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Cities Policy is good economic policy

  • September 07, 2017

Today’s Cities Summit and Smart Cities Policy are important steps in helping to remove the barriers that are holding back our cities from fulfilling their economic and social potential.

“Good cities policy is good economic policy, and the Government has taken a big step in turning talk into meaningful and substantive policy,” said Ken Morrison, Chief Executive of the Property Council of Australia.

“We welcome the Commonwealth’s City Deal approach to lifting productivity and removing the barriers to housing supply to improve affordability and benefit homebuyers.

“The Prime Minister is right – housing supply and our planning regimes are critical determents in dealing with housing affordability and the productivity of our cities.

“Australia is currently running a housing deficit of 200,000 homes and we need new and sustained supply, so that we can tilt the affordability balance.

“Earlier today, the Property Council released a report by Deloitte Access Economics that highlighted the how reforming our planning systems using modest ‘national competition payments’ could generate $3 billion in economic uplift and create 3,000 additional full-time jobs.

UK Style City Deals

Mr Morrison welcomed the commitment of the Government to pursue “UK-style City Deals”.

“City Deals means governments investing in a growth plan for a region, not just a single project.

“The aim is to get all levels of government and each government department to line up behind a single growth plan for a region.

“For a City Deal to be a real deal, they need to be applied to the places we most need them, target economic growth and bring all levels of government together.

“We have advocated for UK City Deals for some time and, while there is still a lot of work to do, it is very pleasing to see this model adopted by the Government.

“With a bipartisan approach on the importance of cities, we are optimistic that we will see the first City Deals negotiated after the coming election.

Value Capture

Mr Morrison said the Government is continuing to sponsor a value capture debate without doing the hard work of defining what value capture means.

“The Government’s position on value capture remains vague and without definition.

“Value capture is not a magic pudding and the risks of damaging the economy with naive approaches are very real.

“Does the Federal Government propose introducing new taxes, or just encouraging state governments to do so? At the moment we have no idea.

“There are models that can work and we would welcome the opportunity collaborate further on those.

“We need to learn from the experience of the Carr Government in NSW which ignored the warnings and held back Sydney’s housing supply by five years by its own version of ‘value capture’ with big land release taxes, all of which had to be wound back.

“We again urge the Federal Government to do the hard work on value capture and don’t repeat these mistakes.”

Cities policy is good economic policy

The Turnbull Government’s Smart Cities Plan, released last week, can remove barriers holding back our cities, but the devil is in the detail, says Property Council chief executive Ken Morrison.

The plan, launched at the national Smart Cities Summit, underscores a new approach to city building, and outlines the government’s commitment to treat funding “as a long term investment, not a grant”.

The Federal Government promises to prioritise projects that meet broader economic objectives, such as employment, affordable housing or sustainability, and to pursue UK-style City Deals to unlock public and private investment in key economic centres.

Speaking at the Summit, Cities Minister Angus Taylor said the Commonwealth was interested in outcomes, “not just handing over a blank cheque”.

“If we are to have the impact we want in cities policy – facilitating quality jobs, more housing and better connectivity – as well as a return to taxpayers, we need investments, not grants,” he said.

The Property Council welcomes the City Deal approach, which it says can get all levels of government “lined up” behind a single growth plan for a region.

“For a City Deal to be a real deal, it needs to be applied to the places we most need it, target economic growth and bring all levels of government together,” says Morrison, who also spoke at the Smart Cities Summit.

The Property Council is optimistic that Australia will see the first City Deals negotiated after the coming election.

The plan also proposes to draw on new finance mechanisms, such as ‘value capture’, to invest in cities infrastructure. Value capture is a type of financing that recovers some of the cost of infrastructure by ‘capturing’ the added value gained by the private sector.

But Morrison warns the Turnbull Government’s position on value capture remains “vague”.

“Value capture is not a magic pudding and the risks of damaging the economy with naive approaches are very real,” he says, adding that the Carr Government in New South Wales introduced its own version of value capture, with “big land release taxes, all of which had to be wound back”.

“Good cities policy is good economic policy, and the government has taken a big step in turning talk into meaningful and substantive policy,” Morrison concludes.

The Smart Cities Plan sets out the Australian Government’s vision for Australia’s cities, and a plan for maximising their potential. 

To provide a structural setting for reform, the Government has made several early commitments:

  • $ million for infrastructure planning, designed to accelerate planning and development works on major infrastructure projects
  • Establishment of an Infrastructure Financing Unit to work closely with the private sector on developing funding and financing solutions
  • Partnering with state and territory governments on City Deals to deliver coordinated investment plans for cities.

The Smart Cities Plan is open for public consultation until 24 June.