Australia’s urban puzzle: balancing local needs with national growth

Running a country as vast as Australia is no easy feat.

To keep things streamlined, we've established three tiers of government - a clever distribution of power ensuring that no single entity holds all the reins.

It's a system where responsibilities are smartly delegated: think waste management at the local level, healthcare at the state level, and national defence at the federal level.

In his article in The New Daily, Simon Kuestenmacher discussed that local government in Australia plays a more significant role in urban planning than its counterparts in many other countries.

He highlights that our local councillors possess considerable veto powers, influencing the fate of developments in their neighbourhoods.

This is a crucial point, especially in states like New South Wales and Victoria.

Local government and the NIMBY phenomenon

But when councils are labelled as 'NIMBYs' (Not In My Backyard), is it a case of self-interest or incompetence?

Kuestenmacher said that it's far from it and we're looking at a systemic issue.

Local councillors, elected by residents, are naturally aligned with their constituents' interests, often leading to resistance against new developments.

Consider the common objections: "A school extension? That means more traffic. A new housing development? It could block my view and strain our infrastructure."

A councillor must heed these concerns, which often lead to stalling or vetoing projects, even those as vital as social housing.

However, when developments are deemed essential, bodies like the Civil and Administrative Tribunals (NCAT or VCAT) in Victoria and NSW can step in.

Yet, this often leads to significant delays, a critical issue given our unrelenting population growth.

The geographic divide

Australia's urban landscape presents a unique picture.

Kuestenmacher explains that in the inner suburbs, there's a growing acceptance of densification, mirrored in the rising skyline of office towers and residential blocks.

Contrast this with the urban fringe, where development faces fewer objections and regional towns that actively seek growth.

The middle suburbs, however, are a different story.

Caught between the high-rise inner suburbs and the expanding urban fringe, these areas are in a limbo of sorts, holding on to the status quo.

What's missing is a transition zone of medium-density housing - a 'Euro block' style development that offers numerous advantages like affordable housing, efficient service delivery, and a mix of property sizes beneficial for local communities.

Suburban expansion: a historical perspective

Kuestenmacher highlighted in his article that post-World War II, the availability of cars and the pursuit of the 'Australian dream' led families to migrate from dense inner-city living to sprawling quarter-acre blocks in the suburbs.

This pattern has resulted in cities like Melbourne housing significantly fewer people per square kilometre compared to European cities like Berlin, increasing the cost of infrastructure and services per capita, he said.

The road ahead: densification and state intervention

So, why not just build medium-density housing in our cities?

Kuestenmacher explains that the challenge lies in assembling the required land parcels and the economics of development.

With high demand in the housing market, developers are inclined to build higher, more profitable structures.

Recognising this, state governments have stepped in with strategies like 'Plan Melbourne' and 'The Greater Adelaide Regional Plan', aiming to manage population growth and increase housing affordability through a mix of infill and greenfield development.

He noted that to combat local NIMBYism, states are setting and enforcing strict housing targets for local governments, offering incentives and, if needed, sanctions to ensure compliance.

This could potentially lead to a more centralized approach in urban planning, akin to the Greater London Authority.

In conclusion...

Kuestenmacher concludes that as we move into the 2030s, we'll witness a transformation in our middle suburbs.

With Baby Boomers gradually moving on, many quarter-acre blocks will likely be redeveloped into townhouses, enhancing land values.

Collaborative efforts between local and state governments will be essential in shaping our urban future, balancing local preferences with broader developmental needs.

About Sam Alaaeddin With well over a decade's experience in asset and wealth management, Sam is an Elite Wealth Planner at Metropole and leverages his expertise to help clients achieve their wealth management goals. He holds a bachelor’s degree in law and commerce (Finance) and a Diploma in Financial Planning.