We need to plan intelligently for Sydney's future jobs

Posted April 04, 2019

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SGS Economics and Planning Jeremy Gill

This article was first published in The Fifth Estate.

The truth about jobs of the future is that they are complex and need integrated land use.

The recent debate on the Greater Sydney Commission’s policy on the management of Sydney’s industrially-zoned lands is welcome as it means an important but neglected strategic planning issue is finally getting the attention it deserves.

In the 2018 paper, A Metropolis that Works, the Greater Sydney Commission acknowledges that industrial precincts have long been considered “land in waiting” for residential development in Sydney.

This has been done without truly understanding the role these varied precincts play in the functioning of the urban economy. The GSC has taken the lead in developing an evidence base so that more informed decisions can be made to guide the long-term shape of Greater Sydney.

The release of A Metropolis of Three Cities – and the GSC’s position on how Sydney manages its industrially-zoned land – provides an important point of reflection as we consider whether the “business as usual” approach to industrial land management applied in the past is the most effective means of delivering the type of metropolis we want Sydney to be in the future.

Delivering new homes to meet a growing population by consuming the places that provide a diverse range of services for Sydney’s future population is a sort of planning equivalent of a pyrrhic victory. Sydney residents may get new homes, but in so doing, we significantly compromise the ability for the city to provide the breadth of services needed to support these future residents.

Perhaps this sounds alarmist. However, while strategic planning must constantly look forward towards an aspirational future it must do this through the lens of the public interest.

The ongoing conversion of industrial areas to residential or mixed use places displaces currently functional land uses that will almost certainly not reappear in established areas. While these may be “low value” compared with “high value” residential uses, they often serve a local population or business network.

The onus on strategic planning then is to interrogate whether the loss of one type of land use (industrial precincts) to provide for another (residential and other mixed use developments) represents a true net community benefit.

The GSC’s policy on industrial lands has come at a critical juncture in Sydney’s planning timeline. This period of reflection and debate provides us with an invaluable opportunity to truly understand the costs and benefits of business as usual development.

Those opposed to the GSC policy position often use the reductive argument that “jobs are changing” to argue why industrial precincts free of residential encroachment should change. This, however, demonstrates a continued failure to understand the complex ecosystem of an urban economy – a failure that the GSC has been actively committed to redressing through their evidence-led approach.

Jobs might be changing but we’ll still need industrial and urban services land

No city in the world comprises solely of office jobs. The knowledge economy still requires services that cannot locate in the CBD. Or a retail centre.

Should industrial precincts be relegated to the city’s periphery simply because they don’t fit into this binary understanding of the urban economy? Even if customers in central areas or areas with high population increasingly rely on “just in time” deliveries?

This increasing reliance on “last mile” deliveries requires these other places – these industrially-zoned or urban services precincts – to be close by, to realise their potential.

The same argument can be applied for why a distributed network of urban services precincts is required to maximise travel efficiency on an already congested transport network.

Bus services or council maintenance services, for instance, minimise the “dead running” of vehicles by having depots distributed throughout the city. This ensures heavy vehicles are not travelling long distances to points of service from the city fringe, which reduces congestion and running costs of service fleets.

This argument, however, goes beyond the question of convenience and efficiency. These precincts, in whatever mix of industries they support in the future, are critical in supporting the knowledge economy.

Industrial precincts don’t exist in a vacuum and neither do CBDs. Industrial precincts accommodate businesses that play various roles along the spectrum of many value chains.

Put simply, the value chain is a series of interdependent activities that add increasing value to goods or services. What is noted in analysis of the value chain process (see, for example, the concept of the “Smiling Curve”), is that higher value-adding components of the value chain tend to be at the beginning (research and development and design) and end (sales, after-sales service) of the value chain. The manufacturing process itself is often relatively lower in value.

However, this manufacturing process is a critical phase in the value chain. It is where high value pre-production activities metamorphose into high value post-production activities. This process is likely to take place in areas that accommodate industrial processes.

Proximity helps advanced manufacturing

In Australia, advanced manufacturing is starting to be adopted and this concept has increasing relevance to Sydney’s eastern and central industrial precincts.

Advanced manufacturing does not mirror the functions and processes of traditional manufacturing. Traditional manufacturing benefitted from separation from other uses, whereas advanced manufacturing industries benefit from proximity to the upstream and downstream value chain activities.

This is because they are intrinsically linked to the intellectual property developed in universities and concentrations of office-based knowledge intensive jobs.

In the future, these precincts, close to hospitals and universities, will drive advancements in bio and med-tech. They not only benefit from but require proximity to ensure collaboration across research, product development, prototyping and manufacturing is seamless.

The jobs of the future in advanced manufacturing and allied industries will require high degrees of skill, and attract talent from across the city. Job accessibility and access to a deep and skilled labour market is therefore critical and will be defined by areas with high levels of transport accessibility.

Pushing these uses to the fringe, or removing the land they can operate on, inhibits the city from realising this huge economic and intellectual potential.

Some mixed use works

The counter-argument often put forward is that these uses can co-exist in mixed-use communities, as that is what people are seeking. Examples cited identify precincts globally that are mixing residential, retail, commercial and light industrial.

Indeed, a range of industries found in industrial precincts are able to co-exist with residential. Car showrooms and even mechanics can, if well designed, be part of a mixed use development. Microbreweries can exist in local centres.

Many of these uses are already supported under mixed use zonings and it is often down to design controls to ensure that ground floor uses provide flexible formats to encourage uses beyond retail.

But mixed use is not a panacea

But while a rethink on what mixed use means is a welcome discussion in strategic planning, it is not a panacea to the industrial land development question. While certain light industrial uses are suited to co-locating with other uses such as residential, others aren’t.

A number of industrial uses require separation from other land uses that either create a conflict that affects their operability or impact land values which prices them out.

This applies to local industrial uses that may be noisy or have high truck movements, such as concrete batching plants or local distribution centres requiring 24-hour access by heavy vehicles. These do not sit well in a mixed use precinct.

It also applies to the emerging advanced manufacturing industries that may require larger floorplates, use chemicals, make noise or have significant potential to grow. Both these industrial types can’t be relegated to the urban fringe, yet do not suit mixed use development.

Reducing the land that they can operate on, or not providing sufficient space to grow, presents a significant opportunity cost that must be considered.

So the GSC’s position on industrial lands is not a policy focused on protecting the past. In fact, it is far from it.

It is a policy that demonstrates its understanding of the inherent complexities in planning for Sydney’s long term economic and social sustainability. It is a policy that at the same time supports the sustainable growth of local communities while acknowledging what is needed to support a knowledge economy.

If Sydney is to truly mature as a global city in the knowledge economy, and support intelligent density, we need to ensure that the jobs and services of tomorrow are truly catered for.

The jobs of tomorrow will be like the jobs of today – diverse – and will require diverse places and networks to support them. Is it worth the risk of compromising this future, without understanding what will be lost in the process?

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