A prosperous regional economy

The new Auckland governance structure provides the “foundation stone upon which we will make Auckland a great place to live, and drive New Zealand’s economic growth.”
Rodney Hide, 2009.

The Auckland economy is doing as well as, or slightly better than, New Zealand as a whole but there is little evidence of it capitalising on its dominance in the national economy or of it playing a major role in leading the rest of the country’s economic performance. Recent trends suggest modest recovery since the 2008/09 recession, although productivity growth in particular remains weak. The other concerning aspect evident in the data presented here is the inequality in outcomes. For example, while the overall Auckland unemployment rate is 7.2 percent, the rates for Māori and Pacific Islands youth aged 15–24 are 26 percent and 31 percent respectively. Similarly, although early childhood education (ECE) attendance is generally high in Auckland, over 40 percent of 5 year olds who did not attend ECE are enrolled in Decile One schools. Disparities like these have long-lasting impacts on social and economic outcomes.

In short, the Auckland economy is a long way from the Council’s Economic Development Strategy vision of delivering “opportunity and prosperity for all Aucklanders and New Zealand”.

Auckland’s GDP per capita is higher than across New Zealand as a whole but is below many other first world cities. Auckland was 69th out of the 85 metropolitan regions ranked by the OECD.39

Income per person in Auckland was more than 25 percent below that in Sydney, and around 40 percent below Dublin, London and Paris based on the 2003 data. The Council’s 2012 Economic Development Strategy set a target of raising this ranking by 20 places by 2031. Council can have some long-term impact on regional GDP per capita through its economic development, infrastructure and related policies but central government policies and international factors are also influential. GDP per capita is a common, albeit imperfect, measure of a region’s or nation’s economic prosperity. It does not show how income is shared across the population.

Auckland’s real GDP has grown at an average of approximately 2.6 percent per annum over the last 12 years.40

While Auckland was more affected than the country as whole by the recession in 2008-2009, it has recovered more quickly and has been growing at an average of 2.4 percent per annum in the three years to 2012, compared with 1.2 percent for New Zealand. Growth rates remain substantially below the Council’s target figure of 5 percent per annum average over the next 30 years. Real GDP growth is a common measure of the trend in economic performance.

Over the last 10 years average labour productivity growth in Auckland has been on a downward trend and has been negative for three of the four years to 2012.41

The recent declines may be due to slow GDP growth since 2009 as in most countries labour productivity growth tends to decrease during recessions42 although this does not explain the declining trend from 2004 to 2008. Auckland Council has set a target of doubling labour productivity growth from an average of 1 percent per annum to 2 percent per annum. Treasury and Statistics New Zealand have estimated that between 1978 and 2008 labour productivity in New Zealand grew at an average rate of 1.4 percent per annum.43 An increase in output per hour worked provides a measure of growth in the regional economy’s ability to use people’s paid working time to produce goods and services.

The unemployment rate for Auckland was 7.3 percent in the March 20 quarter 2013, double that of five years ago.44

The downturn since 2008 had a somewhat larger effect on the Auckland economy compared with New Zealand as a whole. By December 2012 Auckland’s unemployment rate remained slightly worse than the national average and is heavily concentrated among certain groups. In particular, the rate for youth aged 15–24 is 19.8 percent, compared with 5 percent for people aged 25–64. The rate for Māori youth is 26 percent and for Pacific Islands youth even higher at 31 percent. In total, youth make up more than 40 percent of all unemployed in the Auckland region. The unemployment rate is an internationally comparable indicator of the state of the labour market and the ability of people to obtain employment. Although Auckland Council does not have an unemployment rate target, access to employment is fundamental to its Economic Development Strategy’s purpose of ‘opportunity and prosperity for all Aucklanders’.45

Approximately 28,700 Auckland youth were classified as Not in Employment, Education or Training (NEET) as at December 2012. This represents one in eight of all 15–24 year old Aucklanders.46

Although Auckland’s NEET rate is lower than the nation-wide figure of 13.9 percent, of particular concern in Auckland are the high rates for Māori and Pacific Islands youth: one in five of whom are not in employment, education or training. This difference is partly explained by the higher percentage of Māori and Pacific under-25 year olds who are engaged in caring responsibilities at home but even excluding this group a large disparity still remains. There is also considerable variation between Wards, ranging from 5.4 percent in the Waitemata and Gulf Ward to 29.1 percent in Manurewa-Papakura Ward (June 2012 figures).47 Auckland Council has a target to ‘improve the proportion of youth who are in education, employment and training’.

There has been no improvement in NEET rates in recent times. The most recent figures are somewhat worse than four years ago and roughly the same as in 2004. A notable change over the period, however, is the apparent convergence between rates for males and females. There has been some improvement in NEET rates for young women in Auckland but a deterioration for young men. It is likely that the worsening situation for men is due to the weakness of the labour market since 2008.

The youth NEET indicator is a measure of the number of young people who have left the education system but are not in employment. While often this is a temporary situation, or is because of parenting or other caring responsibilities, it can be an indicator of disengagement associated with poor longer-term employment and earnings outcomes.

One quarter, 24.3 percent, of Auckland’s adult population has a Bachelor’s degree or higher qualification (March 2013).48

This proportion is higher than for New Zealand as a whole, 19.4 percent, and has been rising steadily—the Auckland figure was 19 percent in 2006 and 13 percent in 2001. The proportion of people with degrees is higher among those aged 25–64, 31 percent, than among people aged 65 and older, 12 percent, reflecting the growth in tertiary education and its increased importance for employment and earnings. Women’s participation in university education has been growing faster than men’s so that by 2013 in Auckland the proportion of women with degrees is now higher than that of men, 26 percent compared to 23 percent.

Forty-six percent of the Auckland population aged 15 and over have no post-school qualifications, including 19 percent who have no educational qualifications at all at (March 2013).49

This indicator has, however, been improving rapidly. For example, the equivalent 1996 Census figure was 63 percent. Nonetheless, the number of young people lacking qualifications remains a serious issue for Auckland with 28 percent of Auckland 2009 school-leavers not gaining NCEA Level 2. This compares with a New Zealand-wide figure of 34 percent. Fifty-two percent of Māori and 42 percent of Pacific Islands school-leavers in Auckland who left school that year had not obtained Level 2, compared with 22 percent of Pākehā and 17 percent of Asian school-leavers.

A lack of tertiary education or training increases an individual’s chances of unemployment and is linked to lower earnings. A well qualified workforce is important for the economic development of the Auckland region.

Ninety-five percent of Auckland children starting school have previously attended ECE (year to June 2012).50

This figure is slightly higher than the national average of 93 percent. The figure for Pākehā/European children in Auckland was 98 percent, compared with 84.4 percent of Pacific children and 87.4 percent for Māori. A Ministry of Education report51 shows the very strong socio-economic gradient in ECE participation—41 percent of first-year school children who had not participated in ECE attend Decile 1 schools and a further 37 percent attend Decile 2–4 schools.

Participation in quality formal ECE is linked to better school outcomes which in turn can lead to better employment and earnings in later life. A New Zealand longitudinal study found that “high-quality [early childhood] centres had a positive, long-lasting association with [16 year old] students’ literacy, numeracy and logical problem-solving competencies, and also with their social skills”.52

39. Gross Domestic Product per capita adjusted to purchasing power parity, in US$. OECD metropolitan regions database cited in Auckland Council. (2013). Measuring progress: A baseline report on the targets in the Economic Development Strategy. Auckland: Auckland Council.
40. Annual percentage change in real GDP per annum. Auckland Council (2013) (see endnote 39), derived from customised regional GDP estimates prepared by Infometrics Ltd.
41. Annual percentage change in GDP per hour worked. Auckland Council (2013) (see endnote 39), derived from customised regional GDP estimates prepared by Infometrics Ltd.
42. OECD. (2009). OECD Science, Technology and Industry Scoreboard 2009. Paris: OECD.
43. Brendan, M., Janssen, J., Lewis, G., & McLoughlin, S. (2010). Taking on the West Island: How does New Zealand’s labour productivity stack up? Wellington: New Zealand Treasury.
44. The proportion of the labour force aged 15 years and over that is not in paid employment, is available to work, and is actively seeking work. Statistics New Zealand, Household Labour Force Survey. Figures reported here are not seasonally adjusted.
45. Auckland Council. (2013). Measuring progress: A baseline report on the targets in the Economic Development Strategy. Auckland: Auckland Council.
46. The proportion of the population aged 15–24 years that is not in education, employment or training. Statistics New Zealand, Household Labour Force Survey. The ‘Core NEET’ refers to those not in employment, education or training and not engaged in caregiving activities at home.
47. Auckland Council. (2013). Measuring progress: A baseline report on the targets in the Economic Development Strategy. Auckland: Auckland Council.
48. The proportion of the population and over with a Bachelor’s degree or equivalent or higher. Statistics New Zealand, Household Labour Force Survey.
49. The proportion of the adult population aged 15 years and over with no post-school qualification. Statistics New Zealand, Household Labour Force Survey and Census 1996. School-leaver data from http://www.educationcounts.govt.nz/statistics/schooling/school_leavers2/ncea-level-2-or-above-numbers-2009.
50. The proportion of children entering primary school who had previously participated in early childhood education (see Education Counts at http://www.educationcounts.govt.nz/statistics/ece2/participation). In nearly all cases ‘attendance’ means for at least six months during their pre-school years. Data are ‘apparent participation rates’, i.e., measured through school enrolment records as at 30 June.
51. Ministry of Education. (n.d.). Participation in early childhood education. Wellington: Ministry of Education. Retrieved from http://www.educationcounts.govt.nz/ publications/ECE/participation-in-early-childhoodeducation-evidence-booklet.
52. Wylie C., Hodgen E., Hipkins R., & Vaughan K. (2009). On the edge of adulthood: Summary of key findings from the Competent Learners @ 16 project. Wellington: New Zealand Council for Educational Research

One Tree Hill, Auckland

Auckland city parking