Mr Deputy Speaker
Over the past four and a half years I have made many speeches in this place on the infrastructure deficit in Bennelong, and the damaging flow-on implications this has on economic productivity and family relationships.
This malaise reaches across our nation and the Abbott Government has correctly identified infrastructure as a key economic and growth driver.
For too long Australians in both urban and regional areas have suffered from lack of planning and timely construction of infrastructure.
The immediate challenge is to address the deficit that has occurred while ensuring that history doesn’t repeat itself through an absence of commitment to future planning.
The Infrastructure Australia Audit Report recently released by the Prime Minister noted “the current level of public sector expenditure – especially in the transport sector – may be unsustainable”.
It also stated “the current arrangements for the funding of land transport represent the most significant opportunity for public policy reform in Australia’s infrastructure sectors.”
Finally the audit noted that “Government funding alone is unlikely to be sufficient to provide the infrastructure that Australia requires. Maintaining or strengthening conditions to facilitate private sector investment in and operation of Australia’s infrastructure networks is fundamentally important.”
It has become clear that the manner in which governments have funded infrastructure development simply hasn’t delivered the outcomes we expect and need.
Infrastructure construction is a long term and risky business. Companies willing to spend the millions required just to tender for projects require stability in the process and certainty in remuneration.
Failure by governments at all levels to provide this environment has led to generations of neglect in planning and infrastructure deployment to keep pace with our growth.
All transport infrastructure built in this country has been as a direct result of the preceding population growth. This is despite the fact that the growth had been severely restricted by the capacity constraints of existing infrastructure.
My contention is that the infrastructure should serve as the stimulus for future growth, and it is that growth that should be the source of funding for the infrastructure.
This would create a sustainable funding loop where the infrastructure is essentially funded by the benefits it creates.
The alternative is to continue retrofitting infrastructure into our major cities, which is a significantly more costly and logistically difficult exercise.
As land values increase, resumption becomes too expensive so tunnelling is the only option. If tunnelling is too expensive, nothing happens.
Residents in and around my Bennelong electorate know this tune all too well, which has led us to possess five of the ten most congested roads in New South Wales.
Whether it is increasing our housing capacity through urban renewal and densification, or finding ways to grow through regional development, the opportunity to fund the necessary infrastructure through innovative methods is absolutely essential.
This realisation brought me to the concept of value capture, which is used to great success in different formats in many countries, including the United States, United Kingdom, Brazil Korea, Japan and Hong Kong.
This concept harnesses the extra tax revenues drawn from the increase in property values that directly result from the construction of transport infrastructure connectivity.
Australia is very well placed to utilise such a system as our two core property taxes are value based: Capital Gains Tax and Stamp Duty are both calculated on the real value of the property.
We therefore have an opportunity to take a different approach to infrastructure funding; to actively rezone and build connectivity that will maximise property value increases.
Rather than the fashionable concept of transport oriented development, this would be more akin to development oriented transport.
As a government this approach would stimulate a huge growth in tax receipts, and therefore create a new pool from which to fund the infrastructure that was the initial source of the growth.
Value capture brings collateral benefits beyond contributing funds, through its capacity to establish an alignment of state and local government with federal objectives.
Through this alignment government can provide an environment of certainty, stability and sustainable growth under which business can flourish.
This link is forged by the certainty for states to receive federal funding for specific infrastructure projects enhanced by their optimal zoning and development approval processes.
Without a plan our country’s growth, productivity and competitiveness has been compromised, characterised by overheated inefficient cities and regional areas frozen out.
We must build the bridges to unite the three tiers of government with business, and to level out that imbalance.
Value capture has great potential and vast application to deliver our infrastructure needs now and in the future.