Aug 25, 2017

Value capture con exposed

Prime Minister Malcolm Turnbull’s rhetoric on infrastructure has been exposed as just a con to mask his political decision to support Tony Abbott’s cuts to funding for Brisbane’s Cross River Rail and other public transport projects around the country.

Mr Turnbull’s demand that state governments utilise “innovative” funding arrangements such as value capture to help pay for major new infrastructure has been exposed, with the agency charged with assessing projects revealing that it does not consider such arrangements when evaluating project business cases.

Since taking office Mr Turnbull has refused to fund major public transport projects, insisting that states seeking funding must include in their business cases options for value capture, under which they would seek to recover some of the increase in land values caused by the construction of the project.

Money raised in this way would be used to meet the construction costs.

However, while Mr Turnbull cites value capture as a criterion for project selection, Infrastructure Australia, which conducts assessments of project business cases on his behalf, does not take it into account.

In a recently produced written answer to a question before a Senate Budget Estimates Committee, Infrastructure Australia said it “does not take account of funding sources, including value capture, in its economic evaluation of project business cases’’ (answer to Question on Notice Number 17, Senate Budget Estimates 2017-18).

I have long suspected that Mr Turnbull’s endless talk about “innovative’’ financing arrangements such as value capture is a smokescreen for his cuts to infrastructure investment, particularly when it comes to public transport projects like Brisbane’s Cross River Rail Project.

This admission from Infrastructure Australia that they don’t take into account value capture confirms that the Government’s rhetoric is not matched by its actual processes.

Even if a state provided a business case that did include proposals for value capture, it’s not relevant to Infrastructure Australia’s analysis.

The Turnbull Government has refused to invest in Cross River Rail, despite Infrastructure Australia having approved a business case for the project in 2012.

This refusal has provoked outrage in Queensland, given the Federal Government happily funded projects like Sydney’s Westconnex, Melbourne’s East-West Link and the Perth Freight Link without even having seen business cases.

The Government appears willing to hand over money with no questions asked if a project suits its political purposes, but will bend over backwards to contrive reasons to reject projects it sees as less important.

It is time for Mr Turnbull to stop making up excuses not to invest in infrastructure and work with state governments to deliver projects in the public interest.

In particular, he should get behind urban rail projects to help tackle traffic congestion, which the Bureau of Infrastructure, Transport and Regional Economics has calculated costs the national economy $16 billion a year in lost productivity.