Green Building Council of Australia, Melbourne

It is a tremendous pleasure to be here this morning to officially release the 2012 edition of the State of Australian Cities. 
This is the third annual snapshot of our eighteen major cities with populations above 100,000 people.  
It is a unique document – I don’t believe that any other nation has anything quite like it. 
Proof of its value is the numbers of people actually reading it. 
So far, the first two reports have been collectively downloaded two million times. 
This is surely a record for a government report. 
It is one of the pleasures of being an Australian Minister that I can get up and announce yet again that our cities have been ranked among the best in the world. 
The foresight shown by previous generations has allowed millions of people to enjoy a lifestyle that almost anyone else on the planet must envy. 
However, the dilemma we now face is how to ensure that the quality of life in our cities continues to improve. 
Two particular challenges have been the subject of public discourse: what are the drivers of economic activity beyond mining, andhow do we deal with an ageing population and fall in the proportion of taxpayers? 
I want to raise a third issue. 
For the past two centuries, Australia and New Zealand have been the only two advanced urban economies in our region. 
There are now 280 cities of a million people or more in our time zones. 
About 40 of these are as big or bigger than Sydney and Melbourne. 
The challenge is how we retain our competitive edge in this rapidly urbanising and increasingly affluent region. 

PLANNING FOR THE FUTURE 
Globally, more than half of us now live in cities. 
The London School of Economics predicts this will grow to 75 per cent by 2050.[1] 
As the 2012 State of Australian Cities report notes, growth and urbanisation across Asia are highly significant for us. 
This is likely to drive strong demand for our energy and minerals and open up major opportunities in the services sector. 
One thing we do know is that how well we plan, invest in, and manage our cities will determine how well we prosper in this powerful Asian region. 
Our cities have to be more productive. 
As Paul Krugman said: productivity isn’t everything but in the long run it’s nearly everything. 
The industrial structure of our cities is changing. 
In terms of economic functions, our cities are shrinking in on themselves. 
The forces driving the spread of our cities since the war, predominantly manufacturing, are being replaced by knowledge industries – the banking, legal, insurance and myriad of other business services. 
Yet, whereas manufacturing plants were traditionally located on the city fringe or in industrial zones, the job-rich knowledge industries tend to concentrate in the heart of our cities. 
As the State of Australian Cities reports, this trend is seeing more and more workers commuting into our city centres.
At the same time housing growth continues to creep outwards, making the journey to these jobs increasingly difficult. 
Narrowing the distance between where people live and where they work needs to be at the forefront of urban planning in coming years. 
If we don’t address this, there will be major consequences for the productivity, sustainability and liveability of our major cities. 

WHAT’S NEW IN 2012? 
This year’s edition includes fresh data drawn from the 2011 Census, allowing us to shine the brightest possible spotlight on the way we live. 
Thanks to feedback on the 2011 report, we have also included more feature articles. 
These highlight issues such as land use planning around ports and airports, and climate change adaptation and mitigation. 
Two of these articles particularly caught my attention.
The first looks at the role of that often-forgotten transport mode, motorcycles and scooters.
As I can attest from my recent trip to Italy, many of the world’s cities are thronged with motorbikes and scooters as people take advantage of this low-cost, low-energy and space-efficient form of transport. 
However in the Australian policy context, they tend only to be mentioned in discussions about safety. 
This can obscure the fact that they are an important and growing component of the urban transport mix at a time when congestion drags like an anchor on our time and productivity. 
As the feature article notes, some Australian cities are following their European counterparts in encouraging their use. 
Here in Melbourne, motorcycles and scooters can park free on the wide footpaths, while in Canberra they can also park free in designated spaces that are plentiful throughout the city. 
A second feature article looks at the important work coming out of Townsville that is changing the way we consume energy. 
Townsville is one of seven Solar Cities across Australia and an award- winning member of a program operated by the Department of Climate Change and Energy Efficiency. 
One project alone on Magnetic Island has seen peak electricity demand fall by a whopping 44 per cent during the busiest time of the year. 
Earlier this year, Townsville was one of 24 world cities to be selected for an IBM Smarter Cities Challenge. 

KEY FINDINGS - Population and settlement
Let’s turn now to the findings in this year’s report and begin with population and settlement. 
Melbourne and Sydney between them have absorbed nearly 40 per cent of the nation’s population growth since 2001. 
At the same time, the northern cities have experienced the greatest percentages of growth, along with Perth. 
We continue to age, with declines across the board in the proportion of people aged below 25. 
Significantly, the gap between population increase and housing supply is now the largest and most sustained in a century — in other words, we are not building enough homes. 
We seem to be at a cross roads in our housing. 
We know we cannot keep building at the same rate on the outskirts of our cities yet at the same time we are not building enough homes near our transport hubs and employment centres. 
Consequently housing occupancy rates, which had been falling steadily for a century as living standards improved, are now on the rise again. 
Housing prices are also having an effect. 
Although prices have settled a little recently, the rises we have seen since the mid-90s are greater than anything we have experienced in a century. 
Renters are particularly affected by this and the market has been very tight for more than a decade. 
Vacancy rates in Canberra, Darwin and Perth are now all below one per cent. 
Australia must develop a mechanism for large scale urban renewal in suburbs close to city centres and transport hubs. 

Transport
Chapter three tells us that national productivity growth is slowing and that efficient transport is the key to arrest this decline.
The changing industrial structure of our cities means our transport networks are increasingly being called upon to carry large numbers of people into concentrated city centres within a very limited time period. 
The only mode capable of doing this is rail because of the numbers it can carry. 
One single rail line operating at peak efficiency carries the same number of people as a ten lane freeway. 
We must address capacity on our rail systems, particularly for trains heading into our urban centres. 
This means being smarter about the way we capture the value of land created by public transport corridors, and use that to drive further investment. 
We also need to look closely at better separating the freight and passenger tasks on our busy rail networks. 

Workforce participation  
I want to finish the discussion of productivity with some good news. 
The first Intergenerational Report ten years ago bought the issues of ageing population and falling workforce participation into the national consciousness. 
One of the key messages in this year’s State of Australian Cities report is the increasing participation of women of all age groups in the paid workforce. 
Not only is participation rising faster than for men, but so is their skill level. 
With better health and a desire to maintain living standards, people are now staying in the workforce longer. 
Australia joins much of the developed world in retaining workers over the age of 65. 
This increase in participation as well as a carefully targeted migration program will do a lot to cushion the challenge to living standards arising from a declining proportion of taxpayers to the population. 
When this is coupled with the far-sighted compulsory superannuation provisions introduced by the Hawke-Keating Government, Australia is better placed than nearly any other nation to weather the challenges of an ageing population.  

Sustainability
Let’s turn now to sustainability. 
Last year’s report talked a lot about how our cities were vulnerable to heat. 
This year’s report shows why. 
When you look at the charts for temperature and rainfall over the last 60 years for the 18 major cities, with only a couple of exceptions there has been a rise in both maximum and minimum temperature, and a gradual reduction in rainfall. 
A degree here or there may not sound much, but small increases in long-term average temperatures can translate into major changes to climate variability.
Perth, for instance, in 2011 experienced 50 days over 35 degrees, the peak of a three year spike. 
Yet between 1982 and 2009, the number of days above 35 degrees in Perth stayed roughly the same, between 20 and 30 days. 
Even more concerning in Perth is the speed with which the sea level is rising. 
While the global average rise is three millimetres per year, Perth is experiencing a quite extraordinary annual rise of between nine and ten millimetres per year. 
It is interesting to see how cities are gradually adapting to climate change through the development of green infrastructure, but the report also describes the magnitude of the task ahead.
At least two-thirds of Australian superannuation investment fund managers have not recognised the impact climate change will have on investment portfolios.

Liveability 
On the question of liveability, we can proudly say that Australia is still a great place to call home. 
Australia ranks in the top five countries across almost all of the dimensions of the OECD Better Life Index. 
We don’t do so well in terms of the work/life balance with 14 per cent of us working very long hours — well above the OECD average of nine per cent. 
However, when all topics are weighted equally, Australia ranks as one of the top three countries in the world for quality of life. 
Melbourne has been ranked first on The Economist’s Global Cities Liveability Index for the second year in a row. 
Sydney was ranked sixth, Perth eighth and Adelaide ninth. 
That’s a remarkable score to have four cities in the top ten of 140 world centres. 
In both the 2010 and 2011 My City Survey, Adelaide remains the most liveable Australian city as voted by its residents. 
While Australian cities may be expensive for international tourists or workers, the cost of living for Australian residents of our capitals has been relatively stable for more than two decades. 
Sydney is the most expensive capital city with the highest costs for electricity, mortgage interest, transport and recreational activities. 

Governance 
Governance may not sound sexy but it matters. 
I’m pleased to report that just 18 months since its launch, implementation of the National Urban Policy is well underway and you can read of its progress in this year’s State of Australian Cities. 
That said, in its Review of Capital City Strategic Planning Systems in April, the COAG Reform Council found that while States and Territories made considerable efforts to improve their strategic planning systems, none were wholly consistent with the nine nationally-agreed criteria.
The COAG Reform Council highlighted the need for more targeted intergovernmental cooperation on cities to improve the effectiveness of these planning systems.
 COAG has agreed to take forward the cities agenda through the Standing Council on Transport and Infrastructure, which I chair.
In 2013, I am very keen to progress the work we have done so far to develop a set of common indicators so we can measure progress both over time, and between cities. 
I find that comparing and measuring invariably sharpens the senses. 
While it is not the Commonwealth’s job to set city-by-city targets, we can work with the States and Territories via COAG on a common set of indicators to measure progress.
I have a terrific team of experts in my Urban Policy Forum to help with this. 
These indicators could include the rate of public transport use, urban density, traffic congestion, air quality, heat islands, tree coverage, rates of walking and cycling, housing affordability and preparedness for climate change. 

CONCLUSION 
Earlier this year, I had the privilege of delivering the inaugural Property Council of Australia Nation Building Oration. 
In it, I emphasised that the Government is on a mission to build the nation and to provide the critical infrastructure and transport links that will allow us to advance and grow.
When we came to office, the well-being and future of our cities barely rated a mention in the national conversation. 
With the help of state, territory and local governments, as well as industry, business and the community, we are turning this around. 
In addition to the National Urban Policy, we have released a plain-English guide to urban design, Creating Places for People. 
This web-based tool is now championed by over 40 organisations including our hosts today, the Green Building Council. 
We have also established the Liveable Cities program and set up the Urban Policy Forum to advise the Government and provide a conduit to the broader community.
Most recently, I launched a discussion paper on how we can get more people walking, cycling and using public transport. 
This not only addresses the great challenge of congestion and loss in productivity, but also the health implications that flow from obesity and inactivity. 
Submissions on the report close on 31 January and I urge you all to have your say.
In closing this morning, I want to thank all those who have played a part in the production of the 2012 State of Australian Cities report. 
Dorte Ekelund, Warwick Jones and the rest of the Major Cities Unit have done a remarkable job with tight resources. 
This report draws together the work of some of the finest researchers and industry experts in the nation.
I am enormously grateful for their generosity in allowing us to take their findings to a national audience in this way. 
The economist and urban thinker, Edward Glaeser, had it right when he said: “the best cities…provide pathways for those who start with less to end with more.”
I think that goes to the core of what we expect from our cities. 
They have always had a magnetic pull. 
The more we know about how they tick and what their residents think, the better placed we are to make them better places to live, work and visit. 
This morning, I have only scratched the surface of the treasure trove of information contained in the 2012 report and I am happy to take questions. 
Thank you.