Will Brumby’s new decentralisation initiative work?

The Ready for Tomorrow initiative announced by the Premier earlier this week is being sold as a way to relieve growth pressure on Melbourne.

Just why people would move to regional centres on a scale sufficient to ease the demands on Melbourne significantly is not clear, as there’s little in the announcement to suggest the Government has suddenly discovered the secret to growing jobs in the regions.

The track record of policy-driven migration in Australia is poor. The decentralisation schemes of the seventies, based on growing regional centres like Albury-Wodonga and Bathurst-Orange, were conspicuously unsuccessful in lowering growth in the major capital cities.

Decentralisation was supposed to be driven by manufacturing, which at that time was on the march out of the inner city. However rather than moving to regional centres, manufacturing largely moved to the suburbs and offshore. It now offers even less potential for underpinning decentralisation that it did 30 or 40 years ago.

I think the practical impact of Ready for Tomorrow is more likely to lie in enhancing the liveability of the regions than in giving respite to Melbourne. It is really a regional development program. As The Age’s editorial writer points out, even if the annual growth rates of the eight largest regional cities were to double, it would only relieve Melbourne of seven weeks growth.

Nevertheless, I suppose the prospect of cheaper housing and lower congestion in reasonable proximity to Melbourne may be sufficient to attract some new settlers to regional centres, especially if it is hyped as the sensible thing to do by the Government and regional councils. Read the rest of this entry »


Do firms want to be in suburban centres?

We know that most jobs in Melbourne are now in the suburbs. There’s also an increasing understanding that large metropolitan areas are now generally polycentric rather than monocentric in form i.e. there are significant activity centres outside the CBD with large numbers of jobs. The strategic planning update to Melbourne 2030, Melbourne @ 5 Million, released in October 2008, explicitly acknowledged this reality.

It is clear that firms can increasingly obtain the benefits of density, such as face-to-face contact, in both inner city and suburban centres where they don’t have to carry the extra costs in rent and congestion imposed by the very high density of the CBD. The CBD’s share of metropolitan jobs has consequently fallen significantly over the last 30-40 years (it has staged a small revival since 1996, showing significant jobs growth in absolute terms, but its share of metropolitan jobs has not increased).

Tysons Corner - the archetypal edge city

Yet many studies in many countries have found that while the number of suburban and inner city activity centres is increasing, the proportion of jobs located within them is falling. In fact, around a half to two thirds of employment in US cities is scattered across the metropolitan area at relatively low densities. Inter-city and cross-country comparisons are difficult, but the evidence suggests that suburban jobs are even more scattered in Melbourne.

It seems that firms can increasingly achieve the benefits of agglomeration at a larger geographical scale than that of the CBD or suburban activity centres. The advantages of physical proximity have apparently declined to such an extent that the costs of aggregation now exceed the benefits at ever lower levels of density.

But why are firms increasingly spurning density? Read the rest of this entry »


Is the urban fringe getting bigger?

The proportion of new dwelling commencements planned for the outer suburban growth areas increased sharply between the release of Melbourne 2030 in 2003 and the release of the revised strategy, Melbourne @ 5 Million, in October 2008.

Melbourne 2030 envisaged 31% of dwelling starts would be located in the growth areas over the period to 2030 (page 30). It expected virtually all the rest would be located within the established suburbs, either clustered around major activity centres or dispersed across the suburbs.

Residential forecasts by region, Melbourne 2030 (click to enlarge)

The subsequent update, Melbourne @ 5 Million, made a dramatic change. It increased the proportion of dwellings expected to be constructed in outer suburban growth areas to 47% – half as much again as envisaged by Melbourne 2030 (page 3).

This change was consistent with the reality of what was happening in the market.

The authors of Melbourne 2030 probably felt at the time that 31% was a reasonable “stretch” target. Over the four years from 96/97 to 00/01, only 38% of new commencements were in the growth areas.

However four years is a short period to use as a basis for policy. As it happened this was a relatively quiet period compared to the boom that followed. Read the rest of this entry »


Are all suburban centres the same?

Last week I looked at the geography of suburban jobs in Melbourne (Where are the suburban jobs?), finding there are 31 centres that account for just 20% of all suburban jobs. There is a large variation in the size of centres, with the largest four – Clayton, Tullamarine, Kew/Hawthorn and Box Hill – accounting for nearly half of the jobs in these centres.

Today I want to look at the economic functions of suburban centres, as indicated by their industry composition. If a centre is specialised by industry compared to jobs in the rest of the suburbs, it suggests it has a distinct economic role. It could also mean that the benefits of agglomeration may not be especially important.

Specialisation Index scores for suburban centres. 13 centres score 0.3 or higher. Dotted line shows score for suburban jobs located outside centres (click to enlarge)

Actually it’s a little more complex than that – specialisation implies that being in a large, diverse centre is not that important, but being spatially close to firms in the same or a related sector is. In other words, firms seek to minimise the costs of density by locating just with “their own kind” and avoid the overhead of firms from whom they obtain little benefit.

The data shows that the economic functions of suburban centres are many and varied and differ markedly from the 80% of suburban jobs that are not located in centres. Some centres are dominated by a single industry and accordingly have a distinct “personality”. There are thirteen such centres, mostly focussed on Retail or Manufacturing, although Latrobe is concentrated in Education and Heidelberg in Health.

Yet that only tells part of the story. With only one exception, all centres have a specialisation in at least one of 17 industries and some are specialised in multiple industries. For example, although Box Hill is not dominated by a single industry like Latrobe is, it nevertheless has specialisations in Health and Government (defined as having at least twice the share of jobs in each of these two industries as jobs located outside centres do). Health accounts for 27% of jobs in Box Hill and Government for 17% – the respective figures for suburban jobs outside of centres are just 11% and 4%.

Some centres like Burwood East, Sunshine and Broadmeadows are specialised in three industries. The only truly “diversified” centre is Kew/Hawthorne, whose sectoral composition is reasonably similar to that of the rest of the suburbs in all industries (note that larger centres tend to have fewer specialisations because there is less variability). Read the rest of this entry »


Where are the suburban jobs?

Where are suburban jobs – are they located in activity centres or are they spread more or less uniformly across the suburbs?

Many people are surprised to learn that nearly three quarters of the jobs in Melbourne are located more than 5 km from the CBD i.e. in the suburbs (see The jobs are already in the suburbs). Here’s another surprise – only 20% of those suburban jobs are located in medium to large activity centres.

The other 80% aren’t sprinkled throughout residential areas in stand-alone developments (although some most definitely are). Rather, they’re mostly located in relatively small centres, for example in what Melbourne 2030 curiously calls Major Activity Centres.

Suburban employment centres - circles proportionate to job numbers. Click to enlarge

Defining an activity centre is not as straightforward as it might appear. There are a number of possible approaches, such as identifying higher density clusters of jobs, people or trip ends. Another way is to look for concentrations of particular land uses such as retail space. In practise, planning agencies don’t always seem to apply a lot of rigour to defining centres. Counting the area of retail space seems to suffice in many cases, or accepting historical hierarchies in others.

I defined centres as agglomerations of employment. This is in line with the customary approach in the literature on this topic and is appropriate because employment is a good indicator of economic activity. I broke Melbourne down into 1,950 zones and applied minimum thresholds for job numbers and gross job density to each zone using 1981- 2006 Census data. Zones that exceeded both thresholds constitute centres (contiguous qualifying zones are aggregated to a single centre).

Using 2006 Census job data, I found there are 31 suburban centres in Melbourne. These contain just one fifth of all suburban jobs. That low proportion is not because my thresholds are taxing – I used the mean values of employment and density for all zones across Melbourne. The suburban centres collectively are only around one eighth as dense as the CBD (defined to include Docklands and Southbank).

If I were to set the density threshold at the same level as the inner city (including the CBD) then only 7% of all suburban jobs would be in centres. If it were set at just over half the density of the CBD then just 2% of suburban jobs would be in centres (they would be Box Hill, Doncaster, Dandenong, Wantirna Sth and Heidelberg).

I also found that the proportion of suburban firms located in centres declined significantly over 1981-06, although the number of centres increased. This is a near-universal trend in US cities and is often interpreted as signifying that density is declining in importance as transport and communication costs have fallen.

That such a relatively small proportion of suburban jobs is located in centres is an enormously important finding. It indicates that the great bulk of firms in the suburbs (and hence most firms in Melbourne) either eschew anything but modest density or, alternatively, simply can’t get access to higher density locations. Read the rest of this entry »


Cycling in The Netherlands

Fascinating video of dedicated route followed by children cycling to school in The Netherlands. This gives a perspective on cycling that you wouldn’t get from the standard tourist spots. Note the suburban setting – it ties in with my earlier post arguing that the suburbs have greater potential for cycling than the inner city, not least because it would be easier to fit in this sort of infrastructure. (Hat tip to Tom Vanderbilt) Read the rest of this entry »


Transport disadvantage in the suburbs

One of the perennial concerns about suburban sprawl is transport disadvantage. But just how significant is the problem? Most importantly, is it a problem that can only be tackled effectively by ‘abolishing’ fringe growth and replacing it with multi unit housing within established suburbs?

Research done by Currie and Sensbergs and Currie and Delbosc on outer suburban Melbourne gives a sense of the dimensions of this issue. The data shows that 94% of outer suburban households have at least one car and 61% have at least two.

Compared to the 1970s, much of the transport disadvantage associated with outer suburban living has been mitigated by higher car ownership and to some extent by social infrastructure levies on developers.

However disadvantage is usually associated with low incomes. Currie and Sensberg found that 18% of lower income households living in the outer suburbs don’t have a car. They make up around 8% of all outer suburban households or about 1.5% of all  households in Melbourne. They are typically older, retired pensioners living alone and unemployed single mothers in rented accommodation. Read the rest of this entry »