These have been used in the US with mixed success. Others in the value-capture camp point to tax increment financing (TIF) schemes. In a very dense city, good access to mass transit is highly valued. In addition, the city is dramatically denser than Australian cities: more than 7 million people live in a built-up area of around 285 square kilometres, compared with Sydney’s population of about 5 million in around 2,000 square kilometres. That’s because in Hong Kong the government owns all the land. But a similar model in Australia would have to be much smaller in scale. Yes, integrating new infrastructure with rezoning and other planning changes is a great idea. Some advocates point to Hong Kong, where a private company builds and operates the rail lines, in return for cheap access to development rights around the new stations – a non-cash subsidy. They prefer to present value capture as an innovative financing mechanism. 1 is that a value-capture scheme is a tax. But if the federal ministers face up to some home truths, they may find value capture less to their liking. Only last week, Urban Infrastructure Minister Paul Fletcher reiterated that the Commonwealth does not want to be “just an ATM” for the states. But look a little closer: it also means that affluent inner-city residents don’t help fund a better railway station in Melbourne’s outer northern suburbs.įederal ministers from the prime minister down are enthusiastic about value capture and are pushing the states to embrace it. So the people of western Sydney do not help fund a new railway station on the North Shore. Typically, the money the government “captures” is used to help fund the project.Īt first glance, value capture seems marvellously fair, because it applies only to those who benefit from the particular project. Value capture is the name given to a policy whereby governments capture some of the increased value of land that results from building a new piece of infrastructure. Is “value capture” a wonderful untapped opportunity to fulfil all our infrastructure dreams? Or is it just a new way to sting the taxpayer? Our new report casts a cold, hard gaze over value capture, and finds that it’s a good tax in theory, but will prove very hard to put into practice.
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