Liberal Party MP Malcolm Turnbull

Shadow communications minister and former Liberal Leader Malcolm Turnbull has advocated for a value uplift model for funding public transport during last Thursday’s Grattan Institute Productive Cities seminar in Sydney. And it seems NSW Treasury could be listening.

Mr Turnbull, who spoke alongside the institute’s cities program director Jane-Frances Kelly, also said Australia had “tragically” neglected transport infrastructure, which was a social justice issue, and that density, coupled with good amenity, was the solution, not the problem.

These key issues of how to house greater population and make cities more functional formed the core of the seminar, which also canvassed the role of innovation in delivering lower cost housing.

According to Mr Turnbull, a key issue for governments is how to fund public transport infrastructure.

The value uplift model allows those who benefit from infrastructure development to contribute to the cost of that development, rather than the cost be borne entirely by the general taxpayer.

“Don’t you think that one of the problems we face is that we have not worked out a satisfactory way to finance public transport infrastructure… to capture some of the accretion in land value occasioned by the development of that transport infrastructure?” Mr Turnbull asked a NSW Treasury figure.

“Because it does seem to me that we’ve forgotten something that we once knew,” he said. “If you look at the 19th century railway companies, they were all basically real-estate players, and the biggest property owners in Japan or North America are still railway companies. Yet we seem to have lost that. Do you guys at the NSW Treasury think about how you can capture some of that accretion in land value to enable you to support transport infrastructure?”

A NSW Treasury officer said that Treasury was “certainly” investigating value uplift options.

Mr Turnbull advocated for increased public transport infrastructure, which he said was crucial for Australian cities’ development, and somewhat lacking in his hometown of Sydney.

“We’ve tragically neglected transport infrastructure – particularly public transport infrastructure – in this city,” he said.

“If you don’t have adequate transport you discriminate against the old, the young, the poor and the sick. This is a social justice issue. It’s a question of social equity.”

(From left) Grattan Institute communications manager James Button; director of the Grattan Institute Cities Program Jane-Frances Kelly; and Federal Liberal Party MP Malcolm Turnbull.

And density is good

Mr Turnbull also supported moves to increase density in cities.

He said he hoped the upcoming election would not devolve into an “unedifying outburst of chauvinistic rhetoric about population and immigration” like during the last election, saying that complaints about population and immigration usually boil down to issues of congestion.

“The truth is that density is not the problem; density is the solution,” he said. “But density without infrastructure lacks amenity, and density without amenity is congestion, and is very unpleasant.”

Mr Turnbull said that density increases needed to be matched with an increase in essential infrastructure.

“The great failure of planning in this city, and many others in Australia, has been that we’ve had growing population without the investment in the infrastructure, whether it is parks or facilities, but above all transport, to enable you to get the benefits of the density.”

Pointing to suburbs like Potts Point, he said  “the amenity occasioned by density is drawing people back into the centre”.

“You want to be living somewhere where you have the greatest range of possibilities for employment, and you’re clearly going to be more able to do that where there are more people living together.”

Author of the Grattan Report’s Productive Cities: opportunity in a changing economy Jane-Frances Kelly said that density as a term had unfortunate connotations.

“[Density] is a word I try not to even use in public because people think density, they think downtown Shanghai,” she said. “Actually, if you double density it might involve on a suburban street having a couple of granny flats in the background and a couple of townhouses.”

Affordability is the issue

“We are simply not building enough homes in Australia, and in Sydney that is particularly profound,” Mr Turnbull said. “The problem is overwhelmingly one of planning.

“We’ve got to recognise that we have to make it easier to build new dwelling units.

“We’ve agonised for years about why housing is unaffordable – is it demand-side pressures – first homeowner’s grant, negative gearing, cheap interest rates… But overwhelmingly it’s a supply-side constraint.

“Where you make it easier for people to get planning permission to do infill development, you will get more infill development and then you’ll get more supply and housing will become more affordable.”

Ms Kelly noted that the lack of affordable medium and higher density houses also had to do with skills and knowledge deficits.

“One of the reason we’re bad at building affordable medium and higher density is that we don’t do that much of it, and it’s much more expensive to build,” she said. “We’re incredibly innovative and efficient in Australia at building detached houses. If we can bring that same kind of nous and innovation to medium density product, we’ll all do much better.”

Won’t somebody please think of the children?

Pointing to the growing opposition to development, Mr Turnbull said the danger was that this would undermine the ability of our children to find housing.

“NIMBYism is rampant and it’s something people have to think about. If you mount a campaign to stop greater density in your suburb, are you not just simply determining that your children will never be able to afford to live there?”

Mr Turnbull said that we must look at ways to promote infill development, including planning reform and possibly amalgamating local councils.

“The city cannot just keep spreading further and further out,” he said. “Doing nothing is not an option.”

Cities not acting like cities

The seminar described the ways in which Australian cities’ poor infrastructure was affecting productivity.

Ms Kelly recounted a conversation with an OECD regional and metropolitan economics representative who said Sydney was “not doing its job as a city”.

“There are two reasons cities exist,” she said. “One is that we come together in order to be more productive: that’s the economist reason. Another one is that people will move to cities to spread their risk. So if you live in a tiny place in the country and you lose your job, it’s quite hard to find another job. But if you move to a city and lose your job, you’re more likely to find another one.”

The OECD figure reportedly told Ms Kelly: “If a city is as badly connected as this – in connecting people and jobs – it’s not doing its job as a city, either in terms of the economy or in terms of opportunity. What it looks to me like is that Sydney is not functioning as a city of four-and-a-half million people – it doesn’t have the economy or access to opportunities of a city of four-and-a-half million people. It’s more like a city of one million people and then a whole series of areas that are functioning like towns.”

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  1. I agree that Sydney has neglected its public transport. However I don’t agree its only a social justice issue affecting the old, the sick and the poor. We are a professional couple who don’t have a car. We travel everywhere on public transport and occasionally use a Go Get share car. We find its more efficient than driving since you can do work on the bus/train/ferry. With the apps on our available on our mobile phones its easier to know which buses to catch, when they’re coming. etc. This would have been impossible in the old days of looking up timetables etc. Of course, the transport network could be so much more efficient and many more services should be provided. But this is in part due to the lack of use and negative mentality about public transport, by people who are middle class or professionals like ourselves. We live in Fairlight, so not exactly inner city but not exactly in the outer suburbs.
    So Malcolm Turnbull, I would just like to request that next time you speak about public transport, refer to the huge potential for its use by other classes, not just the socially disadvantaged. This will increase its appeal and get more people using it! Thanks, Luisa

  2. I agree with Malcolm when he says transport is a “a social justice issue. It’s a question of social equity.” What is missing however from his reported analysis is that housing for many is also such an issue and will not be solved simply by more efficient supply side provision. The current need for social housing and bottom end affordable housing needs strategies to address it, not just the current belief in the market to solve the problem. It is worrying that the draft New Planning system does not have targets or a non-market strategy for addressing this basic need.

    The COAG Housing Supply and Affordability Reform Working Party’s report agreed to, out of session, in July 2012.recognised the problem and it needs to be addressed in city planning but so far there is silence in the proposed new system as to how it can be achieved:

    “All things being equal, more efficient supply should put downward pressure on house prices. However, addressing supply-side impediments may not cause house prices to fall or rents to ease significantly. It is possible for high house prices to exist even in a relatively efficient market. This is because other structural and cyclical factors — such as population growth and interest and unemployment rates — also play a major role in determining the level and growth of house prices and rents.”

    “As such, reducing the supply-side constraints will not necessarily be sufficient to address the housing affordability problems faced by lower-income households. The issue of (un)affordable home ownership may be largely confined to a lack of means for some segments of the population to purchase or rent a dwelling, rather than a physical lack of supply of dwellings.” Housing Supply and Affordability Reform Working Party, p.3.

    So Malcolm please also champion capturing uplifts for Affordable Housing rather than supporting a market only approach!

    Geoff Turnbull (No relation)
    REDWatch (Redfern Waterloo)

  3. Mr Turnbull’s statement:

    “Where you make it easier for people to get planning permission to do infill development, you will get more infill development and then you’ll get more supply and housing will become more affordable.”

    is a myth that badly needs debunking.

    The world’s highest density cities are also the least affordable in terms of housing- look at Vancouver for example, which the NSW Government keeps referring to as an example of best practice planning.

    Higher density in infill areas may be beneficial on a number of levels but to pretend that it will in itself result in improved housing affordability is simply untrue.

    Let’s look at the real causes for housing affordability. Let’s look at the evidence. This may be good starting point: