VIC Liberals launch decentralisation pipe dream

By Leith van Onselen

The Victorian Liberal Party has continued its new found crusade against Melbourne’s break-neck population growth, releasing a blue print to divert population growth to the regions. From The Age:

Tax breaks, new job zones and geographically targeted visas could be used to encourage more people to move to country towns in a bid to tackle Melbourne’s “unsustainable” population boom.

With 16 months before the next election, Opposition Leader Matthew Guy has launched an ambitious bid to address what some in his party believe may be the greatest long-term challenge facing the state: its unprecedented growth.

…the state Liberals have laid the groundwork for a major push to decentralise growth away from metropolitan Melbourne – where more than two-thirds of Victorian residents now live – and into regional cities and towns…

The interim report will pave the way for a long-awaited strategy that Mr Guy will take to next year’s election…

According to the report, the city’s growth is unsustainable, and continuing with the current “business as usual” approach would result in an extra 3.8 million people in Melbourne by 2051 – but only 690,000 people moving, settling or being born in the rest of Victoria…

“Without a comprehensive plan, Melbourne is at risk of becoming Australia’s most unliveable city within a decade, and regional Victoria may not share the prosperity that comes with increased population,” the report says…

“Victorians deserve better than being squashed on a train, stuck in traffic for hours and paying more for electricity,” Mr Smith said. “The Liberal Nationals have a positive plan to manage population growth by decentralising our state, by taking the pressure off Melbourne and growing regional Victoria.”

As a lifelong Melbournian, I too have watched in disbelief as Melbourne’s population has expanded at a frantic rate, growing by a whopping one million people (27%) in the 12 years to June 2016:

Anyone that has lived in Greater Melbourne over this period will agree that living standards are being eroded. Roads and public transport have been crush-loaded and housing has become hideously expensive.

The situation is set to deteriorate further if Melbourne’s population grows as projected by the State Government. According to these projections, Melbourne will add on average 97,000 people per year (1,870 people per week) for the next 35 years – adding the equivalent of around 9 Canberras or 2.5 Adelaides to the city’s population:

ScreenHunter_16110 Nov. 14 16.13

While the State Liberal Party’s concerns are justified, how realistic is their solution to decentralise? The key driver of Melbourne’s projected population growth is the federal government’s mass immigration program:

And to date, migrants have always chosen to settle in the big cities of Melbourne and Sydney, rather than the regions:

ScreenHunter_17913 Mar. 13 16.00

Decentralisation has been on Australia’s political agenda for around 100 years without success (other than the creation of Canberra). So what makes the Victorian Liberals believe they can magically turn the tide?

And what good is decentralisation if 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?

Rather than accepting mass immigration as a fait accompli, the State Liberal Party should aggressively 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.

To the Liberal Party’s credit, they have at least explicitly acknowledged that Melbourne’s population growth is both unsustainable and unwanted. But they need to look at the root cause – excessive levels of immigration – and seek to bring it back down to sensible and sustainable levels.

For its part, the Labor Government needs to open its eyes. Few Melbournians want a city of 8 million people mid-century. The one we have currently is barely functioning properly at 4.6 million. Enough’s enough.

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Unconventional Economist
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  1. One way to force foreigners out of the cities is to charge $35/day for a train ticket unless the passenger has a Medicare card.

    Maybe Vic can even put in a rental tax on foreigners.

    I met a couple of foreign students from India in 2015 – the rich one went back and the poor one is still here trying to get an Aussie passport.

    Education is only an export if they go back.

    My sister had an Indian workmate – he was rich and went back.

    So we are importing poor who are willing to work for $10/hour and have no money to spend. Brilliant!

    • Yeah Na, not sure if you know much about how Transit Agencies operate, but given how much Myki cost to implement I’d imagine the cost to add this type of scheme would cost the Government more than it would collect, especially if multi-national ticketing vendors are involved. Rental Tax might be sort of feasible(ish). In the UK all tenants require a ‘right to rent’ check based on passport and visa and it seems to sort of work OK through letting agencies, although everyone who rents through a letting agency cops a huge fee so might cause a bit of blow back from local tenants having to fork out extra to rent, plus private landlords don’t really seem to follow the rules anyway. Maybe this whole population thing needs to be addressed at the source instead of implementing a bunch of measures after the horse has bolted…….

      • The feds refuse to cut immigration.

        Something has to be done at the state level – especially if Pauline has the balance of power in QLD.

        But even if the feds cut the official immigration rate, we will still have people on expired visas continuing to work here for $10/hour.

        At least we can deny them a train ticket:

        “Commuters will be able to use credit and debit cards to tap on and off Sydney’s trains, buses and ferries if a trial next year is successful.”

        “Transport users in London still can use their Oyster cards but, from 2014, have been able to use “contactless” debit or credit card payments on public transport.”

        “The director of customer experience at Transport for London, Shashi Verma, told Fairfax Media last year the upgrade to contactless payments cost £68 million”

        We just need a database that has both myki card numbers and Medicare card numbers.

        Use Medicare card for travel!

      • Something has to be done at the state level – especially if Pauline has the balance of power in QLD

        My suspicion is that if Daniel Andrews has ever felt remotely concerned about One Nation, a quick comparison of the Victorian senate vote to the Queensland senate vote makes him feel very re-assured.

    • The train ticket is chump change. The easier way is to make them pay the full rate of school fees. Transport is what $1k per year, school fees are easier to implement and cost a crapload more. Add healthcare and the treasury department starts drooling. It’s no surprise that the most congested hospitals in Melbourne are those where the greatest population growth/house price rise has been – box hill.

      • $40/day x 5 days x 40 weeks = $8000.

        Thus inflicting some pain.

        Imagine if a train user is on $10 an hour:

        $10 x 38 x 48 = $18, 240!

        So half of their salary gone! And a great chunk do come here to work for $10/hour.

    • HadronCollision

      Sorry, but no.

      Corporations as a rule do not embrace telecommuting. So there goes telecommuting.

      And companies won’t move to the regions without incentive (and other services/agencies moving too)

      Fast train for Vic. Proper fast train.

      And 6 regional dev areas. Water, power, NBN, geo tax areas, move gumint there, etc etc.

      Will take years.

      It’s not like everyone lives in Pau and TGVs to Paris every day, innit.

  2. new job zones

    My solution to things I don’t like is to bundle them up and hide them where I can’t see them. Works a treat.

    I am absolutely positive that the Country and National Party are going to celebrate having 100,000 unskilled migrants from war zones dumped in Wogonga where they can break into the local shops every night.

    Should go down a treat.

    Can you imagine Benalla dealing with the Vietnamese street gangs of the 1980’s ? Do you think that would be a “vote winner” ?

    These guys are on meds.


    • Hi Paul, Australia’s national annual refugee intake is less than 20K and will not exceed 20K in the next few years.
      ( so it would be miraculous if 5 times that number ended up in one country town. As for Wodonga, it does have experience of immigrants. Famously, it was a huge centre for post WW2 immigration ( by definition, these people were escaping a war zone), and more recently for Bhutanese refugees. My mother lives in Wodonga, my sister in Albury and my family are frequent visitors. I must have missed all the robberes, and so must the local investors, who are busy building entrire new shopping centres. Apart from the usual local drunken clowns, the most serious crimes that I can recall is a local bloke in a ute dragging a dead kangaroo around.
      The Bhutanese are typical refugees. Living in camps for 20 years, regularly attacked beaten, robbed and raped (my mother was one of numerous local volunteers to help them settle in). They’ve been in Wodonga for more than five years, so I guess they are still working on their master plan for the coming crime wave.

      • Apart from the usual local drunken clowns, the most serious crimes that I can recall is a local bloke in a ute dragging a dead kangaroo around

        One can only imagine that he was an unusual drunken clown.

  3. Decentralisation?

    Nice ambition but a waste of time while the fundamental economic model drives bank credit creation at unproductive but highly profitable purposes.

    Make a note of that – nothing will happen while unproductive but highly profitable purposes are the objective of most private bank credit creation.

    By unproductive I mean do not clearly or directly expand the productive capacity of the economy.

    Pumping up asset prices is the King in this regard.

    The most favoured locations for unproductive bank credit creation are those with assets most likely to rise and the assets most likely to rise are those controlled by those with access to private bank credit creation.

    The bigger the city the more attractive they generally will be for unproductive asset pumping credit creation.

    Where will poor want to move if they are smart ?

    To the cities drowning in unproductive but profitable credit creation.

    Good luck decentralising when this giant monetary magnet is sucking everything to the centre.

    Hard for any of this to change when almost all of the economic glitterati make no distinction between private bank credit creation for speculation as against real productive investment and themselves huddle under the open fire hydrants of unproductive credit and insist it is as natural as mother’s milk. All their ‘theories’ ignore the distinction as well. Funny about that!

    Even if you are scared by the idea of real monetary reform (I.e. no private bank credit creation – just intermediating) at the very least you can demand that private bank credit creation be restricted so that productive credit creation is encouraged and unproductive credit creation is discouraged.

    It is a simple test.

    Does the private bank credit creation clearly and directly expand the productive capacity of the economy.

    If not limit the amount credit that is made available or increase the price (though the latter will tend to follow the former anyway).

    When the cities lose this massive advantage people will leave them in droves for places where they have the space and opportunity to do stuff that is productive rather simply parasitical.

  4. I’ve lived in Melbourne since 2008, after leaving in 1996. I disagree that living standards have fallen. It’s not true in my experience, and it’s not true in the facts. Melbourne is incomparable to the wasteland of the Kirner-bust of the 1990s. You must be living in a different universe not to be excited and amazed by the transformation in our city. Victoria has the highest rate of economic growth of states in Australia and Melbourne is by miles the best performing city: you are completely wrong, in fact. Economists have a hard time regarding bad traffic of a factor in standard of living calculations, but lots of other people compile livability indexes, and Melbourne is nearly always the leading Australian city and one of the top five in the world. This certainly was not true 20 years ago. Housing is very expensive, but that’s only because people can afford to pay; more to do with very low unemployment and very low interest rates. Some people also blame Chinese investors buyying properties and leaving them empty, but considering your dislike of immigration, you probably consider that a good thing.
    Rents have hardly increased (a key indicator of a housing bubble if anyone is listening). In short, there is basically no factual or objective evidence to support what you say about living standards; the evidence mostly points in completely the opposite direction. What you regard as your standard of living is subjective and you are entitled to your opinion since get to definte your own way of measuring it, but don’t mislead yourself that your opinion is common or justified.
    If overcrowding is the the problem, decentralisation is the answer. You won’t stop population growth. Melbourne is growing fast from internal migration, not just overseas migration, and skilled immigration and the tertiary education sectors are huge contributors to our wellbeing, and won’t be stopping. That’s a pipedream, not regionalisation.
    The irony of the Liberal decentralisation plan is that it relies on large infrastructure investments, and they don’t have much credibility. Their pet project East West, does not a single thing for decentralisation, unlike the rail tunnel, which is a huge enabler of much better rail links to Bendigo, and they knew this. The current state government is the first government in a generation which is actually preparing Melbourne for its future: building roads, schools, rail and making the existing network of trains, buses and roads better. I’m glad the liberals are talking about this, but my vote at the next state election is locked in.

    • There is no decentralisation. It’s bullshit.

      How about you provide some data and facts instead of just asserting throwaway stuff? For instance, VIC GDP per capita hasn’t grown at all despite good headline growth.

      Give us some evidence mate.

    • Seriously Tim. What planet are you living on? You are dead wrong on almost every measure.

      – Housing affordability stinks.
      – Traffic congestion stinks.
      – Public transport has become crush-loaded.
      – Victoria (read Melbourne) has the lowest household incomes on the mainland.
      – Victoria (read Melbourne) has experienced virtually zero GDP per capita growth since the GFC (2008).
      – Victoria’s unemployment rate (6.1%) remains well above the national average (5.7%) and has actually worsened over the past year (from 5.7% in May 2016). That is, there hasn’t been enough jobs growth in Victoria to keep up with the population explosion.
      – Crime has increased significantly.

      How is any of this a sign of success or rising living standards? I await your response.

      • Thanks for some numbers. That helps. Housing affordability is bad in Melbourne, but not in the regional cities, which is actually a big point in favour of decentralisation, not an argument against it. Same is true of your points 2 & 3. Plus, housing affordability is a measure of house ownership, not housing availability. If housing was scarce, rents would be increasing, but they are not. Housing prices are a bubble as people pile into this asset class in the hope of capital gains.
        You’re plain wrong about Melbourne income levels being below mainland Australia; it’s so wrong I can only imagine I didn’t understand what you mean. There is lots of data about average income per postcode due to census data, perhaps you can show me what you mean because every data point of know of since Federation is different to your claim, as I read it. I’ve spent a few minutes in case I missed what would be an economic anomaly of unprecedented size, but I haven’t found anything (since the foundation of human civilisation, cities have been the centres of economic growth).
        I can’t substitute ‘Victoria’ for ‘Melbourne’, that’s silly; your own cherry picking, by talking about Melbourne housing affordability to make your point, rather than regional housing affordability, shows what I mean. Regional economic performance has been much weaker than Melbourne’s in the past 20 years (e.g Geelong) and if you want to talk about Melbourne’s performance, you can’t mix its growth story with the declining regional economic performance and hope to have credibility. I grew up in the country, and the economy is completely different. Now I live in Balwyn, and I can assure you that no one in 20km cares about timber mills closing down, droughts and movements in wheat prices. By the way, low ‘GDP’ growth since the GFC is a stunning achievement by OEDC standards; I left Europe at this time, and some of the big economies are just starting to get GDP back to where it was. It was a “global” financial crisis and you are reaching for straws to connect local issues, but even if you do, Melbourne has outperformed virtually any other rich world city. (Of course, we can’t really talk about ‘GDP’ for a city, since it is national metric) . I clearly took a much longer perspective in my post because demographic trends can’t really be measured in short snapshots. You give two monthly unemployment rates, from 2016 and 2017, and you attempt to link this to 20 years of population growth? How does that make sense? In any case, they are not Melbourne stats, they are Victorian stats, they are hardly any different and well within the monthly volatility. This is far from convincing evidence for your argument that population growth has harmed the economic performance of Melbourne. There is a reason why people are coming here, after all.
        You are correct about public transport crowding in peak hour, although trams were standing room only in the 1990s in peak hour too; surely we all remember avoiding ticket purchases because the conductors couldn’t move. I take public transport all over Melbourne every week, recently as far as Deer Park, Lilydale and Dandenong, and to my office in Abbotsford and frequently to the city. It’s actually pretty good although I realise it’s very common to complain about it, and for sure it can and should be better. Voters are angry about it, because the problem of overcrowding was predictable and the solution is clear: build more public transport. The last two state elections have hinged on Melbourne transport, with public transport the clear winner, so we can be optimistic at last. The northern lines cross Johnston St on a two track bridge which must be approaching 100 years of age. Credit to our predeccessors who managed to build in so much excess capacity, but it’s time we started building for our grand children. It’s an easy fix.

        • “If housing was scarce, rents would be increasing, but they are not”.

          According to the DHS, Melbourne rents rose by 3.8% in calendar year 2016 and have averaged 4.9% annual growth over the decade. Whoops!

          “You’re plain wrong about Melbourne income levels being below mainland Australia; it’s so wrong I can only imagine I didn’t understand what you mean”.

          Go read the ABS’ State Accounts. It shows, clearly, that Victoria (read Melbourne) has the lowest per capita gross household disposable income on the mainland. I’ve summarised all the key data in this post. Read it and weep.

          “I can’t substitute ‘Victoria’ for ‘Melbourne’, that’s silly…”

          77% of Victoria’s population resides in Melbourne. So the aggregate Victorian data is a good proxy for Melbourne (especially given Melbourne-only data does not exist).

          How about trying to mount a sensible argument is a few well-worded sentences rather than a convoluted rant? Or are you incapable?

    • The Patrician

      “Rents have hardly increased”
      Melbourne rents have increased by 25% since 2009

      • In other words, compared to Australian wages, rents in Melbourne have increased less than 1% in 8 years.

        Also, based on the DHS data UE refers to, the increase in rents from Dec 2009 to Dec 2016 was only 18% (noticeable slowdown since 2008-2010 period) – $330 median rent in Dec 2009 cf $390 median rent in Dec 2016.

      • For no other reason than Patrician used 2009 as a baseline I did too.

        Vic wages price index Jun 2009 = 100
        Vic wages price index Jun 2016 (latest available) = 123.1

        DHS Median Melbourne Rent Jun 2009 – $320
        DHS Median Melbourne Rent Jun 2016 – $380
        = 19% gain in rents over the period compared to 23% increase in wages over the period.

        The discrepancy between the 10 year view and the 7 year view is due to rental growth halving between 2008 and 2010, as discussed at length in the DHS reports (and slightly exacerbated by DHS not correctly accounting for the effect of compounding – the correct decadal average is 4.5%).
        Admittedly, I used the national wage price index the first time, but in practice there seems to be very little difference.

    • “If housing was scarce, rents would be increasing, but they are not”
      Melbourne median rent has increased by 50% since Mar 2007

      • I’d have said ‘“If housing was scarce, rents would be increasing faster than wages”, and UE’s DHS data suggests they are not.

        I’d have also said that if there have been a few years in a row where rents were increasing faster than wages, and now rents were increasing at or below wages, there was a good chance rental supply had increased in comparison to demand, and this seems to be borne out by the DHS reports, which report that vacancy rates have approximately doubled over the period the reports are available for.

    • Best MB post in ages.

      Of course decentralisation can work. It works in China, Japan, the US, the list for goes on. Build it and they will come.

    • The Patrician

      “If housing was scarce, rents would be increasing, but they are not”
      The median Melbourne asking house rent has increased by 5.9% in the last 12 months

    • The Patrician

      “vacancy rates have approximately doubled”
      The May 2017 Melbourne vacancy rate has fallen to a 7yr low of 1.5%

      • The DHS reports I specifically referred to have not produced a number for May 2017 (nor will they ever, being quarterly reports). You seem reluctant to admit it, but your data seem to have come from SQM – at best the methodologies between DHS and SQM (or at least the way the figures are reported) are too different to make a useful comparison.

        Your earlier comment referenced Mar ’07, so it seemed apt to compare the Mar ’07 figure available from the DHS reports – 1.2%- to the most recent- 2.2% (Dec ’16) You now reference the last 7 years, so it worth noting the vacancy figure seven years prior to the most recently available (i.e. the Dec ’09 figure) – 1.5%

        The comment related to the difference in the rental market between the period ’07-’10, when there were some double digit rises in Melbourne rents (e.g. Dec ’08 saw annual rent rises of 10.8%), compared to the period ’11’-16, when actual rents had annual growth as low as 1.9% (Dec ’14), rather than to differences within the latter period .

  5. Decentralisation won’t work, most of the immigrants moving to Australia are coming from cultures that shun regional areas and want to live in big cities. No matter how many incentives you put up they will continue to want to move to our crowded cities because that is where perceived opportunities are as well as good schooling.

    • What are you talking about?

      The world champion culture at shunning regional and rural living IS Australia.

      What incentives have been put up and did not work?

      Every incentive and the biggest one of all – proximity to asset price inflation and the bank credit that drives it – is driving people – local and immigrant – towards the cities and the bigger the better.

  6. Work from home.

    The three simple words that all collapse in front of the greatest fear of all – “Trust”.

    • That is definitely changing. Many big companies are moving to flexible working as the norm rather than exception. There’s benefit for both parties – cheaper HQ costs for companies, more labour flexibility (people working 3 or 4 days), and a larger pool of potential recruits, and for workers more options to manage their lives.

      • It’s the most simple solution to congestion. Good to hear big companies waking up to this.
        I think Gen X still have a control fear that’s a hangover from the Boomers – my hope is Gen Y will lead the charge in this area.

  7. ” geographically targeted visas “. I thought the Australian constitution specifically allows freedom of movement. How can you have a geographically targeted Visa ?
    Any Lawyers among us to explain ?

    • Not sure, but maybe not all constitutional rights are enjoyed by non-citizens? Would be challenged for sure.

    • drsmithyMEMBER

      “International law does allow a country to impose restrictions on who may enter it. A country may allow entry to a non-citizen on conditions that allow the person lesser rights of freedom of movement to those of citizens, provided those restrictions comply with the country’s international obligations. For example, some work visas impose conditions on a visa holder to reside and work in a particular region. However, a non-citizen lawfully within Australia whose entry into Australia has not been subject to restrictions or conditions is entitled to the same right to freedom of movement as an Australian citizen. “

      • Hmm I see drsmithy…. Its good that the legal framework is in place to set up internal camps for non citizens. They can apply it to the rest of us when the time is right.

      • drsmithyMEMBER


        The “legal framework” is that visas can have conditions attached to them, which if not followed render the visa invalid.

        How is a visa with a condition of “you cannot live in any of these postcodes” any different to a visa with a condition of “you cannot work more than ten hours a week” or “you can only work for this employer in this specific role” ?

        Following on, how is a legal framework entirely based on visas going to be extended to citizens ?

  8. SchillersMEMBER

    There was an interesting discussion yesterday on ABC radio 774 Melbourne with Jon Faine and the leader of the state opposition, Mathew Guy. Much gnashing of teeth and hand wringing about the increase in traffic congestion and how decentralisation to the regions was vital for a “sustainable future”. Massive increase in population numbers was accepted as a fait accompli by both, something that just had to be better dealt with. No discussion about the increase in migrant numbers as the root cause of it whatsoever.
    It was truly pathetic.

    They know. Believe me they know.