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You think Auckland’s housing crisis is bad? The Queenstown car crash will be worse

It’s a place with low wages, stratospheric property prices and housing stock that’s often near-uninhabitable. Sound familiar? But this isn’t Auckland – it’s Queenstown, where the worst aspects of our growing economic inequality are writ large, as Peter Newport explains.

It’s possible you can tell almost everything about a town or city by its job ads.

So what’s the significance of “the world’s number 1 HR company” advertising for a Queenstown Airport Safety Officer, preferably able to speak multiple languages, at $16 an hour? “Uniformm included”. That’s right, the World’s No 1 HR company couldn’t be bothered to spell uniform properly.

More importantly the job spec goes on to describe a candidate with safety, diplomacy, project management, anti-terrorism, logistics and inter-personal skills …..  requirements not dissimilar to the top job at the United Nations in New York.

But the real shocker is that the World’s No 1 HR company will get heaps of applications for this part time, low-pay contract position with anti-social hours. And from people who will be vastly over-qualified for the job.

Why? Because Queenstown is full of super smart, nice, polite but desperate young people from all over the world who will literally do almost anything to stay here. And “staying here” means working for far less than they’re worth while sharing an overcrowded, under-heated, over-priced, broken down rental house with up to 30 other people.

Iconic Queenstown cityscape at dusk, New Zealand

Queenstown. Photo: Getty Images

Queenstown is the driving force behind our booming national tourism industry. It’s a wonderful cosmopolitan place, a small Kiwi town on mega steroids, the diametric opposite of a Zombie Town. Even the empty houses here, and that’s one third of all houses, are fully furnished with manicured lawns ready for their absent owners to visit for a couple of weeks each year. But it’s a town that’s often misunderstood by the rest of the country and has some serious problems which soon could become every New Zealander’s problem. If Queenstown sneezes our national, tourism-driven economy can quickly catch a bad dose of the flu.

Tourism now underpins our economy more consistently, and with arguably more cash, than the entire dairy industry. Queenstown is the real reason most overseas tourists come here in the first place and without this shiny, sometimes brash, bauble we’d all be a little bit screwed on the economic front.

However Queenstown is still a really small place… with over 2 million visitors a year. Only around 30,000 people actually live here, with only 15,000 ratepayers to cover the cost of hosting these armies of very demanding, high-spending overseas visitors. Whanganui is 25% bigger than Queenstown in terms of permanent population.

The truth is that there’s real train-wreck of a crisis developing in Queenstown. Queenstown is now more expensive to live in than Auckland: wages are lower and houses about the same price, so the ratio of income to house prices is nudging an eye-watering 12 – 14, compared to the 9 – 11 ratio that has the IMF saying Auckland is breaking world records in terms of housing affordability.

To make matters worse, the houses here in Queenstown are often old, cold and barely habitable, because many were built in the 1950s and 1960s as basic summer holiday homes for people living in Invercargill and Dunedin. Newer houses until recently have featured leaky building-style cladding. That chicken has not yet come home to roost because it’s less humid down here – but it’s here like a ticking time bomb.

Just a few weeks ago, yet another $100 million complex of supermarkets, fast food restaurants and up-market boutiques was announced for the overcrowded and underserviced Frankton area near the airport. But there’s nowhere for the hundreds of new retail staff to live and the roads are already congested to the point where this part of the adventure capital of the world looks more like a dowdy, traffic-clogged suburb in a very average mid-west town in the US.

Ironically the construction workers who are building this new super-mall are having to live on the construction site because there is no accommodation available elsewhere. They can’t afford the near $1,000 a week for a basic house, or $260 per week for a shared room that is the new normal down here.

An artist's impression of the planned Queenstown Central precinct in Frankton

An artist’s impression of the planned Queenstown Central retail precinct in Frankton

In the nearby Lake Hayes estate, which is far from grand, houses are now nudging a million dollars each. Just two or three years ago they were worth just over $400,000. Kelvin Heights, which is more upmarket, has seen $2 million become the new $1 million in just a couple of years. Arrowtown has earlier this year joined Auckland’s million dollar average house price club, followed this week by Queenstown itself.

However the real crisis is the toxic cocktail which combines the lack of properties, chronically low wages, crippling out-of-control rental costs, and house prices driven to new records every month. And is there a Plan B just in case tourism takes a dive, as it probably will when the next global financial crisis rolls along? Nope, all our shiny eggs are very firmly in one delicate basket.

Well respected Queenstown strategist and World Bank economist Ralph Hanan has been warning for years that serious trouble lies ahead. Hanan points to the incredibly low productivity of Queenstown workers, which he measures as per capita GDP. Hanan says that Queenstown’s economy is broken because so little wealth is being generated across the entire population – it’s in the hands of a few. In a paper delivered to the Queenstown Lakes District Council’s new Mayor Jim Boult, Hanan says that “social fracture” will be a consequence of more growth without greater productivity or economic strategy. If “social fracture” sounds ominous, it’s no accident. Hanan believes that our famously liberal, kind and fair Kiwi values are at risk and Queenstown could be just the first cab off the rank in terms of a Trump-esque or Brexit style national seismic upheaval.

Ralph Hanan’s argument is that Queenstown has mortgaged the mountains, and now can’t afford the repayments.

And yet the council-owned airport keeps growing like there is no tomorrow, with night flights now bringing in even more tourists from every corner of the planet. Queenstown airport now has a take off or landing every few minutes as the visitors, and their cash, flood in. But the cash does not trickle down to the people who live here, and more importantly to the residents who are now leaving because they can’t afford to stay.

Like respectable law-abiding witnesses to a nasty street fight, many of the big players – the council, the tourism business owners, the property developers – are seeing the workers and even the middle managers of Queenstown get bashed, but have so far taken little action. Everyone sort of knows the right thing to do is to intervene, but they all think someone else should actually step in and stop the fight.

Our Kiwi values are indeed looking a bit threadbare in Queenstown. But for the time being, tens of millions of dollars roll in every day. And the whole country benefits, whether from GST collection, the tax take from both employees and employers, or the massive boost to visitor numbers in destinations beyond Queenstown .

But where’s the compassion and empathy – let alone the vision? It would actually be good for business if Queenstown started to look after its workers. The alternative has been highlighted by a recent Queenstown delegation to Aspen, Colorado. Their report paints a picture of a near ghost town full of five star hotels with Ferraris parked outside … but no residents. They all live somewhere else and even the millionaires have been pushed out by the billionaires. Guess what the top industry is in Aspen now. Tourism? No, it’s property development. That’s the killer point – tourists want to visit real places, not plastic replicas of identical global resorts.

Queenstown is actually far better than most New Zealanders realise. The locals who have managed to stay here are nice and friendly. The young, smart overseas visitors who invariably fall in love with Queenstown and spend painful years getting residency add great energy and style to this place. Work here is so competitive that everyone is at the top of their game, which creates a professional, slick and high quality business environment. We have 150 fantastic bars and restaurants, plus art galleries and our very own TEDx talks. In many ways, except for the 2 million visitors, it is the perfect small Kiwi town. Plus it is drop dead, earth-shatteringly gorgeous to look at and play in. But like many beautiful things, it is fragile and needs looking after. The rapidly developing crisis here is Queenstown’s dirty and not so little secret.

Queenstown’s local body elections were hotly and colourfully contested. Mayor Vanessa Van Uden stood down after a bruising few years in the hot seat. The previous CEO, former Serious Fraud Office boss Adam Feeley, left last year saying that Queenstown was a brutal environment in which to operate. His successor, new QLDC CEO Mike Theelen, helped manage the 2011 earthquake aftermath working for the Christchurch City Council, so was at least partially prepared for the enormous task that lies ahead for him here. New Mayor Jim Boult is a smart and experienced business warrior and he says he knows that there are big Queenstown problems to be fixed – and that they need fixing fast.

Queenstown is incredibly important for all New Zealanders, even the Aucklanders who think that they have exclusive rights to a titanic housing and inequality crisis.

Queenstown represents where the whole country could end up, with one fork in the road heading to a sophisticated, diversified smart economy, the other to a sort of sad Disneyland of the South Pacific where the locals just clean the toilets and commute three hours every day in government subsidised buses.

All eyes are on the new Queenstown Council and the new mayor to grab the steering wheel and help get Queenstown back onto some sort of sensible, sustainable track. A track that the rest of New Zealand may well need to learn from and eventually follow.

Peter Newport is the founder and managing producer of TAPtv, a new regional TV channel for Otago and Southland.


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