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Urban Renewal Densification and Infrastructure Policy Proposal

Urban Renewal Densification and Infrastructure Policy Proposal

by John Alexander OAM MP, Member for Bennelong


Insufficient planning of our nation’s settlement has created a significant challenge for state and federal governments. Major cities face prohibitive costs to retrofit infrastructure, extreme cost of living pressures and crippling congestion impacting on productivity, competitiveness and quality of life.

The rezoning of land coupled with a commitment to infrastructure construction (at a state and local level) attracts speculated property value uplift and transactions that generate increased Capital Gains Tax (CGT) revenues that are receipted at a federal level.

In anticipation of this the Federal Government has the ability to quarantine (an estimation of) the increased CGT revenue to provide guaranteed funding to ensure the project’s commencement.

This mechanism could be used for both urban renewal and nation-building regional development projects.


The genesis of this concept was a report on innovative policy proposals for the development of regional centres and the long-term sustainability of our nation’s major cities.

This report focussed on initiatives that would encourage decentralisation and thereby reduce the pressures that lead to traffic congestion and inflated property prices in the metropolitan electorates we represent.

A range of meetings with NSW Government and industry representatives has led to the crafting of a practically workable, economically responsible and politically viable concept that has the capacity to promote both urban renewal and regional development.

This draft concept has been formulated solely to encourage discussion on infrastructure policy, and is totally separate from any formal government policy development process.

Policy Concept

This innovative conceptual strategy has the potential to address:

  1. The backlog of essential infrastructure needs of our major cities;
  2. The need for urban renewal and densification;
  3. The capacity to master plan our cities;
  4. The provision of a continuous, stable and certain environment to invest;
  5. The elimination of conflict between the federal government and states on the funding of infrastructure;
  6. The elimination of the cost of land acquisition for infrastructure projects; and
  7. Sustainable growth with improved efficiency and productivity.

Central to this concept is the quarantining of the Capital Gains Tax (CGT) revenues earned by the Federal Government as a direct result of the infrastructure development.

This concept is based on the following premises:

  1. To fund infrastructure, state governments require investment guarantees. As the receiver of CGT, the federal government is best placed to provide that guarantee;
  2. The identification and rezoning of growth corridors is vital to attract private investors, leading to uplift in land values prior to the physical commencement of the infrastructure construction;
  3. The uplift in land values leads to an enduring increase in CGT receipts. As a result the funding of essential infrastructure is a sustainable federal government investment; and
  4. Densification and urban renewal is necessary to defend popular expectations of suburban quality of life.


The federal government invites the states and territories to apply for the quarantining of CGT revenues that will result from state infrastructure projects that are accompanied by rezoning of hubs and along the corridors of the infrastructure. Approval will be given on a project by project basis.

Federal government contributions will be limited to CGT revenues raised as a direct result of the rezoning and infrastructure construction. For transactional simplicity this is likely to be calculated on a formula based on speculative property value increases derived from Treasury modelling.

This concept will empower the states to identify their most congested arteries for upgrading of road and rail combinations that will be commensurate with future planning/zoning. Lands along these corridors will be strategically rezoned to enable urban renewal and densification maximising land values and resultant CGT revenues to go towards the cost of the infrastructure.


This concept makes the states the direct beneficiary of the CGT that results from the cost of the infrastructure.

Central to this initiative is a partnership between federal and state/territory governments. Through the provision of certainty of federal funding, states will be able to systematically and strategically plan their infrastructure program for the facilitation of both urban renewal and strategic regional development initiatives.

Urban Renewal

Infrastructure projects drive urban growth and real estate investment: two key requirements to support a growing population. The centralisation of development corridors around major transport hubs will facilitate controlled densification whilst protecting traditional suburban areas from over-development.

Strategic Regional Development

A strategic plan of decentralisation and infrastructure development to facilitate regional development will alleviate pressure on major cities. Through improved connectivity funded by CGT receipts, stagnant regional centres hold an enormous growth potential to become booming cities from a very low property value base.