I’ve just come back from a short visit to Japan giving an address at the annual meeting of the Japan New Zealand Business Council.  It was my first time in Japan and I was quite fascinated by the very strong emphasis on infrastructure and most notably the transport system. 

One of the sites we visited was the Sea Surface Landfill site where a 200 ha area is being filled with Tokyo waste after it has been either incinerated or heavily crushed to reduce its volume.  The numbers involved were very impressive: 2,500 truck trips each day bringing 1500 tonnes of non-combustible waste.  What really impressed me was the fact that even though it is many years away from being filled up, extremely large concrete pillars are already in place for a new bridge connecting with the mainland.

This emphasis on the transport infrastructure was also evident on the reclaimed island I stayed on of Odaiba. It was very well laid out with wide, often elevated walking areas, a monorail system, connection to a tunnel underneath Tokyo Bay, and so on. 

Because the development is so recent one would not take it as indicative of Tokyo all up but it does illustrate how well things can function if you get your transport infrastructure highly developed - which of course is where Auckland has struggled, is struggling, and is almost certainly going to struggle for many years going forward.

In fact something we have been noting in a number of our publications since early this year is that soon we are going to see increasing discussion about Auckland struggling compared with the rest of the country.  We saw an early bit of that recently with a prediction from a housing expert that the Auckland housing market would be extremely depressed for the next couple of years.

More commentary of negative nature is likely and the reasons why people are going to be increasingly questioning Auckland’s future include the following.  Most of us economists are talking about New Zealand’s long-term growth prospects being centred round the agricultural sector and therefore the regions driven by growing world demand for our primary exports.

Then there is the ageing population that is likely to lead to an even greater net outflow of older people from Auckland to the more relaxed provinces.  The tight labour market also provides a major challenge for Auckland because in the past young people would have naturally gone to Auckland in an environment of high unemployment to maximise their job chances. 

These days with a very tight labour market people do not need to move to Auckland with its appalling transport infrastructure, high housing costs, and uninspiring city centre.  Young people can enjoy a cheaper lifestyle with better access to the outdoors while still enjoying good cafes anywhere around New Zealand now.

Over the next two or three years Auckland, the destination for nearly 50% of new migrants, will also seem relatively challenged because of the absence of the massive migration boom our economy experienced from 2001 and 2004. 

None of this means Auckland has an appalling future as such.  All we want businesspeople to be aware of is that the traditional assumption over the past two decades that one needs a domestic strategy mainly focused on Auckland is not necessarily true especially in an environment where the provinces have recently been leading the growth and are likely to continue to do so over the coming decade.