Productive cities: opportunity in a changing economy

Most Australians live and work in cities. They are essential to generating growth and to creating and distributing opportunities. Cities are shaped by where people live, where they work, and how they get around. When these three things are in tune with the structure of the economy, cities operate efficiently and productively, and drive growth and innovation. This report examines housing, income and travel data in Australiars four largest cities and reveals strains in the triangle of work, home and transport that could threaten national prosperity. Addressing these issues will provide a significant boost to national productivity, because as the economy becomes more knowledge intensive, deep labour markets and good links between firms become more important. Firms engaged in high-knowledge activities benefit from connections that enable them to collaborate and learn from one another. They locate in places with deep labour markets to ensure that they can attract the talent and skill they need. This report reveals, however, that labour markets are shallow in significant parts of Australiars biggest cities. In many suburbs - particularly outer suburbs - residents can reach fewer than 10 per cent of all metropolitan jobs with a reasonable commuting time. Increasingly, employees with high-level qualifications and high incomes live close to the heart of our cities. Meanwhile, workers with trade skills or low skills, and people on lower incomes, tend to live further from the centre. Rising house prices have exacerbated this divide. If this polarisation continues, then many people risk being locked out of the parts of the city that offer the richest access to jobs.