Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
Half a century ago, the great Aussie dream was clear cut : a quarter-acre home in the suburbs, a job for dad and 2.4 kids for mum.
But the fibro-cladding on the Sydney suburban dream is crumbling.
Jobs have been sucked east back to the city. Former inner-city slums have transformed into exclusive enclaves of wealth and opportunity.
Meanwhile, Sydney's western suburbs have fallen behind. A new Fairfax Media analysis reveals just how far.
After taking account of inflation, all of our top 10 poorest postcodes went backwards over the decade, any meagre income gains eaten up by rising prices.
Meanwhile, the city's richest 10 postcodes all enjoyed outsized income gains, despite the global financial crisis.
Astonishingly, the city's richest postcode – the eastern suburbs postcode that houses Point Piper and Darling Point – also enjoyed the fastest income growth of any Sydney postcode.
The figures reveal a deepening divide between haves and the have-nots in our glittering harbour city.
Particularly, they reveal the growing gap between Sydney's affluent east and north and its middle ring suburbs to the west and south.
They explode the myth that a rising tide will always lift all boats and reveal a distinctly geographical aspect to growing income inequality in Australia.
"You're highlighting the failure of the labour market to support people's ability to afford decent homes," observes Bill Randolph, the director of the City Futures Research Centre at UNSW.
This "suburbanisation of disadvantage" was the result of changing job trends and the concentration of job opportunities back into the CBD and a handful of hubs such as Parramatta, Norwest and Macquarie Park. "In effect, the old crisis of the inner city has been substituted by a new crisis of suburbia."
Sydney's post World War II urban expansion had given way to a new "great urban inversion", he said.
"The centrifugal forces that spread employment and housing outwards away from city centres during the 20th century have been replaced by a centripetal force pulling economic activity and housing investment back into the centre."
The poor get poorer
The media-weary residents of Mt Druitt are again in the spotlight thanks to the controversial SBS documentary Struggle Street.
But the Tax Office data reveals a wider picture of disadvantage in Sydney.
Of the 229 Sydney postcodes analysed, Auburn emerges as the postcode that's home to lowest average individual taxable income.
Mt Druitt is in 15th place, surpassed by low-income postcodes including Lakemba, Cabramatta, Fairfield and Punchbowl.
Incomes in Auburn grew just 13 per cent by contrast, behind consumer price inflation during that time of 31 per cent.
According to Randolph, the focus on Mt Druitt obscures a bigger story about income inequality in Sydney.
"The problem we have got is this idea of western Sydney as this amorphous mass thats undifferentiated. It's actually incredibly heterogeneous.
"The trouble with the focus on Mt Druitt is it's 'housos' stereotypes. Everyone forgets is that most of the housing commission stock has actually been sold off. The real epicentre of disadvantage is the bottom end of the private rental market."
Randolph says the residents of Struggle Street should also include the working poor and older couples who own their homes but are unable to make ends meet.
"There are different sorts of suburban disadvantage. There are the three-storey walk-ups around Fairfield, Blacktown and Lakemba. That's different to the low-density, low-income suburbs where a lot of the volume of people are … they're the fibro belt. They own their places but they're on very low incomes. It's the echo of that suburban push."
Unlike those on welfare, the working poor were caught in the middle, not getting much government assistance, but struggling on low incomes in face of high property prices. "That's where disadvantage is concentrated. It's not housos. It's more dispersed."
Much of Sydney's housing stock is in an increasingly dilapidated state, undermining property values.
Randolph draws a line at Strathfield to mark the border between the affluent inner ring and struggling outer suburbs.
"Once you get to Strathfield, prices just plummet. You get this precipice on the edge of the inner ring."
But low house prices don't necessarily spell better affordability thanks to the generally lower wages in the areas.
The wave of gentrification, which has swept the city, has yet to kick off further out.
"There is little value in land so the pressure to redevelop isn't there," says Randolph.
"Once upon a time it was that the inner-city areas were the problem areas and the suburbs were where we aspired to. That is reversed now."
Inequality expert and associate professor at the Melbourne Institute of Applied Economic and Social Research Roger Wilkins said that, more than any other Australian city, Sydney was undergoing a "ghettoisation" process.
It is primarily a jobs issue, he says.
"Since the downturn, unemployment rates of low-skilled people have fallen whereas the higher-skilled people tend to be better at retaining employment."
The high Aussie dollar and rise of cheap imports has spelled the death of many a manufacturer, creating a vacuum of low-skilled jobs in western Sydney.
"It's not just about what wage rates that people are getting, it's that there are fewer people with jobs," says Wilkins.
Youth unemployment in western Sydney is at crisis levels.
According to Wilkins, the global financial crisis was a turning point for the west.
"Before 2009, it was really the story of a rising tide lifting all boats, just lifting some a bit more than others."
But after the GFC stimulus ran out, a harsh truth of rising joblessness was revealed.
"We are seeing more and more people going backwards, particularly at low incomes and even the middle-income level."
According to University of Queensland economist Paul Frijters, residents in western Sydney are caught in a jobs and property trap marked by "extremely low unemployment in the centre, increasing to quite alarming numbers in the most outer suburbs".
"This is clearly about selection: those with good jobs live in the centre, those without jobs cannot afford to stay in the middle, and then move far away from the centre, in places where it is harder to employ them. What drives this is probably higher property prices and the associated council tax rates."
The rich get richer
But not everyone is struggling. Despite the global financial crisis, Sydney's upper echelons are thriving.
Wilkins says Sydney has seen the rise of a "managerial class", who generally live to the east and north. "They seem to be able to command relatively higher wages than they did 15 to 20 years ago." The salaries of chief executives have soared, even while average wages have stagnated. "They've done a better job of capturing the rents or the fruits of the productive activity."
The rise of the rich has been happening for decades now, traceable to the deregulations of the economy in the 1980s.
Citing waves of cuts to the top income tax rate, Randolph concludes: "The 1 per cent have grown, not because of some natural ability on their part. The dice have been rolled in their favour."
Political economist and emeritus professor at the University of Sydney Frank Stilwell says the differences in accumulated wealth are even more stark than growing income inequality.
"What you say about postcode trends is not surprising, given similar trends towards concentration of gains among the already wealthy." Stilwell says the key to widening inequalities is the divergence between income for workers and income for the owners of capital.
"In general, I think it is the income from capital assets and CEO remuneration that has outstripped other labour incomes, leading to more capital accumulation and wider income disparities."
When the rich get rich, but create job opportunities for the poor, societies can thrive.
But new research in the US suggest such "trickle down" approaches don't work for all suburbs. Trickle down requires moving to richer areas.
In the 1990s, 4600 US families living in public housing were part of a unique social experiment. Under a "Moving to Opportunity" policy, they were entered into a lottery in which the winners would be offered a voucher to move to better neighbourhoods.
The children of families who moved were more likely to attend college and enjoyed a 31 per cent earnings premium in later years, according to a study by Harvard economists Raj Chetty and Nathaniel Hendren.
While sobering, the results suggest the importance of "place" in nurturing future generations and offer proof of the lifelong deleterious effects of neighbourhood disadvantage.
Where you live matters.
And ever more so, according to Randolph: "The more highly segregated a city is, the lower the rate of upwards economic mobility for those at the bottom of the economic scale."
So what can be done to encourage jobs and growth in our city's struggling suburbs?
"That's the one we all struggle with," says Randolph. Planners are really good at planning urban spaces, but attracting jobs has always been the big problem."
A glimmer of hope
There are things governments can do to arrest rising inequality, if the political will can be found.
"Governments can intervene," says Randoph. "[The problem is] we have had governments that don't want to intervene. [But] I am hearing noises that indicate we have got to the end of that 'hands off and the market will sort it' approach."
Previous policies to foster the suburbs have been to decentralise public service jobs, create tax breaks or rent holidays for companies who relocate and to create enterprise zones. "To an extent, they work," says Randolph.
Better transport infrastructure would also help, particularly projects that better connect parts of Western Sydney, rather than simply try to funnel everyone into the city, like WestConnex.
Such projects just create "freeways full of cars, you don't do anything to stop the jobs concentration", Randolph says.
At the end of the day, growth must come from within.
And there are plenty of positives to leverage for western Sydney.
"Western Sydney's big asset is that it's hugely vibrant multicultural community. A lot of them are small business people. There is a kind of underlying vibrancy despite the fact they're poor areas. There's a vibrant and entrepreneurial culture. It would help if it was supported."
Western Sydney's status as a magnet for immigrants may be an early handicap, but it may also offer the path to prosperity.
"Fairfield, for example, is a massively multicultural place. Low-income migrants go where the housing market will let them in. Eventually, communities build up, like the Greeks did in Marrickville and the Italians in Leichhardt. But look at what's happened to the Greek and Italians. They prospered. I suspect that is what will happen eventually … but there is no doubt there are concentrations of disadvantage that will take a long time to break down."
But, eventually, urban decay becomes an opportunity for developers. And there are early signs this is happening, says Randolph.
"Thirty or 40 years ago if you were an aspirational person in Canterbury or Bankstown, you would aspire to move to the fringe. But increasingly, these days, people who are doing well, like small business and those with good jobs – and there are plenty of those – they are knocking down and rebuilding in situ."
"Their kids are getting educated and they're carrying on their businesses where they grew up.
"That property precipice is starting to break down. Developers are seeing opportunities to develop."
Wealth is spreading, but slowly.
"There is some reinvestment going on. What isn't happening is the jobs. The jobs base of the inner and middle suburbs has been denuded."
Sydney's future prosperity, as with so much else, will come down to jobs.
