Will the Grattan Institute get Georgist hate mail?

The AFR has a report on the latest offering from the tax-payer financed Grattan Institute (courtesy of the ALP and surprisingly labelled “independent Melbourne-based advisers”). I haven’t read the actual paper – but I do agree with the premise as reported by the AFR:

… 80¢ of every dollar from goods and services is generated on just 0.2 per cent of the country’s land mass.

A new report from independent Melbourne-based advisers the Grattan Institute has found Sydney and Melbourne’s central business districts, which measure 7.1 square kilometres combined, generate 10 per cent of all goods and services – three times more than the agricultural sector.

The findings challenge local and state government planning policy, which has encouraged businesses and government offices to relocate to non-CBD areas to spread employment opportunities, reduce congestion and enable more people to live near their workplace, as cities generate higher ­levels of productivity per hour worked.

Economic prosperity is not a return to “land” but rather the return to human ingenuity, trade, and the size of the market. Policies that make it harder to access the CBD – like parking taxes – restrain economic prosperity.

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45 Responses to Will the Grattan Institute get Georgist hate mail?

  1. thefrollickingmole

    Next in, water wet, fire hot..

    Someone seriously wrote a paper pointing out what even the Romans knew? That its more efficient to have things close together than spread apart.

    FFS if Sydney was picked up and plonked at Alice Springs then it would still have the same “capacity to earn”. (at least till people said “bugger its, its too hot, Im going back to the coast)

  2. stackja

    Now need to change human nature.

  3. Bruce of Newcastle

    I note that the green as grass ‘independent’ Grattan Institute press release, which you can find here unpaywalled, somehow forgets to mention mining.

    Which in 2009-10 disturbed less than 0.26 % of Australian land area and produced 8% of GDP.

    I note also the Greens like to protest the 0.26 % of land used for mining while living on the 0.2 % used for cities. Perhaps we should move Greens onto mining leases and kill two birds with one stone, environmentally speaking.

  4. boy on a bike

    How did they calculate that? By where companies are headquartered?

    For instance – the mob I work for now are headquartered in the CBD, but most of the activity is carried out elsewhere. By that measure, 100% of BHP’s economic activity is generated in the Melbourne CBD instead of in those nasty coal and iron ore mines in the middle of nowhere.

  5. Leo G

    Perhaps we should move Greens onto mining leases and kill two birds with one stone, environmentally speaking.

    As remediators or landfill?

  6. David

    As remediators or landfill?

    The second option has a certain attraction.

    :-)

  7. boy on a bike

    I can see one failure already in the appendix:

    The key assumption is that within each industry, a worker’s income is proportional to his or her economic activity (on average). For example, a manufacturing worker who earns $2000 a week is predicted to produce twice as much as a worker in the same industry who earns $1000 a week.

    I suppose that assumes that a public servant pushing paper around an office on $3000 a week is producing 1.5 times as much as a mine worker on $2000 per week.

    hahahahahahaha

    With that sort of definition, Canberra would be producing the most value in the country.

  8. Token

    hahahahahahaha

    With that sort of definition, Canberra would be producing the most value in the country.

    Sounds like the type of definition of “productivity” which would encouraged even more pay claims without a link to value.

    You can bet this survey will be quoted by the “Justices” at “Fair” Work.

  9. Chris M

    which has encouraged businesses and government offices to relocate to non-CBD areas to spread employment opportunities

    This works well in the USA but they have a network of highways and similar distributed infrastructure. In Australia we have a few narrow goat tracks. It’s crazy crowing into half a dozen big cities but that’s how it is…

  10. Baldrick

    The Grattan Institute are now using real estate advertising gimmicks?

    COASTAL HINTERLAND ACERAGE SALE
    Fantastic opportunity not to be missed, for the discerning buyer …
    Only 20 kms from Dubbo and 350 kms from Port Macquarie.

  11. Rob MW

    A real pity that they poured concrete over most of it. Think of the whole lot more that could be produced if they tore it all up and planted quality hemp.

  12. alexis

    Environmental advantages too. The place with the smallest per capita carbon dioxide footprint in the USA is…Manhattan.

  13. boy on a bike

    CBD areas have the highest rents. It therefore makes sense to only locate jobs in those areas which have high returns. Which is why things like call centres are located in places like Launceston.

  14. srr

    which has encouraged businesses and government offices to relocate to non-CBD areas to spread employment opportunities

    This works well in the USA but they have a network of highways and similar distributed infrastructure. In Australia we have a few narrow goat tracks. It’s crazy crowing into half a dozen big cities but that’s how it is…

    VICTORIA, The Garden State

    VICTORIA, The Place To Be

    VICTORIA, The State of Cities

    Cities, a short, modern commute from each other.

    Cities sprinkled between Gardens, Lakes, Mountains, Beaches, Forest, Fields and everything that makes for a beautiful living and productive life.

  15. .

    A new report from independent Melbourne-based advisers the Grattan Institute has found Sydney and Melbourne’s central business districts, which measure 7.1 square kilometres combined, generate 10 per cent of all goods and services – three times more than the agricultural sector.

    Well, Agriculture and mining have the highest inter-industry multipliers. Maintenance also comprises about 2.5-3% of GDP.

    The study is flawed.

  16. thefrollickingmole

    But again, imagine to my surprise a lefty institute by inner city people showing (and this will be the eventual thrust of it) they need more money spent on them.

    This will be used to flog high speed rail, less roads, congestion taxes etc, you just wait and see

  17. Driftforge

    Economic prosperity is not a return to “land” but rather the return to human ingenuity, trade, and the size of the market.

    That is what ‘land’ is defined as. ‘Land’, in the Georgist sense, is the return due to location. It includes what is called the ‘bounty’ of the land, which is basically the agricultural and mineral value, as well as the value of being in proximity to community — the return, as you say, on human ingenuity and trade.

    The basic Georgist contention is that the way we currently structure this — as a single sided contract — creates an invert market that exacerbates any unexpected change, rather than correcting it like a functional market should.

    It’s the great parasitic scam of the age, leaving tiddly little things like climate change for dead in terms of its scale. It’s just a scam that is available to all, so it’s politically untouchable — even if there are only a few who work it to its full extent by leveraging government expenditure to make their returns a sure thing.

    Policies that make it harder to access the CBD – like parking taxes – restrain economic prosperity.

    Of course. And councils need to feel that in their returns.

  18. srr

    Victoria’s growth and liveability potential will be maximised by developing a ‘State of Cities’ as outlined in the Victorian Coalition Government’s new planning blueprint, Plan Melbourne launched today.

    As part of the strategy to be announced by Premier Denis Napthine and Minister for Planning Matthew Guy, the towns of Bacchus Marsh, Ballan, Broadford, Kilmore, Warragul-Drouin and Wonthaggi are designated as new major population and employment towns for growth.

    “With Victoria’s population projected to rise to 8.4 million by 2050, regional cities and towns are well-placed to take a greater share of population growth. A key initiative of Plan Melbourne is to unlock the growth potential of these cities – so they can accommodate a greater proportion of the state’s future growth – and provide good transport connections between them and Melbourne. This will create a ‘State of Cities’ where there are greater choices for people about where to live, work or start a business,” Mr Guy said.

    “Population growth in and around these towns should not be an imitation of Melbourne’s growth area suburbs, but should offer a less crowded, lower density housing product that is more suited to regional towns.

    “Larger housing lots will be a key attraction for families wanting a different lifestyle to Melbourne, and will help to maintain the country lifestyle and feel of our regional towns and cities.”

    With improving transport and communications links, Victoria’s major regional cities are within a comfortable distance of Melbourne, opening up more employment opportunities for regionally-based Victorians and more housing and lifestyle options to attract Melbourne residents. These links also help regionally-based business access larger labour pools and improve their productivity, market access and competitiveness.

    To bring forward the creation of a ‘State of Cities’, Plan Melbourne includes a number of measures including the delivery of a permanent boundary around Melbourne.

    “Plan Melbourne includes a commitment to introduce a mechanism that will lock in a permanent boundary around Melbourne. By establishing a permanent metropolitan urban boundary around Melbourne we will protect the values of non-urban land, give active support for growth in regional Victoria and provide an opportunity to rebalance the distribution of Victoria’s population growth over the long term,” Mr Guy said.

    “Plan Melbourne will ensure that the Regional Growth Plans encourage population growth in appropriate locations. The economic, social and amenity roles of regional city CBDs will be improved by encouraging increased business and residential densities as well as social and cultural facilities in these locations.”

    Under Plan Melbourne, a pipeline of renewal and infill opportunities in regional cities and centres will also be identified that maximise infrastructure investment and surplus government land.

    “Victoria’s economy and livability depends on strong connections between Melbourne and the state’s regional cities. As part of this strategy, we will develop long term plans for freight and logistics infrastructure along key corridors linking Melbourne and regional Victoria,” Mr Guy said.

    “Victoria’s population has increased by 15 per cent in the last decade, but 86 per cent of this growth has occurred in Melbourne. Under Plan Melbourne, by providing opportunities for decentralized population and employment growth in regional cities, we can increase their size and ability to function independently. We’re providing Victorians with more choices about where they live and work.”

  19. Petros

    I agree with Boy on a Bike. Let’s not forget from where our compulsory super is managed and also where the banks are headquartered (the protected four pillars). So many things are forced into Sydney and Melbourne which could easily be done elsewhere. Have a look at the US where companies are headquartered in otherwise unimportant cities.

  20. tomix

    Very likely I don’t understand what “parking taxes” are.

    Anyway, since the Brisbane City Council changed the meters from 7- 7 M-F to 7- 10 M-F and 7- 7 Sat & Sun at the start of the year, I’ve been able to get a park on Saturdays and Sundays.

    Previously near impossible.

  21. srr

    Sad how many Queenslanders, New South Welshmen et al, tend to trash Victorians, for being Victorians, when we tend to think of ourselves as Australians First, having a duty to Our Whole Country, as more of this Victorian Plan shows -

    The Victorian Coalition Government will invest up to $220 million to deliver key country freight rail line upgrades and build the transformational Mildura to Geelong rail standardisation link.

    Deputy Premier and Leader of The Nationals Peter Ryan today unveiled the Coalition Government’s Murray Basin Rail Project that will revolutionise the movement of freight across the state and unlock the economic potential of regional and rural Victoria.

    In the keynote address to The Nationals State Conference in Benalla, Mr Ryan said the Coalition Government’s State Budget would deliver funding for the Mildura to Geelong standardised rail link with construction expected to be completed by 2018.

    “This landmark project is more than a century in the waiting and the Victorian Liberal and Nationals Coalition have delivered funding to build it in our first term of government,” Mr Ryan said.

    “The Murray Basin is one of the nation ’s leading food production regions, exporting in excess of $3 billion worth of food products and mineral resources per year.

    “By converting the existing broad gauge tracks to standard gauge, the Murray Basin Rail Project will deliver modern rail infrastructure and transform Victoria’s freight network to meet the increasing demand for freight services.

    “The project involves building and upgrading freight lines to 21 tonne axle loading, providing an immediate 15% productivity improvement that will increase train loads by 300 to 400 tonnes.

    “It will improve transport efficiency and enhance access to the ports of Portland, Geelong and Melbourne for Victorian exports.

    “A modern and efficient rail freight network is critical to Victoria’s economic productivity and this Project marks the first phase in the Coalition Government’s vision to standardise regional and rural Victoria’s freight-only lines to drive future growth and prosperity.”

    Mr Ryan said the first stage of the Murray Basin Rail Project would deliver urgent upgrades on the Mildura to Maryborough and Hopetoun to Murtoa rail lines, while the business case for the full Mildura to Geelong standardisation was finalised.

    “The first stage of the Project will include an initial $41 million to upgrade the Hopetoun and Mildura rail lines to ensure quick benefits from more efficient freight movement,” Mr Ryan said.

    “The final cost and alignment of the full Mildura to Geelong rail standardisation will be guided by the final business case to be delivered by the end of the year. “The standardisation is also a crucial first step in the return of passenger rail to Mildura.”

    Mr Ryan said the Project would assist in moving freight off road and onto rail and pave the way for the potential future creation of a new ‘transcontinental link’ near Broken Hill, connecting to the Sydney- Perth rail line.

    “The project will enable further logistical flexibility and ease of use of the Victorian rail network. It will result in a mode shift to rail and thereby improve road safety, reduce road congestion and lower road maintenance costs,” Mr Ryan said.

    “Ultimately, the project will enable a Transcontinental Rail Link between Mildura and Menindee, near Broken Hill, NSW, connecting to the Perth interstate rail line.”

    Mr Ryan said this historic investment formed a central part of the Coalition Government’s plan to build a better Victoria by delivering new job-creating infrastructure projects that unlock economic potential and drive growth across the state.

  22. Gavin R Putland

    Not exactly hate mail, but certainly criticism: http://is.gd/93buNg .

  23. entropy

    Why would someone want to send freight from NSW as to the mendicant leaners in Victoria? NSW already have perfectly good ports. And besides, rather than south, they might want to send freight north to the lifters in Qld.

  24. Aristogeiton

    Please srr, stop posting reams of this bullshit.

  25. Driftforge

    Hehe, well put Gavin.

  26. boy on a bike

    Yes, the yanks have managed to move a lot of high value jobs out of the CBDs and into fringe areas near where people want to live on large blocks. They were termed “edge cities” about 20 years ago. Many of them are bigger than North Sydney.

    The big drivers of these edge cities have been:

    - few, if any, zoning restrictions
    - freeway intersections. They are all built where freeways intersect because people who live on large blocks in the outer suburbs want to drive to work. These intersections are typically where ring or radial freeways intersect spoke freeways.

    So it’s easy to see what the Grattan institute are proposing – tearing up our zoning laws and massive expenditure on outer ring freeways. What’s there to not like about that?

  27. gabrianga

    Miners use .26% of Australian Land Mass. Environmentalists and their followers (including U.N.) have locked up near 16% to “protect” it.

  28. Somebody in the city makes a transaction to do with what was grown or generated outside the city, and that counts as a city yield? And what was made in China or grown in Canada counts as a city yield as soon as ordered, bought or sold? The guy who handles your money at the end of the meal was the producer of the meal? These New Class leftoids should be working for the BoM. (Come to think of it, they do.)

    What next? A Great Leap Forward or Five-Year Plan to get us into skyscrapers because there are no wheat futures changing hands in the WA wheatbelt? No independent Melbourne-based advisers paying far too much for a coffee out in an irrigation ditch of the MIA?

    Thanks, boffins. I definitely won’t be locating my Nespresso franchise in the middle of a Gulargambone cow paddock. Oh, no. I’m much too shrewd for that…and I’m not even an “institute”.

  29. boy on a bike

    Given it is based on census data, how does FIFO affect mining? If all the miners who FIFO have their place of earnings counted as Perth – because that is where they live – it will of course make mining look minuscule.

  30. .

    Indeed, Robin.

    HQ is in the city – thus the city is making all of this lovely wheat and beef?

    Australian Agricultural Company Ltd are very clever, fitting all of those hectares of dryland farming on George Street!

  31. srr

    Next in, water wet, fire hot..

    Someone seriously wrote a paper pointing out what even the Romans knew? That its more efficient to have things close together than spread apart.

    FFS if Sydney was picked up and plonked at Alice Springs then it would still have the same “capacity to earn”. (at least till people said “bugger its, its too hot, Im going back to the coast)

    So, a State of Cities that aren’t too hot or too cold, with glorious coasts and seasonal ski fields, safe harbours and fertile farmland, serviced by modern infrastructure and transports making all that variety no more than a day trip away and farmers being able to pop into their local city during lunch and pop out to the Capital City for an evening of extra excitement…is doomed to fail because cats hate Victoria and Victorians?

  32. Streetcred

    Wendell Cox was right !

  33. thefrollickingmole

    srr

    Cities have their own “gravity” once they get to a certain size.
    Ive got no beef with bashing Victorians even if its fun… Cities are sited for good reasons originally for all the points you raise but after a certain size they draw resources to themselves, not a bad thing in itself but can starve surrounding areas…

  34. wreckage

    Connectivity allows cities to take advantage of cheaper land in smaller cities. Proposal: an effing enormous eight lane (minimum) tunnel from Sydney directly west under the mountains, tear up rezoning and environmental laws for areas that have been agricultural for more than 50 years.

    Too many silvertail old-money farming families won’t accept having to compete for land though. Much preferable to keep soaking up the ongoing aftermath of the Soldier Settlement Scheme.

  35. bingbing

    It took a study to find out most people like cities?

  36. Monkey's Uncle

    CBD areas have the highest rents. It therefore makes sense to only locate jobs in those areas which have high returns. Which is why things like call centres are located in places like Launceston.

    I think you are putting the cart before the horse here, old chap. Rents are higher in the CBD precisely because there is more economic activity. There is not more economic activity because the rents are higher.

    In other news, umbrellas do not cause rain.

  37. JohnA

    Thanks, boffins. I definitely won’t be locating my Nespresso franchise in the middle of a Gulargambone cow paddock. Oh, no. I’m much too shrewd for that…and I’m not even an “institute”.

    Oi, listen here, Robert, melad.

    You can’t just deny my friends in Upper Gulargambone their Nespresso just because you have a survey telling you that city business is better. That’s just unfair, I tell ya! :-)

  38. JohnA

    srr #1390138, posted on July 21, 2014 at 6:05 pm

    So, a State of Cities that aren’t too hot or too cold, with glorious coasts and seasonal ski fields, safe harbours and fertile farmland, serviced by modern infrastructure and transports making all that variety no more than a day trip away and farmers being able to pop into their local city during lunch and pop out to the Capital City for an evening of extra excitement…is doomed to fail because cats hate Victoria and Victorians?

    No, it’s doomed to fail because some bureaucrat named Lancelot will call it “Camelot” :)

  39. federalfarmer

    Victoria isn’t a “state of cities”, it’s one of the most centralised states in Australia (and Australian states are some of the most centralised areas in the entire world).

    Land on the edge of Melbourne should cost $1,000 an acre. Not $1,000,000 an acre. Repeal the urban growth boundary. Ban zoning. Allow as of right subdivision to any size while banning councils from intervening.

    Then maybe we can finally go back to having big new homes on quarter-acre blocks in spacious suburbs with wide roads for $150,000 rather than houses with no backyards crammed onto tiny lots in suburbs with roads the size of bike paths.

  40. motherhubbard'sdog

    David Collyer (see Gavin Putland’s link above) has comprehensively skewered this report for the self-serving tripe it is. All the report tells us is that we have become captives of the rent-seekers.

  41. pattoh

    A timely dose of reality delivered by the Reserve Bank of Australia & generated from ABS figures can be found at :- http://www.rba.gov.au/chart-pack/balance-payments.html

    Have a good look at the chart on the front page. 3/4 of “the rent”is being paid by less than 5% of the people actively engaged in commercial activity in this country.

    For any students of Australia’s economic history it is a slam dunk as to why we have always had 2-3% higher interest rate regimes than most of the developed world.

    We have got resources but we have not got a savings pool. Australia has always needed foriegn capital.

    The money going round in the Urban areas is exactly that. When the balance of payments goes south, so will the $A & interest rates will have to climb sharply to give a government of any colour operational funding.

    We are losing our steel mills, aluminium smelters, cement manufacturers, car manufacturers & critically our oil refineries. Anectdotally we have less than 2 months of fuel at any one time.

    Got that Chinese phrase book yet?

  42. .

    Anectdotally we have less than 2 months of fuel at any one time.

    Why do you need more than two months of fuel? We have latent supply anyway, as our fuel price is high and trades freely. We have excess capacity.

    Modern warfare would mean supply lines are cut very, very quickly. As are resource producing assets.

    We don’t gain anything by stockpiling years of oil – that’s what an oil well does anyway.

  43. 2dogs

    I suspect the analysis is using salaries of workers, and given the number of persons working for the government in Sydney and Melbourne, such amounts should not necessarily be classified as “productive”.

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