20 Dec 2015

Insight for 20 December 2015 - More Pay for Living in Auckland?

From Insight, 8:12 am on 20 December 2015

Russell Anderson is a first year PE teacher working at a high school in Auckland, but he doesn't think he can afford to live in the city for long.

Despite the fact he's on a salary, he's giving up his flat for the summer and heading back to his hometown in Southland to earn extra money working on a farm, just so he can afford to return to Auckland next year.

A young teacher stands on a field of astro turf with a rugby ball in hand

Russell Anderson moved to Auckland for a teaching job but knows he will need to leave in the next few years. Photo: ( RNZ / Liz Brown )

Listen to Insight -  More Pay for Living in Auckland?

He loves his job and city life, but knows he will have to leave both in the next few years if he is to ever going to get ahead.

"Here, I'm paying for a fortnight for rent about $600 which is half my pay," he says.

 "Then, on top of that is water, which you don't have to pay for anywhere else in New Zealand apart from Auckland, and then there's power on top of that, internet, food and living.  

"Basically at the end of my fortnight's pay I maybe have $5 left, whereas if I was working in the country where I'm from - and I've got a friend who's working in the country who I was talking to the other day - she saves roughly about $600 a pay which is about what I pay for rent."

If Mr Anderson lived and worked as a teacher in London, the UK system would provide him with extra allowances to help cover the much higher costs he would face living in the big city.

no caption

The UK pays a London weighting allowance to public sector workers living in the capital. Photo: AFP / John Meek / The Art Archive / The Picture Desk

In 1974, the British government formally introduced what is known as the London weighting - an extra allowance paid to public sector workers like nurses, university staff, police and teachers to offset the high costs of living in the country's capital and to help with recruitment and retention.

It is worth anywhere between a few hundred pounds, to £6000.

With the cost of housing in Auckland now more expensive than it is in London, teachers and principals are beginning to agitate for a similar New Zealand scheme.

A possible Auckland weighting was a hot topic of debate at the Post Primary Teachers' Association (PPTA) conference in Wellington this year. Teachers were saying they could no longer afford to buy houses in Auckland and it was subsequently becoming harder to find teachers to fill new jobs in the city's growing schools.

PPTA President Angela Roberts agrees housing affordability in Auckland is causing growing frustration.

"It doesn't matter whether you're a nurse or a teacher or a cop," she says.  "I think it's fair to be able to expect to be able to live in the community that you serve."  

The Auckland Primary Principals' Association is in no doubt skyrocketing house prices in Auckland, coupled with long commutes and high travel costs, are causing staffing problems, and it's calling for an Auckland allowance to be considered.

"What we're seeing over time is roughly 50 percent of the teachers who are leaving schools are also leaving Auckland," says Association President Frances Nelson.

"They are going to get jobs where housing is more affordable, the lifestyle is more pleasant, the travel times are not the same, but the money is."

The pressure is set to build

Professor Paul Spoonley, the Pro Vice-Chancellor of Massey University's College of Humanities and Social Sciences, says the public sector is locating more people in Auckland and he believes it's inevitable that pressure will fall on the government and employers to find ways of incentivising people to move there.

Paul Spoonley sits on the back of a bench with green grass of uni behind

Massey University's Paul Spoonley says people will soon need incentives to work in Auckland. Photo: ( RNZ / Liz Brown )

For Dr Spoonley, it's a question of fairness. "Given that you might be living in Whangarei and you're earning the same as someone in Auckland but your costs are so much cheaper then it does feel a bit unfair, and I think there has to be some way for employers, whether in the public or private sector, to recruit people into Auckland and to recognise that the cost of living in Auckland is so much higher."

Independent economist Shamubeel Eaqub also predicts demands for an Auckland weighting or a targeted regional payment will gather pace, but what's really needed is a long-term fix for Auckland's housing crisis and transport problems, he says.

Unions don't back an Auckland weighting

In Britain, the public sector union, Unison, has actively campaigned for increases to London allowances, with its members even taking strike action, but in New Zealand trade unions are not keen to promote an Auckland allowance.

Public Service Association National Secretary Erin Polaczuk says while wages in the public sector have risen just 1.2 percent in the past year, an Auckland weighting is not the answer.

"More money across the board is what is needed.  We're worried that New Zealand has a low wage economy and we think everyone needs a pay rise, actually, not just Aucklanders."

The PPTA's Angela Roberts say while some teachers may want a blanket Auckland allowance, other options, such as providing school housing, should be looked at to take the sting out of the Auckland housing market for teachers.

The Nurse Organisation union would be reluctant to push for an Auckland loading for its members, saying nurses have the same terms and conditions across all District Health Boards and they would not want to see that change.

And the Council of Trade Unions warns putting more money in the pockets of Aucklanders is not the way to address the city's overheated housing market, and workers outside of Auckland could end up paying the price.

What about the private sector?  

In the UK, it is widely accepted that private sector employers pay a London premium.   

In New Zealand, there is no information on whether employers are already paying some sort of unofficial Auckland weighting, or whether people are demanding a special Auckland payment when they go for a job. But in terms of wage and salary growth in Auckland, there is nothing to suggest this is happening.

Christian has just moved to Auckland from Hamilton to take a job in a private company in the inner city.

Christian who is in his 20s sits in front of a green painted metal garage door

Christian is struggling with the expense of Auckland compared with Hamilton Photo: ( RNZ / Liz Brown )

He is living for free in the garage at a friend's place but is looking for a room in a flat for between $200 $250 a week - a far cry from the $130 a week he paid in Hamilton - and that included power and internet.

Christian feels employers need to consider the extra expenses workers face when they live in Auckland.

"I think the biggest thing that I'm hearing is that there are some people, some of my friends are choosing to take jobs in other places because it's expensive to live here. And then I have friends as well who live in Auckland currently who want to leave and perhaps go to ...Wellington."

According to the head of the Employers and Manufacturers Association Kim Campbell, some employers may well be offering higher salary packages in Auckland but he believes most would resist any moves towards paying premium Auckland rates.

In the UK, the government took introduced a London weighting through the centrally-controlled Pay Board, but New Zealand's Minister of State Services, Paula Bennett, said the government is not considering an Auckland weighting.

Follow Insight on Twitter