Report: Rethink needed on city governance and financing

Australian cities are failing to keep up with their international counterparts on urban renewal and infrastructure development, a new report from the Future Cities Collaborative has argued.

The report, Funding Australia’s Future – City Exchange on Local Funding and Financing Mechanisms, said new metropolitan governance models, local business improvement districts and financing mechanisms that captured value uplift were needed in order to successfully manage urban renewal and infrastructure investment.

The findings are based on a US-Australia City Exchange, where leaders from local government and business in NSW visited US cities that had enacted innovative funding and financing methods in order to enable a range of transport, urban renewal and civic improvement projects. The exchange formed the basis of six recommendations to state and local governments on addressing infrastructure investment challenges, as well as a number of detailed case studies contained within the report.

“Our approach to urban growth has to change if Australia is to address the infrastructure deficit that is constraining the productivity and competitiveness of our cities,” report co-author and AECOM technical director Joe Langley said.

“This report clearly shows the potential outcome of the City Exchange recommendations. It details the transformative effect they have had on United States cities that have adopted innovative ways to deliver services, investments and infrastructure for their communities.”

Mr Langley said Australia’s cities were failing to keep up with the pace and scale of economic development of other countries.

“Why should Australia’s ambitions continue to be constrained and our quality of life eroded through inaction?,” he said. “This is not rocket science, but it does require strong leadership by government, a willingness to innovate within state agencies, and a commitment to bring community engagement to a new level…”

The report’s six recommendations, which focus on NSW, are:

1. Positive and strong community support

NSW state and local government agencies to make wider use of formal and informal voter referenda on major infrastructure investment and delivery programs to encourage stakeholder engagement and commitment.

2. Appropriate institutional and governance structures

NSW Government should develop a regional governance structure for metropolitan Sydney comprised of local government elected officials, state agency representatives and experts to undertake long-term integrated land use, infrastructure and transit planning. A Sydney metropolitan commission or similar vehicle be established to provide vision and guidance on development for the next 20-40 years. The commission would facilitate a strategic and holistic approach to development and consist of political, non-political and expert representation, with the remit to guide the metropolitan development, conduct public outreach and gain public mandates for the long-term direction.

3. Urban renewal

Tools: NSW government agencies, including Treasury, Department of Planning and Environment, and the Office of Local Government, adapt and/or develop legislation to introduce the innovative funding and finance reforms needed to meet rising infrastructure funding gaps. Reforms to the present tax system should be designed to support greater autonomy and better decision-making at the most appropriate level of government, as recommended in Re:think – tax discussion paper by the Australian Government the Treasury.

Leverage: The NSW government grant the proposed Sydney metropolitan commission the authority to declare non-core land assets under state agency ownership and engage UrbanGrowth NSW to embark on the redevelopment consistent within agreed state growth strategies.

Urban renewal incentives: The NSW government create credit enhancement and tax incentive mechanisms similar to New Markets Tax Credits illustrated in the Los Angeles cases, backed by funds received from the leasing of “poles and wires”, to encourage innovative urban renewal projects by the private sector.

4. Long-term institutional and funding support

The NSW government introduce a recurring, voter-approved funding base for the long-term metropolitan transport plan with a minimum tenure of 20 years. This could take the form of a land tax or a fixed per cent of sales tax revenue, hypothecated to support long term funding and financing of major transport infrastructure. The funding plan would be aligned with the long term metropolitan transport plan and changes to an approved funding plan would be subject to voter approval.

The NSW government assign a metropolitan development agency the role of catalyser of transit oriented development. This would provide a seamless transformation of complex redevelopment sites rather than having multiple organisations or agencies with a variety of missions involved in the delivery of these key revitalisation projects.

5. Commercial revitalisation strategies and local empowerment

The NSW government introduce model legislation for local governments to establish Business Improvement Districts to empower local business and community groups to revitalise traditional commercial centres.

6. Local economic development

NSW State and local governments apply a regionally integrated land use planning approach that stimulates job growth, housing diversity, sports/entertainment and community amenity. It is recommended that local government examine ways to leverage existing knowledge-based employment centres and new anchors, such as universities, healthcare facilities, and research centres, to stimulate economic development within communities.

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