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Sydney and Melbourne: An Economic Overview

Sydney and Melbourne: An Economic Overview

Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion.
Briefing Paper 7/2010 by John Wilkinson

Presented in this paper is something of an historical and contemporary inventory of business activity in Australia's two leading cities. It does not present a complete picture of economic activity, still less of such issues as the 'liveability' of Sydney and Melbourne. Its focus is narrow and the conclusions that can be drawn from it are therefore limited. The paper's findings include:
    The relative positions of Sydney and Melbourne, as Australia's leading cities, has changed over time. In this respect their relationship is neither fixed nor subject to any natural laws of advantage or disadvantage. Nor indeed is the relationship between them and Australia's other major cities. [7]
    While Sydney was the first city of Australia (and the foundation location of businesses such as Westpac and AMP), it was overtaken (in population) by Melbourne during, and immediately after, the gold rush. Melbourne’s prosperity not only resulted in it becoming the financial centre of Australia during the first half of the twentieth century, but led to its functioning as the temporary national capital.[2(a)]
    Discriminatory tariffs led to Melbourne having the highest concentration of manufacturing amongst the capital cities of Australia, a position which it currently maintains.[2(c)]
    In the first half of the twentieth century a majority of companies had their headquarters in Melbourne. This situation was reversed during the second half of the twentieth century. As manufacturing declined and the property and finance sector expanded, the majority of large Australian companies located their headquarters in Sydney.[2(c)]
    Melbourne’s ascendancy, in population, was effectively ended by the great depression of the 1890s, with 50,000 people leaving for other colonies. From the first decade of the twentieth century, the ascendancy in population returned to Sydney.[2(c)]
      Although the long-run average growth rate for both NSW and Victoria is approximately the same, the opening years of the twenty-first century have seen Victoria’s growth rate exceed that of NSW.[3]
      Tariff reduction has seen a growth in the number of large importing firms, the majority of which are based in Sydney.[5(h)]
      Melbourne is currently the location for the leading mining company in Australia - BHP Billiton.[5(d)]
      Telstra, which is the national leader in telecommunications, has its headquarters in Melbourne. This dates from the time when it was the nation’s capital, between 1901 and 1927.[5(l)]
        Ascendancy in freight transport is split between Melbourne and Sydney. Port of Melbourne is the largest container port in Australia, while Sydney is the centre of airfreight transport.[5(i)]
        Although recent Victorian governments have made concerted efforts to attract visitors, NSW attracts the greater number of domestic and international visitors.[5(k)]

        The Kennett government's facilitation of commercial ownership of electricity and gas production assisted the expansion of NSW electricity and gas concerns into Victoria.[5(m)]
        While, in the early twentieth century, newspaper production was fairly evenly split between Melbourne and Sydney, the late twentieth century saw both a consolidation of print production – and a consolidation of television production – in Sydney.[5(n)]
        Melbourne is host to arguably the biggest domestic agribusiness concern in Australia: AWB Ltd. Two NSW-based large agribusiness operations have emerged in recent years: Ricegrowers and Graincorp.[5(o)]

        In their 2006 publication, Melbourne's Second Speed Economy, Birrell at al tracked developments in the past decade or so in Sydney and Melbourne, comparing their track record with the "resource driven states of Western Australia and Queensland". They found that, while there was 'no room for complacency in Melbourne", it was the case that 'Sydney's slowdown had been sharper" in the post-Olympic period. On the other hand, the same report also noted problems with the Victorian government's strategies based on 'rapid population growth'. Population growth "could not be guaranteed", it was said, "especially given a possible net exodus of people to Queensland and Western Australia". The other problem was that "such growth deflects from the challenge of transforming the Victorian economy into one that is globally competitive". [6]
        In the opening years of the twenty-first century, Sydney remains the city with the largest population and leads Melbourne in 11 out of 17 standard categories of employment.[7]