Why less cash is f lowing in the capital
A leaked Wellington City Council draft report shows central city spending is down 15% in a single year amid a blizzard of issues, including many of our best and brightest shunning the city.
The council argues the February report is “very draft” and cannot be relied on, but experts say the problem is real and ongoing. It was compiled as the city faced an array of disruptive works – fixing ageing pipes and landmark buildings – while the council looked at how the work affected retailers and hospitality venues.
While the report showed a steady downward trend in the city, it pointed out it was hard to draw a direct line between that decrease and works because so many other problems were hitting downtown.
These included a recession, more people working from home, and Covid-19 ripples. It showed city spending had been in decline since 2020 and there was a 15% spending drop from the end of 2022 to the end of 2023.
It noted that Wellington had by far the biggest rate of workers in the “knowledge economy” – well paid, highly skilled people – and this had previously been a
“great strength” to the city.
“However, increasingly this work can be done anywhere, and workers are taking up the option to work and shop where it is most convenient to them, at home or in other regions ...
“The decline in Wellington’s CBD spend appears to be a problem unique to Wellington.”
A similar survey done for central Auckland showed the super city’s spend “continues to rise”, it said.
Lambton/Pukehīnau ward councillor Iona Pannett said some of the work, such as fixing the pipes, was unavoidable.
“Unfortunately, these are tough times and we are going to have to get through somehow.”
Fellow ward councillor Nicola Young said the draft report had to be treated with caution, but the city had become “increasingly unfriendly for business, and the council is directly responsible for much of it”.
Mayor Tory Whanau said it was important to wait for the final report before drawing conclusions and council work was under way to help the capital “bounce back”.
“But I know that it is a really tough time for some businesses in the city right now. We know because the cost of living, prolonged impact of high interest rates, and uncertainty about jobs in the public sector, people may be spending less.”
An email sent from council staff to councillors last week argued the report was “still very draft and needs to be peer-reviewed and data checked, before it is ready for public release”.
“Therefore, no conclusions can be taken from the draft you have seen.”
But Wellington Chamber and Business Central chief executive Simon Arcus said if the final report showed similar figures, there were “unusual anomalies” with separate Infometrics data showing spending in the capital was rising.
“A 15% plunge in revenue is against this trend and deeply alarming,” he said.
“The public works are a clear intervention that could impact businesses. Coupled with removal of in excess of 900 car parks, a chilling deterrent has affected those considering coming into the city.”
Chris Wilkinson, managing director at retail strategists First Retail Group, said visitation and spending data in Wellington was down “week on week on week”.
“Spending data only ever tells half the story, and is reactive – so by the time this is received, any disruption effects can already be difficult to navigate around or recover from.”
Spending data should be looked at in context of how many people come to an area, visitation and sales conversion, he said.
Infometrics economist and chief executive Brad Olsen said changes to working habits, mixed with inflation and high interest rates were being felt everywhere, but Wellington was getting “three blows at once” after public service cuts were factored in.
“Unfortunately, these are tough times and we are going to have to get through somehow.” Iona Pannett, Wellington City councillor