The Western Australian Planning Commission's (WAPC) Activity Centres guidelines for Perth and
Peel include a specific focus on the economics of centres planning. However, achieving the policy's
aims will require more from local government than the production of a centre plan through land use planning.
WAPC's State Planning Policy for Activity Centres (1) seeks to provide a framework for implementation of
the Activity Centres hierarchy defined within Directions 2031.(2) It will also guide the long-term planning of
those centres in order to achieve a greater mix of uses and a greater intensity of activity within each Centre.
In conjunction with a desire to enhance amenity and liveability, and to improve the environmental
sustainability of the urban system (through a more efficient use of infrastructure and fewer private
transport trips) a strong economic rationale underpins the activity centre concept. Along with savings to
society from reduced movement and infrastructure (transaction) costs, the intention is that centres
planning should facilitate local and metropolitanwide economic growth. It would do this by improving
access to a wider range of jobs at greater densities; by providing for an urban environment and dwelling
options attractive to skilled and principally knowledgebased workers and consumers; and by capturing the
benefits of productivity gains derived from business clustering and agglomeration (whereby the proximity
of like or synergistic industries offers enhanced opportunities for the exchange of knowledge and
services in pursuit of innovation, customer attraction and competitive efficiency).
The desired effect is a virtuous cycle of public and private investment, to sustain economic growth and to
distribute its benefits through employment and value-added multipliers that pollinate jobs and increase
aggregate demand within each Centre.
Recognising the importance of economic development and therefore, economics, to sustainable centres
planning, the WAPC has made substantive efforts to institutionalise urban economics thinking within
its policy framework. Although further revisions are expected, the Draft State Planning Policy for Activity
Centres and accompanying Local Planning Manual (3) include a specific requirement for responsible
authorities to prepare Local Planning (Commercial) Strategies, to provide the economic analysis necessary
to inform urban planning and design processes over the long term.
These documents are to be based on district-wide economic assessments and are intended to ensure
that adequate development potential is made available in activity centres to accommodate future commercial
floor space and employment demands. This means identifying the long-term retail, office-space
and dwelling needs of the community, based upon the likely level of residential growth, employment
growth, household expenditure and other economic factors. Specific requirements under the policy include
the need for local governments to produce a comprehensive economic situation analysis and associated
projections, to determine the potential level of ‘activity intensity' within the walkable catchment, and to ensure
that a diverse land use mix can be supported.
In terms of the economic context for an area, the Local Planning Manual suggests that planners must, as a
starting point, understand the characteristics of their local economy in terms of a breakdown of workforce
participation by industry and through a review of trends in local economic development (such as shifts in
industry employment over time). The manual makes explicit reference to a need to analyse:
• The size and demographic character of the local population, based upon expected dwelling yields
and type;
• The level of resident household and visitor expenditure and the amount of retail floorspace required, given
changing retail patterns and the needs of different retail sectors;
• The current ratio of jobs by net lettable floorspace area for various employment activities, including commercial and
community service uses; and the
• Floorspace requirements needed to meet future employment demand and worker population thresholds
defined in Liveable Neighbourhoods. (4)
Also provided for within the planning policy are ‘as required' economic impact assessments for major shopping
developments. These assessments take into account the effects of the development on competition within the
centre and enable the WAPC to mitigate the potential for an over-concentration of shopping floorspace in large
centres (at the expense of a more equitable distribution of floorspace across all centres in the hierarchy).
On the supply side, land use survey data taken from the Planning Land Use Census (PLUC) is commonly used to
benchmark floorspace estimates: to determine the level of existing supply for each activity, so that a gap analyses
can be undertaken once the relevant demand projections are applied. Only after the gap in supply is estimated can
more detailed land use planning occur, to identify specific opportunities to locate intensive employment generating
uses in accessible locations (with potential transport linkages) and locations with re-development opportunities
(considering the constraints to effective usage, such as obsolete industrial structures, inadequate utility services
and other environmental considerations).
These strategies and subsequent centre plans are to be prepared by local governments for all centres in the spatial
hierarchy for endorsement by the WAPC, (5) so that delegation of development control to local government under the
region planning scheme can occur.
All of this is sound practice and good, but of itself is insufficient to maximise the potential of an activity centres
strategy. The move by the WAPC to prescribe the focus of economic inputs to centres planning is born more
out of the failure of previous implementation plans, than from the need to distil sound land use economics as
currently practiced. Past approaches to implementing the findings of activity centre economics have resulted in
what are now widely regarded to be poor planning outcomes. In metropolitan Perth, these include the failure of
some centres to offer anything more than basic retail services, while in others there has been a marked
concentration of office space in central sub-regions, or at the edge of industrial sites, rather than within walking
distance of the centre's transport node.
Such outcomes can only partly be explained in terms of planners' poor understanding of relevant techniques
of economic analysis, as specialist econometric skills have generally been bought in by local government planning
departments. Of more significance is the reality that centres planning, as with any long term development process,
is an inherently uneven and risky process, no matter how comprehensive and accurate the strategic land use
planning component. The development process is not linear or predictable, but an inherently messy activity,
requiring both a persuasive economic justification and a series of practical strategies for attracting the level of
public and private investment necessary to make it all happen. Just revealing the development intentions for a
centre through prescribed land use planning, particularly in a region where competition between centres for
investment is fierce, simply isn't enough.
For an establishing activity centre to thrive and become economically sustainable (as intended under the
metropolitan strategy) it must attract investment and jobs at a rate above that of the existing inner-CBD. The
technical capacity of local government may be an added risk to implementation, but more fundamental is the
problem of ‘activation': how to attract sufficient jobs and investment across competing centres where centre
plans are also well developed. This is especially true in the case of those higher order knowledge intensive
service jobs that contribute most to the industry mix and income levels of a centre, that are essential if it is
to become anything close to self-sustaining economically. The challenge for Perth and Directions 2031 is that
there just might not be enough of these jobs to go around. (6)
A solution found in other major cities internationally has been to adopt a metropolitan-wide approach to urban
governance and economic development, so that planning, investment and implementation can be more
seamlessly coordinated at a regional scale and so that private investment can be attracted at the levels required.
This warrants a State-level statutory intervention, the creation of a well resourced capital city planning authority
capable of raising capital for investment, and the relinquishment of some local government powers - probably at
a scale and pace that is difficult to achieve in Australia given the conventional split in role and functions between
state and local governments, but would nevertheless help avoid the competing centres scenario that is likely to
afflict a city of moderate population size and a limited employment by industry distribution.
Investment and growth tends after all, to concentrate in already seeded locations, (7) unless a coordinated package
of incentives can be delivered that can catalyse growth. The question is whether this can realistically be achieved
across each of Perth and Peel's primary and strategic centres, without a strong implementation authority, given Perth's
position in the nation's hierarchy of capital cities.
In the absence of ‘decisive force' (to use the language of a more empowered variety of planners), the domain of
planning action offered by local government is inevitably more limited, but must nevertheless be worked with to
increase the chances of success. While local government is often not in a position to foster investment
opportunities that aren't already emerging, it does nonetheless have economic development functions that
are crucial to the realisation of economically viable activity centres.
Local government's role in the delivery of development infrastructure that is attractive to visitors must be
considered as a critical success factor, along with provision of high quality community facilities and services
that are essential to retaining a satisfied resident population.
As a facilitator of economic development, local government can play a direct role in the development of strategies
to foster the diversity of activities so vital to centre development: by using its position as a point of contact for
local business and investment enquiries to promote the activity centre vision and to market preferred
development options; by identifying potential public and private investment initiatives, such as opportunities
for large employers with the capacity to catalyse growth and attract complimentary investment; by sponsoring
commercial feasibility studies on behalf of groupings of small businesses in an effort to de-risk ‘first mover'
investments; and by becoming an active partner in the early stages of project development, by working to
incorporate tenant or developer requirements where they fit with activity centres policy.
These are just some of the considerations that go beyond land use planning for centres, which - in an imperfect
governance environment - will be of critical importance to successful activity centre implementation for those
able to meet the challenge.
Footnotes and References
1. Draft State Planning Policy: Activity Centres for Perth and Peel, WAPC, June 2009
2. Directions 2031: Draft Spatial Framework for Perth and Peel, WAPC, June 2009
3. Local Planning Manual: A guide to the preparation of local planning strategies and local planning schemes
in Western Australia, WAPC, March 2010
4. Liveable Neighbourhoods, WAPC, April 2008.
5. With the exception of those district and neighbourhood centres with less than
20,000sqm of retail floorspace
6. In addition to the four districts within the Perth central area, there are two Primary
Centres and eighteen (18) Strategic Centres when specialised and industrial centres
are included. All will compete for knowledge intensive employment activities.
7. SGS Economics and Planning research to estimate agglomeration elasticities in
metropolitan cities across Australia demonstrates that knowledge intensive jobs are
most sensitive to agglomeration economies (meaning that high densities of these
jobs have most impact on productivity and innovation). This finding is supported
by work undertaken in the UK by Graham 8, which also finds that agglomeration
elasticities are strongest for knowledge intensive services and some forms of
manufacturing (where product innovation and design feature strongly).
8. Graham, Daniel (2006) Wider Economic Benefits of Transport Improvements: Link
Between City Size and Productivity, Department of Transport, London, UK.