For the past decade Melbourne has experienced a sustained period of population growth. With an average of 85,000 new residents every year, Melbourne’s population is growing faster than any other Australian city. This is a very different story to the previous decade when the average growth was 45,000 people per year.
Melbourne today is almost unrecognisable from
the urban crisis it was in during the early 1990s. The recession battered Melbourne’s
economy more extensively than the rest of the Australia. The industrial
heartland of the city contracted sharply which had a range of flow on economic
effects. The unemployment rate was near 12 per cent. There was heavy migration
out of the so-called ‘rust-belt’ of Melbourne.
Today, Melbourne is a success story. However,
the transformation has placed pressure on infrastructure and liveability.
These pressures have raised questions about the rate of population growth.
Melbourne’s rapid population growth is due
to a range of factors. Almost 20 per cent of the Melbourne’s population is aged
over 60. This ageing population means that for each person that retires, a new
worker is required. A growing and dynamic economy has resulted in an increase
in demand for highly skilled labour which cannot be met without new migrants. The
Melbourne economy is now more complex and difficult to define. While
Manufacturing was once the dominant industry, Finance & Insurance and
Professional Services are now Melbourne’s strengths. Making cars and clothes were easy to explain. Creating ideas and
bespoke services to solve complex problems is a much more difficult narrative
It’s by no means clear that slowing this
population growth would be good for the economy, the community and the
environment. Growth generates a significant
pipeline of work in construction and population serving industries. Many of these jobs go to medium and lower
qualified workers. Many of these workers
have been left behind in the restructuring of the Melbourne and Victorian
economies. Growth also generates the tax revenues to help
governments undertake environment repair, skills development and urban
any case, slowing population growth is not simple. There is
no way to stop people from Bendigo, Adelaide or Queensland moving to Melbourne.
Australian citizens returning from living overseas can’t be prevented from settling
in Melbourne. Preventing skilled international migrants (Doctors, scientific
researchers and the like) risks damaging the Melbourne economy and the services
available to Melbourne residents. Of course, in periods of such high growth,
reviewing all aspects of the migration program is sensible, but there is
unlikely to be any huge reduction in migration.
While growing Regional Victoria through wise
investments has merits, we have to be realistic about what we hope to achieve.
Even if Regional Victoria’s historical population growth rate is doubled over
the next 20 years (which would be an enormous task in itself), Melbourne will
still add an extra 1.6 million people during the same period. Under that growth
scenario, Bendigo would have to almost double in size, creating a range of
growth pressures for that city. Creating more opportunities in Regional
Victoria won’t change the Melbourne growth story.
The Victorian Government is in the enviable
position of running operating surplus which is being used to fund vital
infrastructure. However, many of the major transport projects will take 5-10
years to deliver. In the meantime, population will continue to grow at close to 100,000 people every year, which will continue to create transport
headaches for commuters.
There is a massive
disconnect between transport and planning, with transport too often appearing
after the land use patterns have been set in place. Transport and community
infrastructure shortages, and structural economic changes drawing jobs to the
central and middle ring suburbs, mean outer urban suburbs are becoming more and
more disconnected from the metropolitan job pool.
SGS has analysed where Melbourne’s youth population live, and the level of accessibility from these areas to
jobs and education. While young people are widely distributed across the
metropolitan area, large numbers live in suburbs with poor connectivity to jobs
and education. Around one third of young people live in areas which don’t have
convenient car access (30 minute travel time) to Melbourne’s employment and
service pool. Current projections show this situation is likely to worsen.
We are also seeing an even greater disconnect between urban planning and economic policy. The economy has shifted to one that is focused on the central city, while growth in the suburbs continues at a rapid rate. We are now so far behind that there is almost no way to catch up with the growth.
No-one is seriously thinking about how
Melbourne will function 50 years from now. Strategic planning, which should focus
on setting out the city we want, has been reduced to narrow cost-benefit
analysis of transport projects which are aimed at fixing yesterday’s problems,
rather than preventing future problems from occurring.
Melbourne compared to other Australian
While there are these problems, Melbourne is better placed than many other Australian cities.
Sydney’s economic geography presents many more transport challenges compared to Melbourne’s situation. The costs to address these transport challenges are far greater than those facing Melbourne.
Queensland provides a parable of poor planning. In the 1990’s it was going
gangbusters, but there wasn’t any commensurate investment in infrastructure. They
grew South East Queensland so fast and for such a long time that it fed into
consolidated revenue. Appalling sprawl was allowed to occur, without investing
in any public transport. Now South East Queensland is in difficult situation.
The Adelaide economy is going through a similar transition to what Melbourne went
through during the 1990's, however lacks the economic mass to reinvent itself as
quickly as Melbourne did. It suffers from loss of its young people and a
rapidly ageing population.
Perth is suffering
at the end of the mining boom. Of all the economic metrics, falling house prices
paints the clearest picture of the city’s decline.
Back to Melbourne itself, there are
solutions to all of problems which have been identified. There is now a clear pipeline of infrastructure projects. This is combined with public and private capital
to fund these projects. Even the topic of road pricing is now in the policy
The Victorian Government deserves credit for
launching the State’s first comprehensive affordable housing policy package in decades. This includes unlocking new housing supply in
infrastructure rich suburbs and renewed investment in social housing.
Land use planning is placing greater
emphasis on large scale employment clusters outside of the central city with national employment clusters
located across Melbourne.
Even the focus on travel time savings (because
in the long run they tend to be eroded away) to assess projects is giving way
to a wider assessment of what the true economic and social benefits of transport projects are.
But all of these solutions are not quick
fixes. For the coming decade Melbourne will have to manage population as best it
can. Part of this management is a willingness to have an open conversation
about what is driving our population growth.
Source: ABS Regional Population Growth, Australia, 2014-15 (Cat. No. 3218.0), ABS Labour Force, Australia, Detailed (Cat. No. 6291.0.55.001), SGS Economics & Planning, Australian Cities Accounts 2015-16