Fringe fading, inner-city Melbourne booming

MORE than 10 per cent of new homes approved in Victoria in the past year will be built in the city of Melbourne, as developers switch gears to meet the demand for inner city living.

The Bureau of Statistics reports that in the past two years, approvals for new homes on Melbourne's outer fringe have plunged by 25 per cent. Yet approvals in inner Melbourne have almost doubled, almost entirely in the CBD, Docklands and Southbank.

In 2011-12, for the second year in a row, most approvals for new homes in Greater Melbourne were granted in established suburbs within 20 kilometres of the GPO. Of 37,885 approvals in the metropolitan area, 8639 were in the inner ring, 20,374 were roughly within 20 kilometres of the GPO, and 17,511 on the outer fringes.

The figures undercut the state government's decision to take more land out of Melbourne's green wedges for housing. They suggest that increasingly, developers themselves are redeveloping the city and established suburbs to meet demand from buyers.

Last year, Melbourne City Council or the appeals body, the Victorian Civil and Administrative Tribunal approved 5166 new homes in the city, including 1915 in the CBD, 1712 in Southbank, and 640 in Docklands. That was more than the boom municipalities of Wyndham (south-west, 2835 new homes) and Casey (south-east, 2322) combined.

One in 28 homes approved in Australia was in the city of Melbourne. Of the $75 billion of building approvals nationwide, $4.5 billion or 6 per cent was on lord mayor Robert Doyle's turf.

There are fears that supply is rushing ahead of demand, with a risk that apartments could remain unsold, or drive down prices across the inner city, or never be built. Similar fears in 2003-04, however, proved unfounded.

The trend to live closer in is not confined to the CBD. Six other inner or middle suburban municipalities Port Phillip, Stonnington, Monash, Boroondara, Yarra and Moreland each approved more than 1000 new homes, mostly apartments and units.

Of the $7 billion of non-residential building approved in greater Melbourne, $3 billion was in the city centre. But Whitehorse council attracted $554 million of non-residential building, including the Box Hill hospital redevelopment.

On the outer fringes, buyers are going north. The biggest number of approvals last year was in Whittlesea shire, where 3260 homes were approved, mostly in booming suburbs such as South Morang and Mernda. The figures will add to pressure on the state government to extend the new South Morang rail line to Mernda.

Geelong is still booming, with 1897 new homes and $911 million of new building approved in 2011-12. Bendigo approved 1222 homes and Ballarat 985. Overall, metro Melbourne dominated, taking 79 per cent of the state's new homes and 81 per cent of the total value of approvals.

Read more >>

Where the bloody hell are we? Probably overseas

WHERE the bloody hell are you? If you're an Australian on holidays, probably in Bali. Maybe in Auckland. Perhaps on the Inca trail in South America, or lying on a beach in Thailand, or sitting at a cafe in Berlin or London. Wherever it is, you're probably not here.

Australians made a record 8 million overseas trips in the year to June, 80 per cent of them as tourists or to visit friends and family. In just five years, the Bureau of Statistics reports, the numbers of trips we make overseas has swelled by almost 3 million or 57 per cent while the number of foreign visitors coming here has risen just 340,000 or 6 per cent. We made more than a million trips to New Zealand, took almost a million holidays in Indonesia, paid more than 800,000 visits to the US, and 600,000 to Thailand. On top of that, we made 1.23 million trips to Europe mostly to the continent, not Britain more than a million trips to other Asian destinations, 603,000 to South Pacific islands, and more than half a million trips to other places from India to Latin America, Africa and the Middle East.

With the high dollar now giving Australians almost double the buying power overseas that they had a decade ago, an annual trip overseas is becoming part of the lifestyle of millions of people who would once have holidayed at home.

It's not hard to see why the Queensland economy is hurting. In a decade, excluding spending by students, Australians' spending on overseas travel has swollen by $14.7 billion or 144 per cent, while foreign tourists' spending here has gone backwards, shrinking by $154 million.

Queensland has been the big loser. Last year, compared to five years earlier, 114,000 fewer foreign visitors spent most of their time in Queensland, whereas 306,000 more spent most of their time in Victoria, and 120,000 more focused their time on WA.

Victoria has been the big winner, and its run continued in 2011-12. Last year the state hosted 1.27 million foreign visitors (including students, who account for almost half of all spending by foreign visitors), up from 756,500 a decade earlier. It accounted for more than 75 per cent of the growth in visitor numbers, in line with trends since the middle of last decade.

In a decade, visitors to Australia from China have more than trebled, from 172,000 in 2001-02 to 583,000 in 2011-12. In recent months, China has overtaken Britain to become Australia's second biggest source of visitors, after New Zealand. In the past decade, China and New Zealand each account for roughly a third of the net growth in visitor numbers.

Visitors from India (including students) have also trebled, providing our third biggest growth market, with Malaysia fourth. The only other countries to generate any significant increase in tourism to Australia over the decade are Indonesia, France, the US and the United Arab Emirates.

But visitors from Japan almost halved in the same decade, from 659,000 to 344,500, as the rising dollar and word of mouth from poor travel experiences sent Japanese tourists elsewhere, especially to China. Visitors from Britain also fell by 30,000 over the decade, thanks to the high dollar.

Read more >>

Melbourne's bustling fringe - 1000 newbies a week

MELBOURNE'S outer suburban fringe is growing at its fastest pace in decades, adding almost 1000 people a week, as greater Melbourne is swelling with almost a quarter of Australia's population growth.

New estimates by the Bureau of Statistics report that, in the past decade, the five areas experiencing the biggest growth in Australia were all outer suburbs of Melbourne.

South Morang grew from a fringe of 6667 people in 2001 to a large suburb of 38,895 by 2011. In one decade, it added the entire populations of Carlton, Fitzroy and Collingwood.

Point Cook was a close second; it began the decade with 2092 people and ended with 33,393, almost as many as South Yarra and Toorak combined. In the west, Caroline Springs added 21,400 people. In the south-west, Tarneit grew from 1427 to 22,473, while in the north, Craigieburn and Mickleham together doubled from 16,647 people to 35,807.

All told, the bureau estimates greater Melbourne grew by a massive 647,164 people in a decade, its population rising 18.6 per cent to 4.17 million in mid-2011.

In the sheer scale of growth, no other Australian city came close. Sydney grew by 477,645 people or 11.6 per cent to just over 4.6 million.

If both cities continued growing at this pace, Melbourne would overtake Sydney by 2028 to reclaim the title of Australia's biggest city for the first time since 1901.

Perth and Brisbane both grew faster than Melbourne Perth growing by 26 per cent to 1.83 million, and Brisbane by 25 per cent to 2.15 million.

The bureau has revised its figures after the census found its estimate of Australia's population was roughly 300,000 too high.

The rapid growth of foreign students coming to Australia to study, interstate and overseas tourists, and service industries more broadly, has been the key to Melbourne's rapid growth. The bureau estimates 60 per cent of the state's population growth came from overseas migration, and just 40 per cent from natural increase.

No other city since the 1960s has experienced growth on this scale, or the strain it has placed on services: from public transport to hospitals, electricity and road space. Those growth strains are widely seen as a key reason for the unexpected defeat of the Brumby government in 2010.

While most foreign students settle in the city and inner suburbs, the city's population growth has been overwhelmingly on the outer fringe. The census found three rings: rapid population growth in the inner suburbs, modest growth (or even decline) in the middle and outer-middle suburbs, and booming growth on the urban fringe.

The 11 innermost councils Melbourne, Maribyrnong, Moonee Valley, Moreland, Darebin, Yarra, Boroondara, Stonnington, Glen Eira, Port Phillip and Bayside added 167,500 people over the decade.

Seven outer fringe councils Wyndham (Werribee), Melton, Brimbank, Hume (Craigieburn), Whittlesea, Casey (Berwick/Cranbourne), and Cardinia (Pakenham) added almost 350,000 people between them.

There was less growth in the middle. The population in Keilor, Wantirna, Endeavour Hills and Frankston shrank.

Regional Victoria saw rapid growth around Geelong, Ballarat and Bendigo and in towns along the coast or the Murray River. The Barwon region added 29,285 people, more than 5000 of them in Torquay alone. But that growth was offset by widespread population losses inland, especially in an arc from the Western District through the Wimmera and Mallee to the irrigation areas in northern Victoria.

More than 1000 people left rural areas around Mildura. Almost 1200, or one in six of the population, departed from around Kerang. More than 3000 left the Wimmera.

Read more >>

Who are we. Melbourne, as seen by the census

ONE in three of Melbourne's residents today was born in another country. Almost as many speak a foreign language at home. Nearly one in five is of Asian ancestry, mostly Chinese or Indian.

You see it every day on the streets, but the 2011 census has confirmed that Melbourne has become a different city different not only from what it used to be, but from the way the rest of Australia still is.

The census results show that more than just the ethnic make-up has changed. Migration has reinforced the city's traditional values, because the newcomers tend to be socially more conservative than those born here.

First, Melbourne has become much better educated: the census found 72 per cent of adult residents have completed year 11 at least, compared to just 60 per cent in the rest of Australia. The city has 18.6 per cent of Australia's population, yet almost a quarter of Australia's full-time university and TAFE students study here.

Second, Melbourne is relatively young. In the rest of Australia, the census found only 34 per cent of people are aged 20 to 44, with 40 per cent aged 45 and over. In Melbourne, by contrast, 38 per cent of people are aged 20 to 44, with just 37 per cent in the older group.

Third, despite what many would expect, Melbourne now leans to traditional family values. More residents over 25 are married here than in the rest of Australia. Fewer Melbourne people live in de facto relationships than elsewhere especially among under 25s.

That reflects the impact of the 433,628 immigrants who have settled in Melbourne in the past decade or so. One in four migrants makes Melbourne their home and they bring with them their homeland's values.

For example, the census found Melbourne has fewer divorces and marital breakups than the rest of Australia. Only 12.2 per cent of people over 25 in Melbourne were divorced or separated, but 13.7 per cent in the rest of Australia were.

Melbourne also has a higher rate of home ownership and, relative to housing prices, lower household debt. The census found the median weekly household income was almost $100 or 8 per cent higher than in the rest of Australia, but the median mortgage payment was virtually identical: $1810 a month in Melbourne, $1800 nationally.

While home ownership rates have fallen everywhere, 71 per cent of homes in Melbourne are owner-occupied, with just 28 per cent rented. In the rest of Australia, occupants own 68 percent and landlords 31 per cent. We re also cosier here. Melbourne

has more mediumdensity housing than average and slightly fewer children, and

45 per cent of homes have three or more occupants, compared to 41 per cent elsewhere.

But immigration has also brought diversity, especially in religion. Once, Melbourne was a

stronghold of Anglicans and Protestants. Now their numbers are fast-dwindling, as other religions advance.

The census found 35.4 per cent of people elsewhere in Australia are Protestants, but just 22.4 per cent in Melbourne. Only 10.8 per cent ofMelbourne people now identify as Anglicans, compared to 18.6 per cent in the rest of the country.

By contrast, Melbourne has more than its share of Catholics (27.2 per cent) and twice as

many Orthodox (5.8 per cent) as elsewhere. Almost half of all Australians who follow Judaism live here. And immigration has given it roughly 30 per cent of the nation s Buddhists, Muslims and Hindus.

Read more >>

Census: How we're changing

MULTICULTURALISM has won the battle for Australia. The 2011 census reveals that Australia has become a melting pot of races, with more than one in four Australians having arrived here as migrants, while almost one in eight have Asian ancestry.

Less than 40 years after the White Australia policy was buried by the Whitlam government, the census results unveiled yesterday by the Australian Bureau of Statistics reveal a land of many cultures, many ancestries and many religions.

In the decade to 2011, the growth in Australia's population was mostly among people of Asian ancestry. From just 982,519 in 2001, the number of Asian-Australians has swollen to 2.4 million in 2011 - or from 5.5 per cent of us to 12 per cent.

Even in Melbourne, where Italian and Greek migrants transformed the city in the post-war generation, more residents now speak Chinese or Indian languages at home than Greek or Italian - and almost one in five Melbourne residents is of Asian ancestry.

Diversity has won the battle for Australia. It has become a country where - for better, or for worse - more and more people are abandoning the old cultural norms. More parents and live-in partners are unmarried. Only 61 per cent of Australians now call themselves Christians, down from 68 per cent a decade ago.

For the first time, most Australians aged 25 to 34 are no longer Christians. Just 49 per cent identified with any Christian denomination - almost half of them Catholics - while 10 per cent declared themselves for Buddhism, Hinduism, Islam or Judaism, 3 per cent professed other beliefs, 29 per cent said they had no religion and 9 per cent gave no answer.

Catholicism is resisting the tide, but the main Protestant denominations are seeing their numbers erode away. In 1981, 26 per cent of Australians said they were Anglicans; in 2011, just 17 per cent were. The Catholics have lost some ground among the young, yet in sharp contrast to the Anglicans' fate, 25 per cent of Australians still call themselves Catholics.

Marriage too is losing ground. The census found fewer than half of Australians over the age of 15 are married. The Prime Minister and the First Bloke were among almost 1.5 million Australians living in a de facto relationship - almost 10 per cent of the adult population. More de facto relationships now include children. In a decade, the number of children living with de facto families has swelled almost 50 per cent to 526,000: one in 10 children.

Seven in every 10 children still grow up in traditional families, with two married parents. But with more than a million dependent children living with single parents, and half a million living with unmarried parents, the old social mores are now deeply fractured - particularly among those born in Australia, rather than overseas.

The census found 548,368 Australians now identify themselves as indigenous, up 34 per cent in a decade. Their median age is just 21, compared to 37 for non-indigenous Australians, which helps explain why so many are footballers.

In the decade, Australians have grown richer, but even more in debt. While the median household income rose 57 per cent since 2001, the median mortgage payment swelled by 108 per cent, and the median weekly rent was up 97 per cent. Only 33 per cent of us own our own home outright, down from 42 per cent.

At least those homes are now wired. Even before the NBN started reaching us, 72 per cent on census night last August had broadband at home, and 80 per cent had some form of internet connection. Would you believe that a decade ago, the 2001 census found only one in three Australian homes was connected to the net?

Read more >>

Census: We've lost 300,000 Australians

AUSTRALIA lost almost 300,000 people on the way to last year's census. The census count suggests that Australia's population growth since 2006 was much smaller than previously estimated, especially in NSW, Victoria and Queensland.

In its first release of census-based data, the Bureau of Statistics has slashed its estimate of the population in mid-2011 from 22.6 million people to 22.3 million. The cut of 294,400 is equivalent to wiping away roughly a year's population growth.

Based on the census findings, the bureau estimates that at June 30 last year, Queensland had 106,000 fewer residents than earlier reported. NSW lost 91,000 people, Victoria 87,000, and South Australia 18,000.

By contrast, the census found slightly more people than expected living in WA, Tasmania and the territories.

Despite the downgrade, Victoria still added more people than any other state between 2006 and 2011, growing by 408,000 or 8 per cent. NSW added 395,400 people, growing just 5.8 per cent.

The bureau will spend the next year working out what was wrong with its earlier estimates. In an explanation yesterday, it gave several possible reasons, including errors in the 2006 census figures, or in the records of births and deaths, or in estimating the real size of net overseas migration.

Yesterday's figures are only preliminary, with final post-census results to be released in a year's time. The bureau next month will publish revised estimates of city and regional populations, which are likely to slash population estimates for the main cities, other than Perth.

Its updated figures show WA streaking ahead in population as well as economic growth. By the end of December, Australia's population had edged up to 22.5 million, growing by 1.4 per cent, but WA was growing at more than twice that rate.

Over 2011, WA outgrew Queensland in absolute numbers for the first time, its population growing by 67,400 or 2.9 per cent while Queensland grew 66,500 or 1.5 per cent.

Victoria again had the biggest growth in numbers, its population rising 75,400 or 1.4 per cent, while NSW grew by 71,000 or 1 per cent. On December 31 NSW had an estimated 7,250,000 people, and Victoria 5,575,000.

Net emigration from NSW to other states jumped sharply in 2011, from 11,240 to 16,100. Victoria again had slightly more people arriving than leaving, gaining a net 3330 from other states. But the main shifts were to Queensland, which gained a net 9600 people, and WA, which took in a record 8460 net arrivals from the rest of Australia.

The first census data also reveals that Australians are getting older, with the median Australian now aged 37.3 years, a sharp rise from 32.4 years in 1991. The proportion of Australians who have faced 65 candles on their birthday cake has grown from 11.3 per cent in 1991 to 13.8 per cent in 2011.

Read more >>

Ballarat gold standard for growth

IN AN extraordinary change of pace, Ballarat is now growing faster than the Gold Coast, as commuters in search of cheap housing are descending on Victoria's regional cities to make their new homes.

For perhaps the first time since the gold rush, Ballarat is outgrowing Melbourne and is now the fastest-growing city in Victoria. Last year it added 1867 people, a growth rate of 1.9 per cent the equal third-fastest of Australia's top 20 cities.

V/Line reports that more than a million passengers a year are now taking the train from Ballarat. Passenger numbers on the line have swollen 126 per cent in five years, thanks to the regional fast rail program.

Ballarat mayor Mark Harris says the duplication of the Western Freeway and the new trains have kicked the city's growth rate up several gears, and not everyone likes it.

"We'd been growing at a half to 1 per cent a year for most of my life and people were used to that. It's been challenging for us to have growth at this pace. Our infrastructure has fallen behind and our unemployment rate is above-average," he said.

"My aim is to have jobs in Ballarat and for the city to grow independently of Melbourne. We've set aside land for an extra 30,000 residents in the west, but we're putting in job zones as well."

House prices in Ballarat are far cheaper than in Melbourne, providing a big attraction for young families. The same is true for Bendigo, Geelong and the Latrobe Valley, which are all seeing rapid growth for the first time in decades.

V/Line figures show passenger traffic on the four lines has more than doubled since 2006. Spokesman James Kelly said it has no more rolling stock to meet the growth in demand, and worries that peak-hour passengers might soon have to stand from Ballan.

Last year the four cities between them added 7500 people, or close to 10 per cent of the state's population growth. But growth was slower in Warrnambool, Mildura and Shepparton, which are out of commuting range.

Read more >>

We are set to live even longer than projected

OUR lives are expanding, at an accelerating rate. The life expectancy of a baby boy in Australia has lengthened by three years in the past decade, the Bureau of Statistics estimates and it is set to stretch a lot more.

In Victoria, a baby boy born today can now expect to live to 80, up from 77 just a decade ago.

Baby boys born 40 years ago had a life expectancy of just 68.

The first decade of the 21st century has given baby girls an extra two years to live. A girl born 40 years ago had a life expectancy of 75. But by the year 2000 that had risen to 82 and now it is 84.

Life expectancy has been increasing but the past decade has seen rapid changes all along the age spectrum between 0 and 80. At any age in that range, the risk of dying has shrunk, in some cases dramatically, compared with 10 years ago.

Retired construction worker Peter Farrugia welcomed the data. "Oh, that's good news for me," he laughed. The 64-year-old grandfather from Westmeadows is "pretty fit and healthy", despite suffering a back injury several years ago that cut short his working career. He also has diabetes.

"Now that I'm not doing any heavy work, I'm pretty good," he said. "I try and stay fit by walking three kilometres every day and I watch what I eat. I have to because of my diabetes."

In Victoria, the bureau estimates, the risk of a man dying at the age of 20 has fallen 45 per cent in a decade, from one in 935 to one in 1700. The risk of a 70-year-old male dying has fallen almost 30 per cent, from one in 40 to one in 56.

Boys and men still have a far bigger risk of death at any age than girls and women, at least until the age of 100. But the gap is narrowing.

While female death rates have also fallen sharply in the past decade down 25 per cent at the age of 30, 23 per cent at 60 and 20 per cent at 80 male death rates generally have fallen faster.

Demographer Peter McDonald, of the Australian National University, attributes the closing of the gap to healthier lifestyles. "There's less smoking, less drinking and far fewer fatal motor vehicle accidents," he said. "These always caused more deaths for men than women. Death rates from heart disease have fallen substantially.

"The rising life expectancy is partly due to changes in lifestyle and partly to medical advances: early treatment, better drugs.

"It's very difficult to say how much is due to one or other."

Professor McDonald said the bureau's methodology was based on current death rates and understated the real life spans we can expect as death rates keep falling in future.

But the bureau's estimates suggest there is still a limit. While the past 40 years have added three years to the life expectancy of 80-year-olds, they added only nine months to the life expectancy of 90-year-olds.

Read more >>

Melbourne's Growing Pains

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.

Read more >>

Asia-born population matching local born

AUSTRALIA'S Asia-born population was growing almost as fast as the Australian-born population in the year before the federal government cracked down on immigration rorts, new figures show.

The Bureau of Statistics' annual migration estimates show Australia's migrant population rose by more than a million in the five years to 2009, topping the 808,000 growth of the Australian-born.

In 2008-09 alone, the overseas-born population rose by 271,360 or 5 per cent, the bureau estimates. The Australian-born rose by 185,360 or 1.2 per cent.

In a stunning figure, the bureau reports that two-thirds of Australia's net migration was of people aged 15 to 34 helping significantly to offset the ageing of the population.

The fastest growth was in the Indian-born population, which grew by 44,012, or 17 per cent. The Chinese-born grew by 30,009, or 9 per cent, and the total Asian-born population by 172,050, or 10 per cent.

By mid-2009, the Chinese were the largest non-Anglo community in Australia. Their numbers grew by two-thirds in just five years to 350,979.

The Indians were just behind them, with the size of the Indian community more than doubling between 2004 and 2009 to 308,542.

The figures predate federal government moves to shut the back door through which foreign students in low-level courses have stayed on in Australia as workers. In 2009-10, student visa grants have fallen by 70,000 or 31 per cent, with net long-term arrivals showing a similar fall.

The data comes at a sensitive time, with immigration now one of the key issues of the election campaign. Opposition Leader Tony Abbott has pledged to limit net migration into Australia to 170,000 by 2012-13, without saying how.

The bureau finds that in 2007-08, 31,419 overseas students entered Australia to start vocational education and training courses, but only 4064 former VET students returned home.

In all, 135,165 foreign students started courses of one kind or another, but only 26,423 returned home. Part of that was because the industry was growing very fast, but part was because for many, studying in Australia was a stepping stone to permanent residency.

The Howard government opened up this option in 2001 to encourage foreign graduates with scarce skills to work in Australia. But when it extended this to the VET sector, foreign enrolments exploded in cooking, hairdressing and hospitality courses.

Immigration Minister Chris Evans has now closed off this option in reforms to limit skilled migration to those with higher-level skills.

The British remain Australia's largest migrant group, with 1,188,247 permanent and temporary residents in mid-2009.

New Zealanders are second with 529,178 residents.


OUR DIVERSE NATION

WHERE WEVE COME FROM

BIRTHPLACE GROWTH 2004-09, POPULATION MID-09

000 000

Australia 808 16,139

Overseas 1020 5816

Asia 621 1881

South Pacific 126 664

Africa 85 279

Europe 78 2421

Middle East 62 330

Americas 48 241

Total 1828 21,955

India 168 309

China 140 351

New Zealand 109 529

Britain 67 1188

Korea 44 95

Philippines 42 169

South Africa 40 149

Malaysia 31 130

Vietnam 25 204

Sri Lanka 22 87

SOURCE: AUSTRALIAN BUREAU OF STATISTICS.

Read more >>

Gillard's big talk more a case of shift in emphasis

IS JULIA Gillard's first policy statement as Prime Minister a real policy shift? Or is she pushing on a door that was already closing?

We all remember the headlines last October when Kevin Rudd endorsed Treasury's projection that Australia would have 35 million people by 2050. "I actually believe in a big Australia," the then prime minister said. "I make no apology for that."

But as polls showed the vast majority of Australians disagreed with him, Rudd retreated.

In April, he appointed Tony Burke as Minister for Population, to produce a population strategy to "balance" the need for more people with their impact on infrastructure and communities.

"Many Australians have legitimate concerns about the sustainability of population levels," the old prime minister said, citing the impact of growth on urban congestion, infrastructure, housing, government services, water and agriculture.

Yesterday the new Prime Minister said much the same, with a different emphasis. She rejected a "big Australia", said sustainability was the prime goal and added a concern that skilled migration should not substitute for skilling young Australians.

But population policy here is largely immigration policy. And whatever the rhetoric, Immigration Minister Chris Evans has been busy making policy shifts to slow immigration.

Evans has cut the official migration intake by 21,500. He has reduced the number of people here on section 457 temporary work visas by 12,500.

He has halved the number of skilled occupations that qualify for entry, toughened a range of rules, and closed the back door by which foreign students in lower-level courses could claim permanent residency.

The bottom line, he reported last month, was that net overseas migration this financial year is set to fall to about 240,000, down 20 per cent from a peak 306,000 in the year to March 2009.

If the door was not closing under the old government, the doorway was narrowing. Gillard's words do not set a new policy direction, but aim to reassure Australians worried by high immigration that she understands and shares their views.

But let's not lose sight of the real issue. As Committee for Melbourne chief executive officer Andrew MacLeod points out, Australia's population will keep growing. We need to plan for that, and build the infrastructure it will need.

Cities far bigger than Melbourne work very well if they build a good metro system, and go up as well as out. Good infrastructure and good planning make big cities work.

Read more >>

Fiscal time bomb yet to explode

PAUL Krugman has a Nobel Prize in economics, and we don't. He is also a columnist with The New York Times, where he writes with insight, deep knowledge, and the courage of his convictions. But he's not infallible. Martin Wolf is chief economics commentator for London's Financial Times, and the most respected of all our tribe worldwide. His columns are rich in detailed grasp of the facts, and in wisdom to judge what weight to give them. But he too is not infallible.

It is because Krugman and Wolf have earned such respect and trust that their crusades, if misdirected, become very dangerous. In my view, that is happening now.

Both disagree sharply with the change in economic tack by Western policymakers in the wake of the Greek fiscal crisis, the subsequent panic in financial markets, and the Tories' victory in the British election.

Last year's consensus was that governments and central banks should remain focused on fighting the legacy of the global recession, and be wary of withdrawing their fiscal and monetary stimulus too soon.

But this year the world has focused on the flipside of that stimulus: debt.

And the more policymakers have focused on debt, the more alarmed they have become: not only by the debt run up to end the recession, but the accumulated debt that has financed three decades of deficits in the G7 economies.

In the 1930s, Keynes taught us that, rather than governments aiming to run balanced budgets, they should adopt a counter-cyclical role: borrow and spend in bad times, when private sector demand has collapsed, then save and repay the debt in good times, when the economy needs no support.

But outside Australia, the first of these goals has proved far more popular with governments than the second. The United States has run a budget surplus just once in the past 50 years. Japan, France and Italy have not run a surplus in the past 30 years, while Britain has had just five years of surplus amid 25 years of deficits. This year, the International Monetary Fund forecast in April, G7 deficits would range from 11.4 per cent of GDP in Britain and 11 per cent in the US, to 5 per cent in Canada, Italy and Germany.

Most alarmingly, by 2015, when their economies are forecast to be back to normal, they would still be running deficits of 7.3 per cent of GDP in Japan, 6.5 per cent in the US, and 4 to 5 per cent in Britain, France and Italy.

Is this sustainable? Take a look at the table below, which shows the IMF's projections of net debt in 2015. Since the Reagan era began, the net debt of the US has soared from 25 per cent of GDP to 66 per cent, and on current settings, the IMF projects it will reach 86 per cent by 2015, and 107 per cent (roughly Greek levels) by 2020.

Japan and Italy already have net debts above 100 per cent of GDP, and by 2015 the IMF projects debt ratios of 75 to 85 per cent of GDP for Britain, France and Germany.

(And Australia? See how low our debt will be? There is no debt problem here. Our problem is having a Liberal Party so clueless on economics that it doesn't know what our real problems are.)

Worse, those G7 debts were run up in good years. Yet the real fiscal time bomb is yet to go off. The West is now in a demographic "sweet spot": many people of working age, relatively few children and retirees. But over the next 20 years, the baby boomers will retire, shrinking the number of workers who pay taxes, while doubling the number of retirees governments will have to support in healthcare, pensions and aged care.

During the Greek crisis, I recalled one of the Reserve Bank's rules of thumb: decide which risk has the most serious consequences if you get it wrong, then lean against it.

The worst risk to the global financial system is not that of investors losing confidence in the Greek government's ability to pay its debts. It is the risk of investors losing confidence in the US government's ability to pay its debts.

Rubbish, Krugman and Wolf interject. The US has deep, sophisticated financial markets. It borrows only in its own currency, and could meet any crisis by raising taxes. Where did the investors fleeing Europe put their money? In US government bonds. It is, Wolf says, "the world's most credible reserve asset".

I humbly disagree. The only sense in which the US is a credible safe haven is that markets now view it as such. But in their modern classic on asset booms and busts, This Time is Different (Princeton), Carmen Reinhart and Kenneth Rogoff show that markets normally view the build-up of dangerous debt overload as safe until the moment the truth dawns, when suddenly everyone wants out.

As long as Washington has a political culture in which one side will veto any tax rise and is indifferent to debt, no one can guarantee that future US governments will honour their commitments. A recent survey of US investors found 46 per cent thought it likely that Uncle Sam would default within a decade; only 33 per cent thought it unlikely.

If this global financial crisis seemed bad, just wait for the one we'll see when investors no longer trust the US government.

That is the risk we must avoid at all costs.


THE G7, AND A SMALL PROBLEM

Net debt as a percentage of GDP: 1990, 2015

USA 46%, 86%
Japan 13%, 154%
Germany 29%*, 75%
Britain 27%, 84%
France 25%, 95%
Italy 89%, 122%
Canada 44%, 30%
Australia 6%, 4%**

*1991 ** Treasury estimates, 2015-16

SOURCE: INTERNATIONAL MONETARY FUND

Read more >>