Clara Cutajar - Infrastructure and Urban Renewal Leader, Peter Konidaris - Managing Partner Melbourne. This article first appeared in The Herald Sun, 19 June 2017
Our cities drive 83% of our GDP1 and, as many global surveys show, Australia’s cities are still considered some of the best places to live in the world. Our cities are made up of hundreds of complex systems, and as our economy continues to change, our population grows and ages, and technology continues to disrupt almost every aspect of our lives which is creating some challenges for our cities.
Locally, the footprint of Melbourne is also changing. New precincts such as Docklands and Southbank are appearing, and the growth in the South East and the Western suburbs are changing how we work and how we commute.
But cracks in our cities are starting to appear in terms of traffic delays, access to jobs and services, and of course affordability of housing. As we confront these challenges and we have to ask ourselves - are we still the lucky country? Are our cities fit for the future we want for our family and friends? Is the divide between the haves and the have nots getting wider? What will the consequences be if we don’t make some big decisions now?
One of the first places to look for signs of the stress is our healthcare system. One of the biggest issues facing state and federal governments is how they can continue to fund our existing health budget. The Federal Government alone spends $74 billion on health annually, and this is forecast to keep climbing at almost 3% per year, so that in four years it will be $83 billion.2 Who will pay for this?
Perhaps we need to change the conversation and question whether we have enough resources focused on health prevention. Arguably we currently have a ‘sick care’ system where dollars are spent on remedies for those already unwell. We need to increase our focus on intervention methods that will reduce future burdens on the cost of providing health.
Moving away from health and to lifestyle, the next big challenge is the seemingly impossible dream of buying an affordable house. Have we moved away from expectations of a quarter acre block to higher density living and is it ok to rent? Conversations at home and work constantly focus on how to fix the housing affordability crisis - but the reality is there is no silver bullet. It will take a much more focused effort to move the needle and arguably face up to the fact that times have changed. The future may be that we live in more densely populated suburbs, but with better connected services and amenities.
Let’s start more widely implementing some best practices from in Australia and around the world. One initiative PwC is pursuing along these lines in New South Wales is a change in the planning laws to allow further densification and to also reserve a percentage of these new homes (largely terraced properties) for the ‘missing middle’ - average wage earners such as teachers, nurses and firemen who are critical to our community but who are forced to travel exorbitant distances to work because they can’t afford homes nearby. A tired worker in these critical jobs means lower quality services for everyone. Some of the stories of shift workers sleeping in their cars to avoid commutes home are simply unacceptable.
This takes me to getting these critical workers to work via roads that are clogged and slow. Most would agree that there really is no more space for cars on our existing roads. Try to enjoy the morning commute from Pakenham to the city. Worse still, consider that the average Melbournian worker currently spends 71 minutes a day, or 7.5 weeks of work a year commuting and this will only get worse with our increasing population.3 This is almost twice the usual annual leave people get. This is time that all of us could be spending with family and friends and on our own hobbies and pursuits.
Real and meaningful change in our transport networks requires long term commitments. Here there are some signs of hope with new rail lines with the Melbourne Metro relieving some pressure on our system and connecting institutions such as Melbourne University to the rail network. The federal and state governments have started thinking about rail to Melbourne Airport and in our opinion, this should be front and centre of new planning. Across the country a new airport in Sydney and inland rail projects looping down to Melbourne will also deliver important benefits.
But, we still need to get the funding model right. This might stimulate harder conversations with the community about who pays for new infrastructure and innovation. In Victoria ticket fares currently only cover 22% of the operating cost of providing the service4 and this is simply unsustainable for a population that is set to grow by over a million people in 10 years.5 We need to create the value and then work out what is affordable to help fund what we need.
Finally, is the education system meeting the needs of our children and arming them with the skills they need for the jobs and opportunities of the future? Australia has slipped behind other developed countries in terms of educational outcomes achieved. Are our schools set up to help our kids succeed and are there things we can do to utilise schools in non school hours to help alleviate costs and deliver greater community benefits?
The health system, transport network, education system and housing affordability are just some major points of focus when I think about Melbourne and the systems that impact our daily lives. But to design what we want our future city to look like we have to think about how all of these components interrelate. We have to think about how we want to live, work, learn and play?
Encouragingly, the federal government is asking these questions too with its city deals focus and also trying to drive alignment between the layers of government and the investments needed to drive cities forward. But there are a few things that are important parts of any cities conversation.
Firstly, governments need to continue to recycle capital. This means leasing existing government owned assets and reinvesting the funds to pay for new infrastructure.
Secondly, we have to ask hard questions about the services governments provide and outcomes of what they are trying to achieve need to be tested. With a focus on outcomes rather than just costs we will all benefit. The reality is that there are some services that can be delivered more effectively and efficiently by the private sector. It might be hard and initially disruptive, but there will be efficiencies in the long run.
Thirdly, we must commit to leveraging technology at every level from the types of public transport we use to the way our kids are taught and how we access our health services. Change is happening and we need to be ahead of the game.
These conversations and decisions might be hard, but they are fundamental to the future prosperity of Melbourne and our country. It’s our cities that keep our economy working and we owe it to future generations to make good choices and ensure Melbourne remain one of the best places to live in the world.
1. PwC Geospatial Economic Model (GEM) 2017
2. Federal Government, Budget Paper 1. Doesn’t include NDIS
3. BITRE, Productivity Commission, PwC calculations. A work week is defined by 37.5 hours.
4. PwC and Tourism & Transport Forum - ‘Ticket to Ride: Reforming Fares and Ticketing for Sustainable Public Transport Dec 2016’
5. ABS Stat Population Projections
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© 2017 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. Liability limited by a scheme approved under Professional Standards Legislation.