Regions need more funding and capability

By Paul Hemsley

Regional areas need more funding allocated to infrastructure projects, according to a report commissioned by the Australian Local Government Association.

The 2012-13 State of the Regions Report, prepared by National Institute of Economic and Industry Research (NIEIR), said a ‘new approach’ to regional development is required to address ‘inequality issues’ across Australian regions.

As an economic analysis of every local government area in Australia, it identifies Western Australia benefitting from the mining boom, as well as regions in New South Wales and Queensland in their own ways.

However, the report also identifies negative impacts in other states and regions.

NIEIR co-author of the report, Dr Peter Brain said there has been insufficient investment in regional Australia because it isn’t planned and is due to a structural imbalance in Australia’s governance structure.

Dr Brain told Government News that the Commonwealth has the money and all the responsibilities, therefore it tends to over-allocate resources to areas.

He said $300 billion has been under spent in transport infrastructure that could have been spent in a pre-deregulated regime.

Dr Brain said it is true that local governments tend not to make a convincing case in their expressions of interest and it takes time to build skills and lower levels of government have not been fully involved in making these expressions.

“The necessary local projects are bigger than the local area,” Dr Brain said.

According to Dr Brain, managed interest and the funds available could possibly accommodate under existing structures, “so there’s the strategic issue and there’s the capability issue”.

“When the capability issue is suddenly involved, you could say ‘okay, you have access to some funding, go to and make the application’, if you haven’t been involved with thinking about the strategy or have the skills available to do that, you’ve got to start from scratch, and there’s a learning process,” Dr Brain said.

Dr Brain said the Regional Development Australia Fund from the federal government is “a step in the right direction and we’ve got to build on that”.

He said the building blocks are more resourcing, more strategic issues of the local focus so that projects can be funneled through the system.

According to Dr Brain, a necessary first step to rethinking regional development across local government areas in Australia is to establish an independent commission of inquiry into the issue.

“If the inquiry concluded that non-mining regions have been adversely impacted due to ineffective planning for regional development, we would have a catalyst to start the process for a productive redesign of regional planning in Australia,” Dr Brain said.

Following the report from NIEIR, the Department of Regional Australia released review from Ernst and Young identifying ways for local governments to plan, finance and deliver infrastructure investments.

Minister for Regional Australia Simon Crean said nation-building does require "big investment" in infrastructure.

“That can’t be done by governments alone – we need partnerships between governments, and where appropriate, with the private sector,” Mr Crean said.

Mr Crean said infrastructure and skills are the constraints to growth and the nation’s future infrastructure needs can be met if partnerships are developed.

“Governments have a key role to play because there is a public benefit – but the private sector also has a role to play,” Mr Crean said.

He said it will be better if governments more effectively partner, but the partnership “also has to include the private sector”.

According to Mr Crean, the report recommends a number of financial instruments to address these issues.

It argues for a national authority capable of addressing the capability and aggregation functions along with appropriate financial instruments, Mr Crean said.

“We know there’s been a concerted effort on behalf of councils to improve their financial and asset management processes,” he said.

“The key is to also keep building capability, and the review recommends extending existing programs of training in these areas.”

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