Malcolm Turnbull should explain to Australians whether his plan to utilize value capture to pay for new railway lines and roads is code for the introduction of a new tax on existing property owners.
On Friday Mr Turnbull launched a pale imitation of Labor’s 10 Point Plan for Better Australian Cities which failed to commit a dollar of new funding for infrastructure but proposed paying for new projects by taxing people whose property values rise because of the construction of those projects.
But with his so-called policy going no further than general statements, it is unclear exactly what Mr Turnbull means when he talks about value capture.
As Property Council of Australia Chief Executive Ken Morrison said in a statement yesterday:
Value capture is not a magic pudding and the risks of damaging the economy with naive approaches are very real.
Does the Federal Government propose introducing new taxes or just encouraging state governments to do so? At the moment we have no idea.
If Mr Turnbull means that existing property owners whose property values are potentially enhanced by new projects should be hit with a new tax, he should be upfront about his plans before the election.
A Shorten Labor Government will invest directly into railways and roads and create a $10 billion infrastructure financing facility to leverage more private investment into infrastructure.
Working with state governments and the private sector, we will augment public investment with sensible value-capture arrangements, such as selling the development rights to space over new railway stations.
Indeed, the former Labor Government committed funding in 2013 to important public transport projects the Melbourne Metro and Brisbane’s Cross River Rail Link, which involved elements of value capture.
But the incoming Coalition Government scrapped these projects, as part of more than $4 billion in cuts to public transport funding.
This ill-advised decision came despite advice from Infrastructure Australia to invest in infrastructure to tackle traffic congestion, which is expected to cost the nation $53 billion a year in lost productivity by 2031 without government action now.
The need for action is real.
Mr Turnbull must clarify his actual plans for value capture and use Tuesday’s Budget to reverse his Government’s cuts to public transport investment.
After catching up with the positon he inherited from the former Labor Government, Mr Turnbull must also commit new funding to the next wave of productivity enhancing railway and road investments.