Metropolitan planning is an enormous undertaking, and no Australian government has yet appeared up to the task. That includes the strategy for Melbourne that the Victorian government has been preparing for over a year now.

Plan Melbourne is more ambitious than its predecessor, Melbourne 2030, but it is not clear why the 30-year plan is being fully replaced just 10 years in.

Governments routinely reject the plans of the previous regime, but larger forces are at play too. Few strategic plans achieve their intents.

As the extensive consultation on Plan Melbourne ended this week, it is worth considering what lessons the discussions around the process and content provide for other Australian cities.

Plan Melbourne

Plan Melbourne is the latest in a series of reviews.

In May 2012 a review was announced of development contributions – the developer levies that fund community facilities and infrastructure. Then came a review of land-use zones – the most powerful mechanism available to councils for controlling what goes where. Before either review was completed, Fishermans Bend was rezoned to become Australia’s largest urban renewal project. Only then was Melbourne’s strategic plan released for consultation.

Thousands of submissions have been made by people dutifully participating in a process in which the key strategic decisions have already been made. Unfortunately, most enable the worst objectives of the plan. The best objectives lack any mechanisms for implementation.

The east-west road tunnel features prominently in Plan Melbourne and there can be no doubt about that particular decision, notwithstanding that it will consume the infrastructure budget of a generation. The commitment to new public transport infrastructure is just as clear: the plan suggests “moving towards a metro-style rail system” in the long term.

The 20-minute city

One of the better objects of Plan Melbourne is to create “20-minute neighbourhoods” in which jobs, schools, shops and community services within a 20-minute walk, bike or public transport ride from home.

Matching employment with residential location is difficult at the best of times. Proximity can be encouraged via a good distribution of affordable housing and job types, with multiple transport links so people have choices about where they live and work.

Housing affordability and availability

Plan Melbourne recognises the need to increase housing affordability – a national issue of huge importance. It makes no requirement for a percentage of social housing in new developments, however, nor effort to regulate the market housing provided. It offers no strategy other than the old chestnut of building more housing – mainly in areas zoned industrial and commercial and identified for urban renewal.

Let’s settle this matter once and for all. Affordability cannot be delivered in Australian capital cities simply by increasing supply.

This is a presumption propagated by housing and development industry associations such as the HIA and the UDIA in the interests of their members, with no more evidence than there is for the argument that inadequate land supply is driving up housing prices. Plan Melbourne states that there is “at least 30 years’ supply of urban-zoned land” within the urban growth boundary.

The housing market in all Australian cities is made up of submarkets in price, type and location. The 16,000 new dwellings in central Melbourne in the last decade and 4800 at Docklands have had no impact on prices on the urban fringe.

Increasing the supply of high-end apartments does not increase affordability for people on low to moderate incomes. It may affect prices in the high-end apartment submarket, but even then, the industry cries “glut” whenever there is anything approaching an oversupply. There is no reason to believe developers will not continue to stage their building programs to keep prices steady or increasing.

Simple supply-demand economics also neglect the global investment market for Australian city housing. This potentially infinite demand is for high-end apartments in the central and inner cities, which is where most urban renewal sites are located. There is no reason to believe that developers will not continue to provide directly for this submarket. The industry needs considerably more regulation to achieve affordability, because the key issues are what the industry is building, and for whom.

AAP/David Crosling

Urban renewal

The areas identified for urban renewal create a problem for the 20-minute city. These are, not surprisingly, where the industrial and commercial jobs are. They are close to railway lines and in well-serviced inner areas, and allow workers to commute by public transport.

But these areas are to be redeveloped for well-located housing for which there is a growing, global market. The jobs will be relocated to the urban fringe where land is cheaper and there is no public transport.

It is true the industrial base in these areas is declining, but in Melbourne the vacancies are being filled by a new range of productive activities. These include creative uses, not-for-profits, start-ups and all sorts of other low-cost enterprises. Melbourne’s industrial areas contain a very wide range of job types.

The new uses for land co-exist with the remaining light industrial not only because they are compatible, but because the zones prohibit residential use. That keeps land prices down and means there are no residents to disturb.

The mixed-use intent in urban renewal has two fatal flaws. First, noisy and messy productive uses don’t fit well in residential environments. Second, because residential is the “highest and best” economic use of land, any other use becomes unviable. That puts the mixed-use zone on a one-way trajectory to residential.

The objective of the 20-minute neighbourhood is compromised by inability to deliver a good distribution of affordable housing, and by the identification of industrial and commercial land for urban renewal. Plan Melbourne looks set to increase concentrations of high-end housing and reduce the range of job types.

What now?

Urban planning can address these problems to a point. Housing affordability, in particular, requires the involvement of state departments for housing (of which Plan Melbourne makes no mention) as well as planning and transport. Federal government and taxation laws must also come into play. A new metropolitan planning strategy is the single best opportunity to engage with state and national policies and grapple with controlling the market.

Wider distribution of a range of jobs is comparatively straight-forward. This requires not rezoning industrial and commercial areas, and where possible creating more. It is unfortunate that the Victorian government has just redefined these zones to enable more residential use.

A more constructive act – and more in line with the intent of Plan Melbourne – would have been to redefine them to keep residences out, and to make manufacturing spaces, small businesses and places for cultural production with and without audiences as-of-right. A review of the zones after the idea of the 20-minute city might have done that.

Some areas will always be rezoned upwards, and revenue from land use will continue to grow. Value capture – the mechanism by which some of these profits are distributed for community benefit – is best enabled through development contributions. These are routinely used in other jurisdictions to fund schools, libraries, social enterprises and cultural facilities, and to provide affordable housing.

The Victorian review of the development contributions system didn’t countenance any of these possibilities. A review of that system after the release of Plan Melbourne might have done so. Perhaps other cities can learn from these mistakes.