How can government policy better align with community aspirations and the reality of the market?

Philip Graus Director Cox Architecture Conjoint Professor, FBE, UNSW

Urban Renewal, Planning & Design Summit November 2014  

How can government policy better align with community aspirations and the reality of the market?

“Why is policy, legislated by people elected by the community, so out of whack with their aspirations? And where does the ‘reality of the market’ fit in to all this?”

Six Things to Think About

We expect too much from government

Government policies don’t align and have unintended consequences

The community’s aspirations are complicated and also don’t align

The world changes more quickly than policy

What is the market?

Policy isn’t made by the people we vote for

We Expect Too Much From Government

•  Deregulation was supported by both federal parties to help keep us competitive in the global economy.

•  In 1990 the average person could borrow less than 50% of the their annual income. After deregulation in 2010 this increased to 150%. Now at state level we have a serious affordability problem with escalating house prices

•  Wealth and the ability to borrow money determines how and where we live

Government Policies don’t Align and have Unintended Consequences for the Community

The Community’s Aspirations are Complicated and Also Don’t Align

The Community’s Aspirations are Complicated

The Community’s Aspirations are Complicated

The Community’s Aspirations are Complicated

The Community’s Aspirations are Complicated

The Community’s Aspirations are Complicated

The Community’s Aspirations are Complicated

?  

•  The people we elect don’t make policy, they legislate it.

•  Policy is developed by the government departments who implement long-term policies as elected governments come and go and change priorities every three or four years.

•  We might for example want a more compact city, but you can’t just stop development on land in outer areas zoned for that purpose. You can’t change the market without many changes at many levels – deregulation etc.

Policy Isn’t Made by the People We Vote for

   

The World Changes More Quickly than Policy

•  In most instances policy does not keep up with change.

•  Very few planning policies changed after deregulation

•  Manufacturing jobs are in rapid decline – most government policy on land zoned for industrial uses hasn’t responded to this. What planning policies are responding to the changing nature of work?

Source: Knight Frank “Global Cities” The 2015 Report  

Source: Knight Frank “Global Cities” The 2015 Report  

What is the Market?

•  What is the ‘reality’ of the market? •  There’s really no such thing as one market. Its as

complicated as policy and community aspirations •  So how do you align the ‘market’? •  There are instances where the market cannot deliver

what is planned - ambitious plans for high-rise centres – meet a planning ideal of ‘compact city’. Why?

•  Density proposed in areas that might have a rail station, but not near attractions – access to good jobs, poor amenity etc. In this case the planning simply doesn’t align – no link between liveability, connections, prosperity and sustainability.

Duplex Terrace Four plex 3 storey WU 4-8 storey 8-20 story High-rise Mixed use Density (per units) 2 4 4 12 20 30 70 150 250 Car space ratio 0 1 0.8 0.8 0.8 0.8 0.8 0.8 0.8 Number of car spaces 0 4 3.2 9.6 16 24 56 120 200 Cost per car space $0k $40k $45k $50k $55k $55k $55k $55k $55k Median value (per unit) $550k $552k $527k $506k $480k $442k $392k $342k $291k

Construction costs (per unit) $300k $293k $280k $260k $250k $240k $230k $222k $219k

Other costs per unit 30.0% 30.0% 30.0% 30.0% 30.0% 30.0% 30.0% 30.0% 30.0% Financing costs per unit 5.0% 5.0% 5.0% 7.5% 7.5% 7.5% 7.5% 10.0% 10.0% Gross margin (per unit) $58k $26k $27k $16k $6k -$8k -$29k -$61k -$88k GM% 10% 5% 5% 3% 1% -2% -7% -18% -30%

The Market – Limited by What You Pay and Sell for?

The Tool Kit- Gross Margin Analysis - Integrated

Source: Knight Frank “Global Cities” The 2015 Report  

Source: Knight Frank “Global Cities” The 2015 Report  

The Market – Searches for Opportunities

Alignment

Participation

Liveability / Improvement

Market Opportunities

Bigger, Better, and Fairer Cities

Connections

A Way Forward – Six Suggestions from Afar

•  Finance

•  Politics

•  Design

Real Alignment – PlaNYC

Chicago Metropolitan Plan

Participation

•  Allow public input to change the plan •  ‘Consulting’ without engaging is

‘Insulting’ •  The Grattan Institute:

Sydney Metro Plan –  1, 000 Participants Vancouver Metro Plan –  100,000 Participants

Because the local community might actually know what they are talking about!

Liveability/Improvement

•  More important to connect places than plan them?

•  What should we be connecting? –  Centres –  Clusters –  Corridors

•  Build a Mosaic not radial lines to one CBD

Connections

Prosperity – The Market

•  I don’t think I’ve seen this as a chapter heading in an Australian strategic plan.

•  Prosperity links the economy, jobs, productivity, rather than just growth and numbers.

•  Economists are getting more interested in the city, specifically urban productivity

High Line - Floorspace Transfer Cross-section

Bigger, Better, and Fairer Cities

•  Start with what the community is concerned about and where the causes of those concerns lie.

•  The community is concerned about quality of life in our cities and suburbs. –  Physical amenity – the environment in which we live –  Congestion, –  Affordability –  Jobs. –  Much of this is reflected in what people object to. Density -

overcrowding, inappropriate development and more traffic. People realise that we lack sufficient public transport infrastructure