A regional jobs slump, stalled transport projects, cost of living woes and housing troubles are coming for Auckland, but one day out from the Budget there is no support on the horizon for New Zealand’s economic engine room.
It’s tough for Aucklanders right now. Our city is heading into a colder, wetter winter than in previous years with record pressure on our emergency departments. What Auckland needs is a government that supports the city through the tough times, but what we have is a worsening employment picture and rising economic pressure.
Auckland’s unemployment rate is 4.8 per cent, the highest the city has experienced since March 2021 during Covid. More than 15,000 Aucklanders are out of work since this time last year, and unemployment is expected to continue to increase through to mid-2025.
The last time National was in charge during the global financial crisis, Māori unemployment rose to a whopping 14.5 per cent. Unemployment was 6.1 per cent, and it was worse for young people.
I remember it well because I was a 24-year-old job-seeker. Young Aucklanders like me felt we had no options in the city we’d grown up in because we were competing with experienced professionals for a shallow pool of jobs during the week, and against landlords bidding at every open home in the weekends.
Auckland fared better in the deeper global economic crisis post-Covid because the Labour Government prioritised jobs. We experienced a record low unemployment rate in Auckland, consistently below 4 per cent.
In mid-2023, there were more than one million Aucklanders in work, an increase of more than 100,000 from the low point of the Covid crisis. Things were still hard, but Auckland households had incomes and people kept their connections with their work.
The National Government could build on the success of Labour’s apprenticeships in Auckland, which includes initiatives like the Ara Education Charitable Trust. Ara supports students from South Auckland high schools in their transition from school to the construction industry. It has students restore houses and prepare them for resale under the guidance of master builders, for example.
Auckland’s construction industry is crying out for government support. Media reports show Kainga Ora has had to cancel construction of 500 homes, including planned builds in Auckland. This undermining of the pipeline of public housing builds creates uncertainty within construction firms that we should be supporting to create employment and invest in new capital.
Auckland needs investment in public transport to ease congestion problems. Aucklanders want more investment in public transport and said so strongly during consultation on Auckland Council’s long-term plan.
However, the draft regional land transport plan is heavily skewed toward state highways. In other words, Auckland’s priority is more public transport, but the National Government will prioritise certain roads in certain areas - all while making it more expensive to drive, hiking motor vehicle registration fees by $50. And of course, free and half-price public transport is gone thanks to National.
Instead of supporting Aucklanders who are struggling to pay their mortgages, the National Government’s pre-Budget decisions are making home ownership even harder. Labour’s change to mortgage interest deductibility in 2021 contributed to the share of total lending going to first-home buyers rising to 25 per cent by the end of 2023. Under the previous National Government, this measure averaged 12 per cent going back to 2014.
Past National Governments have championed home ownership. But Christopher Luxon has instead given property investors a structural leg up over first-home buyers by restoring a tax break at a staggering cost of $2.9 billion over the forecast period.
Prime Minister Christopher Luxon. Photo / Mark Mitchell
We are already seeing the true cost of this tax break for landlords. Last week Chris Bishop was forced to admit first home grants would be scrapped, with applications closing immediately. Last year 7800 people received a grant.
It is callous to scrap a grant that represents months of additional savings for first-home buyers desperate to get on the ladder before the market moves out of their reach.
Reserve Bank analysis also shows that non-performing loans have risen considerably. Both commercial banks and the Reserve Bank expect this increase to continue as the unemployment rate rises and more households and businesses find themselves under financial stress.
Adding to the pressure faced by middle and low-income households, the successful free and healthy school lunches programme will see its funding cut by more than $100 million per year. The change represents a return to a centralised system that was unpopular and didn’t allow schools to establish their own relationships with suppliers that met the needs of their community.
The South Auckland schools that I work with have set up their own in-house services or worked together with other schools to establish collaborative arrangements. The programme has created jobs in these communities, improved nutritional outcomes for children, and relieved some of the cost-of-living pressures for households. The minister responsible, David Seymour, seems determined to uproot the arrangements that local communities have established themselves and are invested in.
There are an array of challenges facing Auckland, as well as the country. But the key issue appears to be this: programmes like school lunches and first home grants have been entrusted to people who are philosophically opposed to the idea that government can do good in people’s lives. Those in charge of public housing do not believe in public housing. Those in charge of transport despise public transport.
This is a Government that is choosing to spend $2.9b on a landlord tax break over lunches for kids, over disabilities support, and over hospital funding. And they are not even finished cutting back public services – we are yet to see the true cost of this absurd landlord tax break.
However they dress things up on Budget Day one thing is already clear: meaningful help is not on the way for Auckland.
