Public loss, private gain – but not where you expected

At the moment, you can’t walk 10 paces down Marrickville Road without seeing one of these:

They were paid for by the Marrickville Chamber of Commerce. I hope they didn’t pay too much, because they are just crudely stencilled signs on torn pieces of left-over fabric. There’s more than a hundred of them along the shopping strip, plus some bigger ones in prominent places. They are referring to the proposed development of the Marrickville Metro shopping centre near Edgeware Rd and Enmore Park. The owners want to essentially double the size of the aging complex, double the height, and if possible purchase half a side street to turn into a pedestrian mall. It has generated considerable opposition in the surrounding suburbs, and the banners pictured above are just the latest in a series of actions by local residents and businesses to try and stop the development. 4,500 people have signed a petition against it, local shops have had small signs in their windows, and the Council is among several groups voicing their concerns. These mainly relate to the size of the buildings, traffic congestion, and the commercial impact on local shopping strips. Interestingly, it is the last of those which is the focus of the protests. It stands to reason – if people think their profits or livelihoods are at risk, they are more likely to be vocal about that than the more diffuse problem of increased traffic.

Unfortunately for the development’s opponents, this primary concern of theirs has the least basis in fact and the weakest social-amenity argument. If you go to Metro Watch, the council-supported grassroots organisation that is spearheading the struggle, or look at comments on local media forums, there is an oft-repeated assertion that small shops will be “devastated”, “annihilated”, there will be “mass closures” and so on. When I first started seeing those claims, I wondered how they knew the impact would be so bad. The handful of shop owners that I asked thought it was self-evident. Searching around for evidence one way or another turned up very little. The developers, AMP Capital Investors, cite “an independent economic impact analysis” but without any details or link. Assuming they’re not spinning the result, AMP claims the analysis predicted only a 3% impact on local shops. Presumably that means a 3% drop in customers. Even if one is sceptical about the veracity of that figure, and prudently doubles or quadruples it to be on the safe side, it hardly constitutes devastation or annihilation. Joe Khoury from the Marrickville Chamber of Commerce has claimed that “the shops on Marrickville Road currently operate at about 50% of what they did prior to the initial opening of the Marrickville Metro in the 1980s.” He offered no evidence this was the case, and I find it hard to believe when walking down the vibrant, well-patronised shopping strip.

Metro Watch and the other groups like to trumpet how many people* are objecting to the development. If that is so, and a majority of residents want to “support small business” as per the banners, then won’t these people continue to buy from the smaller shops? Why would they stop? If the strips have such strong backing, then surely they’re not going to have any worries about losing business. This is the democratic essence of the free market – you can shop where you like, and if enough people agree with you, the shops will survive and prosper. All one has to do is put one’s money where one’s mouth is.

If, on the other hand, the dire predictions are true and not enough people want to buy from the smaller shops, that is sad for the proprietors. But if the popular support isn’t there, why should they have the right to deny someone else the chance to try their luck in the marketplace? Essentially, they are seeking to use the power of government to protect their profits from competition because they are afraid that people would go elsewhere if given the option. If people are choosing to go elsewhere, it’s because they prefer it. That means they are better off by making that choice, and worse off when unable to make that choice. So if the shop owners on the local strips win their demand for no more development, they will in effect privatise the benefits and socialise the losses.

* There are conflicting surveys, unsurprising when they are conducted by the developers and interest groups themselves.

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15 Responses to Public loss, private gain – but not where you expected

  1. john walker says:

    Used to live around there. The metro was a spectacular failure.
    Most preferred the buz of shopping in the real street . There are no shortage of nearby ‘bulk’ shopping malls for the toilet paper and washing powder sort of shopping. Could of the nearby Malls (Leichart ,Ashfield, South Marrickville, Newtown so on)– be worried about competition?

    The Location is in the middle of an otherwise quiet area and is a bit of a bottle neck re car access. Though the mall has been there for decades, its existence is hardly a surprise to people who purchased since the mid 90s.
    Wonder about the project , who is behind it, is it one of the alternative
    outfits – Aldi , Metrocash? Could it involve attempts to use land use regs to block competition setting up shop, would it?

  2. Jarrah says:

    I wouldn’t be surprised – one of the biggest banners is hung on the FoodWorks in Illawarra Road, which is not a small business by any definition. It has 390 stores across Australia.

  3. Jordan says:

    I used to shop at metro when I lived at that end of newtown. It’s an ugly soulless shopping centre in the mold of so many others

    Likewise when I lived in marrickville I used to love the shops on marrickville road, not for basic groceries per se but the takeaway and fresh food shops. As I was on foot it made little sense for me to go to the metro for anything but I doubt I would have even with a car.

    If I was still living in the area you could put me down for a counter petition to let the expansion go ahead. Local anti-development movements are some of the worst instances of systemic private property violation in our society. In fact I’ve been thinking about an idea that involves removing councils’ abilities to decide planning cases altogether – it’s absurd that a democratically elected executive body decides individual property disputes. Imagine if parliament directly adjudicated class actions against large corporations or wealthy private individuals.

  4. john walker says:

    jordan it can depend on the situation.
    Where I live the arguments more about the community being forced to subsidise (at about 20 thou per block !) the costs of subdivision developments that would otherwise not be very competitive. And thus prop up the offering price for the poor aging farmers properties.
    The only really effective socialists in Australia’s history have always been agrarian socialists.

  5. john walker says:

    I feel the real problem with this sort of regulation is that it is very sharp on small matters- for example-
    I recently did a small enclosed sun-room on the back of the house that all up cost about 2.5Kin DA and other regulatory costs.

    And very casual about matters that affect lots of existing land owners, for example the council recently allowed a ‘variation’ of a twenty five year old DA , that changed from twenty single story houses to twenty three-story houses, this was on the basis that “the developer is a nice bloke and a real local’ and the people complaining about loss of sunlight and lack of legal process were ‘blow-in wingers’.
    It is the lawless arbitrary venal pettiness( and Shear Boredom) of local government that gets most, not sure that a free for all would address it all that well.

  6. john walker says:

    Was speaking about our local council -Pallerang council.
    Asked a bloke who works for them how things were going, he answered : “not bad in a Hobbesian sort of way”
    ‘Nasty brutish and short’ is pretty accurate .

  7. Jordan says:

    I don’t suggest a free for all – although I do favour a stronger legal presumption that property owners have the right to do as they want on their own land unless there is clearcut public interest claim to the contrary.

    But orthogonal to that point is that councils should set planning policy, not adjudicate it. An accountable elected comittee will nearly always favour your neighbours’ self interest against your own, since there are more of them voting, even though it’s your land. Hence the rampant nimbyism in urban and suburban areas. Conversely insufficiently accountable politicians will nearly always lead to corruption, where developers who donate to or are even just friends with the decision makers get their way.

    What we need is an independent arm of government insulated as much as possible from both the tyranny of unbounded popular will, and the corruption that tends to follow when elected officials decide specific cases rather than general principles. Conveniently, it already exists – traditionally we call it the judiciary. Courts, and only courts (or similarly constituted bodies such as an arbitration tribunal), should decide property disputes, including development applications, which are fundamentally property disputes between the developer and some party(s) claiming to be disadvantaged by the development.

  8. john walker says:

    Separation of powers would be very desirable!
    Though “councils should set planning policy” has a few rubs; my local council has spent years and lots of money delaying actually having a planning policy, especially in regard to cost recovery. They are very happy with the idea of elected = above the law.

  9. Nice article. I think your final paragraphs discuss the real point. Basically, people in some businesses are asking the government to prevent competition so that customers don’t have a choice and are forced to stay with them. It’s a selfish and stupid idea that hurts customers and prevents economic evolution (ie growth).

    You should cross-post at the ALS blog. :)

  10. Jarrah says:

    Feel free to post this on ALS. It’ll be fun to see certain people’s reaction :-)

  11. Splatterbottom says:

    The thing that gives me a little concern is that shopping centres usually tend to monopolistic behaviour. Councils usually only allow one of them in an area. then the centre imposes all kinds of anti-competitive practices on the tenants – which food stall can sell coffee, how many stores of a particular kind are allowed, and what may be sold at them. T
    Westfield are masters of the Gruen transfer and do very well out of it. Also, part of their success is designing attractive shopping centres, and part is providing an environment with barriers to competition.

  12. john walker says:

    Mr splatter- you are on the money.

    There have been a lot of uses of ‘planning rules’ as effectively restriction of terms of trade.
    The provision of car parks on the roof (and in the basement) has often been the supposed trade-off, community ‘benefit’. The control of easy access to lots of car parking gives the centers a lot of leverage over retailers, especially those selling ‘bulky’ things.

  13. Splatterbottom says:

    JW, I hate shopping centre car parks. Luckily I am within walking distance of a local shopping strip.

    I dread trips to the shopping malls. It takes longer to park and walk to the shops than to actually do the shopping. And it is much easier to pay a bit more for some other item while you are there than to go to another place where it may be cheaper. Maybe I should shop more online!

  14. john walker says:

    The nearest ‘mall’ to us is 100Km– just about the right distance for me.

  15. Grant Henderson says:

    Living in the area – within walking distance of Marrickville, Newtown, Enmore, Petersham and the Metro – I personally can’t see what all the fuss is about.

    The Metro is a dump and in dire need of an overhaul. Redeveloping it would create a modern community hub centered around the new pool and fitness complex, the revamped children’s playground, the park and the Metro itself. It can only be good for residents and would be a magnet for visitors from nearby who aren’t, lets be honest, rushing to get the the Marrickville Road shops. There is nothing else like that prospect in the inner-west, so let’s have it!

    As for Marrickville Road – the solution is obvious:
    – Fall into disrepair as per the Enmore Road end of Addison Road (aka bingo hall, one thai takeaway and a lingerie pub);
    – Or get it together and revitalise as per the shopping village that Enmore has become; highly patronised, inviting and enjoyable to visit. It wasn’t so long ago that it was an area few visited. Check out Danks St, Waterloo for another great example, or Summer Hill, or even the growth in Dulwich Hill’s shopping strip.

    Some notable and awesome shops and cafes along Marrickville Road are already making this happen and they won’t be hurt by changes to the Metro – they are wanted and will continue to be wanted for all the right reasons. Protecting the rest from increased competition is just that, protectionism, and it won’t do the local community any long-term favours.

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