Sydney's global economic corridor
A proliferation of knowledge based firms clustered in Sydney's inner suburbs present an uplifting counter-narrative to Australia's recent manufacturing gloom. Matt Wade and Sophia Phan report.PT2M41S http://www.canberratimes.com.au/action/externalEmbeddedPlayer?id=d-34cbp 620 349 March 7, 2014
A slice of Sydney 25 kilometres long and a few kilometres wide has been one of the city's unsung success stories.
It arcs from Sydney airport through the CBD then north-west to Macquarie University. Planners call it the global economic corridor because within it are clustered some of Australia's most successful and innovative firms specialising in knowledge-intensive activities like finance, professional services, engineering, IT, scientific research, health care, marketing and a host of creative ventures.
The global economic corridor is a vital cog in the national economy and accounts for about 50 per cent of NSW's gross state product. It's an uplifting counter-narrative to the gloom over job losses at Qantas and looming closure of manufacturing plants including Holden and Toyota.
Animal logic: David Burrows and Amber Naismith. Photo: Tamara Dean
Terry Rawnsley, who researches regional economies for consultancy firm SGS Economics and Planning, says businesses in the global economic corridor have proven highly competitive in global markets.
''The people working in that corridor tend to be very good at what they do,'' he says.
It has become a magnet for workers, especially the highly skilled, over the past five years. Employment growth in that corridor has been three times higher than the rest of Sydney since 2008 and about 40 per cent above the national average.
Rawnsley says an extra 93,000 jobs were added in the global economic corridor between 2008 and last year, which equates to an average annual growth rate of 2.1 per cent. By comparison, average jobs growth in the rest of Sydney was just 0.7 per cent in that period and national employment grew by 1.3 per cent.
Globalisation and the advance of technology have put some industries, notably manufacturing, under great pressure. But enterprises along the global economic corridor seem to have thrived on those same forces.
One standout performer is Macquarie Park, a business hub at the north-western end of the corridor. Modelling released this week by PwC found its economic output was $9.1 billion last financial year, having doubled in a little over a decade. The report ranked Macquarie Park Australia's 10th biggest location for economic output behind North Sydney and the Adelaide CBD.
One of the report's authors, PwC economist Rob Tyson, attributes Macquarie Park's success to effective urban planning and a ''dynamic mix'' of new economy businesses including IT, communications, pharmaceuticals and high-value manufacturing such as biotechnology.
It's one of several specialised job hubs thriving along the global economic corridor. The key role Pyrmont-Ultimo plays in Australia's digital economy was underscored by a survey of work spaces and employment released by the City of Sydney this week. The precinct around Harris Street saw a 252 per cent increase in information and communication technology workers between 2007 and 2012.
Meanwhile, the Surry Hills, Redfern and Moore Park area has emerged as major force in the creative industries such as design, architecture, film-making and fashion.
Sydney lord mayor Clover Moore says the strong growth in knowledge intensive jobs in places like Pyrmont and Surry Hills has not happened by accident.
''Our experience shows it takes careful planning and investment,'' she says.
Moore says workers and businesses have been attracted by Sydney City's
''distinctive, character-filled villages''.
''To entice high-value businesses with good paying jobs, you need to entice employees. The strength of local communities is a key attraction for people choosing where to live, work or visit.''
Job growth in the CBD has been more subdued than in other parts of the global economic corridor over the past five years due largely to the impact of the global financial crisis. But it remains an economic colossus, contributing more than $65 billion to the national economy.
The PwC modelling showed the CBD was easily Australia's top-performing economic location last year with economic output about 14 per cent more than the second ranked location, Melbourne's CBD. The labour productivity of workers in the inner-Sydney area in 2011 was about 30 per cent higher than the city-wide average and more than doubled that of workers in some outer suburbs including Sutherland and Campbelltown, analysis by SGS Economics and Planning shows.
The City of Sydney and North Sydney together hosted more employees working in knowledge-intensive industries in 2011 than Sydney's other 41 council areas combined.
''Inner Sydney is one of the world's most successful professional services clusters,'' says Professor Phillip O'Neill from the University of Western Sydney's Urban Research Centre.
But the success of the global economic corridor exposes an urban paradox.
Even though mobile technology has made remote communication easier than ever, the city's fast-growing knowledge industries are bunching together in fewer, more valuable locations.
Knowledge-intensive industries cluster because their workers rely heavily on face-to-face communication in order to share information, generate ideas and cut deals.
These crucial knowledge ''spillovers'' also happen as firms trade and as employees move between organisations.
''These are ''thinking jobs'' rather than ''making jobs'' and those are the types of jobs where agglomeration economics really works because they are very human-centred,'' says Jane-Frances Kelly, director of the Grattan Institute's Cities Program.
Sydney is not alone - in cities across the world knowledge jobs are clustering closer together. Global economic forces are not often linked to day-to-day life in the city. But Committee for Sydney chief executive Tim Williams believes these sweeping trends are having a major impact on the way Sydney works.
''These great global forces are reshaping cities,'' he says. ''They are essentially putting the high value knowledge jobs in one place and the residential development in another place.''
The concentrated pattern of jobs creation in knowledge intensive industries reverses the much more dispersed pattern of job creation when the economy was more reliant on manufacturing. Decades of urban sprawl, influenced by the old dominance of manufacturing, has left many outer-urban communities distant from high-value jobs.
This has increased the strain on Sydney's creaking transport infrastructure.
''We live with consequences of this reshaping every day because we have to get in our cars to travel east to our knowledge jobs,'' Williams says.
''Sydney has been suffering the consequences of this global shift for some time.''
High house prices - another topic of endless debate in Sydney - can also be linked to the clustering of jobs along the global economic corridor.
Those employed in knowledge-intensive industries like to live near to where they work. Their relatively high salaries mean they can afford expensive housing. This has stoked demand for inner-city housing and helped to create the big premium on properties close to the CBD.
The global economic corridor has led Sydney economy's shift away from the production of physical goods to service industries focused on knowledge and innovation.
The state government's draft metropolitan plan, released last year, said the corridor was vital to the future of the state and national economy.
It forecast an additional 213,000 jobs will be added in an extended global economic corridor by 2031.
''The planing vision is to have that corridor extend all the way out to The Hills district and then swing south into Parramatta,'' Rawnsley says. ''That's the holy grail of planning.''
But will that be enough?
Williams warns small-scale interventions will not work. He thinks we need to ''raise our sights'' if we're to confront the economic forces reshaping Sydney. ''We need a big response that actually mirrors the impact of globalisation, and tackles it.''
At the cutting edge of the global corridor
At one end of the global corridor in Moore Park, Sharon Taylor is busy ensuring her employer's animation projects get delivered on time and on budget. The company, Animal Logic, has worked on The Matrix, The Great Gatsby and, most recently, The LEGO Movie.
''It's not as glamorous as one would think but we have such a great company culture and the people at Animal Logic are really fun to work with,'' Taylor says.
At the other end of the corridor in North Ryde are an emerging number of ''knowledge-intensive'' industries. Caroline Chen and Jasmine Baghaei work at Oceanlinx, a company involved in wave energy conversion at Macquarie Park. Chen, the company's business development director, says Oceanlinx has shareholders all over the world.
''One of our biggest shareholders is the Bank of Portugal,'' she says. ''We are talking to the US, in Europe, we're talking to large power plant developers in China. The potential when we commercialise this technology is huge.''
The company is trying to prove the potential of its technology with the world's first one-megawatt wave energy converter device in Port MacDonnell in South Australia. ''When this goes well, we'll commercialise it,'' says Baghaei, the business administration assistant.
A few hundred metres down Talavera Road lies Sonartech Atlas, a company that designs and develops acoustic processing and recording systems for ships, submarines and aircraft.
''We've now got submarine sonars in South Korea, Israel, Portugal, Greece and we're contracting to Turkey and we have supplied systems to Norway, Canada, NZ, the US, Netherlands,'' says Mark Baker, the managing director of Sonartech Atlas.
''Thirty-five per cent of our turnover now comes from export work.''
The appeal of working on the other side of the bridge, away from the CBD, seems to lie in the convenience of public transport and ample parking space.
''We find the transport quite easy … our employees either [travel] by bus or train or we drive. ''And parking is quite good,'' Chen says.
- Sophia Phan