Economic and Labour Market Update - December 2009
1. Introduction
The signs of economic recovery remain uncontested, yet certainty has not returned, and the shocks of the 2009 year are still resonating.
Recently released household income data indicates that many Auckland households have been affected by the recession, with the region experiencing a slight reduction in average annual household income in 2009. While this may represent a rebalancing, or equalisation, across the regions, it is of some concern given that households in the Auckland region spend a higher proportion of their income on housing costs than households in other regions. | |
This sense of region or place was discussed at length in a number of seminars which were delivered in Auckland in the last month. Such considerations of spatial dynamics within the economic discipline is timely, given the current redesign of local government into the new unitary Auckland Council, and the opportunities for crafting better space/place based policies that this provides. |
2. Household Economic Survey (Income)
An update for the triennial Household Economic Survey (income) was released in the last month by Statistics New Zealand. Although not as comprehensive as the main survey (last completed for June 2007),
This update provides figures for annual average household incomes and annual average housing costs. Auckland has had higher average annual household income than other regions over the last few years, but for the year ended June 2009, Auckland was the only region to show a decrease in average household income, from $90,178 in the year ended June 2008 to $89,990 in June 2009.1 The average annual household income for Wellington ($91,827) surpassed that of Auckland ($89, 990), as evident in Table 1. Both figures are above the New Zealand average of $78,876 however. | |
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Auckland has higher relative housing costs than other regions, despite the annual average housing costs having decreased in Auckland from $15,546 in 2008 to $14,704 in the year ended June 2009. This is also against a marginal increase nationally. Auckland households spent on average 16.3% of their income on housing costs in the year to June 2009, down from 17.2% in 2008, and also lower than the 2007 figure. This is still above the national average of 15.3% in 2009 (Table 2). | |
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3. Building Consents Data
Figures for October's residential building consents (including apartments) issued showed a seasonally adjusted increase of 12% for the entire country, over the previous year.
| In Auckland, consents for 304 residential units were issued in October 2009, up by 38% from the figure for October 2008, but down from the 443 issued in September. As can be seen in Table 3 below, Auckland city had the greatest number of consents issued over the last twelve months. | |
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| The value of residential consents issued in October was $84m in the Auckland region - or 17% of the $481m for the whole country. The value of non-residential building consents issued was $48m, in the Auckland region, out of a total of $329m nationally. | |
| There has been pick-up in the housing market. Quotable Value Limited (QV) report that property values in the Auckland region increased by 3.1% over the past year (calculated over the three months ending November 2009 in comparison to the same period last year), an improvement on the 2.5% annual growth reported in October. This is also above the national increase of 1% from the same time last year. The average sale price for the Auckland region increased from $506,642 to $519,051 in November.2 |
4. Recent Publications
Statistics New Zealand and Lincoln University have recently released a report on ‘Sustainable Development and Cultural Capital.3 There is a trend internationally to create frameworks of sustainable development indicators. Given that the Local Government Act 2002 has four well-beings - with cultural well-being included alongside the more conventional economic, social and environmental - this publication is a welcome contribution to the framework for valuation of culture, cultural capital and how it should be measured.
This report adopts a network approach to cultural capital, exploring embodied cultural values and skills. It is of particular importance to the Auckland region, where there is a rich diversity of cultures and ethnicities. Furthermore the ethnic mix is predicted to change in Auckland in the future, and by 2021:4 - the Pacific Island population may grow by 43.8% | |
The Auckland region has a rich cultural resource, which can be harnessed as other forms of capital. There are many different types of culture within the Auckland region, including indigenous, evolving and newly imported culture through recent migrants. |
5. Economic Seminars - the importance of ‘space'
In late November, Prof. Duncan McLennan gave a seminar on ‘The Significance of Place in Planning' as part of the Auckland Regional Council's ‘Refresh' seminar series, in which he advocated the (re)integration of place into the economic discipline. He argued that economics becomes reductionist by abstracting or omitting space and place, with its focus on sectors. Modern economies, as complex adaptive spatial systems, shape and are shaped by major economic, social and environmental outcomes. He explored the role of place and neighbourhood in shaping competitiveness, environmental quality and social cohesion, and described an optimal system or "new choreographies of joining up places in different ways" within the economic discipline.
Also in November, Prof. Philip McCann delivered a seminar entitled "Economic Geography, Globalisation and New Zealand's productivity paradox", as part of Motu's public policy series.5 He also focused on place, and his basic premise was that New Zealand's productivity paradox is due to economic geography and transaction costs of distance, noting that while New Zealand was a textbook example of desirable institutional structures, countries that are deemed as having poorer institutions fare better, due to proximity to markets. He argued that the globalisation debate, as ensconced in Thomas Friedman's 'The World is Flat' thesis - that is, it's a ‘levelling' of the economic playing field - is incorrect. The world is becoming more unequal, and economic activity is increasingly localised, primarily due to the growing importance of cities. More than half of the world's population now live in cities, enabling agglomeration economies. Cities can shape the spatial distribution of activity and thus productivity. He noted that research also shows that the cost of knowledge-intensive activities rise across geographical space, as their complexity increases the need for face-to-face interaction, primarily to build trust.
Both speakers reinforced the central importance of place and space within economic theory, and reinforce notions that markets exist in real space and time. They can not, nor should not, be abstracted from the places where they operate, the people who form them and the resources upon which they are based.
By Dr. Catherine Murray
1. Results at the regional level should be treated with some caution as the HES is based on a relatively small sample.2. http://www.qv.co.nz/
3. Dalziel, P. & Saunders, C. with Fyfe, R. and Newton, B. (2009). Sustainable Development and Cultural Capital, Official Statistics Research Series 6. Available from http://www.statisphere.govt.nz/official-statisticsresearch/series/default.htm
4. Auckland Regional Council (2008) Economic Futures for the Auckland Region: Part 1 Knowledge Base for scenarios development. December 2008
5. http://www.motu.org.nz/
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