09/07/15

Committee Communiqué

Shifting Gears’ shows our car industry still running

Last week, Committee for Melbourne member GM Holden hosted a private viewing of their ‘Shifting Gear’ exhibition for guests from other member organisations. 'Shifting Gear', on show at the National Gallery of Victoria’s Ian Potter Centre, offers a comprehensive historical display of vehicles which includes the world-leading 1970 GTR-X Torana and the glorious Holden Efijy concept vehicles. More than that though, the exhibition showcases world-class creations that arise from the Holden design and innovation centre which is located right here in Fishermans Bend. As we look to an Australian future without a traditional car manufacturing sector, it is important we remember that from a design and innovation perspective, Melbourne continues to lead the world. At the Detroit motor show in January this year, the Buick Avenir, a luxury car whose exterior was designed and built at Holden’s Port Melbourne design centre, stole the show as the leading concept car. While the Avenir will not be manufactured in Australia, it does highlight the potential transformation of Victoria from a manufacturing hub to a design and engineering hub, and shows that our automotive industry is still alive and first-class.

More public holidays bad for the economy?

The recently released Regulatory Impact Statement on proposed new public holidays in Victoria completed by PwC estimates that the new Grand Final Eve and Easter Sunday public holidays will provide an additional 1.5 million days off for Victorians collectively. The associated lost production costs are estimated to be between $717 and $898 million annually, and increased wage payments between $252 and $286 million each year for those who work on the new holiday days. Offsetting the cost is the estimated benefit of additional leisure time – between $156 and $312 million and a boost to regional tourism of between $17 and $51 million. PwC’s assessment concludes the estimated quantified costs of the public holidays outweigh the benefits, although it is noted there is the potential for wider benefits to accrue to families and the broader community due to coordinated leisure time. It seems a long stretch to make the costs and benefits truly balance however, and at a time when the economy is already sluggish, we must ask the question of whether or not these seemingly good ideas at the time, won't in the long-run cost us dearly in terms of productivity.

Victorians' concerns around poverty increase

According to the Ipsos Issues Monitor report for the April to June period, of our top five concerns – healthcare, transport, unemployment, crime and cost of living – only transport issues have grown as a concern with comparisons to the last quarterly survey results showing an increase of 30 per cent. The big mover as an issue of concern for Victorians is poverty, having risen from 14th in 2010, to 10th. According to Ipsos, although poverty still sits well outside our top five concerns, the context in which citizens' concerns around poverty have increased is important. ‘That Victorians' concerns around poverty have increased in concert with a heavy and ongoing reduction of the cash rate, demonstrates that the expanding distance between rich and poor exists and is observed, and that those who participate in and benefit from the economy are so distinct from those who cannot and do not.’ Interestingly, this matches with Victorians' perceptions of what makes somewhere a good place to live. Compared to the rest of Australia, Victorians placed a higher value on public transport, education and equitable opportunity.

Services sector expanding

The services sector expanded in June 2015 after two months of broadly stable conditions. The Australian Industry Group Australian Performance of Services Index figures showed a moderate expansion of 1.6 points after two relatively stable months. According to the Australian Industry Group (AiG), conditions across the services sectors have been broadly positive or neutral in the first half of 2015 with the improvement to date being mainly concentrated in consumer services. For the business-oriented services subsectors, AiG note that low levels of business confidence and private and public investment, combined with an uncertain economic outlook is limiting demand across a range of activities. On the upside, increased housing market activity and very low interest rates are assisting some categories of consumer spending, and the extensive finance and insurance sub-sectors expanded for a sixth month in June. The services sector plays a key role in stimulating the Victorian economy so any upturn is a positive. With the State Government’s review of professional services set to commence soon, now is the time to take the opportunity to think about ways in which we can further stimulate and support this sector.

Metropolitan Planning Levy

The new Metropolitan Planning Levy (MPL) announced in the 2014 budget was formally introduced on 1 July. The new levy will apply to planning permit applications for projects in the metropolitan area with construction costs valued at over $1 million. The levy is set at $1.30 per $1000 (0.13 per cent of the whole value of the project), and will increase by CPI annually. It will apply to all Melbourne metropolitan council areas including the rural areas of the Shire of Cardinia, City of Casey, Shire of Mornington and Yarra Ranges, and other outer urban councils, with the exception of areas outside the Urban Growth Boundary in the Mitchell Shire. The State Revenue Office has indicated that at this time the MPL does not apply to applications for subdivision and will be paid in addition to the existing statutory application fee. The new levy will be used by the Department of Environment, Land, Water and Planning as well as the Metropolitan Planning Authority to implement an improved planning system, fund ongoing strategic planning for the metropolitan Melbourne area and implement initiatives identified in Plan Melbourne.

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