Melbourne has added almost a million people to its population since 2001 – about 250,000 more than Sydney.

But it’s not Melbourne’s hipster lane culture and live music attracting coffee-loving young professionals from overseas; nor is it our sporting venues hosting the most-watched events in Australia drawing sports-mad migrants that is behind this phenomenon.

According to Professor Bruce Rasmussen, director of the Victoria Institute of Strategic Economic Studies at Victoria University, a key reason is the pattern of interstate migration.

Prof. Rasmussen says it is resident Australians who are choosing Melbourne and ignoring Sydney, making a difference in population growth since 2001 of more than 20,000 a year.

“These are people who are knowledgeable about their choices between the upside-down river and the sparkling harbour,” Prof. Rasmussen said, writing in the Sydney Morning Herald.

He said that overtaking a larger city was a slow process. The larger city has the advantage of higher natural increase, and its larger economy tends to attract more migrants from overseas and visitors on working holidays.

Even so, depending on assumptions, Melbourne is projected to become larger than Sydney somewhere between 2030 and 2050.

“Both cities have, in fact, enjoyed strong growth. The similarities outweigh the differences. The big drivers of economic growth have been services; largely, knowledge-intensive services, such as professional services (accounting, law, engineering, architecture, and computer systems design) and the health and education sectors.

“Professional services have grown as businesses have required increasingly specialised expertise that is difficult to employ in-house. The health sector reflects similar trends, with increasing specialisation and centralisation of services in large cities, such as Melbourne and Sydney,” Prof. Rasmussen said.

However, in each of these sectors, Melbourne’s growth has exceeded Sydney to the point where there is now little difference between the cities in the number of jobs in each of these sectors.

While employment in services has grown, the band news on jobs has come in manufacturing. Despite press reports on the catastrophe of the demise of the Victorian car industry, NSW manufacturing jobs have fallen by more than Victoria’s.

The growth of jobs in both cities, but particularly Melbourne, has attracted a new migrant workforce.

Prof. Rasmussen said the migration wave of the past decade had been unprecedented for Australia. In pure numbers it was larger than the immediate post-war British and European net intake and also the previously highest net migration of 1988-89.

“A high proportion of each of these migrant flows has settled in Melbourne and Sydney, but unlike the lower-skilled often non-English-speaking earlier migration booms, the characteristics of these migrants are very different.

“A high proportion of the migrants of the 2000s are English-speaking and well-educated. This reflects both the emphasis on a skilled migration program, which represents half of the total, and the success of Australia as a tertiary education destination,” he said.

Prof. Rasmussen said the largest occupation group of recent migrants had been professionals (27 per cent) and the next largest category is technicians and trades workers (14 per cent).

The largest numbers are drawn from China, India and Britain. More than half of the Indian skilled migrants work in the information and communications technology sector. About 40 per cent of the Chinese are accountants.

“These migrants have been in a great position to take advantage of opportunities opening up in the rapidly growing professional services, in accounting or computer systems design,” he said.

“In merging their skills and Asian-oriented perspectives with those of locally born Australians graduating from our tertiary institutions, they create a significant growth dynamic for the professional services and related sectors.”

Most of this growth has been occurring in the inner areas of both Sydney and Melbourne. From 2001 to 2011, there was a massive shift of jobs to the centres of these cities, and areas within the city centres have become some of the fastest-growing residential neighbourhoods.

In these trends, Melbourne has shaded Sydney but the reasons for that are more difficult to define, Prof Rasmussen says.

The development of both Southbank and Docklands has accommodated the growth of the Melbourne CBD during this period. The growth of residential and professional office towers on Southbank has transformed Melbourne, from a city by the river, to one straddling the river, drawing its cultural and sporting icons closer to its centre.

“It is not exactly clear why Melbourne is growing faster than Sydney. Among the reasons given are lower house prices and greater accessibility. In this regard, the availability of large tracts of land in the west, where most of Melbourne’s suburban growth is occurring, provides low-cost housing options relatively close to the centre of Melbourne,” Prof. Rasmussen said.

“Or maybe it’s just the quality coffee and those lively laneways and bars,” he said.

Jess Phillips
AMES Australia Staff Writer