This is the third edition of ‘Adding to the Dividend, Ending the Divide’ published by the Committee for Sydney. Two underlying factors inform this series:
- Sydney is adding to Australia’s dividend. Sydney’s economic contribution to Australian wealth and productivity has increased significantly in the last five years and remains vital to the nation as it shifts from a resources-based growth model to one based on services and centred in cities.
- To succeed, Sydney must reduce the divides within our city. At the same time, there are serious challenges of inclusive growth and spatial and intergenerational equity in the Sydney model of development.
Sydney’s growth and momentum are integral to the success of the state and its communities. With over 60% of the state’s population and 70% of its GDP, Sydney’s ‘dividend’ is not confined to Sydneysiders. What happens here matters to all.
A CITY OF 8M IN 2056: BUSINESS AS USUAL WON’T DO
By 2056 Sydney’s population is forecast to reach reach 8 million – the same as London’s population today. In that context, the Committee for Sydney asks: what opportunities should we look to exploit and what interventions should we pursue that might help realise not just a bigger Sydney, but a better Sydney? How do we use the wealth coming from growth to invest in the infrastructure, especially public transport, which will better integrate all parts of Sydney? In particular, how do we overcome the great structural divide in Sydney, namely the economic performance of, and community outcomes in, Western Sydney?
‘Adding to the Dividend, Ending the Divide’ both analyses the current performance of Greater Sydney and suggests practical ways to improve the city’s productivity, liveability and equity. Sydney will not stop growing, so the challenge is to ensure a city for all in which growth is inclusive and the benefits are shared both spatially and inter-generationally. A business as usual approach to Sydney will not do.
ADDING TO THE SYDNEY DIVIDEND
The ‘dividend’ is the contribution of Sydney’s high productivity to national economic well-being. Adding to this dividend via effective Government policy, investment in urban infrastructure and civic reform is a matter of national importance.
The evidence presented in this Issues Paper shows that Sydney’s economic momentum, trending strongly since 2011, increased in the 12 months to the end of 2016, as did its contribution to national wealth. Although some predictions suggested a possible peak of the growth cycle in 2015/16 – with uncertainties in the international economy and a possible reduction in housing production – Sydney has remained on its impressive growth path in terms of GDP, population and housing construction. Although a correction or a slow-down in the next 12 months is possible, Sydney is not predicted to return to the low growth pattern experienced in the first decade of this century. This economic expansion will be matched by a growing population that will see Greater Sydney almost double in number of residents over the next 40-50 years.
ENDING THE DIVIDE IN A REBALANCED SYDNEY
While we draw attention to Sydney’s economic dynamism and contribution, we also highlight the need to understand that the city has problems of affordability and intergenerational equity. Of course, these are the kinds of challenges that attend growth and economic success in most global cities. However, Sydney is now one of the least affordable cities in the world. The average home price in Sydney now exceeds $1 million, which is 12.2 times the median household income of the city. This ratio has been rising; dwellings in Sydney are becoming less affordable over time as growth in wages slows – it took 9.8 times the median household income to buy a home in 2014 and 6.0 times in 20015. Using another measure, the Rental Affordability Index, many parts of Sydney are not considered affordable for rental properties. For key service workers, such as teachers, nurses and retail workers, to rent anywhere within 15 to 20 kilometres of the jobs-rich Sydney CBD requires more than 50% of their incomes. Similarly, Sydney has almost no affordable renting stock for low-income earners located east of Blacktown6. This is a spatial challenge of a city divided East to West in terms of economic productivity and social outcomes. We are pleased that the Greater Sydney Commission has picked up this theme and we will maintain our emphasis on the need to rebalance Sydney and improve outcomes in its less socio-economically advantaged regions as part of the overall strategy to raise the performance and productivity of Greater Sydney as a whole.
Clearly there have been significant investments and policy innovations for Western Sydney since the first ‘Adding to the Dividend, Ending the Divide’. But this Paper reinforces the fact that the jobs gap in Western Sydney remains a fundamental challenge. On current trends, most of the new housing in Sydney will be west of Parramatta while most of the jobs growth will be east of it, particularly those higher value jobs in the knowledge and innovation economy. This economic divide must be redressed, along with the different health and educational outcomes between Western and Eastern Sydney.
So Sydney’s dividend continues, but so do its divides. There are some promising opportunities arising – but we must not be complacent. In this report, we review the evidence, analyse some of the key trends shaping Sydney and then recommend some interventions of strategic significance.