The Industries Commission has debunked the view that urban in-fill will solve the problem of sprawling cities.
In a 350-page study it rejects many urban myths. It refutes the popular belief that new home-buyers and the poor are forced by cost to move to the fringe. Its surveys demonstrate that new home-buyers and the poor are well represented in core, middle, outer and fringe areas of Australian cities.
It shows that a move to more medium-density housing will not do much for efficient use of infra-structure or to stop urban sprawl.
The study is a response to questions put at the special Premiers’ Conference in 1991. At that conference it was suggested that Australian cities were too spread out and as a result electricity, water and sewerage were too expensive and used wastefully.
The Industries Commission study found, “”Not much land area can be saved just by a move to medium-density dwellings, given the relatively small share of the total urban area that dwellings occupy.”
It would take a long time to get a substantial impact and it would require reductions in green spaces, roads and other land uses which would be very costly. It would also require expensive replacement infrastructure.
Higher density would also cut private green space, necessitating more public green space.
The commission found there was not enough information about infrastructure costs, however, “”from the information available to it, the commission considers that urban fringe development is not heavily subsidised overall. Reforms would not have a major effect on fringe pricing so might not discourage fringe development.
None the less, there was still good reason for reform because averages can hide significant variations within different areas. Pricing should better reflect actual costs of land servicing. This would affect people’s buying and effect the pattern of land use for the better.
There was a range of tax and other influences which distorted people’s choice of where to live.
Stamp duty was a tax on mobility and interfered with efficient use of land. Capital gains exemption for the family home encouraged greater investment in housing and larger land holdings for the family home than would otherwise occur.
Land tax was not uniform: rental property was taxed; owner occupied usually not. Rural and government land was usually exempt. Local council rates were based on land values, not cost of services and had a wide range of concessions.
“”As a general rule, the commission favours neutrality in all the taxes and charges which affect land use and the provision of urban services,” the report, which came out last month, said. It thought social welfare was better delivered directly than through tax and charges.
In-fill has been cited as better environmentally than carving out new land at the fringe. However the commission said: “”The environmental effects of different forms of fringe development, or of further inner-city redevelopment, are difficult to define, and it is not very clear which generates the greater environmental costs.”
Some fringe development might cause water pollution problems, for example in the Hawkesbury-Nepean system in Sydney, but in-fill might mean bigger storm-water run-off which could be just as expensive and difficult to control.
The popular myth is that transport from outer areas is subsidised. The commission pointed out, however, that the web of regulation, restrictions on taxis and the monopolies given to buses in fact led to penalties to fringe dwellers who needed greater flexibility. They also increased private car ownership and use.
The commission said governments were not good or efficient developers of land. Government development might subsidise lower-income people, however, it was an inefficient way of doing it. Price stabilisation had not been achieved by government entry into land development.
“”People should be subsidised; not the place where they live or work,” the study said.
“”In sum, polices for urban settlements need to emphasise flexibility, and to conscript market mechanisms wherever possible. The issue is not urban consolidation vs fringe development, nor is it low versus medium density housing development. It is about what people want from their cities, and enabling them to express that in the clearest way possible: by paying for it, and getting what they pay for.”
In order for that to happen, more information was needed.
“”Public-sector providers of urban services should be required to compile and publish annually the costs, revenues and charging structures associated with development in different areas within their administration,” it said.