“I think [the Government has] done some worthy long-term things, but in the end if all we worry about is the long term, I’m not sure there’ll be that many Kiwis left in Auckland,” he said.
Bridges’ public call for fresh government policies – including more fiscal stimulus – was remarkable coming from a former leader of the National Party.
It was a sign of some desperation. Bridges is head of the Auckland Business Chamber and is acutely aware of how bad things are looking for many retailers and hospitality businesses in the city.
He has a different hat on these days, of course, and it is his job to lobby for Auckland business, but anybody who has spent time in downtown Auckland recently can see he’s not exaggerating the problem.
Let’s face it, Auckland’s CBD is a dismal place to be in the rain-sodden winter of 2025.
Around the country, I can hear the tiny violins playing.
New Zealand’s largest city is often perceived as a brash and arrogant place, but with nearly a third of the country’s total population within its regional boundaries, it’s a bit hard to ignore.
Politicians ignore it at their peril – as Labour found out after putting the city through a long and unpopular extended lockdown.
I know the long-awaited Central Rail Link is supposed to turn things around, and I see the Prime Minister went for an advance spin on it last week.
It looks great, and I look forward to it opening.
But we haven’t got a date yet, and it may well be later next year before it opens to the public.
That means potentially another winter of waiting for struggling inner-city retailers.
And perhaps a bigger worry than the timing is the risk that, if it opens in anything like the current CBD malaise, people will come to the city once, be disappointed by what they see and won’t come back again.
The same issues apply to SkyCity’s long-awaited New Zealand International Convention Centre, and as Bridges points out, relying on these two developments to fix Auckland’s woes won’t be enough.
But the central Government doesn’t have a lot of money. So what to do?
Bridges’ suggestion of corporate tax cuts is fine in theory. But I don’t think we can afford fiscal stimulus on that scale right now.
And it’s also not clear that it is needed right across the country.
If you just looked at the economy in aggregate, it is flat but recovering – not too bad.
I was pleasantly surprised to see the official unemployment rate land better than expected at 5.2% this week.
My gut feeling was that it would be worse than that.
Of course, if you’re taking your anecdotal evidence from business people in Auckland, you’d assume the economic recovery has stalled.
For better or for worse, Auckland’s economy is driven by population growth and its service sector.
It thrives on rising numbers of tourists and immigrants (international and from around New Zealand).
The population growth drives property and construction. Building booms and property prices rise.
Confident in the extra zeros on their house prices, Aucklanders go out and spend. The shops, bars and restaurants thrive, and Auckland is a fun place to be.
That creates jobs and opportunities and attracts more tourists and more immigrants.
That circle of economic growth has completely broken down.
Meanwhile, in Otago, the June quarter data showed the unemployment rate had dropped to 2.9%.
Christchurch is also, by all accounts, humming along right now.
I’ve written before about the stark regional divide that appears to be opening up as the returns from high export commodity prices bolster rural regions and the cities that support them.
It doesn’t seem like a great idea to be stimulating flush southern economies with either fiscal or monetary stimulus right now.
Economists are currently making the case for one or two more cuts to the Official Cash Rate (OCR).
If the Reserve Bank just looked at the South Island, it might not see a need to cut again at all.
If it just looked at Auckland and Wellington, it might see a need to cut much further.
I think any fresh spending on Auckland would need to be very well-targeted.
The Government doesn’t have spare billions, but it might be able to find spare millions for projects that could make an outsize difference to the grim Auckland mood.
We have a trifecta of dead buildings in the crucial mid-town intersection around Aotea Square.
The remains of the St James Theatre have looked like a demolition site for years. Across the road, the old Smith & Caughey building is now empty and just up Queen St, the Sky World Indoor Entertainment is increasingly empty and run-down.
There are plans in place for all of these buildings (the Government has already allocated funds for restoring the St James), but no signs of anything happening quickly.
It might be time for the Government to look at getting involved – either with cash, some of that fast-track regulatory magic it has sprinkled around the regions (and, to be fair, on plans for Port of Auckland expansion).
Bringing these buildings back to life would deliver a much-needed boost to a key area of the central city. It would also double as fiscal stimulus for Auckland’s construction sector, keeping skilled workers employed while we wait for the broader economic cycle to turn.
And perhaps most importantly, they’d deliver a morale boost, providing another reason to believe that Auckland can and will find its mojo again.
I’m not necessarily wedded to any of these ideas; there might be better ones. Let’s hear them.
The point that Bridges is making is that things are now so grim that we can’t afford to just wait for a recovery that might still be another year away. By then, it might be too late.
