Nov 29, 2013

Speech – The Urban Productivity Challenge – State of Australian Cities Conference

SHANGRI-LA HOTEL, SYDNEY

INTRODUCTION

It’s great to be here today to address your conference, just a stone’s throw from the site of the first European settlement of this nation.

I wonder what the first settlers and the indigenous Australians who witnessed their arrival would say if they were here today to see what became of their endeavour.

I imagine they would have been shocked by the complexity of modern Sydney and the sheer beauty of this city despite its size, population and density.

Australia is the most-urbanised nation in the world, excluding city states like the Monaco and Singapore.

Depending on how you define it, up to 80 per cent of Australians live in cities. The Australian Bureau of Statistics puts the figure about two-thirds.

However you define it, that’s a high level of urbanisation.

It is in our interests to ensure our cities develop and are maintained in ways that preserve our environment and our living standards.

But there’s another aspect of cities that is just as important as amenity and the environment – one that affects the entire nation and must be understood by policy makers if they are serious about serving the long-term national interest.

I’m speaking about the role that cities play in the national economy.

Efficient cities can drive gains in economic productivity and job creation. Conversely, inefficient cities can be a drag on economic and productivity growth.

That’s what I would like to speak about today.

I am worried that the recent change of government will have profound implications for urban policy in this country including potentially dire consequences for economic growth.

The broad problem is simple: Like previous conservative governments, the Abbott Government believes there is no role for the Commonwealth in urban policy.

In particular, Tony Abbott does not believe the commonwealth has a leadership or funding role on urban rail transport.

That’s a dangerous position.

The state of public transport in our cities in the coming two decades will be a key determinant in the nation’s broader economic development.

With the right policies on public transport, cities will flourish and turbo-charge growth of national productivity and jobs.

The wrong policies today will stymie growth and make it harder for future generations.

LABOR’S APPROACH

Modern Labor has always believed that the commonwealth has a central role in urban policy, from Gough Whitlam and Tom Uren in the 1970s to Brian Howe in the 1980s and that tradition was renewed under the Rudd and Gillard governments.

We know that state governments and councils have primary responsibility for transport, utilities and town planning.

But Labor has always believed the federal government should provide leadership in urban policy and, where possible, should help the other levels of government to fund the really big projects that will have profound impacts on the nation’s economic development.

I’m talking about projects like Andrew Fisher’s the trans-national railway, which commenced in 1912, the Snowy Mountains scheme and, looking ahead, a high-speed rail network.

In other words, we are Nation Builders. That’s what Labor does.

Big thinking requires leadership.

Labor looks beyond the electoral cycle to think of where we want our nation to be decades from now and we implement policies to put the entire nation on the right path.

That’s the approach we took when we won office in 2007, when we took over from another conservative government that had no urban policy.

Our starting point was the need for a proper process to assess Australia’s Infrastructure needs, which was why we created the independent Infrastructure Australia to assess and rank projects that could best contribute to improved national productivity.

On top of this we created a Major Cities Unit to drive reform, launched a national urban policy, introduced our Liveable Cities Program and established the Urban Policy Forum to provide us with independent advice.

Our urban policy had as its foundation improving productivity, sustainability and liveability in our cities.

My focus has always been upon evidence-based policy.

So, having set up our policy and administrative bases, Labor set out to tackle the key urban policy challenges of our era – traffic congestion, urban sprawl and the need for greater population density in cities.

These problems have been present for years.

But in their current manifestations, these issues go way beyond urban growth pains.

Changes in our society linked in part to technology are driving a significant shift in cities which must be addressed by governments.

The 2013 edition of the State of the Cities report, which I launched earlier this year, neatly summed up the challenge.

It found that the trend toward strong growth in technology-related, high-paying jobs in our inner city areas was accelerating.

But it also found that despite this jobs growth in cities, population growth was focused on the edge of cities.

Putting it another way, more and more people are driving their cars to work, creating congestion that not only makes them angry as they sit in their cars, but is also a drag on productivity.

There are two approaches possible to respond to this challenge.

Tony Abbott’s prescription for our cities is just to build more roads.

By itself, that approach doesn’t work for me.

Labor’s approach is comprehensive.

Firstly, we encourage jobs growth closer to where people live.

At the same time, we need to encourage greater urban density, particularly near public transport corridors.

And we must invest in public transport.

During our period in office we delivered funding for the Noarlunga line upgrade in South Australia, the Moreton Bay Rail Link, the Gold Coast Rapid Transit and the Commonwealth’s single largest ever investment in urban rail the Regional Rail Link.

This investment followed advice from Infrastructure Australia.

Rigourous cost-benefit analysis also mean we committed to investing in vital projects such as Brisbane’s Cross River Rail and the Melbourne Metro.

They also included innovative proposals to mobile private investment.

These were not politically inspired decisions that were aimed at the electoral cycle.

It is extraordinary that the incoming government has abandoned these projects as well as public transport projects in Perth and Adelaide.

Labor is about finding responses to the long-term challenges of change in ways that would improve urban lifestyles while also lifting economic national productivity to the benefit of everyone.

Infrastructure Australia’s 2013 National Infrastructure Plan notes that the closer businesses are to their workforce, the more productive they become and the more convenient life is for their employees.

The report says, and I quote: 

… higher density residential areas can offer more affordable housing options with better access to services and employment and support more liveable, vibrant communities. 

Success in our cities is also a virtuous cycle, where higher living standards draw global talent, attract global business and investment and boost trade opportunities. 

This phenomenon in cities is called agglomeration – where clusters of economic activity produce bigger effects than the sum of their parts.

It’s clear that urban density has a multiplier effect on economic growth, with businesses and employees thriving when located close to one another.

For every doubling of job density, there is up to a 13 per cent increase in labour productivity.

This brings me back to the alternative approach that holds that state governments should be responsible for cities and that the commonwealth should “stick to its knitting’’ and just fund roads.

Don’t get me wrong here. I like roads.

But their provision must be part of a holistic, integrated approach to infrastructure.

During our six years in office, we doubled road funding to $46.5 billion and built or upgraded 7,500km of road. On top of that, we lifted commonwealth road grants to local councils by 20 per cent.

When it came to major road projects, Labor also took the advice of Infrastructure Australia about where to spend.

That’s because we understood that allowing politicians to choose road projects left the door wide open to political decisions and pork barrelling.

The Coalition is already moving to give Infrastructure Minister Warren Truss the power to interfere in Infrastructure Australia’s independent considerations.

Legislation before the Parliament allowed Mr Truss the ability to direct Infrastructure Australia’s agenda.

That means this government, with its opposition to commonwealth spending on urban rail, will be able to instead direct Infrastructure Australia to focus on its favoured priority of roads.

I note that that Environment Minister Greg Hunt addressed this conference earlier. The speech on his website indicates that his key messages to this conference related to the Coalition’s intention to conduct a Productivity Commission inquiry into Australia’s infrastructure needs and the way they are funded.

We already have a process for this. It’s called Infrastructure Australia – the same process Mr Truss is trying to amend to allow for more political interference.

Mr Hunt also spoke to you about the Coalition’s plan to abolish carbon pricing.

That’s not an urban policy.

In fact, the need for a price signal in a market economy through the use of carbon pricing is understood and supported by the Property Council, the Green Building Council and many others with an interest in good urban policy.

The suggestion that the best the commonwealth can do to plan for the future is abolish the carbon tax and create a green army is the sort of policy framework that exposes the government’s lack of serious policy thinking.

Like you, I’ll be carefully watching the Coalition’s progress.

So far, I’m not very encouraged.

One of Mr Abbott’s early decisions was to abolish the Major Cities Unit, which provided co-ordinated policy, planning and infrastructure advice to government and was helping our government advance its urban agenda.

This decision was a clear manifestation of Mr Abbott’s refusal to provide leadership on the big issues facing our cities.

Despite having four years in opposition to think about what he would do in government, it’s becoming clear his path to office was paved with political calculations, not clear thinking on policy.

As I have explained, roads are only part of the congestion equation.

The incoming government is not a Nation Builder. It’s not a driver of policy reform.

Its interest is in occupying government, not using its opportunities to think ahead.

CONCLUSION

So where is all this leading?

It will take us back into the old blame game that was Mr Howard’s specialty.

Mr Howard refused to get involved in providing leadership on the big reform issues in areas like health and education or urban policy.

Whenever anyone complained, he just blamed the states.

I predict Mr Abbott will take the same approach.

In the area of your concern – urban policy – he’ll spend money on the roads of his personal choice and retreat into policy indifference.

When people wonder why public transport services is not matching shifts in population density, he’ll just blame the states.

The blame game gets you nowhere. It might create grist for the journalistic mill, but it does nothing to help.

Each of our five biggest capital cities is expected to nearly double their population by 2056.

That requires policy responses NOW – not sometime in the future when existing pressures have escalated so much that they stand as obstacles to national growth.

To all those with an interest in sound, evidence-based policy and nation-building, I make this promise: You can expect me to be on your side.

The creation of the Major Cities Unit and the development of the State of Our Cities reports represented a framework for the productivity, sustainability and liveability of our cities.

This whole debate is not some sort of abstract discourse that is only had in places such as today’s conference.

There were three million downloads of the State of Our Cities Reports.

Australians are interested in urban policy.

They want engagement.

They want seriousness from policy-makers.

Once again, thanks for the invitation to speak today and good luck with the remainder of your conference.

Thanks for your attention.