CENTRAL GEELONG FRAMEWORK PLAN ADVISORY COMMITTEE: RESPONSE TO OTHER EVIDENCE BY PATRICK FENSHAM - ADDENDUM TO STATEMENT OF EVIDENCE
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CENTRAL GEELONG FRAMEWORK PLAN ADVISORY COMMITTEE: RESPONSE TO OTHER EVIDENCE BY PATRICK FENSHAM ADDENDUM TO STATEMENT OF EVIDENCE Prepared for 8 SEPTEMBER 2021 DELWP [7716812: 22929283_1]
SGS Economics and Planning Pty Ltd
ACN 007 437 729
www.sgsep.com.au
Offices in Canberra, Hobart, Melbourne, Sydney
Evidence ADDENDUM PFensham - 210908TABLE OF CONTENTS RESPONSE TO OTHER EVIDENCE 1 Introduction 1 Growth rates in context 2 Responses to the Spatial Economics Evidence 7 Responses to the Quick evidence 7 Central Geelong Framework Plan Advisory Committee: RESPONSE TO OTHER Evidence BY i Patrick Fensham
RESPONSE TO OTHER EVIDENCE
Introduction
1. I have reviewed those statements of evidence which address the SGS Market
Assessment and Land Use Report and/or my statement of evidence as prepared by:
• Jeremy Reynolds and Dale Stokes of Spatial Economics
• Mark Woodland of Echelon Planning (focussing particularly on section 11.2.4
Residential and employment floorspace forecasts and capacity analysis)
• Rhys Quick of Urbis.
2. The Woodland evidence endorses the demand analysis in the SGS Report and my
statement of evidence and its reflection in the capacity analysis.
131….I consider that the demand forecasts and capacity analysis have
reasonably demonstrated that the proposed (revised) Framework provides for
significant population and housing growth under a reasonable range of growth
and land development scenarios over the long term (30 years).
3. More than that the Woodland evidence also discusses the issue of ‘which’ scenario
and whether a more generous scenarios should be used. His view corresponds with
mine:
127.Further revising the Framework to provide even greater capacity will have its
own consequences on the future amenity and character of Central Geelong. If
the Framework was to be even further amended to cater for additional growth,
then further analysis of these potential impacts would need to be undertaken.
128. The alternative approach is to adopt a framework based on it having
capacity to accommodate the lower ‘Upside’ growth scenario, and monitor it on
a periodic (say 5 yearly) basis.
129. If it were to transpire over time that the Framework did have a floorspace
capacity shortfall, this is not an issue that would arise for many years to come,
and it may not arise at all if the market response to housing and employment
floorspace demand resulted in higher site probability and efficiency outcomes
than have been assumed in this capacity modelling.
Central Geelong Framework Plan Advisory Committee: RESPONSE TO OTHER Evidence BY Patrick Fensham 1130. In the event that future analysis confirmed a floorspace shortfall was
emerging then changes could be made to the built form controls to allow for
higher growth if that was considered to be warranted at that time.
4. The Spatial Economics evidence statement concludes (in section 11.0) by noting that
based on the corrected evidence it ‘broadly supports the stated additional floorspace
requirements for both residential and employment purposes’.
5. However, the Spatial Economics evidence also suggests using a 3% growth scenario
as a plausible long term scenario. The Quick statement of evidence also suggests (in
the summary) that ‘a higher population scenario should also have been used, such as
the 3% growth sensitivity’ because ‘[a]ccounting for broad range of potential
outcomes is important when considering what may evolve over a 30 year period.’
6. There are few challenges to the overall step-wise methodology used to generate
floorspace projections for Central Geelong in the SGS Report (and my statement of
evidence). Most of the focus in the Spatial Economics and Quick statements is
whether the City of Greater Geelong 2.5% AAGR is sufficient as a basis for these
scenarios, and whether a higher rate might have been used.
7. Given this (and keeping in mind the Woodland evidence cited above) it is worth
considering the adopted growth rates for the scenarios (for the LGA and Central
Geelong) in context before returning to specific points in the Spatial Economics and
Quick statements (the latter in particular).
Growth rates in context
Greater Geelong LGA
8. I maintain that 2.5% AAGR to 2051 for Greater Geelong LGA represents a reasonable,
indeed generous rate to assume as the basis for the upside and optimistic forecasts.
9. Table 1 shows various publicly available population projections for Greater Geelong
LGA. None of these sustain a growth rate of more than 2.1% for the future period
they report, and all have the growth rate declining over time (VIF19 for example has
an average annual growth rate of 2.1% to 2036 but a declining rate in the later five
year periods). This is shown in Figure 1 which plots the growth rates for each period.
Central Geelong Framework Plan Advisory Committee: RESPONSE TO OTHER Evidence BY Patrick Fensham 2TABLE 1: VARIOUS POPULATION PROJECTIONS FOR GREATER GEELONG LGA
2011 2016 2021 2026 2031 2036 AAGR
VIF19 215,837 239,529 271,254 301,563 330,720 360,245 2.1%
AGR in period 2.1% 2.5% 2.1% 1.9% 1.7%
VIF16 215,837 233,349 253,247 274,085 296,360 1.6%
AGR in period 1.6% 1.7% 1.6% 1.6%
2011 2016 2020
ERP 215,837 239,529 271,200
AGR in period 2.1% 2.5%
FIGURE 1 ASSUMED AVERAGE ANNUAL GROWTH RATES FOR GREATER GEELONG LGA PROJECTION PERIODS
FROM SELECTED FORECASTS
3.0%
2.5%
2.0%
Growth rate
1.5%
1.0%
0.5%
0.0%
2016 2021 2026 2031 2036
VIF19 VIF16 ERP
10. The logic underpinning the likelihood of declining growth rates over time is
mentioned in my evidence. Even if the absolute five yearly population increment is
sustained it will imply a falling growth rate as the base gets larger. Sustained high
growth rates imply an ever-increasing absolute figure for any development period.
11. A sustained 3% AAGR to 2050 for Greater Geelong is unlikely. It would imply an
annual increase in population of about 8,000 in the first year (2021) and almost
19,000 by year 2050, as shown in Figure 2.
12. Sustained and consistently high growth rates are also unlikely given market cycles
and disruptions. My evidence and Spatial Economics’ points out that Covid 19 has
Central Geelong Framework Plan Advisory Committee: RESPONSE TO OTHER Evidence BY Patrick Fensham 3impacted on growth rates, and will likely add a short term lag that will reduce growth
rates in the immediate term. Other economic disruptions are certain over a 30 year
period. An average growth rate of 2.5% per annum for 30 years already represents
an upside forecast, sufficient to reflect a positive and robust future for the Greater
Geelong LGA.
FIGURE 2 ANNUAL AVERAGE POPULATION CHANGE IN GREATER GEELONG LGA ASSUMING 3.0% AAGR
20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 2045 2047 2049
Source: SGS Calculations and assumptions, 2021
Central Geelong
13. The SGS Report and my evidence statement use a range of assumptions to project
jobs and population in Central Geelong, based off the LGA wide population forecasts
Neither Spatial Economics or Rhys Quick’s evidence put a considered alternative set
of assumptions to challenge these figures. Having established that the 2.5% AAGR for
Greater Geelong LGA is a quite reasonable and positive base assumption it is worth
setting this aside and just considering the Central Geelong population and job growth
rates used in the scenarios in isolation.
14. Table 2 compares the various assumed growth rates for the scenarios and compares
these to the observed 2011-16 rates. The base case is relatively conservative for
Central Geelong given recent population and employment growth rates but both the
Upside and Optimistic scenarios assume a significant ‘up-tick’ in growth rates.
Central Geelong Framework Plan Advisory Committee: RESPONSE TO OTHER Evidence BY Patrick Fensham 4TABLE 2: ACTUAL AND ASSUMED GROWTH RATES FOR POPULATION AND JOBS IN CENTRAL GEELONG
Actual Base Case* Upside** Optimistic**
2011-16 2016-50 2016-50 2016-50
Central Geelong 5.0-5.7% 5.7-6.2%
4.0% AAGR 3.7% AAGR
Population AAGR AAGR
Central Geelong
2.1% AAGR 1.5% AAGR 2.6% AAGR 2.8% AAGR
Jobs
Source: ABS Census, SGS SALUP model, SGS Calculations and assumptions
* SGS Report 2020 ** corrected and updated with 2.5% AAGR for population for this evidence
15. Furthermore, as mentioned in the discussion above about ‘in-built’ upside bias in the
choice of high growth rates, the scenarios assume these rates are sustained for 30
years with an ever-escalating growth in jobs and population.
16. Figure 3 shows annual population growth climbing from about 127 in 2021 to 522
per annum (average 281) by 2050 for the Upside scenario and from 148 in 2021 to
741 per annum by 2050 (average 371) for the Optimistic scenario (choosing the low
end of the range of growth rates). Again, to put this in context the government’s
current population forecast (VIF 2019) for the significantly larger Central Geelong
District (see Figure 4) is for modest population growth from 2021 to 2036 of about
1% AAGR or 160 on average per annum.
FIGURE 3 ANNUAL POPULATION CHANGE IN CENTRAL GEELONG IN UPSIDE AND OPTIMISTIC SCENARIOS
(LOW END OF GROWTH RANGE)
800
700
600
500
400
300
200
100
0
2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 2045 2047 2049
Upside 5.0% Optimistic 5.7%
Source: SGS Calculations and assumptions, 2021
Central Geelong Framework Plan Advisory Committee: RESPONSE TO OTHER Evidence BY Patrick Fensham 5FIGURE 4 CENTRAL GEELONG STATISTICAL DISTRICT (VICTORIA IN FUTURE 2019)
17. Figure 5 shows annual jobs growth climbing from about 660 in 2021 to 1389 per
annum by 2050 (average 981) for the Upside scenario and from 716 in 2021 to 1595
per annum by 2050 (average 1100) for the Optimistic scenario. For context
employment growth in Central Geelong averaged about 457 per annum from 2011 to
2016.
FIGURE 5 ANNUAL JOBS CHANGE IN CENTRAL GEELONG IN UPSIDE AND OPTIMISTIC SCENARIOS
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 2045 2047 2049
Upside 2.6% Optimistic 2.8%
Source: SGS Calculations and assumptions, 2021
18. Of course, when translated into residential and employment floorspace and provided
for in planning controls all this additional floorspace represents a Central Geelong
wide envelope of potential development rights. It is clearly not provided on a year to
Central Geelong Framework Plan Advisory Committee: RESPONSE TO OTHER Evidence BY Patrick Fensham 6year basis; more specifically, the capacity analysis suggest the controls provide for
the floorspace associated with all 30 years of the population and jobs growth shown
in the Upside scenarios in these figures.
Responses to the Spatial Economics Evidence
19. As mentioned earlier the Spatial Economics evidence broadly supports the corrected
floorspace scenarios. In terms of selected other conclusions (section 10.0) and the
major recommendations my comments are as follows.
20. Re para 6 – “the consequences of underestimating future demand are significantly
more dire than those likely to be caused by overestimating future demand.” As
discussed above the SGS Report and my evidence are unlikely to underestimate
future demand. The Upside and Optimistic scenarios represent a significant positive
change in prospects for Central Geelong.
21. Re paras 9 and 10 – “In planning for central Geelong’s future role it is therefore also
important to consider the wider region population and population growth e.g. growth
in Surf Coast Golden Plains and Queenscliffe”. The employment growth in the Upside
and Optimistic scenarios implies a significant change in economic prospects for
Central Geelong, as shown in the comparison with Wollongong and Newcastle both
of which currently have in the order of a half the jobs suggested for Central Geelong
in 2050 by these scenarios. If it achieved these employment futures, with well over
50,000 jobs in 2050, Central Geelong would be a major regional centre serving south
western Victoria as a whole (again, for comparison wider central Parramatta,
Sydney’s ‘second CBD’, had about 57,000 jobs in 2021).
22. Re Major Recommendation 3 ‘Consideration of using the 3% growth scenario as a
plausible long term scenario, used for sensitivity testing of long-term floorspace
requirements’. This was included in my statement of evidence in Table 12 and Figure
7. I consider this outcome to be unlikely but as the Woodland and my evidence notes
if observed growth rates begin to approach this level over some years a review of
capacity provided for in the planning controls may be warranted.
Responses to the Quick evidence
23. The following responses are provided to selected opinions from the Quick evidence. I
make no comment on the specific Westfield sites or Strategic Development Site
issues of capacity and feasibility.
Central Geelong Framework Plan Advisory Committee: RESPONSE TO OTHER Evidence BY Patrick Fensham 724. Firstly, I note Quick’s comment that ‘in general, the methodology, considering the
purpose of long-range estimates of demand to inform the Framework Plan, is
appropriate.’
25. Re “The SGS report is supported by market evidence with a short-term focus. The
market evidence supplied appears to have given comfort to SGS that the modest
growth outcomes for Geelong are appropriate, and therefore there is no need to
allow for higher growth scenario to be considered.”
The market evidence itself is relatively uncontested by Quick, and though a short to
medium term perspective, does point to the headwinds that need to be overcome to
achieve the universally desired and positive aims for Central Geelong. It confirms
points already made above that sustained high growth rates from now until 2050 will
be difficult to achieve and that at best a ‘ramp-up’ to higher growth rates is likely.
The Upside and Optimistic scenarios for Central Geelong ‘build in’ extra potential by
assuming an immediate jump to the higher growth rates.
26. Re “The Base Case used in the SGS report as a conservatively low estimate that has
little value in this process. In my opinion, both the “Upside” and “Optimistic” scenarios
used by SGS are mid-range potential outcomes rather than representing the extremes
of what demand might be. A higher population scenario should also have been used,
such as the 3% growth sensitivity in Mr. Fensham’s evidence. Accounting for a broad
range of potential outcomes is important when considering what may evolve over a
30-year period.”
I agree that for planning purposes the base case is not particularly useful. Its main
use is as a reference or ‘sense check’ for plausible upside scenarios.
For the reasons noted earlier I don’t consider the Upside and Optimistic scenarios
(which remember contain a considerable range in floorspace themselves) ‘mid-range
potential outcomes’. They represent an ambitious step-up in growth for Central
Geelong. I don’t believe the 3% sensitivity outcome to be a likely scenario and as the
Woodland evidence mentioned this would have required ‘further analysis’ of
potential impacts - in my view this would have been unnecessary.
27. Re ‘The SGS analysis allows for no growth in “other” floorspace (e.g. car parking,
public domain, shared common areas) which currently represents 46% of all
Central Geelong Framework Plan Advisory Committee: RESPONSE TO OTHER Evidence BY Patrick Fensham 8floorspace recorded in Central Geelong. While it may not grow in line with
employment or habitable space, some allowance for growth in other floorspace
should be made as it will consume some of the future floorspace capacity.’ The CLUE
survey allocated floorspace to these ‘other’ categories but in general this was a
misnomer as it applied to at-grade car parks, bus stations and areas of public domain,
as well as some unclassified uses. As Quick points out elsewhere in his evidence
future additional car parking is likely to be in basements (where it is provided at all)
and won’t be counted in floorspace calculations. Areas devoted to additional open
space identified in the Planning Framework should not have been counted as
developable in the capacity analysis. I consider any undercount of demand associated
with these other uses to be very modest and able to be accommodated in the
floorspace envelopes suggested by the Upside and Optimistic scenarios.
28. Re “It is possible that floorspace demand could be substantially higher than currently
indicated by SGS in the evidence of Mr. Fensham. This possibility should be
appropriately allowed for, with the Central Geelong Framework Plan being developed
to provide for more than enough capacity for potential outcomes.”
For the reasons already mentioned I don’t believe floorspace demand will be
substantially higher than I’ve indicated in my corrected evidence. I am comfortable
with the capacity provided by the draft planning controls, as it falls within the range
suggested by the Upside floorspace scenario.
29. Re “The Background Report prepared by DELWP presents the results of a capacity
assessment that has been undertaken should the Framework Plan controls be
introduced. The concept of calculating future capacity to compare against demand
estimates is generally appropriate. However, there are two key flaws in my opinion:
Firstly, this process was undertaken as a check after the controls were set, not before
to inform them.
- Secondly, the fact that the capacity now calculated falls well short of the demand
estimates has not been addressed effectively, as discussed below.”
I agree that in some cases demand analysis or floorspace projections might be used
as the initial guide for capacity and planning responses. The higher end of the Upside
range for example could have been established as a target for floorspace potential to
be provided in planning controls. Ultimately though planning and design merits are
the critical considerations so if these are capacity checked and seen to fall within the
Central Geelong Framework Plan Advisory Committee: RESPONSE TO OTHER Evidence BY Patrick Fensham 9range suggested by the demand scenarios then the order in which the process occurs
is not a material consideration. In my view the capacity doesn’t fall ‘well short’ of the
demand estimates. It falls within a plausible though ambitious 30 year future
floorspace outcome for Central Geelong. This response also addresses the next two
points in the Quick evidence.
30. Re Quick’s opinion that “the Framework Plan fails to meet its stated goal of providing
sufficient excess capacity to allow for likely development outcomes. If the optimistic
scenario is achieved, a shortage of development opportunities could emerge within
only 20 years from now.”
In my view there is little danger of a shortage of development opportunities
emerging given the overall capacity provided in the planning controls. As Woodland
notes (para 99)
“The Planning Practice Note 60 (Height and Setback Controls for Activity Centres)
identifies that Councils should also be able to demonstrate that there is sufficient
land and capacity available within an activity centre to meet forecast demand
and projected population growth over at least a 15-year period, and beyond this
to a 30-year horizon.”
Given that the Upside scenario is well above the base scenario (which though
conservative could have been the basis of demand forecasts) and builds in and
sustains a step up in the growth rate for 30 years it embeds excess capacity.
Furthermore, well within a 20 year period it would be expected that any observed or
pending shortfall in development capacity would be considered in a review of
controls.
Re “The consequences of providing more excess capacity through proposed planning
controls are limited and less impactful than the risk of a lack of capacity. If demand
exceeds capacity, the risks include:
‒ rising prices and rents which in turn impact Geelong’s competitiveness;
‒ underdeveloped sites are taken out of the pool of available [supply]
‒ development outcomes that might otherwise be expected to emerge as Geelong
becomes a true ‘second city’ not being accommodated;
‒ uses that should be concentrated in one precinct being forced to secondary
locations.”
Central Geelong Framework Plan Advisory Committee: RESPONSE TO OTHER Evidence BY Patrick Fensham 10As mentioned, given that capacity is provided in the controls to meet an upside
scenario I do not believe these risks will arise and not before monitoring and a review
of controls is possible. Furthermore, as mentioned in my evidence, I believe a
positive though realistic, rather than implausible development envelope, reduces
some risks. In relation to these suggested by Quick:
- there is little danger of prices rising in the short to medium term given the
significant overall capacity provided for in the controls (in fact establishing a
reasonable development limit or guide can moderate short to medium term price
expectations)
- on some sites it is true that establishing ‘hard’ or mandatory capacity limits might
stifle redevelopment (where the allowable envelope doesn’t provide sufficient
additional density for feasible redevelopment) but any claims in this regard should be
checked via genuine ‘open book’ feasibility analysis and not via assertion, and with
planning merits as the ultimate arbiter of discretion in the granting of additional
development rights beyond those provided for in the controls (the prospect of some
flexibility for specific sites is suggested by my comments here)
- if genuine flagship ‘second city’ developments begin to test site specific or overall
capacity then a review of controls may be warranted; until that time capacity which
provides for the Upside floorspace scenario should be sufficient to accommodate
both the incremental and accelerating growth that will reflect a maturing city moving
towards true ‘second city’ status
- ‘spreading’ capacity across precincts reduces the risk of single site or clusters of
developments monopolising the demand pipeline, though I do agree to some extent
that the risk mentioned exists, for as my evidence statement mentions precinct
objectives may not be met if some uses begin to ‘crowd out’ or absorb capacity for
more desired uses in particular precincts. This needs to be closely monitored.
31. Re Quick’s final comment “Ultimately, there is a fundamental mismatch in the
analysis between demand and capacity which is not adequately addressed by the
Framework Plan or the Amendment.”
In my view, for the reasons mentioned, there is no ‘fundamental mismatch’ in the
demand and capacity analysis across Central Geelong.
Central Geelong Framework Plan Advisory Committee: RESPONSE TO OTHER Evidence BY Patrick Fensham 11Contact us
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