Over the past 50 years, Auckland has joined the rest of the developed world in enjoying some of the fastest most significant advances in prosperity ever experienced. This economic growth and its corresponding improvements in incomes continue to have a remarkable impact on what it means to live in Auckland in the 21st century.
While our largest city has experienced consistent economic growth over the last decade or so, with specific success stories, it has not as a whole performed well when compared to many other cities. We now lag behind cities we were once level with. This is a threat to our relative competitiveness which is playing out in a number of ways, most notably through the Australian migration exodus, housing affordability and socioeconomic deprivation in some areas of Auckland.
Auckland's Economic Development Strategy puts forward a plan to reverse this. The strategy has three key economic goals which would represent a step-change in the rate of economic growth and corresponding income levels for Aucklanders. The first is an annual increase in GDP of 5 per cent. The second is an annual increase in regional exports greater than 6 per cent; the third is an annual increase in productivity growth greater than 2 per cent.
Achieving these ambitious economic targets would mean Auckland's economy would improve 20 places in 20 years in current OECD gross domestic product per capita rankings. Rather than being in the company of Warsaw and Budapest as we are now, these goals will put us in the company of Tokyo and Melbourne.
Before settling on these goals, a range of alternatives were tested against measures of previous economic performance to ascertain likelihood and achievability. Some alternatives were dismissed because they were not ambitious enough (becoming one of the top 10 economic centres in the southern hemisphere), some because they were too ambitious (catching up to Australia by 2025); others because the ability to measure progress against them would simply be too difficult.
The goals adopted in the EDS will undoubtedly require some fundamental changes to Auckland's economy. Achieving economic growth at, say, a level of 5 per cent per annum, over a 20-year period, is a considerable step up from current performance. But using past performance and international experiences as a guide, the goals laid down are possible. It will require the structure of Auckland's economy to shift from import-led to export-driven, to encourage growth in our high-value service sectors as well as in our internationally competing industrial sectors. Businesses will need to be served by world class infrastructure supporting innovation, employment and productivity. Firms will need to leverage off and gain market access to the fastest growing regions of the world.
We will also need to significantly improve the extent to which people can access jobs and contribute to a productive economy. Auckland has considerable areas of socio-economic deprivation which is simultaneously both its greatest challenge and its greatest opportunity. Reducing barriers to labour market participation through heightened investment in skills and education is essential.
Though it will not be a simple shift, the benefits of doing so will be immense and widespread. These goals imply vast improvements to our prosperity and if managed well, provide the means to improved social outcomes.
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*Geoff Cooper is chief economist, Auckland Council
*Garry McDonald is director, Market Economics