EDA Journal Vol 10. No.2 Spring 2017 | Page 5

ECONOMIC DEVELOPMENT QUARTERLY LOCAL GOVERNMENT AND ECONOMIC DEVELOPMENT INTERPRETATIONS: ENABLING AND CONSTRAINING FUNCTIONS BY LEE PUGALIS, PROFESSOR OF URBAN STUDIES, UNIVERSITY OF TECHNOLOGY SYDNEY INTRODUCTION The role of government in economic development continues to divide opinion, influenced by views about market failure, equity and efficiency. Nonetheless, it is difficult to find a unit of government that does not have objectives and aspirations to support and grow the economy. Recent years have been marked by a conveyor belt of formal debates, initiatives and reforms, intended to help clarify and improve the effectiveness of different branches of government in promoting economic development. In Victoria, for example, there was the 2012 inquiry into local economic development, which was proceeded by the 2015 review into regional economic development and services. Most recently, the House of Representatives Select Committee on Regional Development and Decentralisation is, amongst other things, inquiring into best practice approaches to regional development. Notwithstanding the many positives outcomes associated with these endeavours, there is little agreement about the scope of economic development. In turn, debate on the role of government in economic development is troublesome, politically divisive and ridden with conflict. This condition serves as a barrier to meeting economic growth objectives and broader social, economic and environmental outcomes. This article draws upon recent research conducted by the Centre for Local Government, which examines the role of local government in local and regional economic development (Pugalis & Tan, 2017). The objective of the article is threefold: i) to survey different framings of economic development, ii) to demonstrate how these interpretations influence local government practice, and iii) to draw out the implications for policy. The research findings may prompt the local government sector together with other actors and institutions to reflect upon their role in economic development. THE NATURE OF LOCAL GOVERNMENT Absent from the Commonwealth Constitution, local governments are legislated for in state/territory government constitutions. Hence, no single system of local government exists in Australia, but a variety of different systems. From a legal standpoint, local government has no status or powers of its own: its existence and powers are derived from ‘above’. As a result, councils are typically understood as the third tier of government in Australia, but conversely they could be understood as the first tier of government due to their close connections and everyday interactions with citizens and businesses. Within the Australian system of governance, local government is politically, fiscally and legislatively heterogeneous. All states and territories (except for the unitary system of the Australian Capital Territory) have a local government system. As of May 2016, there were 561 local government areas in Australia (see Table 1). The role of local government in Australia and its raison d’être is perennially being questioned and reformulated – evidenced by ongoing structural reforms, including forced amalgamations. Local governments are a diverse sector; ranging from very large metropolitan to smaller rural organisations in terms of population coverage. Paradoxically, some of the most geographically expansive local government areas are some of the most sparsely populated. For example, the Shire of East Pilbara in Western Australia, which covers 380,000 sq km, is larger in area than Germany, but has only 10,591 residents. Councils differ in the wide range of services they provide, although general functions, including infrastructure, building, planning and community services, are often directly relevant to economic development pursuits. Thus, it can be claimed that ‘[l]ocal government underpins economic development efforts in this country’ (Beer & Maude, 2002: x). VOL.10 NO.2 2017 | 5