Repositioning our growth path can deliver major economic benefits for Melbourne and Victoria
20 September 2018: Within 10 years – perhaps by 2027 – Melbourne is set to become Australia’s largest city. As Australia’s most liveable city, millions are expected to move here over coming decades, with Melbourne projected to be home to over 8 million people by 2051. However, without changing our model of growth, we risk becoming a victim of our own liveability success.
Deloitte Managing Partner, Victoria, Jeremy Cooper said: “Victoria is growing at a rapid pace - and this growth is driven primarily by Melbourne. While it presents us with tremendous opportunities - from increased market scale and diversity, competition and investment - it also brings challenges to the way Victorians live and share in the opportunities of growth.
“No other major city globally has navigated these combined challenges well. However, by repositioning Victoria’s growth model to manage population growth in a way that promotes economic and social participation and encourages greater liveability, we can be the first to do so. The challenge ahead for us is real, but the opportunity is also there for the taking.”
To help tackle major questions confronting our State around where and how to grow, Deloitte has launched a new initiative - ‘It’s happening, Victoria’. Deloitte Access Economics assessed how our growth has affected Victorians’ ability to share in the benefits of growth, how growth has impacted the ‘liveability’ of our suburbs and regions, and the implications for how we commute.
As Cooper notes: “Our management of population growth has had profound implications on Victorians’ access to economic opportunity, social and community participation and the liveability of our communities.
“It has typically been managed in an ‘up or out’ manner, resulting in significant urban sprawl, with one in three Melburnians now calling the outer interface council areas home. People are living further away from where job opportunities and amenities are located, placing increased strain on our transportation networks, and fundamentally changing how and where we work, live and play.
“We’re creating two Melbournes where distance from the CBD is increasingly becoming the key socioeconomic divider. Melbourne’s outer fringe suburbs have poorer access to jobs, lower female workforce participation, lower wages, longer commute times, lower amenity, and social infrastructure and services that severely lag behind residential growth.”
According to Deloitte Access Economics Partner, Dr Daniel Terrill: “We’re in the grip of a wicked cycle – people with higher incomes can afford better housing near higher paying jobs with higher amenities and better access to vital health and education services. Conversely, the socioeconomically disadvantaged are forced further out, away from the infrastructure and services they need.
“A key finding is that reducing the unemployment gap in outer Melbourne could benefit Victoria’s economy by around $3.3 billion per annum, with benefits extending throughout the State. Far from being a concern to those only in disadvantaged areas, socioeconomic disadvantage affects us all.”
Many of Melbourne’s ‘growing pains’, such as congestion, noise, parking and pollution are problems of motor car dependent growth, not growth per se. For a typical work commute to the city, the full social cost is almost double that of the equivalent journey taken by public transport, and a staggering 19 times more than an active commute such as cycling. While motorists do pay for some of those costs, the deficit makes commuting into the CBD by car vastly worse than alternatives.
“Active commuting and public transport aren’t an option for all Victorians, and the motor car will always have a place. However, divorcing growth from the motor car in higher density areas opens up a truly tantalising opportunity – seizing the benefits of growth while avoiding many of its most feared pitfalls,” notes Dr Terrill.
The management of our growth also has implications for liveability. Deloitte Access Economics’ analysis of quality of place shows that in the right areas, well-designed and sensible urban infill and density enhances many liveability outcomes for local areas.
The analysis also reveals our regional cities have a vital role as a ‘third pillar’ in managing our growing population with the larger regional cities – Ballarat, Bendigo, Geelong – scoring higher on liveability than the majority of Melbourne suburbs, at a fraction of the housing price. Victoria’s larger regional cities are well supported and connected to critical economic infrastructure, including rail, roads, airport access, internet and mobile coverage. In particular, they have excellent road and rail connectivity to the rest of state and Melbourne.
“The development of regional cities is not only good for the residents and workers of those cities, and the rural areas they serve, it relieves some of Melbourne’s growing pains as well,” said Dr Terrill.
"Regional city population growth, as part of a renewed emphasis on regional Victorian economic development and prosperity, should form a key pillar of any integrated planning strategy for Victoria’s population and economic future. However, promotion of long-term regional growth will require an integrated response from all levels of government and business.”
The themes raised are part of a body of work being undertaken examining how to manage Victoria’s future growth, as part of Deloitte’s ‘It’s happening, Victoria’ initiative.