Decentralisation delusion as Melbourne surges towards 9 million

By Leith van Onselen

The Australian last week gave a good summary of the population pressures afflicting Melbourne as the city experiences an unprecedented population boom:

At the Melbourne train station of Williams Landing in the city’s southwest, the flower beds lining the carpark are repeatedly squashed into the dirt. It’s not that people don’t ­appreciate the decoration. But as commuters flock each morning to the station, which is on the major public transport artery linking the west to the CBD, they are forced to park wherever they can as the carpark overflows, spilling on to footpaths and surrounding greenery.

It’s not an uncommon sight for residents of Melbourne’s outer suburbs, where congestion on the city’s freeways and out of reach or inconvenient public transport are causing frustration… Even battling traffic to get to the station can be a nightmare…

As Melbourne works to retain its mantle as the world’s most liveable city, trends such as these show the Victorian capital is grappling with the burden of an unprecedented population boom that has outpaced forecasts and placed a strain on infrastructure…

Livability increases as people’s commute time decreases, according to research released today by PricewaterhouseCoopers for The Australian.

The study found that Melbourne has reached a critical point where a mix of factors is putting upward pressure on travel time. The downsides of this are manifold.

…those who do not travel long hours are likelier to get medical advice, eat fresh fruit and vegetables, spend time with their family or spend money in their local community…

Victoria is in the grips of an economic and population boom no one could have predicted. Australian Bureau of Statistics figures show 146,600 people moved to the state last year, the highest growth rate of all states. In the year to June last year, Melbourne grew by 126,175 people, making it the Australian capital with the highest growth rate for the 15th year running. And the ABS predicts that if high ­migration, fertility and life expectancy rates continue, Melbourne will overtake Sydney as the ­nation’s biggest city by 2036 and reach nine million people by 2050.

“Melbourne was designed ­really well for a city of two or three million, with a radial transport network feeding into the CBD, but actually there’s a limit to that ­design,” van Smeerdijk says…

A livability snapshot released last month by the Interface Councils — a group of 10 municipalities located on the outer ring of Melbourne — collated state government data and found growing pockets of inequity were developing on the outskirts, with unemployment, obesity, family violence, education and youth engagement issues on the rise. More than 40 per cent of residents don’t live near public transport, a fifth spend more than two hours commuting each day and almost three-quarters are completely car dependent, the study found. And unemployment in these areas was the highest in the state, at 6.9 per cent, 1.1 per cent above the average.

The article went on to argue that Melbourne needs to become a polycentric city with multiple business centres, rather than continue as a monocentric city with a central CBD. This, it argues, would bring jobs closer to where people live and would make Melbourne a “30-minute city”, whereby residents can access ­employment, schools, shopping, services and recreational facilities within 30 minutes of home.

A different notion of decentralisation was also advocated by the State Liberal-National Opposition, which continued to push for Melbourne’s population growth to be diverted to the regions:

Victoria’s country communities are at the heart of the Liberal Nationals’ plan to decentralise population growth in our state…

The Andrews Labor Government is desperate to divert attention from the fact it has failed to plan for the future population of our state.

Unlike Labor, the Liberal Nationals have been consulting with country communities, stakeholders and local government across Victoria to develop a population plan to grow our whole state – not just Melbourne.

Decentralising our population by creating good jobs that will support more small business opportunities in our regional centres is central to the Liberal Nationals’ plan for regional development.

As a lifelong Melbournian, I too have watched in disbelief as Melbourne’s population has expanded at a frantic rate, growing by a whopping 1.1 million people (30%) in the 12 years to June 2016:

Yet, nowhere in either article was the primary driver of Melbourne’s insane population growth even mentioned: the federal government’s mass immigration program.

The reality on the ground is that Melbourne is grinding to a halt as the population deluge is quickly overrunning economic and social infrastructure.

Worse, the Victorian Government’s own bullish forecasts of population growth have already been smashed (see red below). As shown in the next chart, Victoria’s population was in 2015 projected to hit 10 million people by 2051, with Melbourne’s population hitting 8 million people:

However, this projection assumed that annual population growth would not exceed 120,000 over the next two decades:

Victoria’s population growth in the five years to 2016 was massively revised upwards following the Census. And these upward revisions, combined with the growth of 150,000 in the year to March, have smashed the Victorian Government’s own bullish assumptions.

If the current population growth persists, Melbourne and Victoria are headed for populations of roughly 9 million and 11.4 million respectively by 2051, representing growth of some 90% over 2016 levels.

Decentralising the city is a nice idea in theory, but how do they propose it be done? The reality on the ground is that Melbourne has become more centralised than ever as traditional industries like manufacturing – previously located on the fringe or in regional areas – have shuttered, replaced by so-called ‘knowledge jobs’ (read ‘bullshit jobs’) concentrated in the CBD. Australia’s policies encouraging property speculation, rent-seeking, unproductive investment and a high dollar have also increased centralisation within the CBD.

The Liberal-National Party’s idea of shifting population growth to the regions is equally delusional and unrealistic.

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?

In any event, the uncomfortable truth is that the settlement pattern of new migrants into Sydney and Melbourne has become extreme over the past five years, according to the latest Census. As noted by Tim Colebatch:

…the third wave of migration we are seeing now is almost completely city-centric. In Sydney on census night, the 224,685 Chinese migrants… But in the rest of New South Wales, with its 2.65 million people, the census found just 9578 Chinese migrants. Only 4.2 per cent of those in New South Wales live outside Sydney.

Sydney is also home to 96.3 per cent of the state’s Vietnamese-born population, 97.4 per cent of its Iraqi migrants, and 97.6 per cent of its Lebanese…

Migrants to Victoria are similarly concentrated in Melbourne. The few square kilometres ruled by the Melbourne City Council houses four and a half times as many Chinese-born residents as the 210,000 square kilometres of regional Victoria, which includes cities like Geelong, Ballarat and Bendigo. Melbourne is home to 97.2 per cent of Victoria’s Chinese migrants, 96.8 per cent of its Sri Lankans, 94.9 per cent of its booming Indian-born population, and 98.0 per cent of its Vietnamese…

Migrants usually flock to the cities. It’s natural that newcomers go where they have friends or family. But what we are seeing now is that natural tendency carried to extreme lengths.

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 slashes immigration and does away with a ‘Big Australia’ on the grounds that is placing undue strain on infrastructure and housing, and is reducing living standards of incumbent residents.

Few Melbournians want a city of 9 million people mid-century. The one we have currently is barely functioning properly at 4.7 million. Enough’s enough.

[email protected]

Unconventional Economist


      • Where do you reside? Waverley Park stadium was built from 1966 onward and it is 28 km from the CBD. The stadium hosted its last game in 1999.

        At that time, the Docklands Stadium was ready and it is in the CBD right next to Southern Cross Station!

        So we have tried decentralisation in 1966!

        Also, why have mass low-wage immigration when there are so many Aussies looking for a job or a better job? 40% of MEL and SYD are foreign born – that is enough globalism is it not?

      • The specific reason VFL Park was built at Waverly was because it was supposedly the ‘geographic centre of Melbourne’ at the time (or at least expected to soon become the geographic centre) – and supposedly therefore more accessible than other grounds they had at the time. It was an exercise in centralisation, not decentralisation.

    • Question: How does decentralisation even work when housing policy reduces workforce mobility? You can add a business hub to Geelong or Dandenong, but if you live on the wrong side and have kids in school you are not going to move.

  1. So given the excessive population growth is going to continue in Sydney & Melbourne under any or every “colour” of government, how does one make money out of this?

  2. “Victoria is in the grips of an economic and population boom no one could have predicted


  3. “Victoria is in the grips of an economic and population boom no one could have predicted”


    you just have to love when the opinion controllers try to act like all of this population growth has just spontaneously emerged out of the ether, that nobody could ever have seen it coming and theres just nothing we can do to stop it. it’s like you’re driving a car in a straight line headed to a wall that’s 5 miles away and for some reason you act like its impossible to put on the breaks or just swerve. its inevitable mate, theres nothing we can do.

    what an absolute joke.

    • Melbourne 2030 released in the early 00s had a high growth scenario which had us at 4 million by 2016. We’re 20% above that! Some planning by the boffins. They forgot to ask HRH what his plans were.

  4. Decentralisation is a pipe dream whilst the fundamental driver, in a “balanced budget over the cycle” paradigm, of economic activity….private bank credit creation… is inherently attracted to markets where asset prices have a track record of rising.

    That creates both a demand for credit by asset price speculators but equally important easier credit decisions by bank loan officers.

    It is much safer to extend credit in asset markets where other banks are extending credit as their loan decisions protect your own lending decisions.

    If the regulators RBA and APRA are working to keep you supplied with lower and lower sources of funding… allowing you to blow out your external liabilities to ZIRP/NIRP sources of capital, the process can continue for a long time.

    The increasing centralisation of the economy towards the biggest asset price betting rings over the last 20 years is no accident.

    That is how a #FakeInvestment economy rolls.

    If the ALP want to change it they need to start talking about it and what has to happen to wean an economy off #FakeInvestment without killing it.

    Credit creation regulation is essential along with reform of how government budgets are financed and discussed …as the balanced budget over the cycle mania is designed to block off the only way the abscess of a #FakeInvestment economy can be drained.

    • And as Phil notes below, centralisation is even worse when the planning is directed to achieving that outcome.

      Then you have unregulated private bank credit creation AND land use regulation driving the centralisation process.

    • I do wonder if this mob at MB ever witnessed what “decentralisation” actually means other than a nice buzz word on some powerpoint deck. Looking at Jing-Jin-Ji, it does look like a ton of work that is NEVER gonna happen here. You might as well suggest we need teleportation to solve the housing crisis since why not dream big, nothing will happen anyway.

  5. Mining BoganMEMBER

    Move on, nothing to see here. Andrews is banning plastic bags. That’ll be the big talking point in the media…you know, the stuff that affects everyday life…

    • On par with gay marriage? which in fact even gets reported in foreign news. The whole ‘Crisis’ was bigged up to the point that people even started to believe it was a) real and b) important. This is the power of politicians and the media to divert attention from the real issues, ie the real BIG issues like jobs and housing and infrastructure all caused by excessive population growth. Or the biggest issue to date, we have no government nor government in waiting that cares about its own people.

  6. One of the worst stupidities in all this discussion, is that “decentralistion” happens anyway, and is more efficient, when it is allowed to be led by the market, with a minimum of central planning and prescriptive zoning.

    There are numerous cities in the USA where the city centre has less than 10% of total urban-area employment. And even the glorious “polycentricity” argument is still excessively prescriptive because it involves “centres”: again, numerous US cities that have had market-led growth, have well under 50% of total employment in “centres” at all, most of it is just completely “dispersed” almost evenly.

    The secret to “market led growth” is that it is possible to incorporate de facto new municipalities and raise finance via bond markets, for infrastructure, which bonds are then paid back via future residents rates. So there are no central planners specifying that the water will be taken out to here next, and we’ll put sewers in there next, and this is where the shopping centre will be and this is where the industrial area will be, and we want to make sure long distance commuting is by train; etc etc etc.

    Urban travel efficiency is affected by 3 things. 1) The length of the average trip, which is the same as the extent to which homes and jobs (and other destinations) are “co-located”. 2) The speed of the average trip, which is affected by the capacity of the network and 3) the efficiency with which cross-directional flow conflicts are managed i.e. grade separated intersections.

    Of these, 1) is by far the most important. Market-led growth has generally maximised the outcomes here by not only mixing residences, jobs, and other amenities on a very fine-grained basis, but by ensuring a low, flat urban land rent curve so that there are very few “price barriers” excluding potential relocators on the grounds of efficiency.

    By far the worst outcomes are in cities with highly centralised employment, and a housing affordability problem where people are “priced out” of efficient locations. Exhibit A is Wellington, NZ with 35% of employment in a central location and a median multiple of over 6. This is more centralised employment than New York! But Wellington also has worse traffic congestion delays than New York and Los Angeles, at 47 minutes per hour of driving at peak; which is even more absurd when you consider that urban areas of less than 500,000 population, such as Wichita, Boise and Provo-Orem, score delays of 3 to 5 minutes.

    Wellington does have geographic constraints but the central planners have maximised the impacts of these regarding them as “fortuituous” because it enables them to force everyone into two corridors served by trains, and refuse to do road connections that would enable more dispersed travel patterns on the pretext that the terrain is too difficult (which is a BS excuse). But the outcomes should make it absolutely clear what are the consequences of modern-day planners “desired aim” of centralisation and promotion of fixed-route public transport over all other possible urban-policy objectives.

  7. At least Melbourne still has some industry Sydney consumes and consumes and consumes but produces next to nothing. There in lies the problem. As long as Sydney can in effect tax the rest of Australia for it’s growth it will continue to grow, and I dare say the same logic applies to Melbourne.
    Imagine the change if Melbourne were to eliminate ALL welfare payments for Melbourne residents. No aged Pensions, No unemployment benefits, No Disability Pensions, no NDIS, No My Aged care…….and most of all no Corporate welfare especially wrt Banks, Insurance etc. From this perspective we can see that this centralization beast is something that we built, if we built it we can destroy it, we just need the will power to do what’s necessary.
    It’s will power that’s in very short supply.

  8. macrofishMEMBER

    We had some kind great purge or you dated below wrong:

    “If the current population growth persists, Melbourne and Victoria are headed for populations of roughly 9 million and 11.4 million respectively by 2015, representing growth of some 90% over 2016 levels.”

  9. I would like to see the graph for brisbane showing the birthplace of residents for comparison. And then again in five years time to see how the new real estate ‘its still affordable in brisbane’ agenda goes. Either way brisbane is screwed also.

  10. reusachtigeMEMBER

    One of the things that makes Sydney superior to Melbourne is that it is very decentralised with numerous business centres making that 30min commute a reality for most people.

  11. The pollies want more consumption, there is little/no wage growth, so open the immigration gates wider. It’s simple, they are simple, and they live in a bubble rarely feeling the pain they induce. Interesting to see polllie wage growth vs the deplorables over a 10/20 year period. When you look at it there is no serving the public, it’s more screwing the public. It’s right down to the council level.

  12. TailorTrashMEMBER

    Providing electricity for 9 million in Melb and 8 million in Syd should be fun ……given we struggle to keep the lights for at the present population …..