Posted: 18 Sep. 2018 10 min. read

Pursuing a growth path no one wants

Melbourne’s recent slip in the World’s Most Liveable Cities ranking is a timely wake-up to call to re assess our growth model. Melbourne will be the largest city in Australia within the decade and as we transition into a city of global economic significance, and the projected home to over 8 million people by 2051, we’re at risk of becoming a victim of our own liveability success.


Growth through expansion

Melbourne has grown significantly over the past 20 years, with an additional 1.5 million people now calling Melbourne home. This growth has predominantly been accommodated through low-density greenfield development models on the outer fringes of Melbourne. Just over one in three Melburnians now call the Interface Councils[1] home, up from just one in four in 1997[2]. How we have accommodated Melbourne’s population growth over the 20-year period from 1997 to 2017 is highlighted in Figure 1.

Figure 1 – Up or out – Melbourne’s population growth, 1997 to 2017

This growth model has resulted in major urban sprawl. Melbourne’s urban growth boundary now stretches continuously for 85 kilometres from Pakenham in the south-east, to Wyndham Vale in west, and 90 kilometres from Mt Eliza in the south to Wallan in the north, covering an area of around 9,000 square kilometres[3].

We’re getting Melbourne’s growth mix wrong. There is too much emphasis on low-density housing in the outer most fringes and concentrated high-rise development in the CBD. Although we believe high rise towers have their place, there hasn’t been enough growth encouraged in the ‘missing middle’ supported by sensible and well-designed medium and higher density development.

Despite mounting evidence of significant and long-lasting economic, environmental and social costs involved in pursuing urban sprawl, successive governments have continued to approve the development of new fringe suburbs and the expansion of the urban growth boundary. The urban sprawl model is entrenched.


But why?

Melbourne is blessed (or some may say cursed) with an abundance of cheap developable land. Unlike other cities such as Sydney, the land is mostly free of physical or geographical boundaries that often inhibit development.

While apartment living is becoming more attractive, many are still attached to the ‘Australian dream’ of a spacious, low-density house and backyard, driving demand for greenfield and outer fringe development.

Government has supported greenfield development with investment in road infrastructure. New, bigger freeways bring the outer suburbs ever ‘closer’, encouraging further development, bringing about the need for more road infrastructure investment. A vicious cycle has been set.

In contrast, state and local government planning regulations have not adequately enabled or encouraged greater density within Melbourne’s established middle suburbs. Many local governments, anxious to appease Not-In-My-Backyard (NIMBY) concerns over potential road congestion, parking problems and perceived damage to neighbourhood character, have significantly restricted medium and higher-density developments.

While NIMBY resistance to local developments typically focus on poor planning decisions in the past, there are actually many good, recent examples of medium density developments (e.g. Cantala in Caufield North) which, by incorporating design excellence, improved amenity and access to open spaces.

Established Councils are also concerned with the financial burden of delivering and maintaining additional local infrastructure to meet population growth.


The case for pursing a new path

We have assessed the ‘liveability’ of every suburb within Greater Melbourne by looking at 15 factors measuring quality of place, including: access to public transport, proximity to recreational and cultural amenities, road congestion, open space, access to education, and local restaurant and shopping experiences. Our analysis demonstrates that the most liveable suburbs also have higher densities. Far from being a dirty word, density is actually good for residents’ liveability!

Suburbs such as Carlton, Prahran, Fitzroy, Balaclava, South Yarra, North Melbourne and Windsor all rank very highly in terms of liveability, and are some of Melbourne’s most dense suburbs. In contrast, those suburbs that typically rank lower (noting that ‘liveability’ means something different to each of us) are typically some of Melbourne’s least densely populated, such as Cranbourne East, Keysborough, Point Cook, Carrum Downs and Narre Warren.

Figure 2 – Liveability and density within Greater Melbourne

Source: Deloitte Access Economics; Australian Bureau of Statistics; Tract Consultants

Higher density housing can actually improve both the physical and financial access to liveability, by increasing supply and placing downward pressure on housing prices.

Increasing density can also ensure the economic viability of local services, produce an improved return on investment for the infrastructure that underpins liveability, and attract a greater mix and quality of new amenities such as cafes, schools, public transport, shops, and cultural and recreational facilities. Density also greatly promotes active transport over motor vehicle usage.

Density also delivers significant economic benefits. Greater urban density can lead to lower rates and taxes for households as public infrastructure, utilities and services are used more efficiently and to their full capacity.

Resisting higher-density housing through zoning restrictions can also constrain housing supply and negatively impact affordability.


How can we encourage greater density?

Despite mounting evidence around the problems of urban sprawl, sprawl is entrenched in current planning strategies for managing Melbourne’s future growth. However, data suggests that managing growth through well-planned higher density development can promote and enhance local area liveability.

It’s critical to engage residents and local councils in a meaningful discussion on the liveability and economic benefits of appropriate and considered higher density development. Density that is well designed, and well supported by economic and social infrastructure, delivers clear economic, social and environmental benefits. It’s time to call out the NIMBY’s by elevating the conversation and putting an end to a growth model no one wants.

Deloitte is proud to be involved in the conversation about Victoria’s future and sharing our thinking on how we can maintain excellent liveability while growing our population. We’re excited to lead a discussion with businesses, individuals and governments on the things we need to get right to make that happen in each of the key sectors of the Victorian economy during the next phase of our project. We look forward to hearing from you and your community on what we need to start, what we must stop and the things we should continue to make Victoria the very best it can be #itshappeningvictoria

Supporting Footnotes

[1]The nine Melbourne local government areas that form a ring around Greater Melbourne and include: Cardinia Shire Council, City of Casey, Hume City Council, Melton City Council, Mornington Peninsula Shire Council, Nillumbik Shire Council, City of Whittlesea, Wyndham City Council, and Yarra Ranges Shire Council.

[2]ABS, 2018, Regional Population Growth, Australia, cat no. 3218.0

[3]Victorian Department of Environment, Land, Water and Planning, 2017, Plan Melbourne 2017-2050

More about the authors

Daniel Terrill

Daniel Terrill

Partner, Deloitte Access Economics

Dr Daniel Terrill is Lead Partner for Deloitte’s Agribusiness client service group and leader of the agricultural and environmental economics teams of Deloitte Access Economics. He is an economist with a unique blend of professional and lived experience in agriculture and environmental management. He comes from a livestock and broad acre cropping background from a family farm in Victoria. Dr Terrill received his PhD from The University of Melbourne, where he researched policy solutions to improved collective environmental outcomes from farming land. He has over 15 years of experience as a microeconomist, where much of his work is at the intersection of agriculture and the environment, particularly addressing the challenge of feeding growing populations more sustainably.