The Sydney Harbour Bridge was a bad mistake.

There are lessons in Australia’s history we can learn from. One of them is the screw-up that is Sydney.


Sydney was well-placed to become the London of Australia. A prime location, settled first, the early seat of power. It had it all. But while London remains by far the wealthiest and biggest city in the UK, Sydney is on-track to be overtaken by Melbourne in population.

Source: SMH

If Melbourne overtakes Sydney, it won’t be the first time. Sydney had a 40-year headstart and yet lost its lead in the 19th century. At that stage the reason was the Gold Rush. Sydney got its lead back when a financial crisis hit in the 1890s.

Sources: various, but consider this a rough approximation.
Sources: various, but consider this a rough approximation.

If Sydney is overtaken by Melbourne in population, you can’t blame the Sydney-siders. They work hard, but they’re behind the eight-ball. The problem is the harbour.

If you think of it as public space, it’s lovely to look at and nice to use. But if you think of it as distance, is it smart to put so much of it right in the middle of your city? Do you really want so much distance between inner-city suburbs? Wouldn’t it be better to have a network of streets?

I contend that the harbour creates a massive problem in the middle of Sydney. The CBD is unable to connect properly into adjacent suburbs because they are a ferry-ride away.

That explains articles like this: “Why is Sydney’s CBD growing slower than Melbourne’s?”

There is plenty of evidence to suggest that connectivity is absolutely crucial to how cities work. It is no coincidence that the areas best connected to lots of other productive areas are also the most productive and expensive real estate.

Source Grattan INstitute
Source: Grattan Institute

Sydney has more than one major business cluster. The city competes with North Sydney and Parramatta.

But I’d argue that’s a sign of weakness, not of strength. Of course every city has suburban centres, but powerhouses like New York and London aren’t confused about where might be the centre of power, or the best spot to locate a business. Sydney’s situation whispers: this city is too big to really be one functional city. But globally-speaking, Sydney is not even that big, population wise.

So, the harbour in the middle could be part of the problem. But the harbour became the centre of Sydney only when a bridge was built that made the north shore more accessible. You can see the population develop in this video and the north only really takes off after 1932, when the final rivet was painted.

The smart move would have been to densely fill in the area to the south, intensively, before building to the north.

We’ve all played computer games where you have to build certain things in a certain order. If you build too many of the wrong thing too early, you get out of whack, run out of gold and you can’t beat the game. I’d argue that’s what Sydney did.

The Bridge was built using  £6.25 million of public money. That represented about 2 per cent of NSW’s GDP at the time. For comparison, 2 per cent of GDP now would be about $10 billion. (sources: 1, 2)

Despite using tolls to pay it off, the debt lingered until 1988.

The opportunity cost? Not just the proper development of contiguous land areas, but also what that money might have bought if spent differently. When the rest of the world was building world class public transport systems, Sydney let theirs go.

There is a common trope that argues the Sydney Harbour Bridge would not have passed any sort of cost-benefit analysis. This is generally used as part of an argument against cost-benefit analysis, with the assumption being that the Sydney Harbour Bridge is good. Of course it has a lot of value now, in tourism terms. But in 1932, when it opened, tourism was a rather minor part of the economy. (It’s worth noting that the Bridge was built against the advice of the government’s infrastructure adviser, which recommended a cheaper tunnel.)

If Sydney didn’t build the bridge, the city might have simply left the harbour as a boundary on the north. Of course some people would have chosen to live there still, but probably fewer. There’s plenty of space to the south that could have become very desirable had the economic centre of the city not been shifted north by the “coat-hanger”.

sydney map

But building the bridge was not the end of Sydney’s attempts to link north and south. With booming northern suburbs and an incipient northern CBD, it threw good money after bad with years of very expensive ferries and then the construction of a tunnel opened in 1992. The Bridge may soon need to be replaced, due to rust.

But forget the money. I’m arguing that the bridge moved the harbour from the north to the middle of Sydney, and that hurt.

This whole argument rests on the idea – coming back into fashion – that infrastructure is “city-shaping.”  That means you oughtn’t merely provide for existing demand, you should understand what you provide will shape future demand.

Bodies of water are city-shaping. They are often part of cities because of the history of water transport, but now hurt urban connectivity. For example, Oakland remains the very poor cousin of San Francisco.

Even rivers seem to have an impact.

London has lots of bridges but the wealth and the productivity is overwhelmingly on one side of the Thames. It required Manhattan house prices to reach many millions before Brooklyn got any buzz, and Shanghai only developed the far side of the Huangpu in the last 20 years.

By this logic, curvy rivers would be especially bad because they divide the city more. In that respect, Tokyo is better off than Brisbane, because the Sumida River flies like an arrow compared to the meandering Brisbane River. (There is evidence that a single bridge built in Brisbane recently has had a big influence on where people live.)

I’d be very interested to see a meta-analysis of whether, in the last 50 years, the value of having a river has turned from positive to negative in terms of a city’s economic growth. The impediments a big river would create to city connectivity are likely to be significant, especially where bridges are in short supply.

All this is very interesting, but we can’t go back and unbuild the Sydney Harbour Bridge. So what’s the point?

The point is we can learn a valuable lesson. Don’t spend valuable taxpayer resources providing infrastructure that will “shape” your city in the wrong way.

Infrastructure is extremely durable. Every mis-spent dollar will spend centuries choking your city. If it accidentally facilitates growth in hard-to-access places, or encourages inefficient kinds of transport use, infrastructure spending can be the enemy of a good city.

Listen up, Melbourne
Listen up, Melbourne.


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Thomas the Think Engine is the blog of a trained economist. It comes to you from Melbourne Australia.

27 thoughts on “The Sydney Harbour Bridge was a bad mistake.”

  1. And yet despite the harbour, Sydney has a higher proportion of jobs in the CBD than Melbourne. That’s probably largely because it’s the leading location in Australia for industries like finance and media that get a larger benefit than most from agglomeration (interesting question: does Sydney’s centre have density favouring attributes that attracted these industries, or is it denser because those industries located there for other reasons?).

    Interestingly, Sydney also has a larger proportion of jobs located in major suburban centres than Melbourne does. Geography (Sydney’s topography and geology are challenging too) and historical land use planning and transport investment policies have played a part in this.

    Although water bodies the size of Sydney’s harbour impose a big cost in connectivity in modern cities, they were vital for the development of most large cities up until relatively recent times because they facilitated trade. That role is less important now due to factors like lower freight costs, the rise of services, air travel, etc; many cities have moved their ports elsewhere. Now we’re more concious of the constraints a water body imposes on efficient movement within a city (although that’s offset to a degree by amenity and in some places by tourism advantages).

    I think another point worth noting is that the city-shaping potential of infrastructure also depends on the task it’s addressing. Both the harbour bridge and UQ’s new Green bridge spanned natural choke points. I can’t see that something like Melbourne’s East West Link would have as much impact.

    Liked by 2 people

    1. Friend, y’all make some good points there. Up here in Brisbane Town we gots a big ass river with many bridges, but there are still them big ass traffic jams and chokepoints, so it’s not just Sydney. Folks are saying they built the city in the wrong place, because there aint no way in or out except on them bridges, and then the Valley and other places were there aint no good roads in and out of the city as folks commute in from their ghetto ass suburbs each day to their jerbs. It aint right friends. Y’all just can’t get a perfect city no matter whats y’all do.

      God bless the fine folks of Brisbane Town and God bless Billy J. Jack.

      Liked by 1 person

  2. Interesting analysis – I would make the point that New York is founded on a series of islands, and has the evolved into a similar “city of cities” as Sydney.

    I do think there’s something to be said for cities that “look nice” – some of the more attractive cities around the place are founded around harbours, or other geomorphic features, that define the city, that constrain development patterns.


    1. I do concede that New York and Stockholm stand as good examples of watery cities. But Manhattan was always the business centre right up until it became incredibly expensive. And also, they have that famous subway that means the city is very well linked. Stockholm is also not exactly wanting for good public transport connections.


      1. Saying that, sometimes I have to wait over 5 minutes for a metro in Stockholm. Happens a lot late on the weekends – pretty inexcusable if you ask me…


  3. You can have an opinion but please don’t try to dignify this with the label of an economic blog. There is no economic anything in your “analysis”. If you want to present a compelling argument you are going to need more than “The smart move would have been to densely fill in the area to the south, intensively, before building to the north.” Evidence would help. You might start with reference to the mountains of study that show how cities grow. Follow it up with a genuine analysis of the choices that were made. I would accept the results of a choice model, a gravity model or even an agent model. If you haven’t done the work you are not offering anything more than “Because I say so.” as a rationale.


  4. so the point of this article is that the CBD isn’t in a convenient place? Hardly an astute observation. If the bridge hadn’t been built would the CBD have moved south/west? Not likely if you ask me.


    1. Whereas I suspect that if there weren’t such an obsession with connecting with the North Shore, areas south of Hyde Park would have become much more densely commercially developed, and the stretch between North Sydney and Crows Nest would likely be quiet suburbia .


  5. Isn’t the planning failure in Sydney really one of allowing urban sprawl without any public transport infrastructure. Urban sprawl is the enemy of a vibrant city. No-one walks, public transport can’t reach and there is no such thing as the High Street, just the horrible malls. I say the quarter acre block is the main culprit, not the bridge. New York includes its five boroughs and not just Manhattan. I just discovered your blog after reading your piece on the Very Fatuous Train on I have enjoyed reading it.

    Liked by 1 person

    1. Thanks for a great comment. I agree urban sprawl is bad because it puts too much distance between desirable places and I guess the point I’m pondering in this piece is whether other scared cows might have a similar effect. The bovine in question here is the Harbour. In a similar vein I had a go at Melbourne’s Royal Park:


  6. Thomas,

    Despite Sydney’s more challenging geography, it is still MUCH wealthier than Melbourne (check the ATO tax return samples), suggesting it is doing a better job attracting good jobs/talented workers. Melbourne might be growing faster, but it’s largely doing through the growth of crap jobs and lower skilled workers attached by cheap land. It’s kind of like saying Texas is growing faster than New York, so it must be better.

    Liked by 1 person

  7. Melbourne has one of the worlds worst cases of urban sprawl…it’s doing its damdest to join geelong. Bigger population is a terrible measure of success.

    Inconvenient yes, but a benefit of that pesky harbor that you overlook is the space it’s imposed on us. That’s a truly magical feature of a big city and its central location only adds to this.

    Liked by 1 person

  8. “powerhouses like New York and London aren’t confused about where might be the centre of power, or the best spot to locate a business. ”

    As someone who has lived in both places, I have to correct you. In London, the financial district (Canary Wharf) is about 7km from Westminster, Trafalgar Square, or Oxford Street. In NYC, the Stock Exchange is about 7km from Trump Tower or The Rock. In the case of both cities, the space in between is certainly not the centre of the action in terms of power.

    The North Sydney CBD is 3.5km from the RBA on Martin Place.

    Liked by 1 person

  9. While there is an argument for a tunnel instead of the bridge, it seems to me the bridge was a late expression of all the great engineering done in Victorian times. We can all recall Brunel and Telford, the Roeblings and other famed engineers, which today have no equivalence. Perhaps Ove Arup comes to mind, but the bridge is a great symbol precisely because it was a mega structure and still is. Sydney would be much diminished without it.

    However Sydney’s difficulties are not due to the bridge but the hilly landscape. Roads follow the ridges in sydney which gives it a spider web layout. Melbourne is much flatter and has more room to expand. This alone tells a lot about the differences. Sydney is thus a much more scenic city than Melbourne and that alone makes the business model favour Sydney over Melbourne. Personally I am glad Sydney and Melbourne are different. Both cities are great to visit.


  10. All I can say is: “dead right”. The harbour makes for a disconnected city. Cities thrive on connectedness. Melbourne has it, Adelaide has it….Sydney doesn’t (check for the details behind this). Now that we are where we are, Sydney needs more harbour crossings. Will never happen, but a couple to the east and two more to the west of the Bridge should give a higher level of connectedness. But the cost kills it. Pushing out to the west and south west is probably the natural best bet, but Sydney is again killing it with disconnected public transport modes: a light rail here, a metro there, heavy rail here there and everywhere, no rapid intra-urban lines, goods rail tangled with communter…its a mess and only getting worse with kack-handed planning.


  11. There is also the matter civic pride which I think is important to the vibrancy of the city. The bridge is not just a bridge anymore. It has a highly visible symbolic role – a point of pride for its optimism, scale and power, a historic monument to progressive engineering .


  12. TTTE,
    I got to disagree with you on several fronts here.
    Firstly, Sydney is one of the most beautiful cities in the world because of it’s extensive waterfrontage afforded by Port Jackson. Having two world class icons is also a great attraction.

    One of the main premises of your argument is that infrastructure aids development – which I totally agree with – but is not the bridge a major piece of infrastructure that aided development? I know you are saying that it caused segregation of central business districts, but having North Sydney immediately north of the city is not that bad.

    Imagine Sydney without the Bridge? How much would that have hampered development? Immensely. You have to admit that having the bridge aided development.

    I want to suggest a possible error in your idea; Is population growth compared to Melbourne the best metric? Shouldn’t we compare Sydney with and without the Bridge? Obviously without the brideg is difficult, but I am sure you would agee that without the bridge, the growth (at least norther sprawl) would have been significantly curtailed. Would the southern suburbs grown disproportionaly larger without the bridge than the whole north+south with the bridge?

    I think you are saying that with the growth to the north curtailed, the south would be forced to grow and be the dominant CBD not shared with North Sydney. Then if a bridge (or tunnel) was built later, in the 80’s say, then Sydney could have grown faster because it had a concentrated CBD? Even reading this, I can’t agree with that premise. The hampering of growth to the north would not have been offset by a consolidation of CBD to the south and that concentration would not have compensated for the lack of growth to the north at a later stage.
    Anyway, Parramatta would have developed anyway. It would only be North Sydney that would not have developed. But NS is a great compliment to Sydney and I’m not sure is hampering the growth of Sydney compared to Melbourne.

    Maybe it’s the property prices? Maybe Melbourne is growing more quickly due to more and more affordable land?


  13. Just by way of interest, Sydney had a slow-down in population growth in the early 1970’s. This coincides with Whitlam’s rise to power. Not sure of any causative effect as much as the neo-cons might like to find.
    And Victoria had a growth spurt in the late 80’s early 90’s, starting perhaps just before Kennett became premier of Vic but did run through his premiership.
    Just sayin’.


  14. Just another point about the potential cost of the bridge; I am not sure the calculation of 2% of GDP is a fair cost indicator.
    According to the RBA, 6.25m pound in 1932 is equal to $585m in 2016. Let’s round that up to $600m. That is cheap as chips for this bridge. Let’s face it, it would surely cost about $10bn today. So froim a cost perspective, it was much better to have built it then.
    Plus think of the transport benifits to Sydney during the 1930’s? Not to mention the spending right through the Great Depression (not that I’m a Keynesian. I would consider that an insult. However, if it pulled demand forward…)

    Imagine if they built another bridge? Imagine how the unions would love it now? They would have a field day. Nothing would move without another union rent-seeking more dollars from the state govt.


    1. What is amiss in the unions trying for a bigger slice of the cake? After all the toffs are getting away with it in huge amounts. Look how the 0.1% are doing out of the economy. Bear that in mind when criticising the unions. And the toffs are rentiers, just siphoning off rent and toll money for little effort. At least the unions build the infrastructure and ther pay threads through the economy rather than be siphoned off by the financial sector. And look who is covering themselves in ordure as their shady practices see the light of day.


  15. I don’t see any evidence whatsoever that the CBD was ever going to be anywhere than where it in fact is. For example, Museum station on the city circle was constructed 6 years before the harbour bridge. So the CBD was already baked in as where it is, regardless of the bridge. This is where the centre of commerce already was, it was where government buildings already were, and so forth. I would agree that there are massive problems building a large city on a harbour, but the bridge didn’t cause this. There was no alternative CBD waiting to dominate if the bridge didn’t come.

    And the time it took to pay off is irrelevant. They were slow to pay it off because the bond issues were super long and super low rate. When you pay off debt, you pay the most expensive first.

    Liked by 1 person

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