Long Run Economic and Land Use Impacts of Major Infrastructure Projects Final Report Department of Transport July 2012
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Long run economic and land use impacts of major infrastructure projects Final Report Department of Transport July 2012 Confidential Copy This report has been prepared on behalf of Department of Transport. SGS Economics and Planning and its associated consultants are not liable to any person or entity for any damage or loss that has occurred, or may occur, in relation to that person or entity taking or not taking action in respect of any representation, statement, opinion or advice referred to herein. SGS Economics and Planning Pty Ltd ACN 007 437 729 www.sgsep.com.au Offices in Brisbane, Canberra, Hobart, Melbourne, Sydney Confidential Copy TABLE OF CONTENTS KEY TERMS 6 SYNTHESIS AND STRATEGIC IMPLICATIONS 7 Long run economic and land use impacts of major urban infrastructure initiatives 7 Strategic implications 11 City shaping power 11 Investment appraisal tools 11 Investment decision making processes 12 Infrastructure funding 13 1 INTRODUCTION 15 1.1 Project background 15 1.2 Project objectives 16 1.3 Project approach and report structure 16 2 WIDER POLICY AND ECONOMIC ENVIRONMENT 18 2.1 Introduction 18 2.2 Melbourne’s planning history 18 Plan for General Development (1929) 18 Melbourne Metropolitan Planning Scheme (1954) 19 Planning Policies for Metropolitan Melbourne (1971) 21 Metropolitan Strategy Implementation (1981) 22 Victoria Capital City Policy (1994) and Living Suburbs (1995) 23 Melbourne 2030 (2002) and Melbourne @ 5 Million (2008) 24 2.3 Macroeconomic conditions 25 2.4 Considerations 28 3 PROJECT HISTORIES AND CONTEXTS 30 3.1 Introduction 30 3.2 The City Loop 31 Initial project drivers and anticipated impacts 31 Funding and management 31 Key success drivers and anecdotal impacts 33 3.3 CityLink 35 Initial project drivers and anticipated impacts 35 Funding and management 36 3.4 Box Hill Activities Area development 37 Initial project drivers and anticipated impacts 37 Key success drivers 37 3.5 Western Ring Road 38 Initial project drivers and anticipated impacts 38 Funding and management 39 Confidential Copy 1 Anecdotal impacts 40 3.6 Key conclusions 41 4 METHODOLOGY 42 4.1 Rationale 42 Measuring accessibility through Effective Job Density 43 4.2 Key Variables 47 4.3 Approaches 47 Measuring growth in employment and households 47 Changes to labour productivity 49 Human Capital Enhancements 50 Value Chain Accessibility Benefits 51 Dwelling and Land Value Impacts 52 Walk time impacts 52 5 IMPACT ASSESSMENT 53 5.1 CityLink 53 Impacts to Employment and Housing 53 Economic Expansion 61 5.2 Western Ring Road 71 Impacts to Employment and Housing 71 Economic Expansion 78 5.3 The City Loop 89 Impact to Employment 89 5.4 Box Hill Central Activities Area development 93 Impacts to Employment and Housing 93 Economic Expansion 95 6 KEY CONCLUSIONS 99 6.1 Summary of findings 99 6.2 Areas for Further Refinement 101 6.3 Conclusions 102 APPENDIX 1: DATABASE DEVELOPMENT 103 Travel Time Matrices 103 Population and Dwellings 104 Employment by industry 105 Labour force participation 107 Labour productivity 108 Effective Job Density 110 Property values 111 Comparison of Box Hill and Preston Activities Areas 114 APPENDIX 2: TECHNICAL NOTES 117 Labour productivity estimation 117 Accessibility model 122 Agglomeration Model 125 Human capital benefits estimation 134 REFERENCES 141 Confidential Copy 2 Figures Figure 1. Population Growth Trajectories .............................................................................................. 9 Figure 2. Benefit Stream Across Time $Billion (Excluding Box Hill) ..................................................... 10 Figure 3. Taxation Revenue as a Proportion of GDP, Ordered by Tax Burden, 2003 ............................ 14 Figure 4. Melbourne Central Business District (1954) ......................................................................... 19 Figure 5. Northland Shopping Centre (1971)....................................................................................... 20 Figure 6. 1969 Transport Plan – Road and Rail Network Plan ............................................................. 21 Figure 7. 1971 Corridor Growth Plan ................................................................................................... 22 Figure 8. Melbourne Skyline (1981) .................................................................................................... 23 Figure 9. Southbank Skyline (1996) ..................................................................................................... 24 Figure 10. Melbourne 2030 Activity Centres Hierarchy ......................................................................... 25 Figure 11. GDP Growth Rates Volume Measure .................................................................................... 26 Figure 12. Annual Average Unemployment Rate................................................................................... 27 Figure 13. GDP Per Capita Growth......................................................................................................... 27 Figure 14. Selected Indutries Share of GDP ........................................................................................... 28 Figure 15. Congestion at Flinders Street Station ................................................................................... 31 Figure 16. Congestion at Flinders Street Station ................................................................................... 32 Figure 17. CBD Development in the 1950’s ........................................................................................... 33 Figure 18. Employment Numbers by CBD Block (1954)......................................................................... 34 Figure 19. Early City Ring Road and CBD Access Routes (1954)............................................................. 35 Figure 20. Citylink Western and Southern Components ....................................................................... 36 Figure 21. Planned Box Hill District Centre (1954)................................................................................. 37 Figure 22. Proposed Arterial Road Network (1954)............................................................................... 39 Figure 23. Western Ring Road Connectivity .......................................................................................... 40 Figure 24. Demand for Different Land Use as a Function of Accessibility ............................................. 42 Figure 25. Relative EJD Regression Coefficients..................................................................................... 45 Figure 26. Household Share Regression Coefficients ............................................................................ 46 Figure 27. Accessibility Modelling Approach ......................................................................................... 48 Figure 28. Agglomeration Method – Labour Productivity ..................................................................... 50 Figure 29. Agglomeration Method – Human Capital ............................................................................. 51 Figure 30. Citylink Impact to Effective Job Density, 2011 ...................................................................... 53 Figure 31. Employment Impacts, Citylink .............................................................................................. 54 Figure 32. CityLink Employment Impacts, 2011 .................................................................................... 55 Figure 33. CityLink Transport & Wholesale Trade Employment Impacts, 2011 ..................................... 56 Figure 34. CityLink Knowledge Intensive Employment Impacts, 2011 .................................................. 57 Figure 35. CityLink Population Serving Employment Impacts, 2011 ..................................................... 58 Figure 36. Citylink Household Impacts, 2011 ........................................................................................ 59 Figure 37. Citylink Agglomeration Benefits, 2011 ................................................................................. 63 Figure 38. Citylink Additional Employment Benefits, 2011 ................................................................... 64 Figure 39. Citylink Human Capital Benefits, 2011.................................................................................. 66 Figure 40. Citylink Impacts to House Prices, 2011 ................................................................................. 69 Figure 41. Citylink Impacts to Unit Prices, 2011 .................................................................................... 70 Figure 42. Western Ring Road Impacts to Effective Job Density, 2011 .................................................. 71 Figure 43. Employment Impacts, Western Ring Road ........................................................................... 72 Figure 44. Western Ring Road Employment Impacts, 2011................................................................... 73 Figure 45. Western Ring Road Transport & Wholesale Trade Employment Impacts, 2011 ................... 74 Figure 46. Western Ring Road Knowledge Intensive Employment Impacts, 2011 ................................ 75 Figure 47. Western Ring Road Population Serving Employment Impacts, 2011 ................................... 76 Figure 48. Western Ring Road Household Impacts, 2011 ...................................................................... 77 Figure 49. Western Ring Road Agglomeration