Population growth in Australia is double the world average and the New South Wales Department of Planning has projected that the population of the Sydney region will increase by 57,000 people annually. How will these extra people be housed? The NSW Government follows the usual doctrines based on higher population densities. Its planning policy, known as The Metropolitan Strategy, works on locating some 70% of new dwellings within existing urban communities (in-fill) and 30% in new greenfield sites.
This policy is implemented by orders issued by the New South Wales Minister of Planning and imposed by ministerial fiat which are neither tabled nor debated in parliament.
To achieve this 70/30 strategy the Department of Planning in effect has placed a restrictive growth boundary around Sydney to force higher-densities into existing residential areas. Greenfield land release has been reduced from an historic 10,000 lots per year to less than 2,000. This has caused a severe land shortage.
These policies are undemocratic and widely resented. What is more, the government has not justified them in terms of public good. Indeed they might find that hard to do. For example, Australian studies show that greenhouse gas emissions per person are higher in high-density living, congestion is worse, human health is compromised, the costs of electricity, gas and water services increase, heritage conservation areas valued by the community are often lost and irreplaceable urban patchwork of greenery and wildlife within the city is decimated.
The CIE Report
The previous Labor Government commissioned a report on possible planning alternatives for Sydney. This report, by the Centre for International Economics (CIE) titled The Benefits and Costs of Alternative Growth Paths for Sydney: Economic, Social and Environmental Impacts was delivered back in December 2010. It has only now been released by the current government.
The report discusses three different scenarios for Sydney. These portray alternatives of 90%, 70% and 50% of new housing to be built in existing urban areas (in-fill) - and correspondingly 10%, 30% and 50% in greenfield sites.
The report compares the costs of the 90/10 and 50/50 scenarios with those of the current Metropolitan Strategy 70/30 ratio over a twenty-five-year period. It finds the cost differences between them are comparatively trivial. When compared to the Metropolitan Strategy 70/30 policy, the annual non-discounted cost saving per new dwelling for the 90/10 scenario is only A$151. For the 50/50 scenario the additional annual cost per new dwelling is found to be A$950.
This report contains two significant flaws. The first is an implicit assumption that the price of land will be the same for all three scenarios. It also fails to properly consider additional cost factors.
Price of Land
Each scenario examined changes the amount of new land that would be released for development. When compared with the current baseline 70/30 strategy, the 90/10 scenario would require even greater restrictions on the release of new housing land and hence an even greater land shortage. By contrast, the 50/50 scenario would allow for a more generous release of new land and hence more land available for construction. The immutable laws of supply and demand ensure that the degree of land restriction would significantly affect the cost of housing in each scenario, completely swamping the relatively minor cost differences due to other factors.
Incredibly, the report appears to fail to take the effect of relative scarcity on costs into consideration. It simply assumes that the price of land will remain the same for each scenario.
This is significant because the report includes in its calculations factors that are highly dependent on the cost of land. If the report’s findings are to be credible, the variation of these factors caused by land price variation in each scenario examined should also be taken into account. When land is scarce high-density developers can make greater profits as they have less competition from low-priced houses and landholders can get higher prices for their land than would be the case otherwise.
Other Costs
The report alleges that electricity consumption is greater in houses than it is in apartments. This is incorrect. Studies show that consumption per capita is greater in apartments. It appears that the data the report relies on does not take into account the consumption of electricity common to the whole apartment block such as lifts and lighting common areas such as foyers and car spaces.
The report also does not take into account costs to existing residents arising from forcing high-density into communities originally designed for low-density. These include:
- The impact on a single-residential property that has high-rise built next to it. This can involve theft of amenity: new in-fill residents look over gardens of existing residents while the latter have to look onto unsightly structures, and suffer lack of privacy and overshadowing.
- Congestion. Existing residents have to suffer from increasingly congested streets and shortage of street parking.
- Shortage of recreational facilities. As more vacant land is built upon in a community originally designed for low-density, it becomes difficult to secure new open areas to service the needs of the additional population at a reasonable standard.
- Reduction in housing choice, particularly for families. Most infill development consists of apartments which are not suitable for bringing up young children. Indeed the majority of those currently living in apartments do not do so by choice. A survey indicates multi-story apartments are not even acceptable to most people wishing to downsize, if they have other choices such as smaller single residential houses or villas.
- Reduction in biodiversity. When gardens and open space are replaced with unit blocks this has a severe effect on urban plant and animal life.
- Heritage items valued by the community such as traditional period architect designed housing are often lost.
- Atmospheric pollution. There is a local effect on residents of atmospheric pollution in high-density areas. This is due to higher traffic densities and to less volume of air being available for the dilution and dispersion of pollutants.
If these considerations had been quantified into the report’s calculations, they would have changed its overall findings.
Conclusions
As is not unusual in reports by density advocates throughout the English-speaking world, the report’s findings are marred by the fact that significant factors are omitted. If costs and benefits were fully accounted for, including the costs and benefits borne by existing residents, an already weak case for emphasising densification over fringe development would vanish.
As we have seen, even with the flawed accounting used in the report, the magnitude of the cost differences that it finds between its three scenarios is trivial. These tiny differences make the unpopular Metropolitan Strategy 70/30 policy hard to justify, and any intensification of this strategy to 90/10 impossible to justify. Cost differences of either A$151 or A$950 are small compared to the price that people have to pay for a house (the median price in Sydney is A$650,000). These insignificant figures need to be considered in the light of providing people with the opportunity of living in the housing style of their choice.
If costs and benefits were to be fully accounted for, including those borne by existing residents, the case for a policy of enforced densification cannot be supported. When asked voters want less rather than more densification.
High land prices due to restrictive land-releases are already making housing unaffordable for the next generation. Unwanted high-rise development represents theft from the community, reducing the amenity of existing residents and transfers that value to property developers without recompense. This theft is aided and abetted by the policies of the State Government. Moreover, it continues to result in well-publicised favours being granted to developers with connections to government.
The Metropolitan Strategy needs to be replaced. A good start would be for the New South Wales government to adopt the suggested 50/50 strategy as the first step towards reform. The provision of more choice will allow people to demonstrate whether they prefer to live in high-density or in lower cost, more spacious housing with a garden in the suburbs.
(Dr) Tony Recsei has a background in chemistry and is an environmental consultant. Since retiring he has taken an interest in community affairs and is president of the Save Our Suburbs community group which opposes over-development forced onto communities by the New South Wales State Government.
Sydney suburb photo by BigStockPhoto.com.
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