Is Sydney Really Full? Refocus on Federalism for a Fix

 

If you have been reading the paper or listening to the radio anyone would think that Sydney has filled up over the last month.

Anyone interested in recent history would know that the problem was triggered in the early 2000's with the proclamation that "Sydney was full" by the then Premier. Infrastructure spending went into a holding pattern for a decade. 

There are serious economic consequences from the "Sydney is full" slogan and it requires a more serious not alarmist discussion. I'm sure that if the question was recast as "Would you like to cut immigration back and see the value of your assets depreciate, economic growth fall and fewer jobs?" you would illicit a totally different response from the ones being peddled at the moment. Just ask the Japanese about the link between population growth and economic prosperity - where asset values plummeted over 11 years and the economy was in a deflationary funk. 

The last time policy was framed within the "Sydney is full" paradigm in a short period of time we were producing the same number of houses as Adelaide and the state was bottom bouncing on Australian economic performance tables. This lasted for years. People are going to want to move to Sydney (or Melbourne) because they are all too aware that these cities have more opportunity and, in the longer term, will more likely put them and their families into a better financial situation than would otherwise be the case.

Australia has a competitive advantage in its institutional structure that could help solve the issues we are confronted with now. Our federal structure of government has served us well in the past and there is research to show that federal systems lead to better economic outcomes than other systems. Federalism was all the rage when the Hawke Government rejuvenated the Council of Australian Governments. There were discussions on whether our federation was competitive, co-operative or a marble cake model. There were also discussions on how the various levels of government could work together and policies were developed accordingly.

COAG has tapered off since the introduction of the GST, discussions on federalism have subsequently been relegated to the back blocks of policy discourse and have been replaced by arguments on how the goods and service tax revenues should be divided. Our federal system of government provides the opportunity to get all levels of government together to solve major policy issues. Immigration and settlement is now one such area and warrants consideration. 

There is little doubt that Sydney is experiencing growing pains and the ambitious infrastructure program of the NSW government needs to continue. The plans developed by the Greater Sydney Commission on the three cities is a way to make Sydney operate more efficiently. However, there are bigger issues at hand that could be addressed through COAG. There needs to be a refocus on federalism if we are going to seriously address the issues. Bring all three levels of government - the Commonwealth (because they set immigration levels), the States (because they have the infrastructure responsibilities) and local government (because they are at the settlement coalface) to sit down and agree on a settlement strategy linked closely with regional development incentives.