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Wednesday, 10th March 2021

The Future of Our Cities

Address to the Australian Financial Review's Business Summit 2021

Today I want to take the opportunity to discuss the future of Australia’s cities and the need to reinvigorate cities policy so that our great urban centres – the places where so many Australians live, work and do business – can be the drivers of a stronger economy as we emerge from pandemic and recession.

With the rise of digital technologies in recent years, policymakers have discovered the importance of network economics.

Yet networks have been with us a lot longer than the Internet.

Cities are the original networks.

By bringing people together, they expand the scale, scope, and structure of human activity, allowing freer, faster, and more flexible interaction and engagement.

That boosts the creation, production, and exchange not just of goods and services, but also of ideas.

It’s why we think of our big cities as having their own energy – the snap, crackle and pop of creativity and excitement that comes from bringing people together, at scale.

As the American economist Ed Glaeser has noted, the central finding of urban economics is that people are substantially more productive when they work in densely populated areas surrounded by other people.

Economies of scale, economies of agglomeration and network effects all come together to make cities attractive and rewarding places to live, work and do business.

But while there are strong positive impacts from well-functioning cities, there can also be significant negative impacts when cities are poorly managed and poorly organised.

This is why cities policy has been one of the abiding passions of my time in public life.

We need smart cities policy to harness the tremendous benefits that our urban communities can bring for all Australians.

And we need smart cities policy to avoid the drawbacks of poorly-functioning cities – all the urban ills of overcrowding, congestion, pollution, crime, poverty, and disadvantage.

Cities policy embraces all the domains that affect prosperity and quality of life in our towns and cities – transport and infrastructure; housing; urban planning; economic development; industry and innovation policy; business and commerce; education, skills and training; policing and law enforcement; healthcare and social welfare.

Good cities policy will improve the lives not only of the millions of Australians who live and work in cities.  It will also improve the lives of the people of rural and regional Australia who rely on cities and towns to get their products to market, to create demand and to deliver the inputs they need for their own local economies. Regional cities are critical for regional economies. There are real opportunities for a smart regionalization agenda if we get policy right coming out of the recession.

Today I will outline six measures Labor is considering as we recreate cities policy in the wake of the pandemic and the recession:

Transform City Deals into genuine City Partnerships.

Revitalise our CBD’s.

Renew the independent role of Infrastructure Australia in urban planning.

Deliver a new National Urban Policy framework.

Publish an annual State of the Cities Report

And give local government a voice in a meaningful National Cabinet process.


The Pandemic and Our Cities

Australia is one of the world’s most urbanised countries in what has been described as the urban century.

The overwhelming majority of our people live in cities and towns with populations of 100,000 or more.

About 80 per cent of our GDP is produced in cities.

On current trends more than 80 per cent of Australia’s population growth to 2050 will occur in our capital cities, according to the Productivity Commission.

For Australia, having cities that work is essential to national prosperity and to the quality of life of individuals.

The Productivity Commission has shown that many of the aspects that make for well-functioning cities also matter for people to be healthy, for job opportunities, for efficient markets and for the delivery of quality services.

All this means that cities policy is critical to our future. 

And COVID-19 has made it even more pressing.

The pandemic has struck at the heart of what makes cities work – people’s ability to come together, to interact, socialise, travel, and move around the urban environment.

Lockdowns, social distancing, and restrictions on movement – along with the ways we have adapted to the pandemic by working and learning from home, telecommuting and teleconferencing, and shopping and doing business online – these developments all have implications for our cities.

COVID-19 has brought its own changes to the way our cities function.

It has also accelerated pre-existing trends.

Like the displacement of bricks and mortar retailing by online shopping and home delivery.

Or businesses reducing overheads by having staff hot desk or work remotely.

We can’t be certain about the future trajectory of the pandemic, although we all hope the roll out of vaccines will prove successful in containing the spread of the virus.

While some of the changes wrought by the pandemic will prove temporary, many are likely to have a lasting impact.

Working from home will continue to be attractive to many employees and employers in industries where recent experience has shown it is a viable alternative.

For employees, it can offer greater convenience and flexibility and the avoidance of an expensive and tiring daily commute.

For employers, it can reduce the costs of maintaining offices and other centralised facilities.

Some aspects of these changes could improve productivity and quality of life in our cities.

Other aspects may prove negative.

When employees are working from home and communicating by teleconferences and Zoom calls, what happens to the spark of creativity, the insights and ideas that come from face-to-face interactions in a workplace?

Amongst others, Andy Haldane of the Bank of England has expressed his concerns about the depletion of social capital and the drag on creativity and innovation that may come from remote working.

We must examine the impact of changed work patterns on urban infrastructure, transport systems and congestion.

Working from home may reduce traffic flows and congestion in our cities.

On the other hand, as workplaces reopen, continuing concerns over COVID-19 and the difficulty of social distancing on buses and trains may see people switching from public transport to private vehicles.

That would have negative implications for congestion, pollution, and productivity.

Commercial property markets are reflecting the changes.

The Property Council of Australia’s latest Office Market Report shows that Australia’s office space vacancy rate for the six months to January increased from 9.6 per cent to 11.7 per cent – its highest level in 24 years.

At the same time, there is rising demand for warehousing and distribution space as retail shifts online.

Australian retailers leased more than 800,000 square metres of warehouse space in the first nine months of 2020 – that was 33 per cent higher than the amount of space leased by retailers during the whole of 2019, according to Jones Lang LaSalle.

There is a potential transformation from the hub and spoke model of the city, with its large daily inflows and outflows between suburbs and CBDs, to a more distributed and dispersed city.

Changes like these may disrupt our cities and our settlement and living patterns.

Hollowed out CBDs could diminish the benefits of agglomeration.

The structural changes unfolding in our cities; the uncertainties about the pandemic’s future course; and the overarching context of Australia’s first recession in three decades – all these trends mean we are at a critical time for the future of our cities.

These are the issues Labor is contemplating as we prepare for government.

I am an optimist.

With the right policies our cities can adapt to the new opportunities.

For example, one of the fastest growing sectors of our economy in coming years will be health and human services.

This creates the opportunity to develop unique precincts in our major centres like Westmead in Western Sydney and the Melbourne BioProject in Parkville that will serve local populations and offer skilled and secure jobs.

Likewise, for many workers technology will reduce the need for the daily commute, relieving congestion and offering the scope for areas beyond the CBDs to experience similar levels of dynamism.

The expansion in online sales, dispatch and procurement requires greater integration between land use and transport planning.

What we need is a plan to guide these developments in the national interest.

Joined up planning is critical.

Planning where the Commonwealth, the States and Territories, and local government come together to pursue productivity and growth.

To build a more productive Australian economy we need more productive and more resilient cities with high quality, integrated transport systems, efficient supply chains and a skilled workforce.

If we are going to build back stronger from COVID and recession, we need to reimagine our cities and reinvigorate our cities policy.

The pandemic has been a once in a lifetime event.

It now offers us a once in a lifetime opportunity to use these accelerated trends to move towards cities that are more productive, sustainable, and liveable. 

And cities that are more resilient to future shocks, as well.

In Australia, and around the world, planners, designers, technologists, and policymakers are bringing forward new ideas for reinventing modern cities.

The “smart city” movement is focussing on how to use the Internet of Things, fifth generation mobile networks and artificial intelligence to cut congestion, improve urban services, improve public safety and protect the environment.

The Victorian Government’s latest plan for Melbourne includes the urban planning concept of “20-minute neighbourhoods” – improving liveability by giving people the ability to meet most of their daily needs within a 20-minute walk from home.

If we recognise the challenges and opportunities, and develop the right policies, we can harness the urban transformation in a way that will help us build back stronger from the pandemic and the recession.

If we get urban policy right, Australia can attract talent and investment from around the glow in the immediate post-pandemic environment.

Unfortunately, at a federal level, the Morrison Government has vacated the field on cities policy.

It is failing to provide leadership and direction, failing to work with the States and Territories and failing to support local government on these issues.

For Scott Morrison, if he can’t put a marketing slogan on it, he’s not interested.

Cynical pork-barrelling has characterised his government’s approach to cities policy, most evidently through the urban congestion fund which has delivered much more to advertising executives than suburban commuters.

The result: no busting of congestion, no lifting of productivity and no confidence that there’s a government on the side of suburban commuters too often battling nightmare commutes. 

And he has allowed Malcolm Turnbull’s City Deals with state and local governments to wither on the vine, with the result that little of value has been achieved.

Labor takes a different approach. 

We understand the importance of well-functioning cities for Australia’s economy and for the jobs, livelihoods, and quality of life of Australians.

This will be one of my priorities as Labor leader. 

It is an area where I have the background, the track record and the commitment.

I was the nation’s first Minister for Infrastructure.

I developed the country’s first National Urban Policy.

I created the Major Cities Unit, tasked with analysing data and developing policies to improve the productivity, sustainability, and liveability of Australian cities.  It was abolished on day one by the incoming Abbott Government.

Now, in the wake of pandemic and recession, I believe the need for federal engagement with urban policy is greater than ever.


A New Deal for Australian Cities

Firstly, Labor will refresh City Deals to take account of the impacts of COVID – impacts like technological change, new working and consumer habits, diminished migration and slowing population growth.

Labor will honour signed City Deals.  However, we will also offer councils, states and territories the opportunity to improve existing agreements, transforming them into genuine city-shaping partnerships.

We will listen, and we will act.

And we will look to sign new City Partnerships that meet the needs of local communities based on local understanding and transparent criteria.

Secondly, we need a plan to revive our CBDs, not just a generic plea for workers to go back to their desks.

Indeed, according to the Grattan Institute 50 per cent of the new jobs which were generated in the past decade were in the centre of Sydney and Melbourne.

We need our cities to be at the frontier of dynamism and innovation.

And importantly, we need to recognise that the pandemic hasn’t changed the economics of agglomeration. The reasons which led many knowledge industry firms to cluster in city centres will still be valid.

Workplaces which are now places of collaboration rather than task-performance are different, and the spaces around them may be able to be repurposed for housing, or to revive arts and culture.

There is a role for the national government in enabling our city centres to effectively adapt, on their own terms.

Thirdly, a Labor Government will re-establish a Cities and Suburbs Unit within Infrastructure Australia, an independent body tasked with assessing the progress of City Deals.

We will abolish the Infrastructure and Project Financing Agency. This was a solution looking for a problem when it was created four years ago, and as predicted by bodies such as Infrastructure Partnerships Australia it has failed to deliver any outcomes for its $17 million of funding. 

Put frankly, any cost benefit analysis of its effectiveness would set a new low from a Government that has abandoned any pretence of value for money in its allocation of taxpayer funds.

Of course, Labor remains firmly of view that the private sector – and our superannuation funds in particular – has an important role in financing public infrastructure.  Indeed, Infrastructure Australia, when it was working properly under the former Labor Government, was instrumental in securing the public-private partnerships that delivered transformative urban infrastructure projects like Gold Coast Light Rail.

The new Cities and Suburbs Unit will recommend to Government the design of a new National Urban Policy framework, informed by expert evidence, industry expertise and community input.

It will produce an annual State of the Cities report, a report card on the progress and performance of our cities, helping to identify the specific initiatives of local initiatives of local councils and state planning authorities which are effectively working to create more productive, sustainable and liveable urban communities.

The work of the Unit will be complemented by reconstituting an Urban Policy Forum made up of experts including academics and bodies such as the Property Council, Architects, Engineers Australia, the Planning Institute, the Heritage Council, and the Australian Conservation Foundation. 

And lastly, we will ensure local government has a voice in a genuine National Cabinet process, bringing a focus on urban policy to the national stage.

Making our cities and our suburbs work better also means making it easier to buy a home and easier to rent.

The fact is it is getting harder to buy a home, it is getting harder to rent in many parts of Australia and there are more homeless Australians than ever before.

Fixing this requires a bit of national leadership. It’s not good enough to just leave this up to the states.

That’s just like saying “I don’t hold a hose.”

The fact is too many cities, particularly regional cities, are being left behind by the Morrison Government.

Good urban design and better functioning cities are critical to not only the economy, but also to the general welfare of society. Indeed, the great English planner Sir Peter Hall wrote the book on this entitled Better Cities, Better Lives.



Importantly, our cities policy will not stand alone – it will be one element in Labor’s wider plan to build back stronger.

Economic recessions are scarring.

They destroy jobs, businesses, and communities.

Their effects can be long-lasting.

It’s not good enough for national government to check the box when the quarterly GDP number has a plus sign in front of it, roll out the next taxpayer-funded political advertising campaign, and withdraw support from people struggling to recover.

That is why our cities policy will be integrated into a broader agenda for building back stronger.

An agenda that is about jobs and growth:

  • Boosting female participation in the workforce by making quality childcare more affordable for working families.
  • Rebuilding manufacturing for a future that is made in Australia.
  • Tackling insecure work.
  • Rewiring the nation’s energy grid.
  • And seizing the jobs and opportunities that will come from tackling climate change.

This is an agenda for individuals – for their job security, incomes, and livelihoods.

It is an agenda for stronger communities in our major cities and our regions.

And it is an agenda for the nation – for growth, productivity, and sustainability.

Our cities provide connectivity, competition, scale, and energy to the Australian economy.

They are richly threaded with skilled labour, dynamic businesses, enterprises, services, and talent.

To deliver long term growth in living standards, Australia needs productivity to flourish again, in the way it flourished thanks to the reforms of Hawke and Keating in the 1980s and 1990s.

We now have a once-in-a-generation chance to rebuild our cities, our economy, and our country for the better.

Labor intends to seize that opportunity, not to shirk it.

To deliver a Government characterised by reform, policy substance and delivery, not complacency, drift and smirk and mirrors.


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334a Marrickville Rd
Marrickville NSW 2204

Phone: 02 9564 3588

Parliament House Office

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Phone: 02 6277 7700

Phone: (02) 9564 3588
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