VIC Liberals: Divert population ponzi to regions

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By Leith van Onselen

In late 2015, in a great twist of irony, one of the people responsible for the proliferation of high rise development across Melbourne – former planning Minister (now Opposition Leader) Matthew Guy – had a Damascus moment and questioned the merits of high immigration into Melbourne:

“I think there has got to be a genuine community, business and governance discussion about how we really focus on building the population of our regions, because I am very, very sure that the four-and-a-half million people of Melbourne think … our city is bursting,” Mr Guy said. “Can you imagine it with another million people on top of this, as it will be within 15 years time?”

Then in May 2016, Guy went even further claiming that “managing population growth is Victoria’s biggest challenge”:

Every year Victoria’s population grows by the size of a packed MCG.

One hundred thousand new people are added to our state every 12 months and 92 per cent of them are headed towards Melbourne.

So it is no wonder that strained and congested infrastructure is something Victorians experience every day…

Our roads are clogged, our trains are full and we can’t get inside trams let alone find a seat on one.

Managing the growth of our population is the biggest challenge Victoria faces today…

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Then in November 2016, Guy returned claiming that almost doubling Melbourne’s population to 8 million is unsustainable and calling for population growth to be shifted to the regions:

All of Melbourne’s problems are intrinsically linked to this [population] growth, and it requires a government of vision and purpose to adequately respond to these challenges for the sake of us all…

Our vision for Victoria is a state of cities, not a city state.

We want a growing and liveable Melbourne but not a Melbourne that has doubled by 2051.

And we want our regional centres to share in the opportunities this growth can bring if managed responsibly…

For too long, governments have ignored decentralisation… An effective decentralisation agenda is crucial to underpinning our desire to improve Melbourne’s liveability and economic growth of the regions…

Yesterday, Victoria’s Shadow Parliamentary Secretary to the Leader (Population Policy and Housing Affordability), Tim Smith, again warned that Melbourne’s population growth is unsustainable and called for growth to be diverted to the regions. From The Australian:

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The vastness of Melbourne is something to ­behold and the centralising of Victoria’s population continues as 92 per cent of new arrivals to Victoria stay in the capital.

Victoria is growing by one person every five minutes, more than 100,000 a year, and is the fastest growing state in the nation, with net overseas migration ­accounting for about 60 per cent of this expansion.

We have seldom seen population growth like it… Victoria’s present growth dwarfs the population booms of the 1850s and 1960s, and is contributing ­towards an infrastructure crisis characterised by severe road ­congestion, overcrowded public trans­port, schools bursting at the seams and a scarcity in the residential house market that is taking home ownership out of reach of many young Melburnians…

Melbourne is nowhere near as liveable as it was… Growth is good but not when it is unplanned… Opposition Leader Matthew Guy’s vision is to decentralise Victoria and develop its regional cities, to take the pressure off Melbourne and grow country Victoria.

The state desperately needs a government that is committed to decreasing the percentage of newcomers who make their home in Melbourne. Our state needs a government that will ­engage in a mature debate about how to incentivise newcomers to move to country Victoria, or give them the confidence that if they move to a regional centre they can commute to Melbourne with reliability and ease…

We want to see more people commuting to ­Melbourne from regional Victoria — we can’t have a Melbourne that expands forever…

An effective decentralisation agenda is key to improving capital city liveability and the economic wellbeing of the regions.

Tim Smith has done a good job identifying the nightmare facing incumbent Melbourne residents as their living standards are eroded through choking congestion, reduce public services and amenity, as well as more expensive, smaller and poorly-located housing.

After growing by 1 million people over the past 12 years, the State Government’s own projections have Melbourne’s population ballooning by 3.4 million people in the 35 years to 2051, growing by 1,850 people a week (97,000 people each year). That’s the equivalent of around 9 Canberras or 2.5 Adelaides to be added to Melbourne’s population – a crazy situation no matter which way you cut it.

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That said, the Liberal Party’s solution of simply diverting population growth to the regions is likely to be unworkable and possibly undesirable. Short of locating government departments to the regions, what can the State Government realistically do?

Moreover, what good is it if all it means is that ‘urban sprawl’ is replaced by ‘regional sprawl’ as the regions simply become commuter towns for Melbourne? Or, to put it another way, regional dormitory suburbs are created instead of fringe suburbs?

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Rather than accepting mass immigration as a fait accompli, and expecting us to deal with the fallout, the State Liberal Party should instead lobby their federal counterparts to establish a national population policy that reduces immigration and does away with a ‘Big Australia’ on the grounds that is is placing undue strain on infrastructure and housing, and is reducing living standards of incumbent residents.

Victoria’s politicians should also lobby for a greater share of tax revenues on the grounds that they are incurring the lion’s share of the costs from immigration, in the form of providing expensive infrastructure and social services.

Finally, Victoria’s politicians should follow Vancouver’s lead and dramatically raise taxes on non-permanent resident Melbourne home owners in a bid to divert growth away from the capital city as well as raise much-needed tax revenue to fund growth-related infrastructure and services.

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To the Liberal Party’s credit, they have at least recognised that Melbourne’s population growth is both unsustainable and unwanted. But they needs better solutions to ameliorate the situation.

Labor, by contrast, needs to open its eyes. Few Melbournians want a city of 8 million people. The one we have got is barely functioning properly at 4.5 million.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.