City leaders expose vulnerabilities and call for course correction.

‍City leaders express a pessimistic near-term outlook, highlighting concerns about the ability to address the systemic conditions that create and maintain vulnerabilities in our cities. This marks a significant shift from the optimism observed in 2022, especially in smaller capital and regional cities. The decline comes at a time when inflation and economic uncertainty are placing pressure on the people and institutions that form the backbone of our cities.
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In 2024, city leaders are calling for course correction, as declining net sentiment across economic, environmental and social outcomes over the next two years is heightened by pervasive concerns about decreasing housing affordability, rising cost-of-living and sluggish economic growth.
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Despite these exposed vulnerabilities, cities remain where people want to live and where future opportunity lies. Cities globally are at the frontline of navigating disruptions and serve as incubators for new solutions that improve living standards for all – Australia is no different.
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Now is the time for city leaders to collectively lean into these challenges, look beyond the short term, and take decisive action to create the places and conditions that drive sustainable growth benefiting everyone.

Housing and population challenges have overtaken maintaining economic growth and competitiveness as the top challenges in 2024. As overseas migration has surged to record levels, rapid population growth and rising interest rates have exacerbated persistent housing supply issues.

While the near-term priorities for city leaders solidify around housing, population and economic challenges, leaders have indicated less concern about climate change and sustainable development, which ranked third in 2022. Fewer leaders also ranked reducing inequality as a key focus over the next two years, despite social performance recording the weakest near-term outlook.

Private and public sector city leaders are aligned on the prioritisation of housing and population challenges. However, concerns about the economic growth and competitiveness of Australia’s cities are 50% higher among private sector leaders, reflecting business concerns about declining productivity and constrained business investment, particularly in innovation activities¹.

The interrelatedness of these grand challenges is consistently highlighted by city leaders. The results underscore the importance of balancing difficult trade-offs through decision making that set long-range priorities but allocate short-term resources most effectively.

With national home values increasing by 32.5% between March 2020 and February 2024² and real wage growth stagnating until recently, almost two-thirds of city leaders identify rent and mortgage costs rising faster than wages as the top housing challenge for Australian cities. This has wide ranging implications, including a disproportionate impact on welfare recipients and low-to-middle-income households.

More city leaders from Australia’s largest and most expensive cities identify declining housing affordability as the foremost challenge, voicing growing concern about its impact on liveability, productivity and economic competitiveness. As households are forced to spend more on housing, choices are reduced, and new entrants are increasingly shut out of the market.

City leaders are also concerned with the mismatch between new housing supply and the increasing diversity of housing needs, with many Australian cities experiencing a shortfall of diverse and affordable housing types in locations with good access to services, infrastructure, and employment. Leaders from smaller capital and regional cities rank this above all other housing challenges, with over half of leaders from Perth and Melbourne agreeing.

Whether Australians own or rent their home, evidence suggests that a lack of suitable housing is affecting all aspects of the housing continuum and Australian society.

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Increasing housing density in inner and middle urban areas is cited as the top housing priority over the next two years by one-third of city leaders. Higher density in these areas not only exerts downward pressure on prices by boosting supply but also mitigates the higher costs of urban sprawl, such as environmental degradation, long commutes, limited access to employment and services, and the increased cost of infrastructure provision which is mostly borne by governments.

Reducing property-related taxes and improving planning approval processes were cited as the next most important housing priorities. However, private sector leaders view these actions twice as important as public sector leaders, suggesting a disconnect that reflects their respective interactions with market dynamics.

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• Elevate housing aspirations in policy frameworks: Develop policies that ensure everyone has access to a home, enabling social and economic participation. Focus on making the benefits of secure rental or home ownership both deliverable and attainable for all. Leverage comprehensive policy frameworks that address these aspirations.
• Implement a clear and deliberate place-based strategy: Utilise Memorandum of Understanding Agreements between collaborators to define roles and responsibilities between entities so there is a transparent understanding of how each entity will contribute to the housing-objectives at the prescribed place level, including opportunities for co-investment. Ensure policies, plans, designs, and strategies are adaptable to a changing future through strategic planning and stakeholder engagement.
• Promote vibrant, sustainable, and inclusive Communities: Position housing as the centrepiece of liveable places and precincts. Develop a compelling vision that incorporates climate resilience and sustainability, aligning with Closing the Gap Reform Priorities. Optimise the use of infrastructure and surplus land and combine available levers to accelerate outcomes.
• Adopt radical transparency for housing data: Develop an open-source data platform on housing supply, demand, pricing, affordability and other critical measures, to improve accountability and transparency, and supports decision-making at all levels of housing policy – truly empowering citizens and other stakeholders operating in housing markets.
• Create a national housing innovation lab: Establish a testbed to explore and innovate new housing models, construction techniques, financing models, development partnerships, and planning and regulatory frameworks. Co-funded by governments, housing providers, developers, institutional investors, and other stakeholders, the lab would establish a collaborative ecosystem to identify scalable solutions, accelerate the adoption of sustainable technologies, and drive forward-thinking policies that make housing more affordable, accessible, and resilient for future generations.
• Addressing housing affordability: Leverage government funding into social and affordable housing and guide partnerships to unlock investment from institutional investors and other developers.
• Public-Private Partnerships (PPPs): Leverage PPPs to deliver social, affordable, specialist market housing funded by institutional capital, developed by top tier developers and enabled by government land and policy to support it. It's important to engage the community and stakeholders to acknowledge the different roles that government, investment and development play in achieving a common goal.
• Mapping and tracking housing supply and demand: Track how LGA’s are meeting diverse needs in terms of housing supply and demand. This involves making useful information such as social and affordable housing registries more accessible and mapping the needs of different cohorts.
  

More than two-thirds of city leaders are concerned about an inability to sustainably accommodate population growth across their cities – an increase from third place in 2022.

This comes as Australia's post-pandemic migration recovery reached record levels in 2023³ driven by temporary migrant arrivals, particularly students. Migration will continue to be a key driver of population growth, despite ongoing federal policy debate about the size and mix of Australia’s migration intake.

Most leaders are now less worried about skills requirements and budget capacity compared to 2022. The resumption of skilled migration flows has eased concerns about skills shortages in all cities except Perth, where the current strength of the West Australian economy generates high labour force demand.

Rapid growth and an ageing population has instead shifted city leaders’ focus to the escalating demand for government care and support services across our largest capitals, with this issue rising significantly in priority from last place in 2022.

City leaders emphasise the urgent need to adopt more robust and consistent forward planning to respond to the projected size and mix of population change across urban areas.

A more coordinated approach to understanding and planning for population change is essential to improve the delivery of essential economic and social infrastructure and services. Leaders advocate for stronger collaboration between federal, state, and local governments to align policies and resources effectively, ensuring sustainable growth and improved quality of life for all residents.

• Identify population and demographic impacts: Use spatial analytics, demographic analysis, and forecasting to understand projected population and demographic shifts and guide policy and investment strategies, urban planning, and assets and services requirements.
• Conduct infrastructure and service readiness assessments: Perform comprehensive assessment of local infrastructure and service capacities, drawing on population projections to inform future demand across all relevant asset and program requirements.
• Establish a shared vision for future growth: Develop a place-based vision for growth supported by consultation and robust gap and opportunity analysis. This will guide implementation actions and build stakeholder alignment through delivery.
• Use scenario planning during strategy development: Undertake scenario modelling to anticipate diverse growth patterns and challenges, enabling adaptive policies and proactive resource allocation that ensure sustainable and resilient urban and regional development.
• Strengthen strategic urban planning: Embed stronger appraisals and evidence base for urban planning decisions, to reflect their significant economic, social, and environmental impacts. This approach could be analogous to existing government investment and business case processes that incorporate comprehensive needs analysis, outcome logic, cost-benefit analysis and social equity and broader sustainability evaluations.
  

Concerns about the need to invest more in infrastructure to support future growth and competitiveness have outpaced other issues, as city leaders prioritise social and economic infrastructure over skills shortages and threats from population growth and aging.

Leaders of smaller capital and regional cities are more attuned to the threat of underinvestment in essential infrastructure. These cities typically have less diversified economies and are more susceptible to external forces.

Economic shifts are also altering the makeup of our workforce, the demand for new skillsets, and the nature of work itself. City leaders, especially those from Perth, are acutely aware of the elevated competition for skilled workers in emerging and priority sectors, with increasing demand in care and support, net zero, and digital industries projected to outpace population growth⁴.

As demand for these skills increases, the role of place and liveability are becoming more important to attracting high-value workers and investment. City leaders are already recognising the threats of declining liveability in places like Sydney, where cost-of-living and high housing costs are growing concerns.

• Refine investment attraction strategies: Analyse competitive advantages such as functional economic regions, enabling assets, market accessibility, and transport routes to update economic development and investment attraction strategies for specific industries.
• Establish national quality-of-life goals and embed them in policy: Establish an index that measures and tracks liveability and wellbeing outcomes nationally. The index would guide urban development and broader economic and social policy decisions, ensuring that projects, programs, and investments prioritise improvements to residents’ quality of life. Governments would need to demonstrate how their policies and investments contribute to enhancing liveability goals by going beyond traditional metrics like benefit-cost ratios and broad economic impact measures. Governments would also be required to report on performance to ensure consistent application, evaluation, and improvement across Australian cities and regions, and to show how their investments and decisions have contributed to liveability.
• Adopt a systems-based approach to economic development: Transition from siloed economic development to a systems-based approach that integrates industry development, education and skills, infrastructure, and innovation into a cohesive strategy for growth. Identify interconnections between sectors to enhance industry collaboration and competitiveness through workforce attraction and development, skills alignment and infrastructure investment that also addresses community well-being and cohesion.
• Establish a national workforce accelerator: Directly contract universities, non-traditional training providers, tech boot camps, and industry to create a high quality, fast-track workforce training pipeline. The program would guarantee jobs for trainees with emerging industry giants, particularly in tech, renewables, robotics, and other high-priority sectors. A national accreditation body would certify programs and provide clear pathways for upskilling and reskilling across the workforce, especially in high-demand fields.
• Develop plans that assess future needs for critical infrastructure: Develop plans to assess future needs for critical infrastructure, ensuring that both social and economic infrastructure are in place to support growth and achieve positive socio-economic outcomes.
  

Urban density, sustainable transport and the circular economy are emerging as key sustainability priorities in the transition towards net zero. The decline in sentiment, especially outside Sydney and Melbourne, may be attributed to growing confidence that the renewable energy transition is well underway, following upticks in large-scale clean energy investment, which increased by 17% year-on-year to reach $6.2 billion in 2022⁵.

Two-thirds of city leaders support enhancing sustainable transport as the top climate change and sustainable development action. With Australia's transport sector projected to be the largest source of emissions by 2030⁶, city leaders also identify the need to create more compact and higher-density cities, which can reduce urban sprawl, lead to more efficient use of land and resources, and preserve biodiversity.

Strengthening climate resilience and adaptation is prioritised by fewer city leaders than two years ago in all cities except Sydney, despite exposure to increasingly frequent and intense natural disasters threatening most Australian cities. City leaders must carefully navigate the risks posed by climate change, from infrastructure and supply chain vulnerabilities to social inequality. However, there are significant opportunities for innovation, economic growth, and improved quality of life through resilient and adaptive planning.

• Adopt precinct-level strategies: Develop comprehensive precinct-wide sustainability, energy and technology strategies that transition from isolated, standalone assets to fully integrated, interconnected systems to enhance energy efficiency, energy generation and storage, and climate resilience.
• Undertake future scenario-based net zero planning: Model future scenarios of major urban renewal, decarbonisation projects, and urban heat island to optimise investment and net zero outcomes, and future-proof against climate risk.
• Promote and enable sustainable and net zero transport: Develop multi-modal, pedestrian-focused, and electrified precinct and neighbourhood designs supported by infrastructure to enable active and net zero transit. Develop mode shift strategies and electric charging infrastructure grounded in community consultation.
• Pursue transport-oriented development opportunities: Prioritise urban renewal and sustainable development opportunities around key transport nodes – enabling decarbonisation, social value, and sustainable living outcomes.
• Implement precinct- and city-level circular economies: Lower resource demand and energy use, and decarbonise embodied emissions in the material and product supply chains, by developing circular economies at city and precinct levels.
• Advance retrofit and decarbonisation programs of existing built infrastructure: Support the retrofit, adaptive re-use and decarbonisation of existing building stock, by reviewing planning policy and programmes aimed at net zero buildings and precincts.

City leaders unanimously identify deteriorating housing affordability and access as a major factor contributing to urban inequality, reflecting a period where housing affordability worsened across states, territories, cities and regions, income levels, age groups and tenure types⁷.

Leaders from Australia’s largest and most expensive housing markets – Sydney, Melbourne, Brisbane and Perth – recorded the greatest increase in prioritisation of this issue since 2022, as rising housing costs dramatically widen the gap between what Australians on high and low incomes can afford.

• Establish a shared vision at the place scale: Align stakeholders and community on a common vision and understanding of priorities at the place scale. Develop robust mechanisms for embedding community feedback into the process of developing and revitalising a precinct or place to optimise social outcomes.
• Prioritise inclusive growth: Establish minimum thresholds or standards for access to healthcare, education, employment and transport, so that no community is left behind. These thresholds would be incorporated into decision frameworks for policy and investment so that all regions meet basic standards of access and spatial equity over time. Embedding these thresholds into the planning process can help guide the growth of our cities and regions in a way that reduces geographic disparities, prioritises underserved areas, and ensures that every community has the infrastructure and resources needed for sustainable, inclusive growth.
• Measure social value: Develop standardised metrics and decision-making tools for measuring social value to ensure consistency and comparability across projects and align objectives across multiple stakeholders.
• Monitor and evaluate: Implement continuous monitoring and evaluation processes to track economic, health and social impacts of social infrastructure and urban development projects to demonstrate their true value.
• Leverage public-private partnerships: Leverage public-private partnerships in major urban renewal projects to deliver social infrastructure and support strong community outcomes.
• Prioritise social and community infrastructure: Ensure well-designed spaces and accessible services are available to unite people, build trust, and encourage community support networks, enhancing resilience and shared responsibility within communities over time.
  

Public and private sector city leaders agree short-term political cycles, the politicisation of issues, and ineffective cross-government coordination are the greatest barriers to effective governance in Australian cities, potentially constraining long-range improvements.

Budget pressures have also become a greater concern for private sector city leaders in 2024, as ongoing economic pressures from rising inflation, increased demand for social services, and the financial strain of addressing post-pandemic recovery, climate-related disasters, and cost-of-living crises constrains funding priorities.

• Place-based, problem-oriented governance: To address the difficulties in coordinating within and across levels of government, place-based and problem-oriented governance models could be adopted to tackle complex, cross-cutting urban challenges. The emphasis is on addressing the interconnected nature of real-world problems through integrated, cross-functional teams to ensure that decisions are made with a clear understanding of local needs and priorities.
• Incentivise collaboration: Encourage cross-sectoral collaboration by providing incentives such as funding, shared resources, and recognition programs, fostering partnerships that drive innovative, sustainable solutions.
• Embedding legacy strategy: Ensure legacy thinking is enshrined into urban governance models so long-term benefits are prioritised over immediate outcomes. Including the identification of cross-generational goals that shape resilience and enduring value.
• Customise governance model to context: Ensure urban governance models include the right processes and features to coordinate the relevant relationships and interactions required to drive outcomes. This could include innovative adaptive governance, co-design or co-construction or collaborative multi-actor governance functions.
• Urban Futures Advisory Council: Establish a citizen-led advisory body to provide input into major urban plans and infrastructure investment decisions to tackle concerns about short-term decision-making linked to political cycles. The group would comprise a diverse cross-section of the community – elected by their peers – and could offer sustained, independent input on long-term urban development priorities and significant intergenerational investments, so they align with the broader sustainable and equitable urban growth objectives. The council would act as a consultative body, providing insights and recommendations that reflect the needs and aspirations of current and future generations.
  

Despite the overall priority of crisis management falling dramatically as an overarching challenge since 2022, city leaders still emphasise the need to prioritise collaboration, transparency, and information sharing within and between governments.

Leaders across all cities identify breaking down government institutional boundaries and organisational siloes as key to strengthening crisis response, prioritising these actions over those that involve public citizens.

The lasting impact of the COVID-19 pandemic on healthcare systems and public finances, along with increasing frequency, breadth and intensity of bushfires, flooding and other natural disasters, together with the cost of living and housing crisis have all underscored the importance of governments working collaboratively to mitigate the systems impact of urban stressors.

City leaders are calling for a more effective government response to crisis events and have again identified the need to depoliticise these issues.

• Conduct vulnerability assessments: Undertake climate and disaster risk vulnerability assessments for all cities and regions to better understand risks.
• Invest in prevention and early intervention: Allocate resources to early intervention and prevention measures that build protective factors and support strong social cohesion, including programs that enhance community connection and capacity in at-risk areas.
• Protect vital public assets: Establish a framework to target investments towards protecting vulnerable vital public assets such as hospitals, public transportation, and energy systems and aim for betterment in adaptation planning.
• Implement place-based resilience planning: Establish a framework for place-based resilience planning, including effective governance arrangements aligning Commonwealth, state and territory, regional and local governments with community expertise.
• Develop multi-sectoral regional resilience plans: Ensure multi-sectoral regional resilience plans adopt an integrated systems-wide approach to identifying and prioritising needs, such as enhanced urban infrastructure, quality housing in secure locations and integration of urban systems.
• Establish a National Crisis Review Commission: Ensure an independent body conducts post-event reviews and evaluations after major national or regional crises, such as natural disasters, public health emergencies, or human-induced events – ensuring an unbiased and thorough analysis of response strategies, resource allocation, and overall effectiveness. The reviews would involve input from multiple sectors and result in actionable recommendations for improving future crisis management.
  

City leaders generally feel Australian cities are unprepared for global technological competition, as the ICT sector grew about three times faster than the total economy in OECD countries over the past decade¹⁰.

Fast-evolving technologies like AI, cloud computing and big data analytics are driving powerful changes to business models, assets and services, which are heavily concentrated in cities and essential to ongoing economic, social and environmental improvements.

Public sector leaders are more optimistic about competing for these improvements, while businesses balance emerging technology adoption with concerns about proficiency, ethics, legality, and security. Sydney, home to Australia’s largest digital technology industry super-cluster, is perceived to be Australia’s most technologically competitive city, while leaders in other cities record declining sentiment compared to the 2022 survey.

City leaders continue to view upskilling labour markets as the highest priority, likely due to key technological change factors and their growing impact on the economy and society, including:

• Job displacement: Rapid advancements in automation, AI, robotics, and other technologies risk making traditional jobs obsolete, meaning a large portion of the workforce will need to acquire new skills to remain employable.
• Skills gap: Technological change is creating new job opportunities in sectors such as advanced manufacturing, data analytics, and renewable energy. However, there is often a gap between the skills required for these new jobs and the current skill sets of the workforce.
• Economic competitiveness: Cities are increasingly competing on a global scale to attract investment, talent, and innovation. A well-educated, tech-savvy workforce is a key factor in making cities attractive to businesses and entrepreneurs.
• Social equity and inclusion: Technological disruption disproportionately affects lower-skilled workers and those in industries that are more vulnerable to automation.

City leaders also prioritise ensuring infrastructure assets and policies keep pace with technological advancements. Leaders from larger capitals place higher prioritisation on technology-led economic growth than those from smaller cities, suggesting that small capitals and regional cities see less economic growth coming from the digital economy.

• Map digital workforce demand: Conduct comprehensive mapping of digital workforce demand to assess skills and talent readiness across the regional industry ecosystem.
• Invest in digital technology skills: Develop an investment framework for digital technology skills across all components of the workforce pipeline. Scale up and refine technology apprenticeships to create a nationwide, industry-led program that focuses on rapidly growing technologies.
• Attract and place international talent: Explore ways to bring greater focus on attracting and placing international talent, facilitating international student employment placement, and streamlining skilled migration pathways to support the Australian economy to meet future growth in technology-based industries.
• Establish a network of national technology centres: Modelled after the UK's Catapult network, each centre would focus on technology development to solve critical global and industry challenges. The centres would bring government, universities, startups, and businesses together to co-create and scale breakthrough technologies and position Australia at the forefront of technology-driven economic growth, accelerating the adoption of advanced technologies and fostering the creation of high-value jobs across the economy.
  

City leaders identified the three challenges they believe their cities are best able to address. These answers were analysed against the perceived magnitude of the eight survey challenges to identify the likely capability advantages or capability gaps for each of the challenges.

Compared to the 2022 survey, capability gaps have improved for all challenges except housing, which was not previously surveyed. These improvements have been recorded even as the near-term outlook for most city leaders is more pessimistic in 2024, suggesting the pervasiveness of the housing challenge on economic, social and environmental performance.

Cities are likely to have a capability edge in navigating technological disruption and ensuring effective governance. However, potential gaps emerge in reducing inequality, managing population and demographic changes, and addressing housing challenges.

Addressing housing challenges has recorded the largest capability gap (-52%), with less than half of city leaders believing their city is able to address the biggest perceived challenge.

A large majority of city leaders feel most capable of maintaining economic growth and competitiveness, reflected as a capability advantage (15%), along with ensuring effective governance (24%) and navigating technological disruption (35%).

Despite the overall negative sentiment, leaders are more confident about tackling climate change than in 2022 survey. This is supported by a significant narrowing of the capability gap (+37%), suggesting that city leaders perceive they are developing improved capabilities and resources to address the climate change and sustainable development challenges currently facing their cities and communities.

Our survey highlights the pervasiveness of the many interrelated challenges facing Australian cities in 2024; and the disparities and synergies that exist between them. Finding integrated solutions – that leverage strengths and overcome capability gaps – requires a deep understanding of locational drivers and systems-level change.

Challenges such as rapid population growth, declining housing affordability, growing spatial inequalities, managing climate change and sustainable development, are generally beyond the scope of individual government department resources, expertise or jurisdictions. To respond to these challenges, governments need coordinated strategies that can galvanise the full range of public, private and civic actors towards localised solutions.

Success will not be achieved by the public or private sectors alone, rather the magnitude and complexity of these issues, requires both sectors to work closer together than ever before.

The task ahead for city leaders – working with communities – is to be more intentional about driving integrated systems-level change to realise measurable impacts, benefits and legacy. The following strategies can be deployed to regions, cities or precincts:

• Identify place priorities: Understanding place-based context and needs is essential for designing impactful solutions that drive sustainable development and prosperity at the local level. It requires top-down and bottom-up analysis together with deep understanding of the unique stakeholder needs to inform a unified vision for change.
• Prioritise systems-level change: Embedding systems-based thinking helps us interrogate challenges as dynamic systems where changes in one area can create ripple effects across others. For instance, improving public transit not only eases congestion but can also impact housing affordability, access to jobs, and even public health by reducing pollution.
• Unlock integrated collaboration: Enabling cross-government collaboration is essential for developing place-based policies that are comprehensive, efficient, and innovative. By breaking down silos and fostering collaboration, policymakers can better address the multifaceted challenges.
• Embed community participation: Collaborating can also elevate decision-making by drawing on unique expertise and resources of diverse stakeholders by including businesses, civic groups, and communities. Embedding community participation and engagement in place-based policy development is essential for creating policies that are inclusive, effective, and sustainable.