City Deals the key to Queensland’s economic revival
The Queensland economy stands at a crossroads. We cannot go back to the resources boom, but we can steer the economy towards opportunities for new growth and job creation. Unlocking the productivity of our cities through key infrastructure investment is the low-hanging fruit that governments will have to grab in order to kick start our state’s economy.
The Federal Government’s new Cities Policy contains a commitment that could revolutionise the way we fund and prioritise infrastructure, and provide South East Queensland with the potential opportunity to lead the nation with a trial of the innovative new delivery model.
The UK’s ‘City Deals’ infrastructure funding model involves a contract between an economic region (think South East Queensland) and the central government (think State and Commonwealth), committing funding for a priority list of infrastructure which has been assessed for its growth potential in jobs and productivity.
This highly successful ‘City Deals’ approach, which has been strongly supported by the Property Council, essentially lifts infrastructure above day-to-day politics and creates a unified investment strategy focused on a region’s economic growth.
‘City Deals’ are codified as a contract between the relevant levels of government for a period generally exceeding ten years. The contracts are typically linked to economic performance benchmarks with additional financial incentives available for achieving certain milestones.
The UK experience has seen a mix of different funding options through ‘City Deals’. Usually they consist of some baseline general revenue financing, as well as innovative funding models such as borrowing against future tax growth that will flow from increased productivity.
With the Palaszczuk Government ruling out asset recycling to finance major projects, the funding of infrastructure is the biggest challenge facing the state and the largest obstacle to economic growth. While the new State Infrastructure Plan provides some certainty around immediate projects, it highlights the challenge Queensland now faces in delivering the game-changing infrastructure projects needed to support long term growth.
In this context, it is pleasing to see the Queensland Government embrace new funding models by committing to partner with the Property Council and the Council of Mayors (SEQ) to fund a ground-breaking study into how ‘City Deals’ could work in a South East Queensland. This investigation will see a strategic business case and definitive proof-of-concept developed with the desired outcome of a trial ‘City Deal’ program.
With bi-partisan and cross-jurisdictional support for the ‘City Deals’ model secured, thought now turns to what an SEQ City Deal would look like and what benefits would it bring?
A formal agreement with the Federal, State and SEQ Local Governments could see concrete long-term funding agreements for key local projects. These projects could range from sewerage system upgrades to light rail projects. Projects would be assessed to ensure they not only create local jobs and generate immediate economic activity but also are a catalyst for long-term growth and productivity.
The certainty that a SEQ City Deal would bring would allow the property sector, Queensland’s largest industry, to get behind the infrastructure program with its own investment. Growth in the property industry would not only generate jobs but also enable the development of new homes and public spaces. This investment will boost our economy and enable the next generation of Queenslanders to enjoy the enviable way of life that we are blessed to experience.
South East Queensland is the obvious choice to pioneer the ‘City Deals’ approach to infrastructure funding in Australia. With large and co-ordinated local governments who support the model and a long list of potential projects, the Federal Government should be closely looking at partnering with our region for their first ‘deal’.
‘City Deals’ represents a significant shift in thinking from individual project cost-benefit considerations to a whole-of-region strategy for economic investment. The successful delivery of the model will be key to Queensland’s economic revival.