Regional growth plans envisaged by Plan Melbourne
Regional growth plans envisaged by Plan Melbourne

The Leader of the Opposition in Victoria, Matthew Guy, reckons“only the Libs-Nats have a plan for decentralisation and managing population growth. Labor just cross their fingers.” According to the Herald-Sun, Mr Guy says the projected doubling of Melbourne’s population to circa 8 million by 2050 is unsustainable; he wants much more population growth diverted to regional centres such as the Latrobe Valley, Wangaratta, Bendigo, Bairnsdale and Warrnambool.

I’ve noted before that decentralisation is a popular prescription for dealing with the pressures of metropolitan population growth; it’s worth revisiting the points I made then in the light of Mr Guy’s announcement (see Is decentralisation the answer to cities that are “too big”?). The idea of shifting a proportion of growth from the metropolitan area to regional centres is consistent with the current strategic plan for Melbourne, Plan Melbourne, released in 2013 by Mr Guy himself when he was Minister for Planning. Plan Melbourne is upfront about embracing the idea of attracting population growth out of Melbourne to regional cities; it has a chapter titled a State of Cities (see Can the regions save cities from sprawl?).

Decentralisation is one of those enduring aspirations Australian politicians love. It’s an almost magical idea; it promises to relieve the big cities of diseconomies of scale – especially the unpopular pressure to redevelop established suburbs – and simultaneously boost the economic prospects of declining country towns. Moreover, it sounds ‘big picture’ and, best of all, the cost and pain lie beyond the current political cycle.

No wonder politicians love it. But it’s political make-believe; decentralisation has never worked in modern Australia on any sort of scale. Despite the great decentralisation experiment of the Whitlam years, Australians remain wedded to their big cities. Melbourne, for example, gets 88% of Victoria’s population growth.

The centre-piece of the Whitlam decentralisation push, Albury-Wodonga, today has a population of just 90,000; that’s one year’s growth for Melbourne at the moment. The story of Canberra is perhaps even more telling. It’s close to Sydney, has excellent air and road connections, and is the nation’s capital, teeming with influential people. It has the highest human capital of any city in the country and even has two of Australia’s 21 “hippest” suburbs. And yet it’s population is only 400,000. Neither city has “taken off”.

The key problem with decentralisation policy is it’s almost impossible to get employers to relocate from big cities to regional centres. Whitlam had the great advantage of focussing relocation incentives on firms in the manufacturing sector – where firms are relatively agnostic about location – but his efforts had little effect.

It’s much harder now than it was in the 1970s because manufacturing industry is much less important. The growth is in services industries which are generally more sensitive to location; industries like finance and government like city centres. Where regional cities have grown strongly – like Cairns – it’s because they capitalised on underlying demand, not because of some magical policy intervention. Government had a role in facilitating tourism in Cairns – for example by providing an international airport – but it didn’t create the forces that made it a sought-after destination in the 1980s.

What Mr Guy is proposing isn’t decentralisation; it’s regional sprawl. His idea is to send a large part of Melbourne’s population growth to regional dormitory suburbs instead of fringe suburbs. It’s the same idea as Plan Melbourne promotes i.e. substituting regional sprawl for suburban sprawl.

Is regional sprawl a better idea than fringe sprawl? Well, it’s a plausible strategy. London, for example, has around forty ‘overspill’ or satellite towns like Hemel Hempstead and Milton Keynes lying beyond the green belt and housing 4 million residents. They’re closely tied economically to the centre; they’re London’s outer suburbs in the same way as Melton and Sunbury are Melbourne’s fringe suburbs.

Regional sprawl could provide benefits to regional centres:

  • The necessary faster transport connections between regional cities and Melbourne would increase the locational choices of those working in the capital and enhance the access of regional residents to Melbourne’s attractions and specialised services.
  • All those new dormitory residents would create jobs in population-serving industries for regional cities e.g. tradies, fast food workers, teachers. That would help retain young people who currently leave for the big smoke.

On the other hand, regional sprawl could have some disadvantages compared to fringe sprawl:

  • It would require seriously expensive trunk transport infrastructure to get workers from their regional town to their jobs and other services (like the airport) in Melbourne.
  • There’s no infrastructure saving. Limited existing “spare capacity” in services in regional cities would soon be used up. The loss of economies of scale in the supply of services like health, education, water supply and sewage treatment, might increase costs.
  • The pressure to increase residential densities and reduce car use would be lower in small cities compared to Melbourne’s fringe because accessibility is greater.
  • Many long distance non-work trips to Melbourne and a significant proportion of commutes (not all regional commuters would work in the city centre) would inevitably end up being made by car because it provides greater flexibility at the destination.
  • The environmental impact could be worse, given much of the land around Melbourne’s north and west – where most future suburban growth is expected – is already degraded.
  • Melbourne businesses located outside the city centre might not get the same benefits from a larger labour market than they would if population growth took place on the suburban fringe.

The case hasn’t been made that Melbourne is or will be “too big”. There are plenty of successful cities in the world that are much bigger than Melbourne is forecast to be by the middle of the century (see also Will Sydney and Melbourne implode as they get bigger and bigger?).

Melbourne needs what all growth requires; better management of existing assets and better infrastructure (and let’s not forget long-term population forecasts have a poor record for accuracy). Although it’s already a core component of Plan Melbourne, the regional sprawl scenario is barely understood in terms of its benefits and costs compared to fringe sprawl. A lot more hard-nosed analysis is required.