The secret to a ‘smart funding cocktail’

By Kim Powell in Hobart

Unless regional infrastructure is up to scratch, investors will not look beyond major cities when funding projects, and several federal inquiries have confirmed this is already happening, said an expert in investment attraction at the LGAT conference in Hobart.

“The worldwide evidence is that the quality of regional infrastructure is possibly the most important determinant of regional investment,” said Rod Brown, managing director of Australian Project Development.

“Getting strategic infrastructure right is vital to delivering investment in local productive capacity. It is amazing how often in Canberra the role of productive capacity is forgotten. It’s not just jobs, jobs, jobs: it has to be sustainable jobs in a sustainable capacity.”

With the threshold at which institutional investors lose interest at about the $20 million mark, Mr Brown suggested that councils could get around this by bundling projects into what he called “smart funding cocktails” that were a mix of private sector and Federal, state and local government funding.

“We want to bundle up and fund through some smart funding cocktails projects with a mix of private sector and federal, state and local government funding,” he said. “Bundling 10 or 12 water recycling projects where the engineering similarities might be the same in a region. The other half of bundling is to be able to bundle different types of infrastructure across the one region.”

As well as suggesting ways to help councils attract investment, Mr Brown told delegates that by playing a greater role in overseas aid, councils could make themselves more indispensable to the Federal Government.

“The general consensus is our aid program needs a major overhaul,” he said.

“[Foreign Affairs Minister] Alexander Downer put out a white paper on the 26th of April, but the gist of it is a lot of our aid must go into economic development. We’re sick of paying aid bureaucrats to be aid bureaucrats. It must go into community building and infrastructure [and] local government are the experts at the local level in community building and infrastructure. The whole point is to position yourselves as key players with the Federal Government, because they cannot rely on consultants and aid bureaucrats, they need local government as part of that agenda.”

Rod Brown’s 10 techniques for councils to connect with Canberra
1. Get a feel for the government apparatus in Canberra.
2. Do not ignore officials. A meeting with the Minister will always see you back with officials at some stage because of the emphasis on accountability and transparency.
3. Identify the public good. Local government must be ready to put money into projects.
4. Think of federal funding as three different categories: small and easy grants; big and difficult grants, such as water funds and some roads projects; and new policy proposals where Cabinet has to sign off.
5. Be committed. Be aware that the success rate is 12 to 15 per cent.
6. Be aware that the administrative reporting procedures are onerous, but getting it right translates into other opportunities.
7. Lobbying is easier with economically and financially sound projects.
8. On the bigger projects, think iconic. Put your agenda into a national policy framework.
9. Meet on your turf whenever possible. Don’t invite a minister to come and talk to you because they’ll bore you stupid with their program. Pitch it in terms of a question and get them involved in solving your problem.
10. Get regular reality checks – use your networks and local champions to check where you’re at.


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