9 February 2015
(21:05): Whilst there have been some distractions over the past week or two, work on policy has continued. Tomorrow night will be the culmination of much work by my office, in my capacity as Chair of the Coalition Policy Committee on Infrastructure and Regional Development. This work was inspired by my experiences living in Atlanta, Georgia, as I witnessed the Sun Belt boom as a direct result of improved transport accessibility. I detailed this in my maiden speech, which led to my appointment as chair of the coalition’s Sustainable Cities Taskforce.
The research and analysis performed by this taskforce exposed the best solution to the malaise that affects inner urban electorates in our largest cities. My electorate of Bennelong enjoys the dubious honour of being home to five of the state’s 10 most congested roads. Anyone who regularly commutes on these roads knows the pain shared by thousands on a daily basis. Governments come and go, and many fall into the trap of developing policy in short-term cycles mirroring our electoral cycles. Whilst we rightly celebrate our democratic institutions, it is this myopic approach to policy development that has led to so many of the ailments affecting our modern-day major cities.
An extra lane to a road or the construction of a bicycle shelter is a solution that merely tinkers at the edges of the problem. The real answer needs to be big—based on policy that thinks big. From my work, I was continually brought back to the same conclusion: that the answer is decentralisation through connectivity. In my maiden speech I cried out, ‘Where is our Atlanta?’ How can we develop and grow our regional centres to be strong, vibrant, self-sufficient cities? Answering this question will resolve our challenge to ensure Melbourne and Sydney do not become overly congested, crime ridden metropolises like New York and Chicago were in the seventies.
Decentralisation occurs through investment in regional development to encourage businesses, and therefore employment opportunities, to relocate because of the significantly lower costs of operation. As the job opportunities grow so do the families, the social institutions, the entertainment and suddenly these regional centres are burgeoning cities offering residents the full suite of general and specialised services. This growth creates huge increases in property value from a very low base. It is the capture of this value that provides a sustainable funding model to finance the infrastructure that initially created the connectivity and therefore stimulated the regional development.
A huge spike in housing development, transport construction and urban renewal leads to a significant net increase in government revenues: capital gains tax, stamp duty and even GST. This money would not make it into the government coffers if the initial infrastructure was not built. The trick is to accurately estimate the forward projections of this increased revenue to provide the up-front financing commitment or debt guarantee. This concept is known as value capture and operates in a variety of formats across the globe. Tax increment financing is used in 49 of the 50 states of the United States.
Betterment levies are providing the funding for the majority of the 14.8 billion pound cost of the London Crossrail project currently under construction. Hong Kong, Japan, Korea, Brazil and South Africa all have value capture systems in place to fund their infrastructure. Our country has a short history of implementing value capture initiatives to build big infrastructure but not the policy fortitude to reap the full rewards. The construction of the Sydney Harbour Bridge was based on a betterment levy predicted to raise one-third of the total construction cost. This was charged to property owners immediately north and south of the bridge, who were expected to benefit most from increased land values on both sides of the harbour. In another example of myopia, the betterment levy was removed after just 15 years, prior to reaching its funding goal, due to local political opposition. And yet those landowners and thousands, if not millions, beyond have benefited exponentially from that connectivity.
Tomorrow night I am hosting a meeting that will feature guest presentations from some of the nation’s foremost experts in this field from the world of business and academia. They will be joined by departmental and ministerial representatives to thoroughly dissect the opportunities available to our nation to help us resolve our infrastructure deficit and catch up with the rest of the world. I look forward to reporting back to the House on the results of this meeting and fulfilling my core duty to the people of Bennelong. (Time expired)