While economic growth has been concentrated in cities for some time, the trend has really accelerated in the past decade. Half of all jobs growth is now within a 2km radius of the city centres in both Melbourne and Sydney, reflecting the increasing share of new jobs in services industries where physical proximity really matters.
Yet our land use planning policies make it hard for people to live near where the new jobs are. Instead, most new homes are still being build on the urban fringes of our largest cities. Reforming planning and housing policies to allow more people to live closer to the centres of our major cities could yield big economic benefits.
The intensifiying shift in the economy towards our cities also has big implications for our regional development policies. Governments have already spent a lot of money building infrastructure in regional areas this past decade, but have little to show for it.
And the growing economic and social divides between cities and regions is already being reflected in our politics, with a growing share of regional voters opting for minor parties in recent Federal elections.
[Follow the link to view background information for this presentation at the Grattan Institute website]