More specifically, the paper assumes that M2030’s urban form principles will, in comparison to the business as usual (Base Case):
- direct outward development into designated growth areas that can be provided with public transport and other local and regional infrastructure in coordination with the preferred sequence of land release;
- gradually but significantly increase dwelling densities in growth areas from the current average of 10 dwellings per hectare to around 15, with the highest densities located in or close to activity centres situated on the Principal Public Transport Network;
- decrease greenfield development from 38% to 31% of all dwelling starts, decrease dispersed urban and non-urban dwelling starts from 38% to 28%, and lift dwelling starts at strategic redevelopment sites (activity centres) from 24% to 41%;
- increase housing choice, decreasing the overall proportion of detached dwellings, while increasing the proportion of flats, units, apartments and semi-detached dwellings; and
- increase the availability of sustainable forms of travel, with more use of public transport (ie 20% of all motorised trips by 2020) and more opportunities for walking and cycling, with a commensurate decrease in car use.
The independent framework isolates the major spatial differences in metropolitan development outcomes promoted under the Base Case scenario and M2030 aspirations.
It then identifies, and subsequently quantifies where possible, the major costs and benefits associated with redirecting development from the Base Case towards the aspirations of M2030. The quantified marginal costs and benefits are then contrasted over an extended evaluation period (ie out to 2030), using discounted cashflow analysis.
The cost benefit framework developed highlights that the marginal costs associated with Melbourne 2030 are primarily infrastructure outlays, whereas the benefits include:
- improved resident accessibility to urban services and opportunities, with commensurate reductions in travel costs;
- urban land-take savings; and
- efficiencies in constructing dwellings for the city’s growing population.
Figure 1 highlights the estimated composition of costs and benefits. (NB discount rate used is 6% real.) In terms of interpretation: basically any project that has a positive NPV, a BCR greater than 1 and an EIRR greater than the social hurdle rate (assumed 6%) is considered worthy of investment; rendering M2030 a good investment and policy direction.
While caution is urged in reading too much into the quantitative results, due to the inherent data constraints, all indications are that Melbourne 2030’s benefits significantly outweigh its costs.