As populations in many Asia Pacific countries continue to rise, governments across the region are grappling with how to build out infrastructure fast enough to keep pace.
According to official figures, the number of new residents in Australia rose by 388,100 in the first six months of 2017, an increase of 1.6 percent year-on-year, compared with a global average increase of 1.1 percent.
Much of this growth is occurring in Australia’s cities, making livability increasingly problematic as urban infrastructure struggles to keep up. According to Tim Williams, former chairman of the Committee for Sydney and currently head of cities at engineering firm Arup, annual increases of around 100,000 people in a city with a current population of some 5 million mean the opportunity to fine-tune the growth process is lost. “All the trade-offs that a London government can [deliver] between outer London and inner London to soften the development process [are impossible here],” he says. “It’s all growth, it’s all population increase, it’s all housing.”
The multitude of government entities involved in planning has made cities such as Melbourne and Sydney “orphans of public policy,” says Williams. “They’re lost between tiers of government—31 councils in Sydney, 20 government departments. It’s just unclear to anybody how you shape your cities.” He notes that even in Melbourne, where growth was possible in every direction (in Sydney, growth is possible only to the west), the distance separating where people live and where they work is becoming increasingly problematic.
What’s the answer? According to Williams: “That dissonance in cities, between where the jobs are and where the homes are, in my view can only be solved by fast public transit.”
At the same time, however, even as municipal governments in Australia are rolling out massive upgrades to transport infrastructure, there has been no decisive shift in favor of mass transit facilities. In Sydney, for example, the city’s expansion has historically been shaped by the legacy train system constructed in the latter part of the 19th and early 20th centuries. Today, however, “we [continue to] build roads because they can be tolled,” says Williams. “But actually, [roads] don’t perform the same function economically, or in binding a city together, as rail does. If you look at the job density of Sydney, it’s all around the rail network, the car era did not bring concentrations of jobs.”
This failure is really one of policy and the failure of governments to capture value created by new infrastructure. Local governments have been unable to create a framework whereby they can harness for the public good the financial rewards that new transit infrastructure creates for the private sector, and then use it to finance more new infrastructure.
Australian cities would do well to look at successful models of transit buildout elsewhere in the world. In terms of public sector financing frameworks, Williams points to a rail project in Denver, Colorado, as an example of a successful transit project based on a public/private partnership (PPP) model. In that case, a consortium of private sector finance and engineering firms bid to build the line, which was then leased back to the government at an agreed-upon fee.
China provides other examples. Although financing models are not necessarily an issue in China’s command economy, the government has seen spectacular success establishing hub-and-spoke high-speed rail systems that have alleviated the pressure on saturated city centers in its biggest metropolises. Shanghai, for one, now has a transport infrastructure that allows commuters living in cities such as Suzhou, some 81 km (50 miles) away, to reach downtown Shanghai cheaply in as little as 22 minutes. The service runs 175 times per day.
Finally, Nick Brooke, a Hong Kong–based consultant and chair of ULI Asia Pacific, points to a recent project in Rio de Janeiro as a successful model of public transport financing. “In Rio, they are threading [a mass rapid transit system] through the existing urban fabric,” he says. “What they’ve done is to freeze [floor/area ratios], freeze spot ratios at their existing levels, and to the extent that the new railway will allow extra development, that benefit is going to be taxed at [a rate of] probably 50 or 60 percent. They’ve managed to get a bank to buy all that potential plot ratio and give the city a lump sum [for it], which is now being used to fund the railway—it’s a very interesting model.”