Monday, August 4, 2014

More than wishin’ and hopin’ needed

The collective view of what the various property industry lobby groups are asking of government has become a confused picture. Little wonder governments can so easily divide and rule, or simply ignore. 

Dusty Springfield’s enduring classic “Wishin’ and Hopin’” opened with the line “Wishing and hoping and thinking and praying, planning and dreaming.” This is nice for a wistful love song lyric but hardly sound strategic guidance for an industry’s advocacy platform. But if you combined the wish lists of the various property industry lobbies all jostling for ‘peak body’ status, you’d be forgiven for thinking that it was driven by wistful starry eyed dreamers, not hard-nosed business people. 

Here’s what I mean. Recently, the Property Council renewed its call for the abolition of stamp duty and land taxes. This was in response to a Business Council of Australia report that called for workforce mobility barriers to be removed. It’s been a long held position of the PCA and the abolition of stamp duties was even a promise by the States in exchange for the rivers of revenue they would get from the GST. They (the states) lied. 

Now, the States have become even more dependent on property taxes than ever before, and most are subject to juggling very difficult demands for more services against high debt repayments. Calling for the abolition of their biggest direct revenue source, without proposing a replacement, at a time when every State is being forced into cutbacks and unpopular asset privatisations, is unlikely to get much traction.

At almost the same time, the Housing Industry Association renewed its call for first home buyers to be able to access their superannuation to fund a deposit on a home. This is a populist argument that seems to get reasonable airtime, but there are plenty of problems with it. 

What of the first time buyers whose first purchase is an investment property? What of the fact that young people – typically the first time buyer demographic – have precious little in their super fund anyway? What of the reality that over our working lives, what we put into super is going to be nowhere near enough for the job it was initially intended (retirement funding) let alone trying to repurpose super to other things like a house deposit. The answers are not provided.

Then there’s the thorny issue of negative gearing. Here, pretty much all the property industry groups agree: don’t touch it. I tend, mostly, to agree with the arguments why it serves a purpose but a blanket ban on refining negative gearing doesn’t make a lot of sense given the complexities of the economics and the very obvious excesses in some quarters. But to me it looks as if the industry’s collective view of negative gearing at present is that any discussion is simply off limits. As for capital gain tax on the family home – you daren’t mention it or all hell would break loose. 

How about the supply side? Here, the HIA, UDIA and PCA are all pretty much in agreement: artificial planning constraints on new land for housing have been responsible for driving up land costs and for our worsening affordability problem. Their remedy (which I support) is for land to be less constrained, so that competition and more available supply will release the pressure on land prices and flow through to more affordable housing. 

That’s fine, but what’s the view then on restrictive land use planning when it comes to retail? Hell no. The pro-free market view takes a 180’ turn and all of sudden the high retail rents which are product of high retail property prices which are in turn a product of highly restrictive land use rights on retail property, are a good thing after all.  Now it’s a case of an orderly planning scheme and retail hierarchies and the prevention of retail sprawl into dormitory areas. The inconsistency in positions between land for housing and land for other uses is remarkable. 

Put all the collective views together and imagine yourself a Minister for Property. What does the industry want? 

They want stamp duties abolished, and land taxes too. Effectively, better they pay no tax. They want favourable tax treatment through things like negative gearing retained, along with the tax exemption on the family home. Don’t even think about tinkering with that. To address affordability issues they want more land released and less planning control, and for first home buyers to access their meagre superannuation to get them into the market. But while freeing up land for housing to keep costs down and stimulate competition, don’t even think of freeing up planning permissions for retail uses, because if retail rents – which are some of the highest in the world – fall, then it’s the end of the world as we know it. Sovereign risk and all that. 

You’d have to forgive our imaginary Minister for wondering what they could actually do.

This isn’t intended as a cheap shot because as a former industry advocate, I appreciate just how hard it is to prosecute the case for reform with limited resources, an unsympathetic public, and cash strapped governments. And you’d be mistaken to think I regard the current taxation and regulatory approach to property generally as anything but a mess of over-taxation and over regulation. 

But lately the collective comments by the various industry groups seem to have become more one dimensional. Maybe it’s just me but they appear, through their media comments, to be acting the same way Unions did in the 70s and 80s: proposing logs of claims for wages and conditions without also proposing productivity improvements or other trade-offs in exchange. The collective view of the property industry, if it is to have some impact on government policy, might benefit from more collaboration amongst the various groups. 

If a more unified voice on some of these pressing issues could be heard, and if that voice also identified solutions that didn’t leave governments hopelessly out of pocket, then this can’t be a bad thing. If, for example, as an industry we wanted lower stamp duties and land taxes and in exchange were prepared to publicly campaign for a 15% GST, along with a fairer system of distribution of those funds amongst the states, then that solution should form part of the overall industry-wide campaign. Ditto to finding a logically consistent approach to the issue of restrictive versus permissive land use controls, where some of the industry groups differ. If we intend to advocate both at the same time, this logically inconsistent position needs simple and plausible explanation. 

The alternative is to fall into the trap of simply wishing and hoping, and thinking and praying, planning and dreaming.

Tuesday, July 1, 2014


Australian cities have some of the highest carparking costs in the world. Why? Can anything be done about it? And what might happen if it gets any worse?

It’s hard to fathom but the cost of parking a car for a day or even a couple of hours can apparently cost you more in an Australian CBD than downtown Manhattan, or London, or Paris. The latter are  global centres of commerce, with populations that dwarf that of Australian cities. New York City’s 8.4 million residents are the almost the equivalent of our three major capitals - combined. Ditto London, with its 8.4 million residents or Paris with 10.5 million residents.

Manhattan Island alone has 1.6 million residents, plus it adds another 1.6 million commuters, every day, swelling daily to over 3 million people. By comparison, the City of Sydney (the CBD plus surrounds) is roughly equivalent in area to Manhattan Island but home to only around 190,000 residents and a daily influx of workers and students of around 450,000. Yet it can cost more to park in Sydney, or even smaller cousin Brisbane (under 200,000 employees in the inner city), than Manhattan. 


On the supply side, there has been a history of anti-car planning culture in many Australian cities for some time. Sydney was the first to impose a parking tax on CBD car spaces, in a bid to force up the price of parking and divert people to public transport. It forced up the price alright, with a number of subsequent increases in the tax over the years (the tax is now around $2000 per car space), but it made no real impact on public transit. 

Here’s an example of the thinking from then NSW Transport Minister David Campbell back in 2009: 

"The parking space levy is all about encouraging people to leave their car at home, and take public transport," he said. 

In the same story, it took someone from the Nature Conservation Council (the irony is delicious) to point out the bleeding obvious:

“I don't think it will have too much of an impact on congestion… Any increase in parking levies probably isn't going to make too much of a difference to the people who can afford it right now, what it will make a difference with I suppose is the people who really don't have any other options and are currently driving in."

Incredibly - and idiotically - the South Australian Government is trying the same thing with Adelaide, where a $750 per annum parking tax takes effect this July. You’d think they’d be desperate to bring any economic life they could find into Adelaide, but evidently if that economy arrives in a car, they don’t want it. Great place Adelaide. All it needs is an economy to go with it.

The punitive policy stance on CBD parking visits itself in other forms too. Restrictions on building new CBD parking spaces has had the effect of limiting supply as the cities grew. New multi-deck parking stations could alleviate the supply-side problem, and there seem to be enough sites suited to them in most cities, but the policy stance doesn’t support them. New commercial towers are also limited in terms of the numbers of additional basement spaces they can deliver into the pool, in a bid to limit the supply of additional parking. 

This public policy view is connected to deeply held faith (and the operative word is ‘faith’ because there’s little evidence to support the view) that by pricing or policing private vehicles out of Australian CBDs, the same people would be forced to use public transport, and we’d all be better for it. “We just need to get the cars out of the city” is the sort of view you’ll hear often on talk back radio (particularly the ABC; sorry Aunty but your listeners have been drinking way too much Kool-Aid). 

The problem is simple: if you take the cars out of the city, you’ll take the people too. And then the businesses will follow. 

Bear in mind is that parking is not just about commuters. CBDs and inner cities are places for business to interact with other businesses, and with government. They also interact with customers, clients and suppliers. They have restaurants and retail shops that rely not just on the CBD worker but also visitors to the CBD, for the retail dollar. Many of these people invariably rely on the private vehicle to get there. Casual parking costs – at up to $55 for a couple of hours – have long passed the point where they’re a deterrent: they’re a real disincentive to visit the CBD for casual business meetings. Permanent parkers with paid company spaces won’t notice this. But they may begin to wonder at the number of meeting requests for out-of-centre meetings, where the parking cost isn’t ten times the cost of the coffee. 

If the intent is to ‘punish’ the private vehicle in the belief that this will encourage higher rates of public transit patronage, the irony is that the consequence could see more businesses relocate to outside city centres, where parking regimes are more favourable and occupancy costs lower. If that happens, the numbers of office workers for whom train and bus services are a convenient option will actually fall – because public transport options in non-central locations are notoriously difficult to service and often require mode or route changes for a single trip. 

Centralised employment is what works for public transport so it ought to be in the interests of public transport advocates to support more CBD employment and more widely available parking (both in supply and pricing) than to argue for punitive agenda-based policy positions which may deter businesses from city centres. In short, if you succeed in chasing cars out of the inner city, you may also chase business out and end up with more private vehicle transit for work journeys than if they had stayed in the CBD.

The reality too is that public transport will only go so far. In Australian cities, the highest patronage of public transport by CBD workers is by people who live close to the city in the first place. Travel beyond a 5 klm or 10 klm ring and the mode share by public transport drops quickly to below 10% (see here for an excellent analysis). 

The reason is that – contrary to popular opinion – only around 10% to 15% of metro wide jobs are in the CBD and inner city. If you have a CBD job, you tend to earn more, and will want to live closer to your work. Ironically, this makes you also more likely to take advantage of very generous taxpayer subsidies for your train or bus fare to work, than the suburban worker who gets no such subsidy for commuting by private car to their lower paid job in a suburban location. And because most employment is distributed throughout suburban locations of our metropolitan areas, these are always going to be more suited to private vehicles than public transport. 

To get our public transport usage up to even half the rate of somewhere like New York – where 55% of commuters use public transport - we would need to see employment concentration in our CBDs quadruple to 40% of metro wide jobs while suburban employment didn’t grow at all. 

Hardly even a remote possibility. 

On the demand side, we seem to have a capacity to pay when it comes to parking that is allowing operators to charge what they do. However expensive the spaces may be, they do seem consistently full. Arguably, for many there is little choice. There is also little competition, with only a couple of operators seemingly controlling the market. But it is fair to question whether the exorbitant rates now being charged – especially for short term parking – won’t in time begin to change behaviour. If that behaviour begins to lead an exodus of activity to non-central locations, prices should fall as demand weakens. But that may create other, larger problems as suggested above.

So how should we deal with congestion and parking policy and public transport? 

There is no easy answer here but I’d suggest that reliance on proven failures like parking taxes or similar pricing policies in the Australian context is not a good option. It might be helpful instead to get a solid grasp on all the factors driving the high cost of parking – including oligopoly pricing by a small handful of operators. 

We also need to understand clearly the benefits of city parking before treating it like a disease and trying to eradicate it, or the patient will suffer. And we also need to be very clear on what alternatives exist and the genuine likelihood and extent to which public transport can replace the private vehicle, given our urban scale and the nature of our urban economies. 

Tuesday, June 10, 2014

This can’t end well. Can it?

In housing we are eating our young. Investors are competing aggressively with first home buyers for available product, and winning. In what may be the shortest post of The Pulse’s history, there are just two graphs that seem to suggest this might be true. If it is, what next?

My thanks to Leith Van Onselen and his colleagues at Macrobusiness for this one, but it struck such a discord that I thought it worth highlighting.

The Australian Bureau of Statistics figures on housing finance are a measure of activity in housing markets. Something the Reserve Bank watches closely. Their latest sets of data paint a concerning picture.

First up, before we drink the last drop of champagne toasting general activity in housing markets, is the news that investors are clearly on the acquisition trail, and they are hungry. Have a look at domestically financed loans for investment housing. It’s all about investors:

Compare this with what’s happening to the first home buyer market. And remember, we have record low interest rates and allegedly improving affordability metrics:

If this stark contrast doesn’t suggest something is amiss, nothing will. Draw your own conclusions.

If you’re a developer, a deal is a deal and it doesn’t much matter who is buying the stock, provided it makes the project feasible, pays the wages and the consultant’s bills, pays the taxes and hopefully leaves a healthy profit. If you’re in public policy though, you would like to think the ramifications of this distorted playing field might be sinking in.

I’m not sure that it is. The Federal Government says housing is a matter for the States (notwithstanding the Reserve Bank’s clear and publicly admitted interest in housing market dynamics). The States tend to pass a lot of responsibility – in terms of levies and charges and compliance costs associated with the supply of new stock – to Local Government. And Local Governments tend to blame both the States and the Feds for a lack of resources for infrastructure associated with housing supply and growth generally.

Those who point to the obvious problems in public policy settings are faced with the three monkeys rule: first denial, then pass the buck, and if that doesn’t work, shoot the messenger.

We have a very fundamental problem with distortion in our housing markets that is already spilling over into other aspects of economic policy and questions of generational equity. If these two graphs don’t make that obvious, nothing will. 

Monday, May 26, 2014

What we earn.

Discussions about housing affordability focus almost exclusively on the price of the real estate, movements in which are monitored by multiple organisations on a seemingly daily basis. There is comparatively little discussion about people’s incomes, which are equally as important as prices in determining what can and can’t be reasonably afforded. The income profile of what most Australian’s actually earn paints a sobering picture which could more often be taken into account in debates about housing and affordability.

It’s becoming fashionable again for business lobbies to complain about Australia’s high wage structure. It explains, they’ll argue, why we lost Holden, Ford, Toyota, and (almost) Qantas, among other things. And yes, Australia’s wages are high by competitor standards - but so are our costs. One of the most fundamental of needs, along with food and clothing, is shelter. And it’s the cost of shelter relative to incomes which has been stretched to beyond reach for a large proportion of young Australians.

Reducing minimum wages or reducing wage growth further, if at the same time allowing housing costs to further escalate, will only make this situation worse. Arguably, if we could substantially reduce the cost of supplying new housing, this would relieve upward pressure on wages and work towards improving our global competitiveness – along with repairing living standards for working and middle class families, rather than eroding them.

First, here are some of the facts on the infrequently discussed income side of the equation. (I am again indebted to the team at Urban Economics for making these available. These are top line numbers only: if you want more detailed analysis, please contact Kerrianne Bonwick).

Nearly two in three of all Australians earn less than $52,000 per annum. It doesn’t much matter whether it’s Brisbane, Sydney or Melbourne; the proportion is roughly the same.  It’s not much. Slightly more than another one in every eight earn from $52,000 to $78,000 per annum. Roughly eight in ten Australians earn less than $78,000 per annum.

Personal Incomes
< $52,000
$78,000 to $104,000
> $104,000
Not Stated

Problem? It is if you’re trying to buy into the housing market. Take a modest house of say $400,000 (very modest depending on location). A worker on $50,000 – and these represent nearly two thirds of all workers remember – is facing a price multiple which is 8 times their gross pre-tax income.  Basically, two thirds of us are stuffed in terms of affording even a modest $400,000 property if we weren’t already in the market. A more reasonable price multiple of say 5 times income would require an income of $80,000 per annum or more. But there are less than 15% of Australians who fit this category.

But wait, shouldn’t we count household, as opposed to personal, incomes? A good point, particularly for younger families and young couples, where dual incomes are the norm due to necessity.

But even based on combined household incomes, a third of all households earn less than $52,000 per annum. Another 14% to 15% earn between $52,000 and $78,000 and another 11% or 12% earn between $78,000 and $104,000. A reasonably healthy 30% of all households bring in a combined $104,000 per annum or more, but seven in ten bring in less than that.

Taking our modest $400,000 home again, and  roughly half of all household incomes fall short of the $80,000 mark required for a price-to-income multiple of five. For one in three of every households, their combined income means a price to income multiple of eight times. They are pretty much stuffed, still.

Household Incomes
< $52,000
$78,000 to $104,000
$104,000 - $156,000
$156,000 - $208,000
> $208,000
Not Stated

Hang on, isn’t it more relevant to focus on the demographic that’s more likely to be trying to get into the property market, because older people and retirees, who already own or are paying off homes, may skew the figures? Absolutely: this is the key demographic, especially if you’re a developer of new detached housing product - which is what this cohort mainly wants to buy to raise a family in (as opposed to the apartment they might rent while pre-children).

Personal income profiles of the 25-34 year old age group are pretty much in line with the Australia wide picture. More than half earn less than $52,000 and roughly eight in ten earn less than $78,000 per annum, which means eight in ten of this age group – who are at the peak of their family formation potential – would be faced with a price multiple of more than 5 times incomes on a $400,000 property, and more than half would be faced with a price multiple which is eight times their income, or more.

Personal Incomes 25-34 year olds
25-34year olds
< $52,000
$78,000 to $104,000
> $104,000
Not Stated

None of this is great news. For developers trying to provide affordable new housing in new greenfield estates in urban fringe locations, the reality of these income profiles can’t be escaped. I had the privilege of visiting one such estate in south east Queensland recently and what I saw was absolutely first class product at very good entry level prices in a very well designed environment. No ‘McMansions’ here – just quality new detached three and four bedroom homes, on small lots, priced from around $350,000 - and in some cases less.

But even at $350,000, only around 15% or so of the target 25 to 34 year old demographic could afford to get in with a price multiple of less than 5 times an individual’s income. That proportion would rise taking into account combined incomes for this age group, but it won’t rise beyond around a quarter or a third.  The reality is that more than half this age group would find an entry level $350,000 home would be six times their combined incomes or more. It would be tough going.

Granted, interest rates are currently very low and some governments are offering stamp duty and other concessions to first time buyers. But these are having next to no impact on this market. Rates of first home buyer activity are at generational lows.  And interest rates won’t stay this low forever. A significant rise in variable home loan rates could tip a substantial number of families in this age group from the ‘just making it’ basket into the ‘we’re stuffed’ basket.

Since the ‘do nothing’ policy approach doesn’t seem to be working, what could be done to turn the situation around? Basically, it’s a simple formula between incomes and prices. You either increase incomes or reduce prices. The first probably isn’t an option unless incomes can gradually creep up with inflation and with productivity gains over time.

But what could also happen is the cost of supplying new housing (not referring to existing stock) could be reduced. New housing is heavily taxed and over regulated (the same cannot be said of existing stock). Something like a quarter to a third of the cost of the new home in an urban fringe location is due entirely to various taxes, charges and compliance costs (which do not apply to existing stock). It is also affected by the rapid escalation in land costs due to policy induced supply constraints in areas of ample available land (the same can’t be said of existing stock in mostly built-out inner or middle ring areas). Most of these additional costs of supply owe themselves to policy changes made since the early 2000s – precisely the time when the affordability gap began to widen.

It does seem a compelling place to start.

We should aspire to a more competitive Australia but this policy effort cannot just focus on labour costs because our incomes, while high by competitor standards, are now generally insufficient to cover one of the basic necessities of life: shelter. We have made this happen because policy makers have deliberately increased the cost of delivering new housing with new taxes, charges and compliance costs, all justified on esoteric planning or sustainability principles but impossible to justify on social equity or economic grounds.

These policy changes were made to suit political agendas at the time: they were not needs-based or market-based policy changes. (It also has to be said the political agendas at the time were in the hands of Labor State governments, starting with Bob Carr in NSW but which spread rapidly to other jurisdictions. Why Labor Governments introduced policies which hurt people on working wages is as mystifying to me as to why Liberal Governments have continued to maintain the same policy positions, with minimal amendment).

The gap between the cost of supplying even relatively basic housing on the urban fringe, and the incomes of the people who in past generations could afford it, will continue to widen unless regulators and policy makers begin to grasp the wider economic consequences of policy-inflated costs for new housing supply.

Footnote: why a five times multiple? There is no strong reason. The authors of the global housing affordability report Demographia will argue that affordable housing should be around three times incomes. Moderately unaffordable they define as between 3 and 4, and between 4 and 5 is defined as ‘seriously unaffordable.’ The multiples of 7 or 8 times incomes, which we’re seeing in Australia, are off the scale. But for the purpose of argument, if even relatively high (by international standards) multiples of 5 times incomes seems like a utopian dream, it illustrates how far incomes need to rise or costs of new supply should fall before we get even close to the situation that prevailed for most of our history. It’s a big challenge.

Saturday, May 3, 2014

In praise of accidental cities

Most of the built form we know as our cities of today was built before complex town planning regulations were developed. The irony is that it is the accidental parts of our cities – the parts developed during periods of the least regulation – that we now seek most to protect.

An increasingly urbanised world is placing pressure on governments and policy makers to more carefully control the use of land within recently defined urban boundaries. But this is, in terms of the history of our urban development, a largely modern construct. Regulatory town planning itself is largely a post-war concept, first notably embodied in the UK Town and Country Planning Act of 1947.  There had been previous ‘town planning’ Acts prior to this in the UK but the 1947 Act significantly overrode land ownership and required virtually all proposals to seek planning permission from the local authority.

Given the post-industrial state of much of urban Britain in the pre and inter-war period, it’s not surprising that regulators sought more control over how land was used and for what purposes. Well intentioned urban planners sought to segregate housing from industry and to carefully define and control how future urban expansion occurred. Higher standards of living, less pollution and the pursuit of a more equal society were among the motives. (The extent to which these hopes were achieved is open to much debate).

Fast forward some twenty or thirty years and to the antipodes, and Australia’s turn was to come. Our urban development history had largely been a free enterprise model until perhaps the mid 1970s but certainly by the mid 1980s regulators were having more say in land use policy and controls over private land. Prior to this, the 19th century had seen industrial and housing uses develop in close proximity, often centred on transport nodes such as sea or river ports. It was a walkable society back then because there was no other choice, expect the horse, which wasn’t so much needed when the factory or wharf was only a few blocks from home. Tiny workers’ cottages and terraces sprung up in amongst the tanneries, warehouses and factories of industrial pursuit.  

The 20th century witnessed a gradual transformation of work from blue to white collar. Australia by the 1960s was a very different nation – with a rising middle class, white collar employment and the post war baby boom in full stride (or should that be ‘crawl’ under the circumstances?). Suburban development took hold and an upwardly aspirant middle class quickly embraced the quality offered by modern brick homes with flushing toilets and fancy kitchens (by their standards), with yard space for children to play – all features which had largely been absent from the homes they and their parents had grown up in.  Land was developed for suburban use with minimal regulation or control. Cities expanded and entire city administrations had relatively small building divisions with perhaps a few city engineers to ensure what minimal standards existed were met. The notion of town planning departments was something new, and novel.

But as growth continued and society progressed, governments found themselves under increasing community pressure to control and regulate this growth. By the time comprehensive land use regulation took hold, most of the structure of our urban form - including major transport routes, suburban housing development, centres of industry, of white collar employment, the locations of hospitals and schools – all had largely been developed and delivered, as if by accident.

There is no question that modern town planning has helped deliver some very high quality outcomes. Witness in particular the large swathes of urban renewal projects which have leveraged private capital to transform brownfield and largely abandoned inner city industrial land into high quality (and high priced) inner urban housing and commercial developments. 

But the point should be remembered that there are limits to what regulation can provide and there are benefits of enterprise-driven development which are too quickly forgotten. ‘Accidental cities’ has become a derogatory term used by those who see benefit in increased planning control over public and privately held land. The price of not intervening through fine grained regulation, the argument goes, is inefficient cities which lead to inefficient economies.

For me though, this has a touch of Stalinism about it. There are huge sections of cities globally which are now feted for their character, and they are invariably parts which developed ‘by accident’ through free formation of common interests and private capital, unrestrained. Often messy, sometimes disorganised and invariably hectic, they are nonetheless the places that feature in tourist brochures. Think of Singapore’s Chinatown, or Hong Kong’s night markets. Think of Venice’s canals, New Orleans’ French Quarter, or New York’s many ethnic enclaves like Little Italy.

I struggle to think of many places elsewhere in the world which were created under the rigid guidance of regulatory planning, which we’d like to mimic or replicate. To me it seems very much the accidental parts of cities that are somehow more ‘real’ and less reconstituted. It’s as if we can tell the difference, without even really thinking about it.

So it should come as no surprise that it’s also these parts of our cities that we tend to want to preserve. They aren’t necessarily just historical structures or places – sometimes, like the laneways of Melbourne’s CBD – they can be uses which have sprung up as if despite of – or in defiance of - the regulator’s rule book.  

What this means for modern town planning is that the efforts to control and command in fine detail the nature of urban outcomes – even down to deciding what type of retail shop should be allowed in one place or another for example – is actually counter-productive. It stifles competition and smothers creativity. 

There is a balance between the planned and the accidental and to find where that balance lies first means appreciating that accidental cities, or the things that are allowed to happen without intervention, can have as much appeal as those parts which have been carefully planned, controlled and documented. 

Perhaps once we begin to appreciate the design dividend that is delivered through accidental aspects of urban development, we might as a community become less wedded to the idea that only more regulation can achieve the quality urban outcomes we most admire.

Thursday, March 20, 2014

Cattle and Cane

What has this Go Betweens song from the 1980s got to do with proposed changes to the south east Queensland regional plan? Surprisingly, there are some common themes…

In the early 1980s, when Go Betweens songwriter Grant McLennan penned ‘Cattle and Cane’, south east Queensland had a population of around 1.5 million. Today it’s around 3 million and predictions are that this figure will rise to 4.5 million by 2030. Much about the south east – one of Australia’s fastest growing conurbations – has changed in that time, most of it for the better in my view; some of it for worse.

But it’s some of what’s also been protected from change that is somewhat ironic. I’m referring to fields of sugarcane or expanses of cattle grazing land, which remain under a number of planning controls, protected from urban development. These are some of the landscapes McLennan referred to in his song, drawn from memories of the family farm in north Queensland:

“I recall a schoolboy coming home
through fields of cane
to a house of tin and timber”

A resident of south east Queensland when he wrote these words, McLennan would have seen considerable expanses of active sugar cane farms and cattle properties surrounding what was then the urban fringe but what we now know as established suburbs. A drive to the north or south coasts from Brisbane passed through these farmlands, many of which have since given way to housing and non-residential uses demanded by the rising population that now lives here. We need houses to live in, schools for our children, shopping centres, entertainment venues, roads, parks, hospitals, civic buildings and more. It all requires land.

In response to this growth, regulators sought to contain ‘sprawl’ and protect environmental and other features of the region while pushing higher densities of development into existing areas. This became a central plank of what ultimately became the ‘South East Queensland Regional Plan.’  In common with other metropolitan wide plans of the time, it introduced an ‘urban growth boundary’ beyond which future urban growth was virtually prohibited. And even within that boundary, some land uses were protected from development – rural land uses included.

This in many ways is a fine political sentiment for the middle classes of the inner city to ruminate on. The idea of protecting farmlands from urban sprawl hits a nerve with a community who no longer care where their milk comes from, or that buying it for a dollar a litre (less than they happily pay for water or petrol) is sending dairy farmers broke. The hypocrisy of expressing concern for the retention of farming lands while adopting consumer behaviour which renders these enterprises uneconomic is a topic for another day.

Protecting farmlands (as opposed to protecting farmers) needs to be about much more than protecting the view corridors enjoyed by residents en route to their coastal holiday locations, or appeasing the interests of planners who want to see swathes of green open space on their regional plans. If the enterprises are no longer economic, arguing for their preservation is forcing a form of poverty onto farming families that can in many cases only be relieved by the ability to sell the land for a higher and better use. And that use would be housing, which the regional plan prevents them from doing.

Take sugar cane for example. North and central Queensland have large and viable sugar industries (though some farmers in these areas would argue even that’s debateable). They still have operating sugar mills to process the raw cane for domestic or export consumption. But the sugar industry in the south east corner isn’t really viable any longer. Burning cane (described in the song as “and in the sky, a rain of falling cinders”) would no longer be tolerated in a heavily populated south east. Green harvesting is now the go. But the sugar mills long ago closed down, with the sole exception of Rocky Point near Pimpama. A mill at Eagleby closed in 1943 and the Nambour mill closed in 2004. Basically, better conditions for growing sugar cane are found in northern climates and the economic realities of life have a way of taking over. It’s probably why the sugar cane fields found in the 1860s around the Brisbane suburbs of Chelmer, Corinda or Bulimba long ago surrendered to the obvious.

But under our current planning scheme, fields of cane are a protected feature of the landscape. The cane grown on the fields near the Sunshine Coast must be transported to Maryborough for milling. Hardly economic but what choice is there? Are there environmental grounds to support their retention? Perhaps driving past cane fields in your BMW at 100kph gives an illusion of ‘green space’ but in reality, canefields have next to no ecological value. They are full of the appropriately named cane toads (a noxious pest), rats, and snakes and not much else. A hectare of land given to housing would support more native plant and wildlife in people’s backyards than a hectare of cane land.

Cattle country isn’t much different. Much of the grazing land around the outer edge of the urban growth boundary is marginal, at best. Soil types can be sandy or rocky (and not hold moisture) and irrigation isn’t feasible for most given limited underground water supplies and the lack of flowing fresh water rivers. Currently, much of this country is in drought. Take a weekend drive anywhere from Jimboomba through Undullah to Peak Crossing, Laidley, Esk, Toogoolawah or Kilcoy and have a look. Sure this is a seasonal problem and this isn’t a good season, but the country itself – with some exceptions - isn’t the best for grazing. New techniques in raising beef, including the advent of feedlots, new or improved pasture seed types and changes in farming practices mean that in good country with dependable rainfalls and good soil types, more cattle can be raised on less land, faster, than ever before.

Queensland and the NT’s cattle herd is over 15 milllion head, compared with less than 12 million in the mid-1990s. So we are not going to run out of cattle for meat. The question is: do we need to insist on raising it on our urban fringe by withdrawing permission for owners to put that land to alternative uses?

Persisting with the retention of cattle properties on the edge of the urban fringe, only in order to suit some inner urban sensitivities about the loss of nearby farming land, is an unreasonable imposition on those farmers and illogical at best. Plenty of farmers would persist in being illogical and continue to run cattle despite what nature and the economy is telling them even if alternate uses were permitted: but there’s a difference when it’s their decision to do so, or a mandate imposed on them by others.

The same applies for sugar. The same actually applies across a range of land uses where privately owned land is prevented from adopting a higher or better use simply because a planning scheme says so, in defiance of economic logic or even common sense. If the community are so fervently attached to the idea that other peoples’ private land must be retained for these particular purposes, then perhaps the community should buy them out? At the very least, it ought to be the landowners right to seek economic uses for their land, especially if the pre-existing use is no longer economically feasible.

Cattle and Cane may have been a feature of south east Queensland life even as recently as the 1980s when the population was 1.5 million. But to persist with these practices out of nostalgia or to appease shallow and ill-informed community opinion will make little sense in the Brisbane of the 2030s - when the population reaches 4.5 million.

“from time to time
the waste memory-wastes
the waste memory-wastes
further, longer, higher, older”….