Finance Finance News Our cities are killing young Australians’ hopes and dreams

Our cities are killing young Australians’ hopes and dreams

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Long commutes cannot keep increasing indefinitely.
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The Coalition has ramped up its ‘socialist’ attack on the opposition, hoping to counter Labor’s ongoing campaign against ‘inequality’.

Finance Minister Mathias Cormann said in a fiery speech that Labor’s “socialism” would “flatten” aspiration and that young Australians would “leave Australia and go where hard work, risk-taking and success are more highly valued”.

Well, one aspiration has already been flattened for many, but it has nothing to do with socialism and everything to do with inequality.

It’s the aspiration to buy an affordable, suitable home within a reasonable distance of job opportunities.

A major reason for this is the tax break-induced credit bubble, though the Turnbull government prefers to focus on the highly misleading ‘supply problem’.

In fact, there are now more dwellings in Australia relative to population than there were 20 years ago, and those dwellings have more bedrooms on average – see the chart for Sydney here.

The 2016 census revealed that far too many of those homes are left empty, and too many larger houses are occupied by ’empty-nesters’ who would prefer to downsize.

But there is another ‘supply’ issue – namely, the way Australians build ‘cities’.

What is a city?

By some definitions we don’t really build cities at all.

Definitions can be fuzzy, but the United Nation’s ‘World Cities 2016‘ survey uses three:

– the ‘city proper’ which is analogous to old-Paris or old-Beijing;

– the ‘urban agglomeration’ or the ‘built-up’ parts;

– and the ‘metropolitan area’ which is defined by the commuting patterns and economic relationships of residents.

Australian cities have very small ‘city proper’ areas, fairly small ‘urban agglomerations’ and massive ‘metropolitan areas’ – sprawling miles of suburbs.

As the ABS map below shows, Sydney has become as large as London, but with very low population density.

Population densities of Sydney and London

That kind of sprawl is inefficient in economic terms, and offers a bleak future for young Australia.

Property consultant and University of Sydney lecturer Shane Geha points out that the aspiration to own a home in Sydney can mean looking at a 400 square metre block of land 70 kilometres from the CBD, costing $425,000.

Mr Geha, whose consultancy specialises in getting local councils to rezone land for higher-density developments, thinks the solution is to ‘retro-fit’ larger parts of the metropolitan areas – to expand the ‘built-up’ zone.

That is happening to a degree, but Mr Geha thinks much more extensive public transport infrastructure is needed to make it possible.

Historically, Australians wanted to live in suburbs, and enjoyed the transport that helped create them – the motor vehicle.

However, basic arithmetic says that every additional 10km band of suburbs, assuming the same population density, will add double the number of people housed in the previous 10km band.

When large parts of those outer bands of population crush into the city each morning, horror commutes are the result.

Urban planners have long known that when this happens, demand grows for new homes closer to work, creating a maximum commute time of about an hour, known as the ‘Marchetti constant‘.

As Professor of Sustainability at Curtin University, Peter Newman, puts it: “Cities adjust; they don’t keep expanding travel time.”

But to adjust, or to be retro-fitted, local councils and state governments have to approve the right developments in the right timeframe.

Mr Geha, who holds a PhD in urban planning, recently returned from Dallas, absolutely incredulous that “rezonings [in Dallas] take four to eight months with most development applications completed in under one month”.

That, he says, is like “greased lightening” compared with Australian planning processes – meaning the expansion of new ‘built-up’ zones is too slow.

For some, like high-profile entrepreneur Dick Smith, that means we should vastly scale back immigration, to a level our dysfunctional cities can cope with.

But that comes with its own costs – such as choking off Australia’s lucrative ‘education exports’ sector.

It also sends a pretty clear message to young Australians: while other developed nations can plan and create functional cities, but we can only release more and more far flung ‘burbs.

And there’s not much to aspire to in that.

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