Shift growth to regional cities

How is it that Australia, with one of the lowest population densities in the world, has some of the highest housing prices? Could it be because half of our population still crowd into our three biggest cities - Sydney, Melbourne and Brisbane?

It is now 50 years since Whitlam first attempted to introduce policies to encourage decentralisation and even up economic development in Australia. It is time to take a new look at how we can decentralise Australia's population. It is time to tackle the persistent and long-lasting crisis we have with housing affordability and regional economic inequalities.

There is clearly a desire also among many Australians to move to regional cities, as evidenced in the first years of COVID. But this has been beaten by the tyranny of distance. It still takes five hours to drive from Port Macquarie to Sydney or Brisbane, or from Wagga Wagga to Melbourne. 

Airports and highways will not do the trick. Regional airlines will continue to struggle. Many professionals, especially in the health sector, stay in the big cities to get education for their kids. So the cycle continues, with retirees forced back to the big cities to get top quality health care. The only way to address this long term is high speed rail. 

Decentralisation of some of our future population growth away from the three biggest cities will also need a range of other policy initiatives. Urban development and economic incentives may be required to provide a catalyst for growth. For example, our major universities should be required to open much larger campuses in key regional cities, and a significant share of overseas students should be required to study there, at least for the first two years of their degrees.

A Timely Opportunity?

The Government has a unique opportunity to link Housing, Immigration, Regional Development and High Speed Rail into a comprehensive long-term settlement strategy for the southeast of Australia.

This would require an integrated set of policy initiatives including:

• Delivery of High Speed Rail as part of an integrated national rail network

• Increased investment in regional tertiary education and research facilities

• Incentives to start or relocate manufacturing and other industrial development in regional areas

• City Deals with regional cities to coordinate investment in local infrastructure and urban development to coincide with the opening on new high speed lines

• Increased investment in teaching hospitals and other health facilities outside the major capitals

• Coordination of state and federal investment activities under an appropriate committee of the National Cabinet.

This could achieve realistic reduction of population pressures in the major capitals (especially Sydney, Melbourne and Brisbane) along with increases in population growth in medium and smaller cities. This would include strong growth (200 ,000- 700,000) in the secondary cities of Newcastle, Central Coast, Wollongong, Geelong, Gold Coast, Canberra, Sunshine Coast, as well as major local growth (50,000 - 200,000) in the next tier cities (Ballarat, Bendigo, Wagga, Port Macquarie, Toowoomba, Ipswich, Albury-Wodonga, Coffs Harbour, Port Macquarie, Shepparton etc), and smaller cities as well.

For more information, see our Population Trends and Decentralisation Options (2021) report.