Could Australia copy the UK's city deals?

Melbourne: One of the cities that might just get a deal. Image: Getty.

Australia's Property Council heralded the federal government’s proposal to introduce UK-style City Deals as part of a new Smart Cities Plan as:

… a real innovation in policy [that will] break down the barriers between federal, state and local government – and make all of them partners in economic growth.

These deals have emerged as the preferred methods of formulating public policy and resource allocation in UK decentralisation. This kind of explicitly “informal governance” is novel and innovative. Our evidence from the UK experience suggests there are pros and cons in both City Deals and Devolution Deals, however. 

“Deal-making” is good at providing a channel for local authorities to talk to central government. It empowers local actors, encourages strategic thinking, promotes innovation and stimulates governance reform.

But the process is marked by problems. These include:

  • uneven information and power between central and local actors;

  • the ambiguous role of the centre as supporter and appraiser of the plans of local actors;

  • capacity nationally and centrally limited by budget austerity;

  • lack of transparency;

  • highly uneven resource allocation;

  • slippage from announcement to implementation; and

  • limited evaluation of progress to date.

As the process has matured with each new round of deal-making, common elements have emerged alongside more bespoke and particular dimensions. But participants are fatigued by the centrally orchestrated deal-making process and episodic timetable, are unclear about the criteria for assessing proposals and uncertain about where it is heading next – and to what ends.

Those negotiating the deals have experienced the paradox that central government is dominating this chapter of decentralisation.

What Australia might expect

Unpacking some of these issues may help us understand the rationale behind Australia’s interest in City Deals.

First, against a background of rising public debt, City Deals are said to represent an attempt by the federal government to introduce a new approach to investing in urban infrastructure. However, Australia’s net debt-to-GDP ratio (19 per cent) remains a fraction of the UK’s, which is nearly 83 per cent.

Clues as to what is expected of City Deals were evident in the press release launching the Smart Cities Plan. The government said the plan will:

… draw on the Commonwealth’s co-ordination capacity and the strength of its balance sheet at a time of historically low interest rates, to get the best infrastructure projects off the ground.

The government’s fiscal position can be used in various ways – either through direct borrowing or de-risking private investment. The City Deal approach’s logic suggests that, in return for “drawing upon” federal capacity, states and local government will be asked to agree mechanisms that ensure local areas prioritise infrastructure projects that deliver growth.

Despite the rhetoric surrounding innovative funding and financing, such concepts have proved difficult to implement in the UK. Instead, emasculated local authorities, facing continued budgetary pressures, have sought long-term (up to 30 years) grant funding from the national government.

For its part, the UK government has also found grants easier to manage than complex earn-back arrangements of the kind devised initially in the Greater Manchester City Deal.

Second, if City Deals are introduced in Australia, then individual agreements will be negotiated between three tiers of government. The experience of the newer City Deals in Scotland (Glasgow, Aberdeen and Inverness) and Wales (Cardiff) – involving UK government, devolved administrations and local authorities more akin to a federal-type situation – may be more instructive for Australian policymakers.

Like the UK, Australia’s national government is proposing to incentivise actions and accountabilities at the sub-national level. The UK government has dangled the carrot of long-term grant funding to “encourage” local authorities to establish statutory governance partnerships across city regions.

City Deals in Australia may be part of a similar drive for local government reform. This reflects arguments that direct funding of local government by federal government creates efficiencies, and that new investment in local infrastructure requires effective cross-border local government collaboration.

Finally, statements that the City Deals have been instrumental in the “renaissance of Greater Manchester and Glasgow” should be treated with great caution. UK City Deals and Devolution Deals are still at an early stage. Monitoring and evaluation of their impact remains in its infancy.

Ultimately, City Deals may prove successful in Australia and the UK. But, at this initial stage, adopting the model without careful scrutiny and analysis feels more like taking a punt than backing a certainty.The Conversation

Peter O'Brien is a research Associate in the Centre for Urban and Regional Development Studies (CURDS), and Andy Pike, a professor of local & regional development, at Newcastle UniversityJohn Tomaney is professor of urban & regional planning, at UCL.

This article was originally published on The Conversation. Read the original article.


Coming soon: CityMetric will relaunch as City Monitor, a new publication dedicated to the future of cities

Coming soon!

Later this month, CityMetric will be relaunching with an entirely new look and identity, as well as an expanded editorial mission. We’ll become City Monitor, a name that reflects both a ramping up of our ambitions as well as our membership in a network of like-minded publications coming soon from New Statesman Media Group. We can’t wait to share the new website with you, but in the meantime, here’s what CityMetric readers should know about what to expect from this exciting transition.  

Regular CityMetric readers may have already noticed a few changes around here since the spring. CityMetric’s beloved founding editor, Jonn Elledge, has moved on to some new adventures, and a new team has formed to take the site into the future. It’s led by yours truly – I’m Sommer Mathis, the editor-in-chief of City Monitor. Hello!

My background includes having served as the founding editor of CityLab, editor-in-chief of Atlas Obscura, and editor-in-chief of DCist, a local news publication in the District of Columbia. I’ve been reporting on and writing about cities in one way or another for the past 15 years. To me, there is no more important story in the world right now than how cities are changing and adapting to an increasingly challenging global landscape. The majority of the world’s population lives in cities, and if we’re ever going to be able to tackle the most pressing issues currently facing our planet – the climate emergency, rising inequality, the Covid-19 pandemic ­­­– cities are going to have to lead the way.

That’s why City Monitor is going to be a global publication dedicated to the future of cities everywhere – not just in the UK (nor for that matter just in the US, where I live). Our mission will be to help our readers, many of whom are in leadership positions around the globe, navigate how cities are changing and discover what’s next in the world of urban policy. We’ll do that through original reporting, expert opinion and most crucially, a data-driven approach that emphasises evidence and rigorous analysis. We want to arm local decision-makers and those they work in concert with – whether that’s elected officials, bureaucratic leaders, policy advocates, neighbourhood activists, academics and researchers, entrepreneurs, or plain-old engaged citizens – with real insights and potential answers to tough problems. Subjects we’ll cover include transportation, infrastructure, housing, urban design, public safety, the environment, the economy, and much more.

The City Monitor team is made up of some of the most experienced urban policy journalists in the world. Our managing editor is Adam Sneed, also a CityLab alum where he served as a senior associate editor. Before that he was a technology reporter at Politico. Allison Arieff is City Monitor’s senior editor. She was previously editorial director of the urban planning and policy think tank SPUR, as well as a contributing columnist for The New York Times. Staff writer Jake Blumgart most recently covered development, housing, and politics for WHYY, the local public radio station in Philadelphia. And our data reporter is Alexandra Kanik, whose previous roles include data reporting for Louisville Public Media in Kentucky and PublicSource in Pittsburgh, Pennsylvania.

Our team will continue to grow in the coming weeks, and we’ll also be collaborating closely with our editorial colleagues across New Statesman Media Group. In fact, we’re launching a whole network of new publications this fall, covering topics such as the clean energy transition, foreign direct investment, technology, banks and more. Many of these sectors will frequently overlap with our cities coverage, and a key part of our plan is make the most of the expertise that all of these newsrooms combined will bring to bear on our journalism.

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Sommer Mathis is editor-in-chief of City Monitor.