Insights
Melbourne: Governing the growing metropolis
Posted October 01, 2019
Notwithstanding these efforts at place-based policy making and implementation, projects of a city shaping nature occasionally ‘drop from the sky’ – the Suburban Rail Loop being a recent example. I am instinctively supportive of a project like the SRL, and the vision shown by Government in pursuing this initiative is admirable. Nevertheless, it is problematic that a massive project like this, with such far reaching, intergenerational, effects can be conceptualised in the equivalent of the bureaucratic ‘backroom’ with no real links to the other apparatus for integrated planning and service delivery.
The innate silo tendency of State Governments can also trump the best designed architecture for integrated, place-based service delivery. A good example, in my view, is provided by the erstwhile Office of Living Victoria (OLV). It was commissioned by the State Government of the day to champion integrated water cycle management across the whole of metropolitan Melbourne – requiring a catchment and place-based approach to integrating urban planning and water planning. The institutions of State Government convulsed and ultimately spat out the intruder. Notwithstanding the odd show piece project, Melbourne’s water infrastructure system is much the same as that originally put in place a century ago, characterised by long distance haulage of water and waste water, haphazard management of urban drainage and little recycling. Without doubt, OLV was badly managed, but the institutional barriers it faced were probably also real.
It is a fair question to ponder that if, as I contend, the State Government is structurally incapable of managing urban growth, why is it that we have a metropolis that is famed internationally for its livability?
For one thing, for 100 years of its 180-year history, the metropolis had the benefit of a city-wide sphere of governance responsible for water infrastructure, roads, major parks and land use planning. It was called the Melbourne and Metropolitan Board of Works. It was democratically mandated, had its own tax base and sat between State and local government.
It was abolished in 1982/83 by the incoming Cain Labor government, principally because a reforming government with its own ambitious agenda for transforming Melbourne, did not want to have its authority to do so contested by another powerful body. In my research, many of the senior people involved in taking down the MMBW now look back with regret.
The State Government was also better able to cope in the past because the metropolis was smaller and easier to contend with. Moreover, the world of commerce was simpler and more amenable to centralised planning and management. We now have an economy which demands a nuanced place-based approach, something that is more challenging for State jurisdictions with the silo tendencies.
So, while we have an energetic State Government with a big vision for Melbourne, I don’t think this sphere of governance has the wherewithal to manage metropolitan development towards an adopted end, at least not by itself.
We need to construct stronger institutions for integrated metropolitan planning and infrastructure co-ordination, and we could start by building on the Greater Sydney Commission (the GSC) model. The Commission is an arm’s length agency with a clear mission to build and take custody of the metropolitan strategy. It has delivered a compelling plan (a Sydney of three cities; Eastern Harbour City, Central River City and Western Parkland City) which shows every sign of aligning investment and planning across State agencies and local government.
But making a good plan is only a start for, and probably the easiest part of, managing the metropolis. The GSC model needs to be taken further in three key areas: democratic mandate, fiscal autonomy and functional jurisdiction.
On the question of democratic mandate, the governance of a Melbourne Metropolitan Commission should set aside the GSC’s system of appointed district and subject matter commissioners and instead allow for genuine local government representation. This could involve members directly elected by citizens. However, at least in the early stages of its existence, a more modest form of democratic representation could be pursued. The last iteration of the MMBW provides a useful model in this regard: There were five electoral colleges of councillors across the metropolis, each mandating one of their numbers to sit on the board of the Greater Melbourne Authority. The State Government appointed the other members; unsurprisingly it held a controlling majority, but local government still felt real ownership of the institution.
The Melbourne Metropolitan Commission would require a degree of fiscal autonomy, otherwise it would not enjoy genuine agency and independence. I think the obvious source of revenue for this sphere of governance would be the sale of development rights through a licencing system. This would require clear assertion of community ownership of development rights and treating them as we would any other publicly owned economic resource (like mineral resources, water, commercial fisheries etc); that is, we would charge an access fee.
A working model is provided by the ‘change of use charges scheme’ in the ACT, whereby development proponents must pay around 80% of uplift in land value to the Territory Government upon development approval.
We already charge a de facto development licence fee in different parts of the planning system. For example, proponents of development exceeding a plot ratio of 18:1 in central Melbourne are required to pay the residual land value of the additional floorspace in the form of various public benefits.
A broad-based development licencing system could raise between $500 million and $1 billion per year, or much more, depending on where the value capture rate is set. This new tax base for regional governance would be ‘non-distortive’. Because it would amount to a tax on land rather than on developers, Melbourne would continue to enjoy the investment flows into productive construction it would have otherwise seen.
In terms of functional jurisdiction, the Commission would be the custodian of Plan Melbourne. And it would be the planning authority for all those parts of the city which are of metropolitan significance – major activity centres, the principal public transport network (PPTN), the urban growth boundary and the national employment and innovation clusters. Local government would have to stand aside in these areas.
The Commission should be given a ‘gate-keeper’ role in the testing of potential city shaping projects generated by the State Government ‘silos’. Projects would only progress to business case stage if they are congruent with the preferred spatial strategy.
The Commission would own and operate the PPTN and the arterial road network, as well as metropolitan parks and the stormwater, sewer and water supply system. As a place-based sphere of governance it would be able to unlock synergies and innovations in these systems which have proven elusive for State Governments acting alone.
Letting metropolitan Melbourne loose to achieve its full potential would benefit all Victorians and Australians in general. And contrary to the popular retort, would not render the State Government redundant. The State would still be responsible for the laws under which the metropolitan authority operates, just like local government. Moreover, the State Government would remain responsible for many of the big budget functions in our community, including education, health and policing. There’s plenty of policy and power to contest in these areas!
This reform would require genuine power sharing in the interests of a better metropolitan Melbourne. State Government would obviously need to loosen its grip on a number of functions it has directly controlled since the mid 1980s, especially over the planning system and investments in city shaping infrastructure (though the State would ultimately have the last word). Local Councils would, as mentioned, have to give up control of some parts of their municipalities, but they would have a real and meaningful stake in the governance of the metropolis.
You can read more about the case for a ‘self-governing Melbourne’ in Australia's Metropolitan Imperative - An Agenda for Governance and Reform.