A Greater Australia: Population, policies and governance - CEDA

Section 4.2Concerns about urban infrastructure are central to Australia’s population debate.A survey undertaken for the Productivity Commission in 2011 found 51 per cent ofrespondents “would not like increased population” compared to only 11 per cent who“would like it”, with the proportions rising to 64 per cent and nine per cent respectivelyin Sydney. When asked why a greater population was undesirable, the overwhelmingresponse was increased traffic congestion, with other major factors cited beingincreased noise, loss of street appeal and other amenities, and more crowded publictransport. 1 Rightly or wrongly, Australians seem to feel the urban boat is full, if notalready perilously overcrowded.Those perceptions have important policy implications. Although the current resourceboom has attracted some recent arrivals to remote mining communities, the long termexperience is that 90 per cent of new migrants settle in the major cities. If the urbaninfrastructure struggles to cope with current population, a sustained increase in migrationwould likely prove as socially costly as it would be politically contentious.This essay examines those strains and current and possible policy responses. In doingso, I start by summarising some important characteristics of our urban system as landuse patterns and urban infrastructure requirements are intimately linked. I then examinehow policies have developed in recent years, with a focus on land use and on theprovision of public utility services and transport infrastructure. Having assessed theefficiency and effectiveness of those policies, I conclude by reviewing some elementsof possible reform.Major findingsFirst, Australia has long had a settlement pattern characterised by high levels of urbanisationin cities that by international standards have low population densities. This reflectsrelatively high and equally distributed incomes combined with the abundant availabilityof land. However, a low density settlement pattern has implied substantial infrastructureneeds as population expands. Financing those infrastructure needs has largely been amatter for State Governments (albeit with assistance from the Commonwealth), whichhave also exercised primary control over the timing and location of development.Second, in recent years, State Governments have sought to control those infrastructurecosts both by increasing efficiency in infrastructure provision and by promoting densersettlement patterns (a goal usually referred to as “densification”).Third, there is some evidence that at least initially, these efforts at controlling infrastructurecosts succeeded, as output growth in infrastructure services accelerated relativeto input growth. However, that trend appears to have hit significant limits and since themid-2000s, has reversed.Fourth, governments have also succeeded in promoting denser settlement patterns,largely by constraining land availability at the city fringe and rezoning land to in-filldevelopment, where necessary over-riding local residents’ objections to densification.However, there are substantial reasons to doubt those policies are effective in dealingwith issues such as congestion, and even stronger reasons to think they are likely tobe inefficient and inequitable.Fifth, a better policy approach to urban infrastructure would involve a greater role forprices, rather than command and control instruments. Instruments such as congestioncharging are obvious candidates in this respect. However, it is not clear that the costsof congestion in any Australian city are near the levels at which it would be worthwhileA Greater Australia: Population, Policies and Governance187