\ Melbourne prepares to overtake Sydney as biggest city – Committee For Sydney

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Melbourne prepares to overtake Sydney as biggest city

April 28, 2018

Source: The Australian
Author: Ean Higgins

28 April, 2018

If you Google “Melbourne Sydney rivalry”, an option comes up “song”, and a 2015 story pops up from the Leader-Herald Sun website headlined “10 Great Songs About Melbourne.”

As journalist Caitlin Ryan gushed, you couldn’t compose such a list without a song or two from “the great Paul Kelly”.

“We all know Melbourne is better than Sydney, but in this track from 1985, he nails the divide,” Ryan writes. She then quotes “these classic lines” from Kelly’s song From St Kilda to King’s Cross:

I want to see the sun go down from St Kilda Esplanade,

Where the beach needs reconstruction, where the palm trees have it hard …

I’d give you all of Sydney Harbour (all that land, all that water)

For that one sweet promenade.

Australians living in places other than Sydney and Melbourne are probably long over the niggle between these two cities, and very happy to be where they are. But the competition between the NSW and Victorian capitals for who’s best and dominant has been going for 181 years, since 1837 when Robert Hoddle was commissioned to draw up a plan for a town on Port Phillip Bay.

Only three years after Melbourne’s establishment, in 1840, a Separation Association had formed of Melbourne activists wanting to make the Port Phillip District a separate colony from NSW, at a time when it only had about 11,000 residents.

Across the decades, the dominance between Sydney and Melbourne has shifted back and forth.

With a steady stream of free settler migrants, the Victorian gold rush, and agricultural and industrial development, a young Melbourne grew very fast, and was the nation’s largest city between 1858 and 1901. At Federation in 1901, it became the first national capital. But at NSW’s insistence it was always officially designated the “temporary” capital until it went to Canberra — with Federation on the horizon a fierce debate had ensued between the two colonies as to which should host the seat of the nation. In a satirical sketch the magazine Punch had the commonwealth capital in a gigantic balloon hovering six months a year over Sydney and six months over Melbourne.

Sydney has been the most populous city since 1901 and, most would probably accept, the dominant international city in Australia since the 1970s, give or take a decade or two either way. But in a seismic shift, that’s set to change in the next decade. While almost no one has been looking, Melbourne has been attracting people, business, technology and talent, and stealing a march on Sydney. Population growth in the past 12 years has been staggering in both cities.

Sydney’s population grew by more than a quarter between 2006 and now, from 3.9 million to 5.1 million, or 1.2 million people.

But Melbourne’s population grew even faster, by more than a third from 3.6 million to 4.9 million, or 1.3 million.

Only 200,000 people now separate Melbourne from Sydney, and if present trends continue the Victorian capital is poised to become Australia’s largest city in eight years.

The vast majority of the growth in population in both cities has come from overseas migrants.

In Sydney, overseas migration in financial year 2016-17 accounted for about 85,000 of the increase of 102,000 in population, or about 85 per cent.

But that’s where the story gets interesting. New data from the Australian Bureau of Statistics shows that of established Australians, people are moving out of Sydney and moving to Melbourne. In terms of internal migration in 2016-17, Melbourne boasted a net increase of 9200, while Sydney recorded a net loss of 18,100.

The Victorian government and the pro-business Committee for Melbourne say there is no chance about this. They claim the state government has mounted an aggressive and successful campaign to attract big and innovative businesses to Melbourne, leveraging on what is still expensive but somewhat more affordable housing than Sydney and what is claimed to be greater liveability.

“Melbourne has been voted the most liveable city for seven years running,” says the chief executive of the Committee for Melbourne, Martine Letts, referring to The Economist’s annual survey.

One of the biggest coups of Daniel Andrews’s government was to persuade Chinese online retail giant Alibaba to set up its regional headquarters in his capital. Andrews’s office says this is no coincidence; he has gone repeatedly to China to spruik his state and its capital, and his ministers have been there, too.

Two other big international gets for Melbourne were American online retail giant Amazon and Netherlands-based CEVA Logistics.

In addition, Letts notes, “there is a clustering also of some of the digital companies that is turning into an interesting hub for technological innovation”.

As demographer Bernard Salt pointed out this week, the economies of Sydney and Melbourne are different: “Melbourne pro­duces, Sydney finances.”

According to the 2016 census, 10 of the top 20 manufacturing centres on the Australian continent are based in Melbourne while eight of the top 20 financial ser­vices centres are based in Sydney. While the finance sector always has been and will be in demand, a lot of the knowledge and research-based industries, where the growth is, are in Melbourne, including the pharmaceutical and biotechnology sector.

One Australian-owned company in this space is Starpharma Holdings Ltd, which has a market capitalisation of $430 million.

“Sydney has tended to have the Australian offices of multinational companies rather than the homegrown innovative companies that are Australian originally,” Starpharma’ chief executive Jackie Fairley says.

“Victoria has led the way; it attracts 40 per cent of all medical research funding in Australia and most of that would be in Melbourne, compared with NSW which gets about 25 per cent, and Victoria leads in the number of companies and market capitalisation in this sector,” she says.

Victoria’s Trade and Investment Minister, Philip Dalidakis, tells Inquirer: “It’s not by accident that major tech companies and start-ups are heading our way; Victoria is producing more tech graduates than any other state, and our economic climate is ripe for investment. I’ll resist the temptation to name other states, but we’ve worked harder than ever to chase down every opportunity to boost Victoria’s economy and create thousands of local jobs.”

A slap in the face to Sydney was fashion retailer David Jones’ relocation of its head office to Melbourne, bringing 820 jobs to Victoria. When South Africa’s Woolworths Holdings, which owns David Jones and Country Road, announced the move in 2016, group chief executive Ian Moir said it was “a no-brainer”.

“Melbourne really is the fashion centre, the fashion capital of Australia, it’s the retail centre of Australia,” Moir said, adding that Melbourne had a better talent pool and real estate costs were lower.

At the time, Andrews said his government had provided “strong support” for the relocation.

In a triumphant statement to Inquirer, Andrews proclaims: “Whether it’s global giants like Ali­baba or Amazon, or iconic Australian companies like David Jones, more major brands are choosing to do business in Victoria.” He says that since he took office in December 2014, the government has directly facilitated investment projects valued at more than $7.6 billion in new capital expenditure that are expected to create more than 18,500 new full-time equivalent jobs.

The Sydney business community is starting to murmur about whether NSW Premier Gladys Berejiklian’s government has been keeping pace in attracting industry, particularly the tech sector.

“Victoria and Melbourne are aggressively pursuing those types of businesses,” Committee for Sydney director of advocacy James Hulme says. “Sydney has a great story to tell in the tech sector and in terms of start-ups (but) we need to make sure it’s an attractive case and an affordable case.”

Google, whose Australian operation is based in Sydney with 1300 workers, has not had a great experience in trying to relocate to big new premises.

The company first looked at converting the old White Bay power station but abandoned it because, it said, the transport links were not good enough. Then last week the NSW government rejected a plan to create a Silicon Valley-style technology hub on the old rail yards near Redfern, in which Google would have been establishment tenant, saying the proposal failed a “uniqueness test”.

Dalidakis can’t resist a dig: “We enjoy a warm and positive relationship with Google … it goes without saying, if NSW doesn’t want their Australian headquarters, we certainly do.”

Hulme says his group also is concerned about whether Sydney is doing as good a job as Melbourne in making itself sufficiently, for want of a better word, cool, to attract the millennials — talented young professionals who make the new economy tick.

“Melbourne has embraced the night-time economy; it’s a young city,” Hulme says. “It has greater diversity in terms of night-time, late-time retail, late-night arts and culture.” It is partly a planning issue, he says.

“When we plan we need to think about the way the city works. You need open spaces where things can happen at night. In Sydney you confront red tape, regulation in relation to putting things on at night.”

The man who probably knows the most, and has done the most, about making big cities work and thrive happened to be in Sydney this week.

Last year Carl Weisbrod stepped down from his dual role as New York City’s director of the Planning Department and chairman of the Planning Commission, in a career that spanned the redevelopment of Times Square, the rebuilding of the World Trade Centre after the 9/11 terrorist attacks and a major overhaul of the city’s zoning code.

“Carl has been a central force in every major crisis facing New York City’s economic development over the past 40 years,” Mitchell Moss, a professor of urban planning at New York University, told The New York Times when Weisbrod announced his move.

Weisbrod tells Inquirer that millennials have been a key to New York City’s success in recent years. “Our city has always been a pro-growth city,” he says. “We believe that talent is what attracts business, as opposed to business attracting talent. We see our growth as coming from international immigration and millennials. We believe one of the reasons our economy and our jobs are at an all-time high is because that is where the talent is.”

In terms of internal migration, Weisbrod says, it is the millennials “who tend to be better educated” coming in, while “our out-migration is poorer New ­Yorkers.”

The issue the Committee for Sydney and the Committee for Melbourne are keenly aware of is this: it is tricky to manage the vicious cycle of huge numbers of people being attracted to a city because it is liveable, to the point where it becomes congested, and unliveable. No one doubts that for those millennials who have moved from Sydney to Melbourne, congestion and housing affordability were significant factors.

“Sydney has not been as good as other cities in bringing together housing, public transport, roads, jobs, and public sector services,” Hulme says.

Conversely, Letts is worried that Melbourne, in turn, is in danger of becoming a victim of its own success: the pace of growth is producing crowded highways and trains, and new housing is not keeping pace with population growth, raising the affordability question.

“The Committee for Melbourne is looking at these trends; it is Australia’s fastest growing city, and we need to establish how we’re going to manage this,” Letts says.

Weisbrod says the only way for big cities to move ahead is, basically, to suck it up: accept that population growth drives their economies and jobs, and know the modern economy will bring in unexpected “disrupters” that have to be managed.

New York City’s traffic congestion problems have worsened in recent years, Weisbrod says, in part because of the sharp rise in the popularity of Uber and other ride hire groups.

“Private cars entering Manhattan have declined, but vehicles for hire have exploded,” he says.

In addition, Weisbrod says: “New York is suffering from a real strain on its infrastructure, both the extent of its public transport and the condition of it — it’s not in good repair.

“Despite that, we are still pro-growth, it’s the culture of the city,” he adds, saying that the mindset is to work out new and innovative ways to deal with the problems.

New Yorkers are so sure of themselves and their city, Weisbrod says, that unlike the Sydney-Melbourne rivalry, no one worries about other cities.

“This may sound arrogant, but I’ll say it anyway: New York doesn’t really have any rivals in the US.”

 

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