Making Melbourne more polycentric: an economic case

Posted December 01, 2023

SGS Economics and Planning GSEM3

Transforming Melbourne into a more polycentric city could generate $27 billion of economic benefits, including a boost to productivity, improved transport outcomes, and enhanced urban amenity and service accessibility.

The Unlocking the potential: Promoting Investment in Greater South East Melbourne report for Greater South East Melbourne found that turning Melbourne into a more polycentric city could be one of the most economically effective ways to address the problems of the monocentric design.

Melbourne is primarily a monocentric city: many jobs and businesses are centralised around the one city centre. People and businesses in and near this area benefit from the concentration of jobs, services, and economic activity.

However, this centralisation doesn’t suit everyone – particularly people who don’t live close to Melbourne’s centre. The monocentric layout, in fact, creates a few but important challenges for the city.

One way to produce a more polycentric Melbourne is to move all future public service jobs into five suburban activity centres in Monash, Dandenong, La Trobe, Sunshine, or Werribee. We modelled the potential benefits of this transformation, which are summarised below.

The challenges of a monocentric city

Monocentric cities can contribute to traffic congestion. The cost of congestion in Melbourne is expected to double from around $5 billion to $10 billion annually between 2020 and 2030. The combination of employment being centralised in the city centre and sprawling suburbs means that workers must travel long distances, often in cars.

Taking these figures, congestion is expected to cost the average Melburnian $1,700 by 2030.

— William Boadle, SGS Associate and Co-Author of the report

The state government has a considerable transport project pipeline, with more than $100 billion planned to be spent over the coming decades. Much of this investment would sustain a monocentric design and alleviate traffic congestion in the city. While this investment will be beneficial, it does raise questions about how we plan our cities; there may be more efficient and more equitable ways to grow our city and transport network.

Monocentric cities can create spatial socio-economic disadvantage. Our research indicates that many communities living further out of the city lack access to crucial jobs, amenities and services compared to those who can afford to live closer to the city centre.

The map below shows the level of access to jobs in an area. The darker the area, the greater the job and service accessibility. You can see the areas get lighter the further you travel out of the centre of Melbourne.

Figure 1: Greater Melbourne Effective Job Density
SGS Economics and Planning GSEM Maps 02
Source: SGS Economics and Planning 2021

This spatial disadvantage means monocentric cities do not utilise a population’s full productive potential. People might be unable to use their skills and knowledge because they cannot access suitable jobs in their area. In other words, people are overqualified for the jobs they can easily access.

The map below indicates that the further out from the centre of Melbourne that someone lives, the more likely they are to be overqualified for their position.

Figure 2: Overqualified workers with a Bachelor degree or higher
SGS Economics and Planning GSEM Maps 01
Source: SGS Economics and Planning, derived from ABS Census 2016

It is worth mentioning that there is the option of densifying inner Melbourne even more. This would provide more housing for people to be closer to jobs and services. This option and the option of massive investment in inner Melbourne's transport network would address aspects of the current predicament but might not solve the problems of a monocentric Melbourne in the long term. The problems outlined above have costly effects that will impact the economy, community, and environment over a long time period.

The benefits of a polycentric city

We modelled the development of economic centres in Monash, Dandenong, La Trobe, Sunshine, and Werribee. Our research shows that there would be major benefits to a more polycentric Melbourne.

A polycentric city can be more sustainable. A decentralised city would mean shorter, faster, and safer commutes, with traffic being more evenly distributed across Melbourne rather than commuters converging in the city centre.

The reduced travel distances would mean less carbon emissions but also encourage more active and public transport in each of these activity centres. This shift would reduce noise and air pollution and give communities more social time.

Our modelling suggests that the transport benefits of the shift to a more polycentric Melbourne would be approximately $3.94 billion over the next 30 years.

A polycentric city could be more equitable. If we see the development of polycentric centres, it could be that more people living in Melbourne's outer and middle areas have better access to jobs that effectively utilise their skills. This means decentralisation could improve wellbeing, inclusion, and upward mobility and decrease marginalisation. William Boadle says:

The pandemic has changed how Melbourne functions economically and we now have a chance to achieve a more equitable, sustainable and productive city.

Polycentric cities can be more resilient. Having a diverse industry base at the local level can increase a community's self-sufficiency and resilience. By diversifying the industry base in middle and outer metropolitan Melbourne, these regions would be less dependent on individual or small number of industries to generate income and wealth. This can reduce the impact of external shocks on a particular industry or industry group, such as the appreciation of the Australian Dollar affecting tourism on the Mornington Peninsula or export markets.

Decentralisation can generate job opportunities, boost economic activity, and increase wages in a new location. Public investment in a region can also attract private investment by improving the area's image and instilling confidence in the private sector.

Transportation is a major hurdle for job seekers and employees. Decentralisation can help distribute traffic across Melbourne to alleviate congestion, improve proximity to jobs, and reduce disadvantage in the middle and outer regions of the city. It can also save travel time for those working in central Melbourne.

SGS Associate and Co-Author of the report, William Boadle, presented the findings at a launch event for Greater South East Melbourne. You can watch a recording of his presentation here.


Connect with us on LinkedIn

SGS Economics and Planning William Boadle
For further information contact:

William Boadle


View profile →
SGS Economics Planning Marcus Spiller
For further information contact:

Marcus Spiller

Principal & Partner I Executive Director

View profile →
SGS Economics Planning Chathura Perera2
For further information contact:

Chathura Perera


View profile →