Government weighs plan for Melbourne revival

A plan to revive Melbourne's moribund city centre through tax relief, deregulation, commuter incentives and repurposing of vacant commercial buildings is being considered by the Victorian government ahead of the state budget expected on November 10.

Free train travel and coffee, suspension of payroll and fringe benefits tax, waiving of fees for new liquor licences and the transformation of office space into affordable housing and shared working spaces for start-ups, students and artists are among the measures proposed by a high-powered group of business and civic leaders.

Melbourne's Collins Street has been deserted for months.Credit: Wayne Taylor

With Victoria recording only a handful of new COVID-19 cases in recent days, Premier Daniel Andrews has promised to announce today "significant'' easing of Melbourne's stage four restrictions but has dismayed the retail and hospitality sectors by ruling out any immediate steps towards the reopening of shops, cafes and bars.

Instead, the changes are likely to be confined to households, with people given more freedom to leave their homes to gather with family and friends.

“I know businesses want to get back ... but you've got to do it safely,’’ Mr Andrews said.

Melbourne lord mayor Sally Capp said the economic and social impact of the protracted lockdown was reaching a tipping point in the city centre, where retailers and restaurant and bar owners rely on strong pre-Christmas trading to sustain their businesses.

Central Melbourne before the pandemic was the engine room of the Victorian economy, contributing a quarter of gross state product.

Between March and August this year, 52,000 – or one in 10 – city workers lost their jobs. Without significant intervention, Melbourne's gross local product is forecast to fall by $110 billion over the next five years.

“In a year that has been absolutely abysmal for so many of our small businesses in the city we need to start getting their doors open and customers back in as soon as it is safe to do so,’’ Ms Capp said.

Melbourne lord mayor Sally Capp.Credit: Jason South

A high-powered advisory board hand-picked by the lord mayor has produced a 10-point plan to bring Melbourne out of its COVID-19 coma.

The "Bringing Melbourne Back Better'' advisory board includes some of Victoria’s leading figures in business, public administration and the arts including former top bureaucrats Helen Silver and Elizabeth Proust, business heavyweights Lorenz Grollo and Lindsay Fox, Arts Centre chief Claire Spencer, Committee for Melbourne chair Scott Tanner, State Library chief Kate Torney and Herald and Weekly Times chair Penny Fowler.

Its recommendations, although not City of Melbourne policy due to the caretaker provisions of the pending local government council elections, have been submitted to and extensively discussed with the Victorian government as Treasurer Tim Pallas finalises his state budget.

The plan recognises that when Melbourne reopens it won’t be as it was. The experience of Sydney and other regional cities shows that, even once restrictions ease, most city workers are unlikely to return to the office full-time.

Ms Capp said the greatest challenge for Melbourne is to convince its pre-pandemic workforce that the CBD is a safe place to work and a place where they want to work. She also wants more people to call central Melbourne home.

“There is huge scope for us to have more residents,’’ she told The Sunday Age. “That was a big part of how we recovered and became one of the world’s most liveable cities following the recession in the early '90s.

“Residents are the heartbeat and pulse of the city. They underpin so much of the economic confidence of the city because we know there are people here who can support local businesses and attend exhibitions and go to shows and participate in festivals.’’

The plan contains hip pocket inducements for city workers, with a proposal for free train travel for the first month post-lockdown and discounted fares thereafter, an extension of the free tram zone to the university and arts precincts and free coffee.

It suggests relaxing visa restrictions to allow migrant workers to stay.

The plan envisions a staggering of start and finish times for office workers to observe social distancing, with the eight-hour working day to start at 7am for some and as late as 11am for others. The advisory board hopes this will tempt late finishers to head straight to restaurants and bars instead of going home.

To ensure they have plenty of food and drink to choose from, the plan proposes a suspension of fringe benefits tax on parking and eateries, a reduction or suspension of payroll tax for hospitality businesses with low turnover, a waiving of outdoor trading permits and liquor licence fees and an extension of late-night trading for bars and restaurants.

It won't all be fine-dining. To put some sizzle back into the city’s kitchens, it invites city eateries to take part in a “Great Parmigiana Challenge’’ and suggests a loyalty points program for patronising city businesses.

The advisory board also wants to lure a greater diversity of businesses – start-ups, social entrepreneurs and creative organisations – into a city centre heavily reliant on financial services, education, healthcare and logistics. It proposes repurposing vacant commercial leases for rent-free shared work spaces.

Eugene Cheng, the founder of Sneaker Laundry, a start-up business that refurbishes well-worn trainers, is an example of the kind of business activity the plan hopes to stimulate. He has made use of a City of Melbourne grant to lease a Docklands warehouse which he intends to share with other small businesses which need storage or work space.

City-based entrepreneur Eugene Cheng has made use of cheap commercial rents to open a new shared warehouse and workspace in the Docklands.Credit: Eddie Jim

Mr Cheng is paying a fraction of normal market prices for a double shopfront in the Docklands and will charge $10 a day for other businesses to make use of storage, in-house photography and videography and Wi-Fi.

“It is pretty much a not-for-profit so I can help friends who are starting businesses,’’ he said. "Commercial leases in the city are up for grabs everywhere. You can call and get an amazing deal on properties you could have never imagined before."

The lord mayor’s plan predicts a best-case return of 50 per cent of office workers over the next six months and assumes many employees who do return to their desks will spend part of their week working from home.

Committee for Sydney ceo Gabriel Metcalf said this was Sydney’s experience in the five months since the NSW lockdown. “Sydney is halfway back,’’ he said. “People are still worried about COVID and a lot of employers have discovered that their employees like working from home.’’

A recent survey by JLL, a global consultancy which specialises in commercial property, found that 82 percent of businesses in Asia Pacific are intending to facilitate more working from home.

JLL senior director David Bowden, a 40-year veteran of Melbourne’s commercial property market, said while this will cause some businesses to change the layout of their offices, it was unlikely to see an exodus of businesses from the city centre.

“There is definitely going to be a shift in some things but after a few years, it won’t be as profound as people think it will be today,’’ he said. “Melbourne is such a centralised city. It is the beating heart of Victoria.

"There are a lot of people who are missing the engagement and interaction with people. The workplace is where you get collaboration and the culture of a business and the dynamics and ideas that you just don’t get when you are on a Zoom link.''

One of the boldest initiatives within the “Bringing Back Melbourne Better’’ plan is converting disused office space into affordable housing.

The report cites a program in the Portuguese capital of Lisbon where landlords lease short-stay apartments and houses to the local municipality, which then rents them at affordable rates to families. Ms Capp believes a similar program would work in Melbourne to enable more young people to live in the city.

The Andrews government has already backed one key measure in the lord mayor’s plan – the proposal to convert outdoor space in the city into al fresco dining, entertainment and shopping areas.

The rest is contingent on three dates; Saturday’s council elections, the November 10 Victorian budget and whenever Premier Daniel Andrews declares it safe for “non-essential’’ workers to go back to the office and retail and hospitality to resume.