queenstown power

SocietyAugust 7, 2017

Power to the Regions!

queenstown power

If the government won’t do something about housing, then Queenstown mayor Jim Boult will – or at least, that’s the plan. Peter Newport finds out how he proposes to fix the town’s affordable housing crisis – now officially worse than Auckland’s – and why he’s calling on Wellington to loosen its iron grip on local government.

Just when you thought politics could not get any more exciting, the mayor of Queenstown is about to surprise everyone by solving the housing crisis. And to make things even more interesting he has also cracked public transport and is about to have a go at the cost of living, water quality and shifting the local economy away from tourism. Seriously.

Jim Boult was elected last year on a “can do” ticket. He was voted in on the basis he was going to get stuff done. He’s a very successful businessman and I’m sure I was not the only person in town who wondered if he really was going to make a difference or whether life would just get a little better for the rich and successful people in town.

But, against the odds, Jim Boult is quietly and methodically not only getting stuff done, but pioneering a new balance of power between central government and the regions.

Already he’s bashed heads together and produced a $2 universal bus fare, launching in a couple of months. Those negotiations with the Dunedin-based Otago Regional Council can’t have been easy but, as far as we know, nobody died and any blood on the walls has been largely cleared up. “A few people needed to change the way they looked at things,” says Boult, modestly.

That low fixed bus fare is going to make life a lot easier for the legions of vital, minimum-wage workers who keep Queenstown’s $2 billion tourism and hospitality machine running. But Boult knows that if he doesn’t make progress in sorting out the soaring cost of local housing, the Queenstown Lakes District will soon be without teachers, police, retail managers – in fact everyone who isn’t super rich but needs a roof over their heads. That’s the vast majority of us.

Just how he is about to deliver this miracle is an intriguing story, especially as he said before the election that housing was not a local government issue. Well, now it is. Reading between the lines, Wellington couldn’t do the job, so Jim Boult will.

Queenstown mayor Jim Boult

Queenstown is now the fastest growing centre in New Zealand. Annual population growth is over 7%. In Auckland it is 2.8%. The problem is that it’s mainly unproductive people (the super rich or super poor) moving here, not the productive, high value, mid-market work force necessary for sustainable, balanced growth and development.

Queenstown’s average house prices are now consistently more expensive than Auckland’s. Meanwhile Queenstown wages are $10,000 less than the national average. Air New Zealand plans to introduce even more Queenstown-Auckland flights this summer, making the option of living in Queenstown but working in Auckland ever more feasible. I can see the flights becoming so common that they just get called the Queenstown shuttle.

Mayor Jim Boult, like most people in Queenstown, had seen a pivotal report produced over a year ago which compared Queenstown to Aspen in the United States. In simple terms the report said that if Queenstown did not do something serious, very soon, the town would end up as a scorched-earth playground for billionaires, where the only surviving industry was property speculation by and for the mega-rich.

Boult’s first tactic after being elected last year was to call on Wellington. He’s a polite, almost shy sort of person and he paints a picture of positive talks. Ministers came and went. Nick Smith and Paula Bennett had their photos taken standing by the mountains and the lakes. Jim Boult was in the picture too – smiling.

But nothing really happened. In fact Paula Bennett slapped down Boult’s robust advocacy for a tourist tax saying it would make New Zealand too expensive.

Nick Smith waved expansively at tracts of potential housing land and spoke of more special housing areas and government debt, gifted with a big blue ribbon around it – but repayable all the same. Andrew Little had offered Queenstown a thousand new affordable houses (up to $500,000 each) over ten years. Jacinda Ardern might have a better offer.

The message was that the government cared about Queenstown and recognised how important Queenstown was. But it was still hard to get rid of the image of a patronising parent patting a wayward child on the head, explaining that the child was too young, or naïve, to understand the complexities of taxation, housing and economic development.

If I was Jim Boult I would have been fuming. But he’s just shrugged this all off and got stuck into finding his own answers, miraculously without picking a fight with Wellington.

Queenstown mayor Jim Boult holding one of his “Big Issues” cards. Photo: Peter Newport

So how is he going to fix the housing crisis? Well it’s all still under wraps, and he’s as nervous as hell that local property developers will hijack his plans, but the Task Force he put together is about to rewrite the rules.

There are two key parts to the plan. One is to separate land from houses. The other is to change the way low and middle income earners finance their house buying.

The land will be owned by a trust or social housing organisation on a rolling 99 year lease. Low and middle income home buyers will be able to build or buy just the house and keep any increase in house value. The land will stay with the social housing organisation. Property speculation, or the rapid flipping of houses, will not be allowed.

The second part of the plan involves changing the way that the new owners put a mortgage together, potentially moving away from the banks and side-stepping the loan to value arrangements which make it hard for people to find a big enough deposit. Third party investors could put up the money, on commercial terms, in return for security linked to the land or the house via the trust.

The plan could therefore not only make it easier to finance a home but could halve the cost. That means an “affordable” house that is currently over $700,000, and therefore not affordable at all, could drop to $350,00 which is a lot more affordable, especially when linked to the new finance arrangements.

The Queenstown Lakes District Council has in fact already been doing some work around social housing via the Queenstown Lakes Community Housing Trust which uses a 5% levy on developers to get some people into new homes. But the scheme has not been big enough, or bold enough, to make a deep dent in the local housing crisis. Over 400 families are currently on the waiting list for Trust housing.

All of this is against a background of the government’s claim that there is no Queenstown housing crisis and Housing New Zealand selling off the handful of dilapidated local houses it did have, saying there is no demand. Go figure.

But the Boult Housing Task Force, made up of a formidable collection of architects, economists, lawyers, accountants and planning experts, is just the very start of a revolution in the Queenstown Lakes. A quiet revolution fuelled by a small army of very smart people who shifted here because it is clean, friendly and beautiful.

And guess what – they are working with Jim Boult for free. He’s figured out how to mobilise these brains into action, action that is socially responsible and financially realistic. He’s figured out that profit and people are not mutually exclusive.

I asked Boult, who is something of a legend in the business world and a former CEO of Christchurch Airport, where all of this social responsibility is coming from.

“I’m from Invercargill, where my dad was a tailor and my mum was a seamstress. It was a working class family and they lost their jobs in the Depression, so they started their own business. My parents gave me a loving, caring upbringing, but never gave me a cent.”

I was at Boult’s house, covering the local body elections, on the day he was elected mayor last October. It was just him and his close family. There was a total absence of business buddies, and he has plenty. He’d survived a scandal which centred on his involvement in the collapse of Stonewood Homes, but otherwise it was a clean-ish campaign where Boult had a clear lead over other mayoral hopefuls.

Jim Boult only works two days a week as mayor of Queenstown. The rest of the week is spent on his business interests which include a senior role with the Hawkins infrastructure and construction empire. You can see why the Robin Hood role seems unexpected.

I asked Boult what his politics are. “I like making a bit of money,” he tells me. “But one of the things I’ve always liked about New Zealand is that it is an egalitarian society, so you can count me as a bit of a socialist.” He points out that his kids went to the local Wakatipu high school which boasts 43 nationalities. He said  they quickly learned that “not everybody lives in a flash house and drives a BMW.”

I’m still grappling with the apparent disconnect between his triumph-of-capitalism business career and his new role as a warrior for Queenstown’s poor and disenfranchised.

He shows me a stack of coloured laminated cards, tied together with brown, agricultural twine. The front card has “Big Issues” printed in a large font.

“On December 27th I was at home figuring out all the things that needed to be done. I came up with this,” he says, brandishing the stack of cards that pretty much sum up everything that can possibly go wrong with any New Zealand town or city. One card says “Our relationship with central government.”

A Jim Boult ‘Big Issue’ card. Photo: Peter Newport

I decided to check out the Boult story with a cross section of Queenstown people. It seemed too good to be true.

Martin Hawes is a well known and respected financial expert, with a special interest in housing. “I’m hearing time and time again that we are losing people from Queenstown, and being unable to attract new people to Queenstown, because of the lack of decent, affordable housing. I believe that the social and economic concerns around housing are aligned and there’s a sea change that says we, as a society, need to get the housing problem fixed.”

“Jim Boult is bringing commercial experience to a social problem, and that in my view is working. I don’t want to be part of a hollowed out community where even well paid, professional people can’t afford to live, let alone the lower paid workers that are so important to the economy.”

OK, so that’s a tick for Boult. Hawes has just taken on the Chair role with the Queenstown Lakes Housing Trust, so he’ll be directly exposed to the lengthening waiting list of people who can’t get into their own homes, even on decent double incomes.

Trent Yeo is an entrepreneur and something of a local activist in terms of pushing for change. He’s a trained architect and arrived in Queenstown 11 years ago from Australia. He now runs a thriving eco-tourism business and is part of the Boult Housing Task Force. I asked him how good Queenstown could be if people like Jim Boult can engineer the right solutions. “I’d say we could become one of the ten best places in the world to live.”

Has Boult got the answers? “I think he has, but the big question is can he keep up this rate of change or an even faster rate of change that we will probably need. We also need an even higher vision, something that can take us into a bold, even radical future.” I agree with Yeo. Strong and effective won’t be enough. Queenstown needs to aim higher in order to achieve its true potential.

Queenstown entrepreneur Trent Yeo. Photo supplied

Another reality check on the Future According to Boult is his faith in big business. It seems misguided, given that the free market is failing on many fronts to deliver solutions in New Zealand today. The housing crisis is a shining example. Queenstown has a number of businesses which appear to have more than sufficient resources to house their own workers, and yet they haven’t, or at least not publicly.

Former mayor Sir John Davies is listed by the NBR as being worth well over $100 million, as is the Thomas family, founders of the Skyline gondola and restaurant that sit above Queenstown. Davies runs Queenstown’s two ski fields, Coronet Peak and the Remarkables, along with Mount Hutt via Trojan Holdings and NZ Ski. A $20 million private jet is believed to have been recently purchased by the company, presumably to research ski fields beyond Otago and Canterbury. Ironically Queenstown’s airport is so clogged with other private jets that the Davies aircraft has had to park up in Wanaka.

But NZ Ski, after a failed attempt at housing ski workers in Cromwell last year, turned this season to Queenstown private property owners to rent spare rooms for their hundreds of seasonal staff. It worked, but did not cost the ski company a bean.

I ask NZ Ski’s CEO Paul Anderson if the business contributed enough to the community. “We do, but we prefer to stick to the business we know and that’s where we make our investments. If things got critical with accommodation we would revisit the issue of staff housing but so far it looks like the community has supported us well.”

Many commentators would argue things got critical quite some time ago. The media (myself included) has been covering the ghetto-like rental properties that dominate the Queenstown market, which see groups of low-wage workers crammed into an unheated room with little privacy – and paying up to $200 a week for the privilege.

I ask Jim Boult if he thought big business owners were pulling their weight. “They are amongst the biggest contributors,” says Boult. Really? I can’t find abundant evidence of this.

Boult says that the owners of these high profile businesses don’t want to trumpet their contributions in the public arena. “So, hand on heart, you are convinced they are making a fair contribution?” I ask, not wanting to sound sceptical. “Hand on heart, they are.”

NZ Ski CEO Paul Anderson

Before we get too carried away thinking that Queenstown is on the verge of becoming Utopia, it’s worth mentioning that Boult is currently cheerleading an expensive consultation exercise that has all the hallmarks of an Auckland roading fiasco. It’s all about a glossy new town centre, supported by hundreds of thousands of dollars worth of  communications, planning and strategy experts. But given the fundamental challenges around low wages, the housing crisis and environmental threats, does it really make sense to look at spending over $100 million on a by-pass road to help scrub up the Queenstown town centre?

Regardless of how critically Jim Boult’s gospel is examined, there’s no doubt that his enthusiasm and early results are infectious. I was in Wellington recently and bumped into him at the airport, along with a Queenstown Lakes District Council delegation. I guessed they’d just been quietly doing some “attitude adjustment” work at parliament.

Boult’s Council CEO, Mike Theelen, gave me a lift from Queenstown airport back into town. He’s an experienced, cautious operator so I was surprised to hear him talking as though we were back in the Think Big days of the 1970s, when huge things was seen as a good idea.

We were talking about how Queenstown and Wanaka were so different, while driving along the main airport road which used to be clogged with hundreds of cars avoiding eye-watering parking charges at the airport itself. The cheekily parked vehicles have just been surgically banned in a harshly effective council crack down, something that local MP Todd Barclay championed before his downfall.

MP Todd Barclay’s photo of cars parked on the road to Queenstown airport. Photo: Todd Barclay / Facebook

Theelen and I were agreeing that Queenstown and Wanaka had so much to offer each other and yet the two won’t play nicely together, like proud but incompatible members of the same family.

“There was never a proper business case for the Lyttleton tunnel,” observed Theelen, enigmatically.

He went on to explain that he thought the Crown Range, with it’s 3,000 foot high, icy summit road, was not that formidable a barrier between Queenstown and Wanaka. It could be fixed. He was talking about a tunnel.

The conversation stuck with me and I arranged to meet Theelen again a few days later on official turf, with the council’s new comms supremo Naell Crosby-Roe in attendance.

Somewhat to my amazement Theelen was happy to continue explaining his enthusiasm about getting Queenstown and Wanaka physically connected to each other. He was Thinking Big. Clearly Boult’s enthusiasm had leaked through the wall from his office next door.

We talked about how the connection between the two towns could be digital and physical. We agreed that an Elon Musk-style hyper loop train could make the 80 kilometre journey in minutes and would need little land. Mike Theelen was not dismissing a tunnel either.

“I see Queenstown being the headline act and Wanaka being the engine room. Wanaka airport could take on a bigger role, connecting to Auckland, Wellington and Christchurch. A physical link between the Hawea and Wanaka areas with Queenstown could be part of that picture. After all, in Europe, physical links cover even great distances and it would only have to be a partial tunnel.”

Theelen also enthusiastically supports the need for greater economic diversity, getting away from the tourism mono-industry and improving per capita GDP. I ask if he’s OK with becoming an entrepreneurial council CEO. He says he’s fine with that. He’s enjoying the Boult experience and says that not only the elected councillors but council staff have also been infected with the energetic, optimistic vision from the top.

Just the day before chatting with Mike Theelen I’d been over to Wanaka for a meeting. I had half an hour spare and took a local tiki tour to check out how Wanaka was doing. I don’t think they’d like being described as the “engine room” for Queenstown.

Wanaka people take pride in being more refined, less brash than Queenstown. McDonalds has been banned from Wanaka. It would lower the tone.

I drove along Beacon Point Road, on the shores of Lake Wanaka, past row upon row of flash houses, each valued at between one and three million dollars. There were hundreds of them, kilometre after kilometre. Most were not here even five years ago, let alone ten.

I asked Wanaka based Celia Crosbie, one of the area’s top PR people and a former journalist, who it was that owned all of these mansions.

“Retired farmers. People from Auckland. People from the UK.” I asked what they all do for fun – after all Wanaka does not have the night life of Queenstown. Crosbie reeled off the names of Wanaka restaurants and bars I’d never heard of. She noted also that there is a vibrant business community in Wanaka with its own incubator and support structure for start ups. I’m sure they all dream of one day being the headline act to Queenstown’s engine room.

Celia Crosbie. Photo supplied

Back in Queenstown, having driven very carefully over the frozen but beautiful Crown Range, I’m doing my final due diligence on the World According to Boult. I’m having a coffee with two senior economists. Ralph Hanan used to be with the World Bank and Bill Moran was high up in the Treasury. I wanted to find out if an economic miracle was possible in Queenstown, and of course Wanaka.

Moran is part of the Housing Task Force and Hanan is a friendly but persistent thorn in Jim Boult’s side. He’s been arguing for over a decade that Queenstown’s low wage tourism economy is the sort of death spiral which will result in the apocalypse that is Aspen. Most people actually agree with him, including Jim Boult. The trouble is that, so far, not much has been done to avoid that happening.

The picture these two paint is dark. Moran points out that New Zealand is 15% below the OECD average in terms of GDP per capita. He says that our growth has been off the back of extra labour and people working longer hours, rather than increasing output per hour. We only produce two thirds of Australia’s output per hour. He says we are low on labour skills, low on capital investment and have weakness in the structure of our industries.

Ralph Hanan adds that local Queenstown growth has actually been 7.9%, ahead of 7.1% for the district. Employment has boomed, up by 10.3%, but GDP has only increased by 9.6%, which means productivity has got worse. Since 2014  Queenstown productivity has declined below the figure for the rest of New Zealand.

This all means that we need to get smart. Smarter industries, not just tourism. Better pay. Better skills. More investment. More strategy. And of course that needs better housing and roads so people can actually live and work here.

Jim Boult is onto that. It does not really matter whether it is for social or business reasons. Probably a bit of both, which is fine. Mike Theelen is ready to execute the mayor’s vision, to defeat the Crown Range, to join the economic and practical dots. The Queenstown Lakes District Council reported a $39 million surplus for 2015/16. Local tourism businesses are raking in the cash and property developers are developing like there’s no tomorrow.

I asked Oliver Hartwich of the NZ Initiative in Wellington what he made of it all. He told me that central government has to give more power to the regions, including the right to collect tax and decide how it is spent. He is a fan of special economic zones. He points out that in Switzerland and Germany house prices have hardly gone up since the 1970s because local councils also control land, local taxes and housing supply. He tells me that in New Zealand, Wellington just won’t let go, won’t trust local government. Hartwich says he’s had these conversations with Bill English and Stephen Joyce, but they just glaze over.

It could be that Jim Boult is about to take that choice away from Wellington. His argument that he needs to get things done will be hard to fight. Government ministers will have to start adjusting their attitude to the regions. Otherwise Jim might pay them a visit.

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Mad Chapman, Editor
Aotearoa continues to adapt to a new reality and The Spinoff is right there, sorting fact from fiction to bring you the latest updates and biggest stories. Help us continue this coverage, and so much more, by supporting The Spinoff Members.Madeleine Chapman, EditorJoin Members

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