A few weeks ago Lonely Planet named Newcastle one of its top 10 cities in the world to visit in 2011.

Really. Yes, the one in Australia. NSW, to be precise.

Given the perception — actually the reality — that large parts of Newcastle’s city are a basket case, the incredulity that greeted the announcement wasn’t entirely unfounded. Fortunately, it’s how parts of the city have been bouncing back that caught the eye of Lonely Planet and should be catching the policy attention of the federal Government and Minister for Arts and Regional Development Simon Crean.

When I last counted there were about 150 empty buildings in the two main streets of Newcastle. I’m a proud Novocastrian. Though now living in Melbourne, the slow decline of my home town has long depressed and frustrated me. That any major Australian city could fall so far that entire blocks are burnt out and falling into the main street should be a national scandal. That it isn’t and that governments seem structurally incapable of recognising that their own policy settings are often incentivising and accelerating the problem is a national tragedy.

While Newcastle is an extreme example, the problem of dormant and decaying commercial and retail space can be seen everywhere — major cities such as Adelaide, Canberra, and Hobart to major regional centres such as Cairns, Geelong and Townsville and country towns and suburban main streets. Something is broken in the very heart of many communities and decay is breeding decay.

How I ended up doing anything about it is a bit of a long story. Having presented a couple of short-lived ABC TV series a few years back I pitched the ABC a real world feel good arts story. Knowing that there were many in Newcastle keen to revive and activate their decaying spaces I pitched a doco idea to follow my attempts to undergo “a major transformation of the main streets of Newcastle … to provide opportunities for artists and physically change the dynamic of … a broken urban space.”

They didn’t buy it — but fortunately they strung me along for a bit. By the time they made up their minds I’d done enough legwork that I felt obliged to do it anyway. Shame about the doco because it turned out to be a corker of a story.

Since the beginning of 2009 Renew Newcastle has tackled the problem of Newcastle’s empty buildings directly.

We’ve launched more than 60 new creative projects and initiatives from artist-run galleries and studios, to designers and more designers, record labels, to publishers and fashion labels, craftspeople, artisans, one of Australia’s few dedicated zine stores and even a food co-op.

We’ve convinced and cajoled owners to let us open up, clean up and fix up more than 30 of their once-empty buildings. Newcastle’s Hunter Street Mall was in near terminal decline two years ago but is now full of new commercial tenants who have followed the foot traffic back. It has been a low-budget win-win that’s won a stack of awards locally and nationally across the arts, business and community.

When Lonely Planet elevated the much-maligned steel city to top 10 in the world status the “dozens of disused city-centre buildings occupied by photographers, fashion designers, digital artists and more as part of the inner-city regeneration scheme, Renew Newcastle” were cited as a major factor.

As news of what we’ve been doing in Newcastle has spread it’s become apparent that our strategies have applications elsewhere. There are thousands — perhaps tens of thousands — of lost opportunities in the form of empty buildings that are gradually morphing into self-perpetuating problems across Australia. Scores of grassroots groups and cities have contacted us with interest in emulating the cheap, rapid and simple successes of Renew Newcastle.

As a result I’m in the process of trying to roll out Renew Australia as a national scheme to support other areas but as we scale up the role of the federal Government becomes increasingly critical. It’s not simply a funding question. To understand why, you need to start with why Newcastle and towns like it have empty buildings in the first place. Yes, there are hard infrastructure problems, legacies of economic and physical (in Newcastle’s case) shocks but at the core — as anyone who has ever tried to rent any of these empty spaces can attest — the problem is not simply one of supply and demand. The incentives in the system are seriously f-cked up.

Many owners of empty buildings aren’t even trying to rent them. Absent owners maximise the value of their buildings by boarding them up and writing off the losses. Overzealous building codes require a lot of capital to access perfectly functional spaces — for even temporary uses. A ballooning property bubble encourages short-sighted speculators to think that they can get rich anyway and a minefield of insurance and compliance issues can derail even the most well-meaning property owner from activating empty spaces.

We’ve done about as much as we can and it’s working. Renew Newcastle isn’t a funding program or even a particularly well-funded one. It has 1.2 staff — I’m the .2. It’s an efficient intermediary that attempts to simplify these complex problems and create a few incentives that run in the opposite direction. We manage the risk. We hold the insurance policies, we have licence agreements that nullify many of the problems that come unintentionally with a lease, we draft in professional expertise to get around at least some of the compliance issues and the sweat equity to do the work, we use a rolling 30-day access period so as to eliminate opportunity costs for the owners and through managing all of that we get people back into empty buildings again. Where owners are keen enough to participate they have benefited and so have their community.

To scale up it needs to get beyond the one-crazy-guy-seed-funding-it-with-his-credit-card approach. In the face of bad incentives and in the absence of funding, it’s a long slog to even get at the low-hanging fruit. To date the federal Government has proved impenetrable and unresponsive.

Yet, there is a real opportunity here.

Up until now a major part of the problem has been the siloing of policy making. Arts policy is struggling with the 20th century and highly unlikely to leap to the 21st any time soon. Regional development seems preoccupied with capital intensive infrastructure and not the nuances of creative initiative and compliance costs. But now the buck for both stops in the same place — under Crean there is at least some possibility to tie some of these threads together. There’s also a pragmatic political imperative now that regional Australia is back on the agenda and the seemingly high correlation between empty spaces and politically significant seats.

The transformation in Newcastle has created a template for high impact, rapid, cheap, and effective revitalisation that communities across Australia are beginning to take up. Whether those communities do that with the support of or out of frustration with the federal Government remains to be seen.

Marcus Westbury is the founder of Renew Newcastle and the forthcoming Renew Australia. Simon Crean should be able to find his contact details in his inbox.

This essay is part of Crikey’s Big Ideas series. We’ve had enough of sound bites set on repeat, glib slogans and half-baked committees  – we’re looking for the vision thing. One Crikey subscriber will also get the chance to share their Big Idea with our readers: send us a three-line pitch, on an issue of national importance that gets you fired up, to boss@crikey.com.au with “Big Ideas” in the subject line.