Photo: Joel MacManus

OPINIONWellingtonMarch 4, 2024

The Newtown Festival is the promise of Wellington

Wellington editor

Photo: Joel MacManus

Newtown’s legendary street fair is Wellington at its very best. It also shows what the city risks losing.

As a kid growing up in the sterilised world of suburban Nelson, Wellington always held a special allure. A quick jump across Raukawa, there was a city where life just seemed more… interesting.

There’s no event that captures the promise of Wellington more than Newtown Festival. In the peak of the day, 80,000 people descend on the street for food trucks, art stalls and circus performances. In the afternoon and evening, the focus turns to the music stages. Afrobeats and Peruvian electronica. A DJ set in an empty warehouse with a secret entrance to a dance floor through a Portaloo door. Saxophone bands who take breaks in their set to call for a free Palestine.

It’s a colourful, chaotic world. Green hair and flowers. Old men with mohawks. Tattoos and piercings. Fashion that is almost intimidatingly cool. Public servants forgetting about their boring jobs for a moment. Salt-rimmed margaritas, craft beer and recreational drugs.

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Joel MacManus
— Wellington editor

Anyone who has ever started a business understands the value of a unique selling point, something you can offer that none of your competitors can. Cities are the same. They are in competition with each other to attract new residents, who will pay rates, but more importantly, add to the world around them. The creators, entrepreneurs, investors, workers and customers who pump energy into the city. Every kid leaving home in the regions, every new university graduate, every family deciding to move their lives across borders, has some level of choice about where to live.

Wellington has to contend with Auckland, Christchurch, Australia and the rest of the world. It has to make the case for what it can offer. The Newtown Festival is a perfect distillation of that – something that nowhere else in Aotearoa can match. It’s Wellington at its best. It’s the unique selling point of the city.

For the last few weeks, the War for Wellington has dominated my every waking moment (and sleeping – I keep dreaming about zoning maps). I couldn’t escape it, even in the midst of Dr Bazz’s set of “Gangsta Minimal Tough Tech Sleazy Slut Funk” tunes. Because, like every single social and economic issue in this country, the Newtown Festival also depends on housing.

The Newtown Residents Association has been the most militant anti-housing force throughout the District Plan process. They’re the group who hired Dr Tim Helm, the fringe economist who convinced the independent hearings panel upzoning wouldn’t have any effect on housing supply or affordability. They fought to expand character areas, reduce height limits and keep Newtown out of the centre city walking catchment, which would have allowed six-storey apartments by default.

The Newtown Residents Associations has a reputation. Behind closed doors, council staff take great, bitter pleasure in referring to it by its initials: the NRA. (To be clear, the NRA does not represent all of Newtown. It is just a faction of mostly wealthy homeowners who claim the mandate of the entire community).

It’s easy to see why the members of NRA are protective. They see the magic this suburb holds. The Newtown Festival is a testament to that – it’s been running since 1997 and is always a highlight of Wellington’s social calendar. It’s an incredible effort of community spirit and imagination. But ironically, the NRA’s effort to so tightly protect their own idea of Newtown is exactly what could kill it.

A good vantage point. (Source: Joel MacManus)

When you say “gentrification” people mostly think about the physical symptoms. Bougie new coffee shops, bakeries, and chain restaurants opening up in generic concrete and glass buildings. But gentrification isn’t always new buildings – sometimes it’s the lack thereof. When you restrict the supply of housing in a growing city, eventually only the rich will be able to afford them. Everyone else has to move on.

Newtown was once a working class community, home to people who raised families while working in the factories and wharves of Te Aro. Those people were eventually priced out, and Newtown became a home for the upwardly mobile. Young artists and creatives could put five people in a flat and pay higher rents than two working parents.

Those groups gave the area its personality. They started and supported the likes of Moon Bar, Black Coffee, and Baobab. In its own small way, Newtown followed the trend of slowly gentrifying hipster neighbourhoods like Notting Hill in London or Brooklyn in New York.

Newtown is still an area of great diversity of race, religion and income, because it is home to hundreds of council flats. But those council flats were once a stepping stone, where people could take time to get on their feet before moving into the private housing market. That’s no longer the case. Housing in Newtown has grown more and more expensive. There is a huge rift of inequality. The average length of tenancy in council flats has grown longer and longer. It’s not a stepping stone anymore, it’s the only spot on the lifeboat.

This has happened simply because there are not enough homes in Newtown. The NRA has made sure of that.

The next step for Newtown, if it continues on its current trajectory, is even deeper gentrification. The working class has gone. The artists are on their way out, replaced by young professionals in corporate jobs. Soon, it will be only doctors, trust fund babies and principal policy advisors, plus the remaining council tenants who can only dream of home ownership. The ladder has been picked up and taken to Wainuiomata.

The only way to keep Newtown’s character, to allow this community to keep its life, personality, vibrancy, and diversity, is to grow up, gracefully. There needs to be more homes here, and a greater variety of them. Apartments and townhouses. Places for baristas and indie musicians, as well as doctors. So that the new immigrant and refugee families can see a pathway to their own homes, without having to move away from the community that helped them get established in this country.

Newtown is worth celebrating. It’s the best of Wellington. But it won’t survive by staying the same, it will only survive through growth. It needs to be inclusive, not exclusive. That’s the promise of Wellington.

Joel MacManus is The Spinoff’s Wellington editor. He is a renter in Newtown.

AnalysisMarch 4, 2024

How low-density housing is making us poorer

Matt Williamson

Guest writer

Wellington’s new District Plan will decide between a higher-density future, or the current trend of urban sprawl. Economist Matt Williamson takes a look at the economic benefits of dense cities.

Enabling a higher density of businesses and houses can bring many benefits to cities. It makes us as individuals, and as society, richer – and not only in monetary terms. More choices of where to live, and less land per home, means lower house prices. A denser urban form means less time spent in traffic, lower carbon emissions and lower infrastructure costs.

Retail, hospitality and entertainment precincts thrive when their customers don’t have to travel as far to reach them, and the location of so many people near each other enables greater specialisation in the workforce and greater economies of scale.

We can do things more efficiently and at lower cost when we co-locate. Businesses involved in a production chain will create more goods more cheaply when they’re clustered together than if each step in the chain requires transportation over a large geographic distance.

That is what economists refer to as “economies of agglomeration” – the benefits that occur when things and people are located closer to each other. When more people cluster together, it means there is more formal and informal networking, more innovation, higher specialisation, and therefore higher GDP and wages. Larger and denser cities tend to have more efficient labour markets. When you have a bigger pool of candidates, it’s easier for a company to find an employee who’s an exact right fit, and it’s easier for an employee to find a company that’s right for them too.

In 1890, economist Sir Alfred Marshall remarked that cities have “ideas in the air”. He developed the theory of “knowledge spillovers”, that closely clustered businesses in the same industry will quickly adopt innovative new production techniques and technological advancements.

Some great examples include the semiconductor industry in Silicon Valley, or the film industry in Los Angeles. Knowledge spillovers also apply to related industries. A classic example is Detroit’s shipbuilding industry in the 1830s, which later accelerated the growth of an automobile industry in the 20th century, because companies could apply similar technology and processes.

When you have more customers clustered together, businesses can specialise their product offerings to more closely match what people truly want. If you live in a small town you may have to settle for a restaurant serving food described no more precisely than “Chinese”, but in a larger centre, you’ll find restaurants specialising in Sichuan, Cantonese, Shandong or Jiangsu cuisine. It could even specialise in producing dumplings or noodle dishes, a more niche offering than would be sustainable in a smaller market.

This is what’s known as agglomeration in consumption, or to non-economists, a better selection of restaurants. Larger centres also enable economies of scale in consumption. If you want to go to a lot of rugby games, or see a lot of international live music acts, your preferences will be better met if you choose to live in Auckland than Alexandra.

Exactly how much richer can locating closer together make us? Well, it turns out, potentially quite a lot. Prior to Auckland’s upzoning in 2016, Waka Kotahi estimated doubling the density of employment in Auckland could increase productivity by 5-10%.

One US study found that if New York, San Francisco and San Jose had kept restrictions on new housing to the same level as the median US state between 1964 and 2009, US GDP would be 14% higher today. This translates to a “total wage bill” across the entire US economy that is $1.32 trillion higher, or an additional $9,174 in wages for the average worker.

Another study found that if the average US state had housing rules that were even half as permissive as Texas over the 1940-2014 period, labour productivity would be 12.4% higher, and consumption spending would be 11.9% higher. It would mean more productive businesses, higher wages and more spending on the things we want and need.

Unfortunately, one key theme linking many highly productive urban centres around the world is expensive housing. High house prices restrict many people from living and working in these highly productive centres, so people instead choose to live somewhere more affordable and less productive. Research out of the Netherlands shows the key driver of where people choose to live is how plentiful the supply of new housing is, rather than the supply of high-paying jobs.

Escaping the rat race and moving to a small town may sound like a nice idea when you’re stuck in traffic on your morning commute, but when thousands of people make this decision, the productivity impact can lead to a significantly lower GDP than if we just enabled more apartments and townhouses to be built in high-demand areas, and let people move to where they were most productive.

By failing to enable enough housing in our most productive centres, we risk failing to capture these productivity gains, because people are forced to locate not where they are most productive, but where they can afford to live. That means a less productive society, fewer of the things we enjoy, lower living standards and a larger gap in wages with Australia.

Matt Williamson is a managing economist and CFA charter holder working for Sapere Research Group in Wellington. Matt currently owns property in Ngaio, a short walk up the hill from the Johnsonville totally-not-a-mass-transit-route train line. Any opinions expressed in this article are solely the opinion of the author and do not represent the position of Sapere Research Group.