Metropolitan governance is the missing link in Australia's reform agenda

Perhaps all Western countries with which Australia might choose to compare itself have, since the early 1990s, engaged in intergovernmental decentralisation. They have done so as part of a metropolitan “renaissance” that includes “experiments” with metropolitan government.

In contrast, Australia’s state governments are responsible for metropolitan governance. The state responsibility exists in a context of increasing intergovernmental centralisation that favours the federal government, as well as finance and treasury in federal and state governments.

New forms of metropolitan governance and a claimed worldwide decentralisation of roles and responsibilities have been a response to neoliberalism and the competitive forces arising from globalisation. How might Australia’s “unique model of metropolitan governance” be explained? Does it enhance economic competitiveness and the building of fair cities?

At first blush an answer lies in Australia’s Constitution. Federalism in Australia is premised on subsidiarity between the federal and state levels of government. No provision is made for the possibility that metropolitan governments might best undertake metro-scale roles and responsibilities.

Metropolitan governments can be created through constitutional change, but this is improbable. Instead, the governance of Australia’s urban regions is premised on local government being a “creature” of state government. This notion, a product of the 19th century, empowers state governments to legislate metropolitan governments.

A precedent exists for a state government creating a metropolitan government. Created in 1925, Brisbane City Council incorporated all the urban region’s local authorities with an eye to financial viability and metro-scale efficiencies in the delivery of water, sanitation, roads and so on. The council now serves about half of the effective metropolitan population.

‘Rescaling’ is missing element of reform

Neoliberalism, from an urban perspective, comprises reducing government spending and the role of government in the economy and in delivering infrastructure and services. The responsibility of government does not change – that is, to ensure the delivery of hitherto public goods and services. Its role changes substantially: government is not itself responsible for delivery.

Both the Labor and the Coalition, at all levels of government, have embraced public sector reform. This has involved increased competition, deregulation and privatisation and the outsourcing of infrastructure and service delivery. Where this cannot be done profitably, civil society is promoted – an example is NGOs’ involvement in social housing.

But government still bears responsibility for ensuring services are delivered. For example, failures in the private delivery of public transport services contributed to the fall of the Brumby government in Victoria in 2010.

Setting Australia apart, institutional restructuring has not been accompanied by intergovernmental decentralisation. In comparison, throughout the European Union the metropolitan “rescaling” of urban regions was undertaken to enhance their global competitiveness.

This is especially relevant to global city strategies and, one might think, to Australia. Every state, except Tasmania, and the Northern Territory claim their capital cities are, or should become, global cities (“world city” in the case of Queensland).

The metropolitan impetus arising elsewhere from globalisation is not felt in Australia. Australia has not created metropolitan governments. Consequently, there has been no debate by a metropolitan constituency about the desirability of a global city strategy.

Such strategies are closely associated with enhancing inner-city economies and lifestyles. A common outcome is increased social and spatial divides. The global city machismo of state governments is not matched by a concern for fairness.

The missing link: metropolitan governance

In effect, while Australia has embraced neoliberal institutional restructuring and state governments pursue global competitiveness as the foundation for urban policies, decentralisation is not on the agenda. While metropolitan governance is discussed, metropolitan government seldom is.

For example, after pointing to metropolitan governance, planning and democratic “deficits”, urban commentators refer to the need for “metropolitan-scale institutions” and for a “metropolitan governance forum”.

Marcus Spiller, a prominent urban economist and planner, has written that state governance of Australia’s urban regions is leading to ineffectual metropolitan planning and infrastructure investment. The result is less productive and more socially divided cities. Spiller’s views should be read in the light of an OECD report that “cities with fragmented governance structures have lower levels of productivity”.

Urban sprawl represents a failure to implement strategic planning as a result of the lack of effective metropolitan government. AAP/Dave Hunt

Transport and planning ministerial silos also compromise effective state leadership in the development of urban regions. Big-budget transport ministries show scant regard for planning ministries.

A consequence is that despite a professed commitment to compact cities in state-prepared metropolitan strategic plans, infrastructure investment has contributed to urban sprawl. This diminishes access to jobs and education opportunities, and negatively affects household incomes. The city loses the full productive potential of its labour force.

Cities pay high price for funding imbalance

Ineffectual planning and investment and compromised productivity also reflect Australia’s extreme vertical fiscal imbalance. In the words of Paul Keating:

The national perspective dominates Australian political life because the national government dominates revenue raising and only because the national government dominates revenue raising.

Paul Keating: ‘The national perspective dominates Australian political life because the national government dominates revenue raising.’ NAA: A6135, K15/9/89/28

Without a constitutional remit to do so, vertical fiscal imbalance has created a “perverse incentive” for the federal government to get involved in transport funding, housing and other matters about which metropolitan residents might presume to know best.

Thus strategic plans that last the term of a state government and metro-scale infrastructure projects and services that depend on an alignment of state and federal priorities have proven fraught. This is epitomised by the East West Link road project in Victoria.

Melbourne’s residents (75% of the state’s population) favour public transport, but this was irrelevant to the federal and state Coalition. Victorians now have to pay the A$642 million termination fee for the East West Link.

Federal priorities have changed between public transport, the “roads of the 21st century” and “agnosticism”. State priorities have fluctuated between public and private transport, and have been much influenced by federal priorities – that is, following the money. No wonder Infrastructure Australia complains about “infrastructure gaps”.

Dysfunctional infrastructure planning and funding, ineffectual metropolitan governance and endless blame-shifting poorly serve the creation of competitive and fair cities. It is no surprise that Jane-Frances Kelly and Paul Donegan of the Grattan Institute held that Australia’s cities “are broken” and “are no longer keeping up with changes in how we live and how our economy works”.

It is at the scale of metropolitan areas where issues pertaining to globalisation, economic competitiveness, social diversity and inequality are embedded.

Labor and the Coalition, at federal and state level, serve metropolitan constituencies with an eye on the next election. Politicians parade trophy projects, services and plans with power, not a metropolitan perspective, in mind.

There is a wealth of comparative experience to guide us. Effective metropolitan governance requires intergovernmental decentralisation. Metro-scale planning, infrastructure investment and services, and partnerships with the private sector and civil society are best led by a representative and accountable metropolitan government.