Urbecon Volume 1 2015
Australian urban policy is in a quandary. Jobs are being attracted to the inner areas of capital cities, whereas housing is still being provided mainly at the urban fringe. Transport congestion and social disadvantage are being exacerbated as a result. Strategies to address this spatial mismatch of jobs and residents are often not implemented.
Inner areas of our cities enjoy vastly superior access to jobs, whereas outer urban growth areas face significant accessibility barriers. Figure 1 illustrates this by showing the proportion of total metropolitan jobs in Sydney that are accessible within 30 minutes’ drive in peak hour from any location within the metropolis. This pattern is repeated in other Australian capitals and indeed across many cities around the world.
FIGURE 1 ACCESSIBILITY TO JOBS WITHIN 30 MINUTES DRIVE TIME - SYDNEY (view larger image)
Two headline strategies
In its efforts to provide policymakers with solutions to these issues, the World Bank recommends avoiding the forced relocation of jobs to outer areas, as doing so would reduce the overall productivity of economic activity. Rather, it promotes two basic strategies. First, encouraging metropolitan-wide mobility through improved transport connections, linking the labour force better with jobs, and linking businesses better with customers, suppliers and other businesses. And second, ensuring universal access levels across the metropolis to services such as health and education, which better enable economic participation by community members irrespective of their location. 
With this in mind, promoting the economic development of outer urban growth areas in Australia should start by providing quality transport connections between growth areas and the capital city CBDs and regional employment hubs that accommodate a significant share of the metropolitan workforce. And in tandem with this, Australian cities need to provide a universal level of access to health and education services so all have the opportunity to participate.
Once governments are doing all that they can in these dual arenas given the constraints they face, a complementary agenda for promoting economic development in outer urban growth areas can be contemplated. In doing this, we should aim to appropriately apply international and domestic lessons that have been learnt in this regard over recent decades.
International best practice in regional economic development
International best practice thinking surrounding regional economic development delivers several important lessons.
Harnessing private sector leadership is crucial. Government, be it local, state or federal cannot ‘drive’ regional development. Private enterprise is the principal driver of regional prosperity and for this reason it must be embraced as a partner in the determination of regional priorities and strategies for economic prosperity.
True collaboration is essential for success. To effectively engage the private sector in steering the regional economy down the desired development path, institutional collaboration is required between the three tiers of government, as well as with research and education institutions. Otherwise the actions needed to support private sector initiatives are uncoordinated and often unworkable.
A multifaceted approach is required, starting with existing strengths and capabilities and building outwards. In this way governments can influence the multifaceted pre-conditions for a competitive environment. So government should ensure that an understanding of the region’s strengths, weaknesses and capacities is shared widely. Given this understanding, development efforts need to focus on building on existing strengths and leveraging existing local capabilities – not aiming to attract or develop industries ‘from scratch’ or by subsidising uncompetitive operations that do not provide a broader public benefit.
When combined with the World Bank’s policy prescriptions above, this multifaceted approach should be directed by an understanding of three types of jobs. Firstly, jobs which are CBD-tied and which will not move to the growth areas (about one quarter of all jobs). Also, jobs which are population-driven, and which should naturally come to growth areas, all things being equal (about half of all jobs). Lastly, footloose jobs which can be won by the growth areas, if their local strengths and capabilities are relevant, nurtured and communicated well to decision makers (about one quarter of all jobs).
Ongoing innovation is crucial. Consensus now exists that innovation is the key determinant of long-term regional economic performance. Encouraging regional businesses to innovate lies at the heart of the ability to add value in the long term. Innovation often requires the interaction of numerous individuals, so that specific knowledge gaps can be straddled. So focussing development efforts on export markets (global opportunities) can be useful in ensuring that local market competition does not preclude collaboration. Focussing efforts on common problems can also encourage collaboration.
Quality of life is also important, as it attracts the innovators. As innovation is embodied in individuals, it is vitally important for regions to be able to attract and retain skilled workers. Achieving this ultimately relies on more than just employment opportunities, business subsidies, etc. These sophisticated knowledge workers need to be offered quality of life and personal development opportunities. A triple bottom line approach is essential.
Intervene where market failure is evident. Where market failure is evident, intervention is often required. Effectively intervening involves not just understanding the root causes of market failure and their interdependencies, and addressing these issues. Sometimes it also means helping those who wish to help themselves - as long as the benefits are broadly based.
Success often is only evident in the long term. Economic development interventions are not always successful in the immediate term. Not surprisingly, given the multiplicity of factors affecting regional competitiveness, success requires a long-term commitment, ongoing monitoring and refinement of initiatives.
Successful suburban employment hubs
When we move from a ‘regional’ level to a specific location, additional lessons can be learnt from successful suburban employment hubs that have developed across the world. Case studies previously investigated by SGS to help develop strategies for places like Tonsley (southern Adelaide) and East Werribee (Southwest Melbourne) have revealed that successful suburban employment hubs have been strategically located within growth corridors, on greenfield sites in single ownership. Outside of these fortuitous endowments, the case studies also revealed the following success factors:
Public transport infrastructure. Public transport played a significant role in consolidating each hub’s position within its corridor Rail and/ or bus interchanges linking the precinct with the broader metropolitan network were a key feature.
Coordinated infrastructure commitment & planning. Early commitment to delivering this public transport and other key items of infrastructure in an integrated manner was evident, as was the coordination between government agencies and the private sector.
Planning vision, governance and mechanisms. The visions guiding the suburban employment hubs are very similar, in that they all feature:
- mixed use development forms
- significant residential development either within or directly adjacent to the employment hub themselves
- dense development, usually of a minimum of three storeys, particularly around the public transport nodes
- integrated development in that the services and facilities required by a residential community (e.g. parklands, entertainment, dining, public transport, etc.) are provided on site; and
- the provision of a high amenity, pedestrian friendly environment.
Importantly, the vision was matched with cooperative planning ‘governance’ arrangements and mechanisms that catered for development flexibility whilst ensuring the vision was maintained.
Government facilities. Government facilities (such as hospitals, universities, government offices and service centres) are common features across the case studies both as key anchor tenants and enabling infrastructure items.
Superior ICT infrastructure. Superior ICT infrastructure features regularly in terms of both the quality and price of telecommunications services to employment and residential sites alike.
Marketing/ investment recruitment campaigns. Each of the hubs has strong branding and marketing campaigns which highlight government commitment to the site, its planning vision and strategic location, amongst other things.
Applying the lessons to outer urban growth areas
Given the context and lessons provided above, a framework for developing and diversifying the economies of Australia’s outer urban growth areas should consider:
1) Optimising ‘population driven’ jobs
Ensuring that outer urban growth areas are ready to accommodate jobs that service population growth (e.g. construction, retail, education, etc.) is essential and is least difficult to achieve.
2) Knowing your product/ market to capture ‘footloose’ jobs
Stakeholders need to collectively understand what competitive advantages their growth areas have, and how this needs to be communicated/ targeted towards ‘footloose’ industries. Statistical identification of these jobs is one thing: effectively communicating the right messages to private sector decision makers is another.
3) Truly collaborating
The private sector undoubtedly drives job creation/ industry diversification. Only by truly engaging with the private sector can the public sector truly develop a path for regional economic development. Sometimes this means giving private sector leaders the power to drive development efforts. It also means encouraging growth area businesses to work together, which is not an easy task, but is often made easier when bidding for a mutually beneficial opportunity.
4) Economic development roles
It is not the public sector’s role to ‘pick winners’. The public sector needs to build the region’s capacity to respond to economic opportunity, by taking a multifaceted approach, but not by risking public funds on commercial ventures. Substantial ‘hard’ and ‘soft’ infrastructure development effort is required to build regional capacity.
5) Planning for liveability
Growth area communities need to be attractive places. Too often major investors (public and private) ignore the contributions that their projects can make to urban liveability. Often the cost is not greater, it just takes an outward looking project philosophy.
And we should not limit ourselves to permanent ‘relocation’ thinking – society benefits from every day a growth area worker stays in the region, particularly if they can do so without compromising agglomeration effects. Working from a shared location like a digital work hub, or part time teleworking from home or should be actively encouraged.
Finally, it is important to listen to women – if improving labour force participation is one of Australia’s “greatest productivity challenges”, then the outer urban growth areas are the natural place to start, given the concentration of young families, and the child rearing roles women often play in this context.
. World Bank, 2009. World Development Report 2009 : Reshaping Economic Geography