Australian cities have reached diseconomies of scale: Sustainable Australia

At the 2000 Sydney Olympics, Australia’s population was 19 million, and will reach 24 million in late 2015. That extra 5 million people means a 25 per cent increase in just 15 years, or another Sydney.

The federally registered Sustainable Australia party says the Intergenerational Report’s predicted doubling of Australia’s population to 40 million by 2050 will deliver greatly reduced infrastructure services for ordinary citizens.

Why can’t infrastructure be doubled?

“The doubling of our population demands a doubling of our infrastructure, but this will be impossible to deliver in Australian cities. The increasingly obvious reason is that our cities have reached diseconomies of scale,” said William Bourke, President of Sustainable Australia.

“Diseconomies of scale are the forces that cause governments to produce infrastructure - like schools, hospitals, road and rail - at increasing per-unit costs.

“In short, governments do not receive enough proportionately extra tax from each new citizen to provide for this disproportionately expensive infrastructure.

“It used to be easy to deliver infrastructure when the government owned the land, but because our major cities are already planned and built up, there is no room to retro-fit new infrastructure without expensive additions like land buy-backs and tunnelling.

“Consequently, projects like Melbourne’s East West Road Link and Sydney’s North West Rail Link now cost $18 billion and $8 billion respectively. That’s an astounding $350 million to $1 billion per kilometre. The impact on government budgets is clear. According to The Grattan Institute, state and territory borrowing for capital expenditure over the last seven years drove their finances backwards from $37 billion in the black in 2006 to $69 billion in debt in 2013.[1]

“Huge infrastructure costs then force unpopular asset sales, increased debt borrowings and austerity. The ongoing failure to deliver infrastructure leads to congestion and lower productivity.

“Sustainable Australia rejects the bipartisan political agenda to double Australia's population to around 40 million by 2050. We support a target of around 26 million.

“Sustainable Australia is #RedefiningGrowth to secure a prosperous economy, healthy environment and better quality of life for all Australians. Real growth means better, not bigger.

“We call on the federal government to urgently hold a national population summit, closely followed by a referendum-style vote,” said Mr. Bourke.

ENDS

Contact: William Bourke, President

____________________________________________________________________

[1] http://grattan.edu.au/report/budget-pressures-on-australian-governments-2014/