There’s a saying: God created the world, but the Dutch created the Netherlands. On one measure, some seventeen percent of the country is reclaimed. But for the dykes and other works that keep the sea from inundating the land, sixty-five percent of the country would be underwater at high tide. Historically, when the Dutch needed more land, they built a windmill to pump water away, narrowed a body of water, or drained a marsh to make a polder. Centuries ago, they created water boards to govern the protection of the new land. Participation in the water boards was and continues to be the responsibility of local residents. Perhaps this is the source of the Dutch people’s strong democratic ethos.

What can Australia, in its current housing crisis, learn from the history of the Dutch? Given Australia’s large land mass, it doesn’t seem intuitive that we might need to reclaim land. And while we might not need to do it physically, there’s an argument that in order to address our housing supply shortage, we need to reclaim land politically.

The Dutch knew what to do. After a few decades of draining and cultivating, you have a new viable land mass, which, after a few more decades of population growth, needs its own political entity. This is essentially an abridged account of the coming into being of the Netherlands’ most recent province, Flevoland, in 1986. So while the Dutch reclaim physical land, they also create new jurisdictions—after all, the inhabitants of new polders should be responsible for the upkeep of their land, lest they succumb to the sea.

At the time it was included as a province in 1986, Flevoland’s population was less than 200,000. It has since more than doubled in size to over 440,000. New land combined with local autonomy gets results. So much so that Flevoland’s affordable housing programs of the 1980s have now been replaced by regular house price increases well above the national average—which leads to the observation that the Dutch need to make more of the Netherlands. 

Creating new political entities might prove to be the solution to Australia’s housing supply shortage. Think tank The Centre for Independent Studies claims that up to 37 percent of the cost of a new apartment in Sydney can be attributed to planning restrictions (the figure was 68 percent in 2020). Its chief economist Peter Tulip promotes addressing housing supply through infill—that is, densification of existing cities to match demand. But what would the Dutch do? Would they destroy the cityscape of central Amsterdam with nine-storey-plus monoliths—perhaps just sparing a few canals for the tourists? No, they wouldn’t. Because heritage buildings are often the only thing that makes a city unique and beautiful and worth living in, it’s worth resisting the temptation to create some example of bland internationalism.

The problem with blanket infill is that it destroys heritage. One of the underappreciated aspects of Australian cities is their gardens. Even if it just consists of a lawn in a backyard, the Australian family home with a garden is our version of a canal house. The quarter-acre block is (or used to be, anyway) the Australian dream.

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Most Australian families with school-age children would prefer not to live in the Soviet-style buildings that pass as contemporary apartments. (In fact Soviet apartments could be considered more liveable with their superior ceiling heights—2.4 metres is the minimum height in Australia, versus 2.7 metres for a Brezhnevka, while some stalinkas were built to a whopping 4.3 metres.) Plus, unsurprisingly, infill doesn’t solve the problem of affordable homeownership for families. Investors comprise the vast majority of buyers of apartments in new developments.

But now, as a result of crass, economics-only thinking, entire neighbourhoods of family dwellings in Sydney, many of them Federation-era buildings (some of the best heritage architecture Australia has), are slated to be demolished to make way for this kind of housing. If the recommendations of the Grattan Institute November 2025 report are to be followed, we should forget about conserving heritage and instead allow three-storey townhouses and apartments to be built anywhere within a capital city. Why? Heritage "controls are imposed liberally, with little acknowledgment of the consequences of stymieing the supply of housing in areas where people most want to live". Disingenuously, the report fails to acknowledge that people want to live in these areas precisely because of their heritage character.

However, there is an alternative to infill. More jurisdictions. More capital cities. And crucially, alternative laws and bureaucracies. Thankfully, we don’t even need a study tour to Flevoland to figure out why this works, because we have a working example, right here in our own backyard: the Australian Capital Territory (ACT).

Within the ACT’s city of Canberra (whose construction began in 1913) is the exemplar suburb of Ainslie. A mid-century buyer in Ainslie was able to buy a quarter-acre block of land for about £300 from the government and build a house on it for about £4,400, which is roughly AU$171,000 in today’s money. The median price of a house there today is about $1.47 million (a real increase of eight to ten times beyond general inflation). Ainslie has largely kept its family-oriented, garden suburb character, but it is now a relatively expensive area in which to buy. A public servant couple in their mid-twenties and a few years post-graduation working in the Treasury Department would be looking at paying around nine to eleven times their combined annual take-home pay to live in that suburb.

Canberra used to be very affordable. Why was that so? Yes, it was a barren frost-hollow in the middle of nowhere, and so perhaps there wasn’t the greatest amount of natural demand. But it was a new place that was to be grown into the young nation’s capital, and, crucially, it was in control of its own destiny at a local level. Initially, that local control didn’t work as well as it could have, but from 1957 until 1989, when the ACT was granted self-government, the National Capital Development Commission (NCDC) sprang into action and grew the population from 40,000 to 300,000.

Canberra was, simultaneously, a new frontier and a nation-building project. Among other factors, favourable regulation—for example, there was no stamp duty until 1969—cheap land and well-paid government jobs drove migration to the ACT. The NCDC was incentivised to get people to move to Canberra to ensure its viability. Once there, the new inhabitants shared the common purpose of building the capital city (in the multitude of ways that that required). The ACT now has the highest median total income of any Australian state or territory.

Australia now needs new frontiers, and it needs to exit from the existing bureaucracies that have, like the rising sea, slowly crept up on the shorelines of our dynamism with ever more complicated regulation that no recent politicians have been able to summon the political capital to control. The way to do this is to reclaim land politically. Indeed, the authors of Australia’s Constitution may have regarded this as a natural evolution across such a large landmass. Section 124 of the Constitution provides:

A new State may be formed by separation of territory from a State, but only with the consent of the Parliament thereof, and a new State may be formed by the union of two or more States or parts of States, but only with the consent of the Parliaments of the States affected.

The father of Australian federation, politician Sir Henry Parkes (1815–1896), once observed that “[a]s a matter of reason and logical forecast, it cannot be doubted that if the union were inaugurated with double the number of present colonies, the growth and prosperity of all would be absolutely assured.”

The idea of subdividing the states is not new. In the early 2000s, there were a variety of advocates of new states or abolition of states, including barrister and academic Bryan Pape (who is best known for Pape v Commissioner of Taxation, his fight against the Rudd Labor Government’s stimulus spending during the 2008 financial crisis). In his 2006 paper “Federalism for the Second Century”, Pape advocates for the creation of around twenty new states, giving the following as one of the reasons for his stance:

There are several reasons why new States and Territories should be established. The first is to promote economic and population growth outside the State capitals. Roughly half of all Australians now either live in the Newcastle–Sydney–Wollongong axis or in the Geelong–Melbourne–Dandenong axis. Australia’s population has just passed 20 million, with nearly 10 million living in these “city enclaves.”

This situation hasn’t changed in the last twenty years. Over half of the now more than 27.5 million Australians continue to live along those two axes. Add in South East Queensland’s (SEQ) population of around four million (comprising Sunshine Coast, Brisbane and Gold Coast) and you’re getting up to about 65 percent.

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What is new to the equation is the housing crisis. Sky-high rents and house prices in Australia are directly attributable to a failure of adequate localism. If you want to find truly affordable housing in this country, you have to go to a town like Menindee—about as remote and with as harsh a climate as it gets—where you can buy a four-bedroom house on a quarter-acre block in Sunset Strip for $175,000 (about the same adjusted price for house and land in mid-century Ainslie).

But why are you moving out there, only to be ruled over by bureaucrats in Sydney over 800 kilometres away who are focused on funding Sydney Metro lines rather than increasing commuter services between Menindee railway station and Broken Hill? If you had your own more-local state government, improving the service would be higher on its list of priorities.

Localism, or decentralised government, implies not just the ability to make as many relevant decisions as possible at the local polity level (subsidiarity) but also to raise revenue locally for local uses and to have revenue apportioned to the local polity by a higher tier of government. For example, a transfer duty on the conveyance of land collected at the state level might have some portion of it appropriated to the local government area in which the land is located. Or the state might just allow different local governments to set their own rates of transfer duty (as they tend to with local property taxes). With more states and more localism, a multitude of different arrangements will arise, leading to competitive policies. And competition tends to reduce prices.

The obvious starting place is Victoria, where a crisis of government looms. With its addiction to debt, punitive land taxes, crime waves, and generally poor decision-making (attempting to join Communist China’s Belt and Road Initiative, instituting the harshest COVID-19 lockdowns in the Western world, and failing to hold the 2026 Commonwealth Games, for example), Victoria will become a failed state in the Australian context, if it isn’t already. This provides the impetus for rearrangement.

Perhaps Melbourne could be cauterised into an area incorporating its existing water supplies, something similar in size to the ACT. This would give breathing room for around three or four additional states to be formed. It would then be crucial that greenfield sites be found for new capitals. As with Canberra, a nearby Queanbeyan and/or Yass would be needed. And while Melbourne is left to fester (or fulfil its vision of a socialist utopia, who knows?), a blossoming of renewed vigour within those new states would herald the dawn of an Australian renaissance.

Of course, the optimism of those willing to undertake such a plan would likely be met with apathy. Nation-building is hard work. Growing a country according to an ideal now seems to be impossible. It’s much easier to treat a population as a collection of units that make up the gross domestic product. If GDP improves, living standards will have improved, right? If we ratchet up immigration, that’s a shortcut to growth (the people we bring in are all skilled, so it’s fine). Using the existing infrastructure of the major cities is a no-brainer. All we have to do is jam the new arrivals into air-conditioned concrete boxes stacked upon one another in Melbourne, Sydney, or SEQ. Now we’re all on the ladder of aspiration! If we work hard, one day, one of us might own and live in a house with a garden.

Except when that time comes, all the gardens will have been subsumed, not by the sea but by a transport-oriented development zone.