A Look at Auckland

NZ Herald Running Pieces on Auckland

 

The NZ Herald is running some separate pieces on Auckland today ranging from; the cruise ship terminal to Council Assets.

Lets take a brief look at two articles shall we?

 

Aucklanders say no to asset sales

Auckland Mayor Len Brown says Aucklanders have made it clear they do not want strategic assets to be sold, and other alternatives to rates rises are being considered to fund the city’s projects.

His comments come after Local Government Minister David Carter hinted at a Government preference for councils around the country to opt for asset sales to fund projects, rather than increase rates.

The $2.86 billion central rail loop remains the prime project in Mr Brown’s first 10-year budget, which faces a bumpy ride from councillors on Wednesday.

The day before Finance Minister Bill English unveils the Government’s Budget, Mr Brown and councillors will lock horns in the Auckland Town Hall over a $58 billion Super City budget.

Seems the first half of the article is looking at the eventual pistols at dawn style shoot out coming up on Wednesday as Auckland Council firms up the 2012-2022 Long Term Plan. A shame I have to work that day as it is bound to be a lively meeting at the minimum – however VOAKL will run commentary on this situation as it happens. I also notice Main Stream Media are using the $2.86b (up from $2.4b last year) figure for the CRL – only $740m short to the Fallacy figure I have given. Of which I urge the boys at Auckland Transport Blog to get a credible CRL proposal for the tunnel and ALL three stations, plus Aotea Station being future proofed for the eventual North Shore Line together sooner rather than later. I urge you gentlemen as I have complete and utter faith that you guys can keep the CRL on the straight and narrow 😀 – no pressure 😛 .

To the topic of asset sales though:

Asset sales urged

Ahead of the council’s budget announcement, Local Government Minister David Carter urged councils around the country to consider the sale of strategic assets rather than rates rises to fund projects.

Mr Carter told TVNZ’s Q & A yesterday that local governments were in a similar position to central government, which intends to balance the books by selling up to 49 per cent of shares in the state-owned energy companies, and a further stake in Air NZ.

“If they [local governments] find a way where they can sell down some of their assets to maintain the funding, to deliver some other infrastructure required within in their communities, in principle, I would support that. But having said that … it would still be a decision for local councils to make,” Mr Carter said.

“If they had shares in an airport or shares in a port company, they may well decide they could sell down some of those shares to help them provide the infrastructure which their community’s demanding of them.

On asset sales, I have advocated in an enquiry on the Port of Auckland ownership model and whether Council should sell down its POAL stake. The comment was made during my Port of Auckland Relocation coverage as a way for assisting in moving the Port as well as introducing Private Sector discipline and freeing up cash for a deposit on the CRL. I believe if the conditions are right that Auckland Council could reduce its holding in POAL by 25-75% to use the cash for investing in other infrastructure assets of high value such as the CRL. It will need skill and conviction but can be done. Pragmatism against ideological dogma…

New $18.6m design for terminal

It’s back to basics for a cruise-ship terminal on Queens Wharf after the sinking of grand proposals costing $49 million and $29 million.

Faced with community and political resistance, Mayor Len Brown has leaned on Waterfront Auckland to come up with a new design costing ratepayers $18.6 million.

Instead of demolishing the century-old Shed 10 for a $49.2 million new terminal favoured by the Government in 2010, or choosing an $28.7 million makeover of Shed 10 promoted by Waterfront Auckland last year, the council will decide on Wednesday whether to proceed with an $18.6 million design.

Shed 10 would still be more than 50 per cent bigger than the current cruise-ship facility on Princes Wharf but have a more basic fit-out that leaves much of the ground floor as is and refurbishes the upper level to unveil its wooden floors and steel trusses.

Windows would be added to open up harbour views. The two floors would be linked by two internal staircases.

Well credit is due to our resident Prude – Mayor Brown for down-scaling the costs here. However the answer from VOAKL is still NO! Want it? Then slug a $20 per passenger on a Cruise Ship Tax (much like an airport tax) to pay for the “temporary” terminal until THIS ONE is built further east. We have other projects that are sorely needed and sorry a Cruise Ship Terminal being built with ratepayers money is just not on.

So Wednesday is all go with pistols at dawn as the Mayor and Council face off in firming up the 2012-2022 Long Term Plan.

VOAKL will be keeping an eye – especially as the first rates instalment hits our letter boxes in July.

Remember:

BE WARNED AUCKLAND COUNCIL – we are watching 

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Urban Design Shootout

CNU20: SHOOTOUT AT THE NEW URBANISM CONGRESS

 

Now if only this would turn into a good old-fashioned John Wayne Texas pistols at dawn shoot-out  – would have a classic Western drama.

Well actually drama and the shoot-out did happen, just not with pistols but with robust and strong debate.

The 20th Congress of New Urbanism was held in West Palm Beach, Florida just recently – and well read the article and see what happened:

I knew there was the possibility that this month’s Congress of New Urbanism — CNU20 — in West Palm Beach would be an exercise in brainwashing. While I was excited to be meeting some of the thinkers at the forefront of my profession, I certainly was aware that the founders of the movement were opinionated and outspoken. The number of attendees has way outgrown the close dinner group that began New Urbanism more than 20 years ago, but heavy hitters like Andres Duany, Elizabeth Plater-Zyberk, Ellen Dunham-Jones, and John Norquist, to name a few, still have a big hand in the direction of the movement.

I was pleasantly surprised to find just the opposite. The first session was a debate on theology between two very prominent urban designers, Daniel Solomon and Andres Duany, which set the tone of challenging our own and each other’s beliefs in what New Urbanism is and should be.

You can read the rest at the New Geography site.

However I do point out to the video that was captured of the debate:

[Note you will need Microsoft Silver Light before you can watch the video]

WATCH Live: Looking Forward: New Urbanism and the New World

 

Very fiery but very robust and had me asking questions.

VOAKL will follow-up with commentary on the recent CNU 20 convention over the winter.  

Macro Business SUPER Round Up

The Super Round Up of this weeks events at Macro Business

Right after a delay in getting the Wednesday edition of the Macro Business Round Up, I have decided to give a combination Wednesday’s and Sunday’s in a Super Round up.

So today for your weekend and Monday Reading I give the Macro Business SUPER Round Up.

As there is a lot of links and material (being a hot week in the economic division) I am dividing the Super Round Up into three categories:

  1. China and all things linked to China (including Australia and its mining boom)
  2. The Australian (Domestic and Political) Economy (so looking at housing, retail/consumer and political news)
  3. The EU and the constant doom and gloom coming out of that area

China and all things linked to China (including Australia and its mining boom)

From the news floating around at the moment, it would appear not all is well in China. Debt deflation, messy leadership succession, growth falling off, money and charts on the run, and Chinese consumers spooked all seem to be pointing to what pundits are calling a hard landing of the Chinese Economy. Take some time and grab your favourite drink while reading the various links on happenings in China. While the Chinese central authorities are trying nurse the world’s second biggest economy into a soft landing, there is a genuine fear that control could be lost and the landing harder than either anticipated or wanted by the world. Put it this way if China does go in hard (I doubt we would see a full-blown crash and wreck), the effects to the USA, Australia and even New Zealand will be felt in; frozen export growth, business exchange and investment projects (Chinese to assist with the City Rail Link), coupled with shaken consumer confidence going really south could play havoc on those economies. Put it this way, the 1983 Mining Boom Crash in Australia which saw them in a virtual recession through to 1996 (when Little Johny Howard got elected) could happen all over again and be even worse. I hope my New Zealand counterparts chasing the dream over there have a back up plan if it does go tits up in Aussie because its going to be doubly hard when you can not claim the benefits a fully fledged Australian can. I also have an inkling New Zealand might not be also welcoming to those wanting to come back home…

So those links on all things China for you – see what you make of it

China links No# 2 by 

Wenzou’s debt deflation by 

China’s new housing starts turn negative by 

Phat Dragon gets uncomfortable by Houses and Holes

China cuts the RRR by 

China’s ugly April by 

China links by 

The Australian Economy

After the Aussie Budget was released two weeks ago, news and commentary has been flying thick and fast on the health of Australia’s two-speed economy. Two-speed with the fact the Mining Boom is running in 6th gear (flat-out) while the rest of the economy is either in 1st gear or even in reverse gear. Now imagine if you were a car or truck and the front wheels where going in 6th gear forward (so flat-out) but the rear end was in first gear or reverse. Drag would be the word I would be looking for, as well as damage. That is what is basically happening in Australia, a two-speed economy that is getting effectively dragged and damaged at the same time. The Mining Boom should be translating through to the entire economy with consumers confident and spending. However consumers are pessimistic despite this boom and that pessimism is damaging the Aussie economy, for what should be solid growth for all is anything but. The Housing (which needs correction anyway) and Retail market are suffering badly despite money being pumped in from this Mining Boom. But chart after chart is constantly showing this entrenched pessimism in the domestic economy. Are consumers still suffering the hang over from the Global Financial Crisis four years ago, or has China and its uncertainty got people spooked? What ever the case, Australia is struggling and will really struggle when this current mining boom ends.

As a side note, neither side in Australian politics seem capable in rebalancing the two-speed economy so it is a more balanced even one.  If Mad Monk Abbot of the Australian Liberal Party (lol same as the Australian Labor Party – ALP 😛 ) could not come up with a credible Shadow Budget (his was the virtual same as the government’s) then simply put for Australia – ouch.

Although closer to home in New Zealand – things are not that healthy either economic or politics wise. But I do wonder with Kiwi’s going over – do they know what they are in for when getting there?

Rate cut flops with consumers by 

In the poo by 

Sorry Dr Henry, Australia is not a safe haven by 

State austerity to hit growth by 

Australia’s pincer is closing again by 

First home buyers desert housing market by 

Ratings agencies are the great enabler by 

A bottom in QLD mortgage volumes by 

Leith van Onselen on ABC ‘s “The Business” by Houses and Holes

Pincer update by Houses and Holes

My kingdom for a liberal by Houses and Holes

Homes for sale surge, rentals fall by 

The EU and the constant doom and gloom coming out of that area

No commentary from me here, just go read the links and be depressed on the harsh EU Economic Winter. Advice for Britain, leave the EU now and set up a Commonwealth Free Trade Area Agreement – could be better for your health.

Europe’s growth gulf by 

Europe is falling apart by 

Don’t bet on a European resolution by Houses and Holes

How much does Greece owe? by Houses and Holes

Europe’s black cygnets grow by 

One thing I did note, Germany and some eastern EU states are doing quite well while Western EU states are in the bog. Err last time I remember that happening, a conflict flared up between The British Empire and The German Empire – World War One as the two economic power houses vied for dominance (amongst other reasons). However with France in its current state and the French heading to London to escape the impending 75% Wealth Tax, I would say things are looking rosy for the former Imperial power (if the Tories don’t scotch it).

 

And that is the SUPER Round Up for this week.

The next Macro Business Round Up will be published on Wednesday – the day before the New Zealand Budget is delivered by Bill English.

 

Macro Business Round Up #2

The Half Weekly Round up from our Aussie Cousins – at Macro Business

– Sunday Edition –

I am  trialing a twice weekly round-up of some tidbits from Macro Business Super Blog. The round-up would be posted every Wednesday and Sunday (time of day dependent on work and days off) here at VOAKL with the index also updated at the same time for more full length commentary from the respective bloggers over there. Hopefully the round-up gives some brief complimentary material to what gets reported in The NZ Business Herald and The National Business Review.

Your Sunday May 13th Round Up

Leith van Onselen on the wireless – by Unconventional Economist, a.k.a Leith van Onselen

Pipe into the podcast where Leith gives his run down of the recent Australian Budget. Well worth a listen on where Australia is heading into their 2013 Federal Elections.

Nice plant – by Houses and Holes

More commentary on the recent Australian Federal Budget, and by the way – nice plant

S&P confirms Australia has no private debt – again by Houses and Holes

A nice big piece from ratings agency Standard and Poors on the recent Australian Federal Budget:

Bulletin: Economic And Political Risks Could Undermine Australia Budget’s Fiscal Consolidation Strategy MELBOURNE (Standard & Poor’s) May 9, 2012–Standard & Poor’s Ratings Services said that the Labor government’s proposed 2013 budget will have no immediate effect on its ratings on the Commonwealth of Australia (unsolicited rating AAA/Stable/A-1+).

Hmmm where is our AAA rating?

April unemployment dives to 4.9%! – by The Prince

New Zealand unemployment goes up, Australian unemployment goes down; however can you see the catch with the Australian unemployment figures:

The April 2012 ABS Labour Force Survey was just printed at 4.9%, from 5.2% print for March. The market expected 5.3% so has been blown away. The internals are not so good with full-time jobs falling 10.5k, but part-time climbed 26k perhaps suggesting labour market churn. Also helping the rate was the participation rate falling again to 65.2%.

Found it yet? Try looking at the movement between part and full-time numbers. Wonder what is going on here folks?

ECB talks money (and the lack thereof) – by

Seems the EU has no money circulating around – or just money full stop to circulate and fuel the economic engines of the member states:

The May monthly bulletin from the ECB came out last night covering March data. As usual its a big document but in the context of Europe there really isn’t anything important that wasn’t already covered in the April banking survey.

The chart on page 27 pretty much tells you the story of what is happening across the Euro zone, showing clearly that the rate of credit growth in the private sector continues its downwards trend.

Do check the author’s post though, he did stumble on a surprise about economic modelling.

From Houses and Holes: It’s the student loans, stupid

Well we know the Main Stream Media are crap at reporting stuff and it is always up to the trusty blog to make up where MSM fails. So from the USA we have this:

The mainstream media has once again completely missed the reasons behind the US consumer credit growth.

CNN/Fortune: – U.S. consumers had long been known for their love of credit until the financial crisis changed everything. Credit cards and loans were suddenly out of favor as credit markets tightened and millions saddled with debt lost their homes to foreclosure.

Now the latest data have some suggesting that those days are fading. In March, U.S. consumer credit expanded by 10.2% to $2.54 trillion – the fastest pace since late 2001, according to Federal Reserve data released Monday. What’s more, February’s expansion was revised up to $9.27 billion from an initial estimate of $8.73 billion.

Check the article to see where the credit growth in the USA has been? Retraining anyone? Also NZ had a similar thing to when the GFC kicked off with an increase in enrollments to tertiary institutions.

Once more from Houses and Holes: Bulk weakness spreads

I told someone in Facebook that the good times in Australia will not last if the mining boom goes tits up like it did in 1983; needless to say the person did not believe me. Well lets hope bulk commodity prices fuelling the boom in Australia do not decide to tank real fast real soon:

Australia’s balance of trade is getting beaten up again. Two of out three bulk exports are still sliding. Iron ore 12 month swaps are accelerating downwards

Check the post for the graphs which are pointing DOWN DOWN DOWN. I do hope Australia is not relying on pray and hope right now…

RP Data describes a gloomy housing market – by

All figures in the Australian housing market point in one direction – check where by reading the post at Macro Business Super Blog. Looks like negative equity and people losing out from the recent housing boom is set to continue for some time. Which reminds me, I should go look at the NZ data for a comparison – last I heard Auckland was going in full reverse to Australia.

Phat Dragon on poor Chinese data – by House and Holes

China’s cyclical downswing has been closely associated with the trajectory of the heavy industrial sector. Today’s update on May industrial production – a teeth jarring 9.3%yr versus 11.9% in March and a consensus of 12.2% – reinforces the link. There is some real sticker shock in this release – witness the 0.7%yr outcome for electricity generation, down from 7.2% in March. Why was the market forecast so bad on this occasion? Phat Dragon puts it down to three things. The first is over reliance on the PMIs as a short term forecasting tool. The second is an over eagerness to incorporate monetary easing into real economy outcomes. The third is that the majority were surprised by the degree of weakness evident in Q1, so they declared it must be the trough. That means sequential improvement in IP April over March was essential to hold the ‘new view’ together. Alas, there is no doppelganger in the tongue of Confucius for epikhairekakia (or schadenfreude for that matter).

And now you know why Bulk Commodity Prices are beginning to fall out in Australia. If China does lose control and goes in for hard or crash landing – well you can go figure the rest out. In short – it’s going to hurt – even NEW ZEALAND!

By the way I think Houses and Holes is not looking for vindication from all the nay-sayers if China does come down hard. Because if he does get that vindication after warning everyone for months of not years – well the GFC is going to look piddly compared to the world’s second biggest economy and main holder of Western Debt going off the backend.

Big miss in Chinese industrial production – by

Seems China is trying to engineer a slow down and a soft(ish) landing:

From MineBot 2.0: Well on one hand if they are trying to engineer a slowdown why should we be surprised that data shows a slowdown? On the other hand the data is probably dropping sharper than you’d want if you were an omnipotent central planner.

The electricity is interesting. A few months ago this bloke was touting rumours that electricity usage at that time had dropped sharply. We can see from his chart that this never happened. My point at the time was to stick with data and not trade in rumours. So now we have data for the most recent month and it looks the most telling of the stuff in the article. However it would be nice to see plots of the monthly data in addition to the YOY derivative plots so as to add some more clarity — and I don’t mean just for this chart I mean for all charts from all pundits who only show YOY.

Collapsniks will be gleeful. Lets wait and see. The numbers probably explain the $10 drop in iron ore.

And that is the Round Up for Sunday 13th of May

Hope Mother’s Day was well and that you all treated your mothers to something special.

The Macro Business Round Up will be back Wednesday with more snippets from Australia and around the world.

Lets hope for some better figures and news here folks – for everyone’s sakes!

The CRL

CRL Costs Keep Rising

 

I noticed via my email and alert feeds, activity from Councillors and Local Board members on the ever rising cost of the City Rail Link.

The latest figure to get touted by Councillor Cameron Brewer via Facebook was $2.84 billion and 5.5 years to complete the CRL from turning the first sod, to running the first passenger train service through the link. As usual I get the usual hype and hysteria over costs running away on this vital piece of infrastructure link for and in Auckland. To me I consider the news ho-hum as Brewer is $800 million and 1.5 years off the mark – in fact the latest figure touted by Brewer I would consider a savings to what I have got and always stuck with.

You see I have a total budget for the CRL at $3.6 billion from the time the first sod is turned, with starting date around 2018 and completion around 2025 approx. proposed for the project. I came to that figure after a late friend and mentor gave me The Rail Fallacy formula (which is based on examples here in NZ and overseas) which is any rail project which is set in motion by a public authority; multiply the estimate project cost and time to completion by 1.5x.

So if we take what the price tag was at $2.4B and 5.5 years from completion (2021 opening date) set by The Mayor, Auckland Council and Auckland Transport and apply The Rail Fallacy of 1.5x; you can see where my $3.6b and seven-year completion time frame (I shaved a bit of time off) and the opening date around 2025. Yes that means a starting date (turning the first sod) of around 2018, however this factors in several factors such as:

  • Restarting the debate which is rush and ill-informed (this includes a pause for everyone to chill and regather their thoughts)
  • Able to finance the project better (whether that be debt raising, saving some cash, finance restructuring, or a Public Private Partnership)
  • Able to thrash out an air-tight business and development plan
  • Completion of the Rail Efficiency Program (part of my submissions to the Auckland Plan and Long Term Plan – will run commentary on it at a later date)

And I know that is a four-year gap between the mayor’s proposed opening date and mine, however I feel mine will be more realistic given previous rail projects here at home and around the world. I need not remind people of Manukau Line and Station that was 1.5x over budget, meant t 435 metres short of where it should have been due a $10 million penny-pinching exercise (project was still over budget any way ($45m original to $92m actual by the end of it), and missing Manukau to Papakura link due to a planning cock-up. Not confidence inspiring for a small project let alone a mega one is it?

However the CRL must go ahead and I do support it. But it is not helpful with misinformation, politicking and people not getting simple maths right. I await the first sod to be turned and how much the CRL turns to be by the end of this affair, in the mean time, Councillor Brewer – you are still short mate.