Can New Zealand’s cities win in a global war for talent?
Kiwi cities face tough competition in attracting the knowledge workers needed to create innovation and wealth.
- 300 of the world’s largest metropolitan economies account for nearly half of all global output.
- In a globalised, digitised marketplace, existing cities must strive to be competitive if they are to attract valued knowledge workers.
- A recent PwC Cities Institute report describes the challenges ahead for Auckland, Hamilton, Tauranga, Wellington, Christchurch and Queenstown, compared with five Australian cities (Sydney, Melbourne, Brisbane, Perth and Adelaide).
By Helen Corrigan
In the 1989 Kevin Costner movie Field of Dreams, an Iowan farmer hears a voice telling him to get building and turn his cornfield in a baseball diamond.
OK, only the dead turn up initially, but in the end the isolated new facility attracts lively, motivated people from all over, eager to join the fun and games.
A recent report from the PwC Cities Institute, Competitive Cities: A Decade of Shifting Fortunes, makes the point that most of the world’s population now live where the action is – in cities.
Driven by the unprecedented pace and scale of change in today’s globalised, digitised economy, these days 300 of the world’s largest metropolitan economies account for nearly half of all global output. Come 2050, it’s predicted around 66% of us will be living in the ‘burbs’.
The growth of cities coincides with increasing returns from knowledge, entrepreneurship and the creative class. Those urban environments most committed to fostering innovation and leveraging networks will be the ones that draw this type of talent. They’ll be able to compete the strongest and benefit most from the rapid economic shifts around us.
The report has a blunt message for any doubters: existing cities have no option but to strive to be competitive in a marketplace forged by globalisation and new technology.
How competitive are NZ’s growth cities?
So in this context, how well placed are cities in Australia and New Zealand to avoid global marginalisation, and what needs to be thought through to meet the needs of a highly mobile, technologically driven workforce able to up sticks anytime and live anywhere on the planet? Are some cities more ready than others?
Turns out it’s a mixed bag.
Using the perspective of a prospective resident, the Competitive Cities report evaluates income and cost of living over the past decade in six key New Zealand ‘growth cities’ ie Auckland, Hamilton, Tauranga, Wellington, Christchurch and Dunedin. It then compares these with five Australian ‘growth cities’: Sydney, Melbourne, Brisbane, Perth and Adelaide.
Roughly 9 in 10 Australians and New Zealanders live in urban areas, meaning the way we build and design our cities today is fundamental to future success.
Like much of the world, New Zealanders are heavily invested in their cities, with the report revealing the six cities and their supporting areas accounted for 72% of all the country’s growth between 2012 and 2018, adding some 346,000 people.
Population growth is linked to ever concentrating employment and business in these cities, which include areas with a relatively small population base and high annual growth rates, read Queenstown, and those with lower annual growth rates but a larger population, such as Wellington.
Until about 2010 the total number of businesses were roughly equal between New Zealand’s growth cities and the rest of the country. But then things changed.
In the past six years, for every new business established in the rest of New Zealand, five started in growth cities. For every new job in the rest of New Zealand, three were created in growth cities.
“In the past six years, for every new business established in the rest of New Zealand, five started in growth cities.”
Among the six cities, though, not all have grown at the same pace. Once New Zealand’s largest city, Dunedin barely added as many people in the past 90 years as Auckland did in 2018 alone.
“Once New Zealand’s largest city, Dunedin barely added as many people in the past 90 years as Auckland did in 2018 alone.”
What makes an urban centre competitive?
Clearly, the global elevation of cities does not mean all cities will succeed, and in this context the report argues New Zealand’s chronic talent shortage is a major worry.
Not that the concept of urban competitiveness is straightforward.
Places don’t compete like commercial enterprises. Mobile investment, population, tourism, public funds and events, modern efficient infrastructure, local democracy and governance, flexible land and property markets, plus quality of life are all in the competitiveness mix.
Adding to the complexity is the fact that competitiveness dimensions can change, either yearly, like the cost of living, or generationally, like networks and sectors. In comparison, factors like weather and distance to market remain mostly static.
And what’s the future for accountancy in all this? While they’re just as likely to be the digital savvy professionals scoping global cities for a great lifestyle, where to for those accountants that support these internationalist populations here? What’s the future for rural accounting?
Although Kevin Costner’s character lived rurally in 1989, it seems likely an entrepreneur like him would by now have moved to the big smoke, followed by his accountant.
Fast facts: Growth cities
- New Zealand’s growth cities face tough competition from Australian cities to attract labour and talent.
- Labour markets between the two countries are fluid.
- In 2013, about 650,000 New Zealand citizens lived in Australia, roughly 15% of New Zealand’s population.
- House prices have eroded the competitive advantage of Sydney and Melbourne. Between 2008 and 2018, house prices in Sydney and Melbourne basically doubled, rising 113% and 95% respectively. However, house prices in Auckland rose 96% and in Queenstown 64% in the same period.
- In the same period, property prices also increased in Brisbane (27%), Perth (17%) and Adelaide (29%).
- Benchmarking against the median house price, a new Auckland resident meeting deposit requirements today would face mortgage payments 15% higher than in 2008. In Perth, they’d pay 40% less.
- Wellington has New Zealand’s highest median weekly household income at NZ$1997, compared to NZ$1,650 in Auckland and NZ$1438 in Christchurch.
- Auckland’s median household earnings have grown at the lowest rate of all growth cities since 2000, averaging just 0.8 per cent per year (in real terms), compared with 1.4% in Christchurch.
Figure 1. New Zealand urbanisation. Click image to enlarge.
Figure 2. Net per cent of firms reporting difficulty finding skilled labour. Click image to enlarge.
Figure 3. Business and employment concentration in Growth Cities over time. Click image to enlarge.
Figure 4. Change in discretionary income between 2008 and 2018 for 11 Australasian cities. Click image to enlarge.
To attract talent, New Zealand cities must do more to compete. Find out more about what’s needed in PwC’s Competitive cities: A decade of shifting fortunes.