Current and future state analysis: across Victoria Infrastructure Victoria December 2015 This report has been prepared for Infrastructure Victoria. SGS Economics & Planning has taken all due care in the preparation of this report. However, SGS 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 & Planning Pty Ltd ACN 007 437 729 www.sgsep.com.au Offices in Canberra, Hobart, Melbourne and Sydney CONTENTS ACKNOWLEDGEMENT I EXECUTIVE SUMMARY I PART 1. PROJECT APPROACH 1 INTRODUCTION 1 1.1 Project context 1 1.2 Project purpose 1 2 METHODOLOGY, DESIGN AND DATA 2 2.1 Report structure and geography 2 2.2 How indicators were selected 4 2.2.1 Social indicators 4 2.2.2 Environmental indicators 5 2.2.3 Economic indicators 5 2.3 Understanding infrastructure needs 6 2.4 How the scenarios were developed 7 2.5 Future possible scenarios 8 2.5.1 Lower growth scenario 9 2.5.2 Middle growth scenario 10 2.5.3 High growth scenario 10 2.5.4 Consolidated distribution 10 2.5.5 Business as usual distribution 11 2.5.6 Expansion distribution 11 2.6 Appendices 12 PART 2. CURRENT AND FUTURE STATE ANALYSIS 13 3 BROADER INFLUENCES AND TRENDS 14 3.1 A growing, more ethnically diverse and ageing population 14 3.2 Victorians are living longer but health outcomes vary 16 3.3 Our access to health services has remained stable 18 3.4 A changing global and national economy 20 3.5 Rising wealth, but increasing inequality 25 3.6 Households are getting smaller and affordability is a continuing challenge 27 3.7 Education outcomes are varied, but generally improving 29 3.8 Crime has increased 32 3.9 Conserving and celebrating Victorian Aboriginal heritage is a priority 34 3.10 Historical land use has degraded the Victorian Landscape 35 3.11 Air quality has improved 36 3.12 Water management will increase in importance in the future 36 3.13 Climate change will impact Victoria in many ways 37 3.14 We are better at managing our impact on the environment 39 3.15 Conclusion 40 Current and future state analysis: across Victoria 4 METROPOLITAN MELBOURNE 42 4.1 The forces reshaping Melbourne 42 4.1.1 The structural change of Melbourne’s economy 42 4.1.2 The escalation and redistribution of population growth 45 4.1.3 The city-shaping role of infrastructure 49 4.1.4 Environmental challenges remain 51 4.1.5 Access to affordable housing 53 4.1.6 Accessibility to services is strongest in the core 57 4.1.7 An older, but changing population 59 4.1.8 Ongoing urbanisation 63 4.1.9 Population and employment scenarios 64 4.2 What does this mean for Melbourne’s infrastructure? 66 4.2.1 A growing, ageing and ethnically diversifying population 66 4.2.2 Land use change 67 4.2.3 Socio-economic disadvantage 67 4.3 Central Subregion 70 4.3.1 Current and future state analysis 72 4.3.2 Population and employment scenarios 79 4.3.3 Infrastructure implications 82 4.4 East Subregion 84 4.4.1 Current and future state analysis 86 4.4.2 Population and employment scenarios 90 4.4.3 Infrastructure implications 92 4.5 North Subregion 94 4.5.1 Current and future state analysis 96 4.5.2 Population and employment scenarios 101 4.5.3 Infrastructure implications 103 4.6 South Subregion 105 4.6.1 Current and future state analysis 107 4.6.2 Population and employment scenarios 112 4.6.3 Infrastructure implications 113 4.7 West Subregion 115 4.7.1 Current and future state analysis 117 4.7.2 Population and employment scenarios 123 4.7.3 Infrastructure implications 124 5 REGIONAL VICTORIA 128 5.1 The changing nature of Regional Victoria 128 5.1.1 A less diverse and slower growing economy 131 5.1.2 The varied influence of Melbourne 135 5.1.3 An ageing and diverse, but increasingly unhealthy population 138 5.1.4 Strong education outcomes, with some areas to improve 139 5.1.5 Housing is more affordable in Melbourne, but there is still housing stress 140 5.1.6 The continued impact of climate change 141 5.1.7 Soil health is a growing environmental challenge in the regions 143 5.1.8 River system and water quality is varied 144 5.1.9 Erosion is a significant concern 146 5.1.10 Population and employment scenarios 147 Current and future state analysis: across Victoria 5.1.11 Key indicators by regional city 148 5.2 Central Highlands – Ballarat 152 5.2.1 Current and future state analysis 154 5.2.2 Population and employment scenarios 156 5.2.3 Infrastructure implications 157 5.3 Loddon Mallee South - Bendigo 159 5.3.1 Current and future state analysis 160 5.3.2 Population and employment scenarios 163 5.3.3 Infrastructure implications 164 5.4 G21 - Geelong 165 5.4.1 Current and future state analysis 167 5.4.2 Population and employment scenarios 170 5.4.3 Infrastructure implications 171 5.5 Wimmera Southern Mallee - Horsham 173 5.5.1 Current and future state analysis 174 5.5.2 Population and employment scenarios 176 5.5.3 Infrastructure implications 177 5.6 Gippsland – Latrobe City 179 5.6.1 Current and future state analysis 181 5.6.2 Population and employment scenarios 183 5.6.3 Infrastructure analysis 184 5.7 Loddon Mallee North - Mildura 186 5.7.1 Current and future state analysis 187 5.7.2 Population and employment scenarios 189 5.7.3 Infrastructure implications 190 5.8 Great South Coast – Warrnambool 191 5.8.1 Current and future state analysis 192 5.8.2 Population and employment scenarios 194 5.8.3 Infrastructure implications 195 5.9 Hume – Shepparton, Wangaratta and Wodonga 197 5.9.1 Current and future state analysis 201 5.9.2 Population and employment scenarios 205 5.9.3 Infrastructure implications 208 6 CONCLUSION 212 APPENDIX 1. VICTORIAN CLIMATE CHANGE IMPACTS 216 APPENDIX 2 – SCENARIOS TECHNICAL APPENDIX 219 Inherent uncertainty in forecasting 219 Historical (in)accuracy of planning forecasts 219 REFERENCES 222 Current and future state analysis: across Victoria LIST OF FIGURES FIGURE 1. REPORTING GEOGRAPHIES – METROPOLITAN MELBOURNE 3 FIGURE 2. REPORTING GEOGRAPHIES – REGIONAL VICTORIA 3 FIGURE 3. EMPLOYMENT BY INDUSTRY – LOW, MIDDLE AND HIGH GROWTH (2046) 11 FIGURE 4. POPULATION 2001 TO 2014, VICTORIA 14 FIGURE 5. OVERSEAS AND INTERSTATE MIGRATION, 2004 TO 2014, VICTORIA 15 FIGURE 6. POPULATION BY AGE AND GENDER, 2001 AND 2014, VICTOR IA 15 FIGURE 7. NUMBER AND PERCENTAGE OF OVERSEAS BORN POPULATION, VICTORIA 16 FIGURE 8. LIFE EXPECTANCY AT BIRTH BY SEX, VICTORIA 16 FIGURE 9. PREVALENCE OF SELF-REPORTED HEART, STROKE AND VASCULAR DISEASE, VICTORIA 17 FIGURE 10. CENTRE OF GLOBAL ECONOMY 20 FIGURE 11. SHARE OF VICTORIA INTERNATIONAL EXPORTS 21 FIGURE 12. EMPLOYMENT (MANUFACTURING AND PROFESSIONAL SERVICES), VICTORIA 22 FIGURE 13. UNEMPLOYMENT AND PARTICIPATION RATE, VICTORIA 22 FIGURE 14. INTERNATIONAL STUDENT ENROLMENTS - AUSTRALIA 23 FIGURE 15. HIGH PRODUCTIVITY VEHICLES 24 FIGURE 16. INCOME SHARE BY QUINTILES, VICTORIA 26 FIGURE 17. GINI COEFFICIENT, EQUIVALISED DISPOSABLE HOUSEHOLD INCOME (WEEKLY), VICTORIA 26 FIGURE 18. HOUSING AFFORDABILITY INDEX, MELBOURNE AND REGIONAL VICTORIA 28 FIGURE 19. PROPORTION OF CHILDREN IN YEAR 5 WHO MEET OR EXCEED LITERACY STANDARDS 30 FIGURE 20. PROPORTION OF CHILDREN IN YEAR 5 WHO MEET OR EXCEED NUMERACY STANDARDS 30 FIGURE 21. FAMILY RELATED CRIMES AGAINST PERSONS, VICTORIA 32 FIGURE 22. HISTORICAL TRENDS OF PRISONERS 33 FIGURE 23. IMPRISONMENT RATE PER 100,000 PEOPLE 33 FIGURE 24. ABORIGINAL LANGUAGES OF VICTORIA, 2015 34 FIGURE 25. NATIVE VEGETATION EXTENT IN VICTORIA, 2010 35 FIGURE 26. VICTORIAN GREENHOUSE GAS EMISSIONS BY SECTOR, 2000/2013 38 FIGURE 27. IMPACTS OF BUSHFIRE ON CARBON STORAGE IN VICTORIAN FORESTS 38 FIGURE 28. MELBOURNE GDP INDUSTRY CONTRIBUTIONS 42 FIGURE 29. CHANGE IN MANUFACTURING EMPLOYMENT, 1996-2011 43 FIGURE 30. CHANGE IN PROFESSIONAL SERVICES EMPLOYMENT, 1996-2011 43 Current and future state analysis: across Victoria FIGURE 31. FORECAST CHANGE IN EMPLOYMENT 2014 – 2031-46 (VICTORIA) 44 FIGURE 32. LABOUR PRODUCTIVITY (INCOME PER HOUR WORK) FOR MAJOR CAPITAL CITIES 44 FIGURE 33. LABOUR PRODUCTIVITY (INCOME PER HOUR WORK) FOR MELBOURNE SUBREGIONS 45 FIGURE 34. POPULATION GROWTH COMPARISON – PERTH AND ADELAIDE 46 FIGURE 35. ANNUAL POPULATION GROWTH IN MELBOURNE 47 FIGURE 36. POPULATION CHANGE MELBOURNE 1996-2011 48 FIGURE 37. POPULATION CHANGE SYDNEY 1996-2011 48 FIGURE 38. ENROLLED UNIVERSITY STUDENTS IN MELBOURNE 49 FIGURE 39. MAJOR ROAD INFRASTRUCTURE 50 FIGURE 40. POPULATION CHANGE, VICTORIA, 1991-2011 51 FIGURE 41. URBAN LAND USE CHANGE 1996-2011 52 FIGURE 42. MEDIAN HOUSE PRICES AND DISTANCE FROM CBD, 1994, 2004 AND 2014 53 FIGURE 43. SPATIAL DISTRIBUTION OF THE RENTAL AFFORDABILITY INDEX, MELBOURNE 54 FIGURE 44. RENTAL AFFORDABILITY INDEX, MELBOURNE 54 FIGURE 45. NUMBER OF RENTAL HOUSEHOLDS & RATE OF CHANGE, METROPOLITAN MELBOURNE 55 FIGURE 46. PEOPLE AGED 18-25 AND ACCESS TO JOBS BY CAR, 2011 56 FIGURE 47. PUBLIC TRANSPORT ACCESS LEVELS, 2011 56 FIGURE 48. ACCESS TO EDUCATION AND TRAINING JOBS, 2011 58 FIGURE 49. ACCESS TO HEALTHCARE AND SOCIAL ASSISTANCE JOBS, 2011 59 FIGURE 50. METROPOLITAN MELBOURNE POPULATION BY AGE AND GENDER, 2001 AND 2014 60 FIGURE 51. PROJECTED POPULATION OF MELBOURNE BY AGE GROUP 61 FIGURE 52. NUMBER AND PERCENTAGE OF OVERSEAS BORN POPULATION, METROPOLITAN MELBOURNE 61 FIGURE 53.