What’s the Deal?
Has there ever been a more exciting time to live in a regional city?
Prime Minister Malcolm Turnbull thinks not. Last Friday he announced the Commonwealth’s City Deals approach - new policy settings whose core goal is to direct infrastructure spending to projects that boost productivity, employment and economic growth.
The first thing to know about City Deals is they don’t just apply to capital cities. In fact, City Deals are perfectly geared towards a regional metropolis like Newcastle.
Modelled on the wildly successful UK City Deals, a key focus of the Australian version is to provide the new and sustained housing supply we need to tilt the affordability balance. Their aim is to lift infrastructure investment above day-to-day politics - getting all levels of government to line up behind a single growth plan for a region, not just a single project. Sound impossible?
The second thing to know about City Deals is they are codified as a contract between an economic region and the central government. The long-term contract (10+ years) identifies a list of priority infrastructure projects to be delivered, along with economic performance benchmarks. If the region meets those benchmarks it qualifies to “earn-back” a share of the additional taxation dividend generated by the faster economic development.
The third thing to know about City Deals is they focus on productivity and growth. Rather than a narrow cost-benefit analysis, projects are assessed using an agreed measure of gross value added for the region (a local “GDP”). This helps focus competing priorities into a coherent package of infrastructure projects that lift a region’s economic capacity over the long-term.
The most important thing to know about City Deals is they revolve around partnerships. They require local governments to ignore political boundaries and partner based on logical economic regions. The region then contracts with the State and Federal Governments to receive baseline funding and access to a menu of capital formation partnerships with the private sector to fund the projects. When the projects are delivered and targets met, the region receives a growth windfall payment to reward its smart thinking.
But enough theory - what might a City Deal for Greater Newcastle look like?
Firstly – Lake Macquarie, Newcastle, Port Stephens and Maitland Councils’ agree to be City Deal Partners with the NSW and Commonwealth Governments.
Secondly – the City Deal partners assess and agree a package of infrastructure projects that provide greatest regional bang-for-buck. They might include;
- Glendale Transport Interchange
- Light Rail Extension to Callaghan
- Lower Hunter Freight Corridor
- M1 Extension to Raymond Terrace
Thirdly - City Deal partners receive long-term certainty around infrastructure funding.
Fourthly – investors follow the certainty of fixed infrastructure and turbo-charge housing supply to improve affordability and benefit homebuyers.
Best of all – the City Deal joins up economic, social and sustainability goals - providing the basis for phasing out Australia’s panoply of inefficient taxes based on cost-shifting between governments, poor access to capital and policy conservatism.
Media contact: Andrew Fletcher | M 0407 410 017 | E [email protected]