How slowing the development of Melbourne’s outer suburbs would make us $43bn

If we lived closer together and closer to the city, instead of venturing into the outer suburbs of Melbourne, Victoria would make $43bn, a new report says.

The state would be $43bn better off if Melbourne’s urban sprawl was slowed.

Victorians would be $43bn wealthier by mid-century if urban sprawl was reined in and we lived much closer together, new analysis shows.

A report by Infrastructure Victoria shows that a “compact city” model outperforms a city where growth is focused on the fringes or in a network of regional cities where populations are spread out.

Researchers used state forecasts that 11 million people and 5.5m jobs would be in Victoria by 2056, to model five different scenarios their impacts on transport, housing and the environment.

Infrastructure Victoria chief executive, Dr Jonathan Spear, said the work was intended to help government make good choices early to ensure we don’t “sleepwalk into future urban form”.

“We are now at the time that we can choose the future shape of Melbourne and our regional cities and more compact cities clearly give us much better results now and into the future,” he said.

“When you have more people living closer together, in Melbourne and our regional cities, and more people living in the established areas of our cities versus sprawling, you get much better results.”

Graphics showing how Melbourne could look in the future based on modelling by Infrastructure Victoria. Picture: Supplied

Graphics showing how Melbourne could look in the future with a compact city, based on modelling by Infrastructure Victoria. Picture: Supplied

How a consolidated city would look in Melbourne. Picture: Supplied

Under a compact city model, about 55 per cent of population growth over three decades would be focused on inner and middle suburbs – compared to a “dispersed city” model that has about the same proportion of residents heading to outer suburbs or new growth areas.

This would mean more high rises in inner city areas, but 154,000 fewer cars on the road.

A consolidation of businesses and jobs in established areas would boost productivity and mean housing values would soar by up to $100bn, but building schools and community facilities would be more expensive due to higher land prices.

A dispersed city paints a very different picture. Picture: Supplied

Infrastructure Victoria’s modelling of how a network of cities in Victoria could look. Picture: Supplied

Overall infrastructure costs would be much lower when living closer together, because it would cost $59,000 less for every home build in a compact city compared to a dispersed city.

In a consolidated model – which focuses more on medium density – the cost is about $26,000 less per household.

Melbourne currently has a lower density – about 1600 people per square kilometre – than car-centric Los Angeles and major cities in Europe and Asia.

The report says continuing this trend would emit more greenhouse gases and eat up an extra 30,000 hectares of land compared to if we lived closer together – more than 12,000 times the size of the MCG.

Dr Spear said developments would still proceed in greenfields under any model, but that more density in inner suburbs would benefit us all.

“Victorians would be up to $43bn better off by 2056 with more compact cities compared to growth being dispersed across the state,” he said.

He said the report demonstrated ways to the “Holy Grail of productivity growth” that would mean we would “become collectively wealthier”.

Five recommendations have been made, including to create regional growth boundaries, housing targets in established areas of Victoria, and long-term infrastructure and land use plans.

Dr Spear said reforms the tax and incentives system in property were also required, and reiterated Infrastructure Victoria’s call for stamp duty to be axed in favour of another system such as annual land tax, and for first homebuyer grants that push people to the fringes to be dumped.

Those recommendations were in another major work by the advisory body, which advocated creating more housing choice in established suburbs – such as medium-density townhouses that suit families – to deal with rapid population growth.