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Melbourne 2030: Planning Rhetoric Versus Urban Reality

CHAPTER 3

THE URBAN GROWTH BOUNDARY

Bob Birrell, Kevin O’Connor, Virginia Rapson and Ernest Healy

This chapter analyses the role of the Urban Growth Boundary (UGB) in the pursuit of Melbourne 2030’s compact city goal. It examines how firm it is in accommodating demand for housing on the periphery of Melbourne. The answer is that the Bracks Government claims that it will extend the boundary where necessary. In other words it is not a firm UGB. However, policy to date has been restrictive, and this has contributed to the escalation of broadhectare prices within the UGB. Partly as a consequence, house and land prices on the fringe have increased to the point where they are largely beyond the means of first home buyers.

Since the main point of the Melbourne 2030 strategy is to restrict the city’s spread, there must be a mechanism to enforce this containment. The Melbourne 2030 policy document states that greenfield development on the fringe accounted for 38 per cent of metropolitan Melbourne’s dwelling starts between 1996–97 and 2000–01. The planners aspire to reduce this percentage to 31 per cent of new dwellings in the period 2001–30 (Department of Infrastructure 2002a p. 11). The Urban Growth Boundary (UGB) is the main mechanism the planners will use to bring about this outcome and it is described in detail below. This chapter first explores whether the UGB is a real rather than a token boundary. On the basis of this analysis, it then explores the impact of the UGB on house and land production on the fringe.

THE UGB STRATEGY

There are two distinct, but linked, strategies used in this part of the policy. First, a UGB was established to define an area within each development corridor that in principle would encompass at least 15 years supply of land available to be zoned for residential development. An interim UGB was put in place in October 2002. The Melbourne 2030 policy stipulates that the UGB should not be easily altered and that changes should be ‘infrequent’ (Department of Infrastructure 2002b p. 62). Changes to the UGB are not simply a matter of ministerial discretion, but require the support of both Houses of the State Parliament. Therefore the ease or difficulty with which this requirement is met in future will depend in part upon the balance of power within the Legislative Council.

Second, the UGB has been accompanied by a Green Wedge policy. These ‘wedges’ maintain a long heritage in Melbourne’s metropolitan policy. Non-urban land was designated as part of a corridor growth strategy as early as the 1970s. Within Melbourne 2030, these wedges represent the Government’s commitment to maintain open space close to urban development. In effect, all the land bordering the UGB now forms a continuous green belt surrounding Melbourne.

Much of the land involved is of little conservation value. Nevertheless, the Green Wedge strategy is linked to the aspiration for ‘sustainable development’. This part of the Melbourne 2030 package has addressed the concerns of environmentalists, particularly the Green Wedge Coalition. This is a formal coalition of environmental organisations, most of whom have an interest in the environmental outcomes for particular areas of outer Melbourne. Partly as a consequence of this linkage between the green wedges and Melbourne 2030’s environmental credentials, any breach of the UGB will be seen, symbolically, as a failure of this aspect of the plan. Thus it will be difficult for the Government to rezone green wedge land for development purposes. The policy means that the most likely extension of the UGB will occur at the ends of the corridors.

If the UGB was intended to restrict outer suburban growth, that is to enforce the compact city approach by denying outward expansion of the city, it would be a momentous change in Melbourne’s planning history. Where policies restrict land availability it is obvious that they will prompt land price increases. As the Productivity Commission stated in its report on housing affordability:

...to the extent that an urban growth boundary is intended to constrain development, it is inevitable [italics in original] it will have some effect on land prices. For this not to be so, people would need to be indifferent to housing type and location, and the supply of dwellings would need to be just as readily expanded from established urban areas (Productivity Commission 2004 p. 134).

This is evident from experience overseas. Urban growth boundaries have a much longer history in the United States than in Australia. Portland (Oregon), where there is an underlying preference for low-density detached housing, is a well known example. There, the imposition of a UGB, despite the ample provision of land zoned for multi-dwelling housing (normally a cheaper housing option in the United States), appears to have contributed to an escalation of land prices (Danielson et al. 1999 p. 529; Easterbrook 1999 p. 545).

In the Australian context, Sydney offers a parallel example. The provision of land on the frontier for subdivision has been limited by the New South Wales Government, mainly because of environmental constraints inherent in the Sydney basin which have prevented an open-ended expansion of the suburban frontier. As a consequence, a much smaller proportion of the dwellings constructed in Sydney are located in the fringe suburbs than is the case in Melbourne. The minimum price for land in outer Sydney is around $300,000 per block.

HOW FIRM IS MELBOURNE’S UGB?

This is a crucial issue. If the Government implements its policy of ensuring 15 years supply of land for development, then, in principle, Melbourne could continue to expand unchecked. A growth boundary which responds to householders’ demands for detached housing may not constrain Melbourne’s suburban spread at all. On the other hand, by sharply defining the land currently available for development, it may increase competition for that land.

There does not seem to be any doubt that the Bracks Government is committed to ensure the availability of the suburban land, should it be required. It has established an Urban Development Program (UDP), staffed by the Department of Sustainability and Environment. Its task is to identify land availability on the frontier in the light of actual production of lots, developers’ plans to produce lots over the immediate future and the stock of land within the UGB designated for development. These estimates are analysed in the context of the Government’s 15 year supply policy. The implication is that, if the land supply fell below this 15 year benchmark, the Government would release more land. In other words, the UGB is just a symbol which declares the Government’s desire to limit the expansion of Melbourne. The reality seems to be that the UGB is flexible and, if the demand is there, the urban perimeter will be expanded as needed. On the other hand, this flexibility may prove illusory if the Government ignores alternative views about the availability of land on the frontier. This point is explored in detail below.

The UDP has published two reports so far, one in 2003 and one in 2004. These reports relate lot development and raw land supply to the Government’s 2030 aspirations. The 2004 report indicates that, to accommodate the projected total increase in Melbourne’s households over the first part of the Melbourne 2030 planning period (from 2004 to 2019), an average of 23,600 extra dwellings will be required per year. The UDP assumes that, over this period, 43 per cent of these dwellings will derive from broadhectare development (fractionally higher than assumed in Melbourne 2030), or about 10,000 dwellings per year. According to the UDP’s assessment of the amount of land designated for residential development within the UGB, there is enough for 26 years. This assessment holds for all the growth corridors except that to the east, which is restricted by the Dandenong Ranges. On this analysis, there is no need to expand the UGB at the present time. One exception is the Melton area where the UDP does acknowledge that land availability falls short of the 15 year standard. It states that action has been initiated to include more land within the UDP in the area (Department of Sustainability and Environment 2004 p. xi).

But what if broadhectare development proceeds much faster than the UDP indicates is needed. As far as the UDP is concerned, what is ‘needed’ reflects the aspiration of Melbourne 2030 to curb outer-suburban growth. The 2004 report notes that 18,300 lots were produced on the frontier in 2002-03. It also reports that developers plan to produce 94,500 lots over the next five years, or 18,900 a year. This is nearly double the level the UDP assumes is needed, as defined above.

GOVERNMENT VERSUS DEVELOPER ESTIMATES OF LAND SCARCITY

The upshot is that there is a monumental difference between the Bracks Government’s view of land availability on Melbourne’s fringe and that of developers. If the developers’ plans come to fruition and lot production proceeds at around 18,000 per year over the next five years, then half of the total 180,500 broadhectare lots (UDP 2004 p. ix) which can be potentially developed within the existing UGB boundary will be used up. If so, some extension of the UGB should be under consideration now.

The Government rejects this conclusion. In effect, it dismisses the possibility that the production plans communicated to it by developers could come to pass. There is risky stand-off in the making here. If the developers are right, the Bracks Government could find itself accused of promoting an escalation of land prices.

On the face of it, the UDP’s assumption that recent lot production levels are not sustainable seems reasonable. If only 23,000 new dwellings are needed a year to provide for the underlying household growth in Melbourne, it is unlikely that there could be a sustained market for new house and land packages on the frontier at the 18,000 level proposed by developers. In these circumstances there does not appear to be any need to extend the UGB at the present time.

On the other hand, it may be that the Melbourne 2030 and UDP projections for low levels of outer-suburban housing production are a product of the wish that this will be the case, rather than a careful evaluation of household preferences. In other words, the wish is father to the thought; the wish being that the Melbourne 2030 compact city objective requires the share of new dwellings located on the outer suburban frontier to fall. For the developers’ part, their plans reflect an assessment of the marketplace. This is likely to be a better guide to consumer preferences than the ‘aspirations’ of the Victorian Government. The demographic analysis in Chapter Four provides some support for the developers’ market assessment. The evidence provided in the Melbourne 2030 documentation that housing preferences are favouring higher-density dwellings is flawed. It is based on the atypical experiences of the 1990s when there was a large cohort of 20 to 29 year olds moving through the age pyramid. Over the next 30 years their numbers will fall. The main growth in household numbers will be amongst older households whose housing preferences (see Chapter Five) currently favour detached housing.

If the developers are correct in their judgment about the demand for frontier dwellings then it could be that the Government is imposing a tight UGB by stealth. This would be the case if the Government is denying the validity of developers’ production plans, not because the plans are untrue, but because the Government wants to maintain a tight UGB.

DECREASED LOT SIZE ON THE FRINGE

There is one final consideration which relates to the likely scale of the land required on the urban frontier. The Melbourne 2030 plan has as one of its objectives that outer suburban development should proceed on a denser basis than in the past. The goal is 15 lots per hectare. The UDP assumes that the current level is around 10 lots per hectare which, it states, is equivalent to individual lot sizes of about 640 square metres (Department of Sustainability and Environment 2003 p. 11). These figures have been seized on by compact city advocates. Michael Buxton, Associate Professor of Environment and Planning at RMIT University has been widely quoted as asserting that this is a profligate level of land use (by European standards) and that, if the Bracks Government were serious, it would enforce the 15 lot per hectare benchmark. Buxton cites a United Kingdom White Paper on urban development which argues that the average density of 25 dwellings per hectare in greenfield areas in the United Kingdom ‘squandered land’ by comparison with standards in many other countries (Buxton and Tieman 2004 p. 3).

It may be that Melbourne’s outer suburban municipalities will be nudged towards the 15 per hectare benchmark during their current negotiations with the Smart Growth committees. The Government has given these committees the responsibility to identify opportunities for higher-density development ‘with a focus on gradually increasing the number of dwellings per hectare... from 10 to 15’ (Department of Infrastructure 2002c p. 13). If this policy is successful, the municipal structure plans will reflect this objective, thus pushing developers towards higher density lot output.

However, the potential should not be exaggerated. New housing estates featuring lot sizes of well below the 640 square metres standard are common. As Table 3.1 shows, many of the bigger developers, especially those operating in Western and Northern Melbourne, are already putting lots on the market near the 15 per hectare standard. The rule of thumb in development circles is that about 20 per cent of an estate will be taken up by roads and footpaths and about 10 per cent by open space. This leaves about 7,000 square metres of each hectare. If 15 lots are squeezed out of this space it will deliver lots of 466 square metres or about an eighth of an acre.

Even though the 15 lot per hectare target is already being attained in some estates, it is important to ask if this style of building is what we really want in Melbourne. Indeed, one wonders whether the advocates of 15 per hectare estates have ever inspected the outcomes.

Table 3.1 New greenfield developments, average lot sizes and numbers of lots released, March quarter 2003 to March quarter 2004
Department of Sustainability and Environment (Victoria), Residential Land Bulletin, March quarter 2003 and 2004

Figure 3.1
Cheek-by-jowl; side boundary setbacks virtually eliminated, Keilor
Photographs taken by the authors on field trips in 2004

Figure 3.2
Limited footpaths; narrow roads and parking on grassed areas, Cranbourne
Photographs taken by the authors on field trips in 2004

Figure 3.3
Continued car dependence; garages visually dominate dwellings, Cranbourne and Keilor Photographs taken by the authors on field trips in 2004

It is possible to create attractive small-lot estates if there is heavy investment in the design of the housing and the landscape in order to offer households access to, or views of, belts of trees, parkland or water features. But, in the absence of such investment, 15 lots per hectare estates typically feature tight road pavements, limited footpath provision and a wall-to-wall brick and asphalt streetscape devoid of canopy trees and shrubs. As the photos of such estates in Figure 3.1 to 3.3 show, there is usually no room on the limited garden frontage, which often extends to include public land beyond the residential property line, for anything but thin slivers of grass. These areas are often occupied by parked cars because of the narrow road pavements. Where open space is present, it tends to be an afterthought composed of a few straggly trees and maybe a swing or two.

The images in Figures 3.1 to 3.3 demonstrate packed suburbia, with examples of outcomes in low-cost estates with separate dwellings on small lots from Cranbourne and Keilor.

THE CHANGING STATE OF MELBOURNE’S HOUSE AND LAND MARKET

As shown below, there has been a fundamental change in the outer-suburban Melbourne house and land market since the mid-1990s. Its focus has moved away from the first-home market and towards the upgrade or second-home market. The causes are diverse. One, about which there has been much controversy, is whether the establishment of the UGB by the Victorian Labor Government in late 2002 has contributed to higher land prices. After considering this issue, we turn to examine other factors which have shaped the house and land market in outer suburbia and what these imply for the first home buyer.

THE UGB AND LAND PRICES

Since the UGB’s establishment in late 2002, there has been an escalation of broadhectare prices which in turn have given an impetus to the price escalation of house and land packages. The issue is whether the UGB has contributed to this price escalation. As would be imagined from the preceding discussion, the Government has denied that this could be the case.

In mid-2004 the Centre for Population and Urban Research published an analysis of the impact of the UGB on land prices in outer suburban Melbourne which concluded that the establishment of the UGB had contributed to sharp price increases for broadhectare land within the UGB. The analysis reported that, since the imposition of the UGB, there had been increased competition on the part of developers to purchase broadhectares still available within the UGB. In the case of the City of Casey, such prices had increased from around $200,000 to $400,000 per hectare (Birrell and Healy 2003 p. 54).

The Victorian Government responded by vigorously denying that the UGB was responsible (Millar and Button, 2004 p. 3). It reaffirmed its judgement that it had provided for 15 years supply and stressed its willingness to adjust the UGB should any shortage emerge. This denial does not remove the possibility that the UGB did contribute to the increased price of broadhectares.

Interviews with developers and Council personnel over the last six months have revealed a number of transactions where broadhectare land has changed hands at $400,000 to $500,000 per hectare, or even higher in the case of small parcels near the existing suburban frontier. The City of Wyndham claims that, as a direct result of the tightening of the UGB in the west of Melbourne, broadhectare prices by 2003 had ‘soared, evidently by up to 100% in some areas to over $400,000 per hectare’ (City of Wyndham 2003 p. 5).

The UGB was established during a housing boom when there was strong interest by developers in securing a broadhectare land bank for the future. Land purchased within the UGB provided this security. Land outside the boundary lost its allure. The imposition of the UGB thus set off a competitive scramble amongst developers for whatever parcels land owners were willing to part with. For their part, the latter now held the whip hand in negotiations since they were the beneficiaries of the State Government generosity in allowing them to cream off the gains in price attributable to the new development potential of their land.

It was this process rather than the absolute limitation of land for development which implicates the UGB in the escalation of broadhectare land prices since its establishment in late 2002.

THE CURRENT OUTER SUBURBAN HOUSING MARKET IN MELBOURNE

The price of land and housing on Melbourne’s fringe has increased rapidly since the mid-1990s. The standard housing block now costs at least $125,000 to $150,000. Table 3.2 details the median prices of vacant blocks in 2001 and 2003 in the main fringe municipalities of Melbourne. As is evident, there was a sharp increase in these prices over the two years, averaging around 50 per cent or more in each municipality.

Most frontier settlers first buy a block from a large developer then choose a house, usually from a suite of alternatives displayed by project home builders selected by the developer. A good indication of the price of these houses can be drawn from the value of building approvals collected by the Australian Bureau of Statistics. The average values are listed for 2002–03 and 2003–04 for each of the municipalities. The combination of block price and building approval value indicates the overall average cost of house and land to new residents. Except for Cardinia where the overall cost was about $250,000, the average figure was around $300,000 in 2003–04.

At this price level, the fringe housing market is now largely out of reach of first home buyers. This is notwithstanding the establishment of the first home buyer scheme. The Federal Coalition Government’s First Homeowner’s Grant (FHOG) was introduced on 1 July 2000. Since this time, eligible first home buyers have been able to apply for a grant of $7,000, whether buying a new or established dwelling. Between March 2001 and December 2001, for those purchasing a new dwelling, an additional $7000 was provided, making a total of $14,000. This additional payment for a new dwelling was then reduced to $3,000 in the period to 30 June 2002 (Productivity Commission 2004 p. 71). Currently the available Federal Grant is $7,000. However, the Victorian State Government introduced a first home buyer incentive of $5,000 which applies between 1 May 2004 and 30 June 2005. This makes the total government grants available during this period equal to $12,000 (for either a new or established dwelling).

Table 3.2. Number of sales of vacant house blocks, 2001 and 2003; number of building approvals for new houses, 2001–02 and 2003–04; median price of house blocks, 2001 and 2003; average value of building approvals for new houses 2001–02 and 2003–04; main outer suburban municipalities
SD = Statistical Division
Department of Sustainability and Environment (Victoria), A Guide to Property Values, 2001 and 2003; Australian Bureau of Statistics, Building Approvals 2001–02 and 2003–04

As might be expected, nearly three quarters of those who received the FHOG for new dwellings purchased a new house in the outer suburban area (see Table 3.3, second panel). However, the FHOG as a share of the total number of building approvals in outer Melbourne dropped from 34 per cent in 2001–02, to 24 per cent in 2002–03, and to 18 per cent in 2003–04 (see bottom panel of Table 3.3). This decline probably in part reflected the removal, at the end of June 2002, of the Federal Government’s bonus payment to first homebuyers who purchased new dwellings. A more fundamental factor was undoubtedly the escalation in house and land prices since the turn of the new century.

Table 3.3 Paid applications for First Home Owner Grants (FHOG) for new dwellings, distribution in Melbourne and as percentage of building approvals for new dwellings, Melbourne, 2000–01 to 2003–04
Inner = Melbourne, Port Phillip, Yarra and Stonnington Prahran.
Middle = Hobsons Bay, Maribyrnong, Moonee Valley, Brimbank, Hume Broadmeadows, Moreland, Darebin, Banyule, Boroondara, Manningham West, Whitehorse, Monash, Maroondah Ringwood, Kingston, Glen Eira, Stonnington Malvern, Bayside.
Outer = all other SLAs in the metropolitan area.
State Revenue Office Victoria, unpublished data on First Home Owner Grant applications; Australian Bureau of Statistics, Building Approvals by Statistical Local Area

WHY HAVE HOUSING PRICES ON THE FRINGE INCREASED?

In the case of the land component of these costs, the sharp increase over the past few years in part reflects the increased price of broadhectares. If a developer has to pay $500,000 per hectare and achieves around 10 lots per hectare, this cost is $50,000 per lot. The cost of producing a lot (including local roads, sewers and drainage as well developer contributions to the local council) is now about $50,000. These underlying costs imply a minimum floor price of $100,000 per lot for the immediate future.

A further pressure contributing to higher lot prices is the decisions of developers to move their estates into an up-grade or trade-up market. In this market, buyers can afford a higher standard product and indeed their interest in moving is likely to reflect a desire to purchase a new and perhaps grander house. One result has been the greater emphasis on ‘master-planned’ estates on the urban frontier. These estates typically provide elaborate landscaping (often including lakes), prominent entrance features and some investment in social infrastructure such as community centres. This investment requires a higher price tag on average lots than is the case in estates without these features. Only a small number of lots in these estates tend to be targeted at first home owners.

There appears to be a strong demand for this product from homeowners already residing in established nearby suburbia. Their current home equity makes it financially possible for them to purchase a more modern (and expensive) home. Developers selling such homes in places like Caroline Springs indicate that for many such households the movement up to a master-planned estate is seen as a major achievement and the house itself is a symbol of their success. One qualification about this market needs to be noted. Most of the movers are couples with children, not empty nesters. Couples with children will constitute a declining share of total households over the period to 2030 with the ageing of households, as discussed in Chapter Four.

Figure 3.4 The garden in retreat – big houses on small blocks Photographs taken by authors on field trips in 2004

Developers interviewed for this project (including Peet and Co., A.V. Jennings and the Dennis Group of Companies) all indicate that they and their competition have moved towards ‘trade-up’ customers. This outcome helps explain another stunning feature of fringe development: the predominance of two-storey houses, often labelled ‘McMansions’. The demand for this type of dwelling reflects the additional resources of the second- or third-home owners and the fact that second-storey building costs have stabilised in recent years. Purchasers are also commonly offered advice that the resale prospects of their property will be enhanced by the construction of a large house. In some cases, consumers wishing to locate on an estate have no choice. Developers of master-planned estates often stipulate a minimum size for dwellings. The outcome can be seen in data on the average size of new frontier dwellings. The experience in Craigieburn, on the frontier of the City of Hume, is a case in point. This area used to be regarded as battler territory. But, according to unpublished municipal records from the City of Hume’s Council Property Valuation database, in 2003 the average size of the 284 dwellings built in Craigieburn was a floor area of 184 square metres. In Sunbury, where 323 dwellings were constructed in 2003, the average size was 208 square metres. The photographs in Figure 3.4 illustrate this tendency.

A well documented example of where the land market is heading is Cardinia in Melbourne’s south-east. As noted in Table 3.2, land prices have been relatively affordable in this shire. This is no longer the case. An example is the 87 hectare property three kilometres from the Pakenham town centre being developed by Peet and Company. This is a master-planned estate which features some 18 hectares of public open space and includes two lakes. It is proposed to produce 875 residential lots, most of around 550 square metres, over the life of the project. Accordingly to valuers retained by the Company, these lots are estimated to sell at an average price of $127,500 (Peet and Company 2003). This is well above the median price of lots ($85,000) sold in Cardinia as recently as 2003 (see Table 3.2)

The escalation in land prices has been fuelled by the great property boom which began in the mid 1990s. As the recent report of the Productivity Commission has detailed, this boom reflects, amongst other factors, the downturn in interest rates, the favourable tax treatment of residential investors and the deregulation of the financial system which has provided new sources of funding to those wishing to enter the property market (Productivity Commission 2004 p. 71). Now that this boom has begun to abate, as manifested in a slowdown in building approvals for dwellings and a stabilisation of housing prices, perhaps the housing market will become more accessible to first home buyers. This could occur if the developers holding substantial chunks of land felt impelled to move downmarket, away from master-planned estates in order to accommodate the financial resources of the first home buyer.

The future of the property market and developers’ responses inevitably involves speculation. We cannot resolve the issue. The developers with whom we have discussed the matter hold differing opinions. For some, Australia is about to enter a new phase of the property cycle and it will take years to return to the boom conditions of the last few years. In such circumstances the trade-up market will be affected because prospective purchasers will be fearful about investing heavily in real estate. As a consequence, developers will have a powerful motive to cater for the first home market.

On the other hand, other developers argue that the housing market is likely to maintain its buoyancy because interest rates remain low and the employment market is very strong. In any case, developers who have invested in establishing an upmarket profile for their master-planned estates will be reluctant to prejudice this profile by moving downmarket. They indicate that, as long as interest rates remain at their present levels, holding costs are not high. In some cases (including Peet & Co.), developers have syndicated their estates to investors. In these cases, it is the investors who carry the holding costs.

THE SOCIAL IMPACT OF INCREASED HOUSING PRICES ON THE FRINGE

If the focus for outer suburbia continues to be on the trade-up market, what does this mean for first home buyers who previously would have located on the frontier? According to developers, trade-up customers dominate the purchasers of house and land packages in master-planned estates, to the exclusion of the traditional first home buyer. Table 3.4 describes some of the characteristics of householders who moved to outer suburbia from inner and middle Melbourne between 1996 and 2001. It supports the argument that the newer market is likely to exclude many of the types of households who moved to the frontier prior to the present boom.

Table 3.4 Owner-occupier households in 2001 where the household reference person lived in the inner or middle suburbs in 1996 but was not at same address in 2001, by age and work of reference person, and household income and type
Outer West comprises Melton (S) and Wyndham (C).
Outer North comprises Hume (C) - Craigieburn and Sunbury; and Whittlesea (C).
Outer North East and East comprises Cardinia (S) - North, Knox (C), Manningham (C) - East, Maroondah (C) - Croydon, Nillumbik (S) and Yarra Ranges (S) - Part A.
Outer South East comprises Cardinia (S) - Pakenham and South; Casey (C) - Berwick, Cranbourne and South; and Frankston (C) - East.
Peninsula comprises Frankston (C) - West; and Mornington Peninsula (S).
The inner/middle area comprises the rest of Melbourne.
Australian Bureau of Statistics, Census 2001 customised matrix held by Centre for Population and Urban Research, Monash University

Those moving from inner or middle Melbourne to the fringe over the 1996 to 2001 period were disproportionately drawn from younger couple-with-children households where the household head was employed in a blue-collar or lower white-collar occupation. By contrast, households who moved within inner and middle Melbourne over the same period (far right column of the table) were quite different. The household heads were much more likely to be older, hold professional employment and be in households with relatively high household incomes. It is notable that relatively few households headed by professionals moved to the fringe during the period in question. For example, only nine per cent of the 7,216 household heads who moved from inner and middle Melbourne to the Outer South East held professional occupations compared with 24 per cent of those who moved within the inner and middle areas of Melbourne. By contrast, 35 per cent of the movers to the Outer South East were blue collar, compared with just 17 per cent of those who moved within the inner-middle Melbourne area.

As noted earlier, changes in the fringe housing market already appear to have had an impact on the younger first home owner. Unless circumstances change sharply, their capacity to purchase outer suburban housing in the foreseeable future will be limited. It is argued in Chapter Five that many of the households affected will have little choice but to purchase cheaper infill properties in the lower priced areas of established suburbia.

THE UGB – A DISTRACTION FROM CREATIVE PLANNING?

The Melbourne UGB does not place a restrictive boundary around the city’s urban perimeter. If the demand for outer suburban housing is as the developers have projected, the Government will be obliged to extend it. Nonetheless, the UGB reflects a negative mindset on the part of the Melbourne 2030 planners towards outer suburban development which is stifling creative planning solutions to the settlement of Melbourne’s burgeoning population.

One glaring omission in the strategy is attention to the expansion of employment opportunities on the frontier which are linked into the promotion of local self-containment of employment and work trips. There is land zoned for industry in the Pakenham area but there are no links with broader smart growth objectives. Currently outer suburbanites typically travel in towards a wide range of employment opportunities in middle suburbia. In the case of the south-east, there is already serious congestion on the freeways and arterial roads linking Berwick, Narre Warren and Cranbourne to the middle suburbs – links that do not figure on the Principal Public Transport Network (PPTN). The morning and evening peaks have already slowed to a crawl with cars often queued for hundreds of metres at entry and exit points. The addition of up to 100,000 new households in the south-eastern corridor is a frightening prospect. The solution requires some broader vision of outer suburban development (discussed further below).

Another indication of this negative mindset is the lack of any policy innovations directed at improving the lot of the residents who will be settling within the UGB frontier. All that is offered is a policy of packing households into smaller lots. Take the case of the outer south-eastern corridor which extends in a narrow band from Beaconsfield to Pakenham. Compact city advocates often bemoan the alleged absence of ‘community’ on the frontier. One way of promoting it is to provide these locations with a sense of geographical delineation. In the south-east, the green wedge provides boundaries to the north and south. But Melbourne 2030 does not provide for any physical break between communities, or prospective communities, located within the corridor. Under the Melbourne 2030 template, suburbia is likely to spread without break or focus all the way to Pakenham. There is to be a new community at Officer with a town centre to be developed by VicUrban, but this development borders land parcels already purchased by other developers. Since it is all within the UGB, unless the Shire of Cardinia purchases land to create a break, any border between Officer and Pakenham to the east will be a token at best.

The creation of community in Melbourne’s outlying suburbs is largely left to the local governments affected. These struggle with huge demands for social and physical infrastructure as their populations burgeon. Unlike its New South Wales counterpart, the Bracks Government (and the Kennett Government preceding it) has not imposed an up-front levy on developers which would make a significant contribution to this infrastructure. All the developer pays for is local roads and the reticulation of sewerage and drainage within the estate. They pay no contribution to the cost of the arterial road system servicing the estate. Partly as a consequence, these roads are often inadequate for the additional traffic generated by the new residents. Nor do developers normally contribute to infrastructure such as community centres, libraries, sports grounds, swimming pools and the like. Should the Cardinia Shire wish to provide additional open space, the municipality will have to provide the money.

It often takes decades before the contributions of the new ratepayers are sufficient to finance the community facilities and physical infrastructure which inner-city residents take for granted. Yet, such infrastructure is needed if residents are to interact in a way likely to promote a sense of community. For their part, the original residents of places like Pakenham, quite reasonably, are likely to feel that their existing infrastructure is being swamped by new residents.

There are ways, however, of ameliorating this situation. There is currently no betterment tax in place on the windfall gains to broadhectare landowners within the UGB who are raking in the profits from selling their land to developers at $400,000 plus per hectare. Such a tax could be utilised to help pay for the infrastructure required in the new outer-suburban communities.

It is obviously too late to rectify this extraordinary deficiency in the current UGB policy framework. But such a tax could be introduced prior to any future release of land within the UGB. Melbourne 2030 currently has little to say about policy guiding the release of such land. The present policy is that land adjoining the UGB will be released on an incremental basis. Decisions on which land is to be released are being determined by the relevant Smart Growth Committee. This procedure is likely to preclude any larger regional vision.

Perhaps the reason for the absence of any betterment tax is a desire to keep development costs in Melbourne low. They certainly are, relative to Sydney. However, if this is the case, it is a policy at odds with the philosophy animating Melbourne 2030. One of the reasons advanced for the compact city policy is the alleged high cost of infrastructure on the frontier. Surely an appropriate response would be to require the new households (through levies on the developer which would be passed on as part of the house and land price) to pay a more appropriate share of this. Development costs would increase, thus inhibiting movement to the frontier – exactly the objective of Melbourne 2030.

A final comment on the shallowness of Melbourne 2030 concerns its stance on the provision of lower income housing. It is continually asserted that affordable housing is a priority. Yet the sole strategy offered in the Melbourne 2030 plan is the formation of regional housing working groups, and promises to monitor the availability of affordable housing and to engage the Government’s Office of Housing in assessing the issue. For Melbourne 2030 to achieve its equity and access objectives, some careful thought is needed on incentives for developers to supply new land parcels that are conducive to local community development and consistent with other liveability criteria. Such a strategy will also require dedicated resource allocations. Their absence suggests that the UGB is really about pushing the less well-off into high-density housing to satisfy the design and ideological objectives of its bureaucratic and academic supporters.

LACK OF REGIONAL VISION

Melbourne 2030 assumes that most of Melbourne’s longer term growth will be towards the north and west of Melbourne. Some 62 per cent of the broadhectare potential within the UGB is located within these two sectors and only 38 per cent in the south (Department of Sustainability and Environment 2004 p. xi). This does not reflect the realities of the city’s growth path. As a consequence, it is likely that substantial additional amounts of land will have to be released in the south – predominantly in the Pakenham area and beyond – well before 2030. This is partly because Melburnians rarely shift from one corridor to another, but mainly because the main thrust of Melbourne’s overall development pattern is to the south.

There is scope for some vision about how this outer south-eastern development can be handled. One strategy would be to designate a large sub-regional tract of land beyond Pakenham. This designation could be accompanied with a betterment tax on the land, as well as the creation of a development authority to guide its future. Such a policy offers the best chance of implementing the ideals of smart growth advocates; that is, integration of housing, community services, recreation and sites for industrial and commercial employment, and thus the consolidation of work and social trips within the one locality.

REFERENCES

Birrell, Bob; Healy, Ernest. ‘Migration and the housing affordability crisis’. People and Place 2003; 11 (3): 43-56.

Buxton, M; Tieman, G. Urban consolidation in Melbourne 1988–2003. Melbourne: RMIT; 2004. 64 p.

City of Wyndham. Submission to the Productivity Commission Inquiry on First Home Ownership. 2003. 18 p. Available from: http://www.pc.gov.au/inquiry/housing/ subs/sub210.html.

Danielson, K; Lang, R; Fulton, W. ‘Retracting suburbia: smart growth and the future of housing’. Housing Policy Debate 1999; 10 (3): 513–540.

Department of Infrastructure. Melbourne 2030, Planning for Sustainable Growth, Implementation Plan 4, Activity Centres, Draft. October 2002a. 50 p.

Department of Infrastructure. Melbourne 2030, Planning for Sustainable Growth. October 2002b. 192 p.

Department of Infrastructure. Melbourne 2030, Planning for Sustainable Growth, Implementation Plan 2, Growth Areas, Draft. October 2002c. 34 p.

Department of Sustainability and Environment (Victoria). Urban Development Program Report 2003. 2003. 204 p.

Department of Sustainability and Environment (Victoria). Urban Development Program Report 2004. 2004. 208 p.

Easterbrook, G. ‘Comment on Karen A. Danielsen, Robert E. Lang, and William Fulton’s “Retracting suburbia: smart growth and the future of housing”’. Housing Policy Debate 1999; 10 (3): 541–547.

Millar R; Button, J. ‘Future city plan will fail: studies’. The Age, 3 June 2004: News 3.

Peet and Company. Cardinia Lakes Syndicate Ltd, Prospectus. 2003.

Productivity Commission (Australian Government). First Home Ownership, Productivity Commission Inquiry Report no. 28. 2004. Available from: http://www.pc.gov.au/inquiry/housing/finalreport/ index.html.

Cite this chapter as: Birrell, B; O’Connor, K; Rapson, V; Healy, E. ‘The urban growth boundary’. In: Melbourne 2030: Planning Rhetoric Versus Urban Reality, Monash University ePress, Melbourne, 2005.

Melbourne 2030: Planning Rhetoric Versus Urban Reality

   by Bob Birrell, Kevin O’Connor, Virginia Rapson and Ernest Healy