses for goods and services. Quite simply, business operates in a competitive environment, and rents are set in the market without reference to costs. So, this argument is theoretical nonsense.

Land is taxed because it is easy to collect, and secure, taxing people is hard to do and hard to collect. Whenever flat poll taxes have been introduced, councils are thrown out. It is simple really. People vote, businesses and absentee land owners do not, and big land holders who pay lots of rates only get one vote. As I have said before when all get to vote the poor will always vote to tax the rich, but not themselves, and perhaps this is equitable.

In other countries, local bodies have larger functions than ours do. We have local health boards maybe these need to be rolled into councils nationally. We have state housing and council housing. Maybe state housing assets need to be transferred and administered locally too. We have local school boards, maybe these need to be run by local bodies, and then we need to work out how to fund all this increased activity from decentralised activities. In other countries central government funds local bodies by revenue-sharing the central government taxes raised in each area. Should we consider doing this too, and while we are deleting all of Auckland's quangos have a good go and getting rid of central government duplication in local matters?

There is a compelling case to be made to tax the citizens who live in an area for some of the costs of the services provided directly - a poll tax. The way to do this is for central government to impose a tax on all individual, taxpayers of say $500 per annum, collect it as part of the PAYE system and the provisional tax system and pass it across to the local bodies monthly. This deals with the collection issue. Councils then do a budget and raise the balance by way of a tax on land or land and improvement values as previously. Logically this would be a set rate per ratable dollar so the more valuable your property the more you pay none of this flattening out. The rate for homes and businesses could arguably be different as the home occupiers have already paid a rate, so differentials between different land zonings should be considered.

Now the final issue for a super-sized Auckland. The rural areas of Waitakere  North shore Rodney Manukau and Franklin will have no community of interest with a Queen street based council. These areas should be divided off and transferred to the nearest rural local body, thus expanding those local bodies as well and giving them economies of scale.

Now what about the ARC? It should roll into the super council. But what do you do with regional parks outside the city limit? Where do they go? They should be transferred to DoC as Auckland's regional parks are actually national treasures, and should be paid for by the whole country, provided of course that as a result of such parks finding there way into Crown ownership they don't in turn find there way into Maori ownership.

There are many issues to think about in rolling this thing together and there is a compelling case for expanding the brief.