We need (better) city deals from the Commonwealth

Posted May 02, 2022

  • Federal Government
SGS Economics and Planning Australian city deals article image

Australia needs a radically different approach on national urban policy.

For urbanists, one of the Turnbull Government’s more interesting initiatives was the ‘City Deals’ program. The idea was largely borrowed from the UK policy of the same name, but much was lost in translation.

The original concept, developed by a group of councils in the Manchester region and the Westminster Government, was founded on a peer to peer agreement to reconcile the competing priorities of central and subsidiary governments in urban policy.

On one side of the bargaining table, you had the Central UK Government with the financial muscle required to transform British cities so that they might make their best contribution to national goals around productivity, greenhouse gas abatement and social inclusion. However, this sphere of governance lacked the mandate and competence to directly intervene in the day to day planning and running of the cities.

On the other side were local governments who could, if they were so minded, better align their infrastructure spending and planning policies with these national goals. However, their mandates and fiscal limitations would ordinarily see them focus on local issues and priorities.

Under the UK version of City Deals, the local governments would band together and offer up an integrated metropolitan strategy that would materially advance national goals on productivity, climate change and equity. In return, Westminster would share the tax dividend arising from improved productivity with the participating councils. This would comprise additional payments made over and above regular intergovernmental transfers.

So, Central Government gets better national outcomes on cities without meddling in the business of regional and local governments. And local governments get more money to boost their economies and improve social and environmental conditions of interest to their constituencies.

Australia's version of City Deals drifted away from the core idea

The Australian version of City Deals drifted away from this core idea, most notably in the area of subsidiarity.

Westminster focussed on what it does best, and what local governments simply can’t do, while local governments also stuck to their knitting. Councils, which know their regions in detail and have authority to represent local interests, generated the planning and investment strategies best suited to their conditions while still advancing national objectives. The Central Government paid up if agreed performance indicators were met.

Meanwhile, the Australian model morphed into an intergovernmental collaborative extravaganza, whereby each sphere of governance, local, state and Commonwealth, was at the same figurative table, poring over plans and infrastructure priorities. In the process, the competencies and accountabilities of the parties were mashed up, leaving many of the participants bewildered, let alone the ordinary citizen.

Australian City Deals also quickly became ‘part of city’ deals. Instead of aiming for coherent intergovernmental agreements for whole metropolises or functional economic regions, Aus City Deals targetted bits of city or non-metro regions somehow deemed to be of national significance.

To be fair, some sub-metropolitan and non-metro regions do have a special role to play in national economic outcomes and deserve particular attention from the Commonwealth. It makes sense, for example, to have the Western Sydney City Deal in place to ensure that the Commonwealth’s investment in a second Sydney airport delivers maximum national benefit. But, generally speaking, we need the whole of our cities to work better – economy-wise, environmentally and socially, if the nation is to meet shared aspirations across these fronts. Instead, we’ve seen what appears to be politically motivated cherry-picking of target locations for actual or prospective City Deals.

The concept of City Deals deserves to be revived

The concept of City Deals is a strong one. It deserves to be revived and rehabilitated by an incoming Commonwealth Government. Canberra should seek to negotiate a UK style City Deal with each and every one of the nation’s metropolitan regions for a start, treating them as a whole and bringing in their peri-urban districts which, post COVID, are even more tightly woven into their host city economies.

These deals would see the Commonwealth defining, in sharp, measurable terms, what it would want to see from the strategies proposed by the states, regarding economic adjustment, climate mitigation and access to jobs and opportunity. It should leave the ‘how to-s’ to the States and local government and concentrate instead on the robustness of the evidence furnished by these jurisdictions that they will, indeed, shift the dial on national priorities.

Under Aus City Deals version 2, the modelled tax dividend from better cities should be shared equitably with the participating states and transferred on an untied basis, with continuing payments contingent upon independently verified performance against agreed outcomes. Simultaneously, the Commonwealth should get out of local grant programs that do mostly nothing but undermine faith in our governance institutions and political accountability.

This article was first published in The Sourceable.

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