AARON PATRICK: A fight over Woolworths shows what’s wrong with Australian cities

An unexceptional supermarket in Melbourne’s Western suburbs explains a lot about Australia’s property problem.

The owners of West Footscray’s IGA outlet complain that a plan by Woolworths to open a $28 million supermarket and bottle shop next door may drive them out of business.

Competition is brutal, especially in retailing, and the IGA’s owners, Brendan and Jackie Schroeder, must feel under great stress after they ended up on the losing side of a legal fight to stop Woolworths building on a site it owns.

There is another side to the story of a threat to a popular local business.

Councils often prevent sensible development to protect existing interests.

In this case, one the main opponents is the newly elected mayor, Pradeep Tiwari. In his previous role as president of the local business association, he argued a Woolworths store would be too convenient. Its two parking levels would lure consumers away from shops he represented.

The argument prompted an organiser at pro-development group Yimby Melbourne, Ethan Gilbert, to quip: “So many urban planning disputes are just different flavours of maintaining local monopolies.”

Customer feedback

Even the Schroeders acknowledged in the Victorian Civil and Administrative Tribunal, which ruled against the council’s objections, there was unmet demand for supermarkets in the neighbourhood. They just said it was not great enough to justify one more.

The fight makes it hard not to conclude the Schroeders’ business will suffer, although Woolworths may not be entirely to blame.

A reviewer on Google, Scott Lascelles, complained some of the IGA’s food was out of date, the service indifferent and half-unpacked boxes of stock littered the aisles. “Worst supermarket in Melbourne,” he wrote six months ago.

Councils are energetic blockers of urban development. The problem extends beyond trying to control local shopping economies to preventing new homes.

In Melbourne, 42 per cent of land within 10km of the city is restricted to one-or-two storey housing. As a result, the city is one of the least-dense of its size in the world, a vast urban sprawl requiring expensive transport infrastructure.

The latest is a rail line circling the city that will cost, for the first stage, more than $1 billion a kilometre.

Going up

The state government is working on the problem. In March rules came into effect allowing apartments across suburbs almost entirely populated by separate houses. Sometimes called the “missing middle”, they include some of the most desirable streets in Australia, close to high-paying jobs, shops, schools and public transport.

Councils will no longer be allowed to veto apartment buildings of three storeys or less if the builders comply with planning rules. Neighbours will not be able to appeal against them either.

The decision to remove councils’ power, which supporters hope will lead to thousands of new, less-expensive homes across the city, has triggered a bitter fight.

A prominent planning expert, Michael Buxton, predicted much of Melbourne’s inner-suburbia will be demolished. “Melbourne finally has been handed over to property and powerful interests by turning a planning system designed to regulate into one designed to approve,” he wrote in the Herald Sun.

One of the economists who leads the pro-apartment movement, Peter Tulip of the Centre for Independent Studies in Sydney, insulted Professor Buxton after the article was published and accused him of not understanding economics.

“The Victorian Liberals cite him as a leading authority,” Dr Tulip wrote on X. “Which says a lot about them.”

Two weeks ago, the Liberal Party tried to overturn the new rules in the upper house of parliament, where the government does not have a majority. They were defeated when parties on the left and the right, the Greens and the Libertarian Party, sided with Labor.

Free choice

The push for more housing is separate, legally, to the argument over the Footscray supermarkets. But the principles are similar: the right of people to live and shop where they choose.

The Schroeders, who own the Footscray IGA, would not talk to The Nightly, but told The Age: “A supermarket that big, it’s just David and Goliath to be honest.”

Woolworths is a big company. Its revenue last year was $64 billion. But competitors survive near its supermarkets all the time.

Two years ago, residents of Mosman in Sydney predicted a new Woolworths outlet on their main shopping strip would force the local IGA, which was 100m away, and other shops to close.

The IGA still operates, residents love the Woolworths, and the shopping district is not much different.