Economy thrives while CBDs dive: the argument that CBDs are the engine rooms of the Australian economy is being tested right now

Business confidence is also strong. A recent Financial Review articlequoting a number of sources said: "The disruption to the vaccine rollout and the end of JobKeeper have left business confidence undented – two-thirds of employers say there are few barriers to keeping their doors open and one in four expects to increase staffing levels over the next six months."

Reflecting much of the confidence in the economic conditions (along with access to cheap debt), house prices in Australia have surged. "Australian house prices are rising at the fastest pace in 32 years, as the Sydney and Melbourne property markets stage a full recovery from the short-lived COVID downturn" according to an ABC report in April quoting Corelogic data. "Prices in Sydney, Melbourne, Hobart, Canberra and Brisbane are all at record highs," it said. House prices in suburban and regional areas have performed strongest while inner city apartments have not fared so well – meaning the market performance has been uneven.

And living standards nationally, according to consultants Deloitte, have come "roaring back." So lots of good news all round.

Even the commercial property industry – allegedly beleaguered by the problems of the CBDs – is confident. The latest Property Council/ANZ surveyof industry confidence was reported thus: "…property industry confidence levels are steadily bouncing back after recording near-record highs as the sector surges into economic recovery from the COVID-19 pandemic. The national industry confidence for the March quarter continued its upward trend to 142 points, rising 19 index points from the previous quarter at 123. This is the highest index score since September 2017."

The highest since late 2017. Meaning, the highest since long before anyone had heard of a Chinese city called Wuhan.

So how can we reconcile claims that "thriving CBDs will be critical to Australia's economic recovery" when the economic recovery seems well and truly underway, even while CBDs languish?

There is no doubt that CBD property owners and businesses are being severely challenged in the current market. But the evidence strongly suggests that this challenge is largely confined to the inner cities. To suggest that CBDs require government subsidised initiatives because CBDs are allegedly "critical to Australia's economic recovery" is in stark contrast to what the evidence is suggesting: that Australia's economic performance is not reliant on CBDs to anywhere near the extent once claimed.

Efforts to seize the virtuous high moral ground of centralised economic superiority are not new. The mythical powers of the inner city have been celebrated by urbanists for decades, often at the expense of suburban and regional economies which were often at the same time subject to derision.

And in fairness, calls for initiatives to support CBDs may have merit. I happen to agree. Markets in temporary stress deserve support, as we do for many industries and for some particular geographic regions - although I don't see that extending to ongoing business welfare.

At the same time, it's also fair to remind ourselves that CBDs typically account for just one in ten of metro wide jobs. That proportion is even less on a national basis. CBDs also tend to be home to higher paying jobs. Plus, CBDs tend to enjoy preferential capital spending prioritiesover high growth outer suburban or regional areas. They are privileged domains, with the best taxpayer funded amenity in terms of public transport services, recreation facilities, arts, culture and entertainment, and are surrounded by some of the country's most expensive housing. Life inside the bubble was intoxicating before Covid. Now the bubble is in trouble and it seems to be reaching out for yet more support.

Yes, CBDs are important to the economy and important to the life of a city. But what we are seeing unfold is an economic resurgence in Australia which, if anything, has busted the myth that CBDs are central to the wider economic performance of the country. The current economic resurgence is evidence that the economic contribution of CBDs has been overstated while the importance of suburban and regional centres and their economies has been understated, if not ignored, for too long.

So, while we're called upon for short term support initiatives to revive CBD fortunes, we need to temper that support with the realisation that the wider non-CBD economy continues to do much of the heavy economic lifting. Imagine the potential if we got ourselves more invested in that than we have in the past?