ONE WEEK out from the Victorian election, Tim Colebatch reports on a city and state in the grip of a population boom that is squeezing infrastructure, services and affordability:
A NEW Melbourne is growing on the city's western fringe. And as Victorians head into next week's state election, in some ways it epitomises what has been an extraordinary decade in the state's history.
In 1993-94, after the Kennett government sacked 30,000 government employees, Victoria's population growth sank to as low as 12,680. Yet 15 years later, the population of a single municipality Wyndham, centred on Werribee grew by 10,758. Melbourne's growth in 2008-09, at first estimated at 93,478, now looks to have been closer to 100,000. And the latest estimate for Victoria's growth is 121,229.
No city in Australia has seen growth on the scale Melbourne has experienced in the past five years. In that time, the city's population has risen by 400,000 or more. And Victoria's population has grown by more than 500,000, or 10 per cent, twice as much as it did a decade earlier.
Since Labor was elected in 1999, the state's population has expanded by close to 20 per cent, from 4.7 million to 5.6 million. Is it any wonder that we are now seeing a state election campaign being fought largely on the failure of state government services to cope with surging demand?
The epicentre of Victoria's population growth is in Melbourne's outer-western suburbs. KPMG demographic guru Bernard Salt has declared it the fastest-growing region of Australia, outpacing even the Gold Coast. In 2008-09, for probably the first time since the 1800s, most of Melbourne's population growth occurred north and west of the Yarra.
But Salt highlights a crucial difference. The Gold Coast's population boom, he says, was based on lifestyle. "For Melbourne's west," he says, "this fundamental truth is affordability. But . . . affordability must be triangulated with job opportunities, and with quality-of-life issues that deliver social infrastructure such as schools, shops, a sense of community and public transport."
And that, so far, is a promise yet to be delivered.
Across the flat empty fields west of Laverton, you find Truganina. It is one of Melbourne's most affordable suburbs, and one of its fastest growing. Sudanese refugee Ayan Majok moved here in 2008 with her husband and five children. Last year fellow refugee Hawa Mahmoud and her husband and seven children moved in next door. Both women complain about the lack of services, which has turned the street into the children's playground.
"We don't have a park for the kids to go and play in," Majok says. "There's no school around here, no shops around here, no petrol station and now we have a bus, but not many services. If you don't have a car or the car breaks down, you have to walk 25 or 30 minutes to the shop."
But Truganina was cheap: the Ayan Majok bought a 500-square-metre block for $135,000, and look back on it now as a bargain. "Now the prices are up to $220,000, and the blocks are 400, 350-square-metres," she says. It's a good neighbourhood with "all kinds of people Aussies, Indians, Sri Lankans, Lebanese, Arabs".
The latest Melway map shows a park and school proposed for Truganina: it's just that the people got there first, and they're still waiting. Across Skeleton Creek in the slightly more upmarket suburb of Tarneit, resident activist Shawn Lynch notes drily: "It's always in catch-up mode here. The Baden Powell P-9 College was opened just three years ago, and they've already had to add portable classrooms because they didn't allow for population growth.
"The high school hasn't started yet. The kindergartens are full, and some people had to sign up for a kindergarten as far away as Little River."
And the lack of broadband access in many areas is a big problem. A recent study found Truganina has the slowest internet speeds in Melbourne.
Yet people keep coming, because Truganina remains cheap. The median house price was $325,000 in the September quarter, the Real Estate Institute of Victoria estimates, and around the corner from the Majok home, land and three-bedroom-unit packages are on sale from $295,000. People want their own home, and they have to buy where they can afford it.
And Truganina is just over 20 kilometres from the Bourke Street Mall: no further from the city than Mitcham, Glen Waverley and Beaumaris.
In this state election campaign, the issues and problems raised cover every area. For some, the issue is hospital waiting lists. Between 1999 and 2009, public hospital admissions rose more than 40 per cent, yet waiting lists have mostly kept growing. For others, the issue is public transport: in the past four years, Melburnians have made more than 100 million extra trips on trains, trams and buses, with train passengers alone soaring by 57.5 million, or 36 per cent. After years of little growth in passenger demand, a landmark change in Melbourne's culture has arrived suddenly, catching the government off guard, with overcrowding and late or cancelled services becoming widespread.
For some, the issue is traffic congestion, as population growth and rising affluence lead to hundreds of thousands more cars piling onto Melbourne roads.
For others again, it is street violence, and a sense of diminishing safety.
There are so many issues the $5.4 billion desalination plant, the pipeline to send Goulburn water to Melbourne, the state of schools, and thousands of local grievances that have built up over the 11 years of Labor's rule.
There's a common thread underlying much of this. Rapid population growth, particularly since 2005, has combined with other factors to put serious pressure on the state's services, and the government has struggled to respond quickly enough. That's its job, you might say, and when the population grows, taxes also rise. Victoria's revenue from all sources has more than doubled from $22 billion when Labor took power to $45 billion this financial year.
Yet most of that has come from the relentless growth of Commonwealth grants, as a revenue-swollen Canberra imposes its spending priorities on areas run by the revenue-deprived states. This year, almost half of Victoria's day-to-day spending will be funded by Canberra. But meeting rising demand also requires more capital spending, and the government's ability to do that is limited by a political culture that treats government debt as undesirable, and by a construction culture that has pushed building costs so high as to make urgently needed projects unaffordable.
But how did Victoria attract all that population growth? Let's go back a step.
FROM outside the state, Victoria looks quite different. In the rest of Australia particularly in New South Wales it is widely seen as a success story, a competently run state where things work. Until yesterday's surprising revisions to state growth figures, Victoria was ranked fairly consistently as the fastest-growing of the non-resource states. Thursday's report by the Business Council naming the Brumby government as Australia's most business-friendly government is in the latest of a range of commendations from business and economists.
Two crucial areas exemplify Victoria's strong performance. Over the past four years it has generated 278,000 new jobs, more than any other state, and 28 per cent of the nation's job growth. Full-time jobs have increased by 2.1 per cent a year, including the period of the global
financial crisis, and total employment by 2.6 per cent a year, both second only to booming Western Australia.
New home building has been spectacular: one in every three homes approved in Australia over the past two years has been in Victoria, 34 per cent of the nation's housing construction activity, rising to almost two in every five so far in 2010-11. In the past year, councils in Melbourne approved 44,194 new homes more than their counterparts in Sydney, Brisbane and Adelaide combined.
Construction has been one of the industries picking up the baton of growth as the high dollar and government indifference has meant the stagnation of Victoria's manufacturing industry since 2002. Another factor has been the foreign student market, with Melbourne the main magnet for overseas students, particularly from India. With Melbourne's image as Australia's coolest city, tourism has soared. Victoria has attracted 38 per cent of the growth in foreign tourists over the past decade. The financial sector, healthcare, the cafe culture, transport and distribution, wholesaling and retailing: Victoria has developed a diversified services economy which has helped it withstand the loss of almost 50,000 manufacturing jobs in the past 10 years.
And with the students came migrants. In the past three years net overseas migration into Victoria has doubled to 227,000, almost as many as in NSW. India and China were the biggest sources, but Victoria has also been the main settling ground for Malaysians, Sri Lankans and of course, the refugees from the Horn of Africa, who have now become a significant presence not only in western Melbourne, but also in cities such as Shepparton.
It is not only our people who are changing: so are our cities. In the past year, Victorian councils approved 19,900 new apartments and units, more than double the 8147 approved four years earlier. Most of them were in high-rise apartment blocks in Melbourne. In the metropolitan area, 18,083 of the record 44,194 new homes approved were apartments and units, roughly 10,000 of them high-rise.
It is a different Melbourne we're building. We're not just building out any more, we're building up. Expansion at the fringe is also booming, but two-thirds of the growth in home building in the past four years has been in apartments and units most of them in the inner-city, where prices have risen fastest, and demand is hottest.
Even before the apartment boom started, the tide had begun turning in. Between 2004 and 2009, a third of Melbourne's population growth took place within 15 kilometres of the Bourke Street Mall. The city centre, bayside, the leafy eastern suburbs, the affordable inner-west: people raced to buy the new apartments, units and townhouses that developers put up wherever they could get a permit.
Between 2001 and 2009, the populations of Brighton, Caulfield and Hawthorn all grew by 10 per cent, Footscray by 17 per cent, the inner-bayside suburbs by 19 per cent while the CBD, Docklands and Southbank population trebled. For the first time in decades, 1 per cent of Melburnians live in the centre of the city.
Yet populations are now growing almost everywhere. Between 2004 and 2009, excluding the area of the bushfires, only six of Victoria's 79 councils recorded falling populations, all in the Mallee and Wimmera. Geelong grew by 15,000, Ballarat 8250, Bendigo 8700, and even the Latrobe Valley added 5000. Virtually anywhere within a two-hour drive of Melbourne has been touched by the population boom, as have the larger cities and coastal areas beyond it.
But that is in the past. As we head into the election, Victoria's economic future is more clouded.
Foreign student numbers have plummeted thanks to the soaring dollar, the end of the backdoor working visa rorts, and the lasting impact of the violence against Indian students.
The Reserve Bank's interest rate rises are hitting manufacturers and exporters with a double-whammy of rising costs and rapidly shrinking returns. Treasury is pressing the federal government to end support for the car industry, which would shut down Melbourne's largest manufacturing sector. And construction activity is surely at its peak.
Another worry is housing prices. One crucial part of Victoria's success story has been its ability to offer affordable housing, compared with Sydney. But as its population has grown so strongly, housing investors have moved in to buy up Melbourne homes, helping drive prices to record levels. The Real Estate Institute of Victoria says the median price in the September quarter was $565,000. The zone of affordable housing has shrunk to suburbs such as Truganina, the outer suburbs with poor services and poor public transport. And while we are now building up the inner city, the building unions make it a high-cost activity, resulting in high-price apartments.
But Victoria's future is what Victorians make it. Melbourne's incredible rebirth from the ashes of the 1990-91 recession was the product of many creative people, each adding their bit, in their own way, to remake the old town as a wonderfully vibrant, alive city.
Whoever forms our next state government will have to nurture that, and foster new sources of growth to take over from those whose time is past.
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