The latest frontier in boosting Australia's productivity lies in the way we spatially organise and manage our cities
Melbourne's metropolitan structure can drive labour productivity, innovation and human capital accumulation to underpin Victoria's long term prosperity as a non-resource State, according to a submission from SGS Economics & Planning Pty Ltd to the State Government. The submission is to the Inquiry into a State Based Reform Agenda being conducted by Victorian Competition & Efficiency Commission.
Macroeconomic policy settings and a microeconomic reform agenda have boosted the Melbourne and Victorian economy over the past 30 years. But major city building projects, like CityLink, the Western Ring Road, the Melbourne Convention Centre, EastLink, the State Museum, expansion of the sports precinct also played a crucial role in Melbourne's transformation from a rust belt relic to a leading knowledge intensive economy.
Melbourne's renaissance has brought policy makers a new set of challenges. The current metropolitan structure now appears to have reached its use by date. Ensuring the future prosperity of Victoria will require a new generation of reforms and infrastructure investments. This next generation of reforms will have to ensure a well connected, higher density metropolis with a focus on extending the highly productive environment centered on the CBD to other parts of Melbourne.
This will require the future structure of the city to tap into the productivity dividends provide by agglomeration economies:
• Improved transport links (to overcome the congestion which will accompany increased population and employment growth);
• Road pricing to bring congestion under control;
• More intensive development in existing areas around the CBD and in Melbourne's middle ring and in its six Central Activities Areas (Footscray, Broadmeadows, Box Hill, Ringwood, Dandenong and Frankston) to take advantage of existing transport infrastructure.
If Melbourne is not maintained in its current level of liveability and economic prosperity the city's competitiveness will diminish and the population can be expected to migrate to other areas of Australia or the world. This can result in a smaller working age population to support the overall population. Combined with lethargic labour productivity growth (driven by a poorly organised city) this would have a range of negative implications for the whole of Victoria.
Click here to view the submission
