December 1, 2015
Source: The Sydney Morning Herald
Author: Tim Williams
1st December, 2015
Cities collaborate to compete. Looking at cities around the world, it’s clear that collaborative cities produce better results.
Strong local and state government collaboration across 15 councils in Metro Denver persuaded their communities to increase GST by 0.5 per cent for 30 years, but tied it to investment in a fantastic new public transport network. In London, the new $30 billion Crossrail project is being part-funded by private sector beneficiaries of the investment paying a higher business rate, reinforced by all Londoners paying a small amount each year in their rates.
Cities simply cannot be run well without such collaborations, across government, between sectors, with the community and business. Which brings me to a philosophical proposition and a challenge for Sydney.
The philosophical proposition is this: cities are the ultimate public-private partnerships. Ideologues of the hard left or right are just wrong. The totally free-market city is as unimaginable and indeed as undesirable as the totally socialist city. We have seen enough of both to know that the best approach is the mixed economy where the role of government is to plan, regulate and indeed intervene to ensure that we get the best results from the market and enterprise.
Government’s very purpose is also to ensure that what economists call the “negative externalities” of market activity are reduced to a socially and economically beneficial minimum – in the interests of society and private enterprise.
This is why we have regulations limiting emissions or speeds on our roads and why town planning exists at all: markets left to themselves simply cannot deliver liveable, safe, productive and equitable cities.
In the modern lingo, cities are co-produced between the public and private sectors and the community. The effective partnership between these forces creates great cities.
In the current state of Australian cities you’d have to say that the partnership needs renewal around a core “negative externality”: housing affordability. And it is the public sector that needs to bring something new to the collaboration.
At 12 times the average yearly salary, housing affordability is twice the problem it was 20 years ago. Government fingers are all over this problem. Since the 1990s, governments globally have allowed promiscuous financial leveraging of the economy which has fuelled housing inflation. The private sector didn’t create this problem and cannot solve it.
The same is true of the other side of the housing equation – not just how do we make homes more affordable, but how do we supply more “affordable housing” in the form of sub-market rental for those excluded from both home ownership and the increasingly competitive rental market?
Although it’s conventional to demonise developers, the absence of new sub-market rental stock in Sydney is entirely down to government. Simply put, if the government wanted more sub-market rental in Sydney, say for key workers currently experiencing housing stress – those nurses, teachers, police, fire-fighters we need to make our city work – they have the answer.
Use government land: stop doing what you are doing at the moment, which is selling your land at top dollar which then disappears into Treasury. Instead, tender government land with a requirement for a mandatory amount of sub-market rented accommodation, as they would in South Australia (where 15 per cent is mandated) or London (at 40 per cent, which is the planning requirement on all developments whether on private or public land).
This can only be achieved if the government accepts a cheaper sale price from the private sector than it can achieve in an outright sale at market rates. Only this collaboration between the public and private sectors can achieve more sub-market rental properties in Sydney.
The private sector is not the barrier. At the core of the solution is the way the government disposes of public land – and what it sees as the best return from its assets: cash – or a better, more inclusive city?
Read the article here.