LUKE FRASER. Australia is not “full” but lazy infrastructure policy strengthens the notionMar 19, 2018
The “Australia is full” immigration argument suggests we have our infrastructure planning and investment settings quite wrong.
Debate is now re-emerging about the need for Australia to consider new cities.
Before we let the ‘infrastructure rent-seekers and lobbyists[i]’ lead this debate (a perilous choice), there is a better model for Australia’s governments to consider by looking to how the Nordic countries are managing to pursue more generous refugee immigration policies while spending far less on transport infrastructure than Australia.
Are the Nordic nations “full”? I would propose that their transport and development model has been a vital part of a broader policy approach that has allowed Sweden, Norway, Denmark, Finland and Iceland to recognise and resettle 302,000 refugees in the decade 2006-2015 – more than double the amount of Australia (139,000) over the same period[ii]. This has great value. To quote the Parliamentary Library:
‘Humanitarian entrants have the youngest age structure of all migrants groups and the largest proportion of dependent-age children…this helps to counteract the effects of an ageing Australian population, by adding to the supply of working age people. Further, humanitarian entrants have begun to contribute to the revival of regional populations and economies, as they are increasingly settling in regional Australia’.[iii]
Australians should not be strong-armed by politicians into a position where Sydney and Melbourne’s surging populations, congestion and white elephant transport failures become justifications for abandoning the moral, economic and demographic imperatives of increased immigration – especially humanitarian immigration, which has been at the heart of our nation’s success story.
We can help avoid being duped into bad immigration choices by producing better transport and settlement policy.
(They’re bigger than we are)
A bucket of cold water for those who counter that Sweden, Norway, Denmark, Finland and Iceland aren’t big enough to bear comparison with G20 member Australia and its challenges: the Nordic economies combined were worth $US1.45 trillion dollars in 2016 – as big as South Korea and considerably larger than Australia[iv].
The Nordics are already highly-integrated economically, culturally and in infrastructure terms. Their land mass, excluding Greenland, is close to the size of New South Wales, Victoria and Tasmania combined. Then there is the Nordic population of almost 27 million – roughly Australia and New Zealand’s combined.
This leaves aside other important motivations for comparing ourselves with the Nordics, such as income inequality: while it is not the final measure of societal equity, all the Nordics presented consistently better income distribution results than Australia over the past decade[v]. Their approach to infrastructure and geospatial settlement is also quite different. This probably helps their populations avoid the worst excesses of megacity sprawl and project overspending which can embolden the “we’re full” sentiment.
Exhibit A in the “Australia is full” case is the congested, sprawling state of our two major cities, Melbourne and Sydney; far outer suburbs sprouting up with little to no supporting transport infrastructure present ideal political conditions for whipping up an anti-immigration message.
Australia’s Bureau of Statistics has projected Melbourne and Sydney will both contain around 10 million people each by mid-century[vi].
There is not yet a published government policy anywhere which questions this assumed geospatial destiny, let alone seeks to alter it in a productive way.
Last year, Melbourne announced 17 new suburbs, some over 50 kilometres away from the city centre. What will the people in these vast future outer suburbs – stuck in traffic with second-class access to social infrastructure and job opportunities – think about increased immigration levels?
I could hazard a guess, and I wouldn’t blame them.
In this way, lazy infrastructure policy begets dark political opportunities.
Small(er) is beautiful
Just like Australia, the Nordics are urbanising[vii], but they are doing do from a less-urbanised base. Clearly, this conditions how infrastructure is planned and invested in.
Nordic capital cities are smaller, but there are greater numbers of large regional cities. No Nordic city contains more people than Brisbane: Stockholm and Copenhagen are both around this size; Oslo is a bit larger than Perth; Helsinki is roughly the size of Adelaide. Outside their capitals, only two Nordic cities contain over a million people.
Many of the 27 million Nordic people live in larger regional centres of around half a million people – places like Aarhus in Denmark or Malmö in Sweden – as well as more towns of around 300,000 than Australia, like Turku in Finland or Trondheim in Norway. Several regional ‘metropolitan zones’ of over a million people are also created by the proximity of several cities, such as East Jutland in Denmark.
They spend a lot less on transport
The Nordic model is also proving cheaper from a transport spending perspective.
In the five years between 2011 and 2015, Australia spent an average of $AUD 28 billion each year on transport infrastructure investment and maintenance.
With a larger population, the Nordics spent just $AUD 18 billion annually over the same period[viii].
No doubt some of what they saved each year was available for reinvestment in helping Nordic refugee numbers acclimatise quicker into the workforce – thereby bridging the efficiency gap between humanitarian arrivals and economic migrants.
Lower spending may not be down to luck. In some instances they are proving smarter and braver in transport policy.
Consider how Sweden addressed traffic congestion in its largest city, Stockholm: instead of spending billions on new toll roads, they just priced the existing roads to change driver behaviour, by levying a world-leading congestion charge. This worked immediately and continues to work; a decade after opening it enjoys two-thirds majority public support[ix]. If Stockholm’s level of congestion charging benefits were to be applied in Melbourne, Infrastructure Victoria[x] suggests that Melbourne’s daily traffic could revert to school holiday levels of congestion.
Contrast this with the orthodox Australian response, which is for State governments to accept unsolicited proposals from large toll road operators to build multi-billion dollar new tollways. These new roads will induce more traffic and create as-yet-unknowable cumulative tolling impacts on motorists.
Perhaps the Nordic-Australian transport spending gap will tighten. Some have argued persuasively that Norway in particular, home to the world’s largest sovereign wealth fund, has been too slow to appreciate the value of major infrastructure spending and market demand for unlisted infrastructure investments[xi]. More recent government statements suggest transport spending there will increase in future.
This surely does not explain the entire spending gap between the Nordics and Australia. Plain-stupid decisions at the Australian end are a more reliable explanation.
My recent post estimated Sydney is spending around $AUD 85 billion just on its biggest new transport projects[xii]. Like Frankenstein, Sydney’s new Metro and Westconnex motorway in particular have almost become their own sentient creatures – the scope, budget and complexity of each widens by billions with each passing year, without any detailed economic justification, serious independent scrutiny, transparency or counterfactual analysis.
This is a textbook way for transport spending to run out of control and deliver poor returns.
A focus on connecting our regional centres to contribute more to economic growth and take pressure off the big cities can, if done well, be a more sensible use of scarce funds.
‘Going Nordic’ would be a big change
In an Australian setting, the Nordic focus on regional centres might even include places like Parramatta in Sydney’s West – Sydney has more than one ‘city centre’ these days. But a lot would need to change for this to occur: the advisory deficit in Sydney transport planning is so pronounced that for now, as a recent post from John Austen highlights, bungled rail planning and spending in Sydney may well end up isolating the city’s west, rather than integrating it[xiii].
Neither Infrastructure Australia nor the Commonwealth infrastructure department publish national infrastructure spending value by location; were they to do so, the starkness of Sydney and Melbourne-centric spending patterns would shock voters. Treasuries seem all too ready to allocate cash to dubious, low-return Sydney and Melbourne projects.
This probably doesn’t end well. Assuming status quo planning and spending patterns, Melbourne will be approaching 10 million people at mid-century, yet the nearby regional centre of Bendigo – one of Melbourne’s largest regional satellites – could be nearing just two hundred thousand by that year[xiv]. Bendigo is an almost two-hour drive from Melbourne today. There are already credible fast rail proposals to reduce this to just over an hour’s fast rail commute. Such proposals still have no official status[xv].
Would Canberra lead?
A new Commonwealth government – whatever its political stripe – has the opportunity to ‘reset’ regional infrastructure investment and bring the States, local communities and market investors along with it. A Canberra government armed with the right regional development attitude and the power of its treasury cash box could force a material shift in our infrastructure development patterns.
In this way, our Federation model substitutes for the famous Nordic consensus politics: they arrive at their decisions via reasoned debate, we do so by Canberra providing cash incentives to encourage States to do the right thing. Both approaches can work.
Absent such leadership, we seem fated to status quo ‘regional policies’, which are not authorised to consider serious infrastructure investments (much less to work with market investors) and which instead hand out small ‘show bags’ to rural and regional Australians around election time – new sporting and cultural facilities and the like[xvi].
Pursuing some serious regional infrastructure projects might help Australia rebuild high-quality advisory capacity within its transport and infrastructure agencies, which for now remain denuded, and which have become part of the problem rather than part of the solution.
All of this would build a better foundation for debating the benefits of greater immigration levels. Doing otherwise in infrastructure policy only leaves immigration open to manipulation by darker forces.
Luke Fraser is the founder and principal of a transport policy and investment advisory. In 2012 he was appointed to the board of the Prime Minister and Premiers Road Reform Project. From the late 1990s he spent over a decade in Canberra in several APS executive, Commonwealth government chief of staff and industry CEO roles across the transport and Defence sectors.
[x] http://www.infrastructurevictoria.com.au/sites/default/files/images/The%20road%20ahead%20final.pdf see p.41 ‘What if every day was like a holiday?’