SEQ City Deal on the back-burner: Is it still a visionary plan or just a mirage?

One hundred and twenty years after federation, federal, state and local governments are still figuring out how to work together. Will the pandemic change anything? Possibly not, writes Robert MacDonald.

Jul 27, 2020, updated Jul 27, 2020
With the SEQ City Deal now spinning its wheels, does it remain a visionary project or just a mirage? (AAP Image/Darren England)

With the SEQ City Deal now spinning its wheels, does it remain a visionary project or just a mirage? (AAP Image/Darren England)

You’d think that 120 years after federation, the three levels of government – federal, state and local – would have figured out how to work together.

But no.

Eighteen months ago, then-treasurer Jackie Trad, Federal Cities Minister Alan Tudge and former Brisbane lord mayor and chair of the South East Queensland Council of Mayors, Graham Quirk signed an agreement to develop the SEQ City Deal.

The SEQ City Deal was visionary they said – the biggest urban development scheme of its type in Australia, which had the potential to boost the local economy by close to $60 billion over 25 years according to the experts.

The plan was that the three levels of government would work closely with the private sector “to deliver a better-connected region through key transport projects, creation of more jobs” while also “protecting the region’s liveability”

It was to have been launched by June this year but last week the parties announced they were postponing talks until next year.

COVID-19 was the reason given.

There was no public suggestion that the Federal Government simply didn’t want to give the Palaszczuk Government any good news to announce before this October’s state election.

And there was certainly no hint that current Queensland Treasurer Cameron Dick, who replaced Jackie Trad in May, had priorities other than this pet project of his predecessor.

Pro-development groups, such as the Queensland division of the Property Council of Australia and the Committee for Brisbane, were dismayed by the delay in a plan that had been at least six years in the making.

They had seen it as an important part of post-pandemic recovery.

But not Dick, who said the SEQ City Deal was “about projects that only deliver years away,” such as the region’s early preparations for the 2032 Olympics – “a process which is currently on hold given the IOC has delayed the 2020 Olympics.”

Whatever the politics behind the postponement, the very fact that it was regarded as such a big deal in the first place, highlights the rarity of such tripartite arrangements.

It also highlights the enduring problem of Australia’s model of federalism – vertical fiscal imbalance.

That’s the economists’ way of saying that while the Federal Government has most of the revenue-raising powers, it’s the state and local governments that provide most public services despite having only limited capacity to raise their own money.

Local government in Australia is responsible for about a third of all public infrastructure across the country but raises only 3.5 per cent of total public sector revenue, compared with the Federal Government’s 80 per cent take.

This third tier of government was once  guaranteed a certain percentage of the personal income tax collected by the Commonwealth, a funding model abandoned in the mid-1980s.

Since then,  according to the Local Government Association of Queensland, it’s been a  “35-year slide into the funding abyss”.

And so, from time to time, new funding models, such as the SEQ City Deal – an idea adapted from the United Kingdom – are rolled out.

The Federal Government unveiled the City Deal concept in 2016 and has so far managed to complete seven agreements around the country, including one In Townsville, which counts the North Queensland stadium as one of its successes.

City deals, the Government says, “work to align the planning, investment and governance necessary to accelerate growth and job creation, stimulate urban renewal and drive economic reforms.”

But, as the stuttering state of the SEQ City Deal shows, they’re ad hoc and hard to negotiate and don’t address the underlying problem that the levels of government delivering the services have to beg for their money rather than raise it themselves.

The LGAQ says now is the perfect time to tackle the issue.

“The pandemic presents us with an opportunity to solve the long-term problem facing councils as they struggle to continue providing the services and infrastructure our communities expect – closing the vertical fiscal imbalance funding gap,” it says in its recent submission to Queensland Parliamentary inquiry into the State Government’s COVID-19 response.

“Local government also needs to see the re-opening of a federal discussion around taxation and inter-governmental fiscal relations,” the LGAQ submission says, almost wistfully perhaps. It’s a drum local government has been beating for years.

But will it happen?

Judging from the current climate, probably not just yet.

When the Morrison Government set up a national cabinet at the beginning of the COVID-19 pandemic, it included the states, but not local government.

Local government was, naturally enough, outraged. It had, at least, been part of the now-replaced Council of Australia Governments.

Now, it was being sidelined with a once-a-year meeting with the national cabinet.

And, at the same time as the Federal Government, was abandoning, for now at least, its SEQ City Deal negotiations, Federal Treasurer Josh Frydenberg was accusing local government authorities of dragging the chain in the economic recovery effort.

He claims they’re being too slow in processing the billions of dollars’ worth of development plans already in the system – a charge the Local Government Association of Queensland flatly denies.

The Morrison Government has, so far, shown little interest in major tax reform, recently batting away suggestions, led by New South Wales, that the Goods and Services Tax should be increased.

And so, will local government get what it wants?

Probably not, but we’ve only been at it for 120 years.

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