Will the party of urbanism please stand up?

Fun [sarcasm] times this week in politics.  If you were like me, glued to ABC News 24 on Wednesday afternoon and night, you might have felt the same revulsion as the Federal Government gave itself another public lobotomy.  

I suppose it's futile to expect the Liberal and Labor parties to have any real pro-urban policies going into the next election - Federal politics has traditionally stayed out of city development in most respects.  However we can't gloss over how much the Federal Government has a firm grasp on the nation's, and therefore the state's, purse strings.  They own the largest public purse, and it's the purse which is best equipped to invest in our cities, our core centres of productivity across the nation.

In the last Federal budget, the now former Treasurer announced Canberra's intention to help fund the Metro Tunnel project over the next decade (that's the realistic timeframe should the project start today) and Tony Abbott has already committed $1.5billion of public money to the East-West tunnel should he his coalition win government - a project the public has not seen the business case for (a project which really only rubs the collective tummies of the industry and road lobby groups) and will simply shift congestion from Collingwood/Clifton Hill to Parkville/Ascott Vale.  No prizes for guessing which policy I and other UrbanMelbourne.info contributors thinks is the clear winner.

Infrastructure Australia - a Federal body set up to assess infrastructure projects on merit and advise the Federal Government what to allocate funds to - looked to be the beginning of the end for infrastructure paralysis for cities.  The future of this agency isn't all that certain with a potential Abbot-led Liberal Government coming to power in the next couple of months given the aforementioned commitment to a dubious road lobby gravy train project.

Is it furthermore futile to hope for an NDIS-like rare show of bipartisanism on how to raise capital for new infrastructure through some kind of levy increase like the NDIS will have through the Medicare Levy?  If history is any guide, then yes it is futile.  We need to think out of the box with regards to new capital raising - and no I'm not proposing a further increase to the Medicare levy - for infrastructure, but increases in the GST and the carve up of the extra income derived from it must be on the table.  Likewise property value taxes which capture the increasing value of a property through local council rates when new public transport infrastructure is built should also be explored.

We don't need to have an infrastructure debate: we need to have a Federal Government-led future city debate because it will include anything and everything that a city is comprised of, naturally including infrastructure.  The Federal Government shouldn't pick winners and State Governments should steer away from complacency and ensure their cities, no matter how big or small, remain competitive on a national and global level, but the Federal Government must get involved with supporting cities more than ever before.

Will the party of urbanism please stand up?


Indulging for a moment: best cartoon I saw this week - the ever hilarious First Dog on the Moon over at Crikey, Leadership of the Federal Parliamentary Labor Partyopoly!

Photo credit: UM user Glennwilson.


Martin Mankowski's picture

I totally agree with you about the levy. However in the current political environment theres not much hope. The only reason the NDIS levy got through was if the liberals had have blocked it, they would have been saddled with the perception of 'Tony abbott hates disabled people', which, quite obviously, would have been politically fatal.

Given we have a minority government, and the election looms to be similarly close, I dont think any party would be brave enough to propose a new levy. Worse still, tony abbott is hell bent on building his own legacy, hence his ridiculous 'roads are a sign of progress' mantra as roads display a tangible and obvious sign of him doing something. Shame it wont solve any problems, just create them!

That doesnt mean a levy isnt possible in the future. 2 things need to happen. One, the (world) economy needs to enter another boom cycle, and so be condusive to what essentially equates to a tax increase. Two, we need a goverment that has a large enough majority, possibly in both houses of parliament, to be prepared to take a bit of a hit in the polls in the name of some important nation building.

However we cant wait that long.Raising the GST would be a good way of doing it. State governments get the majority of that revenue, so giving them a larger slice would make them less relient on the federal government to fund these projects. However this increase would have to be made conditional on state governments agreeing to a suitable urban agenda. So this is where I think the debate needs to start - at least the economic one.

Theres probably only one party willing to make that happen. Under a recent 'fresh start', they have the perfect opportunity to stand up and be the party of urbanism. The other party will certainly remain obstinately sitting down - which is somewhat inevitable when you're driving a car through yet another failed road tunnel.

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Alastair Taylor's picture

On the GST - I'd like to see something like:

- rate increased to 12.5%
- the existing 10% continue to work as is, divided up by the Federal Government as it currently is.
- the extra 2.5% (or whatever is increased by) on top of the existing 10% is sent directly back to the state the good or service was sold in, and paid directly to a state-managed infrastructure fund that can only be used for infrastructure projects.

See page 4 of this CGC report: http://www.cgc.gov.au/attachments/article/43/2012_Update_report.pdf

Victoria is estimated to receive $11billion in GST in 2012-2013 (the existing 10%).

If the rate were increased to 12.5% that would mean an extra $2.5-$3billion in extra revenue, dedicated toward capital for infrastructure projects.

Plucking a random figure to implement PTV's heavy rail plan over 20 years: $30 billion - it would be made a lot easier with that extra, direct, GST revenue.

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