Putnam's "constrict theory" suggests that ethnic diversity creates challenges for developing and sustaining social capital in urban settings. He argues that diversity decreases social cohesion and reduces social interactions among community residents. While Putnam's thesis is the subject of much debate in North America, the United Kingdom, and Europe, there is a limited focus on how ethnic diversity impacts upon social cohesion and neighborly exchange behaviors in Australia. Employing multilevel modeling and utilizing administrative and survey data from 4,000 residents living in 148 Brisbane suburbs, we assess whether ethnic diversity lowers social cohesion and increases "hunkering." Our findings indicate that social cohesion and neighborly exchange are attenuated in ethnically diverse suburbs. However, diversity is less consequential for neighborly exchange among immigrants when compared to the general population. Our results provide at least partial support for Putnam's thesis.