2 Executive Summary
3 Settlement Strategy
The proposed Settlement Strategy addresses key issues for Australia’s future:
- Where and how Australians live in the next few decades
- How to connect them most effectively
- How to raise Australian innovation, international competitiveness and prosperity
- How to invest the next trillions of dollars, including infrastructure, for an extra 25m people
- How to avoid the next recession and lift GDP growth back to 3.5% pa. long-term
2 Executive Summary- An Australian Mega-region
Clearly, the Australian regions need more population growth and the major cities less. An Australian mega-region provides this, together with superior economic performance and lower cost of very large spending on infrastructure.
One definition of mega-region is a spatial and structural outcome of urban expansion, exploitation of comparative advantage and increasing international interaction. Another is a large network of metropolitan regions that share several or all the following: environment systems and topology, infrastructure systems, economic linkages, settlement and land-use patterns and common culture. Further, a distribution of a broader range of economic activity across a network of neighbouring separate cities than any one metropolis could hope to encompass. This allows firms located in the mega-region to capture a larger share of global value chains (business) than any individual city. Connecting the mega-region by High Speed Rail (HSR) and a shared identity are the keys. It has been noted that there are 40 mega-regions in the world which contribute 2/3 of global economic output, 90% of global innovation but cover only 18% of world population.
The key ingredients of a mega-region are:
1 Two or more growing metropolitan areas
2 A rapidly growing in-between zone
3 Multiple transport connections
4 Complementary growth patterns
5 A diversified regional economy
6 HSR connecting a diverse but shared workforce
Benefits of a mega-region are:
1 More diversified, less prone to down-turn; more robust
2 Businesses have access to more customers, partners and suppliers
3 Workers gain a wide range of job opportunities
4 Residents gain access to more entertainment, shops and recreation
5 People have access to a deeper housing market and range of prices
6 Maximum agglomeration for innovation
Key factors for success are:
1 Build new large, low cost regional cities attractive to settlers that generate greater innovation
2 Build one uniform HSR system connecting all new cities and major cities in the mega-region based
on world-leading Japanese technology and finance
3 Grow the Australian dominant global niche industry (e.g. CSL and Res-med)
4 Leadership ensures all pull together for Australia.
5 Establish a mega-region before the next economic crisis when large scale finance for it will evaporate
McKinsey Global Institute noted that China and India are consciously creating new mega-regions while American and European mega-regions are created by sprawl. Australian cities are sprawling enough. Conscious creation is a more attractive and productive approach.
It is envisaged that the mega-region would have six new regional cities of 1-3million people on the HSR line, two on either side of Melbourne, Sydney and Brisbane. They would be within about 100-200km and commuting would take on average 30 minutes to the next new city CBD and to the nearest major city CBD. As the six new cities reach 1-3m, another new city of 1-3m would be established on the HSR line. The mega-region could accommodate even more new cities on HSR and a large, growing population, as required.
As the cost of building housing, utilities and infrastructure to accommodate a growing population in the country is around half the cost of building for the same growth in major cities, the cost of the population increase in the regions of a mega-region would be less than the same increase spread over only three growing poly-centric mega-cities.
The total cost of the connecting transport infrastructure (around $200 billion), that is, the HSR, plus an adjacent dedicated, dual track fast freight rail (FFR) to serve all cities and building 400,000 inner-city dwellings above the tracks in the three main cities would raise $200b and pay for itself in the 10-year construction period when the dwellings would be sold.
Much of the large cost savings on the mega-region infrastructure would be invested in more R&D for greater innovation, productivity, international competitiveness and prosperity. More everyday and technical jobs would be created, especially in the regions.
An Australian corridor mega-region on the HSR line would include, in time, Adelaide, Geelong, Melbourne, Hobart (connected by air and sea), Canberra, Wollongong, Sydney, Newcastle, Gold Coast, Brisbane, and Sunshine Coast, together with six new cities of 1-3m, one to the west of Geelong, one to the east of Melbourne in Gippsland, one to the south of Sydney and one to the north of Newcastle, one on the Gold Coast and one on the Sunshine Coast.
The mega-region, through greater cooperation, collaboration and connectivity, would generate innovation and superior performance, improved productivity, and international competitiveness with this superior settlement strategy for a growing population. It would forestall the next recession and raise economic growth. It would end housing unaffordability and significantly combat climate change through reduced air and land transport emissions. It would curtail congestion and end demands for lower immigration. It would greatly improve liveability, prosperity and wellbeing. It is the practical, achievable and most beneficial way forward for Australia. It should be adopted soon.
3 Settlement Strategy
Clearly, Australia has been built by immigration. It has grown to a population of 25m. The prospects are for another 25m people in the next 50 years and possibly a further 25m thereafter. While a population policy about how many immigrants is controversial, a settlement strategy about where and how people live is less so, but very necessary to guide multiple decisions, to ensure consensus and promote pulling together, not apart.
There is considerable unease about the rapid immigration of the 10 years since the GFC and projections of Sydney and Melbourne doubling to +8m. It indicates that people want to retain their lifestyle and not be swamped by immigration. So far, the only two options offered have been high densification, which people largely reject, or lower immigration, though government relies on high immigration for at least 1% of the long-term average 2.3% pa growth of real GDP. There is a third: an Australian mega-region.
The authorities plan for Sydney and Melbourne to become poly-centric mega-cities of 8m-10m. It has been shown in China that this ends in fading innovation. China is leading the way by changing policy from mega-cities to mega-regions with clusters of large cities around a major city whose CBDs are connected by High Speed Rail (HSR) to turbocharge innovation rather than let it continue to fade.
Australia can emulate China and create a mega-region down the east coast incorporating new greenfield cities and existing major cities along the HSR line, connecting a chain of critical mass CBDs effectively and rapidly in 60 minutes or less, which cannot be done by traditional rail, road or air.
Greater innovation in the mega-region would lead to superior economic performance, higher international competitiveness, broader more liveable settlement, and greater prosperity and wellbeing.
In European countries population increased long-term and city densification was an inevitable way of life. It has also led to excellent public transport systems developed in these small densified city areas that maximise limited land for cropping, often over 100 years like London. Australia is not constrained by size. It has developed rather like America, which is the same size. City sprawl has occurred based on a car orientation and generally poor public transport. America is different to Australia. Both Melbourne and Sydney at 5m are larger than the second largest US city, LA at 4m, though not US metropolitan populations. Australia is troubled by American-like sprawl and relatively poor public transport systems compared with compact European cities, but it has the highest liveability in the world.
High European style density is planned for this large country with plenty of space. It is not the most effective or desirable solution to a much higher rate of population growth than that to be experienced in most advanced countries, particularly Europe and America. There is a better settlement strategy.
In the 30 years from 1988 to 2018, Melbourne’s population grew two thirds from 3m to 5m, and Sydney likewise. Immigration was the main source, especially after the GFC. Wages grew enormously, and Australia’s international competitiveness declined. The manufacturing industry contracted, and the car manufacturing industry closed, because it could not sustain high wages in a mass, low cost global industries. The finance industry grew as it was able to pass on high salaries. The construction industry grew to accommodate finance workforce expansion, immigrants and international students particularly in CBDs. It was able to pass on high wage increases in fixed assets, ultimately in mortgages and rents spread over several decades. The number of Australian unionists shrank substantially and concentrated in industries where there was no international competition and little constraint on pay: the public service, health, education, utilities, transport and construction. Welfare increased substantially to the point where, for instance, some 50% pay no net tax. The mining boom enabled increased welfare. It has been less easy to fund after the boom.
GDP growth slowed from an average of about 3.5% pa pre-GFC to around 2.3% pa post-GFC. High welfare has been maintained largely by government deficits funded by growing government debt. This is not sustainable long-term, unless GDP growth returns to 3.5 % pa on average long-term.
Government regulation has increased greatly. Its direct costs are reflected in larger expenditure on higher public service wages for the growing staff of government regulators.
Higher wages, higher welfare and higher regulation costs have diverted government expenditure away from the infrastructure needed to keep up with high immigration and population growth. Australia is now in a position of increasing infrastructure spending to catch up, especially on public transport in major cities, unlike long established cities overseas with good public transport systems and slow population growth. Some European countries face population contraction like Japan.
This has led in Australia to strains of greater road congestion and higher use of packed limited public transport to access CBDs. Melbourne and Sydney CBDs have become centres of high-rise flats tending to crowd out high-rise offices (looking forward over the next 50 years), which raised office building costs and rents and pushed office building into the suburbs. Low interest rates since the GFC have stimulated building causing higher prices. Residential building has mushroomed in lower cost fringe suburbs ill served by public transport, adding to congestion and difficulty in reaching CBD jobs.
The response to this is the movement of offices and jobs to suburban hubs with lower cost office buildings near where staff live to avoid long uncomfortable, high cost commutes. Generally, the hubs are connected to the CBD at railway stations. However, the hubs are not conveniently connected to one another. They do not have critical mass of people meeting readily face-to-face as in CBDs. The (critical) mass of major CBDs is less than it would have been without the hubs.
The core of present settlement policy is for Melbourne and Sydney to expand their populations from 5m now to a highly densified 8m like London. There is strong pressure for greater sustainability to reduce greenhouse gases; formation of “20-minute neighbourhoods” to reduce health costs through more walking and higher densification; and “30-minute cities” with lower commuting time; and concentrating on bipolar poly-centric mega-cities of 8m.
There is an implied assumption in policy planning that growth of Melbourne and Sydney will stop at 8m. This is highly unlikely, though they would be certainly much less, if the alternative settlement strategy proposed here is adopted. Indeed, their populations may be limited to around 6m with some densification, but without the huge disruption of mass densification planned at present. If this policy continues, their populations may expand to 10-15-20m by 2100 with undesirable consequences. Their size may be self-limiting as liveability, innovation and prosperity decline.
Sustainability is desirable to mitigate climate change. Smart digital technology means densifying new building in the cities of 8m at the great intangible cost of reduced spatial liveability. There is support for greater sustainability, but no obvious public support for high overall densification. The public is largely unaware of the high densification plans and their consequences, but highly conscious of present congestion, the difficulties of commuting and loss of suburban spatial liveability so far.
Clearly, the many “20-minute neighbourhoods” were unavoidable in densified European cities owing to the lack of space and encroachment on limited food growing land, unlike Australia. Is there any evidence in the London of 8m now that health is better in a high-density city with abundant walkable “20-minute neighbourhoods” and an excellent public transport system, though still extremely high road congestion? Are government health costs per capita lower? Probably not, unless service is poorer.
‘Poly-centric mega-cities’ is the present conventional wisdom supporting policy. It is ineffective in cities with poor public transport because it reduces critical mass of face-to-face office meetings and informal meetings, or “serendipity collisions”, in the CBD by taking people from jobs in the CBD to small suburban hubs well below critical mass. Consequently, innovation fades, as experienced in China.
Present policy creates imbalance in major cities between sustainability, health costs and innovation. The balance is overweight in the former two at the expense of the later. It upsets performance of innovation, the core of creating greater international competitiveness in a country with high wages and high welfare that it wishes to preserve. Innovation is especially valuable as it can improve both sustainability and health while reducing their costs.
Authorities plan to develop three adjacent cities in Sydney with a total population of 8m. In Melbourne, three scenarios have been proposed: high-rise densification of inner-city suburbs; medium-rise densification of all suburbs; or a new city in western Melbourne. The second seems to be the Victorian Government’s chosen strategy for 8m. It plans to build an underground railway circling the middle suburbs costing $50b over 30 years. A commentator approved saying that it would create 15 mini-CBDs at the stations. This would disperse critical mass of meetings and collisions even further and innovation would fade more. It is not necessary, is very costly and is too late. This somewhat better public transport connectivity would not correct for sub-critical masses. Immigrants to Australia are endeavouring to escape high density and poorer prospects at home. Australia would be less attractive.
There are proposals to upgrade traditional rail to fast rail (Medium Speed Rail, MSR) to connect Victorian country towns and small cities of less than 250,000 people faster to the CBD and double their populations. The problem is lack of water supply inland, only enough for a small increase in populations. The total increase will have little effect on offsetting Melbourne’s rapid population increase to +8m.
There is early indication of country peoples’ unease at having their lifestyle swamped by doubling their population and becoming a “little Melbourne” or by development of an adjacent city of 200,000 on HSR like that proposed for far smaller Shepparton.
Parliamentary Committee study
The Report of the House of Representatives Standing Committee on Infrastructure, Transport and Cities, chaired by Mr John Alexander OAM MP, entitled “Building Up and Moving Out”, September 2018, Canberra, is a study of and a recommended settlement strategy for Australia. It is an excellent Report. It canvasses and collects the views of many experts and based on these makes 37 recommendations to government and business. The Report began:
Australia is undergoing rapid change. Population growth, urbanisation, the aging of the population and transformation of the economy towards service and knowledge-based industries are causing profound changes in the urban and regional landscape.
The scope and complexity of the challenges of growth require a reconfiguration of our understanding of our cities and their relationships with surrounding regions. Managing these challenges requires a national vision- a national plan of settlement. Report p ix
It was concluded that agglomeration and poly-centric cities are important drivers of city development.
The Committee recommends that the Australian Government in conjunction with State and Territory Governments, pursues a system of urban planning… This planning must incorporate the reality of agglomeration and the need for connectivity and densification, with a focus on the development of polycentric urban forms. Report p xxi
The Report recommended three connected, cascading levels of hub and spoke development: major city, regional city and country town.
The Committee recommends that the Australian Government develop a framework for the development of cities and regions outside the major metropolitan centres, based on the hub-and-spoke concept, within the context of a national planning framework. Report p xxiv
The Report recommended MSR to connect these centres and HSR to connect major cities.
The Committee recommends, that as part of the national plan of settlement, the Australian Government, in conjunction with State and Territory Governments, undertake the development of transport networks which allow for fast transit between cities and regions, within cities and regions, with a view to developing a more sustainable pattern of settlement based on the principle of accessibility at a local, regional and national level. The Committee further recommends that the development of a fast rail or high speed rail network connecting the principle urban centres along the east coast of Australia be given priority, with a view to opening up the surrounding regions to urban development. Report p xxv
The Report acknowledged the priority of a national freight system.
Give priority to the development of a national freight network, with a view to creating a strong system of multimodal integration base on dedicated freight nodes, prioritising the movement of freight by rail, separating freight and passenger movements where possible, and develop dedicated fast-rail and high-speed-rail passenger rail lines to relieve the congestion of existing networks. Report p xxvii
Aspects of the Report
CSIRO stated that ’if urban sprawl remains a default setting, Sydney and Melbourne risk becoming megacities (over 10m people), negatively impacting liveability (Weller and Bolleter 2013)’. Report p 21
Professor Barbara Norman noted that ‘the negative social, economic and environmental externalities of continuing the urban sprawl of Sydney and Melbourne will only increase at significant national cost to productivity, environmental degradation and social isolation on the urban fringe’. She urged new approaches to urban settlement, stating:
Exploring alternative scenarios such as investing in larger regional centres and/or examining new possibilities of medium sized cities will require an integrated approach considering all elements of sustainability (social, economic and environmental). Report p 21
Agglomeration refers to ‘a cluster of activities and the innovation and specialisation that stems from this’:
As more businesses and expertise locate in close proximity of one another it allows for increased collaboration, a reduction of costs when exchanging goods and services and greater labour specialisation as people can move more easily between jobs. Report p 47
Polycentricity, the creation of cities with more than one centre- a city of cities -was another concept proposed as a solution to the pattern of settlement. Report p 58
Professor Sue Halliday labelled the concept the ‘city of cities’. She noted that ‘sprawling cities, as Sydney and Melbourne have become, are the most highly unsustainable cities we have’. Report p 59
Professor Peter Newman … stressed the role of technology in reshaping the pattern of settlement, using high-speed communications to structure work in any number of ways, while fast rail allowed for redistribution of population according to the Marchetti constant- the 30-minute commute. He stated:
‘For 35 years I have been a large fan of the role that high-speed rail could take in the settlement shaping of Australia and helping attract population into those centres’. Report p 94
‘Both in this inquiry and in its previous inquiry, the Committee was presented with a number of potential opportunities for high speed rail to open up the development of regions around Sydney, Melbourne and Brisbane, making those cities more accessible to the regions for the purposes of employment and access to services, while in turn making regions more accessible for housing, recreation and employment.’ The Committee concluded ‘Ultimately, with the implementation of successful regional development policies … high speed rail would lead to the creation of employment opportunities and lifestyle options. This is the model that must be pursued’. Report p103
Associate Professor Hussein Dia observed that ‘one of the keys running throughout the recent initiatives for reforming urban mobility is a recognition that past (and still current) practices in urban and transport planning are fundamental causes of the transport problems we have today’. He noted that ‘the policies and practices that we adopted in the past are now having widespread negative effects on urban form, liveability, health and economic productivity.’ He argued that it was ‘important to commit to the premise that urban transport policies and practices can be transformed in a sustainable and socially equitable direction for the benefit of future generations’, but that achieving this required a ‘conceptual leap and renewed thinking of how we address the contemporary challenges facing urban mobility and accessibility in our cities’. Report p 155
CSIRO asserted that ‘urban research providers have a pivotal role to play in translation of urban science and technology into the innovation products and services that will help benefit the liveability, sustainability and resilience of existing and new cites in Australia’. Report p 294
CSIRO suggested that ‘as we retrofit our existing cities and build new ones, we should seize the opportunity to create innovative businesses, products and services that position Australia as a global leader in city building’. Report p305
The Report did not address three major factors: the new Chinese concept; a mega-region in Australia; and large new regional cities on HSR for greater population distribution in the mega-region. The Report did not recognise the conflict between agglomeration and the poly-centricity it favoured. Agglomeration is aimed at concentrating a critical mass of people face-to-face in CBDs to generate more business efficiency and innovation. Poly-centricity dissipates people in small, dispersed, sub-critical agglomerations in poorly connected suburban office areas that generate less innovation.
The Chinese concept for increasing innovation follows the realisation that three new high-rise office buildings in the Shanghai CBD were only 30% occupied after several years. It turned out that commuting to the CBD was too much for staff, so businesses shifted their offices to suburban hubs nearer to where staff lived. The problem was that they were sub-critical mass in size and unconnected to other hubs. As a result, poly-centric mega-cities’ innovation faded. China’s new concept, which leads the world, is to consciously develop mega-regions of cities clustered around a major city and connected by HSR. This brings a critical mass of people together face-to-face in their home CBDs and particularly in the major city CBD to generate more innovation.
China has 19 mega-regions. (See “The Economist”, 23 June 2018.) It is dedicated to becoming a world leader in innovation and technology. President Xi is personally supervising development of a new city 120km from the Beijing hub by HSR to be a high-tech spoke in the Beijing mega-region.
It is becoming clear that rate of innovation in a city is a function of population size, good public transport system and education leading to a critical mass of face-to-face “serendipity collisions” of experts, experienced staff and entrepreneurs. While the combinations are complex and there are many diverse examples, it is considered that the most accommodating city size with excellent public transport and the well-educated may be a 30-minute city of 3m. Melbourne and Sydney are now 5m. They are larger than the second biggest cities in Britain and America. The bipolar Australian cities taken together are larger than the single 8m cities of London and New York. Education is good, but transport is poor.
Australia has the second busiest air route in the world between bipolar Melbourne and Sydney, 9.1m passengers pa, busier than the busiest domestic American and British air routes. Australians have a very high propensity to travel. A major part of Sydney/Melbourne flights both ways is business travel for face-to-face meetings. The technology of fax, phone, mobile, internet, and videoconference is not enough. Probably businesspeople in London and New York seldom travel into their regions for meetings. They require regional people to come to them in the CBDs of the 8m commercial centre of their country, so there is no single busy air route, and a lot of rail and road travel respectively.
London and New York lead the world in innovation. Melbourne and Sydney hit below their weight on innovation individually, but at 5m each, when combined their total innovation is far more significant. The problem is that both are becoming poly-centric as their relatively poor public transport systems are not keeping up with population growth now, never mind when they grow to +8m (+16m in total). Their rate of innovation is in danger, even more so if they grow to 8-16m each (developing countries’ city scale). Keeping welfare and wages high in low growth leaves few funds for transport infrastructure.
The better settlement strategy solution is to consciously harness the power of high immigration in an Australian mega-region of innovation, superior performance and international competitiveness, rather than allow sprawl or high densification and poor public transport to diminish innovation, prosperity and liveability. The aim is to settle 13.5m of the 25m population increase over the next decades in the regions in six new cities of up to 3m with excellent education and internal public transport from the start, located on HSR between Melbourne, Sydney and Brisbane. There would be rapid HSR connections CBD to CBD for critical mass of meetings. This would relieve Sydney and Melbourne of excessive growth. As the new cities reach 3m, more new cities of up to 3m on HSR would be established to avoid swamping Sydney and Melbourne. Australia should form its own special cities instead of regarding London and New York as models. It should create its version of the leading Chinese concept: an Australian mega-region that would raise GDP growth back to 3.5% pa to recover previous prosperity.
Mr Steve Bracks, a former Labor Premier of Victoria, and Mr Patrick McNamara, a former Coalition Deputy Premier, said in their joint article “Growth in Our Regions is the Key to Success”, ‘Our view is that a policy should aim to have 1 million to 1.7million people (up to half of the 3.4 million people projected to come to Melbourne) to be settled in regional Victoria by 2050. That target is chosen because it is big enough to allow for population at existing or new regional centres to reach critical mass to support a local jobs market.’ (The Sun Herald, 16.8.18). (It would have to be mainly in new cities.)
An Australian mega-region
The most powerful new concept for Australian settlement is that of a corridor mega-region bringing together all cities along the east coast by HSR. It would connect Adelaide, a new city (1-3m) west of Geelong, Geelong, Melbourne, a new city (1-3m) east of Melbourne in Gippsland, Canberra, a new city (1-3m) south of Sydney, Wollongong, Sydney, Newcastle, a new city (1-3m) north of Newcastle, a new city (to 1m) on the Gold Coast, Brisbane, a new city (to 1m) on the Sunshine Coast. Hobart would be connected by air and sea as now. Regional towns in Victoria, NSW and Queensland would be connected by MSR. Cities further north in Queensland would be connected by air as now. All existing major airports and new cities’ airports would be connected by HSR. Fast Freight Rail (FFR) would connect all cities on HSR and major ports. High speed communications would connect all cities.
There would be 6 new city centres of innovation, plus Adelaide, Melbourne, Sydney, Brisbane, Canberra, Wollongong, Newcastle and Hobart, a combined total of 14 closely connected and cooperative, together seriously productive innovation centres, compared to 7 separate ones at present.
The HSR route is not the same as the inland route via Albury prescribed in the Government 2013 HSR Report. It includes Adelaide and goes via Gippsland to Canberra. It avoids expensive tunnels on the 2013 route. It creates property value. It includes connecting with major airports that were excluded in the 2013 plan, particularly connecting Tullamarine and Badgerys Creek airports by standard gauge as part of the HSR project and cost. It excludes the 2013 customer unfriendly spur lines to Canberra and Gold Coast. This cost saving is applied to the east Gippsland section of the new route along Cann River valley.
Mr Bob Brown, former leader of the Green Party, said at an HSR conference in Sydney that HSR is so important to reducing Australian emissions of trucks and planes some environmental damage during construction was acceptable, if it was minimised. This would apply on the Cann River section.
The route takes this direction for good reason. First, it favours the new city of up to 3m in Gippsland near the coast and Sale airport rather than one 300km inland at Albury/Wodonga, which is highly unlikely to attract 1-3m people as 80% of Australians prefer to live near the sea. Second, there is not enough water supply for 1-3m cities inland. Cost of piped water inland from desalination of sea water on this scale is prohibitive. Third, by going east and west from Melbourne CBD instead of north enables a large part of the HSR project cost to be recovered before construction is completed. It would build the Melbourne part of the 400,000 dwellings for sale by the project in the 30km high property value section of Melbourne to Dandenong instead of the shorter, lower value city section of the northern route. The total sales would pay for the whole HSR project and reduce housing affordability in each major city.
The mega-region of many closely connected CBDs and critical masses for meetings would mean everyone pulling together in a common endeavour to increase international competitiveness and to achieve superior performance. It would lift prosperity and wellbeing to a new higher level while absorbing high immigration for a growing, less congested, higher quality of life for Australia. (Please see “An Australian Mega-region” on www.veryfasttrain.com.au )
It has been proposed that small towns and cities in the regions should be expanded by taking more immigrants, connected to CBDs by fast trains (MSR). There are several problems: insufficient water supply for much population increase, residents’ concerns, and small increases in country population having little impact on slowing major city population increases. Many of the towns to expand are inland and limited by water. There are reservations about recycled water with significant amounts of illicit drugs from human waste. Ms Nichola Philips, resident of a country town, wrote in her article “My Town a Mini Melbourne? Please No” (The Age, 1.10.18), that people are concerned about their lifestyle should their town double its population or more. She feared a “little Melbourne” developing. She probably spoke for many.
Even if regional towns took another 0.5m people altogether in Victoria, it would have little impact on 3m more in Melbourne in coming decades, if it were limited to a population of just 8m. It may be much more. Small capital cities of Adelaide and Hobart are less attractive to immigrants than Sydney or Melbourne, and unlike Perth and Brisbane during the mining boom which made many new jobs.
The hub and spoke method covered in the Report should be used more effectively at each level in the mega-region. Major cities would be the hub for new large cities clustered on HSR as spokes. These new cities would be hubs for MSR to other regional towns spokes. These towns would be hubs for the farming community around them, as they are now. The new greenfield cities would enhance innovation most and provide closer health and city services for the dispersed surrounding regional populations.
It was noted in the Report that there is a trend in Australia for a decline in vertically integrated companies, such as in manufacturing, as they focus on their core specialities and contract out services for the rest, thereby disconnecting their value chains. This creates more specialisation in supply and service firms, more customers and more opportunities for specialisation, innovation and cooperation. It creates a need for even more market information and coordination of multiplying inter-relationships and more “collisions” to improve value chains in the bigger, well-connected market of the mega-region.
It has been noted that Australia has some successful dominant global niche companies. (See “An Australian Mega-region”.) The mega-region would build on them and create more. They are not in mass, low cost global markets. They are in global markets that require specialised products and are willing to pay highly for them; industries that suit Australia’s high wage and high welfare and attract innovation.
Professor John Shine, outgoing Chairman of CSL, a large Australian dominant global niche company, supported this approach in his article “Biotechs Urged to Target Niche Areas” (The Australian, 17.10.18). Mr Stephen Tomisich, Chairman and co-founder of Trajan Scientific and Medical, a Melbourne company that exports components for advanced measurement equipment to the US, Asia and Europe, said that not all businesses wanted to export. For those that did, he had two pieces of advice. First, it is better to identify and dominate a niche market than capture a small slice of a big market. Second, to understand a market, you must go there to establish a presence on the ground. (The Australian, 29.10.18)
There is a reliance by planners in Australia on driverless electric vehicles combined with ride sharing to reduce congestion in the planned highly densified cities of 8m. Their introduction may be protracted because of the many difficulties. The cost of their batteries may decline, but these vehicles are far more expensive overall than petrol engine cars to produce at present. There are many behavioural matters to overcome on a mass scale before they are widely adopted. Insurance and hacking are serious issues.
Densification will do away with garages on ¼ acre blocks, so competing vehicles will be operating on roads 24/7 waiting to pick up nearby passengers quickly, making ownership of cars and garages unnecessary, but creating autonomous congestion. Although cars are garaged/parked 94% of the time, most passenger demand is for only 6% of the time, particularly in compact CBD areas. Vehicles will compete with cheap, autonomous, trackless, rubber-tyred, battery powered trams in new cities. Driverless 4-seat electric vehicles cannot be relied on to solve congestion and commuting in cities of 8m.
Interstate HSR is not the reason for a mega-region. Population increase is the driving force. HSR is an indispensable service, connecting new and old cities in a corridor mega-region along the east coast of Australia. HSR is the next increase in rail scale as seen in many countries’ mega-regions. It provides very fast train city connections over 2-300km CBD to CBD in under an hour, not possible by MSR, road or air, or from major city fringes. It is advanced, here now, safe, proven, low risk and financeable. Dedicated electric FFR would serve all new and old cities along the HSR route and connect to ports. Freight is projected to triple in the next few decades. HSR would connect to all major airports in the mega-region.
It may be tempting, but unwise to defer HSR until after an agreed settlement strategy and population policy are eventually determined. Its construction should begin immediately, after a feasibility study confirms its viability, huge productivity, and great robustness. It has a high cost/benefit ratio, internal and external. It would cause less disruption than demolishing some 1.5m homes for higher suburban densification. It should be built now to forestall further high population increase in the two major cities: 3 to 5m each. It would also forestall effects of the next recession by generating further growth from its large investment and more job. It would find finance now, but not in the next world recession, which may be imminent. Interest rates are historically low now, but probably will be much higher later.
In 2017, Japan contracted to build a 550km HSR for India as part of its new 1,500km corridor mega-region with a long-term loan on 70% of the cost at an interest rate of an extremely low 0.1% pa. No doubt, at present Australia could raise a very low interest rate loan for its HSR project from Japan close to, but probably not quite 0.1%.
HSR, FFR and the 400,000 dwellings built above the tracks in trenches in the inner-city suburbs of Melbourne, Sydney and Brisbane would cost a total of about $200b. Sale of 400,000 dwellings at an average of price of $500,000 would raise $200b. The project would pay for itself during its 10 years of construction. Fares would be halved since construction cost would not have to be recovered from higher fares over 40 years of operation as is traditional railway practice. Commuting would be low cost and profitable. The $200b fully self-funded cost of HSR is a relatively small part of some $1-2trilion cost of housing +13.5m more people in the country or costing perhaps $2-4trilion in the major cities.
India built the Comcan single track traditional railway along the edge of its rugged west coast from Mumbai to Mangalore in the 1990s. It was 475 miles long, about the distance between Sydney and Melbourne, through an area of lakes and mountains subject to regular, very heavy monsoon rains. It had 2,000 bridges, 94 tunnels and negotiated with 40,000 landowners. It was completed in 7 years. It should be possible for Australia to build its HSR in 10 years through less challenging conditions.
Building HSR and new cities would create many jobs where they are needed in the regions. It would really stimulate investment, development of a mega-region and innovation, the future of Australia.
Traditional rail may be upgraded to MSR to regional towns quickly during the period to construct HSR to take off some of the population pressure on major cities in that time. The attractive new cities on HSR with short commutes to CBDs would take up most of population regionalisation as they are constructed.
Other transport and urbanisation
This innovative approach to HSR can be extended to almost all suburban rail to provide additional, more convenient, inner-city housing. A trench would be cut next to existing suburban rail tracks. New higher capacity tracks and stations would be built in the trench. Many new dwellings, up to 4 stories, would be built over the trenches for their full length and sold to fully pay for improved suburban rail and housing. When ready, suburban trains would be switched to the new tracks without interruption to services. Dwellings would be within 20 minutes walking distance of stations and shops. Residents would have ready access to the CBD by public transport. It would avoid more people building on city fringes.
Around 1m inner-city dwellings could house about +2m people over the three major cities. Some of the people living in inconvenient fringe suburbs would move to these new convenient inner-city dwellings. Others would move to new regional cities for shorter, cheaper commutes to the CBD, a better lifestyle and amenities for themselves and their children, and to gain cheaper, more affordable country living. People are already moving to regional towns with longer commutes. Immigrants would be attracted.
Apparent disappearance of the suburban railways in trenches would raise the value of nearby property, which previously had been depressed by the usual 10% for proximity to ground level railway lines. Land tax would capture some of this increased value. It is opposite to lower cost “Skyrail”, the elevation of which saves government expenditure (never recovered in fares), but its sight and sound depresses nearby property values below the usual 10%, and as it is highly visible and noisy, spreads the 10% loss of value further out. Property owners are not compensated for their loss, totalling billions of dollars. It adds to depressed areas. Some private owners are forced to suffer loss to subsidise other less equitable, less desirable, more affordable fringe housing. “Skyrail” level-crossing removal just pushes congestion further down the road. It does not reduce the number of vehicles on the city roads.
Drivers of mega-region
There are many drivers that make for superior mega-region performance. A conscious decision to form the mega-region sets the stage, the imperatives and the goals. It instils a desire to pull together in the same direction, a sense of unity of purpose. It creates easier access to more critical masses for more “serendipity collisions”. It concentrates effort on achieving greater innovation. It directs training and education towards innovation. It creates a deeper, broader, more connected job market. It encourages higher skills, expertise and labour specialisation. It increases access to a broader and deeper housing market and more affordable housing. It encourages leading tech companies to locate in new cities.
Each city contributes its own complimentary comparative advantages, strengths and assets. They share identity in the mega-region. Growth of congestion ceases. Extension of commuting time ceases.
Cooperation, collaboration and coordination bring together and make available more specialised supplier, customer and service firms in the many industries’ value chains for more innovation, improved results and increased international competitiveness. It gathers and communicates more information to form closer links in the chains and create more, better, stronger chains. It focuses on Australia’s strength and comparative advantage in dominant global niche businesses, builds on them and encourages development of more of them. The leaders mentor the new.
The “different rail gauges” in laws and regulations are removed and replaced with world best practice that suits Australia, supports and grows the mega-region. The mega-region ensures high immigration of skilled and expert people who enhance Australian innovation and entrepreneurship, while adding to annual GDP growth. It maintains high wages, high welfare and community spirit, especially in regions.
Construction of attractive new cities in the country is lower cost than in major cities. A large part of the huge cost savings of building government services for new cities in regions would be invested in R&D to turbocharge greater innovation in all the cities. The settlement strategy would agglomerate the agglomerations and ensure ready, rapid connections for collisions and extraordinarily better innovation.
Professor Saskia Sassen, recorded in Ge lookahead (The Economist 6.6.14), saw that the rise of mega-regions as the distribution of a broader range of economic activities across a network of neighbouring cities than any one metropolis could hope to encompass. This allows firms located in a mega-region to capture a larger share of global value chains than in any individual city.
The mega-region would meet the critical criteria for a successful settlement strategy. First, it can readily accommodate all the immigration and population growth over the next century. Calls for slower immigration would disappear. Second, most of the population increase, immigrants and residents, would be settled in new cities connected to major cities, almost ending their congestion growth. Third, rapid, high cost growth of population of Sydney and Melbourne would cease. It is unsustainable, undesirable and unnecessary. Fourth, settling population in new, greenfield cities would be at far less cost, possibly half that in major cities. Fifth, the greenfield settlements would be smarter, more sustainable and more highly innovative.
In consequence, it would end housing unaffordability, significantly combat climate change. It would greatly improve liveability and wellbeing. The mega-region would generate superior performance, productivity and prosperity with this superior settlement strategy. It is the bipartisan future.
Settlement strategy, and population policy, should be designed to best suit the establishment of an Australian mega-region. It should be a conscious policy to develop and enhance a superior performance mega-region, not the result of sprawl and the decline that goes with it. The policy should support generation of much greater innovation in the mega-region, not the poly-centric mega-cities concept that loses growth of innovation. The mega-region would meet the criteria for a superior settlement strategy. The drivers of the mega-region would galvanise Australian prosperity and wellbeing.
The aim of the settlement strategy, or national plan of settlement, is to settle 13.5m of the next 25m in six new cities of 1-3m in the regions on the HSR line in a mega-region of cascading, interconnected hubs and spokes that increase innovation, markets, jobs, opportunity, prosperity and wellbeing.
Poly-centricity should be replaced by the ‘new cities clustered around a major city connected by HSR’ mega-region concept pioneered in China. HSR should be started immediately without delay to begin implementing this optimum settlement strategy. It would cater for expansion of the population comfortably in a series of new, lower cost, regional cities on the HSR line growing from 25m to 75m people over the rest of the century, if necessary, without over-crowding or over-densifying the major cities or country towns. Overall, it would reduce congestion and increase accessibility.
Building the mega-region and HSR would return Australia to 3.5% pa. average economic growth long-term. It would stimulate private investment and further growth. It would reduce government deficit and debt. It would pay for continued high wages and high welfare, supported by development of many more internationally competitive, dominant global niche businesses. HSR project would pay for itself in its construction period.
New Victorian proposals for suburban and country MSR would be great for the Melbourne of 3m, just acceptable for 5m (in the short term while HSR is being built), but certainly not for the planned +8m where it would have little effect. A mega-region and connection of major cities and airports by national standard gauge HSR are not mentioned in the State plans.
The east coast mega-region and HSR would save Melbourne, the other cities and country towns from over-population and, by multiplying new cities on HSR, would accommodate any sized Australian population. It would end fears of country folk of their town and lifestyle being swamped.
The new regional cities would have low cost, new public transport compared to high cost retro-building in major cities. It would be designed and planned from the start to best connect people for innovation and built gradually before their populations grow, not after. It would pay for itself during construction. New cities in the country are lower cost to build than their high cost equivalent in existing major cities.
New regional cities would be designed to be attractive and innovative for new settlers, whether immigrants or existing residents. The cities would be smart, sustainable and innovative in a three-way balance that, if anything, should favour innovation which would enhance the smart and sustainable.
MSR should be used to settle some people in regions prior to completion of HSR and the beginning of new regional cities’ growth. Low cost public transport systems should be designed and built for new greenfield cities on HSR ahead of population growth (not after like Melbourne and Sydney today) to prevent congestion and to ensure 30-minute cities are provided for up to 3m people. (Please see “New Innovative Cities in an Australian Mega-region” on www.veryfasttrain.com.au )
Standard gauge rail would be the base for the one uniform east coast HSR project to avoid the problem of “different state gauges” and different signalling and safety matters of partial, state based HSR. The “different railway gauge” problem in many state laws and regulations would be modified for best world practice to support mega-region superior performance and international competitiveness.
HSR should be initiated immediately as a signal of commitment to the Australian mega-region and to superior performance. The mega-region would pull people and business together in the common direction rather than being subject to excessive state orientation, “different rail gauges” and state competition, so that attention is focused on Australia’s innovation, international competition, comparative advantage and greater prosperity.
Australia should design its own special settlement strategy and cities, suitable to Australian circumstances and based on best world practice, instead of adopting out of date and inappropriate models that try to make up for poor public transport. It should retain and celebrate its special world leading suburban spatial liveability. It should join the most prosperous 10 world leading mega-regions.
The mega-region offers a bipartisan vision and strategy for the future of Australia and the way forward. It offers a new, more cooperative, mutually supportive approach to federal/state relations with a common Australian purpose that would bring governments together.
The main issue for Australia’s future becomes: Can Federal leaders adopt this superior settlement strategy and engage with State leaders to take up the opportunity to play for Australia in the highest world league as part of a prosperous mega-region, not just for their own states in less prosperous, competing mega-cities?
Peter J Knight B. Com (Hons) (Melb), MBA (Melb)
Advisor on the Australian mega-region
Recently Founder, Chairman and CEO, The CEO Circle Pty Ltd
Former BHP Member of the Advisory Board, the original VFT Consortium
Chairman, The VFT 2 Project
Former Manager Corporate Planning, BHP H.O.
Former Economist, RBA