FIRST STATEMENT OF EVIDENCE OF DR JAMES DOUGLAS MARSHALL FAIRGRAY ON BEHALF OF UNITEC INSTITUTE OF RELATION TO TOPIC RPS ISSUES (ECONOMIC)

Transcription

1 Unitec Institute Of Technology Submitter number 2742, FS 1246 IN THE MATTER of the Resource Management Act 1991 and the Local Government (Auckland Transitional Provisions) Act 2010 AND IN THE MATTER of the Proposed Auckland Unitary Plan FIRST STATEMENT OF EVIDENCE OF DR JAMES DOUGLAS MARSHALL FAIRGRAY ON BEHALF OF UNITEC INSTITUTE OF TECHNOLOGY IN RELATION TO TOPIC RPS ISSUES (ECONOMIC) 16 OCTOBER 2014 B J Matheson / F M Lupis Phone Fax PO Box 8 DX CX10085 Auckland 1140

2 i CONTENTS EXECUTIVE SUMMARY QUALIFICATIONS AND EXPERIENCE... 4 Background CODE OF CONDUCT SCOPE OF EVIDENCE TERTIARY EDUCATION AS AN ECONOMIC DRIVER THE ECONOMIC BENEFITS OF CO-LOCATION TERTIARY EDUCATION INSTITUTIONS AS ECONOMIC HUBS UNITEC POTENTIAL CONCLUSIONS APPENDIX A... 16

3 2 EXECUTIVE SUMMARY A. The zoning and precinct provisions in the Indicative Wairaka Masterplan ("Masterplan") sought by Unitec would enable significant intensification of activity on the Wairaka site. This would be through concentration of the tertiary education role within the Precinct; capacity for business activity to co-locate enabling both tertiary-commercial relationships and independent business activity; and capacity for housing. B. This evidence examines how that development potential is likely to impact on regional growth and development outcomes, and Auckland s urban form outcomes, which are set out in the Proposed Auckland Unitary Plan ("PAUP"). C. The core function of Unitec is to provide tertiary education. Tertiary education is a major driver of economic development and wellbeing in its own right, and enhancement of education capacity and services is an important component of regional growth. This is particularly through its contribution to the quality of the labour force, enhancing productive capabilities and competitiveness. D. This role will grow and diversify as global economic trends and mega drivers, including shifts in technology and demographic change, continue to shape economic interactions and patterns. Like other tertiary institutions, Unitec s contribution to skills and learning is an important part of Auckland s economic growth. E. Tertiary institutions have strong and growing linkages to the scientific, technical, and research sectors, and directly with commerce and government. A key part of their future contribution will be through expansion and enhancement of these linkages, a process which will be considerably accelerated by the co-location of business and education functions. The spatial concentration of economic activity generates benefits from the transfer of learning, the formation of business to education relationships, and easy access to people and knowledge, including to third parties and the wider community.

4 3 F. Businesses locating in close proximity to tertiary facilities helps speed up and grow the business-tertiary interactions, and that can enable firms to grow faster because they have more marketable ideas, and better research and development. G. Expanding the range and intensity of activity on the Wairaka site can be expected to achieve such benefits, and in doing so contribute directly to the growth and competitiveness of the Auckland economy, with consequent benefits for the Auckland community generally. H. In addition, the Wairaka Precinct would become a significant hub of economic activity in the western Auckland isthmus, with a wider range of activity and larger critical mass than exists currently. That hub will provide employment as well as educational opportunities, and can be expected to give rise to travel (both private and public transport) and service efficiencies, because of the combined mass of a tertiary education facility and the range of co-locating activities, especially where these are functionally inter-related. I. The Precinct will contribute positively to Auckland s compact urban growth strategy, by adding both employment and residential capacity in a relatively central location. It is well situated relative to the major arterial (motorway) network, with good accessibility to other parts of Auckland. J. In my view, the amendments sought in Unitec s submission on the RPS section of the PAUP are well founded, and accurately reflect the evolving roles of tertiary institutions. This is especially in relation to the trend for co-location of business activity, and the associated trend for tertiary institutions to become more comprehensive economic hubs, progressively integrating a wider range of activities than their traditional combination of just staff, students, cafes and halls of residence.

5 4 1. QUALIFICATIONS AND EXPERIENCE 1.1 My full name is James Douglas Marshall Fairgray. I have a PhD in geography from the University of Auckland, and I am a principal of Market Economics Limited, an independent research consultancy. 1.2 I have 35 years' consulting and project experience, working for commercial and public sector clients. I specialise in policy and strategy analysis; the geography of urban and rural economies; assessment of demand and markets; and the evaluation of outcomes and effects in relation to statutory objectives and purposes. 1.3 I have applied these specialties in more than 900 studies throughout New Zealand, to analyse the economic geography of regions and districts - especially the functioning of urban spatial economies - and to analyse specific sectors of the economy, particularly retail, services, leisure, housing, travel, local government, infrastructure, transport and commercial property. 1.4 Of relevance to this evidence, I have undertaken wide-ranging research into the Auckland regional economy, and its urban form (the spatial economy), assessing economic growth and change. I have examined how growth in key sectors of an economy flows on through to more general economic and employment growth (for example, the Auckland Region Economic Development Strategy), and how development in different locations has effect locally and regionally. 1.5 I have studied New Zealand s regional economies and the national economy, including growth patterns, trends and change, and the interrelationships among and within regions, and growth issues including the provision of zoned area for business activity and employment. I have examined the interactions among different sectors of the economy, with a general focus on outcomes that enhance urban efficiency and effective management of urban growth. 1.6 I have applied these studies for assessment of effects in evidence to the Environment Court and the High Court.

6 5 Background 1.7 Market Economics Limited has undertaken a range of studies to identify the roles of tertiary institutions in regional economies, and their interface with the business sector including inter-relationships with commercial entities. 1.8 In early 2014 I was engaged to assist Unitec in relation to their longterm development strategy for the Waikara Precinct, specifically to examine the direct and wider effects of the proposed development on the local economy, the regional economy, and ultimately on Auckland s growth and urban form all in the context of the PAUP. 1.9 That work is building on a wide range of my previous research into the Auckland spatial economy, covering the retail and service sectors and the roles of centres, the location, nature and roles of business and employment areas, the structure and growth prospects of the regional economy and the wider upper North Island economy into the medium and long term, Auckland s housing needs and affordability, tourism, and travel aspects I am also engaged by Auckland Council to provide independent advice in relation to urban growth matters I have read the Parties and Issues Report and supporting information relevant to this topic, along with other relevant submissions and further submissions. 2. CODE OF CONDUCT 2.1 I confirm that I have read the Expert Witness Code of Conduct set out in the Environment Court's Practice Note I have complied with the Code of Conduct in preparing this evidence and I agree to comply with it while giving oral evidence before the hearing committee. Except where I state that I am relying on the evidence of another person, this written evidence is within my area of expertise. I have not omitted to consider material facts known to me that might alter or detract from the opinions expressed in this evidence.

7 6 3. SCOPE OF EVIDENCE 3.1 I have been asked by Unitec to address matters relevant to its submission and further submission on the Regional Policy Statement ("RPS") section of the PAUP, within my areas of expertise. 3.2 I have done this with regard to the development that would be enabled by the zoning and precinct provisions sought by Unitec for the Wairaka site, 1 and how this may affect the regional growth and development outcomes, and Auckland s urban form outcomes, which are set out in the PAUP. The development path sought for the Wairaka Precinct would enable intensification through concentration of the tertiary education role within the Precinct; capacity for business activity, to co-locate enabling both tertiary-commercial relationships and independent business activity, and capacity for housing. I have considered how such development may: (a) (b) (c) (d) (e) contribute to education and related outcomes; contribute to Auckland s economic growth and employment; provide capacity for business activity, including through commercial-tertiary partnerships; provide housing capacity; and contribute to a compact urban form. 3.3 To do this, I have examined the manner and processes through which the proposed future development of the Precinct is likely to affect the Auckland spatial economy, taking into account: (a) (b) tertiary education as an economic driver; the economic benefits of co-location of activity to provide for more integration of tertiary and business sectors (and the opportunity costs of not doing so); 1 See submission points to , , to and to

8 7 (c) (d) the role of tertiary education institutions as economic hubs; and the economic benefits of strategic corridors. 3.4 I present brief conclusions at section TERTIARY EDUCATION AS AN ECONOMIC DRIVER 4.1 The core function of Unitec is to provide tertiary education. Tertiary education is a major driver of economic development and wellbeing in its own right, and enhancement of education capacity and services is an important component of regional growth. The role of tertiary education will increase as global economic trends and mega drivers, including shifts in technology and demographic change, continue to shape economic interactions and patterns. 4.2 Auckland has a range of tertiary education entities which individually, and especially in combination, have a significant place in the regional economy. (Refer Appendix A - regional location of tertiary institutions.) In addition to their major roles as places of activity and employment, their contribution to skills and learning is a very important part of Auckland s economic growth. Moreover, the tertiary institutions have strong and growing linkages to the scientific technical, and research sectors, and directly with commerce and government. 4.3 These roles have naturally grown from tertiary education s core role to develop a quality workforce that can respond to the changing needs of society and industry, equipping workers with the skills sets needed to participate in the labour force and formal economy, and enhancing human capital as a key ingredient in growing economies. Empirical evidence suggests that labour quality has a strong and robust influence on economic growth. 4.4 Tertiary education makes a tangible contribution to competitiveness by expanding and improving labour force quality. Labour is a key

9 8 production factor and in regional competitiveness theory, 2 labour is viewed as a resource endowment that can improve or inhibit reduce competitiveness. Tertiary education institutions are a key source of scientific and technical expertise, and research capability. In addition they create the skilled labour force needed to remain competitive in the global market place. 4.5 These roles underpin their direct contribution to community well-being, including through technological and scientific advance, and opportunity for employment. Similarly, for business the availability of suitable (quality and quantity) labour contributes to competitiveness and productivity. A strong and skilled labour force can be a source of regional and international competitive advantage. 4.6 In terms of just the education role, and the need for ongoing skill acquisition and development to underpin Auckland s economic and social advancement, the tertiary institutions including Unitec deserve specific recognition in the PAUP at RPS level THE ECONOMIC BENEFITS OF CO-LOCATION 5.1 In my opinion, the PAUP needs to make the most of the opportunity to fully recognise and gain the full range of benefits that the tertiary education sector delivers. 5.2 Traditionally, tertiary education entities have focused on training and education. More recently, their scope has widened so that tertiary entities more directly interact with commercial and economic activity generally, as well as other wider social activities. Internationally and 2 3 Regional Competitiveness is intrinsically bound to economic performance, there exists a growing consensus that competitiveness is best measured in terms of the assets of the regional environment. These include the level of human capital, the degree of innovative capacity, and the quality of the local infrastructure all of which affect the propensity to achieve competitive advantage in leading-edge and growing sectors of activity. The influence these assets and other externalities can have on firm competitiveness, such as the ability of regions to attract creative and innovative people or provide high-quality cultural facilities, are all important features of regional competitive advantage. In other words, competitiveness is increasingly concerned with creativity, knowledge, and environmental conditions, rather than being purely based on accumulated wealth (Huggins, Izusih and Thompson 2013). See submission points , , and

10 9 within New Zealand, the tertiary education sector has developed stronger and closer direct linkages with commerce and the government sector, to their mutual benefit. Particular benefits to commerce and government arise from close access to the leading edge, a skilled workforce, and upskilling opportunities, while the tertiary sector expands its capabilities in the application of knowledge, access to research funding, and employment opportunity for graduates. 5.3 There are several reasons for this. Firms and households actively seek to minimise costs and maximise benefits when making decisions. This is also the case when deciding where to locate. For some firms, there are clear and measurable benefits in locating close to (or far away from) other activities. Location decisions are influenced by factors such as the location of competitors, suppliers and customers/clients. For example, some exporters seek to locate in the vicinity of an airport for ready access to air transport services to reach overseas markets. 5.4 The spatial concentration of economic activity is a key component of economic geography. Knowledge production (research and development) has a strong spatial dimension, for which an important aspect is the benefits of co-locating. These benefits include both those arising directly from easy access among firms to people and knowledge, and those accruing indirectly as externalities (or benefits to third parties) which arise because of the general environment. The accrual of agglomeration benefits from the geographic concentration of business activity is well documented This applies also to tertiary education and research institutes, in their relationships with each other and with commercial and other sectors. By locating close to tertiary education institutions, it is easier for 4 For example, Capello and Nijkamp. Handbook of Regional Growth and Development Theories. Edward Elgar Publishing, 2009; Fujita, Masahisa, and Jacques-François Thisse. Economics of Agglomeration: Cities, Industrial Location, and Globalization. Cambridge University Press, 2013.

11 10 people to interact, creating opportunities for ideas to form and for collaboration, as well as possibilities for recruitment, and innovation. 5.6 Businesses which are located in close proximity to tertiary facilities can assist in speeding up these interactions, and that co-location can enable firms to grow faster because they have more marketable ideas, and better research and development. Further, these firms have direct access to the tertiary education institution s research and knowledge base, and facilities which help them to successfully compete in the market place. Common patterns to achieve this outcome are for larger firms to have branch or office locations on or near a tertiary institution, and the establishment of specific innovation centres adjacent to tertiary institutions, complemented by formal and semiformal relationships including for direct knowledge inter-change through teaching on one hand, and workplace application of skills on the other. 5.7 There are several New Zealand examples of businesses and tertiary entities benefiting directly from co-location, for example: (a) (b) The Unitec Delivery Centre (in partnership with Concentrix and IBM) offers students professional industry experience while studying. In 2013, Unitec students accumulated over 100,000 hours of practical paid work experience. Massey University, in Palmerston North, has several relationships through co-location, and has more than 30 research centres which conduct independent and collaborative research. 5 5 Three Crown Research Institutes (AgResearch, Plant and Food Research and Landcare Research) and a range of private research facilities (such as the Fonterra Research Centre), have located on Massey University's grounds or in close proximity to Massey University (e.g. in the Science Centres), with the benefits of co-locating with Massey University a significant part of the reason for that location. In addition to these ancillary organisations, other businesses considered the presence of Massey University and associated research institutions as a major factor in their decision to be based in Palmerston North. These interrelationships highlight the role of Massey University as an important driver within the urban and regional economy.

12 Tertiary education is an integral part of the skills and innovation supply chain to businesses. However this is not a simple, one-way relationship. Co-locating with a tertiary education institution is a proven model to improve the quality of the supply chain, lifting innovation capability and the quality of skills. 5.9 Associated with the closer relationships is the co-location of commerce and tertiary learning, particularly through on-campus or beside-campus location for commercial activities. This ability to colocate is an important component of the expanding relationships It is important that the planning base both recognises this trend for the tertiary sector, and makes appropriate provision for it. 6 The PAUP does recognise the benefits of a strong tertiary education sector to a certain extent. However, there is more limited recognition of the significance of key linkages between tertiary and commercial activity, or how those requirements and opportunity will play out on the ground There is also potential loss of economic opportunity if the development paths of the tertiary sector are not well recognised and catered for. The business and economic landscape is highly dynamic, and the gains associated with the closer relationships between tertiary entities and commerce are equally opportunity costs if they cannot be achieved Globally, cities and governments are actively seeking out ways to improve economic performance and have identified regional innovation networks as a focus area Auckland s innovation network is relatively weak. 7 Initiatives to improve the network s overall functioning should be considered and supported. If this is not done then the long-term capability to lift productivity and innovation will be undermined. In turn, this will have a negative effect on wellbeing. 6 7 Submission point and Ministry of Business, Innovation, and Employment, 2012.

13 In my opinion, the changes sought by Unitec to the RPS Issues section would appropriately recognise the current and future economic benefits of tertiary education and its links to the innovation and commercial sectors. 6. TERTIARY EDUCATION INSTITUTIONS AS ECONOMIC HUBS 6.1 Finally, I consider the role of tertiary education institutions as economic hubs. This includes the concentration of people and activity through their education function both teaching and learning (The Tertiary Education Commission identified 418,000 tertiary students, including international students, enrolled for formal study in 2013, and Unitec itself has in excess of 10,000 students). In addition to their external focus, institutions commonly provide a range of on-site activities, which vary in scale and scope, but may include administrative functions, laboratory and research services, information and communication technology services, as well as education facilities. There are also commonly residential functions (student accommodation), as well as social and retail services, such as food and beverage, small scale retail, pharmacies, gyms, etc. 6.2 The benefits of co-location (outlined above), are generally enhanced by the scale or critical mass of the hub which tertiary entities create. Hence, the benefits of co-location include travel and service efficiencies, which generally increase with size in particular, the combined mass of an institute and its co-locating activities, especially where these are functionally inter-related. This includes both private travel and public transport. 6.3 Moreover, tertiary education entities are commonly important economic hubs within urban spatial economies, having many of the characteristics of commercial centres in terms of people flows, employment, and the functioning of the city. In a large city like Auckland, the range of tertiary campuses provides an important part of the network of centres of economic activity.

14 The Indicative Wairaka Masterplan ("Masterplan"), when enabled by the PAUP, will directly enhance Wairaka s role as a hub because of the increase in mass (larger workforce and student body); the geographic concentration of business and learning activity; the facilitation of direct linkages between the commercial and education sectors; the co-location of activities which benefit from the immediate local market; and associated efficiencies (for example, more public transport services will be viable). These effects, individually and collectively, are a natural consequence of a more intensive work and education environment. These are in addition to the residential capacity which would be enabled, and the extra market opportunity that it will represent for businesses serving the workforce and student body. 7. UNITEC POTENTIAL 7.1 These considerations provide very important context for Unitec s proposed development path. Of particular note is the substantial potential offered by Unitec in the Wairaka Precinct because of the size of the established entity, together with the scale of the under-utilised land resource and its opportunities for significant co-location by business activity. This suggests that the likely benefits of co-location will be correspondingly important. 7.2 Also of note is the strategic Wairaka location, on the western isthmus where the emergence of an integrated economic hub can be expected to add significantly to employment opportunity and activity in the local area. The area has limited employment opportunities currently, apart from small retail centres at Point Chevalier and Mount Albert, and Unitec's existing campus. The nearest centres with significant office commercial activity are Henderson and Rosebank to the west, and the CBD and Newmarket to the east. The immediate area is predominantly residential, with most of the workforce commuting rather than being employed locally. The development path is based on intensification of the existing urban land, as distinct from

15 14 development at or near the urban edge. This will contribute directly to the Auckland compact city strategy, through the addition of commercial activity and associated employment opportunity. That fits well with the prospect of intensification along Carrington Road itself, which is an important through route and has potential to be a strategic growth corridor. 8 More important, the proximity to the Waterview link means that Wairaka has good accessibility to other parts of Auckland through the arterial (motorway) network. 7.3 Similarly, the provision of residential capacity in a relatively central location will contribute to the compact city outcome. Auckland must accommodate in the order of 400,000 more dwellings by 2041, with 60-70% of these ( ,000 dwellings) within the 2010 Metropolitan Urban Limit. Much of that growth will arise from intensification of residential areas which are already developed, and there are relatively few opportunities for residential development on vacant land which the Masterplan would enable. 8. CONCLUSIONS 8.1 Drawing from the above assessment, I consider the amendments sought in Unitec s submission on the RPS section of the PAUP are well founded, and accurately reflect the evolving roles of tertiary institutions. This is especially in relation to the trend for co-location of business activity, and the associated trend for tertiary institutions to become more comprehensive economic hubs, progressively integrating a wider range of activities than their traditional combination of just staff, students, cafes and halls of residence. 8 Acknowledging that the PAUP has not yet defined Auckland s corridors.

16 The explicit recognition of these wider roles and the corresponding nature of future tertiary-based economic hubs is important at the RPS level because of the regional significance of these entities. In my view it will provide a suitable base for ensuring appropriate provisions (objectives, policies, zone rules and development controls) at lower levels in the PAUP. Douglas Fairgray 16 October 2014

17 16 APPENDIX A Regional Location of Tertiary Institutions