Straight Thinking – By Owen McShane

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The suburbs keep scoring points!

The 2007 conference of the American Dream Coalition featured presentations by economists, transport engineers, and other genuine experts in urban affairs. A common question was “how come today’s planning professionals are given so much credibility when they actually have no expertise in any of the matters they talk about?” Indeed, a popular definition of the US planning profession was “a group of professionals who claim to know how to plan cities even though they have no knowledge of how cities actually work.”

One claim in favour of “Smart Growth” is that people will interact more frequently and more effectively if they live at high densities and avoid the isolation they experience in the dreadful suburbs – which promote every kind of misery known to man.

A new international study, “Social Interaction and Urban Sprawl” by Jan K. Brueckner (Department of Economics, University of California, Irvine) and Ann G. Largey, (Dublin University Business School, Ireland) puts this piece of planning lore to rest. The authors’ final paragraph concludes: “the paper’s findings suggest that social-interaction effects should not be included in the panoply of criticisms directed toward urban sprawl. In fact, the results suggest an opposite line of argument.”

The banging sound you hear is another nail being driven into the coffin of planning lore.

And now a new report from Australia provides even more music to the ears of those challenging “Smart Growth”, the ARC’s Policy Change 6, and similar foolishness. The report by Energy Australia, “Multi Unit Residential Buildings Energy & Peak Demand Study” examines the relative energy consumption of high-rise and medium-rise apartments and villas, town houses, and detached dwellings, on a “per capita” and “per household” basis. Now we all know – because the planners tell us so – that higher densities save energy, and that suburban detached housing is energy profligate. Well, it seems we have been misled – again.

The report finds that low-density housing outperforms high-density housing in energy consumption and greenhouse gas emissions.

The Royal Commission and the Governance of Cities.

The Government has announced a Royal Commission of Inquiry into Auckland Governance. The Honourable Peter Salmon QC is in the Chair. Dame Margaret Bazley and Mr David Shand are the Commissioners.

The terms of reference are suitably broad and the members of the Commission are well qualified. However, most commentators seem to assume the outcome will be some variation on the “Super City”, with the specific arrangement of the grand amalgamations being all that the Commissioners have to decide on.

Again it is to be hoped that we can learn from the experience of others. A good place to start is some recent studies of similar experiments overseas.

The 2005 study “Pennsylavania’s Efficient Township Government” by Wendell Cox shows that the smaller local governments in that State have by far the lower costs per capita even when attributable spending is added, and spending financed by state and federal sources is subtracted. Back in the mid-nineties a Consumers’ Institute survey of New Zealand local government reached the same conclusion, so we should not be surprised.

This conclusion contrasts with the current “conventional wisdom,” that larger governments are more efficient. The Cox report finds that the only “economies of scale” in larger governments are for special interest groups, which are able to exert control over larger government organizations with less effort and expenditure than would be necessary to control a myriad of smaller local governments.

At the same time, smaller local governments are more effective because they are “closer to the people.”

The rot has set in when your Council decides to adopt a “sister city” somewhere far away.

This report on Pennsylvania is mainly about outcomes, while Wendell's earlier 2004 report on Montreal is mainly about process. The gerrymandering of the vote for the amalgamation of cities in Quebec makes depressing reading. The amalgamations were effectively forced on an unwilling public who became so disillusioned they eventually demanded their right to vote to “de-amalgamate” or “de-merge”. The greatest blow to amalgamation occurred in formerly “Grande Montreal”, where 22 former municipalities qualified for the referendum and all voted to de-merge.

Ten years ago, the Ontario State government forced six municipalities to amalgamate into the “Super City” of Toronto.

The government was convinced this mega-government would be more efficient and claimed this was supported by a study by a prestigious accounting firm which predicted annual savings of $300 million. (They always do.)

In reality, Toronto’s costs increased dramatically, and government became much less efficient. The “efficiency” claims evaporated away as fast as the value of money in post-World War I Germany. University of Western Ontario urban policy expert Dr. Andrew Sancton had predicted that the harmonization of collective agreements and services among the six jurisdictions would rapidly lead to higher costs and higher taxes. He was soon proved right.

By 2003, the Toronto City Summit Alliance reported “The amalgamation of the City of Toronto has not produced the overall cost savings that were projected.”

The amalgamation has failed to make Toronto more competitive. Between 2001 and 2006, the first full census period after amalgamation, the city accounted for only five percent of the metropolitan area’s population growth. In the period before amalgamation (1991-1996), the city-to-be accounted for 30 percent of the growth – six times better than the post- amalgamation period.

In 2007, the city now faces a projected budget deficit for the current fiscal year that is almost twice the phony $300 million savings.

These amalgamations may have generated economies of scale but they benefit only the special interest groups. As local government is more centralised, voters have less control over what goes on. Moneyed interests find larger governments more accessible and thus more susceptible to their influence. This political reality will apply wherever human nature operates. This is why special interest groups lobby so hard for amalgamations.

The experience of large municipal amalgamations is clear. Montreal and Toronto are just two of the more recent examples. Municipal amalgamations are virtually always sold on the basis of saving money. They virtually never do.

How to Manage Infrastructure

The drive to amalgamate Auckland’s cities is driven largely by the belief that one Super City will do a better job of planning infrastructure and land use because a single government will be better at integrating all these issues into coordinated outcomes.

This notion is based on the totally false premise that we actually know how to plan large systems, and that the bigger the entity the better the planning. If this were so, the Soviet Union would have been a raging success.

All human experience shows the opposite is true.

The best planning of infrastructure is done by single-minded entities who have to compete for resources.

In Unlivable Strategies: The Greater Vancouver Regional District and the Livable Region Strategic Plan, Randal O'Toole argues convincingly that the best way to manage infrastructure is to have dedicated bodies who deal solely with their own task, just as the Reserve Bank deals solely with monetary policy, and Catchment Boards used to deal with flooding. We now get heaps of floods because Councils are obsessed with “rising sea levels” (even when they are actually falling) and neglect their responsibilities in river management.

Under special function infrastructure management the necessary “integration” takes place through public debate rather than by committees meeting behind closed doors. With multi-functional regional government one pressure group usually comes to dominate all activity and everything gets brushed aside in favour of “the favourite fad”.

There are a host of failed experiments out there. We should be able to learn from them.

So far, the track record is hardly encouraging.

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