Welcome to Wellington, where 'water and optimism' are both hard to find

Friday, 1 March 2024

Glenn McConnell has been speaking to the people of Wellington - those who run it and those who live it - to find out: Is our capital city all right?

“The death of Wellington has been told many times,” says Craig Renney, an economist who’s lived in the capital for more than 12 years.

We’re standing on the forecourt of Parliament. It’s a typical Wellington day - not one of those “can’t beat it” days.

It’s grey, cloudy and spitting rain. A protest is gathering on the lawn in front of us while public servants, lobbyists and politicians scuttle between buildings.

It appears like it’s been a tough few months for the capital.

Do you live in Wellington? Tell us your views on the water situation in the comments below.

From afar, the various Wellington councils have been copping flak for failing to properly invest in water infrastructure. When I was last in the capital, in late 2023, there was dirty water bubbling out between the bricks on Lambton Quay.

When something similar happened in Auckland last August, Mayor Wayne Brown was calling for an investigation into how the council’s water agency, Watercare, let that happen in the heart of the CBD, Queen St.

But in Wellington, it seemed like business as usual.

Mayors from across Greater Wellington’s various “cities” have warned the huge bills to repair water infrastructure will mean cuts to the things that spark joy.

Pools, cultural events, and money to make things beautiful - expect less of that, and a higher rates bill to boot.

“We’re all cutting budgets, everywhere, to pay for water. We’re cutting everywhere, looking at where we can take from roading, take from parks, everywhere,” says Anita Baker, mayor of Porirua.

This is not particularly unusual. Most New Zealand councils are grappling with the poor planning of predecessors and are expected to impose record rates increases alongside big funding cuts for other projects.

An age of austerity has swept local and central Governments.

But in Wellington there is a difference. The effects of austerity among its councils and also central Government could be particularly pronounced.

Finance Minister Nicola Willis has asked most Government departments to find savings between 6.5% and 7.5% by May. Does that mean job cuts? Last year, Chris Bishop - now housing minister - said “hope so”.

Government MPs have continually rallied against “Wellington bureaucracies” and - as Deputy Prime Minister Winston Peters calls it, “the beltway”.

Sources at the Ministry of Education, Customs, ACC, WorkSafe, Crown Law, MBIE and other departments have all confirmed to Stuff that jobs will go.

The confirmed and anticipated job losses in Wellington have caused significant anxiety in the capital, according to the Public Service Association (PSA).

About 45% of the public service lives in Wellington. Of Wellington’s total working population, 12% are public servants - but if you include state-owned schools and hospitals, almost one in three Wellingtonians are paid via the Government.

PSA national secretary Kerry Davies says it is “a worrying time” in Wellington.

“The Government's relentless attack on public services to fund tax cuts for landlords and higher income earners will not only impact many of our members, it will flow through to the many businesses,” she says.

The end of finery

Across the world, the fine dining scene was decimated in 1987 during the great stock market crash.

“And that in turn led to the cafe boom that we now enjoy,” says David Burton, Wellington’s most respected and longest-serving food critic.

Something similar is happening in Wellington right now. It happened in 2008 as well, Burton says, where many hospitality businesses went decidedly “down market” to survive the Global Financial Crisis.

The dominoes started falling last year. Atlas was closed, with its owner, Yu Group, saying: “The market isn’t as buoyant as it was… People aren’t spending as much as they used to.”

The Eva St restaurant Shepherd quickly followed. In February, Hiakai - a world-renowned destination for Māori and Pasifika fine dining - announced the end of service. Field & Green closed the same month, as Hippopotamus announced it would stop doing dinner services.

“What we're now seeing is the city’s leading restaurants are closing,” says Burton.

While restaurants are suffering, he says the hospitality industry will survive. It will just look very different.

“People still want to go out for coffee and still want to go out for a drink,” he says.

“Five new cafes have opened and four new bars have opened… We’ve got an interesting new development of the revival of wine bars with serious food.”

Headwinds blowing through the capital

On the surface, last year wasn’t horrible for Wellington. Compared to the rest of the country, growth in the city’s economy was right on average at 0.7% for the year to December 2023.

But when you zoom out to look at the strength of the entire region - not just the land south of the port - the picture is far less rosy.

Greater Wellington only just avoided a localised recession, with growth of 0.2% for the year.

Wellington Chamber of Commerce boss Simon Arcus says the region has stalled, readying itself for the storm of political change.

'We would describe the mood at the moment as 'brace for impact',' Arcus told Stuff.

Everyone is holding their breath for the Government's Budget, which Willis is set to deliver in late May.

“There is a definite sense that economic activity has been cut back or is on hold,” he explained.

“The big question for Wellington is the size and impact of any public sector job losses. These are well-paid professional salaries and a large cutback could have an impact on the economy, house prices and city businesses.”

Local Government hasn't been much help either, he says, with water restrictions generally annoying everyone - including businesses.

“They are being told to restrict water due to a crisis as 40% of the city's water leaks onto its footpaths. It is only human to find this aggravating.”

A National-led Government had, initially, led to some optimism for employers - but the mood of the city appears to have deflated any economic benefit. Arcus says it's difficult to pinpoint the roots: “It is hard to say whether water or optimism is in shorter supply”.

Liz Melish, the Wellington-based co-chair of the Federation of Māori Authorities, says ahu whenua - Māori primary industries - in the rural north have kept steady, but delays with transport infrastructure are not helping.

She says the incessant “negativity” is itself starting to take a toll, stymieing investment and generally bringing down the mood of the nation.

There are glimmers of hope as you walk through the CBD.

Two prime spaces in the CBD, the old Readings Cinemas on Courtenay Place and Kirks building on Lambton Quay, should soon be filled.

Wellington City Council agreed to a controversial multi-million deal for Readings Cinemas on Thursday, if the owners agreed to redevelop the abandoned Courtney Place wreck. Mayor Tory Whanau said the empty site had been killing the city’s entertainment and nightlife centre.

Jim Wana, a commercial real estate agent, said he leased out the Kirks’ ground floor to international brands Calvin Klein and Tommy Hilfiger last year - but they weren’t able to move in until March due to seismic work on the old building. Bringing Lego to Willis St had also been a highlight.

“We’ve got a few other things in the pipeline, but can’t disclose those yet. Safe to say, retail is quite active in the CBD,” Wana says.

Mood of the city

When the sun shines, Wellington emerges.

On a bright and warm lunch hour last Monday, Midland Park was filled with workers eating crispy chicken, reading books and listening to podcasts. For the most part, things felt good.

But in conversations with many, there was an undeniably gloomy outlook. The little things are taking a toll.

A Ministry of Social Development worker told Stuff they were now forced to go and buy coffees because their work has taken away plunger coffee “as part of the cuts”. Now there’s just a can of instant coffee in the staff lunchroom “which is depressing”.

That staffer sees writing on the wall, and is looking to move to either Melbourne or Sydney, in Australia. With more advanced public transport there, including completed light rail systems, he says he could also save money by living further from the city centre - while keeping an easy commute into the CBD.

That same Monday, Newstalk ZB Wellington was reporting the train system would likely close every weekend “for the next 10 to 15 years”.

Renney, the economist, ponders if the people of Auckland and Christchurch do seem happier than him.

“There's no reason to believe Wellington will do worse than anywhere else,” he says.

He thinks this is history repeating itself.

“John Key, famously in 2013, said that Wellington was a dying city. It hasn't died yet.

“Rumours of its death, maybe, are a little bit overblown. Certainly, it's going to face some challenging circumstances and possibly with the loss of public service jobs, that will be really significant because these are key cornerstone jobs for local communities around Wellington,” says Renney, who works at the Council of Trade Unions.

“But, you know, Wellington is a big city. It will thrive and survive in the future. It's just going to face some challenges.”

Too much negativity

Wayne Guppy has been the mayor of Upper Hutt for 23 years. He says he’s seen this all before and is calling for an end to the doom and gloom.

“There’s nothing negative about living in this region. Nothing at all,” he says.

Talk of cuts, the closure of beloved venues, it’s all happened before. He looks back to the 1990s, when the Mother of All Budgets slashed the public service following the 80s’ stock market crash.

“Those are cycles that the region goes through and survives,” he says.

“Think back historically, about the resilience of the people and the workers - they do re-emerge.”

He says the capital appears to have entered into its own self-fulfilling spiral of misery, which will turn people away from moving here, hamper consumer confidence and scare off tourists.

“We’re not walking around drowning, it’s not -10 degrees, we don’t get earthquakes every day. But if those things are so constantly being said, then it does make it really hard,” he says.

A cramped space

Since around 2016, when the shocks of the Kāikoura earthquake were felt in Wellington, the city has been struggling with building repairs.

The library, a centrepiece of the city, was forced the close. Readings Cinema, a meeting point for families and youth on Courtney Place, has been a dreary display of decay ever since. The Town Hall is down and out needing repairs, the list goes on.

For many in Wellington, the reason they love it is “the culture”.

Burton talks about the theatre, and music, and happenings of the city.

Wellington Central MP Tamatha Paul says music and the arts have kept her here, since she moved from Tokoroa to study at Victoria University.

The issue is - as a result of seismic issues and earthquakes - the traditional spaces for arts and culture have been hit hardest.

“That's a real problem for Wellington because we like to pride ourselves on being the arts and culture capital. But in order to have that, you have to have people's basic needs met in terms of housing and transport,” she says.

With the councils putting together long term plans now, it will become clear how long the “soft infrastructure” like cultural and community spaces will need to be put on ice. With that said, progress on repairing the library and town hall is ongoing - despite mammoth cost overruns.

The standard of housing in Wellington’s CBD is a mixed bag and is fairly low density. Paul says there needs to be more housing in the city, and of higher quality, to make the city an attractive place to live.

The compactness of Wellington’s CBD is talked about often. People describe a natural “medieval fortress”, with mountains and the harbour surrounding the CBD. It makes it “walkable”, but also limits spaces for homes.

Guppy is preparing for more people to move to areas like the Hutt Valley, anticipating significant growth as Wellington de-centres from the CBD. In Porirua, Baker is also seeing growth with many moving further north to the Kāpiti Coast.

“First home buyers are now moving north, because we have such high rates and they will continue to be going forward. The cost of living is driving people out of cities,” Baker says.

If that is the case, and a great suburbanisation is occurring, a city on the most southern tip of the island will need to work hard to attract people to the CBD. The normalisation of working from home means the mere presence of instant-coffee office blocks won’t be enough.

This, Paul says, is Wellington’s “Auckland-phase”. A moment of awkward growth which has hit economic turbulence, and now it’s “that time for everyone to hate”.