Using Council-Owned Corporations for Economic Development

Introduction

Welcome to the fifth article in our series on council-owned corporations. This article explores how council-owned corporations can drive sustainable economic development and support long-term community outcomes.

Council-owned corporations are increasingly being leveraged as strategic tools to drive economic development. By operating through a corporate structure rather than traditional council mechanisms, councils can pursue infrastructure and development projects more efficiently, attract private capital, and balance public accountability with commercial sensitivity.

Reducing Red Tape

One of the most significant advantages of using a council-owned corporation is the ability to operate with less bureaucracy than a council.

Council processes are often constrained by extensive regulatory and internal approval frameworks, which can slow down project delivery and limit flexibility. For example, engaging contractors for a development project would typically require:

• preparation of detailed tender documentation that complies with council procurement policies and procedures;
• public advertising of the tender;
• formal evaluation panels to assess submissions against pre-determined criteria;
• internal reporting and approvals, often involving multiple departments (procurement, legal, finance, governance, business units etc.); and
• Council resolution or approval at executive and/or committee level before awarding the contract.

In contrast, council-owned corporations can make decisions more quickly within delegated authority limits without requiring council resolutions for routine matters. This allows council-owned corporations to streamline the procurement and contracting processes and respond flexibly and with agility to market and commercial opportunities, such as negotiating land transactions, entering joint ventures, or engaging contractors.

This reduced red tape allows council-owned corporations to act with a degree of commercial independence while remaining accountable to the council as the shareholder. This increased efficiency enables them to seize emerging opportunities promptly, without the delays that often accompany traditional council approval processes.

Effectively Leveraging Corporate Vehicles for Infrastructure and Development

By operating through a corporation, councils can structure and deliver projects in a commercially disciplined way, allowing them to access specialist expertise, manage complex funding, assets and project arrangements, and pursue projects that might otherwise not be possible the same way for the council directly.

Whilst there is a more comprehensive policy framework that we would recommend for a council-owned corporation, to effectively leverage corporate vehicles for infrastructure and development, we would recommend putting in place dedicated frameworks for governance and accountability, such as:

• Board Charter
• Corporate Governance Framework
• Delegations of Authority
• Procurement and Contracting Policy
• Treasury & Investment Policy
• Risk Management Policy
• Financial Management & Reporting Policy

These frameworks help ensure projects are financially sound, risks are identified and managed, and reporting standards are met. Using Australian standards such as AS ISO 31000 for risk management and tailoring the policy for your company’s objectives and risk appetite can further strengthen decision-making processes.

Council-owned corporations can focus on multi-year projects, managing assets and debt over their lifecycle to maximise value for both the council and the community. For example, a council-owned corporation could manage the development of a transport hub or mixed-use precinct, coordinating funding, design, construction, and leasing activities under a corporate governance framework while keeping the council informed of progress and risks.

Attracting Private Capital and Co-Investment

One of the key strategic advantages of council-owned corporations is their ability to leverage private investment to co-fund projects. Traditional council structures may face constraints in attracting private sector participation due to procurement rules, political considerations, or administrative processes. In contrast, council-owned corporations can operate more commercially to:

• form public-private partnerships for infrastructure and urban development projects
• attract co-investment in commercial developments with shared risk and returns
• access financing and corporate credit facilities that may be unavailable to councils directly

These arrangements can increase the scale and scope of economic development initiatives while sharing part of the financial and operational risks with the private sector. For example, a council-owned corporation might partner with a private developer to build a commercial precinct, where the corporation contributes land and planning approvals while the private partner provides construction financing and expertise. Clear governance frameworks ensure the partnership is structured fairly and delivers value to the community.

Driving Sustainable Economic Development

When structured and managed effectively, council-owned corporations can be powerful drivers of sustainable economic growth. They enable councils to deliver projects efficiently, support local employment and attract private investment, while maintaining transparency to the community.

By combining commercial agility with robust governance, council-owned corporations can pursue development initiatives that may be difficult within traditional council frameworks. Their flexibility allows innovation, responsiveness to market demand, and alignment with broader community and environmental goals.

Council-owned corporations are also well placed to embed sustainability into procurement and project delivery, ensuring economic growth is environmentally and socially responsible. As explored in our Sustainability in Procurement Article Series, integrating sustainability considerations such as circular economy principles, life-cycle costing, and supplier engagement can help councils and their related entities achieve smarter, more resilient outcomes. In this way, council-owned corporations contribute to both immediate economic recovery and long-term sustainable prosperity.

Conclusion

Council-owned corporations provide councils with a flexible and commercially capable tool for economic development. By operating within robust governance, financial and compliance frameworks, councils can use these entities to deliver infrastructure, attract private investment, and stimulate economic growth while still maintaining transparency and accountability.

Suggested policies such as Board Charters, Corporate Governance Frameworks, Financial Management & Reporting, Risk Management, Procurement & Contracting, and Transparency Policies help councils manage risk, uphold public trust and achieve long-term value for the community.

When thoughtfully structured and supported by appropriate policies, council-owned corporations combine the agility of a commercial enterprise with the accountability of public service, making them powerful vehicles for sustainable and impactful economic development.

Councils seeking to accelerate sustainable development should consider how a council-owned corporation model can unlock new opportunities while delivering lasting community and environmental benefits.

If you would like to discuss the establishment of a council-owned corporation for property development and/or investment purposes or need assistance with the development of a governance and policy framework, please reach out to our authors.