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Federal government steps up on cities

Assistant minister for cities Angus Taylor

More than seven months after appointing a cities minister and promising a fresh approach to engagement on cities, the federal government has released its Smart Cities Plan for consultation, and it has the support of major built environment players.

The plan, released on Friday, outlines the opportunities and challenges facing Australian cities, proposing a range of solutions, including the use of “city deals” – an infrastructure funding model based on a UK approach that ties funding for infrastructure projects to the economic growth the projects can deliver. This model was first advocated for by the Property Council back in 2014.

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The government’s plan commits $50 million for infrastructure planning, which it says will help accelerate planning and development works on major infrastructure projects, including urban rail.

It will also see the creation of a Infrastructure Financing Unit, which will work with the private sector to develop financing solutions for key projects, including value capture, which the government said it had a policy to explore early in all business cases, and would also release a separate discussion paper on.

“The unit will create integrated project teams with the private sector and key agencies to broker investment in landmark projects through innovative financing solutions including private partnerships, balance sheet leveraging and value capture for major projects,” the plan states.

Prime Minister Malcolm Turnbull said the government would pursue issuing bonds with terms of up to 30 years in order to lock in current low interest rates to partly fund projects like Sydney’s Badgerys Creek airport.

The plan also promises to “take full advantage” of disruptions in transport, communications and energy efficiency.

“We will leverage real time open data driven solutions and support investment in sectors commercialising new innovations to grow Australian’s economy,” it says.

It includes reference to the “30-minute city” as a way of dealing with transport and congestion issues, with particular emphasis on public transport.

“While no city around the world has eliminated congestion, most world class cities have invested in fast, efficient public transport systems to provide viable alternatives to passenger vehicles,” the plan says.

“Well designed public transport networks including heavy and light rail, buses, ferries as well as integrated active transport (cycling and walking) are an efficient, convenient and environmentally friendly way of transporting large numbers of people within and between cities.”

Assistant minister for cities Angus Taylor said the plan would also target regional centres.

“The global lesson is that cities collaborate to compete,” he said. “There’s a great incentive here for everyone to work together. The Smart Cities Plan will also importantly target jobs growth for regional cities and outer metropolitan centres. Our regional cities need a strong platform for coordinated investment and planning.”

Mr Turnbull said the plan would also work to increase housing supply.

“By increasing the supply of housing we can address one of the greatest financial issues of our times for most families – housing affordability,” he said.

Announcement welcomed by industry

The plan has received broad support from the built environment and business sectors.

The Australian Sustainable Built Environment Council said the plan created a vision for enhancing liveability, sustainability and productivity.

“The building sector, through ASBEC, has long called for a whole-of-government approach to planning, energy efficiency measures, infrastructure investment and urban design, to create better long-term outcomes for cities,” ASBEC president Ken Maher said. “We congratulate the federal government for their focus on the future of our cities, and look forward to this process leading to tangible action.”

He said the City Deals model would support “jobs and more liveable, healthy, productive and sustainable communities”, however said that a long-term metropolitan-scale approach to city planning needed to be underpinned by efforts to increase the sustainability performance of buildings.

The Green Building Council of Australia noted that plan stopped short of “a commitment to meet best practice benchmarks for green buildings, precincts and infrastructure”.

“We are pleased to see that priority will be placed on investments that improve environmental outcomes, and that the Australian Government promises to encourage the use of rating systems such as Green Star,” GBCA chief executive Romilly Madew said.

“The Smart Cities Plan acknowledges that Green Star can improve the sustainability, quality and efficiency of buildings and precincts.

“What we’d like to see are clear commitments to ensure sustainability is a central pillar of any City Deal project around the nation.

“Put simply, cities can’t be ‘smart’ if they aren’t sustainable.”

The Property Council of course welcomed the take up of its City Deals approach.

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

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

“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.”

Mr Morrison, however, warned that value capture was not a “magic pudding”, and that the government needed to better define its proposal.

“Does the federal government propose introducing new taxes, or just encouraging state governments to do so? At the moment we have no idea,” he said.

The Australian Industry Group said the plan could raise the standard of living and quality of life.

“We should strive to make Australia’s cities less congested, more amenable, more affordable and more productive,” AIG chief executive Innes Willox said.

“As the government acknowledges, delivering the benefits will require close cooperation of all levels of government, all sides of politics, and with the engagement of business and the broader community.”

He particularly congratulated the creating of the Infrastructure Financing Unit.

“There is a strong appetite from institutional investors, particularly superannuation funds, to invest in infrastructure either as owners or lenders,” Mr Willox said. “Ai Group has long advocated the case for greater public-sector investment in productivity-enhancing, intergenerational infrastructure. The infrastructure financing unit should examine how best to tap these sources of funding for different projects.”

The Urban Development Institute of Australia said the plan was “the most aspirational plan for Australian cities since the Hawke Government’s Building Better Cities Program”, while Consult Australia said it was “terrific” to see the government consider alternative infrastructure funding like value capture.

The Urban Taskforce urged that the first City Deal should go to the Western Sydney Priority Growth Area in order to stop the “jobs drain” to the east and the associated congestion.

“Currently around 200,000 workers head east in the morning and west in the evening as they travel to and from work,” Urban Taskforce chief executive Chris Johnson said. “They have been called the ‘squinters’ as they are always travelling into a low sun. These trips to work are taking up to two hours each way. The Prime Minister’s call for ‘30 minute cities’ should become the performance indicator to be used for the City Deal for the Western Sydney Priority Growth Area.”

Labor slams paper as lacking substance

Opposition cities spokesman Anthony Albanese said the policy went no further than “general statements”, and warned that the value capture provisions could just be a tax on existing property owners.

“If Mr Turnbull means that existing property owners whose property values are potentially enhanced by new projects should be hit with a new tax, he should be upfront about his plans before the election,” he said.

He said Labor would instead create a $10 billion infrastructure financing body to leverage private sector investment.

Funding priorities raise eyebrows

While most are praising the move by the government, current funding priorities have raised a few eyebrows.

Last week the Victorian Government decided to move on with its ambitious $10 billion Metro Tunnel public transport project, despite the absence of federal funding. It wanted federal funds earmarked for the aborted East West Link funnelled to the train project, however there has been no federal commitment made.

Earlier today (Monday), the federal government announced it would provide $857 million to the project, though the news was slammed by Victorian Treasurer Tim Pallas as a “ridiculous trick”, because the money was from the federal government’s existing asset recycling program, and had already been factored into forward estimates.

“This payment is the state’s entitlement; it’s not a gift for Scott Morrison to disperse wherever he pleases,” Mr Pallas said.

“This money is money the Commonwealth owes the state for the lease of the Port of Melbourne. This is not new funding. It’s just a broken promise from the Coalition Government more intent on self-promotion than on integrity.”

Greens transport spokesperson Senator Janet Rice said it was disappointing the government looked to only be supporting public transport through “the privatisation of vital public assets”.

“As Prime Minister, Tony Abbott insisted that he would only fund public transport through so-called ‘asset recycling’, and Malcolm Turnbull looks like he is doing exactly that,” she said.

In Sydney too, the WestConnex road project has gained billions in funding support for the federal government, despite protests that the project will increase congestion, has not complied with state government best practice in procurement (as alternatives weren’t assessed), and is not a 21st century approach to urban mobility.

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“From leaks to the media, we have seen that only 15 per cent of… infrastructure funding for NSW is going to commuter public transport. This is failing to address the chronic imbalance between roads and public transport,” Senator Rice said.

“Fixing our congestion woes with more roads is like loosening your belt to cure obesity.”

The government is seeking feedback on its Smart Cities Plan.

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