12 April 2012  – This article, focused on the opportunities in Sydney for jobs and more housing, is an edited version of a recent presentation by Patrick Fensham at a cities forum by SGS Economics and Planning, where he is a director.

Geography and topography and existing development patterns are beginning to constrain Sydney’s ability to grow jobs in its centre.

There is a major social agenda (also linked to productivity in the form of enhanced conditions for human capital development) to be addressed in considering the future of western Sydney.

A pattern of two Sydneys emerges. To the north and east around the water, a highly educated, high income population and to the west and south west a poorer and more disadvantaged population, with fewer life opportunities. A metropolitan strategy for Sydney cannot afford to neglect these large areas of disadvantage.

The last metropolitan strategy for Sydney produced in 2010 showed a:

  • Radial pattern of the past – with a dominant central Sydney providing most of the higher value employment opportunities
  • Polycentric “city of cities” as proposed in recent strategies – with a dominant central or global Sydney and higher order employment nodes at Parramatta, Penrith and Liverpool
  • Network city – with a greater share of highly cross connected employment centres in a larger, higher density core area with polycentric nodes beyond this core.
Patrick Fensham

In reality the city is closer to a combination of network and polycentric metropolis.  It should be the blueprint that all major transport and government investment decisions in Sydney should be working toward,” Mr Fensham said.

Five big ideas should be the mantra for metropolitan planning:

  • New job sites in the centre
  • A denser core
  • A focus of resources and policy effort on regional cities
  • Transport for the network and polycentric city
  • Connecting the knowledge cities and beyond

The first priority is to ensure an expanded array of options for employment growth in inner Sydney.

There is limited existing capacity in sites where controls already provide for additional growth. These are:

  • Sydney CBD, Frasers, Redfern-Waterloo Authority – Australian Technology Park; Green Square and Barangaroo. In these and some other areas there is potential for a maximum of 134,000 new jobs.
  • With some up zoning (while maintaining important industrial activities) there is potential for perhaps 15,000 new jobs in the South Sydney employment area.
  • The Bays precinct – just minutes from Barangaroo and the CBD by ferry and a world class site in anyone’s language – could conservatively accommodate an additional 20,000 new jobs. There is the chance that its potential will be frittered away without bold thinking. Already a plan to remove the Old Glebe Island Bridge has been mooted – this would be a very short sighted thing to do.

Another option for high value jobs is  the Western Distributor Corridor. In the City of Sydney’s Sustainable Sydney 2030 strategy – work led by SGS Economics and Planning – the idea of lowering the Western Distributor was raised. The sites freed by such a move (not to mention the amenity and environmental benefits) could house perhaps 20,000 new jobs.

A more radical and longer term option is Garden Island where perhaps 5,000 jobs could be accommodated if Defence decide to move on.

All up the capacity of these sites would provide for around 175,000 jobs – which is probably 30 to 40 years supply.

This will make a difference but is a drop in the ocean compared to what might be available in Melbourne – estimated at capacity for +500,000 jobs in the City of Melbourne alone by my Melbourne SGS colleagues.

To bring down potential rents and the “purchase price of a unit of agglomeration” clearly it is not sufficient to match supply tightly with demand – there needs to be greater contestability in the market.

Clearly, relying on central Sydney will not be sufficient. Centres on the north shore including Macquarie Park (+20,000) have capacity. Further west Sydney Olympic Park (+20,000) and Parramatta (+30,000) have capacity for significant future employment growth.

Better connections in a networked inner and eastern Sydney complex of employment locations will also be required.

A key question for the short term is where is acceptable density feasible?

The work the company had done with the NSW Department of Planning and Infrastructure  showed that the high land value locations along the waterfront and on the north shore are the only areas that support tallish apartment buildings (up to eight  storeys).

With the lower building costs implicit in lower rise forms such as three-storey apartments much more of metropolitan Sydney becomes feasible for development.

From an infill point of view the more challenging middle ring suburbs enter the equation. Terrace or town house development is feasible all over metropolitan Sydney.

The so-called “network city” has well over a 100 railway stations. If we accept that the planning for higher density and higher rise futures needs greater attention over the medium to longer term, then in the short term we might focus on those areas where it will be easier for individual lots to “turn over” and produce dwellings.

For example, in the 500-1000 metre radius area of these railway stations (10-15 minute walk) the density is in the order of 33 dwellings per net hectare. If there was a target to increase this to say 45 dwellings per net hectare (something achieved in a location like Dulwich Hill for visualisation purposes) – there is scope for about 138,000 new dwellings.

I am attracted to the Grattan Institute’s idea of a small lot development code which would make it easier to produce more housing in these areas.

•            The aim should be to maximise potential yield from small lots – without needing amalgamation

•            Small sites enable more builders and architects to get involved; more affordability and diversity

•            Maybe a case for restricting car parking or on-street permits

This would be achieved by more ancillary dwellings (granny flats) in backyards (of a not excessive minimum size); dual occupancy; ancillary dwellings; conversion of existing dwellings to multiple dwellings.

The metropolitan strategy designates Parramatta, Liverpool and Penrith as the regional cities at the heart of their respective sub regions.

For the polycentric city, significant resources and policy effort needed to be allocated for opening up new employment opportunities into the regional cities.

This is perhaps the most challenging policy area because it defies the preferred Treasury logic of predict and provide. Investing in these places is not necessarily consistent with market trends or demand – it is about shaping the city for ulterior ends.

The agenda is to make these places attractive across the spectrum – so they are desirable places to live, work and play. In each case they have the basic DNA to build upon but it will take a deliberate and focused effort.

The centres need to offer affordable housing and access to enhanced amenities, and good internal transport options.

From a work perspective the centres need to compete with suburban business parks so settings in relation to parking and opportunities for large floor plate buildings have to be in place.

Health and education facilities are a priority. Restrictions on major commercial and office development outside of these centres may need to be contemplated; riverfronts and cultural and recreational assets and amenities need to be improved.

The Cities Taskforce plans from 2006 are a reasonable place to start. These include around $300 million worth of proposed civic improvements. Once the wider city areas and additional projects are taken into account this might be closer to $600-800 million.

The funding plans in the Cities Taskforce documents – via a s94a levy (effectively a development tax) – need to be revisited.

Enhanced connectivity between key employment and surrounding residential areas relied on projects such as:

  • The regional faster rail service; the network city rail or metro program
  • upgrading and linking of global economic corridor services – to create Sydney’s first circle service – four universities, three hospitals, multiple interchanges, retail hubs and the major employment locations in Sydney (perhaps 600,000 jobs)
  • Inner city transit – connecting inner Sydney together – light rail or metro services as currently being worked on. Radial services connecting hinterlands to regional cities – rapid bus services (think inner Brisbane)

Another agenda was how to better connect Sydney into the complex of higher value city hubs along the east coast – and beyond to the world.

The politics and funding solutions are enormously difficult, but we need national and state leadership and co-ordination to make bold decisions in relation to high speed rail and the second airport in Sydney. These have the potential to re-shape not only individual cities but also national competitiveness.

Both of the recently released reports say very little about the city shaping potential of these developments, from a metropolitan Sydney perspective.

One view of the opportunities and potential is put forward by my occasional associate Rod Simpson.

In this view the Mascot airport is actually closed to provide high value residential development land.

New Airport
The new airport is developed at Luddenham – the preferred location based on benefits and costs identified in the recent study.

The high speed train connects Brisbane and Melbourne to Sydney via the new Sydney airport and Parramatta and the same corridor is used to satisfy the faster regional city rail objective of connecting Penrith to the new airport, Parramatta, the Mascot redevelopment site and Macquarie Park.

The combinations are numerous but this sort of thinking is missing from the current studies.

State government needs to sign off on the agenda but it has shown itself to be politically compromised when it comes to the detail.

By definition the state has an array of responsibilities – Sydney is but one place (albeit important) in those it has responsibility for.

Are 40 local councils going to be able to implement this agenda? Are the special purpose vehicles able to address the agenda?.

Landcom has resources but is project based. Sydney Metropolitan Development Authority is a good idea but doesn’t have any resources or internal clout.

Infrastructure NSW has yet to show what it will do but my big concern is that it doesn’t seem to be operating with a strong plan. If it doesn’t have the polycentric and network city agenda as its mantra how can it prioritise projects?

It goes without saying that a complete idea would be to establish an agency that has both major infrastructure and land use planning responsibilities, financial independence and preferrably some democratic legitimacy.

Metropolitan Sydney needs an agency as an advocate for the big moves required to secure a prosperous future. The agency needs to be above local and state politics but have democratic legitimacy.

There are a number of emerging models and lots of debate about what the best form of metropolitan agency should be. The current study into how to make local governments more efficient is not enough. The question needs to be broader, and cover the best way to implement long term strategic policies for a more efficient, productive and sustainable Sydney.

Such an agency would combine the functions of Infrastructure NSW and SMDA – but with decision making autonomy and teeth. Funded via a metropolitan levy of say $50 per year on rates (on approximately 1.7 million properties this is about $85 million per year).

Sydney local government rates look lean – if a limited comparison with Melbourne is used as a guide.

This would be expected given the counter-productive policy of rate capping that applies in Sydney.

A flat in the Melbourne suburb of Carlton is rated at $1644 while a flat in Randwick, Sydney  (with a similar unimproved value) is rated at $1083.

Melburnians also contribute a parks charge of about $60 a year which goes towards maintaining the fantastic regional parks system in the metropolitan area.

A hypothecated Sydney metropolitan improvement fund – involving a modest levy on local government rates – should be considered to kickstart effective planning and the initial expenditure required.

Patrick Fensham is a principal of SGS Economics and Planning, based in the Sydney office, and has been a lead consultant for the City of Sydney’s Sustainable Sydney 2030 Vision plan.