Chapter 7 from: J.J. Ray (Ed.) "Conservatism as Heresy". Sydney: A.N.Z. Book Co., 1974


Can We Afford Decentralisation?



By PETER SAMUEL

That big cities are bad, has been received wisdom for many Australians since the beginning of this century, when they showed their first shock symptoms after realising that they were the most urbanised nation in the world. Lately there has been added to it the new whizz idea that big cities are uneconomic. Mr Whitlam, more likely than anyone else who matters in Federal politics to hop on to whizz ideas, has had a ride or two on this one lately. Now there is sad news for both a conventional wisdom and a newly fashionable idea: big cities may be the most economic way of housing Australians. This news comes from a confidential Government document.

Why this particular document is confidential may be due partly to Australia's unique (among democracies) insistence on keeping practically everything secret. (See: 'Why can't we know what the public servants are doing,' The Bulletin, 6 March 1971.) But it may also come from the vested interests of the governing coalition parties in keeping their rural seats. Now that so many farmers are going broke it can seem to be good politics to theorise away about how there must be decentralisation of new industry away from the big metropolitan areas.

Not that anyone does anything about this question. There is plenty of blah, but Government machinery stays still. It is five years since a Commonwealth and State Decentralisation Committee was established. The Committee commissioned a series of studies on the costs and benefits of decentralisation. Now the findings of these studies remain secret. Mr Whitlam has asked for them to be made public but he has been refused. One reason why they remain secret may be that they deny politicians' blah.

The Bulletin has obtained a copy of one of the key reports. Under the forbidding title of 'A study of the comparative costs of providing public utilities and services in Melbourne and select Victorian centres,' prepared by Dr J. Paterson of the consulting firm Urban Systems Analysis, Melbourne, and circulated to Commonwealth and State Departments but otherwise kept secret, the report suggests that decentralisation may be uneconomic.

The sixty-page document fails to find any significant diseconomies in Melbourne's growth compared with eight smaller cities. Indeed, it finds that the cost of maintaining services in the smaller centres 'was at least fifty per cent higher on average than the cost of services in Melbourne.'

The main conclusion of the study is that the size of urban centres is probably relatively unimportant in urban costs --that in determining costs, geographical location, resources, management and planning are all much more important than size.

The Paterson Report is rather tentative in some of its conclusions because it is unable to allow for differences in the quality or range of services, so that it really measures expenditures rather than real costs. For this reason it is just possible that the results of the study would favour the big city against the small centres rather more strikingly if it had been possible to adjust for different levels of service.

Here are some of the report's main findings:

* In education and hospitals, at least, Melbourne's standards look higher than those of the small Victorian cities, and only in the case of roads, where the metropolitan centre suffers severe traffic congestion, does the big city provide clearly inferior levels of service to its citizens.

* Expenditure on police services in Melbourne and also in the larger Victorian provincial towns is lower than in the towns under 20,000-about $5.50 per person per year against an average $7.50. There was no significant difference in education spending as between the larger and smaller centres, despite the better facilities available in the larger centres-which suggests strongly that real education costs are less in the big city. Much the same appeared true for hospitals.

* Unit expenditure on running water supply and sewage services in Melbourne were significantly lower than in small centres-about $4.00 compared with $8.50 per citizen per year. Postal services were $3.95 against $6.79.

* The small centres do much better in only two areas-- garbage disposal and Local Government. The small centres spend $1.51 on garbage and sanitary work against the $2.46 of Melbourne, which clearly requires more sophisticated garbage incinerators and cannot rely so much on open rubbish dumps as the small towns. As for local government administration, this costs almost twice as much in Melbourne, at $5.60, as the $2.86 per citizen per year of the small centres.

* In total, current costs of urban services in Melbourne come to $71 a year per person against $117 average for eight country centres, which varied individually between $89 and $149. On the capital side the cost of providing overhead services for extra people was found to be much lower in Melbourne than in the smaller centres-$1192 per extra person compared with an average of $3582.

The opponents of decentralisation could use these figures to tremendous propaganda advantage. They could claim that to house an extra 100,000 people on the fringes of a big city would cost only $120 million in capital services compared with about $360 million in small centres.

One of the difficulties the report points up is to distinguish between economics of size and economics of fast growth. The mere fact that Melbourne grew the fastest in absolute terms may have been the reason why services could be put on at lower unit costnot that additions were being made to a big city system. Urban facilities are often what economists call 'lumpy' projects. They cannot be built in bits and pieces. That is to say, a new water main has to be built bigger than immediately needed and there are economies in rapidly taking up its full capacity.

Another defect in the Paterson report is its narrow scope. Urban centres in Victoria are not very big. Most of the more sensible advocates of new cities in Australia have been thinking of the advantages of cities of half a million or so. But the Paterson report certainly puts paid to any idea of just dispersing population round existing small-population centres. It may not put paid to the idea of building new cities of 250,000 or more. But that is not what most of the a flicionados of decentralisation mean when they use their favourite word.

It is a most valuable report-- an example of how rationality can deflate emotion and of the necessity to base policy on something stronger than unalloyed prejudice. For this reason, it makes one question the validity of the present vogue for opposing present immigration policy on mere hunches. For all we know --until the new studies the Government has ordered have come in-- it is just as likely that it would be more economic to increase our rate of immigration than to reduce it.



This article originally appeared in "The Bulletin", 27 March 1971, p. 21-22.