Expensive new infrastructure is not the only fix for population growth - Grattan Institute

Expensive new infrastructure is not the only fix for population growth

Losing the title of the world’s most liveable city seems to have triggered an anxiety attack among Melburnians. Fast overtaking the weather as Melbourne’s number one “coffee shop conversation” is the idea that the city…

02.10.2018 News

Published in The Age, Tuesday 2 October

Losing the title of the world’s most liveable city seems to have triggered an anxiety attack among Melburnians. Fast overtaking the weather as Melbourne’s number one “coffee shop conversation” is the idea that the city has grown too fast: how crowded it’s become and just how poorly prepared we are for the population boom.

Politicians in particular are drawn to these anecdotes. And the policy solutions they’re proposing are increasingly extreme. The state opposition is pushing a decentralisation policy that would use taxes, subsidies and restrictions on migrants to try to move people out to the regions. And the state government wants to build a $50 billion suburban train line, even though its economic merits haven’t been demonstrated and it won’t be completed for 30 years. Such policies are the siren song of the desperate.

We should be sceptical. And we should base this policy discussion on some firm data.

Here’s a fact that might surprise you: despite regular media coverage claiming the opposite, the impact of rapid population growth on commuting distances and times has been remarkably benign. The average commute distance for Melburnians barely increased over the five years to the most recent census in 2016. The data also shows that commute times have also not changed much overall in the 12 years from 2004 to 2016.

How can this be? It’s due in no small part to the spread of jobs across the city. There’s a common misconception that jobs are centred in the CBD, which gets harder to get to as Melbourne grows. In reality, fewer than two in 10 people work in the CBD, whereas three in 10 work just a suburb away from home.

The importance of suburban “employment centres” is similarly overblown. We hear a lot about Clayton as a jobs magnet, for instance. But the truth is that Clayton, home of Monash University and medical centre, accounts for only 1.7 per cent of Melbourne’s jobs, and this proportion did not increase in the five years to 2016. Instead, three-quarters of Melbourne’s jobs are dispersed all over the city, in shops, offices, schools, clinics, and construction sites.

People adapt to population growth: some change job or worksite, or increasingly work from home; some move house, or leave the city; and some change their method of travel, leaving the car at home and catching the train to work. Others simply accept a longer commute – at least for a time – particularly if they earn a high income.

Of course, even if commutes are not getting much worse, congestion is still a problem. There is overcrowding on our trains and trams. Commuting times are unreliable, forcing workers to allow a buffer. A previous Grattan Institute report, Stuck in traffic?, found that while most drivers are delayed no more than five minutes getting to work, this number can be much higher on bad routes.

And the bad days are more frequent, as Melbourne’s building boom disrupts trains, trams, cars and buses. But unfortunately, this disruption is in some ways a source of poor decision making. Take the state and Commonwealth governments’ promise to build a rail line to Tullamarine airport. This promise was made just months before the improvements to the freeway flow were due to be completed, easing what had been 18 months of slow and unreliable journey times. It was also made before the analysis needed to assess the value of the investment – the business case – was undertaken.

To date, governments have acted as if new infrastructure is the only way to respond to population growth. They’re wrong. Major projects such as Melbourne Metro, the West Gate Tunnel and the North East Link have not yet been completed, and yet commute times and distances have been remarkably stable. Building expensive new infrastructure is far from the only way to cope with population growth.

Instead of making “congestion-busting” election pledges, governments should not announce any projects before rigorously establishing their net benefits to the community. Our politicians should also focus on facilitating the natural adaptations people make. This means removing barriers to people and firms locating where they want to be. It means abolishing stamp duty, which effectively locks people into staying put when they otherwise might move house. And it means introducing congestion charges to encourage drivers who don’t really need to travel at peak times to stay off the most congested roads.

It might not be Vienna – now supposedly the world’s most liveable city – but Melbourne will remain a great city, provided our governments ensure the benefits that draw people to live and work close together outweigh the costs of the congestion and crowding that come with population growth.