VIC Liberals launch decentralisation pipe dream

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By Leith van Onselen

The Victorian Liberal Party has continued its new found crusade against Melbourne’s break-neck population growth, releasing a blue print to divert population growth to the regions. From The Age:

Tax breaks, new job zones and geographically targeted visas could be used to encourage more people to move to country towns in a bid to tackle Melbourne’s “unsustainable” population boom.

With 16 months before the next election, Opposition Leader Matthew Guy has launched an ambitious bid to address what some in his party believe may be the greatest long-term challenge facing the state: its unprecedented growth.

…the state Liberals have laid the groundwork for a major push to decentralise growth away from metropolitan Melbourne – where more than two-thirds of Victorian residents now live – and into regional cities and towns…

The interim report will pave the way for a long-awaited strategy that Mr Guy will take to next year’s election…

According to the report, the city’s growth is unsustainable, and continuing with the current “business as usual” approach would result in an extra 3.8 million people in Melbourne by 2051 – but only 690,000 people moving, settling or being born in the rest of Victoria…

“Without a comprehensive plan, Melbourne is at risk of becoming Australia’s most unliveable city within a decade, and regional Victoria may not share the prosperity that comes with increased population,” the report says…

“Victorians deserve better than being squashed on a train, stuck in traffic for hours and paying more for electricity,” Mr Smith said. “The Liberal Nationals have a positive plan to manage population growth by decentralising our state, by taking the pressure off Melbourne and growing regional Victoria.”

As a lifelong Melbournian, I too have watched in disbelief as Melbourne’s population has expanded at a frantic rate, growing by a whopping one million people (27%) in the 12 years to June 2016:

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Anyone that has lived in Greater Melbourne over this period will agree that living standards are being eroded. Roads and public transport have been crush-loaded and housing has become hideously expensive.

The situation is set to deteriorate further if Melbourne’s population grows as projected by the State Government. According to these projections, Melbourne will add on average 97,000 people per year (1,870 people per week) for the next 35 years – adding the equivalent of around 9 Canberras or 2.5 Adelaides to the city’s population:

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While the State Liberal Party’s concerns are justified, how realistic is their solution to decentralise? The key driver of Melbourne’s projected population growth is the federal government’s mass immigration program:

And to date, migrants have always chosen to settle in the big cities of Melbourne and Sydney, rather than the regions:

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Decentralisation has been on Australia’s political agenda for around 100 years without success (other than the creation of Canberra). So what makes the Victorian Liberals believe they can magically turn the tide?

And what good is decentralisation if it means is that ‘urban sprawl’ is replaced by ‘regional sprawl’ as the regions simply become commuter towns for Melbourne? Or, to put it another way, regional dormitory suburbs are created instead of fringe suburbs?

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Rather than accepting mass immigration as a fait accompli, the State Liberal Party should aggressively lobby their federal counterparts to establish a national population policy that reduces immigration and does away with a ‘Big Australia’ on the grounds that is is placing undue strain on infrastructure and housing, and is reducing living standards of incumbent residents.

Victoria’s politicians should also lobby for a greater share of tax revenues on the grounds that they are incurring the lion’s share of the costs from immigration, in the form of providing expensive infrastructure and social services.

To the Liberal Party’s credit, they have at least explicitly acknowledged that Melbourne’s population growth is both unsustainable and unwanted. But they need to look at the root cause – excessive levels of immigration – and seek to bring it back down to sensible and sustainable levels.

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For its part, the Labor Government needs to open its eyes. Few Melbournians want a city of 8 million people mid-century. The one we have currently is barely functioning properly at 4.6 million. Enough’s enough.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.