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Sydney isn't dominated by inner-city knowledge workers

John Muscat / 11 November 2014


Recently, the Sydney Morning Herald’s James Robertson fired another salvo in the paper’s long-running campaign for more inner-city infrastructure and amenity. Most of it was a regurgitation of some familiar assumptions about stalled employment growth on the industrial fringe and the need for rail ‘connectivity’ to core office-towers. Quoting an academic on the ‘schizophrenic nature’ of Sydney’s housing construction, ‘either low-density [on the] fringe or high-density in the central city’, Robertson claims ‘sprawling population is becoming the biggest problem for government service delivery’, adding that ‘the trouble of travelling from western Sydney to the CBD has been the city’s most obvious transport issue for decades’. For a solution he cites more academics, advocates of better rail links to offset the increase in car traffic. Job creation in peripheral growth areas, he writes, ‘compares unfavourably with the kind of high-density employment in inner-city offices and tourism’.

Robertson’s piece echoed an earlier Herald series by Matt Wade featuring research by Sydney Council, PwC, SGS Economics & Planning, and Grattan Institute, a progressive think-tank linked to Melbourne University, on the mismatch in jobs growth between inner-city and outer western locations. Wade reported that over the last five years one Local Government Area, City of Sydney, encompassing the CBD and surrounds, produced four in every ten new jobs in Greater Sydney. Most were in knowledge-intensive and ‘creative’ industries like information and communications technology, business services, design, architecture, fashion, film-making, law and accounting in emerging hubs like Redfern, Centennial Park, Surry Hills and Pyrmont-Ultimo, where employment rose 46 per cent.


While jobs in Sydney’s ‘global economic corridor’, from the business hub of Macquarie Park in the north-west sweeping down to the CBD and inner-city, grew at an annual rate of 2.1 per cent between 2008 and 2013, they grew by just 0.7 per cent in the rest of the city (due, in part, to a loss of 7,000 manufacturing jobs). Wade describes Macquarie Park as a ‘standout performer’, doubling its economic output to $9.1 billion over the last decade. PwC ranked it the tenth biggest location for economic output in Australia, owing to a ‘dynamic mix of new economy businesses, including IT, communications, pharmaceuticals, and high-value manufacturing such as biotechnology’.
In contrast, writes Wade in his series, employment in western Sydney grew by an average of only 0.5 per cent in the last five years compared to an average of 1.6 per cent in the rest of the city, contributing to what he describes as an ‘exodus’ of about 200,000 commuters heading eastward each day, many ending up in ‘job-rich centres like the CBD, North Sydney, Pyrmont or Macquarie Park’. He holds this responsible for Sydney’s overcrowded buses and trains, and costly and soul-destroying traffic congestion.

Throughout, Wade makes much of Grattan Institute’s report Mapping Australia’s Economy, a manifesto for rising inner-city knowledge workers and their prerogatives. ‘Today the Australian economy is no longer driven by what we make – the extraction and production of physical goods – but rather by what we know and do,’ say the report’s authors Jane-Frances Kelly and Paul Donegan, ‘like other advanced economies around the world, our economy is continuing to become more knowledge-intensive, more specialised and more globally connected’. Wade buys into this perspective, arguing ‘the concentrated pattern of jobs creation in knowledge intensive industries reverses the much more dispersed pattern of job creation when the economy was more reliant on manufacturing’.

But Kelly and Donegan address the concentrated nature of ‘economic activity’ as measured in dollars, not job numbers. They report that Sydney CBD defined broadly to include Haymarket and The Rocks accounts for 23 per cent of the metropolitan economy while hosting only 13 per cent of the jobs (they concede that ‘more than nine of every ten jobs are outside major CBD’s’). On this basis they say half of Sydney’s economic activity is generated on land totaling less than one per cent of Greater Sydney, including the global arc (with CBD), Parramatta and Homebush Bay.

If, as Kelly and Donegan point out, the CBD generates $100 of economic activity per working hour compared to $61 across the metropolitan region, activities in the global arc are productive in the sense that they generate more income with fewer workers (only around 22 per cent of Sydney’s total workforce is in the knowledge-intensive sectors of ‘information, media and telecommunications’, ‘professional, scientific and technical services’, ‘financial and insurance services’ and ‘arts and recreation services’). High percentage jobs growth in places like Pyrmont-Ultimo, Surry Hills and Redfern simply started from a low base. Until recently they were slums and derelict industrial sites.

Having reported a geographic concentration of wealth creation, Kelly and Donegan appear to assume a corresponding concentration of job location. They write that ‘many workers, particularly in outer suburbs, only have access to a small proportion of jobs across the city’ and recommend ‘enabling people to choose to live in areas with access to large numbers of jobs’. Wade makes a parallel point. ‘The lack of an effective, city-wide mass transit system threatens to stunt Sydney’s knowledge industries’, he claims.

For all the hoopla about ‘global’, CBD or inner-city business hubs, however, Sydney has a highly dispersed, not centralized, structure of employment. A 2010 analysis by transportation experts found that 60 per cent of the city’s jobs were not centralised and the rest were spread over 33 ‘centres’ throughout Greater Sydney, including places as far-flung as Penrith, Liverpool, Parramatta, Hornsby, Hurstville and Bondi Junction, none of which had more than 1.8 per cent of the workforce, apart from the CBD with 12 per cent. One third of western Sydney commuters join the daily ‘exodus’, but they are headed for hundreds of scattered points across the metropolitan region. In its 2012 State Infrastructure Strategy, the New South Wales Department of Infrastructure & Planning put it this way:  

The travel flows and transport infrastructure demands created by the dispersed housing and employment patterns of Greater Sydney are complex. Historic assumptions about Sydneysiders commuting to a single central business district by mass transit do not reflect the current position. While the travel flows into Global Sydney from across Greater Sydney are significant, intra-suburban and cross-suburban commuting flows are even greater. Private vehicles are better suited to this diffuse orbital travel than public transport, which needs relatively high demand along a given corridor to be viable.

Nor is there a necessary association between knowledge-intensive clustering and the established city centre. Wade likes to assert that ‘fast-growing knowledge industries are clustering together rather than spreading out’, citing the latest handbook of knowledge-class urbanism, Enrico Moretti’s The New Geography of Jobs. ‘The best way for a city to generate jobs, is to attract and nurture innovative companies which hire highly educated workers,’ says Wade, adding ‘that’s where public transport comes in’. But many of America’s high-flying innovation clusters, including Silicon Valley, Massachusetts Route 128 and more recently, to take one example, Interstate-15 between Salt Lake City and Provo in Utah, sprung up along highway corridors in dispersed suburban or peri-urban settings, far from a traditional CBD. That emerges clearly from Moretti’s snapshot of Silicon Valley:    

Most of the iconic Silicon Valley companies are located in anonymous office buildings or office parks. Like many other metropolitan areas in the United States, the San Jose metro area is made up mostly of parking lots, corporate campuses, and a few sterile-looking glass towers surrounded by an ocean of single-family homes. There is nothing distinctive about its urban form; freeways crisscross its vast expanse, and people drive everywhere.

Moretti concedes that ‘the history of high-tech clusters indicates that while we understand fairly well what happens after clusters are established, we often have a hard time predicting them … [and] … an even harder time creating them.’ According to Peter Murphy and Robert Freestone of the University of New South Wales, so much is true for Sydney’s celebrated global corridor, most of which straddles suburban locations like Macquarie Park and Norwest some 25 to 35 kilometres north-west of the CBD. In a 1994 book chapter, Murphy and Freestone offered an insight into the corridor’s unplanned origins:

Postal authorities and street directories call the area Macquarie Park, but this is not a label in common popular or bureaucratic use. The core is the North Ryde Industrial Area, lying near the intersection of two major arterial roads: Epping Road (MR 28), a key route to the northwestern suburbs, and Lane Cove Road (RR 3), Sydney’s only real outer ‘ring road’ …

There are now diversified employment centres in the suburbs which have grown up almost despite, rather than because of, traditional land-use planning policies …

The most prestigious development has overwhelmingly favoured the middle-ring northern and northwestern parts of Sydney in centres easily accessible by car …

A study by Urbis, moreover, explains that business parks ‘attracting a variety of high-tech, value added industries’ are clustering in non-central places outside the corridor, including Olympic Park (Homebush Bay), 17 kilometres west of the CBD, Rhodes, 15 kilometres west, suburban Frenchs Forest, 17 kilometres north, and Mascot, 11 kilometres south. On the whole, though, ‘they are generally concentrated in the north, along key rail and road corridors’ and ‘appear to have leap-frogged from the CBD, to North Sydney, to St Leonards, to Chatswood, Macquarie Park and Norwest’. Since around 60 per cent of Greater Sydney’s workers commute by motor vehicle and only 9 per cent by rail (mostly to the CBD), arterial roads and the Orbital Motorway Network (‘ring-road’) hold their own as ‘key corridors’ for many if not most knowledge-workers.

Unlike Moretti, the Grattan report assigns special significance to ‘CBD and inner city areas’ in stimulating knowledge-intensive clusters, citing ‘face-to-face contact among workers, promoting knowledge spillovers’ (‘agglomeration economies’) and a central location with ‘good transport connections’. Wade agrees and so does the Herald’s economics editor, Ross Gittins. Universities and media elites can be expected to hype the economic importance of their knowledge-class constituencies. In any case, knowledge-jobs aren’t so spatially segregated from industrial or mid-level service jobs, at least in Sydney’s case, to warrant a recentralisation of the transport system. Wendell Cox of Demographia points out that US cities dominate international income rankings because so many jobs are accessible by automobile within a reasonable period of time. Grattan, the Herald, and others fail consider that while some knowledge firms choose to locate in or near the CBD, it doesn’t follow that this is why they are highly productive.

Economists Edward Glaeser (before his green tract Triumph of the City) and Joshua Gottlieb observed that the depopulation of inner-cities over 50 years, due to the dispersing effect of automobiles on housing and economic activity, started to turnaround in the 1980’s and 1990’s. They ascribe this to rising levels of education, income and demand for consumer amenities like ‘museums, restaurants, bars, movie theaters and concert halls’. Noting that this resurgent core ‘had more to do with rising consumer amenities than with rising productivity’, Glaeser and Gottlieb dubbed it ‘the consumer city’.

An analogous point can be made about the drift of some knowledge firms to the centre. Shedding their historic roles as functional, metropolitan business hubs, global CBD’s like Sydney’s are turning into zones of high social, cultural and consumer amenity, sites of campus-style offices and corporate headquarters, plush apartment towers, luxury retail strips, haute cuisine eateries, chic bars and coffee shops, fitness clubs and diverse arts venues. Then there’s the added factor of Sydney’s beautiful harbour setting. These are bound to attract high-margin businesses with the weakest geographic constraints. In the current economy, that means knowledge and technology driven firms in the FIRE (finance, insurance, real estate) and TAMI (technology, advertising, media, information) sectors. By virtue of their media and institutional power, to boot, they are able to extract publicly-funded transport and streetscape amenity from ‘progressive’ officials, a trend writer Joel Kotkin calls ‘luxury urbanism’.     

New in December: Industrial workers lose out to Sydney's knowledge elites

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