melbourne bench marking live ability

8/3/2019 Melbourne Bench Marking Live Ability

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City Benchmarking and Liveability City Comparison

City of Melbourne(Doc# 4127535 v15)

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Melbourne Benchmarkingand Liveability

September 2009

www.melbourne.vic.gov.au


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Table of ContentsTABLE OF CONTENTS.............................................. .................................................... ........................................ 0EXECUTIVE SUMMARY............................ .................................................... ......................................................... 11.

INTRODUCTION ............................................. .................................................... ........................................ 2

2 PURPOSE............................................. .................................................... .................................................. 23. OBJECTIVES...... .................................................... .................................................... ................................ 24. QUALITY OF LIFE VS. COST OF LIVING STUDIES................................................ ................................. 2

4.1 QUALITY OF LIVING/LIVING STANDARD ...........................................................................................................2 4.2 COST OF LIVING..........................................................................................................................................2

5. CITY RANKING............ .................................................... .................................................... ....................... 35.1 QUALITY OF LIFE SURVEYS (STANDARD OF LIVING)..........................................................................................3 5.1.1 Economist Intelligence Unit quality of life............................................................................................35.1.2 Mercer worldwide quality of living .................................................. .................................................... .45.1.3 Monocle quality of life ................................................ ..................................................... ....................45.1.4 Recommendations for policy arising from liveability studies .................................................... ..............55.1.5 BankWest quality of life ................................................ ..................................................... ....................65.1.6 Australian Unity Wellbeing Index ............................................. .................................................... ..........65.2 COST OF LIVING SURVEYS............................................................................................................................7 5.2.1 Economist Intelligence Unit worldwide cost of living ................................................... ........................75.2.2 Mercer worldwide cost of living...........................................................................................................85.2.3 Interpretation and discussion of cost and quality of living studies..........................................................95.2.4 Mercer Australia/ New Zealand regional differentials..........................................................................95.2.5 Demographia international housing affordability...............................................................................105.3 CITY BRANDS ...........................................................................................................................................12 5.3.1 Anholt Index.........................................................................................................................................125.4 CREATIVITY AND INNOVATION .....................................................................................................................12 5.4.1 2thinknow a creativity index..............................................................................................................125.5 CENTRES OF COMMERCE...........................................................................................................................14 5.5.1 MasterCard Worldwide .................................................... ........................................................ ............145.6 ENVIRONMENT AND SUSTAINABILITY............................................................................................................15 5.6.1 MasterCard Worldwide urbanization and environmental challenges ................................................155.7 TRAVEL DESTINATIONS ..............................................................................................................................16 5.7.1 Conde Nast Traveller Readers' Travel Awards.................................................................................165.7.2 Euromonitor - top destination cities......................................................................................................175.7.3 Thoughts about the usefulness of tourism city benchmarks ........................................................... .....185.8

SPORTING CITIES......................................................................................................................................18

5.8.1 Sports Business International - ultimate sports city ................................................. ............................185.9 UNIVERSITY CITIES....................................................................................................................................19 5.9.1 RMIT University global university cities ...................................................... ......................................19

6. CONCLUSIONS .............................................. .................................................... ...................................... 217. REFERENCES................................................ .................................................... ...................................... 22

Acknowledgements

This research report was written by Nick Casey.


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Melbourne Benchmarking and Liveability 2009


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Executive summaryIn recent years a range of national and international studies has (and continues to) rank Melbourne differently.Melbournes rank, in these studies varies according to topic, methodology, or ranking organisation (specifically,philosophy/values of the organisation). When comparing city rankings, consideration of these issues helps in theinterpretation of their results and usefulness.

Below is a summary of Melbournes rank in key benchmarking surveys, change of rank by survey, summary ofchange from previous surveys, and conclusions about potential usefulness for further/future reporting for Council.

RankRegions

compared

Change from previous

period

Summary of

rank/change

Potential/

applicability

Economist Intelligence Unit - Quality of Life Ranking, 2009 3 128 - Good Mercer - Worldwide Quality of Living Survey, 2008 17 215 Down (17th to 18th place) Balanced Monocle - Quality of Life Survey, 2009 9 25 - Positive BankWest Quality of Life Index 2008 575 590 N/A Poor Australian Unity - Personal Wellbeing of Australians 75 182 N/A Poor Economist Intelligence Unit - Worldwide Cost of Living Survey, 2008 24 132 Down (more affordable) Positive Mercer - Worldwide Cost of Living Survey, 2008 92 143 Up (more affordable) Positive Mercer - Australia/ NZ Regional Differentials, 2006/2007 2 7 N/A Good Demographia - International Housing Affordability, 2008 12 265 Rank up - number down Good Anholt - City Brands Index, 2009 15 50 Down Negative 2thinknow - Global Innovation Review, 2009 20 256 Down Negative

MasterCard Worldwide - Worldwide Centres of Commerce, 2008 41 50 Down Negative MasterCard Worldwide - Urbanization & Environmental Challenges Index, 2007 1 21 N/A Good Conde Nast Traveller - Readers' Travel Awards, 2009 0 20 Not rated this year Negative/Poor Euromonitor - Top Destination Cities 2007 95 230 Rank down - number up Balanced Arksports/Sportsbusiness Ultimate Sports City, 2008 1 25 - Good RMIT - Global University City Index, 2008 4 20 Up Positive

Quality and reliability issues

The key to effectively using benchmarks in this report is to consider the results (Melbournes rank) in context ofthe particular studys purpose and methodology - as well as partners or competitors. Most studies give only alimited view about a Citys relative performance and in some instances a studys suggestions about how a city canimprove its performance are based on debatable interpretations of the studys findings.

The most useful of the indices above are the Economist Intelligence Units indices and rankings for cost andquality of living, Anholts City Brands Index, RMITs University Cities and the Mastercard index for worldwidecentres of commerce and index for urbanization and environmental challenges, mainly due to their relativereliability in terms of ability to provide consistently replicable results over time. Benchmarking studies often usesmall samples, subjective surveys and perceptions and hence are often the products of fashion, e.g. Conde Nastwhich is based on the views of its readership.

Demographia and Euromonitor give useful rankings but do have l imited value in policy development.

Benchmarking studies are very popular with the media, particularly as some studies suggest or infer waysCouncil could improve the Melbournes rankings.

Key issues that may be addressed

City of Melbourne has a limited jurisdiction to respond to some benchmarking studies recommendations, such asDemographias recommended removal of land use regulation around Melbourne and Mastercards, that

Melbourne compete with Sydneys financial centre.Key areas in which the City of Melbourne can potentially have an impact are:

Tourism. The citys reputation is influenced by international awareness and perceptions of its attractiveness forevents and visitors. City of Melbourne:

has cooperative agreements with cities and regions in China such Guangzhou (one of the big tourist travelperformers of the past year), Hainan, Nanjing, Fengxian District, Shanghai and Tianjin;

designs tourism and destination plans and programs for Melbourne. The City of Melbourne could alsoconsider participating in a Tourism Victoria campaign to raise awareness of the city as a great touristdestination; and

could examine ways to encourage the development of a more varied mix of tourist accommodation options inthe city, to meet tourists needs e.g. more B&B or guest house accommodation.

Creativity and Knowledge. The city is perceived to be a centre for innovation and creativity and a gooduniversity city. City of Melbourne could leverage these things through:

continuing to use the Office of Knowledge Capital to foster relationships between cities; and

continuing to assist the social and economic inclusion of both domestic and international students.

Potentially useful for Council

Limited/qualified use for Council

Little use for Council


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1. Introduction

As centres of administrative, business, cultural and major activities, cities are high on the agenda.

Capital cities are major generators of wealth in each Australian state and territory. They are the engine roomsof economic growth and the cradles of national creativity and innovation responsible for 78% of economicgrowth over the last five years. Australias continued economic prosperity depends on its capital cities

maintaining and enhancing their international standing and we need to invest in their security and sustainabilityif Australia is to become more competitive, innovative and productive. Our capital cities are centres ofopportunity which attract business, labour, tourists, international students and investment from around theworld. They are the face of Australia, projecting its character, and are the international gateways to our region.

Australian Capital Cities Partners in Prosperity Executive Summary Report, Council of Capital City Lord Mayors, 2007

Melbourne is frequently rated amongst the most liveable cities in the world, for example, rated by the EconomistIntelligence Unit, three times, as one of the best cities in which to live. Melbournes rank, however, variesaccording to topic, methodology, or the philosophy/values of the organisation doing the ranking. To betterunderstand ways in which cities, particularly Melbourne, are ranked the City Research Branch initiated theMelbourne Benchmarking and Liveability project.

This project helps Council learn from these studies and understand how to respond to changes in Melbournesranking. The project has so far produced an inventory and short summary and critique of some relevant studies,methodologies and surveys developed worldwide.

2 Purpose

Explain and summarise city benchmarks comparing Melbourne over time and against other major cities. Thisreport shall not refer to Country or once-off City ranking projects. City indexes that havent been updated since thelast Benchmarking Report (February 2008) will be interpreted anew rather than updated.

3. Objectives

1. identify the key studies which rank or benchmark a citys liveability or related aspects;

2. determine how Melbourne was ranked in those studies by investigating the methodology and philosophy ofeach major city ranking project;

3. critique the philosophy, purpose or methodology of each benchmarking project with the intent of makingconclusions about their usefulness; and

4. identify key issues that authorities should consider addressing to ensure Melbourne remains competitive.

4. Quality of life vs. cost of living studies

Quality of living and cost of living studies allow direct comparisons between locations. Usually their purpose is togive a premium to employees in locations presenting different living conditions to those of the location of origin(hence theyre really a measure of living standard). Payment is based on the philosophy that expatriates have aright to live at the assignment site with the same standard of living and comfort as at home.

Monocles quality of Living measure, however, attempts to evaluate less tangible aspects of life in a city, arguablymaking that measure more fit for purpose than EIU or Mercers measures.

4.1 Quality of living/living standardQuality of Life measures political, social, economic and environmental factors, personal safety, health, education,transport and other public services within a geographical area (hence it is measuring a living standard) andpresents findings as an Index and a ranking - higher scores denote higher Quality of Life.

4.2 Cost of living

Cost of Living is the cost of a representative basket of goods and services considered to provide a given standardof living within a geographical area. Presented as an Index, it uses a base, or reference city with a score of 100. Ascore of 110 indicates the cost of living in a given city is 10% higher compared to the base city.

Example

Quality of Life: a premium may be given to an employee who is relocated to a city that has extraordinarily difficultliving conditions, excessive physical hardship or notably unhealthy conditions.

Cost of Living: a premium may be given to an employee who is relocated to a city where the price of rentingaccommodation or the price of consumer goods is higher.


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5. City ranking

5.1 Quality of life surveys (standard of living)

5.1.1 Economist Intelligence Unit quality of life

Benchmark method and outcomes

The Economist Intelligence Units (EIU) Quality of Life Ranking, part of the Worldwide Cost of Living Survey,assesses living conditions in 140 cities around the world bi-annually. This is achieved with a small sample ofexpatriates residing in each country.

Quantitative and qualitative data is used to derive a Quality of Life Index which quantifies the perceivedchallenges to an individuals lifestyle in a given location and allows direct geographical comparison.

The Index evaluates of over 30 indicators grouped in individually weighted categories:

1. stability (25%): prevalence of petty crime and violent crime, threat of military conflict, threat of civilunrest/conflict, threat of terrorism;

2. healthcare (20%): availability of public and private healthcare, quality of public and private healthcare,availability of over-the-counter drugs, general healthcare indicators;

3. culture and environment (25%): humidity/temperature rating, discomfort of climate to travellers, level ofcorruption, social/religious restrictions, level of censorship, recreation: sport, culture, food and drink,availability of consumer goods and services;

4. education (10%): availability of private education, quality of private education provision, public educationindicators; and

5. infrastructure (20%): quality of road network, public transport, and international links, good quality housing,quality of energy and water provision, quality of telecommunications infrastructure.

Indicators are given a rating of between one and five, where one means there is no reduction in the quality of lifeand five means the quality of life is extremely challenging. Ratings are weighted to produce and Index, where 0%means the quality of life is exceptional and 100% is intolerable. An Index of 20% is where real problems areconsidered to begin and anything over 50% severely restricts lifestyle. Cities are then ranked according to theirscores.

The 2009 rankings placed Melbourne 3rd

behind Vancouver and Vienna. In the past this has been ascribed (in

Benchmarking and Liveability 2008: pg 7) to Australia's relative remoteness from Europe and North Americameaning that it is slightly less likely to host acclaimed theatre and modern artists or a regular varied internationalsporting calendar.

Figure 1: EIU: top 10 cities quality of life ranking 2009

City Ranking 2009 (%)1 Vancouver 982 Vienna 97.93 Melbourne 97.54 Toronto 97.25 Perth 96.66 Calgary 96.67 Helsinki 96.28 Geneva 96.1

9 Sydney 96.110 Zrich 96.1

Interpretation and discussion

The 2009 ranking for Melbourne seems unrealistic given that in 2008 Melbourne won the title, Ultimate SportsCity, (Vancouver ranked 5

th, see section 5.8) in a survey measuring the number and importance of international

and annual major sport events hosted or awarded between 2004 and 2012 (for example, four annual internationalhallmark events: Formula One Grand Prix; Australian Open; Spring Racing Carnival; and International ComedyFestival all supported by City of Melbourne through its Event Partnership Program). In 2008 Melbourne alsohosted major theatre and music events, for example an Andre Rieu concert and the musical production Wicked.See section 5.8 for a more comprehensive list of sporting events staged by Melbourne in recent times.

It must be noted that the difference between the top two cities (Vancouver, followed by Melbourne), in the EIUliveability index is only fractional, and that a difference of just 0.5% in the Index between the top two cities

represents no practical difference at all.


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We may conclude (on the above findings) that the fact Melbourne recently hosted a varied mix of internationalevents has, for some reason, not countered survey respondents perceptions of the tyranny of distance orpenetrated their collective consciousness.

5.1.2 Mercer worldwide quality of living


The Mercer Worldwide Quality of Living Survey evaluates and compares quality of living in 215 cities worldwide.The survey is an annual survey of a small sample of professionals working for major multinational companies, aswell as other experts in the field. The Quality of Life Index is derived from survey responses and evaluation of 39quantitative Quality of Life Determinants in 10 individually weighted categories:

1. political and social environment (23.5%): relationship with other countries, internal stability, crime, lawenforcement, ease of entry and exit;

2. economic environment (4.0%): currency exchange regulations, banking services;

3. socio-cultural environment (6.4%): limitations on personal freedom, media and censorship;

4. medical and health considerations (19.0%): hospital services, medical supplies, infectious diseases, waterpotability, waste removal, sewage, air pollution, troublesome and destructive animals/insects;

5. schools and education (3.4%): standard and availability of schools;

6. public services and transportation (13.0%): electricity, water availability, telephone, mail, public transport,

traffic congestion, airport;7. recreation (9.0%): variety of restaurants, theatre/musical performance, cinemas, sports and leisure ;

8. consumer goods (10.7%): availability of food/daily consumption items, alcoholic beverages, cars;

9. housing (5.1%): housing, household appliances/furniture, maintenance and repair services; and

10. natural environment (5.9%): climate, record of natural disasters.

Figure 2: Mercer: quality of living ranking and index, top 10 countries plus Melbourne 2009

Rank2009

CityIndex2009

1 Vienna 108.62 Zurich 1083 Geneva 107.94 Vancouver 107.44 Auckland 107.4

6 Dusseldorf 107.27 Munich 1078 Frankfurt 106.89 Bern 106.5

10 Sydney 106.3~

18 Melbourne 104.8

Melbourne is ranked 18th, in the 2009 survey. According Rob Knox, a principal at Mercer Human Resource

Consulting, the reasons for Melbournes ranking this year are that Transport has a little bit of room to improve and air quality is an area Melbourne could continue to focus on (Herald Sun, 28 April, 2009 p 15).

By comparison Sydney was ranked 10th this year because it has more international flights to more destinationsand more foreign schools attractive to overseas executives.

Summary and recommendations

In 2009 Melbournes weaknesses are:

1. transport , has a little bit of room to improve; and

2. air quality.

It is interesting to note Mercer identified one of Sydneys main advantages over Melbourne as being betterinternational air connections. This is an opposite aspect of what the previous EIU surveys reported as aweakness for Melbourne (reported in section 5.1.1 above). This does add some credence to previous EIUfindings that Melbournes main weakness has been its relative remoteness.

5.1.3 Monocle quality of life


To determine what makes a city liveable, Monocle Magazines - 2007 Quality of Life Survey looked at specificthings that created a great urban environment. The survey uses quantitative data and subjective opinion (2007was Monocles inaugural survey) to develop a list of the 20 most liveable cities.


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Monocles 25 Quality of Life indicators include:

international long-haul connections with a well-managed thoughtfully designed airport;

low crime rates on murders and domestic burglaries;

quality of education and health care;

hours of sunshine and average temperature;

availability of communications and connectivity; level of social tolerance, including positive climate for ethnic diversity, employment of women and gay rights;

ease of getting a drink after 1am;

cost and quality of public transport;

strength and availability of local media; and

access to nature, amount of green space, key environmental initiatives in urban planning.

In 2007 Monocle concluded Melbournes public transport system was struggling with trains overcrowded andtrams running slowly.

According to Monocle, in 2008 Copenhagen was the most liveable City.

Melbourne ranked 9th

most liveable City in 2008 (improving from 11th, in 2007s survey). In 2008 Melbourne is

characterised as: vibrant, art-loving; having the sport and culture; having the best neighbourhoods in the southern

hemisphere; and booming. The drawback is that the City sprawls. The weather is also an issue - pack anumbrella, according to Monocle.

Figure 3: Monocle: quality of life in the worlds top 10 cities, 2008

CityRank2008

Copenhagen 1

Munich 2

Tokyo 3

Zurich 4

Helsinki 5

Vienna 6

Stockholm 7

Vancouver 8

Melbourne 9

Paris 10


While Copenhagen ranked first, due to its airport and bike paths, Munich ranked 2nd

due to its airport rail link.Monocle magazine considers Melbourne should addresss public transport needs (similar conclusion as in 2007)with a city-to-airport rail link such as Munichs. The magazine also noted the City has a problem with alcohol-related violence a growing issue of community concern in Melbourne.

5.1.4 Recommendations for policy arising from liveability studies

Melbourne improved its ranking in Monocles Quality of Life Index during 2008, however opportunities, identifiedby Monocle, include addressing transport (also a concern previously, in 2007) and alcohol related violence in theCity. Monocle concurred with Mercers 2008 survey finding that transport links to the airport are one of

Melbournes main weaknesses; one which should be resolved with an airport rail link, according to Monocle.

The small area of jurisdiction and limited legislative power restricts what Council can do on transport (which is aState and Federal Government responsibility) and addressing alcohol related violence.

Setting aside the State Governments Transport Strategy, to reduce road traffic congestion in and around themunicipality, City of Melbourne supports other transport modes through the following: Moving People andFreight, Transport Strategy 2006-2020; Bicycle Plan 20072011; Carlton Parking and Access Strategy; Wheels &Heels; TravelSMART; and Councils Traffic Engineering Unit which helps traffic management improvementsthrough traffic signals changes.

The previous edition of this report suggested there are no current policy responses to cars that hover around thecity, contributing to traffic congestion and so this remains an opportunity for Council.

A carbon tax regime may change current travel behaviours, helping resolve transport and congestion issues inMelbourne, but this is beyond Councils authority, and City of Melbournes Working Population Profilepoints out it

would penalise low income households living on the City fringe.


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City of Melbourne is addressing alcohol-related violence with a variety of measures, including policies such as the24 Hour City strategy.

5.1.5 BankWest quality of life


The BankWest Quality of Life Index ranks the performance, across 10 criteria, of 590 Australian Local

Government Areas (LGAs). The indicators were: employment levels; crime (against property) rate; internetaccess; health; 16 year olds attending secondary school; earnings; home ownership rate; house size; proportionof empty homes; and community involvement (volunteerism).

The Index was designed by BankWest, primarily for the Banks purposes targeting of products, etc. The year2008 is the inaugural year of the indicator and BankWest envisages future editions of the Index. To do this theyare likely to develop and/or change their range of data used from predominantly 2006 Census statistics to datasets that may be updated on a more regular basis.


City of Melbournes overall ranking for quality of life, was 574th

out of 590 Local Government Areas (LGAs).

Analysis of the methodology and outcomes of the Index raises the following concerns:

1. philosophy. Selection of indicators for inclusion in the index appears based on implicit value judgements, forexample, the home ownership rate indicator scored LGAs according to the percentage of households thatare owner occupiers and reflects value judgements about the merits of home ownership over other tenures generally value judgements reflect the intent;

2. relevance. The relevance of some indicators is questioned. For example it is not made clear what relevancethe proportion of empty private homes has to quality of life;

3. incomplete list of indicators. The index does not address other issues that may arguably be related toquality of life, such as retention in education beyond 16 years of age, proximity to public transport,entertainment, services (e.g. libraries), public and private open space;

4. balance. Three out of ten indicators directly relate to housing (i.e. home ownership rate, type of house andempty homes). This could be argued to produce an index skewed in favour of certain types of housing ortenure and should be addressed;

5. clarity of indicators. It is unclear what the good health indicator refers to. Investigation suggests goodhealth is defined by the authors of the index as lower incidences of risk factors such as alcohol consumption

or smoking, obesity and lack of physical activity only; and6. analytical issues. The use of 2006 Census data on proportion of empty homes is inappropriate. The data

includes dwellings vacant because they are between rental tenants and also because they are newly built butnot yet occupied. The crime indicator (property crime per head of population) doesnt reflect the reality thatCity of Melbournes resident population is one tenth the size of its total daytime city user population (incl.workers and visitors) and most criminal offences in the City are committed by visitors from other LGAs.

5.1.6 Australian Unity Wellbeing Index


As well as looking at personal and national wellbeing, each survey explores a unique topic and its impact onwellbeing. This provides a timely insight into a variety of issues that are influencing peoples satisfaction with theirlives. Over the years, issues such as personal debt, caring at home, health and body weight and job security havebeen explored. This however, does have implications for consistent reporting and publicly available information.

Each report uses the data gathered differently, reporting aspects of the accumulated data set to differently, todescribe the wellbeing of Australians. The latest report (2008) reveals the personal wellbeing averages of thepopulation in Statistical Sub Divisions, of which there are 180. It also explores the relationship of variousdemographic characteristics, as determined by the Australian Bureau of Statistics, to these wellbeing averages.

The theoretical framework underlying this survey, in particular its interpretation is the theory of SubjectiveWellbeing Homeostasis which theorises a person has a natural level of personal wellbeing. The theory assertsthat the normal level of personal wellbeing in a population is, on average, around 76 points on a 0-100 scale(although for individuals it is as low as 60 or as high as 90 points.

Satisfaction is expressed as a percentage, where 0% is completely dissatisfied and 100% is completely satisfied.A survey score of 76.5% on personal wellbeing means Australians, on average, feel 76.5% satisfied with their li fe.

Elements of the Personal Wellbeing Index are satisfaction with:

health;

personal relationships;

safety;


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standard of living;

achievements in life;

community connection; and

future security.

The City of Melbourne is within the inner Melbourne Statistical Sub Division, which also includes City of Port

Phillip, City of Yarra, and a part of City of Stonnington. On average the population of this area has a below normallevel of personal wellbeing, according to the Personal Wellbeing Index. Personal wellbeing was 74.68%.

The main conclusions of the study were that wellbeing generally falls in cities with more than 40,000inhabitants.


The report concluded the happiest regions usually have an above-average proportion of elderly peoplewho are consistently shown to be more contented than the young.

Rural people were generally happier because they felt more connected to their community and had a greatersense of belonging, according to the studys authors. Residents of high-rise buildings, on the other hand, often didnot know the people in the flat next door. In some respects these findings accord with the Bankwest benchmarkproject, which made relatively positive value judgements about separate housing, as opposed to apartments.

The Australian Unity survey also shows lower rates of wellbeing in communities where more than 40% of

residents were born overseas. This was considered reflective of anxiety about "strangers" felt by Australian-bornrespondents in the area (who were more likely to be interviewed for the survey). An issue of concern in regards tothis survey is that, while rigorous in terms of its theoretical framework and analysis, it specifically soughtresponses from only English speaking respondents (potential bias).

5.2 Cost of living surveys

5.2.1 Economist Intelligence Unit worldwide cost of living


The Economist Intelligence Unit (EIU) conducts the Worldwide Cost of Living Survey enabling managers andexecutives to compare the cost of living in 132 cities and calculate fair compensation for relocating employees.This report analyses the latest available outcomes.

The survey gathers data (in each city) on the cost of 167 products or services - food, toiletries, clothing, domestic

help, transport and utility bills, etc. More than 50,000 individual prices are collected. This is achieved with a smallsample of expatriates residing in each country. A Cost of Living Index is calculated from the price data to expressthe difference in the cost of living between any two cities.

Each city report lists local prices for 167 products and services, in 13 sub-categories:

1. shopping basket;

2. alcoholic beverages;

3. household supplies;

4. personal care;

5. tobacco;

6. utilities;

7. clothing;

8. domestic help;9. recreation & entertainment;

10. transportation;

11. housing rents;

12. international schools, health & sports; and

13. business trip costs.

Price data is used to calculate Cost of Living Indices that express differences in the living costs betweenlocations. New York is the base, with an index of 100, and each destination city is indexed and ranked against it.

There are two main reasons why a citys cost of living Index will change over time: exchange-rates and consumerprice movement. To make comparisons all calculations are converted into US dollars - which exacerbateschanges due to currency movements.

Melbourne was the 24th

most expensive City in the world the City has become slightly less expensive in the past

year.


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Figure 4: EIU: cost of living index and ranking of top ten cities, plus Melbourne, 2008

Rank 2007 City Country Index

1 Oslo Norway 132

2 Paris France 130

3 Copenhagen Denmark 126

4 London UK 125

5 Tokyo Japan 1246 Osaka Kobe Japan 118

6 Reykjavik Iceland 118

6 Zurich Switzerland 118

9 Frankfurt Germany 116

9 Helsinki Finland 116

24 Melbourne Australia 103

5.2.2 Mercer worldwide cost of living


Bi-annually, Mercer conducts a Cost of Living survey that is generally similar to the EIUs. It is designed to collectprices for approximately 200 products and services in 143 cities around the world. This report analyses the latestavailable outcomes from March, 2008.

The prices of various goods and services are collected and categorised into the following ten groups:

1. food at home;

2. alcohol and tobacco;

3. household supplies;

4. health and personal care;

5. clothing and footwear;

6. domestic services and utilities;

7. food away from home;

8. transportation; and

9. sports and leisure.

The price data is used to calculate the Cost of Living Index to express the differences in the cost of living. NewYork is used as the base city with and an index value of 100 and each destination city is indexed against thisnumber which formulates an overall ranking.

Melbournes rank in 2008 was 36th.

Figure 5: Mercer: cost of living in cities, top 10 countries, plus Melbourne 2008

March March

2008 2008

1 MOSCOW 142.4

2 TOKYO 127.0

3 LONDON 125.0

4 OSLO 118.3

5 SEOUL 117.7

6 HONG KONG 117.6

7 COPENHAGEN 117.2

City

COL IndexRank

8 GENEVA 115.8

9 ZURICH 112.7

10 MILAN 111.3

36 MELBOURNE 94.2


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5.2.3 Interpretation and discussion of cost and quality of living studies

According to Mercer, Melbournes place on its list seems to have been determined as much by the increasingrelative expense of other Asia Pacific cities (as cities such as Tokyo decline) in the region as by a slight decreasein the cost of living. These cities include Seoul, Singapore and even Nouma. Europe also dominated therankings this year because of the strength of European currencies and rising prices across that region. At thesame time prices in Japan have been almost static.

Currency movements have an impact on the outcomes, so the strength of the Australian dollar partly explainschanges in the Mercer cost of living Index for Melbourne. The Australian dollar, however, has lost some of itsvalue in the second half of 2008, which will relieve some future cost pressures. It is important to keep the aboveresults in perspective. Australian cities are and will continue to remain internationally competitive from a cost pointof view.

The EIU findings contradict the Mercer findings which reported in early 2008 that Melbourne is a more expensivecity in which to live (although that may change in the short-term as Melbourne may become slightly moreaffordable as a result of economic turmoil in 2008).

The differences between the Mercer and EIU cost of living studies fall into two main categories; methodological,i.e. the way the indexes are calculated (the EIU gives an informative discussion of how the outcomes of a cost ofliving study can vary depending on the way the indices are calculated. See http://eiuhelp.enumerate.com/) andconceptual difference that are finer grained. Mercers survey includes fewer sub categories than EIUs (which has13 compared to Mercers 9 sub categories, e.g. EIU includes cost of utilities and Mercer doesnt). At the finer levelthe differences between methodologies are many for example, EIU and Mercer collect costs for slightly differenttypes of clothing and footwear for inclusion in their surveys respective clothing sub categories.


The reader should bear in mind that in surveys such as those conducted by EIU and Mercer, the difference inscores between some of the top cities are so small as to present no tangible difference at all and thereforeMelbournes rank, in them, should be viewed by the City of Melbourne as indicative. Policy responses based onthis surveys outcomes should be weighed carefully with the outcomes of other surveys summarised in sections5.7.1 and 5.7.2.

The EIU and Mercer provide a relatively objective benchmarking exercise for both cost of living and quality of

living. Overall, they are long running, reliable over time and reasonably sound.

The main criticism of this methodology is the relatively small sample size taken in each city.

It is acknowledged that other (political and media) entities regard both these liveability indexes well (See section4) and there is clearly a need to maintain a watching brief on both of them.

The purpose of the Mercer and EIU quality of life indexes is to help employers make decisions about payment ofexpatriate employees. Arguably, the liveability index presented by Mercer, a Human resources firm (EIU probablyhas a little more distance from that function), is relatively less fit for [our] purpose, as a measure of city liveabilitythan the EIU index. City of Melbourne may therefore consider the EIU index for comparing Melbournes in costand quality for living against international competitor cities.

Monocle admits in its publication that its method is a mix of scientific metrics and more subjective feelings, forexample about the ambience of a city. Its Quality of Life Survey, however, appears on the surface to be relativelyfit for purpose because of this. While probably not appropriate for use on its own, theres a case for using it forinformation on specific aspects of liveability not covered by a survey such as that produced by the EIU.

The Australian Unity Personal Wellbeing Study is, for the most part a rigorous study of the wellbeing of theAustralian population. The main methodological concern is it effectively excluded non-English speaking personsfrom its sample (introducing a potential bias).

While generally valid, the surveys reliability/trend over time is problematic. The cost to Council of consistentlyreporting specific findings of the survey is likely to be an unjustifiable cost.

Finally, City of Melbourne is concerned the BankWest Quality of Life index unrealistically presents the City in anegative light. There are several flaws (above) in the BankWest Index and it is not fit for purpose as acomparative quality of life indicator, when taken at face value. It is recommended the City of Melbourne not reportthis indicator again, until its quality is improved.

5.2.4 Mercer Australia/ New Zealand regional differentials


Mercers Australia and New Zealand Regional Differentials 2006/2007measures cost of living in Australian Stateand Territory Capital Cities to provide a tool for decision-makers involved in staff transfer policies, realignment ofsalary levels, salary reviews, company/divisional relocations, and mergers/restructuring. The report also analysedcost of living and rental accommodation cost differentials in the capital cities.

A salary differential is an index providing comparison of one group of salaries against another.


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10

Statistics are drawn from data covering over 200 positions in support staff, middle management and seniormanagement from over 600 companies and 30 industries.

While Victorian salaries have seen a decline in its relative salary position: in 2005 Victorian wages were in linewith the NGM (national general market) median and in 2007, 1% below the national general market.

The state of NSW has the highest paying salaries at 3% above the median. Western Australia is now the secondhighest paying state, behind NSW. Salaries in Western Australia are now 2% above the median and only 1%

below the base salary in NSW.Figure 6: Mercer: Salary and cost of living differentials Australian states and territories and capital citiesState salary differential vs National general

market median NSW WA VIC QLD SA

% from NGM base salary (2006) 3 2 -1 -3 -4

% from NGM base salary (2005) 3 0 0 -5 -6

Cost of living differentials (vs Sydney) Sydney Perth Melbourne Brisbane Adelaide Darwin Canberra

Score Base city -6 -3 -8 -10 -10 -13


It appears the resources boom and resulting skills shortage have had a direct impact on wages in WesternAustralia, Queensland and South Australia (although as the figure above reveals Adelaide, Perth, Darwin andBrisbane still have lower costs of living than Sydney or Melbourne).

The findings about housing differentials were that both Perth and Brisbane rents have been catching up toSydneys in the past four years, indicating the resources boom is driving accommodation costs higher. It isinteresting to note that while Demographia(see section 5.2.4, below) considered home purchasing in Melbourneto be unaffordable (but improving in 2008), Mercer considers Melbournes rentals (relative to Sydney) to havebecome more affordable between 2006 and 2007.


Due to its small area of jurisdiction and limited legislative power, the City of Melbourne is restricted in what it cando to counter the risk that key talent from Melbourne may be drawn to the resource states, with higher and lowercosts of living.

As a local response, however, to the impact of skill drain, Council helped found Office of Knowledge Capital(OKC) whose mission is to collaborate to develop and promote Melbourne as Australia's Knowledge Capital.(See Section 5.9 for detail). International relations are a potential resource for technical, cultural and social skillsthat help Melbourne to remain competitive and are integral to the perception of Melbourne as a contemporarycentre for business, education and cultural exchanges. They include: the Business Partner City Network, established in 1988 to promote business interaction in the Asia Pacific; six sister city relationships; MelbournesTianjin Office, to help Victorian companies do business in Chinas fourth largest city; and the Small BusinessGrants Program (established in 1997 and the only program of its kind in Australia).

5.2.5 Demographia international housing affordability


Demographia is a United States based market research company which regularly reviews housing markets in 227major markets of six nations, including Australia, Canada, Ireland, New Zealand, the United Kingdom and UnitedStates.

The Demographia International Housing Affordability Survey employs the median house price to medianhousehold income multiple (median multiple) to rate housing affordability. Median house prices are divided by the

median annual household income in a particular market which in turn gives the multiple of average incomerequired to purchase a home.

Affordability is recorded as follows:

Severely Unaffordable 5.1 & Over

Seriously Unaffordable 4.1 to 5.0

Moderately Unaffordable 3.1 to 4.0

Affordable 3.0 or less

In 2009, Melbourne was rated 12th

most unaffordable housing market out of 265 city regions with affordabilitymeasured at 7.3 to 7.1 times annual income required to purchase a house.


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Figure 7: Demographia: most unaffordable housing markets (and Australian sub-markets), 2008

Rank Country CityMedian

Multiple

1 Australia Sunshine Coast, QLD 9.6

2 United States Honolulu, HI 9.1

3 Australia Gold Coast QLD-NSW 8.7

4 Canada Vancouver, BC 8.45 Australia Sydney, NSW 8.3

6 United States San Francisco - CA 8

7 United States San Jose - CA 7.4

7 Canada Victoria, BC 7.4

9 United States San Luis Obispo, CA 7.3

10 Australia Bundaberg, QLD 7.2

10 United States Los Angeles, CA 7.2

12 Australia Adelaide, SA 7.1

12 Australia Melbourne, VIC 7.1


Demographia studies are based on the premise that urban planning places unnatural restrictions on the supply ofland for development, thus putting pressure on housing affordability. Demographias philosophy equates to aperspective that planning for growth in many guises, constitutes an artificial restriction on the supply of residentialland which drives housing affordability down. This philosophy should be borne uppermost in mind when analysingDemographias housing affordability benchmarks (City of Melbourne plays an advocacy role for sustainableresidential development and as a local authority has planning regulation responsibilities). It has potential tointroduce a value judgement (subjectivity) that colours Demographias interpretation of the survey outcome.

According to this study, Median Multiple is more than double the ceiling level (the common affordability standardof three-times average income) and house prices would have to drop dramatically, or incomes rise substantially,to meet that level. Across inner, middle and bay side areas of Metropolitan Melbourne, prices for both houses andother dwellings (flats, units and townhouses) are rising rapidly. People who can no longer afford to buy a homeare staying in rental accommodation. This has resulted in a shortage of rental properties, and an increase in rentsacross almost all Melbourne suburbs.

Demographias index, however, does not inform us about the costs associated with renting a home in Australia

(most households in the City of Melbourne rent; 2008 Melbourne City Suburbs Economic and DemographicProfile Resource Material, pg 20), nor does it inform the analyst about the impact of interest rate flunctuations.Mercers report on salaries and cost of living differentials (which found rents rising in Perth and Brisbane afunction of the resources boom) does, however. The median-multiple methodology, applied across a metropolitanmarket, is subject to a skew introduced by sales of relatively high priced properties alongside more affordableones.

Demographias (pg 15) interpretation stresses prescriptive land use regulation on the urban fringe as the primary

cause of unaffordable housing markets but dismisses other causes (migration and population growth,average size of households, taxation and interest rates, residential investment, and financialderegulation).


Home owning and purchasing has become less affordable in the past few years in Melbourne and the trends

identified by Demographias survey across a small number of international markets are real, despite thereservations already mentioned. Analyses using the median multiple enhanced by reference to Mercers salariesand cost of living differentials (where available) would likely continue to be informative to Council.

The problem in Demographias analysis is its interpretation of its survey findings (that planning regulation is themain cause of unaffordable housing) which should not be relied upon by Council and which in turn makeDemographias recommendations to remove land regulation unrealistic.

In any case, removing the Urban Growth Boundary and planning regulations from metropolitan Melbourne isbeyond the City of Melbournes jurisdiction.

Council also has a number of other measures in place to improve the availability and access of affordable,secure, appropriate and accessible housing across the municipality, including: Social and Affordable HousingFramework 2006-2009; Homelessness Framework 2007-2009; Melbourne Affordable Housing, a non-profitdeveloper/owner/manager of affordable, long term rental housing to which the City of Melbourne regularlydonates funds; and the City of Melbourne recently transferred the Drill Hall in Victoria St, Melbourne.


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5.3 City brands

5.3.1 Anholt Index


In 2009 the Melbourne brand was rated 15th

best by the Anholt Index (according to Tourism Victoria).

The survey is conducted in 20 major developed and developing countries and this year 10,068 online interviewswere conducted with adults aged 18 or over. The city brands index ranks 50 cities based on the followingdimensions:

1. presence how familiar people are with each city and how much of a contribution they believe that each cityhas made to the world in the last 30 years;

2. place physical and climatic attributes of each city;

3. prerequisites basic amenities such as affordable accommodation and the standard of schools, hospitalsetc;

4. people the friendliness and safety of each city;

5. pulse the variety of activities available in each city; and

6. potential what economic opportunities each city offers.


Although ranked 15th

best brand in the world, overall, within the survey itself Melbournes reputation as a friendlyand welcoming destination is reflected in the People index where it is ranked 3rd in the world because of itswelcoming and friendly people.

Melbourne also made 5th

in the list of happiest cities. "People know it's in Australia, and that it's full ofAustralians," according to Simon Anholt. "Therefore, it must be fun" (Forbes.com)

Figure 8: Anholt City Brands Index - Top Cities, 2009City Brands Index1 Paris2 Sydney3 London4 Rome5 New York6 Barcelona7 San Francisco

8 Los Angeles9 Vienna10 Madrid

~15 Melbourne

It is important to remember the purpose of the survey is to record people's perceptions of cities, whether they arerealistic or not. It attempts to measure the brand image and reputations of cities.

The underlying premise is that there are already many surveys and publications in existence which evaluate thereality of visiting or living in places, but that what is missing is what people believe about those places even ifthey havent directly experienced them.


These rankings are based on scores that are averages of averages, and simply illustrate a summary ofresponses to the Anholt survey.

Another concern regarding the application of the index is the mix of objective data and surveys of respondents,which can introduce a degree of subjectivity to the ranking process, thus opening it to the variation of attitudesbased on fashion and exposure/awareness. Outcomes should be read as indicative only.

Overall, however this is a purposeful survey and is highly regarded. It is worthwhile considering this survey forfurther use as a comparative measure of the citys international brand relative to other cities.

5.4 Creativity and innovation

5.4.1 2thinknow a creativity index


The 2002 State of the Regions Report Creativity Index, used Richard Floridas concept that successful cities willhave three economic development determinants: technology, talent and tolerance. Similarly, 2thinknow a

relatively new company who consult on specific actions for established and emerging cities , and are a


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recent entrant to the benchmarking market, try to point out conditions conducive for innovation and allocatingcapital, knowledge and intellectuals in the global economy. It covers more than 250 cities.

Overall innovation based on a total score of 30, based on 162 indicators comprising three categories:

1. inspiration - Can you get ideas?(Culture, art, food, high culture, design, people, open-ness);

2. implementation - Once you have ideas can you implement them in your city?(Infrastructure, businessenvironment, capital, ethics, ease of operation); and

3. market access - is there enough of a market accessible from your city to make it worthwhile toinnovative? i.e. is there an incentive for innovation?(ease of market access for innovation, size, affluence& importance of markets, trading partners, relative regional advantage).

Figure 9: 2thinknow - Top 20 innovative Cities, 2009Rank City Score

1 Boston 28

2 Vienna 28

3 Amsterdam 27

4 Paris 27

5 San Francisco 27

6 London 27

7 Hamburg 27

8 New York 27

9 Tokyo 2610 Lyon 26

~20 Melbourne 25


In 2009 Melbourne was ranked 20th

most innovative City, with an index score of 25/30, suggesting Melbournepresents a good destination for some type of innovation.

The 2thinkow methodology uses an index scoring a long and comprehensive list of criteria, weighted on asubjective basis. It invites the administrations of the cities included in its index to score their own cities. They arealso asked to supply/input sources and data in support of those scores. Where there isnt a reliable sourceparticipants are asked to estimate. Where city administrations dont participate, the company uses its ownestimates and opinions and data from a variety of publicly available sources: Governments statistics and NGOs;

rankings or analysis from Industry Associations, Professions and other Surveys such as MasterCard (see below);academic research and media analysis; and travel journalism.

These results tend towards Conservative (i.e. lower) scores. Conceivably, participation in this surveyby city administrations could lift their cities scores (although this doesnt necessarily mean outputs arealways open to bias).


City of Melbournes limited jurisdiction and legislative power restricts what it can do to about capital and finance orinfrastructure, to a coordinating or driving role establishing networks that can respond.

In May, 2007, the Office of Knowledge Capital (OKC a partnership of City of Melbourne and eight metropolitanuniversities and the Committee for Melbourne [an independent member network of Melbourne citizens andleaders aimed at encouraging a competitive business culture and enhancing Melbourne's liveability]) released thereport, Melbourne Australias Knowledge Capital. The OKCs objectives are to:

develop and promote Melbourne to achieve recognition as Australia's Knowledge Capital and aGlobal University City (more about that in Section 5.9 University Cities);

facilitate collaboration between the OKC, governments, businesses and other communities; and

link with similar 'knowledge cities' to enable mutually beneficial interactions.

The OKC provides capacity and coordination for networks of partnerships as well as promotional activities toestablish Melbourne as a knowledge city - Universities are a key part of this.

2thinknow uses a mix of data and subjective opinion in its methodology and should be considered subjective andindicative only.

It is a small and recent start up. It may be worthwhile maintaining a watching brief over this index until it gainswider currency.


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14

5.5 Centres of commerce

5.5.1 MasterCard Worldwide


The MasterCard Worldwide - Worldwide Centres of Commerce Index aims to rank the world's top 50 cities interms of their performance as centres of commerce in the global economy (2007 was the inaugural year).

The Index consists of seven individually weighted categories (which in turn consist of 41 of indicators, eachcomprised of over 100 sub-indicators):

1. legal and political framework: degree to which legal and political frameworks enable the emergence of aglobal centre of commerce;

2. economic stability: degree to which a centre of commerce is handicapped by an unstable economicenvironment, currency, or unpredictable inflation;

3. ease of doing business: availability of quality, cost-competitive trade logistics; level of interconnectedness;and ability to attract and retain talent due to a high quality of living;

4. financial flow: measurement of the city's actual output or financial achievement;

5. business centre: degree to which the city intermediates the flow of goods, services, people, finances andinformation, etc;

6. knowledge creation and information flow: degree to which information flows freely and knowledge is

generated; and

7. liveability (added to the list, in 2008).

In 2007, Melbourne ranked 34th

out of the top 50 cities in the world in terms of performance as a centre ofcommerce in the global economy, but slipped to 41 in 2008.

Figure 10: MasterCard Worldwide: centres of commerce top 10 plus Melbourne, 2008

Ranking

2008City

Aggregate

Score

Legal &

Political

Framework

Economic

Stability

Ease of

Doing

Business

Financial

Flow

Business

Center

Knowledge

creation and

information

Flow

Liveability

1 London 79.17 85.17 89.66 79.42 84.7 67.44 62.35 91

2 New York 72.77 88.28 87.44 75.91 67.85 54.6 59.02 90.88

3 Tokyo 66.6 83.6 86.4 71.28 48.95 58.15 52.06 92.69

4 Singapore 66.16 90.32 89.74 82.82 42.15 62.58 39.45 84.94

5 Chicago 65.24 88.28 87.44 73.81 52.51 40.52 46.31 90.81

6 Hong Kong 63.94 82.16 81.85 80.37 39.61 72.25 36.62 82.25

7 Paris 63.87 78.19 91.58 66.17 41.85 57.73 51.65 92.63

8 Frankfurt 62.34 85.75 89.88 66.68 52.88 46.73 30.41 93.38

9 Seoul 61.83 79.35 84.63 61.5 52.76 47.33 51.31 76.38

10 Amsterdam 60.06 84.96 90.47 68.78 34.44 48 39.11 91.63

41 Melbourne 49.93 82.9 84.97 71.34 7.7 22.35 33.35 91.63


It is notable that Melbournes liveability score (treated by Mastercard as integral to commerce and economics)was not ranked among the top 20 cities (lower than either EIU or Mercers rankings), although it was Melbournesgreatest strength highest score. High liveability scores reflect a high level of environmental awareness in cities,as well as the provision of high-quality and accessible basic public services and health care.

Financial flow refers to the number of financial services networks, number of equity and bond transactions,number of derivatives and commodities contracts traded, presence and intensity of global banking, insurancecompanies and securities companies. Melbournes score was lowest in this indicator, because it does not containthe Australian Stock Exchange, Reserve Bank of Australia and Futures Exchange (all based in Sydney).

Other low scores were received for Melbournes business centre and innovation and information flows.

The Mastercard index favoured large national capitals and/or major international financial centres. In any caseMelbourne as a business centre doesnt attempt to compete with Sydney for financial flowing through SydneysAustralian Stock Exchange, Reserve Bank of Australia or Futures Exchange; rather it focuses on its comparativestrength - funds management and superannuation (the Business Melbourne website cites, approximately 120

fund managers operating in Melbourne, funds management is the primary growth sector for Melbourne) and infuture it is here that Melbourne may improve its profile as a financial centre.


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The only concern with the objectivity of this index is related to its use of relatively subjective survey data, whichcould open it to the variation of attitudes based on fashion and exposure/awareness. It is not certain this meansthe results of the survey should be treated with caution, so City of Melbourne could continue to observe this as areasonably reliable benchmarking project.

In regard to policy responses, once again, City of Melbournes limited jurisdiction and legislative power restricts

what Council can do to address the issues and influence outcomes in future rankings, Councils leading role isexemplified two initiatives with which Council is involved.

It supported the Melbourne Financial Services Poll since 1998 - based on the premise that Melbournes financialservices sector has unique competitive advantages that should be identified and shared. The next survey/reportwill identify trends and changes. City of Melbourne promotes outcomes of the survey widely to international andnational partners, via its website. City of Melbourne also promoted its advantages as an investment and financelocation by sponsoring the Responsible Investment Association Australasia Conference in 2008 and theMelbourne Financial Services Symposium in 2009.

City of Melbourne could also actively promote, to business and the State Government, the clustering of fundsmanagement businesses in the CBD and or Docklands.

The City of Melbournes (as discussed above) role in establishing the Office Knowledge Capital (OKC) meansMelbourne now has a network of key tertiary, advocacy (Committee for Melbourne) and Local Government andbusiness stakeholders that may successfully develop and promote Melbourne as a knowledge/innovation centre.

5.6 Environment and sustainability

5.6.1 MasterCard Worldwide urbanization and environmental challenges


In 2007, in addition to its commerce index, MasterCard Worldwide launched an index of Urbanization andEnvironmental Challenges. The report was published in early 2008.

The report used data from 21 key centres of commerce in the Asia/Pacific, Middle East and Africa regions (asidentified in last year's MasterCard Worldwide Centres of Commerce Index) and reviewed their relativevulnerability and protection from key environmental challenges such as air pollution, infectious disease andnatural disasters. It identified the impact environmental factors are already having on them and what challengesfurther urbanization presents in the future.

The overall assessment process is based on the consideration of three individually weighted categories:

1. environmental indicators under government control (70%): water potability and availability, sewage system,waste removal, air quality, and infectious diseases this indicator is subjective and responses reflect theimpacts of these every day things on general health and wellbeing;

2. environmental indicators affected by climate change that are not directly under government control (20%):rise of sea level, water scarcity due to drought, severe storms, and fires; and

3. unpredictable environmental risks (10%): earthquakes, storms, volcanic eruptions, etc.

The three dimensions were then weighted (above) based on the perception that the most important dimension byfar is the quality of the day-to-day environment, since that is the daily experience of the city resident or visitor andits indicators have the most significant impact on health and welfare. Next in importance is the dimension of risksfrom climate change, since the trends are to some extent predictable and known to be getting more severe. Theleast important dimension was considered to be the element of unpredictable risk.

Melbourne was the top ranking city in the Asia/Pacific, the Middle East and Africa with an overall score of 2.03.

Melbournes worst score was in the dimension impacts of environmental indicators affected by climate changethat are not directly under government control (one of the worst scores, at 6.2 see below). This did not translateinto a worse overall score because of the weighting given to indicators under government control.


Melbournes result as the top ranking city in the Asia/Pacific, the Middle East and Africa highlights howappropriate government policies and actions can make a difference in creating a high urban quality of life; thepotential impact of climate change and other less predictable exogenous impacts notwithstanding.

The index concluded that Melbourne is less likely, than Sydney, to be impacted by climate change. Sydney ismore likely to face the risk associated with rising water levels, resulting in permanent flooding of suburban areas.

The relatively affluent cities can provide improvements in environmental quality (eg Singapore, Tokyo, Melbourneand Sydney). Poorer cities at a lower level of development suffer from a lack of basic infrastructure services suchas clean drinking water and sanitation. As they industrialize and income levels increase, basic services canimprove, but new environmental problems can emerge, such as traffic congestion, air pollution and toxic wastes.


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The difference between Melbourne and Mumbai (overall, ranked lowest) can also be explained by Melbourne'ssmaller population and growth rate, in addition to positive wealth and income levels and generally healthyeconomic condition.

The reliance of the first indicator (environmental indicators under government control), however, on perceptionsby survey respondents, of their immediate surrounds is subjective and given the heavy weight applied should betreated with caution. The weighting scheme to enhance the importance of respondents subjective assessment ofeveryday environmental health issues under government control (i.e. water potability and availability, sewage

system, waste removal, air quality, and infectious diseases) does not recognise, and arguably, does not highlightclimate change, or its impacts.

Figure 11: MasterCard Worldwide: environmental ranking of centres of commerce, 2007Environmental

indicators under

government

control

Environmental

indicators

affected by

climate change

Unpredictable

environmental

risks

(normalised

1=best)

(normalized 1=

low risk)

(normalized 1=

low risk)

1 Melbourne 2.03 1 6.2 1

2 Johannesburg 2.37 2.7 1.9 1

3 Singapore 2.4 1.7 5.4 1.3

4 Dubai 2.7 2.2 5 1.4

5 Sydney 3.02 1.8 8.4 1

6 Tel Aviv 3.08 3.6 2.2 1

7 Tokyo 3.27 1.7 5.4 10

8 Seoul 3.29 3.8 2.4 1.6

9 Kuala Lumpur 3.54 4.6 1 1.4

10 Riyadh 4.35 5.2 3.1 1

11 HongKong 4.93 5.3 4.8 2.9

12 Chengdu 5.25 6.7 1.3 3.3

13 Shanghai 5.54 6 6.2 1.2

14 Bangkok 5.79 5.3 10 1

15 Beijing 5.82 7.4 1.9 2.9

16 Cairo 5.95 7.1 4.4 1.4

17 Shenzhen 6.07 6.9 4.8 2.9

18 Beirut 6.29 8.2 2.2 1

19 Jakarta 7.1 7.8 6.7 3.4

20 New Delhi 7.24 9.7 1.6 1.4

21 Mumbai 7.78 10 3.2 1.4

OverallCityRank


The use of weighting in this index is questionable, but overall the index could be considered a reasonably reliable

candidate for the city of Melbourne to heed and compare the citys performance internationally.

Within its own limited jurisdiction Melbourne City Council can do some things to maintain and or improve the localenvironment, for example:

1. the Open Space Strategyto provide sufficient open space for City users; and

2. the Municipal Public Health Plan 2009 - 2013, which is being developed in 2008/09 and will be integratedwith the City of Melbournes Corporate Plan.

5.7 Travel destinations

5.7.1 Conde Nast Traveller Readers' Travel Awards


Conde Nast Traveller magazine has given the Readers Travel Awards annually since 1997. The results of theawards are based on a questionnaire asking (around 30,000) readers to choose the best the travel world has tooffer across a number of categories.

The questionnaire was a self select form, sent to readers in the United Kingdom and made available on thewebsite.

In the Overseas Cities category, which determines readers favourite travel cities outside the UK, respondentswere asked to rate a city with marks out of five for the following ten categories:

1. aesthetics/architecture;

2. culture;

3. cleanliness;

4. user-friendliness;

5. range of accommodation;

6. food/ restaurants;

7. people/hospitality;

8. nightlife/entertainment;


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9. safety; and

10. value for money.

Votes were calculated as an average on each criterion, providing the overall satisfaction index.

After being ranked 12th, in the previous two years (with a score of 85.6, in 2006) Melbourne did not receive a

ranking in 2007. Sydney did receive a rank in 2007s survey (number one).


Sydney scored highly in terms of food/restaurants (97.56), cleanliness (94.78) and user-friendliness (93.68).Some of these results are surprising, given of Melbournes reputation, as a culinary capital of Australia and inspite of a popular negative perceptions of Sydneys transport system.

Tourists consider Sydneys identifiable landmarks as important to its credentials as a tourist destination of choicein 2007. It is also worth noting that Melbourne does not possess an internationally recognisable landmark, suchas the Sydney Harbour.

Conde Nasts interpretation of the findings highlights the welcoming, laid-back, vibrant attitude perceived byreaders and the physical attractiveness (a greater mix of identifiable landmarks, aesthetics) of the City, Sydney isthe cosmopolitan capital of New South Wales. Sydney was described as cosmopolitan and at the forefront ofcutting-edge design, with chic hotels and excellent restaurants - excellent food. Melbourne prides itself on itsliveability and its many subtle layers, but this can come at the cost of excitement in a tourist destination.


The results of Conde Nast Travellers tourism awards suggest the City of Melbourne has an international imageproblem it doesnt seem to have an image with (mainly U.K.) tourists. Past EIU quality of life surveys foundMelbourne had a level of remoteness that prevented it from hosting a good event calendar (see section 5.1.1) andMercers 2009 quality of living survey found Sydneys international airport links to be superior to Melbournes. Itseems reasonable to suppose therefore that Melbourne suffers somewhat from the tyranny of distance.Considering how to respond to that issue may be worthwhile.

There may be a need to do more than advertising and promotions. Providing a better experience for visitors to theCity (better accommodation and more and better transport options for visitors after they arrive) may demonstratethe tyranny of distance is overcome and raise awareness of the City of Melbourne as a travel destination. Tomaintain continued growth in Melbournes tourism industry, Melbourne needs to ensure the provision of highquality visitor services.

The City of Melbourne has taken a leadership role by designing the following:

a five-year plan for welcoming and engaging tourists when they arrive - Tourism Plan 2007-2012: Managing

Melbourne as a tourist destination; Talk Destination, which focuses on the future of Melbourne as a destination for all kinds of visitors. Through

Talk Destination, the Future Melbourne project is exploring options and possible futures; and

the Value of Tourism Report, which aims to help city businesses to understand more about who visitsMelbourne, and how to maximise the opportunities tourism presents.

City of Melbourne may consider using the planning regulations to provide incentives for developers to build amore varied greater mix of tourist accommodation options in the City, to meet tourists needs e.g. more Bed andBreakfast or Guest House accommodation.

5.7.2 Euromonitor - top destination cities


Euromonitor International is an independent provider of business intelligence on industries, countries andconsumers. It releases an annual City Destinations Ranking, covering over 230 of the world's leading and mostdynamic cities in terms of international tourist arrivals.

The methodology used is a relatively objective one, collating tourist arrival data, by city, from sources could be aproblem. Sources include: World Tourism Organisation; European cities tourism; national statistics; nationaltourist boards; local tourism & convention bureaux; trade press (local and national newspapers, business travelnews) and Euromonitor Internationals own data.

London ranked on top of Euromonitor International's Top City Destinations in 2007, but Asian cities led by HongKong, Bangkok and Singapore also scored highly in 2007.

Melbourne was the 95th

largest tourist destination in the world (out of 230 surveyed) in 2007 (See Euromonitoronline). While this rank seems mediocre, Melbourne still attracted approximately 954,000 international visitors in2007.


According to Euromonitor the economic turbulence of 2008 will not only impact the next Top City Destination

Ranking but could reshape the city tourism market in the years to come. The increase in fuel prices has harmed


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the low cost carrier model and as financial crisis becomes a global recession, Euromonitor considers the outlookfor city tourism will worsen as travellers reduce spending and business meeting and incentives travel declines.

Euromonitors most recent data on tourist arrivals for 2008 suggests city tourism was one of the first sectorsaffected by global recession, as consumers cut their spending on travel. Most European hotel chains reportedfewer bed night figures during the first half of the year in key European cities. Although only a small proportion ofpotential holidaymakers cancelled their annual holidays, they reduced the length of their holidays abroad.

Their opinion was that as global recession affects the tourist industry worldwide, Melbourne may experience adecline in its 2008 destination city ranking and number of international visitors. The global recession and cost offuel in the future may dictate how large the decline in international visitor numbers will be and long it lasts.


The City of Melbourne has cooperative agreements with Guangzhou, for Biotech (one of the big tourist travelperformers mentioned above), Nanjing (Friendship Agreement), and Fengxian District as well as with Shanghaiand Tianjin through the Business Partner City Network. Furthermore, City of Melbourne and Racing Victoria hopeto profile Melbournes event capabilities and racing industry to Hainan Province, a growing domestic Chinesetourist destination which is also the site of the annual Boao Forum (Boao Forum is an Asian Economic Forum).

City of Melbourne should maintain its current long-term involvement with these Chinese cities.

5.7.3 Thoughts about the usefulness of tourism city benchmarks

The Conde Nast questionnaire, being a self select form, sent to readers in the United Kingdom primarily,

introduces a bias to the survey on which Conde Nasts rank is based. Therefore the results of this rank should beconsidered with caution, and it should be remembered that the results may disproportionately reflect the viewsand latest fashion of readers from the United Kingdom.

It is probably still worthwhile maintaining a watching brief on this survey.

Euromonitors ranking is, for the most part an objective secondary data collation exercise. It is, however, limited toa single dimension of data and would be more informative if put in context with other information sources abouttraveller preferences and behaviour, including but not limited to Conde Nasts survey.

5.8 Sporting cities

5.8.1 Sports Business International - ultimate sports city


Melbourne has been named the ultimate sports City. This means the survey considers Melbourne, the bestlocation in the world to hold a sports event.

The survey conducted by SportBusiness International in 2008, initially profiled 25 cities and selected, according tonumbers and the importance, international and annual major sport events hosted or awarded between the period2004-2012.

Over 100 interviews were undertaken with government departments, city officials, event organisers, federationsand industry specialists during the process of the analysis.

Evaluation criteria included number of annual sports events held, major events held/won up until 2010, facilities,transport, accommodation, government support, weather, legacy, public sports interest and quality of life.

Figure 12: Sports Business International: ultimate sports city, 2008

CityRank2008

Melbourne 1

Berlin 2Sydney 3London 4Vancouver 5


The naming of Melbourne as ultimate sports city two years running is in contrast to the EIU, which concluded thatMelbourne was relatively remote and less likely, than a city such as Vancouver, to host a large number ofimportant international and annual major sport events. In contrast, SportBusiness recognised that Melbournehosted or was awarded, between 2004 and 2012, four annual major sporting events: the Formula One GrandPrix; Australian Open; Spring Racing Carnival; and a round of the MotoGP (most or all supported by City ofMelbourne through its Event Partnership Program). Furthermore, the City successfully hosted the 2006Commonwealth Games, and in recent years secured World Championships in Gymnastics, Cycling, Lifesavingand Swimming (2007).

Other important factors in deciding Melbournes status as ultimate sports city were the quality facilities andgovernment support. The fact that Melbournes weather is mild was also a factor.


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The results of this index should be considered with caution. It relies heavily on subjective analysis of policy,weather, culture, etc.

5.9 University cities

5.9.1 RMIT University global university citiesBenchmark method and outcomes

The inaugural 2007 Global University City Index produced by RMIT University is believed to be the world's firstindex ranking university cities a broader measure than quality of Universities, only. Ranking of University qualityalone wouldnt tell us much about the City in which it is located.

Drawing on internationally recognised data, the Index seeks to define and measure the qualities which make up agreat university city. These include liveability, scale and the quality of its universities, investment in research andeducation infrastructure, and the mobility and connectedness of its population (therefore the index functions as amessage about how important Universities are in conjunction with business and industry, highlighting theconnection between the scale of the city and the clusters of knowledge in that city.

The cities that were ranked in this study were home to knowledge workers and research clusters that made thema significant driving force of their local knowledge economy. The Global University City Index is based on five

individually weighted factors:1. size of city is an absolute threshold. Cities with a population less than 2 million are excluded;

2. city liveability and amenity (30%);

3. the number of global universities and their degree of internationalisation (30%);

4. educational inputs and performance (20%); and

5. research inputs and performance (20%).

In the 2008, the strength of Melbournes as a university city was highlighted with Melbourne ranking 4th.

Figure 13: RMIT University: global university city index top 5 cities, 2008

CityRank2008

London 1Boston 2Tokyo 3

Melbourne 4Sydney 5


The Global University City Index highlights those cities where there is confluence between their size, liveabilityand connectedness (internationally for example in Melbournes case, reputation and attraction to internationalstudents, overall student numbers), the number of excellent universities within their bounds and sustainedinvestment in education and research.

Cities such as Melbourne are home to knowledge workers and research clusters that make them a significantdriving force of the local knowledge economy.

This benchmark is about the size and liveability of the City as a whole, rather than a measure of individualUniversities (this also excludes some small but prestigious university towns), explaining why Melbourne isperceived as a poor place for tertiary education in one index (City Brands Index), but still a good University City(RMIT Global University Cities Index).

Benchmarking focuses on what the researcher, market, corporation or community feel is important for them tomeasure. The point is to benchmark against like organisations/markets, cities.


This index could almost be considered a liveability index for students and is therefore interesting to a city with alarge education sector, such as Melbourne.

Council does not have much control over tertiary education specifically, however, because the focus of the GlobalUniversity City Index is about the liveability, scale and the quality of universities cities university institutions,investment in research and education infrastructure, and the mobility and connectedness of its population. Thereare some things, however, the City of Melbourne can do within its area of jurisdiction (within its municipalboundary) to improve or maintain Melbournes standing as a University City:

Office of Knowledge Capital (OKC) could support facilitation of relationships and opportunities between cities,

industries and academics to maximise graduate and research outputs and help ensure international studentsget access to services and supports that promote their health and welfare. Further, opportunities could beprovided to international students to actively participate and contribute to the citys social and cultural life of;


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if international student numbers decline sufficiently it will adversely affect university revenue and Melbournesposition as a knowledge capital. The City of Melbourne Student Profile identified the City has potentialinternational competitive advantages teaching engineering; creative arts; agriculture/environmental science;architecture/building, management and commerce, which OKC could help the education sector leverage;

ensuring global connectivity social, economic, educational. According to the

melbourne bench marking live ability

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