October 2014
Cities of Opportunity: Auckland supplement – We the urban people
pwc.co.nz
In 2014, PwC released the sixth annual Cities of Opportunity report, comparing the performance of 30 international cities, all of which are capitals of finance, commerce and culture. These cities embody the energy, opportunity and hope that draw new people to city life every day and make urbanisation one of the most powerful megatrends of our time. Cities of Opportunity 6 enables us to compare the trajectory of cities over time, and against their key competitors – providing a window on what makes cities function best, and what features provide the strongest draw card for attracting talent. Through the addition of a global staff survey, PwC has overlaid this research with an exploration of city liveability. This supplement provides some relevant insights for Auckland, both within our national context and drawing on learnings from international comparators. We trust you’ll find our analysis valuable, and look forward to discussing with you how we can help you put our insights into practice. Best regards,
A look at the vital role of liveability in the success of cities.
page: Photographer Kieran Scott 2 FrontPwC
Craig Rice Strategy & Markets Leader
David Walker Director
Cities of Opportunity: Auckland supplement
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Key take outs Top cities are strong across the board Balance is the key to success, with top cities performing well across social and economic outcomes. Nearly all of the top cities score in the top 10 in the majority of indicators; Sydney is the exception, reaching this benchmark in only four of the 10 indicators.
Small cities can perform as well as (or better than!) big cities An important take out is that size does not matter. Every one of the indicators has both small and large cities in the top 10, usually in a good mix. Even the economic clout and city gateway indicators, which are intuitively associated with larger cities, have several smaller cities in the top ranks. Interestingly, all four quality of life indicators have a majority of smaller cities in the top 10.
Importance of city gateway status Cities of Opportunity 6 has highlighted that one of the critical factors to a city’s success is its openness to the world. While this has traditionally been associated with major hubs of trade and notable ports, increasingly being a ‘city gateway’ allows a city to be open to the world for exchange of ideas, people and commerce. While New Zealand is constrained by its geographic distance from the rest of the world, it will be important for local and central governments to continue to work towards increasing our visibility, enhancing international connections and promoting international investment and attracting of skilled migrants.
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Demographics and liveability Sydney ranks first in the demographics and liveability indicator, an encouraging result given Sydney’s similarities to Auckland on a number of relevant factors such as density, location and demographics. Additionally, some of the metrics within this indicator are based on the findings of The Economist Intelligence Unit Global Liveability and Ranking Report, where Auckland placed 10th overall, three places behind Sydney.
We the urban people PwC’s supplement to Cities of Opportunity 6 examines what people need from a city, what attracts and keeps them in a city, how they spend and what urban life looks like across the study’s 30 cities in terms of ages, densities and dependencies. The study aims to provide leaders in business, government and education with an understanding of how to develop strategies to advance the well-being of urban people and communities.
This is the fifth year in a row that Auckland has placed in the top 10 which is an excellent result out of the 140 cities assessed. However, as noted by the Auckland Mayor, Len Brown, “the number 10 ranking should remind us that we still have many challenges… as we strive to become the world’s most liveable city.”1 To further explore and illuminate the idea of ‘liveability’, PwC undertook a global staff survey of 15,000 employees, the results of which were issued as a supplement to the main Cities of Opportunity 6 report. Some of the questions in that survey were used to inform components of the Demographics and Liveability indicator, such as ease of commute, and attractiveness of a city for relocation.
The source of the survey data Who’s who?
20% of PwC staff on average in each of our 30 cities of opportunity took
Respondents break down evenly by gender.
a five-minute survey. That’s 15,000 professionals (or 8% of the firm) in every urban corner of the world.
Primary working age Nearly half of respondents (46%) are aged 30-49.
The broader findings of the global staff survey, published as Cities of Opportunity 6: We the urban people, provide a range of interesting insights for our major metropolitan areas.
Sophie Ryan, ‘Auckland 10th most liveable city – again’, New Zealand Herald, 19 August 2014, nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11311303
From the survey of 15,000 PwC staff, we found that today’s urban professionals want to live in cities with strong reputations for developing intellectual capital and innovation, as well as high marks for employment prospects and quality of life. Immigration is a ‘critical economic enabler’2 for New Zealand; the findings of Cities of Opportunity 6: We the urban people help shine light on our comparative advantages and areas of weakness when competing on a global stage for working professionals.
51%
49%
6% 5% 17% 20% 21%
2
31%
18-24 years 25-29 years 30-34 years 35-44 years 45-49 years 50+ years
P Stevens (2013) ‘Foreword’, in Migration Trends and Outlook 2012/13, Wellington: Ministry of Business Innovation and Employment, dol.govt.nz/publications/research/migrationtrends1213/MigrationTrend-and-Outlook-12-13.pdf (accessed 16 September 2014).
Cities of Opportunity: Auckland supplement
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Key take outs for Auckland
Urbanisation is one of the most powerful megatrends of our time Over half of the world’s population live in cities and this urban growth is expected to continue. For Auckland, while continued growth is expected, the rate of change is forecast to slow from almost 9% growth over the five year period 2006-2011, to 6% growth from 2026-2032.3 As many other regions around New Zealand are faced with static or declining populations, Auckland is expected to be the only region in the country to grasp an increasing share of New Zealand’s overall growth rate.
PwC’s Cities of Opportunity 6: We the urban people looked at cities through a number of demographic lenses, segmenting population statistics into six age groups; youth, young workers, prime age workers, seasoned workers, retirees and elderly. The study examines the ratio of economic dependency by looking at the working age population contrasted to the young and old they are supporting, and also considering the city’s geographic area and density. Taken together, these factors allow us to compare the nuances of city demographics and reflect on the different trajectories the cities are likely to take as their demographics change over the next two decades.
Auckland is forecast to increase its share of national growth from around 55% to over 70%, an outcome which reinforces the local impact of the international trend towards urbanisation and agglomeration.
35
†
avg.age
17
San Francisco
2013 population:
832 thousand
15
7
2025: 0.4 m
15
28
Dependency: 66%
Density 289 ppl/km²
Area: 4,894 km²
40
6
19
avg.age
21
Density 6,853 ppl/km²
33
7
Prime age workers 30-49
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2013 population:
890 thousand
21
Young workers 20-29
38
31
14
avg.age
23
32
This figure represents Auckland's median age of 35.1 years as at the 2013 New Zealand census.
†
Refer to: http://www.stats.govt.nz/Census.
Density 7,524 ppl/km²
Density 4,755 ppl/km²
Area: 716 km²
2.2:1
Sydney 6
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2013 population:
4.5 million 2025: 0.4 m
25
37
15
avg.age
19
30
Density 360 ppl/km² Area: 12,368 km²
Elderly 75+ For Auckland the ‘Seasoned workers’ group refers to 50-64 year olds and ‘Retirees’ 65-74 year olds. In the comparison cities, these groups are 50-66 years and 67-74 years respectively.
2025: 0.9 m
23
38
5
2025: 0.1 m
16
avg.age
19
5.4 million
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Area: 121 km²
2.6:1
Youth 0-19
2013 population:
Dependency: 46%
Dependency: 39%
Stockholm
KEY
Singapore
2025: 0.1 m
1.5:1
Retirees 65-74
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PwC
1.4 million 28
5 7
2013 population:
Seasoned workers 50-64
Digging beneath the high level growth numbers, it is important to look at how our international city of scale will be growing – what demographic changes will happen over time, and what that means for future urban needs.
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Auckland
Dependency: 57%
Dependency: 52% 1.9:1
Area: 187 km²
1.8:1
While Auckland is expecting growth in the proportion of prime age workers, a positive move for any economy, the predicted 33% growth in this age bracket pales compared to the 71% increase in the over 65 age bracket – rising from 12% of the total population in 2013 to 15% in 2025. This trend is not unique to Auckland, with many developed nations facing sharp growth in ageing populations over the coming decades. Cities of Opportunity 6: We the urban people examines this trend in further detail, looking at the challenges this will create for cities’ social and physical infrastructure. The report also looks at the opportunities that are inherent within cities to provide solutions for these challenges, as ‘naturally occurring retirement communities’ develop. The critical conclusion drawn in Cities of Opportunity 6: We the urban people is that demographics are not destiny. A city’s trajectory is not set in stone, ageing populations do not necessarily mean greater cost and dependency, and migration can be a game changer. With this in mind, it’s interesting to look at what factors attract people to a city, and how a city’s attractiveness to potential migrants correlates to the different indicators measured in Cities of Opportunity.
National Institute of Demographic and Economic Analysis, The University of Waikato. ‘Demographic Trends and Local Government Reform’ Presentation to the Institute of Public Administration Conference, Wellington, April 2, 2012.
Cities of Opportunity: Auckland supplement
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What do people look for in a city? The factors that people state are most important to them when considering relocating to a new city are relatively unsurprising, with friends and family being the most commonly cited (29%) followed by employment prospects (23%). While there may be little that cities can do in the short term to impact the presence of potential migrants’ friends and family, increased employment opportunities would attract more people internationally which would in turn, provide greater attraction for their friends and family to follow. Other initiatives, such as promoting international education, help break down the barriers between New Zealand and the rest of the world and can result in long term dividends through creating ongoing people-to-people links.4 Safety and security was the third highest ranked factor in a city, with 14% prioritising this as the most important factor. This is an area where Auckland has a natural advantage. Not only is New Zealand consistently ranked as one of the safest and least corrupt countries in the world5, but small cities appear to have an advantage over larger cities in maintaining a safe and secure environment. In Cities of Opportunity 6 the top 10 ranking cities in the health, safety and security indicator have an average population of 2.5 million, considerably smaller than the 8 million average population of the remaining cities in the study.
What attributes of cities attract or retain skilled workers?
Preferences
Looking beyond the factors that people cited as being the most important things to have in their city, PwC correlated respondents’ stated preferences for the cities they would be interested in relocating to (or remaining in) against those cities’ performance in the ten indicator categories in Cities of Opportunity 6.
Where to? London and New York offer the opportunity to compete at the highest level and dominate the firm’s relocation preferences. Then, the beauty and culture of Sydney, San Francisco, and Paris, offer their own allure.
London =
New York = San Francisco
= 18%
The table below sets out the indicator categories that showed the highest positive correlation for both likelihood to attract new migrants or retain those already living there.
20% Paris
5%
9%
Likelihood to stay Rank Sydney
10%
Most critical in a city:*
29%
23%
14%
Friends and family
Employment prospects
Safety and security
Most needs improvement:*
Likelihood to attract Rank
Intellectual capital and innovation
1
79%
1
63%
Tech readiness
2
76%
3
58%
Health, safety and security
3
73%
6
56%
Demographics and liveability
4
64%
2
62%
Ease of doing business
5
61%
5
56%
None of these are indicators that small cities have a disadvantage in; in fact, for some of these indicators, small cities actually have a comparative advantage, as in the case of health, safety and security noted above.
The factors contributing to intellectual capital – key for both attracting and retaining people – include measures relating to educational attainment, entrepreneurism and innovation, but the real impact of these factors is more than the sum of the parts: ‘What distinguishes intellectual capital and innovation is that it is not merely a gauge of technical (or technological) progress, or social development, or economic growth, or cultural advance, or major improvement in quality of life. It is all of these things, together and simultaneously. Investment in intellectual capital leads to an almost universal enhancement of urban society – indeed of society generally.’ 6 Clearly, cities with good intellectual resources and comparable technology readiness appeal to the relatively young, globally mobile, PwC demographic. A city’s attractiveness also rises when it offers an opportunity to live a good life on sound economic footing. Accordingly, these findings support the hypothesis that socioeconomic balance is key to a thriving city, and that skilled migrants will seek to balance heart and mind when looking for a city of opportunity.
Affordability at 28% This area was ranked as in most need of being addressed. But transportation infrastructure is also a universal complaint at 24%. *% of respondents reporting each factor as #1 most critical or #1 most needs improvement
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Nicola Gamble, ‘The importance of international education’, Business and economy in Auckland 2014, Auckland Council, aucklandcouncil.govt.nz/EN/planspoliciesprojects/reports/technicalpublications/Pages/home.aspx#business (accessed August 2014).
5
Transparency International, ‘Corruption Perceptions Index 2013’, transparency.org/cpi2013/results. (accessed September 2014).
PwC
6
Cities of Opportunity 6, PwC (2014). Page 19. (Emphasis added)
Cities of Opportunity: Auckland supplement
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Get in touch Craig Rice Strategy & Markets Leader T: +64 9 355 8641 E:
[email protected]
David Walker Director T: +64 9 355 8033 E:
[email protected]
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