Auckland City Council struggles with rail transport funding model

Originally published
November 15, 2014 Andrew Sheldon Civics, Economics, Finance, Governance, Markets, New Zealand, Politics 

It should come as no surprise that any decision by government is destined to be ‘political’. By ‘political’ we mean that decisions are destined to convey extorted influence rather than any commercial or analytical consideration of costs, benefits or impacts, with still less any real or effect accountability. What sustains political debates over city planning is ‘fear of environmental catastrophe’. What suspends or defers any debate on the issue is a ‘fear of exaggerated influence by vested interests’, and what inevitably gives a city constituents reason for cynicism is the realisation of the uncertain costs, or the open-endedness of those costs, which few people understandably don’t want to bare. The reality is that it does make sense for a city to have a rail network – but only in certain cases with conditions dictate that it is a prudent commercial decision. It likewise makes sense for a city to have a plan, to develop a rail system in a cost-effective manner so that costs of living can be contained, and that any such planning conveys ‘integrated interconnection of services in the best interests of all constituents, and not simply the indulgent hopes of vested interests, real or exaggerated.

Until now Auckland has been defined by a ‘city centre’, namely Auckland City CBD. The reality however is that such ‘city centres’ defined by zoning restrictions are very costly. It makes far more sense to have a multitude of city centres connected by efficient transport connections. The best evidence of such efficiency is the costs of pre-existing ‘connectors’, and the corresponding costs of not having them. It does not mean you don’t have central hubs ‘like a city centre’, it means that you expand the city so that it has multiple hubs which are well-integrated.

The appeal of course is that a ‘centralised city’ with a single core tends to compel everyone to live in a small area, which results in a number of problems:

1. Congestion – There is a need for a large portion of the city population to travel a long distance to reach a focal point, whilst a ‘satellite city model’ allows people to live in a broader range of places, and to consider rail transport as a ‘best option’. There is actually considerable opportunity for people to travel across city in previously impossible directions, ensuring a better balance in traffic flow, ensuring that there is less ‘entrenched polarity’ in traffic flows.
2. Uncompetitiveness – When a city is geared towards the pre-eminence of one location then compelling structural barriers arise preserving or embedding the ‘structural’ position of that centre. That allows some people to profit at the expense of others simply because they have political pull others don’t, or because they have been allowed to preserve the pull they historically had. An extortion-based political system is destined to do that, and the costs and burdens arising are the reason to break down not just the rules that permit it, but to radically reform the political system that makes such political patronage or privilege possible.
3. Cost disparities – It is far cheaper to rent city apartments or office space under a ‘distributed urban model’ and to commute to other offices for appointments. A centralised city model would likely require an expensive taxi trip compared to a ‘distributed city model’, which will likely see a commuter walk 5 minutes to a train station, wait 3-5 minutes for a train, and then take a further 5 minutes to reach a location. In contrast, getting a taxi can take 2-20 minutes, and you can wait in traffic queues delaying arrival at a destination for 20-30 minutes. This explains why few Japanese people get taxis, and why they are so expensive. Another way of looking at the problem is to consider comparative rents. Rent can be expected to be 30% cheaper for a satellite CBD (saving say $400 per month, or $12 a day). The differences in parking are less apparent if a city ‘enforces’ strong provisions for underground parking. Auckland has yet to do this I suspect, or perhaps this is merely a legacy of the old system. The cost of travel is relatively comparable under either model. The system captures more customers, but it requires more infrastructure.

This model of a ‘super-city’ is best illustrated by Tokyo City. Tokyo City comprises 23 inner wards. These inner wards are effectively integrated by a single ‘efficient’ rail loop line called the Yaminote Line. Trains on thin line come every 3 minutes, and they will take you to the most substantial satellite CBD’s in Tokyo (all 20 of them) in a matter of 25 minutes. This central line gives great connection to any number of ‘spoke’ lines that run off into the suburbs and outer satellite cities, to the various airports, port districts, inter-city rail connectors and so forth. These ‘spoke lines’ also provide access to the core of the city. There is often 1-2 ways to get to any place in the city, so you need to work out where to change to get there in the most optimal time. The trains are so frequent that you don’t really need to fuss over which is the best way.

In the spirit of this idea, I have roughly sketched out a possible system that outlines a staged rail development that would integrate rail & ferry terminals. The implication is that there could be opportunities for people to commute by ferries to work as well. Of course in future, more ‘ring or loop lines’ could be added, as has been the case with the extensive Sydney network. In comparison, the Japanese system does not function as ‘ring lines’, but rather as ‘spoke’ and ‘branch’ lines extending off the main ring line. The Yaminote ‘ring line’ serving the central core of Tokyo City is functionally the most important line in the system. It is also connected to several low-traffic loop lines servicing Hanada Airport and the port district.

This ‘mock network’ does not attempt to ‘build upon’ the existing Auckland rail network. It matters little how the network is shaped since the network itself will transform the way people live. What is important is:

1. The regulatory regime that shapes people’s decisions
2. The barriers to rail and commercial development which determine the cost structure and commercial returns possible, as well as determining the level of competition.

Political obstructions defer rail developments

In contrast to Japan, where rail development was made by quasi public-private corporations, which were comprehensively integrated with commercial developments from the start; in Auckland, the government decides. This means that there is a lot of ‘vested interests’ who are ‘legally enabled’ or ‘politically enabled’ to jump in and cause legal obstructions, as well as mobilising support bases to extort some concession, so that commercial efficiency is no longer ‘attainable’.

When the rail development model is directed by governments, it is destined to be a quagmire where sub-optimal decisions are made. Any vested interest is able to  elicit ‘self-serving’ standards (as a form of economic rent) upon expensive projects, even though these interest groups have no direct equity interest. Their arrogance arises from the fact that:

1. They have the decadent right to self-expression
2. They have the unreasonable right to impose their ideas on others under our political system

Notwithstanding their influence over others and their lack of direct involvement with the project, they are still able to influence or ‘scare’ others into submission, by using fear or misrepresentations (i.e. misuse of valid data or use of unsubstantiated data) to achieve a disproportionate influence over a state project. They achieve this influence because they are able to forge ‘special privileged relationships’ with political leaders, and because most of the people don’t have that influence, or because they are ambivalent about what their political leaders are doing under a sanction they bestowed upon them by voting for them. Voting is the ultimate threat since it represents the people giving power of attorney to a ‘stranger’ to do as they please. Notwithstanding their influence, these powerful partners also have some influence, and that is to impart their own threats upon decision-makers. The fact that these ‘decision-makers’ are pursuing ‘self-interested’ projects or are intimidated into submitting to powerful interests in the name of some  ‘public spirited’ endeavour really never comes under any scrutiny, because there will be no expectation or monitoring to ensure that these projects are even profitable.

This has proven the case with the Auckland rail system; except the paranoia has been instilled on both sides of the political divide because there are:

1. Liberals who want to build environmental projects
2. Conservatives who don’t want to spend on services they don’t personally use

For this reason, councillors have withdrawn their immediate support for a rail development. Auckland Mayor Len Brown has secured $2.2 billion of funding for rail in the latest 10-year budget. The first priority is a 3.5km underground rail link to commence construction in 2016 for completed in late 2020.[i] It remains to be seen whether he can bring all the councillors onside. The concerns of councillors are:

1. The cost to be borne by the toll payers – some want the national or City government to carry some of the burden
2. Against the possible impact of city government debt on future rates

For this reason it is possible the rail development will be deferred until 2020.

The libertarian perspective

The problem with the prospect of a government-driven rail project is that the project is destined to be poorly executed. The best solution is for the project to be funded by:

1. A private developer which is able to develop a funding model based upon:
   • Commercial development sub-contractor provisioning
   • Fixed price commitments for the rail services provided – at least until such a time that there is competition in the market place
2. A government that sets certain ‘reasonable’ parameters within the ‘rail corridor’ zones as well as development zones, so that prospective private sector developers can investigate the merits of those options. These parameters will include:
   • Provisions for open spaces and car spaces
   • Provisions for noise reduction and limits on route corridors
   • Provisions to facilitate transport system connectivity
3. Any prospective private operator can establish commercial commitments with owners of properties so that they are able to finance the development, whilst undertaking preliminary contingency studies at their own cost for engineering, commercial due diligence, etc.

“The $2.4 billion City Rail Link could be deferred until 2020 because of mounting concerns by councillors about its impact on rates, debt and big cuts to community services”.[ii]

There is actually no reason for the government to put in any money. There is no reason for city residents to put money into the project directly unless they are using the project. The best approach to the development of such rail corridors is for:

1. Objective standards of value to be established as fundamental criteria, i.e. noise levels, building heights, minimum public space requirements, tunnel design & safety (i.e. ventilation) requirements, car parking provisioning. These standards can be common law standards or standards established in the same manner.
2. Private rail system developers to determine best route, appropriate commercial terms with commuters and commercial sub-developers who will profit from land developments in the precinct of the rail stations.
3. Private rail system developers to determine quantify whether the project can proceed on the basis of objective standards of compensation. The private operator pays the cost of any ‘excess’ or ‘non-compliant noise’ or safety breaches.

There is a great opportunity for Auckland to have an efficient rail system without anyone paying for a government ‘white elephant’. The problem with government-sponsored projects is that there is no limit to the money that they can throw at them – without account or consequence – to give you the “experience you expect”, at whatever cost you will endure. In contrast, a commercial operator acting under a framework of objective law, is required to meet your “reasonable expectations” at a cost accepted by the ‘discretionary’ user of their services. Those costs would be borne through:

1. Direct payment of train fares
2. Indirect payment by paying for goods, where the merchant has paid for the opportunity to gain access to customers through such a ‘transport hub’. He passes some of his costs on to customers (who are in a competitive market place) so that he can make a profit.

In contrast, the reason why ‘big business’ often likes politicians like Len Brown is because the business community is ‘subsidised’ by allowing them to profit from the establishment of such hubs, and for you the taxpayer, to pay the cost of the hub, whilst they profit from:

1. Their good fortune to have ‘lobbied’ government to have a station established near their land holdings
2. Their ‘good fortune’ to have ‘lobbied’ the government to place the burden of transport systems placed upon the taxpayer, as if they should be the sole beneficiary of those services, because they create jobs (i.e. they lobby).

Working “village city” communities

There will be those people who will object to the development transformations to take place, but in fact ‘small cities’ make very liveable spaces, and again Japan shows the way. On a recent visit to Japan I took some pictures of how Japan has created very liveable communities with ‘modern commercial precincts’, ‘old-fashioned’ entertainment precincts with narrow roadways lined with restaurants, bars and craft shops in places like Hibarigaoka. There are roads with ample provision for bicycles in places like Iruma City. In fact, most Japanese people rely on rail and bicycles to meet their transport needs. Cars tend to be used by parents (with kids) and everyone on weekends. Even then it will be rare that Japanese people will go further than their local sporting grounds, restaurants or bars. Most shopping is done locally at these ‘city villages’. Of course many will use a car to go skiing or hiking. But again, many people will use public transport. It is probable however that most of the councillors in Auckland have not bothered to investigate the approaches that other nations have taken to meet their transport needs.

“[On the 5^th Nov 2014] all 20 councillors and the mayor will debate the budget and make decisions on the rail project for public consultation”. [iii]

Will they be well-informed or will their decisions simply be a reaction to the narrow expectations of mobilised ‘lobbyists’ who don’t really analyse the broader ramifications of public transport.

“The Government has agreed to fund half the project, but will not make a financial commitment until 2020, unless the council meets rail patronage and downtown employment targets”. [iv]

Observe that there is no requirement to meet any commercial criteria. The implication is that the government is not being terrible considerate of customer patronage, and that is evident enough from the fact that the government is prepared to force upon the community ‘another tax’.

Financing rail transport under government

The huge cost of the rail link would cause a $12 billion transport funding gap over the next 30 years unless alternate funding is secured – namely:

1. Motorway tolls and regional petrol taxes
2. Cut from community projects, parks and local works
3. Increases local government taxation

“The options are for an overall rates rise of 2.5% in 2015 and 3.5% for the next 9 years, or a 3.5% rate rise every year plus a $3000 charge upon new houses”.[v]

This is not the best approach to providing services to the poor, or users, or even achieving some level of ‘commercial discipline’ in our urban areas. Our cities are the most important economic systems in the country. If they are not based upon commercial discipline or ‘realities’ or price constraints, then taxpayers are destined to experience a blow-out in costs, on top of the costs that the mayor and councillors have previously imposed upon rate payers. There is actually no reason why residents of Auckland need to pay more. They should only pay more if they get benefits. The only motivation for government officials to embark on such policies is if:

1. They are so beholden to public pressure that they convey no personal integrity
2. They are positioning themselves for a litany of kickbacks from business who are destined to be subsidised by such developments, and who will be reliant upon government as ‘gatekeepers’ presiding over these developments.
3. They get the opportunity to act like Santa Claus, identified as the crusaders for development, without a corresponding requirement to be accountable for their flagrant spending.

This is an enormous spend for a city. It should not fall upon ill-disciplined councillors who have little experience to handle the affairs of such an immense project, and given a blank cheque to meet any indulgent expectation of lobbyists, who ultimately keep these councillors in power. Many councillors are sensitive to the ‘cost backlash’ of such policies. i.e. Labour councillor Ross Clow has called for the project to be deferred until 2020. These is however no reason to defer. The only necessity is for the project to be carried by those people who can afford the luxury of wanting it to risk investing in it. There will be a ready market of people who should pay, who will want to benefit, whether they are:

1. Residents who want to live in inner-city apartments close to transport and ‘village cities’. Another example is Chatswood in Northern Sydney.
2. Commercial businesses who want to profit, who are prepared to pay more for property and high rents in order to get access to that greater street traffic that arises from ‘denser living’.
3. Finally rail system developers who want to develop a long term ‘cash cow’ by offering prospective residents a ‘village community’ and cheaper and faster access to jobs than is currently offered by cars on tollways. Residents in these places will save on bus fares or car parking fares in the city, as well as securing more options and great accessibility to services in other communities.

Labour councillor Ross Clow argues that the budget was gutting suburban areas such as Avondale, which had been waiting 30 years for a new town centre, in favour of “pet projects” like the City Rail Link. [vi] There is really no reason for people to wait if a road upgrade makes sense, but it ought not to ‘make sense’ because it benefits a councillor to say so. There needs to be objective criteria.

Taking the transport funding burden off cities

There is really no reason why people have to wait for a centralised, inefficient, politicised ‘poorly skilled’ bureaucratic culture to act as ‘gatekeeper’ for the provision of basic services. It is a false economy that has proven not to work. In Tokyo, people on the fringes of Tokyo pay property rates as low as $300 a year because they only buy the land they need for a house. A 1-hour commute to the city centre costs just $4. There is no concession for a return trip like in Sydney. Most commuters going daily to the city will instead decide to rent in an inner city, low-rise 40m2 apartment complex for $700/month. They will pay just Y200 ($US2) each way. In most cases, workers commuting costs are borne by the company (up to a certain amount). The prospect of paying $2500/month in Auckland, a far smaller city, and an additional $200/month for parking because the city transport system is so bad, is simply ridiculous cost impositions arising because of political mismanagement of basic infrastructure. Communities won’t miss out on infrastructure if the government is not the centre for funding and decision-making. Autocratic regimes inevitably collapse. We are witnessing the collapse of Auckland City Council as a ‘decision-making hub’. It needs to become a far smaller centre for setting objective standards for universal & fundamental conduct, whether it be noise limits, or safety measures. They should not have the arbitrary capacity to impose any standard upon people, and they should not be a gatekeeper for decision-making. They are only arresting the development and prosperity of Auckland, and the same folly is being mirrored in other regions around NZ, as well as other countries. The council is responsible for the excesses in property prices. New Zealanders are paying as much for property – in a city with just 1.5 million residents – as they are in Tokyo – a city with 22 million residents. This is because NZ councils are able to restrict land development to artificially raise council rates.

It is precisely the spectre of huge planned budgeted costs like $20 million to widen Whangaparaoa Road, which is why these decisions need to be made in a broader context than the government can handle. There are simply too many long-range decisions to be made, and the risks of waste are enormous; which is why those risks and costs should be carried privately by developers, and not by the taxpayer who is oblivious to the real cost of what they are funding. Why can’t Aucklanders enjoy the same low rates as the Japanese – at least as an option. I’m sure the low-income earners of Auckland would love such consideration and discretion. You therefore have to wonder whether Len Brown and his colleagues are really the ‘liberals’ they profess to be, or whether they are serving their own interests.

References to quotes

[i] “City Rail Link faces delay until 2020”, Bernard Orsman, NZ Herald, website, 3^rd Nov 2014.

[ii] “City Rail Link faces delay until 2020”, Bernard Orsman, NZ Herald, website, 3^rd Nov 2014.

[iii] “City Rail Link faces delay until 2020”, Bernard Orsman, NZ Herald, website, 3^rd Nov 2014.

[iv] “City Rail Link faces delay until 2020”, Bernard Orsman, NZ Herald, website, 3^rd Nov 2014.

[v] “City Rail Link faces delay until 2020”, Bernard Orsman, NZ Herald, website, 3^rd Nov 2014.

[vi] “City Rail Link faces delay until 2020”, Bernard Orsman, NZ Herald, website, 3^rd Nov 2014.

Media displays of Chinese frivolity in the West – lessons in perspective

In a separate article “The real cause of Western world high property prices” I highlighted how wealthy Chinese investors are not the cause of high property prices in Western markets. In this section, I want to deal with the impact of stories that suggest as much. Consider the litany of stories that make this argument. We are talking about:

1. An endless stream of articles under the ‘NZ Housing Crisis‘ tag in the New Zealand Herald, with similar stories in One News and elsewhere.
2. An endless stream of stories in Australia, both in the commercial press, as well as from the government-owned Australian Broadcasting Commission (ABC); for example, its Datelineprogram described above.

The property crisis is a popular storyline because it affects everyone; moreover the narrative has allowed the media to serve up a broad pallet of ‘related stories’ like homelessness, wage disparities and the impact of immigration. There is of course a reason for this type of storyline, and that is ‘commercial stress’. You could argue that it is ‘greed’, but the reality is that this is just a sordid narrative that ignores the fact that — everyone is right to pursue their self-interest, and ‘greed’ suggests an overt concern for one’s interests, rather than what is critical, and that is a concern with facts. Greedy people don’t need to sell falsehoods; they just do because there are no consequences for doing so. Of course the media is not thinking about the impact of their narrative on their readers. They are simply concerned with pleasing their employers and getting paid to ‘fill a role’. This is not overtly an attack upon the media, but rather to highlight how politics founded on extortion is effective at breaking down the fabric of society. People’s purported ‘narrow self-interest’ does not arise from capitalism, or even ‘a greedy nature’, but actually from the tragic nature of democracy, or if you like, the ‘nature of humans’ when they are subjected to tragic values like democracy. This is not a popular storyline to espouse, however a litany of argument at CMG and other postings at Quora, will expand the argument.

We need to recognise that globally, there has been immense consolidation in the media over a number of decades. Media groups are under stress despite the economies of scale they have reaped, and despite their capacity to combine TV and newspaper media content resources. The travesty for the media is that:

1. They don’t have the resources to offer quality news
2. They face a great deal of competition from other forms of media
3. They have witnessed a huge loss of revenues from the ascension of cable TV in the first instance, and the internet, blogging, Google Search and other conduits like Netflix and YouTube
4. They have been gravely impacted by plagiarism, both of their own context, as well as movies, since there is no longer a reason for people to watch TV anymore. The benefits of ‘the big screen’ have been curtailed by free content online.

It is easy of course to argue that the problem is ‘capitalism’ or ‘greed’, or ‘competition’, but it isn’t simply the political structure that dictates how people conduct themselves; it is the underlying values that shape their conduct, and how ’empowered’ they feel to decide their course of action. A journalist doesn’t decide the standards – they are external. The corporate media boss doesn’t decide the standards or media market laws, an external politician does. The politician doesn’t decide whether he is elected, or what policies he advanced, an unaccountable constituent does. Now, even the constituent has a ‘gripe’, because he doesn’t really possess meaningful power, so why should they invest time in a process that doesn’t reward them. This is why democratic outcomes are so bad – because it estranges or alienates political actors when it ought to be bringing about engagement. It is an intellectual war, like any physical war, and it is arresting the intellectual and personal development of all members of the human race.

Of course the media have been able to capitalise on certain advantages, for example:

1. The largest media groups still preserve a strong brand name and a loyal following from elderly viewers, who persist in buying their newspapers and watching their TV channels
2. The largest media groups retain a near monopoly on their accessibility to the nation’s politicians and business leaders
3. The largest media groups are able to expound ‘issues’ that are destined to captivate the public, and using the ‘polarising’ content of politicians only serves that end.

This surely looks impressive to the media bosses that take home more money, buy larger houses, and fund the private school education of their kids. You should however not be surprised to learn however that even these ‘bastions of the good life’, are not so happy with life. The reason is:

1. They are not happy dealing with ‘unreasonable people in their life’
2. They don’t have time to engage in their children’s lives; their kids are out of control
3. They are subjected to unreasonable standards in the office, and through the media
4. They are obliged to take on vast responsibilities as ‘corporate officers’, and are feeling the pressure of a political witch hunt

The question you have to ask is:

1. Who does it serve for the media to extol these stories?
2. Who is destined to keep the media honest? Who is performing the fact checking?

Now, you might expect the media to treat the public with respect when it writes its story lines. After all, the media is supposed to research, gather facts, and present compelling, objective articles. The travesty is that, the media is not so motivated at all, but is rather motivated by:

1. A desire to instill a sense of fear in the public, so that their content presents ‘riveting’ viewing, and thus allows them to earn more money
2. A desire to appeal to certain constituents, and to serve as a mouthpiece for those groups
3. A desire to ‘leverage’ their ‘faithful’ constituents, so that those constituents ‘spread the word’ of their media ‘representatives’.

The reason of course is that ‘education is not a value in itself’, so for the media to lock people into a ‘buy signal’ for any particular newspaper, they feel compelled to give prospective readers with busy lives:

1. An imperative to read that specific story in that specific paper
2. An imperative to reach other readers by buying advertising

The implication is thus:

1. The media is no longer presenting ‘balanced’ or ‘objective’ coverage of issues, but is rather canvassing a narrative that it thinks will resonate with a ‘mass audience’, or in the case of some media groups, with a certain ‘political constituency’.
2. The media is functioning as a political party in some respects, whether it is serving the interests of a single political party, a constituency, or the ‘mainstream parties’ that are the bedrock of democracy, as legitimatised by the media and these political parties. These parties and associated media groups are therefore dedicated to the ‘marginalisation’ of any alternate parties or voices that would undermine their paradigm. You see this most clearly with the attempts of the media to ‘disparage libertarian parties’, along with more unreasonable interests like nationalists. i.e. Pauline Hanson’s One Nation.

Any presentation of libertarian parties is destined to give rise to:

1. Rhetoric suggesting that libertarianism is (i) ‘extreme’ (when it is somewhere between conservatives and liberals on many issues), (ii) classical (in keeping with the original constitutional provisions of the nation), and (iii) are the only exponents of common law (given that the mainstream parties are undermining it with a predilection for statutory creep).
2. Rhetoric implying that libertarians are ‘unrealistic’ because they are ‘ideological’ or ‘principled’ in outlook. There is never an argument made to ‘defend ideology‘.

We saw in the case of the US election that Gary Johnson was not even given the opportunity to be presented as a plausible ‘3rd candidate’ in the US presidential race by the two main parties, or the media. Trump was not against his participation, though that could be construed as a ‘straw argument’ if he knew that Hillary would veto his tacit support.

It is interesting to look at how the media misrepresents the state of markets. They do this in a variety of ways, including:

1. Canvassing the views of ‘tragic narratives’ supported by academics who seek ‘limelight’ in the media. This could be construed as a logical fallacy known as ‘appeal to authority’. i.e. Taking an academic view as an ‘expert view’, and not subjecting it to critical review. In the NZ Herald and One News (NZ), you could be forgiven for thinking that there was only one viewpoint on property, and that it was a ‘housing crisis’. This has been the narrative of the NZ Herald ‘Home Truths‘ series. Clearly the appeal of these stories generates great interest, so the fear has to be perpetuated.
2. Canvassing the need for taxes. The media actually has an interest in empowering minorities, and expanding the number of vested interests vying for power. We are inclined to think this is an ideological position, but in fact, it could be construed as an affirmation of the media, who serves as the ‘glue’ that brings it altogether. These minorities need representation as well, and they need governments to fund the parties, and supporters who make the conflict that allows fear and greed to demand the media can ‘serve as the glue’ in this democracy.

Seemingly, this ‘housing crisis’ narrative has fostered a number of issues, that have served to embarrass the NZ government. The reality is that most of these issues have no link to high property prices, even if they are embarrassing for the government. But are they reason to vote for a ‘bigger embarrassment’ – the opposition parties? There is no consideration of this issue because the media is really only interested in a ‘competition’. A foregone conclusion is not good for business. The media want a bloodbath to get people buying newspapers. This underlying strategy does not feed into the media narrative, as that would diminish readership. It would turn people off and make them cynical.

Now, to draw upon the content from the Dateline story, I will elucidate the media proclivity to sensationalise issues. Watching this story you would be inclined to draw the conclusion that:

1. Vancouver property prices are high because of the Chinese. The truth is that property is a popular investment for a great many people, and most Chinese are more likely to buy new apartments rather than old houses. In any case, it cannot be argued that Chinese are ‘driving the market’ because we are not seeing a withdrawal of other buyers. The reason why property prices are rising is because currencies are expected to decline in value, making retention of ‘hard assets’ a good defensive strategy from currency debasement. Leveraging yourself into asset markets at a time of low interest rates is a sensible investment strategy. The Chinese are doing it because of the ‘yields crisis’ in their own country, but Westerners should be doing it as well.
2. The media is actually chronically mis-educating the public on investment advice. We have the government reining in ‘the advice of financial advisers’, but the flipside is that the government has done nothing to stop the media ‘creating the illusion that housing prices are a bubble’. Of course they pitch it through the eyes of an academic, who is not a licensed professional’, and yet he is offering investment advice, albeit of a general nature. One can also see the media pitching art through its tabloids, as well as selling solar panels as an ‘investment’. They are not an investment. They are not commercial viable, unless the media or the installers are guaranteeing future electricity prices.
3. The story pitches the story as if it ‘not about the fact that they are Chinese, but the fact that they are wealthy people who happened to be Chinese’. The overt message ‘is that this dialogue is not racist’, but it is still prejudicial because it is identifying a group, and creating a false narrative, and attributing it to a group of people, who are mostly ‘spoilt rich people’. Of course, they didn’t earn all the money they made. Their parents in most cases made it. Of course this is an opportunity for the ‘left media’ to present rich people as ‘greedy’ and ‘gratuitous’.
4. It presents wealthy people as spoilt and unrealistic, however this is but a stage in the life of everyone. We make mistakes with purchases, and we might pay a price for those mistakes, and someone profits at our expense. They might be profitable today, but losers tomorrow. One is left wondering whether the story is contentious at all. Of course conservatives will deplore the materialism, but they don’t spurn the jobs created. ‘Ultra Rich Asian Girls’ highlights a culture of wealthy people ‘bidding over the top’ for assets. A broader perspective would argue that the bulk of Canadian (and other Western investors) already entered the market at the ‘bottom’, whilst the Chinese are entering at a high end. The issue is where prices will go, and the media is suggesting the property market is a bubble.
5. The argument that 80% of buyers in some areas are ethical Chinese highlights the fact that Chinese buyers are pitching themselves at the top end of the market. The reason why ‘doctors can’t enter the market’ is more likely because they are indebted with student debt. The spectacle of Chinese bidding up ‘top end’ properties is not going to flow into lower priced markets if there is a physical demand, unless those investors are merely sitting on the property. There is no reason to ‘sit on properties’, unless there are fears about destruction by tenants.
6. There is nothing new about people being unable to pay their way, whether earlier Chinese labourers who couldn’t afford to pay their way, or the ‘new age’ immigrants who can. The fact that Chinese are bringing in cash and are not confined by low wages. It is no different from any other wealthy person entering a ‘cheap market’ and buying up.
7. It is not surprising that ‘millionaire migrants’ are not interested in traditional Chinese culture, which is anachronistic in the new era. Why is not advocacy of ‘traditional Chinese arts and culture’ not being questioned. There is really nothing new about ‘spoilt girls’ spending. The same occurred in Japan. You might wonder why there is no focus upon the number of Hollywood children who end up on drugs.
8. The issue here is ‘pitching Chinese Canadian Establishment’ as inconvenienced by ‘modern millionaires’. i.e. The modern immigrants are making it a struggle for the Establishment to remain in their position.
9. Journalist Ian Young suggests that these Chinese ‘millionaire property speculators’ are paying little tax, implying that there is no gain for Canada in accepting these immigrants. Yet the subtext of the story is that they are ‘bidding up property prices’ and spending lavishly. The ‘income making is being done by others, or their parents in China. What are we to make of this selective thinking, but to consider it highly biased or ‘parochial reporting’. The media is out looking for ‘victims’, and it is struggling to find them. His narrative is that ‘millionaire migrants’ are not good because they don’t pay taxes, and they don’t contribute to the country. Clearly he is espousing a ‘mercantilistic view’ wherein you only adopt policies that benefit the country, as opposed to adopting policy that treats everyone equally before the law. He argues that these millionaire immigrants are not creating jobs or fostering growth’, but that is not true if you acknowledge their asset purchases, their tax payments and their spending. He is only looking at their personal ‘income taxes’, and not their sales or consumption taxes. Understandably the government never considered the ‘millionaires visa’ a failure.
10. A community ‘liberal‘ argues that “money has taken precedence over our community”, but the reality is that the rights of Chinese people to invest in Canada have were upheld as a right (until recently), along with other’s rights. So you have to ask whether liberals are exponents of ‘rights’, and whether they are really defenders of people from prejudice. The fact is that, when subjected to fear, they are as ‘reactive’ as conservatives. The greater travesty is that this is a global market phenomenon that has its origins in the same statism that liberals support – albeit a ‘conservative’ overt authoritarian variety, that saw Asian workers locked out of employment markets for decades (1960s to 1980s). She parochially is defending ‘rights at the expense of others’. The conservative view is equally not helpful, arguing that ‘she is racist’ or that ‘she should move’. It is not Chinese people calling her a racist, it is wealthy ‘white’ property owners who want the right to sell.
11. Dateline has certainly managed to find an academic who is prepared to support their narrative that it is a bubble. This time it comes from Dr David Ley, a professor of geography. In my earlier article, I highlighted the fact that this is not a ‘physical or real housing market crisis’, but a monetary ‘asset inflation’ crisis, and that it will be resolved in time, and that people needed the truth, and not to be mislead by the nature of the market.

The Chinese millionaire featured is ‘spot on’. She reasonably argues that those begrudging people need to acknowledge that life is confronting; that ‘time changes’ and things change in time. I would argue that these Chinese buyers are ‘relatively lucky’ in terms of timing, but if they are not attentive to the risks, they will face the prospect of losing their new-found wealth, or needing a bail out from their parents.

It is possible that this focus on the Chinese comes from a desperation within the media for influence, and a spectacle of hypocrisy. Are they not trying to make a dollar by sensationalising stories? After all, who is the loser if these stories find no audience? Consider that this Dateline story was published on the 7th June 2016, and just two days later there was a competing story on the 9th June 2016. Media competition or some notion of ‘syndicated research’? You might wonder. The media is under pressure, and it would be understandable if tragically journalists were really extolling whatever narrative was destined to keep their heads above water. Here are the stories:

1. “China’s Millionaire Migration” by Aaron Thomas, Datline, website, 7th June 2016.
2. “China’s Rich Girls” by Steve Chao, Al Jazeera, website, 9th June 2016.

The sentiments of these girls is little different from many other rich women for decades or centuries past. One might be surprised by the number of Chinese people who stay in China and work hard in the family business, pleasing parents and earning a meagre allowance for it. These are ‘new liberal’ Chinese parents, who hold a double standard for their children. It is not even typical for Chinese, however it reflects a ‘guilt’ or intellectual laziness that sees them as too generous. In this case, these women are engaged in ‘self promotion’, so developing an image is part of it. It is therefore a ‘celebrity development’ enterprise. Some of these ‘frivolous values’ display nothing more than adolescence, however in other cases there is an appreciation of ‘sustained value‘. Chelsea describes how her wish for her child is that “he will be able to spread his wings without falling”, even if she insists she doesn’t want to spoil him. In fact, these girls are studying in the West, or working, so they are not the frivolous lives that we are lead to believe.