Lord Mayors: bypassing state government

The Lord Mayors of our capital cities are offering the Prime Minister a new deal they believe will help secure new economic development opportunities for local councils.

The mayors have lost hope with state governments and want to go into partnership with the Commonwealth. They argue that this is their only way of finding the cash they need for infrastructure projects that will encourage economic growth and create better city environments for the future.

What a sad picture this makes in a time of budget surpluses and a booming economy. Our wealthiest local councils still do not have the financial resources to undertake projects that they see are vital to the future of our cities.

Can we speculate on the likely consequences of such an arrangement? Will their proposal provide the solution to the desperate situation the mayors argue our major cities face because of long term neglect and lack of money? Will they get what they are looking for?

The main elements of the mayors’ argument are: over the last decade there has been a lack of investment in city infrastructure; we need to invest in our capital cities because they play an important role as major drivers of our economy; if we continue to neglect our capital cities we face the threat of missing major investment opportunities that will promote economic growth; and they want a direct line to the money and the power by establishing a capital city unit in the PM’s department.

While the main focus of the partnership would involve investment in infrastructure projects to promote economic development, the mayors are also concerned about environmental sustainability, tourism and security issues.

Cost shifting by both the Commonwealth and the states has contributed to the Lord Mayors’ dilemma by reducing their capacity to undertake new initiatives and projects. By ignoring the state governments and placing more reliance on the Commonwealth Government, there is a serious risk that they could be worse off as a result of the proposed partnership.

While Prime Minister Howard has shown little interest to be involved in such “urban” matters he does have an inclination towards centralism. In bypassing the state governments with this proposal, the mayors provide the Commonwealth with another opportunity to reduce the policy making role of the states as well as local governments.

The last time the Commonwealth became involved with similar projects to those the mayors are proposing was in the early 1990s. Hawke and Keating, as part of their “new federalism” initiatives, established the Building Better Cities program in conjunction with the states and local governments to show they could co-operate on urban issues and micro-economic reform.

The various evaluations of Better Cities judged most of the projects to be successful. Where public funds served as a catalyst, through seed funding and tax incentives, private dollars followed and real improvements happened like public transport in Melbourne; a university campus in Geelong; a rail link in western Sydney; land decontamination in South Australia; and the redevelopment of old industrial areas into new housing in East Perth and Brisbane, to name a few. Despite this success, Howard made it an election commitment in 1996 to get rid of the program.

The experience of the Better Cities program and Howard’s response to it have some important messages for the Lord Mayors to consider in their push for project funding and the partnership with the Commonwealth. The success of the Better Cities program was based on some very important aspects that experience shows will be incorporated into any new policy initiatives the Commonwealth will pursue.

First, the successful outcomes will be largely determined by the level of co-ordination and co-operation between the three spheres of government. The complexities of the projects undertaken require contributions across government agencies. The considerable costs for major infrastructure will also require contributions from Commonwealth as well as state governments.