MARCUS SPILLER. Immigration is not the cause of our urban challenge.

Our biggest cities, Sydney and Melbourne, are growing at around 100,000 people a year causing a bevvy of commentators including, Four Corners and the Grattan Institute, to question whether Australia is in a position to sustain its historically high immigration rates.

As Grattan’s John Daley puts it “unless the states are prepared to reform their planning systems, the Commonwealth should consider tapping the brakes on Australia’s migrant intake”.

Framing Australia’s urban challenge as an immigration problem, however obliquely and sensitively this might be done, is wrongheaded.  Firstly, it leads to ‘cutting off the nose to spite the face’ solutions.  Australia’s healthy economy and outstanding record of unbroken growth has a lot to do with our immigration program.  Our famously selective intake of migrants gives us the workers to do jobs that Australians cannot do or are unwilling to do.  Most credible reviews have affirmed that immigration delivers a net community benefit. Australia’s successful integration of migrants into a dynamic and productive economy is one of the nation’s greatest achievements.

Pointing the finger at the migration program also diverts debate from the core cause of our growing pains.  This is systemic failure in the way we govern our cities; a failure that is evident in our housing sector as Daley points out but also reaches far beyond this.

We should be asking why it is that a country with an elite ranking in GDP per capita (US$55,200 in 2017 according to the IMF) cannot find a way to plan and deliver the urban infrastructure to keep pace with immigration?  Greater London has grown at around 100,000 people per year since the mid 1990s and seems to have made a better fist of it in a nation with a GDP per capita of US$37,800.

Australia has, arguably, the least efficacious arrangements for managing big cities of any country in the OECD.

Let’s look at housing and transport, for example.  For its part, the Commonwealth does not have a coherent policy for housing people.  It has all but vacated the social housing sector, preferring to focus on safety net and band-aid programs in the homelessness arena.

In the main, the Commonwealth views the housing challenge through the prism of household investment.  Over the decades, policies to privilege the tax treatment of home ownership has distorted housing preferences, rendered the housing market less nimble and played their own part in entrenching the NIMBYism which Daley laments.

It’s hard to keep track of Commonwealth policy and programs on urban transport.  Canberra is wont to use its excessive tax base to pick winners in major road and rail projects for local jurisdictions.  It purports to have better insights to the congestion and access problems that beset our burgeoning cities.

The scorecard for the States in these matters is hardly more encouraging.  The over-reliance on income and consumption taxes in this country as opposed to land taxes means that the States have a vested interest in maintaining buoyant property markets and sprawling cities.

Notwithstanding recent policy initiatives to start the slow climb back in social housing construction, the truth is that, like the Commonwealth, the States have been grossly negligent in this area for the better part of 3 decades.

The States have ‘perfected’ planning systems to package up and release greenfield land on the metro fringes, ever more remote from where the jobs are. They have been strikingly unsuccessful in coming up with similar high volume pipelines for infill housing construction.

The States continue to preside over planning systems where speculators chase windfalls from rezonings and infrastructure projects, instead of establishing routine value capture arrangements where the community reserves ownership of development rights.  In the process, valuable resources for investment in transport, affordable housing and other facilities for the growing city are foregone.

Meanwhile, in the transport arena, the States are perennially bogged down in silo approaches to policy making and investment.  There is the odd success story, but, by and large, transport plans are made and funded separately from housing and land use plans.

While the Commonwealth, with its national mandate, cannot purport to speak for individual metropolitan communities, the States have a similar legitimacy problem in engaging metropolitan citizens.  This makes some vital urban reform discussions almost impossible.  For example, the States have great difficulty embracing road pricing (as distinct from road building) as a way of dealing with congestion.  The fact that Ken Livingstone, London’s first Mayor following the reinstatement of the Greater London Authority by Tony Blair in 1999, was able to introduce cordon pricing in that metropolis is instructive.  It’s doubtful that Westminster could have ever managed the politics to pull off this important reform.

The problem we have is not too many migrants, but a system where urban growth management is entrusted to two tiers of government that are not competent for the task.  As Infrastructure Australia recommends in its recently released ‘Future Cities’ report, we need profound reforms in urban management including the establishment of autonomous urban governments such as the GLA.

Dr Marcus Spiller is principal at and a founding partner of SGS Economics & Planning. He has lectured in urban economics at Melbourne University, been an adviser to the Minister for Planning and Housing in Victoria and a Senior Executive in the Queensland Department of Housing, Local Government and Planning. He is a past National President of the Planning Institute of Australia and a former Board Member at VicUrban (now called Places Victoria). He has also served on the Commonwealth Government’s National Housing Supply Council.


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1 Response to MARCUS SPILLER. Immigration is not the cause of our urban challenge.

  1. David Maxwell Gray says:

    Dr Spiller, the continuing high rates of immigration should be curtailed, not because of some populist racist agenda, but because we not not have the very governmental systems and policies in place to manage the effects of the high rates and the predominantly Melbourne and Sydney destinations of most of the new entrants.

    We are so far from having, through governance infrastructure, the policies and planning processes – as well as actual plans and projects – which would enable our cities to cater for high levels of immigration-led growth that until this situation reverses, maintaining such high levels seems foolish. Policies can be suggested to ameliorate our problems such as: twenty-first century integrated public transport; planning policies which allow higher housing densities in established, near city areas; creation of entirely new cities at the expense of Sydney/Melbourne; more distributed office and commercial centres in existing cities; exclusion of most cars from city centres using electronic devices to charge entry fees. On one could go. But how are our parochial systems of government and the “games of mates” culture which underpins them going to be changed?

    Australia has been for decades running a “ponzi” scheme with much of the aggregate growth of the economy, measured as GDP particularly in the housing sector, being driven by immigration. This has disguised the fact that the type of growth triggered does not enhance community welfare or higher disposable incomes at the bottom third of society, but forces ever longer and slower trips. At some point, the gains in Sydney and Melbourne are more than offset by the costs . Eventually, even the elites become affected.

    A truly healthy economy would be one which does not rely for its growth on the currently very large immigration numbers, but one which reduced this to cater for required high-level skills. Current high rates also have an agenda, not too hidden, of keeping a lid on wages growth in the sectors requiring lower-skilled workers.

    Skilled migrants bring enormous benefits to Australia. We often talk about engagement with Asia, but maintain barriers to entry to good jobs in many parts of industry and commerce where Asians’ language skills and cultural knowledge could add to their relevant professional know-how in export oriented activities. A recent Landline (ABC) programme had a story about a very well educated experienced Indian who has started a canola oil processing plant at Wagga Wagga which, after decades of non-Asian Australians talking about the need to add value to agricultural products, but achieving very little, has already established good markets in India and the USA for its canola oil. Where were the Australian banks? The founder needed to get Indian banks and investors involved to get the project up.

    My direct experience of “planning” as conducted by States in Australia is that it is run by cabals of large developers, buttressed by minor government “planning” officials, so they can order and control the markets for land and housing for the maximum benefit of developers without paying for most of the externalities including traffic congestion which their developments induce on the rest of the community. City-wide visions of “green wedges” get trashed later once the big boys put political pressure on the relevant players. The “game of mates” goes on.

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