President’s column – 28 August 2020

Image shows President David O'Loughlin smiling in front of a black background

Are you ready to play an even greater role?

Last week, Reserve Bank Governor Philip Lowe provided National Cabinet with an economic update which will have a direct and important bearing on our local government sector.

Dr Lowe told first leaders that jobs and unemployment are the biggest economic challenge Australia faces during Covid-19, and that all governments need to coordinate their focus in three key areas:

  • Income-support programs such as JobKeeper;
  • reduced taxes and less regulation; and
  • investments in “our physical capital including infrastructure and human capital via skills and training”.

Crucially, he called on state and territory governments to provide more fiscal support – around $40 billion over two years – to address current economic challenges and for them to ensure this investment is “purposeful and achieves the maximum economic dividend”.

To put that $40 billion figure in context, it is equivalent to the amount already injected into stimulus and support measures rolled out by state governments since March.

Prime Minister Scott Morrison later revealed there had been “a very good discussion [in National Cabinet] about about how state governments can be supporting local governments with their works and their measures, particularly as they reach out beyond metropolitan areas into regional communities”.

He added: “And we [the Commonwealth] welcome that discussion”.

The states’ willingness to spend more to sustain employment during the pandemic has become a bone of contention in recent weeks. That argument need not concern local government at this point, however.

What is clear is that National Cabinet will act on Dr Lowe’s directive – and that more infrastructure money (whether emanating from the Commonwealth, which has the greatest capacity of all governments to raise and service debt, or the States/Territories) will flow, and perhaps soon.

If the intention is to invest money in local infrastructure efficiently, effectively, and productively, then local governments should be the primary investment vehicle.

Our success in delivering long-established programs like Roads to Recovery, Road Safety Black Spot upgrades, Bridges Renewal, and community facility upgrades speaks for itself. It amounts to over 60,000 projects over 20 years.

When Covid-19 took hold in March, councils were immediately on to front foot bolstering their already sizable involvement in facilitating, establishing, and growing local businesses and economies.

When the Morrison Government said infrastructure investment would be an integral part of its three-tiered Covid-19 national economic recovery strategy, local government responded.

In addition to expanding our capital works programs, we quickly identified further project works for the Deputy Prime Minister’s $500 million Local Roads and Community Infrastructure Program (LRCP) – no small task given the nominated deadline for completion is 30 June 2021.

Infrastructure projects have also been a major focus of federal and state initiatives implemented during Covid-19: indeed, the NSW Government last week announced applications were open for its 2020 Fixing Country Roads program and its Fixing Country Bridges program.

Given that mainstream infrastructure contractors are reaching capacity, and their market is at risk of over-heating, ALGA expects that a sizable chunk of the additional $40 billion Dr Lowe wants invested in job creation will be directed at eligible community infrastructure projects, with a commercial building contractor focus, including repairs and improvements, to fill the “stimulus gap” between the Home Builder program and the recent nationwide civil infrastructure spending boost.

The Prime Minister also referenced water infrastructure at his press conference last Friday.

Councils, then, should start preparing screwdriver or paintbrush-ready community projects for state government assessment. Larger community infrastructure project master plans should also be dusted off, and cross-checked with the community. Access to, and tolerance for, further debt should be tested – in the event any grants require matching funding.

If you have plans to improve, renew, or add capacity to water, wastewater and stormwater infrastructure, particularly in regional areas, these should be expedited or freshened up with current cost plans.

We need to make the strongest possible case for local government to be the primary conduit for this potential new money by, among other things, reiterating our record of achievement over the past 20 years and six months in particular. 

It has been outstanding – we have proven to be exceptional investment partners each and every time other governments have chosen to work with us on projects.

It is yet another reason why Australians continue to expect all three levels of government to work closely together on national health and economic recovery. Three levels, two focuses, one peak decision-making body – National Cabinet.