Some Auckland living costs cheaper than for other Kiwis: New infrastructure report

Central Auckland has higher-than-average power transmission charges, possibly a result of the city being a long way from most electricity generation sources. Photo / Andrea Izzotti

Auckland households spend an average 10% less on electricity than other Kiwis and less on every other form of home energy, a new report on the city’s infrastructure says.

The Infrastructure Commission, a Crown entity charged with long-term planning for infrastructure, cites the energy spend in a report underlining how different Auckland is to the rest of New Zealand.

It found on average, Aucklanders spend a smaller share of their after-tax income on infrastructure services, are cheaper to service with network infrastructure (though new projects can be more expensive) and had different views about the fairness of some options for pricing infrastructure than other Kiwis.

For example, they were more likely to think it’s fair to price piped water based on household use.

Auckland’s lower retail electricity prices were mostly due to lower distribution charges, the report said.

This likely reflected the city’s scale and population density, as a kilometre of urban electricity line served more customers than the same length in a rural area.

However, central Auckland had higher-than-average transmission charges, possibly a result of the city being a long way from most electricity generation sources resulting in the need for more transmission infrastructure to serve it.

Retail electricity prices were lower than the national average in the central Auckland urban area, but not in Pukekohe, a satellite town with rural surrounds.

Over the past five years, prices in Auckland central had been on average 5% lower than the national average and those on North Shore, on average, 3% lower. Prices in Pukekohe had averaged 4% higher.

The average Auckland household spent around 10% less on electricity than those outside the city. This was larger than the difference in retail electricity prices, suggesting Aucklanders also used less electricity than non-Aucklanders, the report said.

Electricity prices are lower in Auckland, a new Infrastructure Commission report says.

This could be due to lower heating costs in a warmer climate and the smaller average floor size of new homes.

Over time Aucklanders had been driving less and using public transport more, the report said.

In 2023-2024, the average Aucklander drove 11% less than they did in 2010-2011 while total vehicle kilometres travelled per capita stayed constant elsewhere.

The commission found household spending on infrastructure services varied throughout Auckland, New Zealand’s largest city and the only city with a population of more than one million at 1.6 million people or 33% of the total population.

The region contributed 38% of the country’s total economic output or GDP.

While it accounted for 33% of the country’s population, the city only occupied 1.8% of the total land area. Its population was not evenly spread within the region with 92% of Aucklanders living in only 14% of its area.

While the city was less densely populated than large European cities, it was comparable to similar-sized Australian and Canadian cities, the report said.

The city had grown rapidly as a result of people having more children and through immigration. It was New Zealand’s most ethnically diverse region with 42% of residents born overseas.

Overall, Auckland households spent 16% of their after-tax income on infrastructure services compared to an average of 19% in the rest of the country.

They spent a slightly smaller share on private transport – 52% of total infrastructure spending compared with 55% - and a larger share on public transport – 11% against 6%.

The share of household spending on telecommunication services was similar to non-Aucklanders.

The report examined how household spending on infrastructure services varied across Auckland’s 13 territorial wards.

Orakei is Auckland's highest earning ward where householders spend more on electricity. Photo / Chris Tarpey

Average after-tax incomes ranged from $63,000 in the Manukau ward to $121,700 in the highest-earning, Ōrākei.

This was important because higher incomes tended to increase demand for services, as well as increasing households’ ability to pay for them.

For example, people on higher incomes tended to own larger homes, which tended to use more electricity.

Households in Auckland’s higher-income wards spent more on services but because of their higher-than-average income, this took up a lower proportion of their income.

Wards with similar average household incomes could have quite different spending patterns, the report said.

This was because income wasn’t the only driver of spending on infrastructure services.

For example the Rodney and Maungakiekie-Tamaki wards had similar average household incomes at $83,000.

However, those in the northernmost ward Rodney, furthest from jobs and services and with less access to public transport, spent about 25% more on private transport annually ($8800 compared to $7000) and about 33% more on electricity ($2200 compared to $1700).

The report said the cost to the Government of the ultra-fast broadband rollout to Auckland homes and businesses was around 13% less than the cost elsewhere, reflecting the city’s scale and population density.

Andrea Fox joined the Herald as a senior business journalist in 2018 and specialises in writing about the $26 billion dairy industry, agribusiness, exporting and the logistics sector and supply chains.