Melbourne to tighten urban boundary

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By Leith van Onselen

Melbourne’s population is booming. Since the beginning of 2000, the city’s population grew by a whopping 27%, or more than 900,000 people. If growth continues at that pace – 2% per annum – then Melbourne’s population would surpass 5 million by 2025, overtake Sydney by 2037, and hit 8 million by 2049.

With Melbourne’s population expanding at such a rapid rate, it has no choice to expand its urban footprint as well as grow upwards. Yet for some reason, the Victorian Government seems intent on thwarting further urban expansion (“sprawl”) by tightening the city’s urban growth boundary. From the Age:

A 40-year vision for Melbourne expected to be released this week will outline four employment clusters at La Trobe University, Parkville, Monash Clayton and Sunshine and moves to reduce urban sprawl with tighter urban boundaries.

A draft of the Napthine government’s long-awaited metropolitan planning strategy is tipped to be released on Wednesday outlining key housing and employment growth areas, transport priorities and a vision for Melbourne as it races towards 5 million people.

The blueprint is the government’s strategic replacement for the former Labor government’s Melbourne 2030 plan and will be the launch pad for its infrastructure priorities heading into the 2014 state election. The draft is expected to expand on a vision in the earlier discussion paper for a ”20-minute city” with jobs, services and recreational attractions within 20 minutes of home.

While precise details are sketchy at this stage, any move to tighten Melbourne’s growth boundary amid rapidly growing population is destined to fail. We have already seen how this experiment works in Auckland, New Zealand. There, a very tight urban growth boundary (the “Metropolitan Urban Limit” or MUL) has been in place for well over a decade, strangling urban land supply. Auckland now has one of the densest populations in the Anglosphere (see next chart), ridiculously unaffordable housing (median house price of around $650,000), and severe congestion problems.

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Put simply, despite its relatively small population (circa 1.5 million), the hope of a “20 minute city” in Auckland is nothing more than a pipe dream due to crippling congestion brought about (in part) by jamming too many people into too small an area. How the Victorian Government believes that Melbourne – a city almost three times the population of Auckland – can achieve such a goal via forced urban consolidation is delusional at best.

Should the Victorian Government succeed in tightening Melbourne’s urban growth boundary, the result is likely to be skyrocketing urban land values, deteriorating housing affordability (despite shrinking home sizes), and worsening levels of congestion. Those lucky enough to be pre-existing land holders will benefit from the rising wealth brought about from higher values, whereas those yet to enter the market (and future generations) will suffer immensely. The overall Melbourne economy would likely also lose competitiveness as escalating land costs feed into the costs of production.

Expecting to achieve a more liveable city by restricting the urban footprint at the same time as Melbourne’s population surges towards 5 million and beyond is a contradiction in terms and is mutually exclusive. The plan, therefore, needs to be abandoned.

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Unconventional Economist
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  1. There is no example anywhere in the world of a city that has short commutes because it has been made more compact and denser.

    If there is, I would live to know how they did it.

    It has been pointed out by Anthony Downs and Peter Hall and others, that the only way to realise planners intentions, would be to compulsorily acquire property at locations that have been targeted for intensification and changes in use. Otherwise, the owners of this land hold out for maximum possible gains and the actual process of evolution is slowed down to almost nothing.

    Portland Oregon still has completely undeveloped sites on its commuter rail routes near the city centre, 30 years after imposing its UGB – and its “intensification” has all been near the urban fringe where development is “least unaffordable”. As Alain Bertaud points out in his study of “Spatial Distribution of Density”, this has the effect of increasing, not reducing, average commute distances.

    • I thought Toronto had good commute times because it has a fantastic public transport. I’m happy to be corrected. I thought dense population works great if it is joined to good public transport. There are tons of dense cities with good transport. Moscow is one that I’ve seen personally. Hong Kong too.

      • Here is data from a 2010 Toronto Board of Trade paper which has unfortunately been taken off the internet recently;

        Toronto Board of Trade Paper, comparable average commute times (ROUND TRIP):

        Barcelona 48.4 minutes (probably due to high unemployment)
        Dallas 53.0
        Milan 53.4
        Seattle 55.5
        Boston 55.8
        Los Angeles 56.1
        San Francisco 57.4
        Chicago 61.4
        Berlin 63.2
        Halifax 65.0
        Sydney 66.0
        Madrid 66.1
        Calgary 67.0
        Vancouver 67.0
        New York 68.1
        Stockholm 70.0
        London 74.0
        Montreal 76.0
        Toronto 80.0

        Higher public transport mode share in denser cities never calculates into shorter commute times for two reasons. One is that the public transport commute is never advantageously quick in international average terms. There is walking to be done at each end of the commute, and a bit of waiting.

        The other reason is that in most cases, most travel is still by car even when the public transport has an unusually high mode share (HK is an exception) and this car travel always suffers extraordinarily high congestion delays.

        It also needs to be pointed out repeatedly that a city’s form and function are both the end result of a long process of evolution, economically and socio-economically. Containing a city’s growth in the hopes of replicating Manhattan makes no more sense than Cargo cultism. All the UK’s cities are growth contained and high density, but this has not made all of them “London” or HK or Manhattan. Few of them are economic successes or desirable places to live, and the growth containment policy and the consequent unaffordability of land and housing is a major reason for the deline of most of them.

        Hong Kong was of course a tax haven for decades, and a hub interface between the British Empire and most of Asia.

      • I don’t even think the Toronto density figures from Demographia are correct.

        Statistics Canada has the (metro) city’s density as ~1000 pp/km^2.

        Presumably the issue here is that the ‘city’ of Toronto is relatively small (about 2 Million people), with a number of bedroom communities (including Brantford, Mississauga etc…) contributing another 3 million people to the metro area.

        I’m guessing they only looked at the ‘city’ of Toronto. It’d be like looking at the density of Melbourne from Yarraville to Toorak, and ignoring everything else from Pakenham to Werribee.

      • dumb_non_economist

        HK only if you live along the MTR. Don’t confuse an expats view with what a local may experience.

      • @dumb_non_economist

        i’m staying with a local and we’re about as far from an MTR as you can get. plus, we’re in the New Territories, which is about as far as you can get from Central while still being in HK. and i can attest to even that local experience being awesome too.
        no MTR? no problem! cheap minibuses going everywhere at all hours.
        local knowledge means MTR proximity is a restriction for amateurs only (and even those amateurs, such as myself, can always catch a cheap-ass red taxi)

        (another unrelated anecdotal HK story – apartments here are cheaper and better than australian ones, and this is supposed to be the most expensive real-estate market in the world. look for yourself. take $350 000 AUD, multiply it by seven and go see what you can actually afford to get on a HK real-estate site. then try and find anything close to that in OZ.)

  2. I believe that urban planners are all using computer models that provide the results they like to believe in.

    There is no lack of academic literature that repudiates these models, but the urban planning profession is impervious to what is going on in the world outside, whether it is ordinary people and their lives, or true experts who actually have the real answers.

    • Planners draw circles around ‘nodes’ and assume everyone will want to live within the circumference; we don’t use computer models. The most difficult part of our job is selecting the right crayon colour. I prefer blue, but most of my former colleagues tend tend to utilise red.

    • Planners draw circles around ‘nodes’ and assume everyone will want to live within the circumference; we don’t use computer models. The most difficult part of our job is selecting the right crayon colour. I prefer blue, but most of my former colleagues tend tend to utilise red.

      • Right, and they assume property prices within the circle won’t go up as people move into the inside of them, so that most of the people the planners think will live there are “priced out”.

        In fact it is worse than that, the property prices go up as soon as plans and zones are enacted, the owners of the property don’t even wait for any of the population, businesses and developers whose multitudes of actions have to give effect to the planners intentions.

  3. This is why I am anti immigration. At least at the levels they are now. To think that the powers that be won’t exploit it as much as possible is naive and stupid.

  4. Stupid? Depends whether u think they care more about housing affordability than stamp duty. We all know the answer to that.

  5. Maybe I missed it in an earlier article or something, but where does it say that Melbourne’s UGB is going to be tightened/reduced in area? That would be a huge about-face from years of policy, and as far as I know would come as a complete surprise to the planners I work with.

    • The planners I’ve worked with, at fairly high level of State Government wouldn’t have known shit from clay to put it bluntly.

  6. The Victorian L/NP has abandoned the citizens it governs. This is the reemergence of old fashioned class warfare after a long and productive meritocracy.

    Bob Menzies said (I wish I could find the quote) that the task of the Liberal Party is to advance the interests of the middle class and that the rich can ‘bloody well look after themselves’. This is not the behavior of the current lot.

    Land prices are at ridiculous multiples of earnings. Rents remain attached to wages.


  7. It would not be unreasonable to assume that our domestic stock of town planners have been heavily indoctrinated by UK inspired training and policy in this area. The colonial mentality is alive and well in 2013.

    Deliberately engineering a building land shortage in one of the least densely populated countries in the world is an act of utter [email protected], protecting the windfall gains of specufesters and insiders at the expense of everyone else.

    As some others have pointed out, this is entirely about propping up Stamp Duty revenues and development levies.

    Nothing will change until the last interfering politician is strangled with the intestines of the last ‘planner’.

    • ‘It would not be unreasonable to assume that our domestic stock of town planners have been heavily indoctrinated by UK inspired training and policy in this area. The colonial mentality is alive and well in 2013.’

      They do seem to love their annual study tours to those regions. I recall the Melbourne 2030 team frequently went there in numbers, all attached to the Minister at the time.

      • And they LIKED what they saw on the ground?????

        Of course they would have been given a nice Potemkin tour.

        I recommend Ian Abley of AudaCity and his colleagues to show them round next time.

  8. “Since the beginning of 2000, the city’s population grew by a whopping 27%, or more than 900,000 people. If growth continues at that pace – 2% per annum – then Melbourne’s population would surpass 5 million by 2025, overtake Sydney by 2037, and hit 8 million by 2049.”

    These estimates are based on a period that does not include a single technical recession. You can bet your ass that it will NOT remain so until 2049.

    It looks like just another piece of scare campaign designed to reel in naive minds aka “don’t miss the boat (even if it might sink from overloading)”

    Perhaps they should read more about the history of ghost towns in the wake of a gold rush……

    • the most reasonable assumption is to think the trend would likely continue as it is, but feel free to miss the boat.I m not sure how one can think land could be cheaper with few million more immigrants.

      • “the most reasonable assumption is to think the trend would likely continue as it is”

        I do not know which fantasy land you are from, but if you think that population can keep growing with recessions then you’d better have a look at Detroit…..

      • ““the most reasonable assumption is to think the trend would likely continue as it is””

        The most reasonable assumption is to think that the trend would return to its long-term average.

      • Also, if anyone thinks a popular city can keep growing rapidly once its policies go “anti sprawl”, needs to look at what happened to the growth rates of LA and SF from the 1950’s to the current day.

  9. “ANZ’s Property Investors’ survey found 92% expected property values to rise over the next year.” Unbelieveable! You mean, those who have invested in property…expect prices to rise? That confused 8% need a good talking to……

  10. arescarti42MEMBER

    I think the problem with imposing strict UGBs is mostly that mechanism for densification in existing areas does not work.

    Imagine if you were to, say, completely remove all zoning, height, etc. restrictions from existing residential areas, and give existing residents zero influence over what gets built in their area, and then combined that with a hefty LVT.

    Land values would plummet, and there’d be a surge in new construction within the existing urban footprint.

    It be much more expensive than greenfields by virtue of the need to significantly upgrade existing infrastructure, and also the cost of buying land with existing dwellings and knocking them down, but if the Victorian Government is hell bent on growing the population whilst restricting the growth boundary, that might allow it to actually work.

    I think it’d be very interesting to look more in depth at what the Japanese have done in their urban areas. They’re a nation of 120 million crammed on to a tiny island, most of which is mountains that can’t be built on anyway.

    From what i can tell they have much looser zoning and planning restrictions, and as a result, despite being land constrained, Japanese housing is some of the cheapest in the developed world.

    • I think you are exactly right; even with the policies you suggest, it would still be more expensive to do intensification.

      As it is, NIMBY rights and the speculative gains anticipated by property owners under conditions of growth containment planning, make it absolutely impossible.

      There is a superb analysis of these effects in Auckland NZ; the Jasmax Consultants “Fine Grain Analysis of the Auckland City Spatial Plan”. Google it.

      Japan’s property values were in a ridiculous bubble in the early 1980’s, and there has never been a turnaround from the bust; the prices just keep going lower and lower, to the point that they are now undervalued by any metric.

      Their planning has done the best it could given the constraints of their population and available land; they actually manage more choice of housing than the Poms do. But avoiding the bubble they had was almost impossible unless they had been prepared to use powers of compulsory acquisition of land, which is how the Dutch have done it sometimes in the past.

  11. Nice work once again Leith,

    it’s interesting looking at the lead up to the last election. Tony Abbott said that Australia should be home to as many people as possible. Julia Gillard just prior being exchanged with Rudd said we should continue to run our record levels of immigration and of course Rudd is a Big Australia man. Even the population-timid Greens acknowledge we can’t sustain even the more modest 35 million – we’re not remotely living sustainably now and on a crash course with ecological limitations that are the inevitable outcome of an obsession with population growth and/or the lack of desire to have a mature debate about it. Still, economies are failing all over the world, and the strategies amount to shuffling deck chairs rather than recognising that stable populations are the only rational and actually most desirable progression.

    The election results were interesting with over 4 million voting informally, and the overwhelming majority voting Liberal or Labor as their first preference.

    So, one can only assume that people are voting for their misery to continue while lamenting their loss of quality of life, the lack of economic resilience and ultimately the loss of their freedoms just to have that little more comfort that their property prices are going up – but what does that actually mean? It costs you more to live, it costs you more to move, it costs you more to maintain these properties, it strangles the economy by encouraging non-productive investment.

    We clearly need more adults in political circles that “get” that an economy based on perpetual population growth to fuel an unsustainble housing industry and selling off our finite resources to pay for it is obviously going to fail. And failing it is.

    One of the few notable voices in Australian politics is Kelvin Thomson (Labor member for Wills) in his speech to to the Association of Independent Retirees.

    “More than half the milk produced in Australia is now processed by foreign-owned firms. Half the wheat export industry is controlled by foreign companies, which own 12 of the nation’s 23 licensed wheat exporters. Three foreign milling groups account for nearly 60% of Australia’s raw sugar production – including a subsidiary of the Chinese state-owned COFCO Corporation, which took over Tully Sugar last year. And 40% of Australia’s beef and lamb is processed by foreign firms. 9% of irrigation water licenses are owned by foreigners.

    In Queensland foreign land ownership has quadrupled in the past five years to 4.4 million hectares. Mining companies accounted for 60% of all foreign investment in Queensland farmland during 2010. In the Northern Territory, over 14 million hectares, an area larger than the State of Victoria, is overseas owned. Over 30% of Western Australia’s water entitlements for agriculture are overseas owned. On December 30, last year Wesfarmers sold its Premier Coal business to a Chinese company, leaving all coal mines supplying the WA electricity grid in foreign hands”

    But when it comes to voting, the choice should really be clear – unfortunately, it’s very hard to help promote understanding. If people want things to improve, then it can only happen from one of two ways, a) we continue as we are and let the laws of thermodynamics and mother nature sort it out or b) the more moderate/gentler path through parties like the Stable Population Party.

    • And why do we require someone to have a permit simply to sell primary commodities (wheat, wine, meat) from Australia…aren’t we supposed to be facilitating exports.

  12. But aren’t we jumping the gun a little? The rest of The Age article mentions that Melbourne is one of the biggest cities in geographical terms in the world. Shouldn’t we be filling in the gaps a little more instead of continuously expanding ever outwards into far flung suburbs that god knows I would never want to live in. So we can’t really compare to Auckland’s experience if they’re hugely congested and we’re the opposite.

    We would need infrastructure to back it up, but as the report isn’t released yet, we don’t know if that’s planned for or not. I agree a ’20 minute’ city seems unlikely, however I would personally like to see more low density become medium density around Melbourne, rather than just expect the next generation to be either super rich (and afford inner city) or be thrown out to a boondock suburb somewhere.

    • The rest of the Age article quotes planner “expert” Michael Buxton, who has never supported any prior expansions to the UGB and has zero grasp of urban economics or the deleterious impacts of the urban consolidation policies that he supports. Had Melbourne followed his prior prescriptions, and stopped expansion in the mid-2000s, it would be far more expensive and congested than it already is.

      I have no issue with higher density provided it is dictated by consumer preference, not the preference of planners living in ivory towers. The fact remains, if Melbourne’s population is going to continue to grow by 2% per year, it needs to expand both up and out. Trying to further curtail “evil sprawl” is self-defeating and will turn Melbourne into a more congested and expensive city.

      Moreover, the best way to discourage land banking and ensure those vacant areas are built on is to remove the land owners’ market power by making them compete with other land owners on the other side of the growth boundary. A broad-based land tax also wouldn’t go astray.

    • Lottie, (and Leith, I am not sure if you have ever read this), “Containment Policies for Urban Sprawl”, by Mason Gaffney, 1964, explains why crude growth boundaries are bad, and land taxes and proper pricing of infrastructure are the correct way to achieve efficient outcomes.

      There are many energy-efficiency responses to fiscal incentives that are compatible with lower density living rather than higher density, and enforced higher intensity has numerous unintended consequences that mean that this policy approach is sub-optimal to say the least, and the cost-benefit is certainly very much on the wrong side, with the cost burdens falling most inequitably. (Gibbons, Overman and Resende, “Real Earnings Disparities in Great Britain”, state that unaffordable housing acts as a multiplier of initial income disparities, in terms of disparity in life outcomes).

      The policies of growth containment are due to a combination of private vested interests, bureaucratic vested interests, ideology, and planners computer models that have not the slightest resemblance to reality.

  13. graft and corruption

    i was once informed by the sitting planning minister that the only thing politicians care about are votes and money. fully one third of funding for both liberal and labor in nearly every State in Australia is from developers. i asked the planning spokesperson in victoria; if the UGB and the green wedges are not about funding then why not introduce legislation banning political contributions from developers? the reaction was unprintable. Follow the money it explains everything politicians do.

  14. graft and corruption

    The NSW colonial government refused to sponsor any expeditions to cross the blue mountains 1801-1813 why?, land in the NSW colony land was more expensive than england and people were starving. The blue mountains were an urban growth boundary. Blaxland Wentworth and Lawson finally crossed the mountains sponsored by a newspaper in 1813 and opened up the interior. Nothing changes with time, the purpose of government is the continuation of government, it is not now nor will it ever be the welfare of the people. The UGB and green wedges are a breach of the constitution as well as the declaration of human rights. They are devices to force the price up of land mostly for selfish and nefarious purposes they are applauded by the ignorant envious masses and used by the unscrupulous to make graft a real problem in victoria.

  15. This is a very biased article. It does not mention that in cities with very low densities and no urban growth boundaries such as Perth, property prices are ridiculously high and travel times worsening.
    Also I think most Australians would agree, we spend too much time travelling and without a doubt distance obviously is a factor!
    The article very cleverly describes Auckland as one of the most densely populated cities in the Angloshpere, since when are NZ and the US the global benchmark in city planning? No mention of the UK, Europe…and Asia, Australia’s closest neighbour. Auckland is a bad comparison, it’s public transport system is also poor.
    There might be good comment on the economic affects of UGB, but a poor argument really if not balanced with some reality, Australian cities are among the most least densely populated in the world with excessive traveling times, traffic congestion and a resultant loss of economic efficiency for the economy as a whole.