by Tom Griffiths

Western Australia’s new Activity Centres Policy (ACP) sets residential density targets for centres within each level of the hierarchy for Perth and Peel. For WA’s ten Strategic Metropolitan Centres (e.g. Fremantle, Stirling, Joondalup), the highest in the hierarchy apart from Perth City centre, the policy targets a minimum residential density of 30 dwellings, and desirably 45 dwellings per gross hectare (within a walkable catchment of the centroid).  It also sets dwelling density targets for Secondary (e.g. Subiaco, Victoria Park, Booragoon) and District Centres.

I was wondering what this meant within the context of the population and dwelling targets set in Directions 2031. For example, Directions 2031 aims for the population of the Central Sub-Region to increase from 705,000 to 910,000 by 2031, and dwellings to increase from 319,000 to 440,000. If all activity centres within a Sub-Region were to meet their minimum dwelling density targets (set within the ACP), how much would that densification contribute towards the total Sub-Regional dwelling and population targets (set in Directions 2031)? That is, would the densification within each of the activity centres be sufficient to meet the total dwelling and population targets for a Sub-Region, drastically reducing (or even eliminating) the need for urban fringe development?

Over the next few weeks we’ll be exploring this topic in more detail through a series of blog posts that will look at equating the dwelling density targets of the ACP to actual dwelling and population numbers, and comparing those numbers to the overall Sub-Regional targets set in Directions 2031.

Diversity is the degree to which a variety of activity types are located within an Activity Centre. Historically, planning policies have overemphasised the role of retail activity promoting the development of retail-centric Activity Centres to the exclusion of other activities such as health, education, entertainment and other commercial/office activity. To the WAPC’s credit, a key component of the new activity centre policy has been the diversity performance targets.

The policy sets targets in relation to the ‘mix of land uses’ floorspace as a proportion of total floorspace. The implications of the measure, as discussed yesterday by my colleague Jason, are that the outcomes achieved may not be that which is ultimately desired. A centre with 50% shop retail and 50% bulky goods retail while it would meet the requirements of this metric, can hardly be called diverse.

Pracsys has worked for a long time to develop metrics for measuring the performance of Activity Centres. The nature of our work makes us very conscience of the need to ensure that the metrics accurately reflect the desired outcomes.  Pracsys has examined all activity centres in Perth and applied an ecological diversity technique to calculate an index of diversity (between 0 and 1) for each centre. The measure accounts for richness, which is the number of different types of uses in the activity centre and equitability, which is the evenness of the distribution floorspace amongst the different types. Figure 1 outlines the top five most diverse and top five least diverse activity centres in Perth, outside of the Perth Capital City.

Figure 1. Top five least and most diverse activity centres in Perth

Overall, more mature local economies such as Highgate, Victoria Park, Fremantle and Mount Hawthorn perform well against the diversity measure as they have benefited from age, diversity of land ownership, proximity to the CBD, infrastructure and intensity/diversity of users. In contrast, centres than perform poorly are typically either located in the outer sub-regions, experience a constrained boundary or single land ownership. Figure 2 shows the least and most diverse Activity Centres at each level in the hierarchy.

Figure 2. Least and most diverse activity centres in Perth according to hierarchy

A full list of all activity centres can be found here.

While, the revised policy represents a shift from the previous planning paradigm, it’s important to note that the requirements in the Activity Centre Policy are only a minimum for compliance. As such, Pracsys will be encouraging clients to apply a range of measures to ensure that centre plans accurately reflect the outcomes desired.

“Why does a dog wag its tail? Because a dog is smarter than its tail. If the tail were smarter, the tail would wag the dog.”

With the release on Friday of the WAPC’s Activity Centres Policy for Perth and Peel, there has been a lot of reflection around the office on the four-odd years of seeking to influence the development and implementation of this policy.

What is clear, looking back, is that statutory rather than strategic considerations largely have had a greater influenced on the final documents.  This unfortunately follows a common path of policy development shown below.

Within this process, elements of the existing statutory system acts as a circuit breaker, moving focus away from a strategic pathway in which statutory outcomes are developed as a consequence of a strategic vision, to a process where the policy is shoehorned into existing statutory structures.

Diversity

An example of the result of this within the new Activity Centres Policy for Perth and Peel is the ‘Diversity Performance Targets’ outlined within Table 3. A diverse activity centre is one in which a variety of different land uses (or jobs, or user types) exist in close proximity.  The Policy “encourages higher-order centres (strategic metropolitan, secondary and district) to develop in a manner that does not result in a predominately single-purpose centre.”

Based upon the ‘mix of land uses’ floorspace proportion metric outlined in the Policy, an activity centre with over 100,000m² of shop retail floorspace, may be considered diverse with 50% shop retail, and 50% ‘mix of land uses’. In reality, this may mean a centre comprised of a large box retail shopping centre adjacent to a series of showroom retail offers, conforms to the metric.

From a statutory planning perspective the diversity measure included in the policy is understandable, and easy to measure with current data available. Strategically however, it is obvious that the outcome may not be that which is ultimately desired.

Many alternatives are available from fields as varied as economics, environmental sciences, and engineering, however these would require a change in the paradigm of statutory assessment processes (including the collection of information required to measure performance).

There is no doubt that statutory planning processes are incredibly complex, and have a very important role to play in the implementation of planning policy for our cities and regions.  I realise that this blog might seem highly critical of the discipline, possibly unfairly.  My argument is simply that statutory planning should be guided by a well-articulated and understood strategic vision…..I fear that at the moment the tail may be wagging the dog, and that ultimately we will all be worse off for it.

by Tom Griffiths

Much of the recently reignited population debate (“Population Policy A Pyramid” article by Terry McCrann of the Australian, and “Inane words from Julia, poor policy from Tony” from the West’s Shane Wright) has excluded two of the concepts most crucial to the issue.

There has been no analysis of the quality of employment that needs to be generated for the future population to produce real economic development outcomes. Sure, economic growth can occur with only population-driven employment; however it will only be in proportion to further growth in that population, and it will not yield real productivity gains for the economy.

McCrann asks valid questions about how many jobs are needed and how they will be generated, but he falls short of asking the real question about the quality of jobs that need to be generated for a future population and for sustainable economic growth.

Secondly, we need to understand how the non-productive components of a future population will pay for themselves. The developed world’s aging population will require investment in new supporting infrastructure (e.g. hospitals) – infrastructure that should have been planned for over and provided the past twenty years.  Should tax funds from a decreasingly small productive population base be spent on infrastructure to support a previous generation’s needs?

Terry McCrann article:
http://www.theaustralian.com.au/business/opinion/population-policy-a-national-pyramid-scheme/story-e6frg9if-1225896291035

Shane Wright’s article:
http://au.news.yahoo.com/thewest/opinion/post/-/blog/theburningissue/post/1201/comment/1/

Countries often compete for the right to host the FIFA World Cup Finals. Apart from Antarctica, it has now been hosted in all continents except for Australia/ Oceania. It has been widely suggested that the economic benefit from hosting a World Cup is often overstated. Fédération Internationale de Football Association (FIFA), the sport’s global governing body spent £800m in addition to the estimated £3.5bn (or 1.72% GDP) that was spent by the South African government on building and redeveloping stadiums, transport infrastructures and security of the event. Is it really worth it for South Africa to host arguably one of the biggest events in the modern world?

Tourism and retail were said to benefit most.  Despite the empty seats spotted at several games, the number of transactions in South Africa using Visa-branded credit cards for the first 20 days of June was up by 60% compared to the same period last year (exceeded US$128m). In early July, the Finance Minister of South Africa announced that the tournament was projected to add 0.4% to South Africa’s real GDP.

It was estimated that with the creation of 130,000 jobs, with most of them being in the construction, roads and transport, and hospitality industry, leading up to the World Cup, the long run benefits for South Africa are definitely significant. A report by UBS Investment Research estimated that the 4 year preparation for the 2010 World Cup has added between 0.5% to 2.2% of GDP to South Africa’s economy, and 2.7% to the employment figure since 2006.

In addition, South Africa will also benefit from the infrastructure development to its transport, energy, telecommunication and social infrastructures. These infrastructures that were developed to support the World Cup may well be the catalyst for South Africa’s future economic development.

Hosting the World Cup had added values to South Africa’s hospitality and retail industries, employment and infrastructure development. Can these benefits justify the hefty expenditure? Or will South Africa gain more if these resources were to be used elsewhere? It is too early to draw a conclusion to this now. It is up to the government as to how they are going to maximise their benefits now that the game is over.

“Euclid taught me that without assumptions there is no proof. Therefore, in any argument, examine the assumptions” – E.T. Bell

Challenging long held assumptions is not easy. Once assumptions are made, they can be readily taken for granted.

Until recently our retail analysis was predicated on the assumption the expenditure capture was a function of the type of offer, scale and proximity to catchment. This assumption held very well until the day I met a client who wanted to analysis the impact of brand preference on demand. A company’s brand is one of its most valuable intangible assets however until this point; an implied assumption in the model was that all brands were equal. The change in scope suddenly rendered an effective and useful model invalid.

So over Friday afternoon drinks, when all our best thinking is done, the Pracsys team debated and redefined the assumptions behind our retail analysis (this may reveal more about the Pracsys team than is necessary). The result of this process was an augmented gravity model that allows brand preference (as well as scale, offer and proximity) to determine expenditure capture.

The process of challenging a long held assumption reminded me that we operate in a complex and ever-changing environment, and it is essential not only to evaluate assumptions when they’re first made but to regularly review them to ensure that they’re never inadvertently taken for granted.

What long held assumptions have you challenged lately and how did the process result in a better outcome?

I had the opportunity on Friday of attending a workshop held by Infrastructure Australia’s Major Cities Unit, and the National Growth Areas Alliance, that sought to tackle how best to encourage the creation of diverse employment within the outer growth areas of our capital cities.  My pre-workshop responses to a questionnaire are attached here.  Jason McFarlane Workshop Response

Overall, the workshop drove home a number of key reminders including the following:

• All major cities are experiencing pressure for continued urban growth on the fringes, with quality employment growth still focussed around the CBD’s and major pieces of existing infrastructure
• All tiers of government are more or less conscious of the problems that this ultimately will cause
• Population and employment self sufficiency targets should define not only the number of jobs required, but the types of jobs that should be focussed on (population-driven jobs will largely sort themselves out)
• Solutions require cross-tier government cooperation and most importantly  proactive engagement with the private sector
• Success stories almost always contain a single landholder that invests for long-term value generation
• Targeted infrastructure investment must lead demand
• The public sector must be willing to understand market drivers and intervene where market failure creates negative consequences (these areas include workforce skill development, infrastructure investment, desired land-use outcomes, capital availability, governance structure,etc)

by Tom Griffiths

Economic studies from around the globe consistently link entrepreneurship with rapid job creation and economic growth. A great article in Harvard Business Review (June 2010) explains how countries with traditionally poor economies such as Rwanda, Chile and Israel have become fertile grounds for entrepreneurship thanks to timely and effective government intervention. Although innovation is largely bred from entrepreneurial creativity, governments can sow the seeds of innovation by creating commercial environments that allow it to grow and prosper.

But what exactly is the extent of the government’s role in creating innovation?  Efforts to filter creativity and innovation ‘down from the top’ have had very limited success. This is partly because governments have chosen the wrong projects to invest in, lack commercial acumen, or misjudge market conditions. Although, to be fair, some significant inventions have occurred through government funding, such as the Google search engine, GPS devices, DNA mapping, inexpensive mass data storage and even Teflon. Innovation as a ‘bottom-up’ approach (i.e. sowing the seeds) is far more effective because innovation is less about control and direction, and more about catalysis and facilitation. While effectively distributed and managed seed funding is always useful, simply throwing money at projects from afar is not an answer. Governments should focus efforts on things that private enterprise simply cannot provide, such as soft and hard infrastructure; and it may facilitate business interactions and create a culture that allows social capital to grow organically, without bureaucratic or structural constraints. As Michael Chappell explored in his earlier blog entry, the more social capital, the more innovation is fostered and the faster the knowledge economy grows.

As cities have the highest concentration of commerce and people, logically they offer the best destination for governments to focus their energies on. The ultimate goal is to shape a city that promotes business ‘match-making’, in much the same way as you’d match-make two single friends who were both seeking a partner. If you took no action, your two singles friends would never meet; if your approach was clumsy and insensitive, you’d probably lose both as friends.  But, if you created an opportunity for them to meet in mutually comfortable environment, and to talk in an informal and unstructured manner (if they chose to), the likelihood of a suitable match greatly increases. Alcohol also helps.

But governments can’t do it all though; the private sector must shoulder the lion’s share of the burden. The HBR article explains how private sector initiative can make it easier for governments to act more quickly and show strong and visionary leadership. It outlines nine prescriptions for creating an entrepreneur-friendly environment. The first of nine, and the one that resonated strongest with me, was to ‘stop emulating Silicon Valley’.  This is a point I explored briefly in a Masters paper last year (http://wa2020.murdoch.edu.au/publications/). Generally, the cities that have tried this approach have failed because they have not reproduced the unique conditions in Silicon Valley that connected companies within the same industry and speed up the innovation and creative processes. You can read the full HBR article on-line at: http://hbr.org/2010/06/the-big-idea-how-to-start-an-entrepreneurial-revolution/ar/1.

In a modern, globalised economy innovation structures span cities, countries and continents. A fantastic example of how web-based innovation networks can be focussed on solving geographically distant challenges is the Emergency Response Pavilion recently launched by Innocentive.com.

This site presents a forum for innovators to propose creative solutions to global emergencies such as the oil spill in the Gulf of Mexico.  By directly linking innovators to decision-makers, the site seeks to provide creative solutions to enormous challenges – right when they are needed the most.  This Web 2.0 approach to innovation underlines the importance for local economic development practitioners to examine the connectivity of their economies to international innovation networks.  Three examples of how strategies may support these connections are:

• Hard infrastructure investment attraction that seeks to provide appropriate telecommunications services to allow innovators to seek out their own collaboration opportunities;
• Targeted soft infrastructure networks that support to innovators in identifying and accessing opportunities; and
• Direct support services that assist in funding business cases, proofs of concept, pilot projects, skill development, travel, etc.