The future of Australian cities

On 7 August 2018, Australia’s population clock ticked over to 25 million. The population is currently twice what it was in 1970 with forecasts having Australia exceeding 35 million people by 2050. This raises the significant question: what is the future of Australian cities?

Urbanisation

With 90% of Australians living in a city, there is no doubt we are a highly urbanised nation. Vibrant cities are good for our prosperity. Productivity growth is high in cities, and where a city doubles in size, so too do wages, output and innovation per capita. All the benefits of human collaboration unfold in a productive and dynamic environment.

However, as cities grow, negative impacts can grow too. These include more congestion, more pollution, and generally more stress on infrastructure. As the population of our key cities is expected to double by 2050, there has never been a greater need for coordinated planning to safeguard their future.

Globalisation

Trade as a percentage of global GDP increased from around 30% in the 1960s to nearly 60% in 2015. Despite the anti-globalisation rhetoric coming from around the world, globalisation continues to intensify.

One of the implications of this is that cities are no longer able to operate in self-contained silos, and must instead focus on collaboration on both a domestic and global level. Creating connections with global trade channels as a competitive means requires substantial investment in connective infrastructure. An example of this was discussed in the Winter 2018 edition of Insight regarding China’s Belt and Road Initiative (BRI).

Launched by China in 2013, the BRI provides a platform for multilateral cooperation to create new trade routes, economic links and business networks. The BRI will involve 65 countries with a total population of 4.4 billion and 30% share of the global economy. To date, US$1 trillion worth of projects have been initiated, with another US$5 trillion expected to commence over the coming five years.

Globalisation, urbanisation and also technological advancement are creating sweeping changes to urban form and living. The challenge for cities everywhere is in providing the infrastructure and environment for productive activity that facilitates creativity, innovation and entrepreneurship, while at the same time fostering a sense of community and wellbeing for residents.

Transport

Transportation forms a far-reaching aspect of Australia’s readiness for the future. The low-density nature of Australia’s major cities means the domestic transport network often fails to adequately serve the needs of commuters at present, and will therefore be ill-equipped for a more intensive future.

Further, the transport network trails behind many of its comparable global counterparts across Asia, Western Europe and North America, due to a range of factors. In comparison, Australia has higher than average congestion coupled with lower than average public transport coverage, which is magnified by growing commute distances and journey times.

The Stockholm Solution

Stockholm, a city similar to Sydney in terms of rapid population growth, is a success story with regard to a shared vision and strategic, collaborative city planning.

Over the course of several decades, Stockholm has created a number of sub-centres located outside of the CBD. In order to do this, planners needed to integrate land use, transport and housing, and also move towards a singular economic, services, education, energy and climate strategy.

As a result, these new sub-centres became attractive locations to work and live, catering for population growth, while simultaneously reducing congestion.

Similar to London, Stockholm has also employed some more targeted measures. In January 2006, the city began charging drivers between €1 and €2 at key bottlenecks leading into the CBD. This, in turn, resulted in a 20% reduction in cars on the road, and a significant decrease in congestion.

Australian cities, particularly Sydney, Melbourne and Brisbane, have all introduced tolled infrastructure to relieve congestion but this is only half the solution. None have yet effectively made the shift from a single CBD to a more distributed model in order to spread demand effectively.

Cities’ preparedness for the future

For Australia’s cities to combat the challenges of urbanisation and globalisation, they must have a clear, shared vision for their future. Australia continues to attract population growth that challenges the capacity of our cities’ infrastructure, housing and governance.

Comparable first world cities globally, for the most part, are significantly better serviced in terms of high capacity infrastructure and are managed in a more coherent way than those domestically.

In the past, these shortcomings were relatively unnoticeable and substantially less detrimental, due to consecutive cycles of economic growth, and a captivating set of national and city brands centred on the Australian way of life.

Australia has been the lucky country, but poor planning cycles will not save our cities. As such, coordinated, long-term transport, investment, infrastructure and job planning are a pre-requisite for Australian cities to have a successful future.

Investment

Cities do not necessarily need to compete with one another for investment. Rather, the focus must be on targeting the uniqueness, individual appeal and offerings of each location. EY managing partner, Selina Short, provides the example of Sydney’s Innovation Districts, Macquarie Park and Eveleigh.

Macquarie Park is often described as ‘Australia’s Silicon Valley’ and is home to Macquarie University, while Eveleigh plays host to the Australian Technology Park. Both locations house start-ups, research firms, and some of Australia’s most recognisable companies across the communications, IT and pharmaceutical sectors.

These Innovation Districts are most effective when they target connected communities of research, innovation and capital, based in well-planned, well-designed locations. While these Districts are vital, they must also form part of a wider, connected cities strategy that addresses all of the urban challenges, including the provision of affordable housing, transport congestion and access to education and employment.

Jobs

Drivers of urbanisation often vary from country to country, and even on an individual city basis, but the greatest driver of urbanisation is employment opportunities.

In Australia, most existing and future jobs are located in close proximity to cities. As a matter of fact, more than 25% of jobs are located within five kilometres of our major cities’ CBD, and 40% within ten kilometres.

Australia does not have an issue in terms of creating employment opportunities. Rather, Australian cities struggle to maintain economies that localise and retain top entrepreneurial talent particularly when it comes to globalising innovative opportunities.

The future

As it stands, there is a large pipeline of planned infrastructure slated to re-engineer the face of Australia’s major cities, particularly along the east coast. However, whether this surplus of infrastructure is sufficient in its own right or coordinated enough to the extent required remains to be seen.

Regardless, the strategy needs collaboration, coordination, long-term goals and leadership – both public and private – to effectively engage with community stakeholders so that people understand the trade-offs and changes necessary for our cities to have a strong future.