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Auckland EDS Growth Goals
1. Background
2. Approach
3. Goals
4. Caveats
5. Results
Background
Objective: to grow the regional economy in order to provide more wealth for the city’s residents. M.E instructed to test alternative growth goals. The goal would need to be  Credible,  Ambitious, and
 Measureable. Approach
We have conducted a two stage test in this study;
1.Historic Growth Test: calculated the required growth rate for each goal and compared it to the historic growth rates. We removed any goals that were either unambitious, unlikely or not measureable. For more detail see “Auckland Council: Auckland Economic Growth Agenda 1st February 2011”
2.Reasonableness Test: the remaining goals were tested by calculating the required change in exports, consumption and productivity using percentiles. For more detail see “Auckland Council: Auckland Economic Growth Agenda 11th February 2011”
Goals
Goal Name
Description
a)
20 in 20 (OECD)
Gain 20 places in the OECD rankings in 20 years (by 2031).
b)
Top 10 in the South
Auckland to be in the top 10 cities in the southern hemisphere by 2031.
c)
Third in Australasia
Auckland to be in the top 3 cities in the Australasia by 2031.
d)
Top 10 in the ASEAN
Auckland to be in the top 10 cities in the ASEAN cities by 2031.
e)
2025 Task Force
NZ to have living standards that is comparable to Australia by 2025.
f)
Top half of OECD
New Zealand to be in the top half of the OECD by 2031. g)
20% better than Historic
Auckland grows 20% faster than in the past. h)
Top 10 in 20
Auckland to be placed in the top 10 OECD rankings in 20 years (by 2031).
i)
Top in the South
Auckland to be the top city in the southern hemisphere by 2031.
j)
20 in 20 (Demograhia)
Gain 20 places in the Demographia rankings in 20 years (by 2031).
Goals
Goal Name
Description
a)
20 in 20 (OECD)
Gain 20 places in the OECD rankings in 20 years (by 2031).
b)
Top 10 in the South
Auckland to be in the top 10 cities in the southern hemisphere by 2031.
c)
Third in Australasia
Auckland to be in the top 3 cities in the Australasia by 2031.
d)
Top 10 in the ASEAN
Auckland to be in the top 10 cities in the ASEAN cities by 2031.
e)
2025 Task Force
NZ to have living standards that is comparable to Australia by 2025.
f)
Top half of OECD
New Zealand to be in the top half of the OECD by 2031. g)
20% better than Historic
Auckland grows 20% faster than in the past. h)
Top 10 in 20
Auckland to be placed in the top 10 OECD rankings in 20 years (by 2031).
i)
Top in the South
Auckland to be the top city in the southern hemisphere by 2031.
j)
20 in 20 (Demograhia)
Gain 20 places in the Demographia rankings in 20 years (by 2031).
Caveats
There were two main Caveats
1.Suggested Goals:
Single focus on Economic growth ignores other important factors.
2.Modelling is a ‘best’ estimate: The work was done under tight deadlines. Results: Historic Growth Test
Findings,
Unambitious: Top 10 in the South, and Top 10 in ASEAN and Australasia. Unlikely: 2025 Task Force, Top in South, and Top 10 in 20 (require growth of 5% to 11% p.a.).
Not Measureable: NZ Top half of OECD, and 20 in 20 (demographia).
Potential Goals: 20 in 20 (OECD), Third in Australasia and 20% better than historic goals are all conceivable (requiring growth of 3% to 7% p.a.).
At the request of Council we have included ‘Top in South’ and ‘2025 Task Force’ goals in the following slides.
Results: Reasonableness Test
Reasonableness Test: Compare the required change in consumption, exports, and productivity against historic percentiles. As an example we present the test using exports in the following slides. Required change in Auckland Exports vs growth in Auckland Real GDP Results: Reasonableness Test
• The historic national average is noted by the black point.
• The red points indicate required growth for the five goals.
• Dark Red Area: goals that require continuous high growth year‐on‐year over 20 years (Unachievable)
Required change in Auckland Exports vs growth in Auckland Real GDP Results: Reasonableness Test
• Red Area: Scenarios require growth that has only been seen once every 20 years in the past to occur continuously for 20 years into the future (Unlikely)
• Purple Area: Scenarios require growth that has only been seen once every seven years in the past to occur continuously for 20 years into the future (Bold)
• Green Area: Ambitious
scenarios that require Auckland to exceed historic growth rates. Required change in Auckland Exports vs growth in Auckland Real GDP Results: Reasonableness Test
Conclusion:
Attainability of goals is heavily influenced by the exchange rate, 20 in 20 (OECD) and 3rd in Australasia are the more realistic goals. The 20% better than Historic is probably too optimistic.
Results: Other Goals
Relative Growth Goals: Auckland’s exports growing to 50% of NZ’s total exports in 20 years.
Auckland’s GDP growing to 50% of NZ’s total GDP in 20 years.
Initial research indicates that the relative growth goals of 50% would fall into the Unlikely to Unachievable categories.
Issues
Correlation: NZ activity is (highly) positively correlated to Auckland exports (i.e. exports in Auckland and NZ will follow a similar growth trajectory). Measurability: for relative exports goals there is a measurement issue. Regional exports can only be estimated, which means that this goal can not be tested accurately.
For more information
Dr Garry McDonald [email protected]
p. +64 9 915 5520
Rodney Yeoman
[email protected]
p. +64 9 915 5525
www.marketeconomics.co.nz