So many levers, why don’t we use them?

In the pursuit of suburban and regional renewal, have we fallen into the trap of thinking this is a responsibility for local governments? Have we become too reliant on local government powers to provide incentives to attract and stimulate development – things like density bonuses, rates relief, infrastructure charges relief – without lifting our thinking to wider opportunities to support targeted geographic areas? Are we relying on too few of the levers actually at our disposal?

Local government development incentives can be highly effective, as Brisbane City Council showed when it targeted the limited supply of 5 star hotel rooms across the city some years back, along with student housing and seniors housing. Each sector was offered specific incentives designed to bring forward proposals for adding to supply in that sector, in support of city-wide economic development objectives. It worked, although it wasn’t intended to support specific geographic areas within the city.

On a wider geographic level, these can become more problematic: some local governments lack the resources to provide sufficient stimulus options to make much difference to a project’s viability. And some location-specific initiatives within one local government boundary might offer region-wide benefits, but neighbouring local governments are unlikely to chip in out of a sense of noblesse oblige. There are many other valid reasons why the task of economic attraction shouldn’t be delegated entirely to local governments.

Let’s take a hypothetical example of an outer suburban or regional business district which has seen better days. Picture plenty of ‘For lease’ and ‘For sale’ signs – some of the signs old enough to warrant a heritage listing in their own right. Regional plans may identify it as a centre of wider employment potential but without strategic policy support beyond the reach of local government those sentiments are unlikely to be realised. Somehow the ‘planning’ and the ‘doing’ never quite align. Our business district continues to promise potential but nothing much changes.

If asked what’s needed to turn that around, I suspect many of us would think the first order priorities are physical – infrastructure and placemaking upgrades being top of the pops. These things are unquestionably important in business attraction and centre renewal but, for the sake of argument, what other levers could be applied? What other things could we do to make a particular suburban or regional business district more appealing as a place to base jobs?

For starters, we often overlook the impact of utilities providers on the costs of both doing business and developing new assets. Many years back, these were public utilities and some – such as water and sewerage – were local government owned. Today many utilities providers work to a set of objectives which do not include business attraction or incentivising development. Nor do they respond to the economic development wishes of their former owners. But their cost structures for new or upgraded infrastructure can add significantly to local project costs and hence detract from the ability of getting our hypothetical run-down centre up to speed. A new project in our renewal centre will be competing with other existing centres where services are already in-ground, and not as fully priced into the location costs; which puts us at an immediate cost disadvantage. If we are serious about making outer suburban and regional centres competitive, is it valid that we leave utilities off the team?

Another lever we usually don’t engage in incentivising regional or suburban renewal is the tax lever. Payroll tax for example is levied at the same rate whether you are major accounting or law firm in a CBD tower, or a mid-size business in a suburban or regional location. Same payroll value, different locations, same tax bill. (Payroll tax in Queensland kicks in at $1.3million per annum in wages and is 4.75% for up to $6.5m per annum and 4.95% for over $6.5m per annum. The Queensland Government introduced a regional discount in 2019 - of 1%. It's a start but unlikely to to be deal maker. It also doesn't apply to outer suburban or regional areas within South East Queensland). If our aim was to make our run down outer suburban centre or regional centre more attractive to a cross section of businesses, is there any valid reason we couldn’t offer payroll tax exemptions based on place of business? (Sure, there’s a risk that some will set up “post box” locations to exploit initiatives like this – there always are. But consider that the opportunity cost of the lost revenue is relatively small if confined to specific locations, plus the specific geographic location ought to make validity checks relatively easy? This could actually be an easier tax measure to police than many already on the statute books).

And if a “horses for courses” approach with payroll tax to favour specific places of work is a potential lever, why not a similar approach to things like land taxes, depreciation rates or the big one – income and company taxes?

Let’s imagine our run down regional or outer suburban centre given the collective support of Federal, State and Local Governments, along with utility providers. Bring your business here and pay a concessional rate of company tax, your workers will receive extra income tax rebates based on location, your payroll taxes are zero, you are offered accelerated depreciation on built assets and fixed equipment, land tax is half what you would pay elsewhere, while energy, water and other utilities are less than what you’d pay in a major centre. Plus the housing for your workers is plentiful and affordable. I’m writing the economic development pitch already!

It’s only a crazy idea because we’ve never really been fair dinkum about supporting the efforts of suburban or regional business districts wanting to refresh their appeal. We have tended to assume that the inner cities are where it’s at and directed the bulk of our infrastructure investment there for that reason. We’ve also benchmarked and tuned our statewide and nationwide tax and regulatory settings to the economic environments of major centres. Little wonder that they have thrived while many suburban and regional centres have struggled.

It isn’t enough to be able to offer cheap land as the prime location incentive for regional or outer suburban areas – a tactic we often see resorted to. It’s cheap for a reason, and land cost itself is rarely the deciding factor. The cost of building in an outer suburban or regional area is either no different or (often) more expensive than building in a major centre – so you are effectively at a disadvantage from the outset. If the tax and regulatory framework is also designed on a ‘one size fits all’ basis, whether you are regionally or city based, then the odds start to become well and truly stacked against you.

We might stand a chance if we factored in the very high costs of inner urban infrastructure needed to support a highly centralised economy. For example, mass transit projects designed to ferry people to inner city workplaces are eye-wateringly expensive, but those costs are borne by taxpayers, usually without much dissent. Providing a similar ‘leg up’ to regional or outer suburban centres, in the name of a more resilient and dispersed economy that shares benefits more widely across the country, shouldn’t prove as problematic as it seems.

Nothing in this is new of course. The notion of a ‘Northern enterprise zone’ to develop the economy across the north of Australia gets a regular airing, but rarely any traction. It’s an idea that has now been floated so many times that it almost invites ridicule when it gets aired again. But surely the idea can be no less ridiculous than the notion that the tax rates and other government costs ought to be the same for businesses located in the CBDs of major cities - where they are surrounded by taxpayer funded amenity - as it is for outer suburban or regional business centres?

We need to begin to think more broadly about ways to support a more geographically diversified economy. Continued concentration of our economic fortunes into a handful of cities is a strategy fraught with risk, as we are watching play out now in Melbourne thanks to Covid-19. Geographic diversification is no longer an economic or planning pipe dream – it’s a matter of national economic security.

Turn and face the strange ch-ch-changes.

For decades we’ve lived with a range of accepted truisms around city planning, urban development and infrastructure planning. Then along came a virus. Some suggest the long-term impacts of the current pandemic will turn fundamentals on their head. Others – myself included – are more sanguine. But changes there will be and, as Bowie sang, we need to face them.

This article tries to sum up some thoughts of my own and distil a good amount of reading over recent weeks. Nothing here is a given, but simply offered to encourage us to think carefully about what lies ahead. The first thing to keep in mind is what Indeed.com’s global Chief Economist Jed Kolko pointed out to me a few weeks ago: "Many of the post-pandemic predictions are really just statements of how the prediction-maker has always wanted the world to change. The virus doesn't kill cognitive biases!" I will try avoid that trap.

Population growth:

Australia’s population growth has been driven by direct overseas migration, and much of that has concentrated itself into three capitals, each of which was predicted to grow by close to a third in the 2016 to 2030 period. That rate of growth was ahead of many world cities. Would we have managed, without falling further behind on infrastructure? Growth has taken a short term hit thanks to closed borders. It remains to be seen if those growth rates will slow over the longer term. A slower rate of growth may not be a bad thing: it could allow us to catch up with infrastructure, hence improving quality of life, rather than being in constant lag mode. This in turn could support property values by making places more desirable – as opposed to just crowded. Remember,  some of the most highly prized property markets around the world are actually in low growth areas. It is their desirability, environment and placemaking qualities that makes them so.

If growth is to slow, would that change a wide range of urban policy settings, with the dial turning from volume to quality?

Housing:

Predictions that housing demand will change quickly from inner city apartments to suburban housing are I think wrong. For starters, inner city apartment demand for much of recent history was driven mostly by speculators who had no intention of actually living in the one-bedroom, low cost apartment they were buying off the plan. That frenetic level of speculator activity created a false impression about the extent of real demand for inner city apartments. There are now more two and three bedroom inner city units being designed which are more likely to meet with owner occupier needs. But being larger, they will also be more expensive.

Suburban housing has tended to dominate urban settlement in Australia and while the pandemic may remind us that the burbs may not be so bad a place for a lockdown, those who live there now do so by choice, and because 8 in 10 of us actually work in suburban locations. The same applies to inner city apartment dwellers who choose where to live for work or other reasons. There may be some changes in preference if more people seek out suburban work locations (as opposed to densely populated inner-city ones) but I can’t see wholesale change here.

Neither can I see prices collapsing in the long term. The cost of new supply – land plus building costs plus taxes – tends to be fixed. Unless there is a major change in those supply side drivers, any movements in house prices will reflect shorter term economic circumstances (more owners needing to sell than buyers able to buy).

Finally, the argument that housing design will change to better facilitate home offices for work from home needs to be kept in context. This may happen on some new product but as this only affects new supply (and renovations to existing supply) we aren’t likely to see a wholesale change of our housing stock to accommodate work from home (which only works for some occupations anyway). There is also speculation that home isolation will mean a move to larger balconies in townhouses and apartments, as we appreciate the importance of space more. You could counter that this was always the case, but larger balconies and home offices mean larger floorspaces and townhouses and apartments are expensive to begin with. This prediction, if it eventuates, will simply make new product significantly more expensive. Will there be a sufficiently large market to pay?

Work from home?

No doubt the future will see more people working from home, either on occasion or routinely, than in the past. Some companies may direct that this change happens in pursuit of cost savings, and some individuals will request it for lifestyle or other reasons. But for the vast majority, my thoughts are that once a return to the workplace is allowed, many will return with enthusiasm. Productivity, creative engagement and the social value of work are genuine positives for that proportion of the workforce who do work in offices (and for whom work from home is possible).  As this article in Bloomberg wryly observed, the whole work from home thing has soured quickly for many:

“Many mapped out plans to fill time they would’ve spent commuting to take up new hobbies, like learning a foreign language, baking or getting into the best shape of their lives. It looked like the beginnings of a telecommuting revolution… A month and a half later, people are overworked, stressed, and eager to get back to the office. “

Offices: 

The office market could be in for some changes but these may take time. Markets like this will tend to be quite ‘sticky’ because of things like long term leases and fixed fitouts, which make quick adaptation difficult. However, it does seem likely that things like an 8 square metre per person benchmark - which was becoming common - could reverse and the trend head in the direction of more space per person. 

Imagine a company of 100 staff ready to lease new premises. Where once they would have needed 800m2 they may soon be thinking more like 1500m2 (15 or even 20 square metres per person were more typical in the 1990s through to early 2000s). Will they actually lease that 1500m2 or instead reduce their workforce for those premises to around 53 people for the 800m2 tenancy and instead send staff for whom a CBD location is non-essential to suburban collaboration hubs, or have some of them work from home? 

Less density of workers in expensive CBD offices makes them more expensive, per worker. Suburban business centres may benefit from this. How this change plays out will have a long-term impact on office space demand.

Retail: 

Hard hit even in the lead up to the spread of the Coronavirus by flat wage growth and online competition, shopping centres and retailers have been frontline victims of the viral shutdown. As we emerge from our burrows into a post viral world, industry consensus is that there are big changes for this sector going forward. Tenants may have taught themselves that the value of paying to be close to centre-generated foot traffic can be traded off against more aggressive online strategies with a neighbourhood shop front presence. And a proportion of consumers may equally have adapted to sourcing their immediate retail needs more locally, rather than travelling to major centres. There are potential lasting changes too in the types of consumption habits of consumers.

Major mall owners have survived multiple predictions of the end of bricks and mortar retail in the past, and I have no doubt they will innovate and survive again – but as in the past, it will likely mean significant changes to tenancy profiles and to the nature of the centre itself. Typically very well located, with public and private transport connections, these assets will always find a market. My money is on more health, education and community service functions increasingly making their presence felt.

For the suburban strip or neighbourhood centre though, the changes in retail could be a positive – provided they can provide a high standard of amenity (placemaking appeal) and convenience (eg ample parking) and affordable rentals. Given that many have received little government investment in their improvement for decades (governments were too preoccupied with the inner cities) and given that many landowners have likewise invested little in some of their assets, many centres may miss their opportunity for renewal. How governments and private owners might work together to avoid that happening will be interesting.

Public transport:

What happens with public transport in the future will be fascinating. Having already faced flat or falling mode shares, will a post-viral world see more commuters recoil at the idea of joining fellow travellers in crowded trains or buses, coughing and sneezing in close proximity? 

How could this affect demand, and will public transport providers respond with less passenger density (as some airlines already seem to be proposing)? And will this in turn mean even higher costs for PT given lower passenger density? And will more people drive instead, leading to a spike in congestion? Or will the whole idea of commuting en-masse to centralised workplaces served by public transport start to pale in favour of local commutes – including by walking or cycling - to suburban business hubs for collaboration and the social aspects of work? This is city changing stuff. Watch with interest for the short term response once the economy opens up again, and for long term changes.

Health:

Health was already predicted to the fastest growing industry in Australia prior to the pandemic. I can only see this accelerating. Health services are typically not centralised so this growth is likely to benefit suburban and regional centres – not just in the capital value of the infrastructure but also the jobs that come with it. Australia’s investment in health is good by world standards but not (I was surprised to learn) world leading. The graph below shows the number of hospital beds per 1000 of population, as just one metric. Will we move to lift this level of provision? How will we fund it if we do? (And from the graph, you can see in part why the UK and USA have struggled, and why India is so worried).

Education:

Education – especially tertiary – became one of our leading export industries in recent years. It was also a ‘clean’ industry and ticked a lot of boxes in terms of international relationships. There is no question that education sectors heavily reliant on foreign fee-paying students have hit a virtual brick wall – the question really is to what extent this will recover and how long it might take if it does?

Failure to quickly recover could jeopardise billions of dollars in proposed capital expansion and improvement plans, plus put pressure on fees for domestic students. It would also mean we would need to find a replacement source of foreign income. More coal anyone?

Manufacturing and industry:

A possible beneficiary of changed international trade arrangements could be the local manufacturing and industrial sector. Employing 20% of Australian workers, this sector has been in slow decline over the long term but can rapidly retool to replace a wide range of imported products. Skilled and affordable labour isn’t the issue it once was – the issue now is the high cost of energy. Australia’s energy costs have hurtled ahead of inflation to become some of the most expensive in the world. Given we have a small domestic market and international markets are a long way away, lower prices for longer is what this sector needs from the energy market, and a subsidised and expensive renewables market just isn’t ready to provide that yet. Again, more coal anymore? Or nuclear? Hmmm.

Finally, to end with something from a mate who was once head of planning for Brisbane City Council, ran his own business, later becoming a key part of the ULI growth story into Europe and Asia and who now teaches planning and real estate development at Texas A&M University – Professor Geoffrey Booth. As Geoff said to me in a recent note, changes from this pandemic are inevitable because our patterns of human interaction will change:

“Never forget that all real estate is place and it is people that create the enduring value of real estate – take out the people and there is no market, no demand, and no one to buy it or pay in one way or another to use it, and as a consequence, you the real estate developer, left with no raison d'être, starves to death. There will be a world after Covid-19 but as our patterns of repeat visitation have been severely disrupted, as a consequence, the real estate market will be forever changed.”

If only we knew how, and where, and when this will happen.

Are our Universities holding back our education export potential?

Education is one of the fastest growing industries in Australia, soon to reach number four spot as an employer – ahead of the traditional retail employment machine. Not only this, but education is a spectacular export earner – now worth more than $20 billion to the Australian economy, and most of this is in higher (ie tertiary) education. Education is now worth more in exports than even tourism, and is ranked only behind coal and iron ore as an industry that earns the foreign exchange dollars needed to keep us economically afloat.

This is potentially only the beginning. Our close economic relationship with trading partners like China, India, Indonesia and other rapidly expanding Asian economies, along with the US and Europe, should logically mean the potential of our education exports has barely scratched the surface.

Many of our Universities are already highly geared to the full fee paying international student market. This is a good thing, as the evidence is that it is full fee paying foreign students that are in effect subsidising the costs of tertiary education for Aussie kids (and mature aged students). Universities need to maintain a balance between foreign and domestic student numbers and also need to maintain their academic standards: it’s not simply a case of rapid expansion to meet international demand or this could throw things out of kilter. Many Universities are also at capacity due to physical constraints on their campus or have already expanded by adding additional campuses. 

Some, like RMIT (Melbourne) have seized the opportunity to explore the international demand by opening overseas campuses. Since the year 2000, RMIT has had a presence in Vietnam and has now grown that to a 7,000 strong student body in two campuses – one (the main one) in Ho Chi Minh City and a smaller campus in Hanoi. 

I learned this visiting Vietnam a couple of years ago and it struck me as a terrific idea. RMIT is not the only Australian University to expand overseas. For example, Townsville’s JCU has - since 2003 –had a campus in Singapore. “Bringing programs direct from Australia and resident senior academic staff from JCU to ensure academic quality, students studying at JCU Singapore can be assured of the same enriching university education as our students in Queensland Australia” it says on its website. 

Many local government areas in Australia are keen to explore development of the tertiary education sector as an employment generator and as a ‘clean’, knowledge based industry. Which is also a terrific idea. Moreton Bay Regional Council to Brisbane’s north recently announced a deal to secure a new campus of Sunshine Coast University on a former paper mill industrial site, in what was widely (and rightly) regarded as quite a coup. 

But in investigating this further it also became clear that many Australian Universities just didn’t want further campus expansion: they have enough sites already. So there are regions with impeccable sites and a supportive policy infrastructure which are unlikely to get a shiny new campus of an Australian University, no matter how compelling the case. “That’s OK,” I thought to myself, “let’s just do what RMIT did but in reverse: let’s bring some international Universities here with a new campus.” 

This could mean bringing campus expansion of some leading international names with an already big appetite for education in Australia. Imagine a University of Fudan (Shanghai) or Hong Kong Polytechnic, or a University of Delhi (with an astonishing 400,000 strong student body) or Universitas Terbuka (Jakarta – and with an even bigger student body of 650,000) having a campus here? Students, teachers and researchers from overseas would be exposed to western culture and language, and Australian students would also have the opportunity to study at an overseas University without having to leave the country. Our export potential could go exponential.  We create more high value jobs in a fast growing, clean industry, we grow our export dollars and we cement valuable trading and cultural relationships within the region and elsewhere. 

But alas, this is Australia; if only it were that simple. I soon learned that this was largely an unrealistic dream. Without the full support and cooperation of our existing Universities, this can’t happen. Universities are governed (mostly) by State Legislation and are, in effect, granted a license to operate. The existing Universities would first need to agree to allow foreign competition into “their” market before anything could happen and they are – in the main – largely opposed to allowing that competition in, even though they themselves might be expanding overseas. There are only a couple of exceptions as I understand it, and both are in Adelaide - Carnegie Mellon University and University College London.

Why is it that Australian students and their International compatriots have such limited exposure to International University campuses on Australian soil? Is it just fundamentally unrealistic or is it a strategic blocking force from our own Public Administrators and Higher Education providers? The expansion of Australian Universities off shore is well supported strategy while the limited number of offshore Universities in Australia is an underwhelming frustration. 

Some developers and investment attraction agencies I have spoken with concede their interest to attract international education providers to our shores. As international investment continues to deliver the core funding for future developments it is quite logical that their home based education providers will see the opportunities missed if they don’t leverage their home based capital to support their global expansion. 

There may well be legitimate concerns by our tertiary institutions: erosion of existing fee incomes through foreign competition could jeopardise standards; foreign Universities may mean less foreign student incomes for existing Universities – pushing up fees for domestic students. No doubt there are countless more “reasons why not” – arguments which, at the end of the day, are largely designed to protect a regulated industry from further competition, even if the potential economic value to the country is limited because of it.

But would it really do that much harm? Consider the huge number of Universities in the USA for example: the competition there doesn’t seem to affect the position of the leading institutions which continue to build strong global brands with small student numbers. MIT has 11,500 students. Harvard some 22,000. Though small and despite swimming in the same sea as legions of others, they remain brands of global repute. There is no reason our own institutions should fear competition if their standards of excellence in research and teaching were such that competition was not a threat but an opportunity to elevate their reputations further. 

Australia is at the end of the day a small country with desirable education qualities in a region of mega nations with a matching appetite for the education opportunities we could potentially offer. Is shutting the door to international institutions in this way really to our best advantage?

Footnote:

For more on the value of education exports see:

http://monitor.icef.com/2016/11/australias-education-exports-surpass-aus20-billion/

Also this handy but dated RBA report: 
https://www.rba.gov.au/publications/bulletin/2008/jun/pdf/bu-0608-2.pdf

How the future of work will reshape our cities

The growth industries and professions of the future will shape our cities in very different ways to the industries and professions that shaped our cities in the past. There are profound implications for urban planning and property, if we’re ready for them

The biggest growth industry for coming years and for the foreseeable future, the official forecasts all seem to agree on, will be in health care and social assistance. This includes professions from surgeons to GPs to nurses to child care or aged care, various therapies and counsellors, dental, and even laundry workers, cleaners and administrative support roles. Already our biggest single industry, it employs more than 1.5 million Australians. It grew by over 20% in the five years to 2015 and that rate of growth is unlikely to change going forward. Nearly half of everyone in this industry has a bachelor’s degree or some higher education qualification so they’re not all hospital cleaners – many will be skilled professionals.

This will be followed by the professional, scientific and technical services industry and very close behind that, the education and training industry. Construction, manufacturing (yes, still growing despite all attempts to kill it off) and accommodation and food services round up the top six biggest growth industries of the future.

This is important because the nature of growth industries of the future - and more particularly where they will be located - is going to reshape our cities in a very different way to the industries that grew with and shaped our cities in the past. This was highlighted in a recent report on employment in the growing region of South East Queensland, prepared by Macroplan for The Suburban Alliance.

The health care and social assistance industry is predicted by government authorities to grow more than any other industry in the years to 2041, producing around 220,000 extra jobs. But this industry has very different spatial needs to, say, the legal industry which has the highest inner city concentration of any occupation in the region. In health and social assistance, 200,000 of those 220,000 jobs will likely be in suburban business districts or otherwise scattered across suburbia. The biggest growth industry has little need or preference for clustering in the inner city.

Consider the implications for transport networks, property development and urban planning. What will it mean in terms of additional medical centres, hospitals, professional and consulting suites, new aged care and child care, and all the peripheral jobs that hang off these occupations? Where will they go? Will we see existing shopping centres morph from a largely retail focused offer to embrace a wider range of mixed uses? And if not in existing centres, what planning changes will be needed to accommodate this growth in new centres?

Our urban model, reflecting a 100 years of employment centralization, is changing to one of employment dispersal. Jobs are not moving from the city centre to the suburbs but the industries which fuel growth are changing, and with them, the patterns of employment location.

Even in the professional, scientific and technical services industry – one you would presume is largely centralized - much of that future growth (based on current spatial preferences) will occur outside the inner city. Take for example the generically titled occupation of “professional.” There were 284,300 of these in the South-East Queensland region but only 24% of them in the inner city. A further quarter were in a number of defined suburban business districts and the balance – half – elsewhere in suburbia. This is our second biggest growth industry and those patterns of employment distribution are unlikely to change meaning of the 146,000 new jobs in this industry to be created to 2041, the clear majority will likely be suburban based.

The third biggest growth industry (education) also shows little evidence of centralization – only 7% of educators are inner city workers the rest are suburban. Even of those professionals who describe their occupation as “Chief executives, general managers or legislators” delivers a surprise: there are only 21% of them in the inner city. And for clerical and administrative workers, it’s a similar picture: only 22% are inner city workers. The rest are suburbia based.

Engineers appear to have a preference for central locations with 42% of the 16,639 engineers of South East Queensland in the inner city as do the lawyers with 65% of them in the entire region to be found in the inner city. But there are only (fortunately?) just over 9,000 lawyers in the entire region so unless there’s to be an unpredicted explosion of work in the legal profession in the future it’s hard to see this occupation fueling demand for space and transport in the inner city of the future.

Fifty years ago, cities were full of clerical and administrative, managerial and professional workers, shuffling in to centralized offices in their cars or on trams, trains or buses to clock on at 9am and clock off at 5pm. The suburbs were centres of manufacturing and heavy industry, and retailing, wholesaling and transit related industries. That pattern is still there but in another fifty years’ time, our cities will have different industries generating the bulk of jobs and many of those jobs will need to be based in suburban centres to be closer to their markets or regional transport arteries.

And what are the implications for our city centres? Will they continue to evolve to embrace yet more entertainment, recreational and culture based hubs for the regions they serve, rather than largely just places of work? And how will different cities behave, given the economic drivers can be so substantially different?

There’s much more to be explored in this because the implications are profound. Sadly, much of our thinking around urban planning seems firmly rooted in traditional models which owe more to a sentimental rear vision view of urban development rather than a forward looking one.

Footnote: If you or your organization is interested in exploring what this means in more detail, or for specific regions, please just drop me an email. I’d be very interested to discuss this with you. I’ve got a useful presentation which runs through all this in a bit more detail which I’d be happy to share. You can download the entire report prepared for The Suburban Alliance here.

What really makes cities liveable?

So called city liveability rankings are proliferating like rabbits before Myxomatosis. And like rabbits, they can be pest. A couple of recent liveability surveys beggar belief, not just in their method but also their conclusions. Here’s what’s wrong with them, and some ideas for alternative measures of city liveability.

In August this year, that journal of inner city indulgence The Sydney Morning Herald published a front page story boldly declaring “Sydney’s ten most liveable suburbs revealed.” Attention grabbing headline? Tick. Rigorous methodology? Fail. In fairness the study wasn’t by the SMH but a research consultancy, whose approach to assessing what is liveable and what isn’t says a lot about how some in our community are becoming besotted with wealth and privilege at the expense of opportunity and equity.

If you think that’s harsh, first consider their top ten, and where they are:

Sydney's top 10 most liveable suburbs

Rank	Suburb	Region
1	Lavender Bay	Lower north shore
2	Milsons Point	Lower north shore
3	McMahons Point	Lower north shore
4	Kirribilli	Lower north shore
5	Waverton	Lower north shore
6	Wollstonecraft	Lower north shore
7	North Sydney	Lower north shore
8	Millers Point	City and east
9	Elizabeth Bay	City and east
10	Darling Point	City and east

Yes, it’s a list of Sydney’s most expensive suburbs, all of them inner city.

In a remarkably narrow methodology, the researchers assessed liveability on 16 qualities which are most commonly found in inner city areas where high real estate prices prevail and where wealthier members of the community tend to live. Talk about confirmation bias.

The criteria included: access to employment (the nearby CBD employs a lot of very highly paid people); being close to light rail and trains (most concentrated in the inner city and “essential” they claim for any functional modern city); bus stops (fair enough); ferry access (limited to being close to water which is also where the high priced real estate is); culture (being close to theatres, museums and art galleries – most of which are centralised in downtowns, meaning inner city locations are bound to win); main road congestion (the further from slow moving traffic the better, but inner city residents working in the CBD have less of this problem); education (agreed - the more primary and high schools the better, and the closer the better); shopping (fair enough to a point); open space (agreed); tree cover (nothing quite like those leafy inner city suburbs with the spreading old  deciduous trees imported from the UK); topographic variation (hills are great for expansive views and also high priced real estate); cafes and restaurants (I kid you not, this is word for word: “Access to a decent short black and a sushi train should be a no-brainer.” Yep, they’ve nailed Maslow’s hierarchy of needs with that one); crime (obviously best avoided); telecommunications (“We’ve come to expect five bars and speedy broadband at all times and this has never been truer than in today’s world of Pokemon Go and Netflix”- so they obviously have life’s priorities sorted); views (“The more water views – whether it’s of the harbour, a bay or the ocean – the better”); beach access (well of course, life’s a beach in a multi-million dollar home with harbour views and beach access).

Stunning isn’t it? According to this survey, liveability equates with the lifestyles of the Sydney rich and famous. The rest of you mug punters can only watch on in envy. The higher social order has, like some twist on The Hunger Games, spoken.

Another equally vapid survey is by the Economist Intelligence Unit. Their latest world survey concluded that Melbourne was the world’s most liveable city. Their league ladder was as follows:

	Rank	Rating
Melbourne	1	97.5
Vienna	2	97.4
Vancouver	3	97.3
Toronto	4	97.2
Calgary	5	96.6
Adelaide	5	96.6
Perth	7	95.9

You can read about their criteria here but it will be obvious to many of you that, like the survey lauded in the Sydney Morning Herald, there’s a preference for cities where wealth and privilege rule (except Adelaide, whose presence on this list given its failed economy is anyone’s guess). Vancouver, for example, is among the world’s least affordable cities but that’s obviously not a liveability problem if you are in the minority for whom that isn’t an issue.  

So what’s missing from these sybaritic surveys of liveability? And what should we be thinking more about? My suggestions are follows:

Affordability. The elephant in all the rooms is housing affordability. How can a city be liveable if that definition really only applies to a minority of the population on the highest incomes or with the greatest wealth? That housing affordability, and the cost of living generally, should so easily be overlooked in measures of city liveability is an indictment on much that passes for urban policy and the thinking that goes with it.

Housing choice. Cities that offer their citizens housing choice, by type and location, surely fair better as more liveable than ones that dictate the form and location of housing by decree? This applies as much to ensuring young people have access to types of housing that suit their needs, and equally for seniors, who are too often shunted out of the areas they grew up in because housing types are locked in stone to uses and a society whose era has long since passed.

Dispersed employment. Highly centralised city economies force more of their residents into longer commutes, which tend to be more costly for those on lesser incomes than the more generous incomes earned by inner city residents. Encouraging employment centres to disperse so that opportunities for work are closer to where more people live is a liveability angle that deserves recognition.

Full or close to full employment. Immunity from unemployment or the risk of it is more likely to be found amongst residents who already enjoy a degree of economic privilege by way of education or otherwise. Lesser skilled city residents are less likely to find quick transitions into new or different jobs so a city with full or near full employment ought to be regarded as more liveable than one where strong employment and ongoing certainty is confined to a minority.

Equal access to economic opportunity. Equality of opportunity is different to equality of outcomes. Cities that offer their residents broadly equivalent opportunities for education, employment, and advancement ought in my view to be considered more liveable than those where inherited wealth or opportunity are the norm. This is different to equality of outcomes – if residents have opportunities and they don’t pursue them or squander them, that is their responsibility at the end of the day.

Tolerant and rational. Free speech and a tolerant, rational approach to social issues is a precursor to liveability, surely? The antithesis of this is residents fearing to speak their mind or venture their opinions. There seems an increasing tendency for self-appointed and unelected urban cognoscenti to dismiss or talk down to others, which is disappointing. The next step on that path is censorship – something no liveable city should tolerate.

Clean and unpolluted. This should go without saying but a city that pollutes its own waterways, skies, or open space isn’t as liveable as one that doesn’t.

Shared benefits. Cities which spread the benefits of their urban infrastructure improvements throughout the metropolitan area are logically more equitable than those that focus all their energies on inner urban domains. If residents in outer metropolitan areas are denied access to transport improvements, open space, schools or other forms of infrastructure because the budget’s been spent downtown, that’s not what I call a formula for liveability.

Innovative and enterprising. Not sure how you could measure this, but I suspect the answer lies somewhere in the support for new ideas as opposed to old established formulas and traditions. Starts ups are the KPI of an innovative economy but how to encourage and facilitate more of this is something we are yet to learn. Unless the answer lies somewhere in the suggestions above?

There are many more suggestions I could add but none would promote the idea that liveability is best measured by some connection to high priced real estate in a limited number of areas enjoyed by a limited number of people. Cities are as much suburban as inner urban and measures of liveability need to recognise the broader measures of what makes life in cities most enjoyable, wherever you live and whatever your income or lifestyle.