We need to get off this magic roundabout (it's going nowhere)

Heavy commuter rail is a frequently mentioned “solution” to congestion. But just as frequently, it is revealed as horrendously expensive to build, expensive to operate and seemingly incapable of moving the dial on mode share: that is, it doesn’t succeed in getting many cars off the road.

Explosive cost blowouts are all around us. In Melbourne, the proposed “suburban rail loop” was promoted by then Premier Andrews as costing $50billion. It was later revealed the cost has already ballooned to four times the original estimate to $200billion – which exceeds the entire state debt of Victoria.

In Queensland, the Cross River Rail was persistently promised to be delivered for a fixed $5.4 billion but it is understood to be over budget by $1 billion at around $6.3 billion. It’s hard to work out what this includes as related works like yards are understood to be under separate budgets.

Then there’s the Queensland Train Manufacturing program, which was originally budgeted at $7.1 billion but which is now estimated at $9.6 billion – a blow out of $2.4 billion.

Add to that the Logan and Gold Coast Faster Rail project, which duplicates lines over an 18klm section of the network with station upgrades and better alignment. That was to cost $2.6 billion but has now been revealed to cost an estimated $5.75 billion – an increase of $3.1 billion, more than double the original costs.

Prior to all this was the new Moreton Bay Rail line to Kippa Ring, a new 12klm line with 6 stations which opened in 2016 at a cost of $1.15 billion – roughly $100 million per kilometre. That almost looks cheap compared with over $300 million per kilometre just up upgrade the Logan-Gold Coast line.

Undeterred, we are now also canvassing a new 37 kilometre line from Beerwah to Maroochydore, with perhaps 7 new stations and a tunnel section. No costs for this yet and its fate is hard to determine. But if we used the per kilometre upgrade cost for the Logan-Gold line, and multiplied that by 37 kilometres, we could easily be looking at a project costing $12 billion. My bet is that an initial estimate will come in closer to $20bn BB. ("BB" = before blowout). 

Are your eyes starting to water? Worried about where the money is coming from? Maybe consoling yourself that this is all necessary to support transport infrastructure in a growing state and to “solve” congestion. With better and more train services, loads of people will happily give up their cars and use public transport, and all this is supported by rigorous business cases which are readily accessible by members of the taxpaying public. No?

Here are some numbers for context.

The population of the greater urban conglomeration of SEQ (Greater Brisbane plus Sunshine and Gold Coasts, Ipswich and Toowoomba) was 3.6 million people (2021 Census). Of that number, 1.58 million went to work – somewhere. 280,000 worked at home. How many of the 1.58 million caught a train or light rail as at least part of their journey to work? Only around 44,000. The 2021 Census was taken in the midst of Covid so an unfair year to sample train travel. The comparable figure from the 2016 census was around 64,000 people catching a train.

With Covid behind us, passengers are returning but are still at only around 80% of pre pandemic levels. Because rail people like to use trip numbers (which are much bigger numbers to talk about given just one person can generate more than 10 trips in one week) direct comparisons with actual numbers of people are hard to find. But if you assume current passengers are around 80% of the 64,000 pre pandemic, there might be around 55,000 people using a train to get to work in South East Queensland today.

Why do more people not catch the train? And will all this investment mean it becomes a more attractive proposition?

Sadly, heavy commuter rail for Australia is battling against a changing economic geography and a changed society. An “all roads lead to Rome” centralised economic model (much like mega Chinese cities, or mega centres like NYC or London) can work for heavy commuter rail. But in our region, only around 10% of jobs are in the inner city, for which rail is well suited provided you can access a station with convenience. The greatest growth in jobs is not in the inner city, but across suburban centres. These are not typically serviced by rail.

Little wonder then that there is a high correlation between proximity to the CBD and use of public transport. Why? Because people who live in middle and outer suburbs do so because they don’t work in the CBD. People with jobs in the CBD prefer to live closer to it, and are also more likely to use a service which is CBD centred. It’s not rocket science.

(As an aside, proposals by The Greens to make public transport free would therefore most benefit inner city residents who already earn higher incomes and own more expensive real estate. And who work in the CBD. It will be of no benefit to lower income suburban workers who would in all likelihood need to pay for it via higher taxes).

Plus, once those tracks are in the ground, the wires overhead and the stations in place, there’s no changing that route - ever. Irrespective of how demand and economic geography might change, you’re stuck with that network. Buses and projects like the Metro can be re-routed, but not heavy rail.

In addition to that is social change. Trains are fixed route, schedule-based services. They were suited to a time when the trip to work did not involve any side trips and you scheduled your trips around the train timetable. For many, those trips now change every day – dropping kids to school, picking up from sport, gym classes, shopping for groceries… any number of reasons why a fixed route, fixed schedule service doesn’t appeal to as many people as it once did.

You might think the basic numbers and reality is sinking in? Not it seems with any number of economically illiterate politicians who offer nothing more than glib phrases and vague promises about “congestion busting” while proposing projects that are budget busting, and supported without transparent business cases due to “commercial in confidence” reasons.

So we are spending tens and perhaps hundreds of billions of dollars on a mode of transport which is best suited to a minority of inner city workers, and which currently carries fewer than 100,000 people in the region, and which, despite spending many many billions more, is possibly unlikely to carry many more people in the foreseeable future.

Who wins in this? Loads of consultants doing multi million dollar business cases which will never be put up for scrutiny, sheltered industries and work practices, and a very small number of commuters who will get better service at the expense of a majority who won’t.

 

The government giveth, and the government taketh away

Much of the news media lapped up the surprise announcement that Queensland will double the first home buyer grant to $30,000, effective immediately as of the weekend. The new grant, which applies only to new builds of up to $750,000, is intended to help stimulate supply rather than boost the overall market. To that end, despite being what economist Saul Eslake has labelled “bullshit”, I can see some merit in it.

But what the media and many commentators seem to have missed is that while the government giveth, it also taketh away. Only recently, there was a proposal to introduce changes to the National Construction Code in order for new homes to meet higher energy efficiency standards, along with increased accessibility standards.

Those changes were estimated by Queensland Master Builders to add – wait for it - $30,000 to the cost of a new home.

"It's the first homebuyers who are most impacted, who are struggling to get a deposit together, to make the repayments, and then the cost of construction goes up," Master Builders CEO Paul Bidwell said. "$30,000 is a significant amount."

Yep, it sure is. The same amount in fact as the increase in the first home buyer grant. Other estimates suggest the code changes could add up to $70,000 to the cost of a new home. There was a predictable outcry from industry – which argued increasing the cost base at a time of worsening affordability especially for new home buyers who are typically younger families was a very bad idea. The outcry won and the introduction of the code changes has been deferred to May 1, next year. So as of May next year, the increase in the first home buyer grant will be cancelled by the increase in code compliance costs, if not outweighed by them. Savvy first home buyers will want to get in before that happens.

But there’s another reason the proposed construction code changes are a seriously bad idea: they will impact most the people who can least afford it, and make little to no difference to household energy or water consumption, because it only applies to new builds and not to the established market, which is responsible for nearly all domestic energy and water consumption.

There are around 2 million dwellings in Queensland. At present we are building around 35,000 new dwellings each year. So that’s just 1.75% of stock that will affected in year one, rising of course the more years it’s in effect. But who is driving that 1.75% of the market? 60% of these starts were houses and the balance units. We know that new detached houses are some of the cheapest forms of housing, and are typically favoured by younger families on lower incomes. Apartments, especially in this market, are expensive to build and that market is drifting quickly to the wealthy end (a new mid spec two-bedroom apartment now needs to sell for over $1 million for an apartment project to be viable). Who do you think is going to be more impacted by a $30,000 cost increase?

As ideas go, can it get any worse? Yes it can! And the reason is because the biggest consumers of household energy and water are not the young families living in detached homes but the wealthy – irrespective of whether it’s a detached home or apartment. Because the wealthy more typically congregate around inner cities, this is also where the greatest excesses of energy and water consumption are. Don’t take my word for it: this was proven some years back in a study by the Australian Conservation Foundation in conjunction with the University of Sydney.

“Inner cities are consumption hotspots” the report declared:

“… despite the lower environmental impacts associated with less car use, inner city households outstrip the rest of Australia in every other category of consumption. Even in the area of housing, the opportunities for relatively efficient, compact living appear to be overwhelmed by the energy and water demands of modern urban living, such as air conditioning, spa baths, down lighting and luxury electronics and appliances.”

Back in 2007 I was running the Residential Development Council and we commissioned a report to investigate this in detail. “Housing form in Australia and its impact on greenhouse gas emissions” was the result. Lots of graphs to explore if you’re interested but this one helps tell the story:

Think it through. The wealthy inner-city resident in their $2m plus town home or apartment has no access to a hills hoist to dry their clothes, and is unlikely to worry about leaving the lights on when not in a room, or running the air con on a semi-permanent basis. Long showers are not a problem either. They can afford it.

So how can an increase in energy code requirements that will most affect lower priced homes favoured by young families on lower incomes make any discernible difference to the biggest energy and water wasters? It won’t. By applying only to new builds and ignoring the majority of the market, particularly those households in established dwellings in inner urban areas, this is a highly distorted and regressive policy which ultimately favours the inner urban wealthy and penalises the suburban working- and middle-class families.

If we were genuinely concerned about reducing household energy use, we’d wake up to the fact that buildings don’t consume the energy or the water: it is the habits of the occupants that drive that.

So celebrate while you can the increase in the first home buyer grant because from May next year it’s going to be worth nothing thanks to new energy codes for buildings which don’t even touch the biggest energy consumers but which will make new detached homes for families even more expensive, for no environmental gain. 

The great urban mobility challenge

Each major Australian capital city is faced with predicted population growth of millions more people within just the next 25 years. In Brisbane it’s over 1.5 million more, Sydney will cop another near 4 million and Melbourne over 3 million more people. Here’s a scary fact: at current rates of cars to people, Brisbane will also have another 1 million more cars, Sydney will have around 3 million more and Melbourne around 2 million more. Unless we ban personal ownership of cars, what are the future choices we need to be thinking about, now?

Before we run through a list of the various options, first a challenge: whatever the “solution” to an imminent urban congestionastrophe, let’s try agree that whatever succeeds needs to provide a personalised mobility solution: it needs to be available on demand (there when I need it), offer infinitely variable routes (takes me where I want to go and when I want to go, which differs every day), and can carry my stuff (from groceries to whatever). Ideally it’s also expandable (can carry more than one person when I have someone travelling with me) and offers good range and rapid recharge/refuelling.

Sounds a lot like a personal car doesn’t it? This probably also explains why they have proven so successful in meeting community needs. But what are the other options in the future? Here goes…

Shared car ownership. It’s been touted as something of a solution to car ownership but doesn’t seem to address congestion so much. Plus, things like Goget (car sharing app) have struggled. Perhaps having one parked in our garage, ready and waiting, is still just too convenient?

Passenger rail. The great hope of many but, in my opinion, never to repeat its historic 19^th and 20^th century popularity. The routes are fixed, the overhead wires are fixed, the stations are fixed, and the schedules fixed. It struggles to serve the realities of modern life with multiple trips and different routes daily. It isn’t convenient for carrying our stuff and mostly suits the 9 to 5 centralised office worker market, which is shrinking globally. The average CBD share of metro wide jobs for a city in a modern western economy is around 13% - and that was before the ‘work from anywhere’ thing started to take off post Covid. It actually carries very few people (just 10% of work trips across capitals in Australia using pre-covid numbers from 2016 – the 2021 journey to work numbers being Covid affected) and is frightfully expensive – especially underground. At over $100million per kilometre on surface, you’d struggle to find a more expensive and less popular mode of travel. Worldwide, infrastructure projects with massively blown budgets and under performing passenger numbers often feature passenger rail (except China, where everything is different).

Buses. Not as popular as rail (5% of passenger in Australia capitals) but more popular than trains in Brisbane - possibly because they service a wider variety of routes using the road network? Buses can be re-routed with ease and bus stops are low capital intensive investments. But they are still not “on demand” or offer personalised routes, nor are they very convenient for doing the shopping. They have been around a long time but the mode share has stubbornly not moved much. Unlikely to do so in the future either.

Metro. Trackless trams or metros are a modern solution which may gain a lot of support. They don’t require permanent rail or overhead wires, they are electric, and potentially autonomous. They provide a higher level of comfort than buses and can be rerouted using the road network if needed (all of which makes them much cheaper than trains). They can also turn corners (which trains struggle with) plus in Brisbane they are promised as a high frequency service (so no need to check a schedule). Metro stations are more capital intensive than traditional bus stops, and like other public transport modes, aren’t exactly the preferred way to do the groceries, visit the doctor or get the kids to school. Still, in all likelihood, a big step forward in the future.

Ferries. “Believe me, my young friend, there is nothing – absolutely nothing – half so much worth doing as simply messing about in boats.” So said Ratty to Mole in Wind in the Willows. Ratty was right – a more pleasant way to travel is hard to find. But when it comes to solving congestion by providing a meaningful alternative to cars, ferries aren’t the go-to choice. They are confined to water ways for starters. And they don’t usually go near shops or schools. They are expensive to operate and maintain (ferries need terminals and require a lot of maintenance) on a per passenger basis. The lucky few who can make use of these on a regular basis can count themselves very fortunate.

Cycling & walking. Fun fact: three times as many people walk to work (3.2%) as bicycle (around 1%).  The numbers on active transport are an interesting read. Active travel works for people when their jobs are close to where they live. Any more than a few kilometres away though, and walking or cycling drops right down. Hint to urban planners: don’t segregate future housing from future work places and you might see more active travel. On the downside though, climate (too hot, too cold, too wet or too unpredictable) are factors difficult to overcome. It’s also difficult to carry your shopping bags any great distance (unless you steal the supermarket trolley which the visual evidence says happens a lot). Unlikely to ever make a big dent in urban congestion, however appealing the idea.

Uber buses. Yet to gain a lot of traction here are Uber buses – a way of tailoring schedules and routes to users. It’s working overseas and I witnessed a non-tech version in Vanuatu a few years ago (the bus driver asked where you were going and, based on where all passengers were going, worked out the route from there). The Uber bus is typically a smaller bus which varies routes and schedules around user demand. Sounds great in theory, provided they don’t cancel on you, or hit you with a surge. The technology platform that makes this possible ought to be something public transport agencies look into further. Will it bust congestion? Unlikely, but with support it could make an impact.

Flying cars & taxis. They’re coming, and I want one! Brisbane has announced the promise of flying taxis by the time of the 2032 Olympics. Other cities will follow. The technology is proven and trials of various personal flying cars are underway with some already available – if you have the cash. One thing promoters haven’t counted on is Australia’s love of regulation, and I fear that Federal aviation authorities will pose so many constraints on operations in the sky that it will be decades before private users will be buzzing around like George Jetson. As for parking one at your local shops… yeah, nah – that just takes shopping centre parking to a third dimension!!!

Scooters & e-bikes. Love them or hate them, there’s no denying they’ve been rapidly adopted where they’ve been allowed. For shorter trips they are brilliant. But they aren’t cheap to hire, and scooters are useless for carrying anything more than the wallet in your pocket, and have the same climate issues as active transport. Plus, regulators are introducing so many geofencing limits that their appeal is being limited. However, privately owned e-bikes that make use of extensive bikeway or active transport networks could potentially see a rise in popularity – shopping baskets included. Provided the lithium battery doesn’t burn your house down, these could be useful to have in your garage.

Autonomous, electric vehicles. This is a serious proposal, being explored by leading institutions and thinkers including my friend Prof Alan Berger from MIT, and the Toyota Mobility Foundation. To quote from the Toyota Mobility Foundation: “Imagine how self-driving vehicles and derived mobility services might impact every aspect of life in the future. From how and when we move about and how we design cities, to how we enhance environmental sustainability with this technology. As we approach this new era in urban/suburban planning and transportation, can we develop models and guidance that will help us address issues such as congestion and affordable universal access?” The beauty of the work that people like Alan Berger are doing is that they realise real solutions involve a lot more than magic wands and glib sayings like “get people out of cars.” They involve the redesign and retrofit of urban and suburban domains – from housing to work to physical and digital networks. If you’re genuinely interested in exploring some advanced thinking (it’s not a big club) start with a look at https://www.alanmberger.com/next-generation-suburbs#7 and also https://toyotamobilityfoundation.org/en/research/suburban/

As for me, I think the maths is undeniable. Millions more people will mean millions more cars (for now) so it will get a lot worse before it gets better (if it does). Which is why you’ll continue to find me on the one form of transport that’s ready when I am and is able to sneak through traffic snarls while bringing a smile to your dial. And if it rains? A small price to pay.

Keep the rubber side down!

Population growth: context in a few critical graphs

Population projections that talk of very high growth are welcomed by some parts of the business community and many governments. Others warn that the numbers and speed of growth will fast outpace our ability to provide the necessary social and other infrastructure required to maintain the quality of life that attracted people in the first place. 

Rarely though does either side of this discussion provide some context to numbers so that we can arrive at our own conclusions. With that in mind, here are some graphs and comparisons that might help. You can draw your own conclusions. 

(CLICK ON ANY OF THE GRAPHS TO ENLARGE)

 

This graph (above) shows a range of global cities often mentioned as comparison cities in discussions about Australian urbanism. It’s a random selection and not exhaustive. It shows that the predicted population increases for Australia’s largest cities are generally on a par with or exceeding the growth of these cities – nearly all of which are much larger in total population than Australian cities. The exception is Tokyo, which is shrinking.

This is the same data but this time showing the increases in population as a percentage rather than as a raw number. In this comparison, the percentage increases predicted for Australian cities are several times that of these advanced western cities. This graph is helpful to show the speed and scale at which a city’s population is predicted to grow. 

In this graph, for comparison’s sake, I have added in some mega cities in developing parts of the world such as India and Africa. Much of the world’s growth in population will come from the sub-continent and from Africa. India will overtake China as the world’s most populous country. The African population will surge. Lagos in Nigeria, for example, will grow by 17 million people in the same time our cities grow by between 2 and 4 million. 

Looking at these growth rates as percentages however shows that the rate of growth in Australian cities is equal to or near to the rate of growth of Delhi, Mumbai and Lagos. There are some very obvious differences in housing, social infrastructure, quality of life, regulatory and governance frameworks and a range of other metrics which makes our cities very different from these. 

Let’s now look at Southeast Queensland. The latest revision of the SEQ Regional Plan includes some updates of population projections together with some forecast job increases (which are promised to be reviewed). Putting the population and jobs growth into the same graph allows us to see that there is an apparent imbalance between areas that are predicted to grow the most in terms of population, but which are not anointed with comparable jobs growth. This will invariably mean that more people will need to commute greater distances for work than if jobs were provided closer to where they are expected to live. 

A closer drill down into the detail comes from the Queensland Government Statistician’s Office, which released detailed population projects in June 2023. This graph shows where within the inner city of Brisbane the population is expected to change, and by how much, in the 2021-2046 period. 

This is the same graph but showing the percentage increases. This graph is helpful to understand the speed and scale of growth by small area. The CBD (Brisbane City) for example is expected to grow by 160%, while other areas will more than double. 

This is an image of 443 Queen Street – which when completed will provide 264 apartments. If we allow a modest 10% vacancy rate (apartments locked up by owners and not available for letting), and multiply the balance by a conservative 1.6 people on average per apartment (we are told there will be many more single person households so there could be less than 1.6 in the future), that gives a total population for this tower of 380 people.  With Brisbane’s CBD predicted to grow by 22,500 people (see graph above) that means we will need the equivalent of 60 more of these in the CBD for those predictions to have effect. 

Last one! Here are the regional population predictions for 2021-2046. This graph shows the forecast increases in population by region. I have added a couple of lines to show how these predicted increases compare to the current populations of Rockhampton and Ipswich, just for context. 

So, what did you conclude? Some will be excited by the infrastructure challenge. We need not only houses, but schools, hospitals, libraries, water, energy, roads, parks and open space and more. Plus workplaces of course. And protection of the environment. 

Others will worry that, if we struggle to find houses for people and with tent cities popping up around the region, we should slow this rate of growth. Longer hospital wait lists, growing school class sizes, rising congestion, environmental pressures – these could be some of the things we should try avoid they will say. 

Others again will question the numbers themselves. Some of these predictions seem to lack a reality check. Can we even find, for example, sites for 60 more towers like 443 Queen Street in the CBD? Let alone what many of the other numbers will require in terms of sites for housing, for schools, workplaces, hospitals, and the rest across the region. 

It’s important that predictions like those contained in these numbers are fully understood for context and impact. More than anything else, they will reshape the regions and cities in which we live. 

They are however just predictions based on public policy settings and expectations. They are not fate. 

Do you see what I see? (Many would see an empty office. I see a future classroom).

Global markets are actively exploring how to repurpose now empty office buildings, as the post covid impacts of work from home and distributed employment take their rising toll. Typically, it is the older style office buildings which are most affected. Owners of premium office property compete more aggressively for premium, large-scale tenants who still want the high performance CBD workspace, while the lower graded buildings are often rendered uncompetitive. 

Conversion of office buildings to residential is something being explored in markets from Manhattan to San Francisco to London and also here in Australia, but there are a multitude of challenges in converting floor plates designed for office workers using shared facilities (such as toilets) into multi-tenanted apartments each with their own facilities. These challenges have more merit in markets where housing is blisteringly expensive (think Manhattan or London) but even there, the conversion costs are significant and, in many cases, insurmountable (much depends on the building itself).

But as our cities hurtle toward the addition of over a million new residents, there’s a conversion opportunity which to me makes a lot of sense, and one which could be achieved at lower conversion costs. Think schools. Here’s why. 

The latest Queensland Government Statistician’s projections for population growth mirrored those for many of our major cities: a lot more people, in a short space of time. For the Brisbane region alone, their medium series predicts an additional 1.2 million people by 2046. 

That figure includes an increase of 630,000 children in the 0-14 age group and while the QGSO notes this cohort will reduce as a share of the overall population (due to our ageing profile), the increase of 630,000 kids is a number that will need to be accommodated.

To keep the math simple, assume 500,000 of that cohort will be school age, and assume a typical school size of say 500 students (averaging across independent schools which can be smaller and state schools which are typically larger). There’s perhaps 1,000 new schools required.

Where will they go? These projections are for the Greater Brisbane area. The predictions for where growth in the school age population will occur within Greater Brisbane vary. In the Brisbane City Local Government Area (LGA) for example, there’s only a predicted increase of 6,610 in the 0-14 year age bracket. (Which is still 13 more schools). 

In Moreton Bay, the increase in school age children is predicted to be much higher – at nearly 40,000. And in Logan, the increase is nearly 30,000. That’s a lot of kids and a lot of space to find for a lot of schools within the urban footprint.  

 

The challenge is greatest for areas which are largely built out, but where density is increasing. How do you infill new schools? There just aren’t large chunks of land of several hectares ready to accommodate new schools with sports fields in areas already urbanised. 

Back to our repurposed office building scenario. Australia is only starting to get used to the idea of vertical schools, but they’ve been around for a long time. This (below) is picture of the primary school I attended in Hong Kong (where I was born and raised until end of year 6). As I am now officially old, this was obviously a long time ago. The school though, like me, is still standing. Year ones were on level one, year twos on level two, and up it went. (Fun fact: Michael Hutchence of INXS attended this same school at the same time.  He was three years older than me, so a couple of floors up). On the roof was a canteen and caged in play area. On ground there were play areas in under crofts, and a couple of basketball courts. No grass. We shared an oval up the road with multiple other schools, each allocated their timeslot. Somehow I managed to finish primary with an education which was possibly two years ahead of what I did in year 7 at primary school in Australia (Kenmore State). The lack of open space didn’t impact my education. 

In terms of building size, schools are fairly hungry users of space. Have a look my school in Hong Kong for example. Here in Australia, schools of several hundred students need roughly 10,000 square metres of floorspace. Some, like Brisbane’s new vertical Fortitude Valley State Secondary School, are closer to 25,000 square metres gross floor area (it was designed for up to 1500 students and cost $100m to build). 

Now, tell me how many single tenants you’re aware of with a requirement of potentially 10,000m2 to 20,000m2 and who need long term leases, and you might see where I’m going with this. 

But why would a school want to occupy an office building in a CBD?

Location is one reason: the CBD is probably the best served in an entire region by public transport – of all forms. That centrality also means the school could be accessed from all points of compass, meaning its physical catchment could be city wide – it isn’t restricted to just one side of the city. Keep in mind that schools have traditionally been based on local catchments: back in the day, kids used to walk or cycle to school. On their own! Now, parents seem prepared to drive some distance to drop little Johnny or Mary at the school gate. Local catchments are becoming less of a consideration, especially in the non-government sector. 

Lack of available sites for new schools is another driver. When you simply don’t have the space in infill suburbs, what do you do? Following a well-established trend that is decades old elsewhere in the world by putting schools in central locations is a logical option. 

Schools seem to benefit most from proximity of students with each other and with their teachers. Remote learning is unlikely to take off in the same way as remote working, so office buildings which offer that proximity advantage make sense. 

Building design is also amendable for school use. Similar to offices, education is primarily a day use function. Shared learning spaces, shared toilets and shared facilities. Fire, building and other relevant codes that are designed for a comparable intensity of floorspace use. (Remember offices at one point got to just 8m2 per person!). No planning reasons why not, and in terms of accreditation by education authorities, potentially easier than some alternatives. 

Entire floors could be dedicated to physical education – soft-fall but enough room for half courts for basketball, soccer, gymnastics etc. If outdoor sports is essential, buses take students and coaches to nearby parks and playing fields – just as they do elsewhere in the world. It’s very feasible. 

This idea logically suits secondary grade office buildings, and those closest to transit hubs (train and bus) will rate best. Conversion to education use will depend on the building and the needs of schools, but will be less costly than office to residential conversion in most cases. If you are faced with the option of building a new vertical school for $100m+ (provided you can find a site) versus buying and refurbishing an existing CBD office building for less, the sums on the surface at least look interesting. 

This could also better suit secondary as opposed to primary schools: we seem too protective of our primary school age kids to consign them to school buses or (gasp!) catching the train, but for secondary school age children, catching a train or bus from your suburban home into the city for school is no different to what office workers have done generations before. The entire CBD infrastructure is designed around this hub and spoke model. If there are fewer office workers needing to make this journey now, then why shouldn’t students take advantage of generations of investment in public transport networks, and the amenity offered in the CBDs? Plus, there’s nothing quite like education to activate a space. And CBDs need activation. 

Sure, this isn’t something that will be seized on by multiple schools quickly, but I have no doubt it will happen. It’s already started in fact. You would be surprised at the number of non-government secondary or special needs education establishments already occupying former office space in and around our CBDs. 

If a city region is planning to absorb 1.2 million more people (as is Brisbane) in a relatively short space of time within existing urban boundaries, it needs to do much more than talk about just housing. There’s a need for workplaces, for health facilities, and a need for schools (amongst a very much longer list). In our case, potentially 1,000 new schools. Some of that demand will result in much bigger schools in existing locations, and much larger class sizes. And some of that demand might just find its way to a CBD building or two. It only takes a small number of schools to potentially generate demand for tens of thousands of square metres of space. 

It’s something worth investigating. 

No Noddy, you and Big Ears won’t solve housing with a tiny house

One of the more infuriating ideas that seems to have more followers than it deserves is the notion that “tiny houses” are part of the solution to the housing affordability (and availability) challenges being faced in large Australian cities.

“Tiny houses” are variously defined, but Wikipedia offers a useful description: “The tiny-house movement is an architectural and social movement that advocates for downsizing living spaces, simplifying, and essentially "living with less." According to the 2018 International Residential Code, Appendix Q Tiny Houses, a tiny house is a "dwelling unit with a maximum of 37 square metres (400 sq ft) of floor area, excluding lofts." The term "tiny house" is sometimes used interchangeably with "micro-house". While tiny housing primarily represents cheap, simple living, the movement also sells itself as a potential eco-friendly solution to the existing housing industry, as well as a feasible transitional option for individuals experiencing a lack of shelter.”

Think Gypsy wagons. Alluring as the description is, the tiny house promise of being eco-friendly and low cost ignores one very inconvenient truth: the land on which it sits and the services provided to that land – if they meet the bewildering array of standards and regulations – are anything but low cost (or even eco-friendly).

This was dramatically highlighted by some recent research from the engineering team at Colliers (who acquired Peak Urban). According to their research, which is based on cost estimates for around 6,800 lots and 3,400 in construction, across seven regions in South East Queensland, the civil construction cost per lot is now $157,833. This is 37% more than their 2021 estimate.

Remember, this is just the civil infrastructure cost. It does not include the raw land cost – it is just the cost of providing services to that piece of land – water, sewerage, roads etc. Those services need to meet increasingly higher standards which, combined with today’s market realities, are driving the cost surge. According to the Colliers Report:

“Increases in civil construction costs due to supply constraints are the most obvious reasons for increased overall costs. However, skilled labour shortages have meant that some businesses are paying overs to get people (if they can get them), but it also means that it is taking longer to get things done. Authorities are suffering the same, with some being forced to contract works to external parties which further diminishes industries capacity to keep up. It’s a perfect storm that is leading to higher input costs across the board.”

Ironically, some of the drivers of these costs relate to standards which aren’t always the most eco-friendly or cost friendly. Arguments against “out of sequence” land development, for example, usually revolve around the roll out of trunk infrastructure (things like water and sewer mains, or roads for example). The argument being that the trunk infrastructure must be supplied in a sequential manner for cost reasons. Yet large scale off-grid infrastructure options – water collection or waste water treatment for example – which can provide environmentally superior and lower cost solutions, are often prohibited by regulation. You are not allowed, for example, to use collected rain water for anything but flushing your toilet or watering your garden. We have standards! And your wastewater must be pumped many kilometres through expensive concrete sewer pumps and energy hungry pump stations to reach a waste water treatment plant, even though large scale localised treatment options are technically available and environmentally superior. Once again, we have standards! Using recycled materials for road surfaces? Standards again.

So back to our tiny house. The cost of bringing services to the land on which it sits is now around $150,000. The land is also subject to a per-lot infrastructure charge, and the developer who has generated the lots has been subject to a range of taxes from land taxes to stamp duties to application fees and other regulatory and compliance costs. Plus there’s the actual cost of the raw land. You can see how the physical cost of a block of land – even one as small as 400 square metres – is now starting at around $250,000 or $300,000 – and that’s at the lower end (depending on location).

Then you get the pleasure of adding the house, which is also subject to a range of compliance costs and taxes – including the GST. According to the Housing Industry Association (2023):

“In 2019, the Centre for International Economics (CIE) released a research report Taxation on the Housing Sector which identified the costs associated with bringing land and housing to market and provided a breakdown of these costs as either resource costs, regulatory costs (red tape), statutory taxes (federal, state and local) or excessive charges. The research showed that the combined costs of the statutory taxes, regulatory costs and excessive charges equate to 50 per cent of the cost of a new house and land package. The situation since 2019 has only worsened.”

Many years (2007), when I prepared a report “Boulevard of Broken Dreams – the Future of Housing Affordability in Australia” for the PCA – that cost was around a third. It’s now half. No wonder things are getting worse. (If you want a copy, I can email you one just let me know).

Even more concerning is the equity argument. Buyers of an entry level new house and land package on the urban fringe – our archetypal young family of first home buyers – will pay a great deal more in embedded taxes and charges on their new home than someone buying a multi-million dollar established home in, for example, the privileged inner-city market of New Farm (or Balmain for a Sydney equivalent). Our young buyers are buying into an area where the infrastructure is largely still a promise of things to come. Our New Farm buyers are buying into a market where other taxpayers have generously funded the extensive hard and social infrastructure which has made the suburb so desirable, but they pay no infrastructure levy, no GST, and no other regulatory or compliance costs. They may grumble about stamp duty but it is far less than the combined tax bill faced by our young family.

So, the solution to this mess of regulation and tax, which has made new land for housing a complex and costly exercise, is to suggest building a tiny house of less than 40 square metres on land which costs over $150,000 to service, let alone the cost of the land itself?

Sorry Noddy and Big Ears, it’s a nice idea, but we’re in the real world now.

No, we can’t address affordability by building lots more apartments

One of the (many) furphies that gets aired (frequently) in discussions around housing affordability is that we can build ourselves out of the problem by building a lot more high-density housing units rather than typical detached suburban houses.

In fact, the opposite is likely to happen should we attempt this course of action. Here’s why.

First, the reality of construction economics is such as that every square metre of space in a high-rise apartment building is more expensive – roughly double or more – than the same square metre of space built in a detached single level home.

The traditional “sticks and bricks on slab” construction of detached suburban housing has been incredibly efficient over a very long period of time. As a building form, it lacks complexity (despite recent moves to introduce it via new standards). It’s even been said that in post-World War II Sydney, as many as a third of the new suburban homes were by owner-builders.

Despite recent and rapid cost escalations, the build cost per square metre of a low-set detached suburban house is still around $1700 for the modest spec home. Not including the land, you can still find project home builders who will give you the keys to a brand new three bedroom, two bathroom house from around $220,000 to $300,000 – and that’s for roughly 200m2 under roof.

It’s a different story for multi storey apartments. These are more complex structures, with a good deal more going into them – more than just concrete and reinforced-steel slabs (which are themselves more expensive than timber frames or bricks for a low set house). There are also lifts, fire systems, standby generators, deep foundations and excavations for basement car parks… it’s quite a list. Building them also takes a lot longer than a standard house and involves at least one tower crane, sometimes more.

All of which means each square metre of floorspace in that high rise unit tower is going to cost around $4,000/m2 for a structure of basic design. This applies to the whole floor of course – corridors and common areas included. The cost per metre for the actual living space, developers and QS’s tell me, is closer to $5,000 per square metre. So a unit of 120 square metres will cost around $600,000 just to build. Not including the land or other development costs. This is around half the size but twice the cost of our detached new stick-and-brick example above – which includes builder margin.

Market prices need to factor in land and other development costs. The new low set detached house and land package will set you back from around $500,000 to $700,000, depending on location. (This is the discount end of the market of course). New home units however are well above this. Try finding a new three-bedroom apartment for $700,000 in Brisbane. Many are priced at $1m or more, even those well away from the urban core. (Spend a little while searching on realestate.com.au and see for yourself!).

What’s happening to the theory that we can solve affordability by building more apartments? It doesn’t stack up. You can’t “solve” affordability by building more of the most expensive building types.

It gets worse. Developers will know that, given base build costs plus land, infrastructure levies, and other costs (including allowing for a margin), they will have a minimum retail price they can deliver apartments for. The build cost is virtually the same in middle and outer suburbs as the inner city (land being the only differentiator). But in middle and outer suburban markets, the price points that people will pay are below the cost at which the product can be delivered. So it’s not worth doing. Instead, they will turn their attention to locations which can support higher purchase prices – and already well-off inner-city locations tick that box. There is less risk and a deeper market in building units that sell for over $16,000 per square metre (nearly $2m each or more) in any number of inner city locations, than trying to build lower cost units in suburban locations.

Which means the market supply of higher density housing will concentrate in and around the inner city where you will increasingly see new projects with price tags four times the Brisbane unit median. This is hardly doing anything for affordability.

A similar thing happened in Vancouver, Canada. There, as Patrick Condon (James Taylor chair in Landscape and Livable Environments at the University of British Columbia’s School of Architecture and Landscape Architecture and the founding chair of the UBC Urban Design program) points out, the city tripled its housing via high density infill: “this was an unreservedly good thing – in all but one respect. This giant surge of new housing supply did not lead to more affordable housing as we all hoped. Somehow, confoundingly, the reverse happened.”

Sure did. Vancouver became the world’s least affordable housing market. Not a great outcome if affordability is your objective. Don’t be like Vancouver.

Last words:

Yes, townhouses are a halfway point in build costs. Suburban renewal precincts with townhouses or low set apartments are a more affordable answer, but even this is a challenge given construction economics.

No, outer suburban detached housing will not result in more people trying to get to the inner city for work. These buyers typically don’t work in the inner city. Inner city workers are typically higher paid. In New Farm for example, one in five households earns over $4000 a week. Inner city markets are high income markets with high-cost real estate. These people typically don’t work in the suburbs at a hospital or in retail or in education.

No, we don’t have “a housing supply crisis”

We have plenty of things we could call a crisis, but suggesting we have a housing supply crisis isn’t one of them. Here’s why.

First, recall that the immutable law of economics 101 is called “the law of supply AND demand.” The two work together. In periods of high demand, the law states that supply will normally respond with increases. Failure to do so will see prices rise. In periods of low demand, supply should also fall. Failure to do so will see prices fall. 

Looking at supply of housing commencements on a national basis, it’s hard to see a crisis. Sure, early 2023 figures are low, but the longer-term trend should provide some comfort.

What about the demand side? Our rate of population growth has come off the Covid-induced shut down and is headed for the moon. It’s both a very rapid increase (almost vertical) and at total levels that are themselves records. This is almost entirely the result of immigration policy. In other words, it’s deliberate. 

So combine very rapid increases in demand and record levels of overall demand that are well in excess of what the market can supply and guess what – prices rise, vacancies fall and we start calling this self-inflicted situation a crisis.

There’s another reason that “housing supply crisis” doesn’t ring true, and that’s because building houses is still – despite high profile builder collapses – relatively easy. It’s the land to put them on that we’ve made a herculean challenge. Sure, there’s no shortage of land in Australia but economists who don’t understand the delights of our planning systems would have little idea how hard it is to find suitably zoned land, either serviced or capable of being serviced, in or near locations where people seem to most want to live. This artificially induced supply constraint has been supported in the interests of combatting sprawl. Yet it is also having the effect of reducing the supply side response. Bringing land to market is now a minimum 5 year (in some cases longer) proposition for many larger urban markets. It’s also costly. 

(Ironically, when asked, many seem to respond in favour of sprawl – allowing more homes in new suburbs outside city centres was the most popular response to a range of options offered in this 2023 Resolve Political Monitor poll. The least popular? Allowing more apartments to be built within existing city areas):

So what I’d suggest is that we don’t really have a housing supply crisis, but instead we have a growth crisis. Not just a shortage of zoned land to build houses, but shortages of hospital beds, of schools, of transport infrastructure, even looming shortages of potable water and energy. 

How can pumping our population growth to record levels and doing so at warp speed, given what we know from bitter experience about our unresponsive regulatory environments, not end badly? 

Why do we keep falling for the idea that the rate of population growth in Australia is inevitable?

There is nothing inevitable about the rate of our population growth in Australia. So why does so much of our urban planning assume that the rates of growth are something “we can’t do anything about” when the opposite is in fact true? Only recently we proved it can be done when we pulled the policy levers on growth to ‘halt’ for the first time in many decades - thanks to Covid. Given planning for growth is about demand as well as supply, why is it we seem to accept rapid growth as ‘fate’ rather than plan for growth at speeds we can actually handle?

Our population clock shows there are now nearly 26.3 million of us. The biggest driver of that growth is net overseas migration – which is a direct result of national policy. When net overseas migration slows, our overall rate of population slows. Our natural (births over deaths) rate of growth is very modest by comparison and (unless you’re adopting a Community China approach to birth control and family planning) is beyond the reach of policy makers.

So population growth in Australia is invariably a discussion about net overseas migration numbers – something we seem sensitive about lest we be charged with racism or some other allegation. Nearly every country around the world views control of its borders as a primary responsibility, and with it, management of its own population. We are no different.

Australia’s rates of net overseas migration really took off in the early 2000s. After bouncing around at the 100,000 per annum mark for the best part of 50 years, it surged to double that and momentarily to triple that before crashing to negative as a result of global Covid border shutdown:

 

Ironically, the rapid acceleration in rates of net overseas migration followed a 2001 pre-election speech by then Prime Minister John Howard, who seemed to suggest the opposite was coming:

“I hold very strongly to the view that this country has an obligation as part of the international community to conduct a generous refugee program and we have done so to our credit now for some decades. We are one of only nine countries in the world that has a resettlement program and we take more refugees on a per capita basis than any country in the world accept Canada. But my friends we will decide who comes to this country and the circumstances in which they come and we'll decide that applying humane equitable principles and international refugee assessment. What is involved in this debate about asylum seekers is the proposition that some people have, namely if people can quite literally present themselves at Australia's borders and demand entry no matter what the background or no matter what the circumstances are.”

That won him much support at the time, and the phrase “we will decide who comes to this country and the circumstances in which they come” has become one of his signature lines. The speech was in response to national security concerns flowing from global terrorism but was also widely taken to refer to immigration policy generally. But population numbers boomed to record levels in the next term of his office as Prime Minister.

The ALP too have had views on our rates of population growth. Labor Prime Minister Anthony Albanese, when he was Opposition Leader, called for a “mature debate” on population growth rates. In response to an Infrastructure Australia report that warned rapid growth rates would require $40bn per annum in spending, he had this to say:

“It’s a matter of appropriate population growth… What we can’t have is what has historically happened of just opening up land release, growth in outer suburbs, people not located near jobs without working out where they will work, where they will access health and education services, where their kids will play.”

“There is a role for government in just not allowing the market to let rip and having significant development occurring without looking at the social infrastructure that is required in order to improve liveability and sustainability.”

Now elected to office, that debate hasn’t happened. Instead, our rates of net overseas migration have been again set at record high levels.

To illustrate the speed of that growth, consider this graph which compares the various rates of predicted growth in our three major cities (where most growth pressure is occurring) with a range of global cities. While other cities (such as LA or London or San Francisco) may be significantly larger in number, their rates of growth are much slower. Since I did the research for this graph, LA and San Francisco have entered negative territory. In the case of LA, the US Census Bureau said it had “the largest population loss of any county, losing 159,621 residents in 2021.” This hasn’t led to a collapse of the LA economy.

Our rates of population growth, pre-pandemic, were three times that of many global cities we like to compare ourselves with. They are comparable only with the hyper growth rates of cities like Shanghai and Beijing in Communist China. Let that sink in.

The consequences of our inability to deal with these very rapid rates of growth are everywhere – housing shortages, hospital shortages, school shortages, rising congestion (doubling the population of a city but relying on the same transport infrastructure networks that were there in the 1980s will do that!), potable water shortages, energy shortages, shortages of parkland… if you think we’re doing OK you’re very much in the minority. (A recent article of mine went into some of these shortages in more detail).

What does the Australian population think of these rates of growth? Invariably, whenever their opinion is asked, the answer isn’t what the development industry or big business lobbies want to hear. A 2021 poll of Sydney and Melbourne residents for Fairfax media for example found that two thirds of residents wanted net overseas migration numbers to return at lower levels than pre-pandemic. Only One in five were happy with pre-pandemic levels or higher.

It's hard to suggest these somehow reflect racist views, given that both Sydney and Melbourne are highly multicultural cities and a diverse range of cultures would invariably be included in that sample.

So if rapid rates of growth are leading to obvious critical infrastructure shortages and eroding our quality of life in major cities, and if the majority of the population has significant reservations around the speed of growth and net overseas migration, why are we doing it?

There are arguments in favour of rapid growth – that it’s essential for the economy etc. Those arguments are often promoted by ‘big end of town’ interests motivated by selling cheap apartments or finding low-cost labour to plug labour resource gaps. Critics have argued that support of high migration policies are the equivalent of a pyramid scheme. Not all critics are cranks either, such as this article from the respected economist and journalist Terry McCrann:

“The next big battle for rational policy that adds value to Australia and individual Australians and not just dollars to the bottom lines and bank balances of developers, construction companies and assorted billionaires has to be over population. Two years of the virus put Australia’s ‘Population Ponzi’ on hold – the idea that you could build a healthy and strongly growing economy on simply bringing more and more people into Melbourne and Sydney, every year, forever. Yes, we got bigger aggregate growth in the economy, but we most certainly didn’t get quality growth, that actually improves the lives of ordinary Australians.”

 

The argument that we might be better advised to grow at more modest rates to ensure that our provision of critical infrastructure can keep up, and that our quality of life (and access to essentials like housing) doesn’t get worse, isn’t a discussion we seem ready to have.

Keep in mind too that the wealthy and privileged easily self-insulate from the adverse consequences of rapid growth, while enjoying the material benefits of it. They may promote higher infill housing density for their business interests’ sake, but rush to oppose it when a project threatens their own personal residential amenity. The problem of public hospital shortages doesn’t worry them either as they have the best private health cover available. Issues around state government schooling isn’t a worry, they have their children in the very best private schools. Rising household energy costs aren’t a concern for people who can afford $100,000 electric cars to openly demonstrate their eco credentials. And so it goes on.

There is nothing inevitable about our rates of population growth. They are the result of policy decisions we, as a nation, deliberately make. There is however something inevitable about the reluctance of our leaders in public policy, business and government to engage in an informed debate about the impacts of rapid growth and whether or not a more modest pace would benefit a greater number of people.