Planning
Integrated planning
4.1
Integrated planning—planning of land use and transport in a coordinated and mutually supportive way—was seen as critical to the successful development of transport connectivity in Australia. In its submission, KPMG emphasised that:
Ultimately, what cannot be lost sight of in the broader debate on infrastructure delivery and funding is that the benefits expected to be delivered, and capture via various mechanisms, will only materialise from the integration of transport network planning and land use planning (at a node and corridor level) and for all levels of government, particularly State and local government, to prioritise the “right” projects that maximise the productivity and agglomeration benefits, and drives value capture at the real economy and real property level.
4.2
The City of Melbourne argued that ‘you have to have some sort of master plan to provide certainty’; while the Committee for Sydney criticised the tendency to plan the infrastructure that we can fund rather than funding the infrastructure that we need, and highlighted the need to attach funding to infrastructure planning and development. In this regard, the Department of Infrastructure and Regional Development acknowledged the potential utility of value capture, stating:
Appropriately applied value capture mechanisms can encourage governments to better integrate infrastructure investments into wider planning decisions by linking payment for new infrastructure with those households and businesses which benefit from the new infrastructure.
4.3
Construction firm Goodman highlighted the importance of planning by observing that ‘there is universal recognition across government and industry that well-planned investments in transport infrastructure increase surrounding property values and tax revenues’. It noted research showing that ‘these increases are greatest when transport investment is teamed with integrated land use–transport planning’. Integrated land use–transport planning involved a number of factors, including:
Long term strategic land use and infrastructure planning linked to adequate and reliable funding sources
Appropriate and dependable zoning and development controls on land and infrastructure corridors
Consistent, coordinated and supportive public policies, guidelines and processes that enable public and private sector stakeholders to invest with confidence.
4.4
Goodman emphasised the link between planning and value creation, noting that ‘evidence shows that property values increase by an average of 12 per cent as a result of proximity to transport investment’, but that the level of increase ‘varied between +150 per cent and -21 per cent’. The variation was attributed to differences in ‘market conditions, the presence of supportive planning and development policies, and most importantly, the degree of integrated land use–transport planning’. Goodman concluded that:
Integrated land use–transport planning involves long term strategic planning linked to reliable funding sources, appropriate and dependable controls on land and infrastructure corridors, and public policies that support public and private investment.
4.5
Engineers Australia observed that ‘comprehensive and integrated land use and infrastructure planning’ was ‘necessary to ensure that scarce funds are directed towards projects with the highest potential returns for the nation and State, Territory and local economies’. It stated that ‘present practices are simply not working’, although it conceded that ‘change is already underway as demonstrated by the important improvements occurring in Sydney’. Taking an overview of investment in transport infrastructure, Engineers Australia noted:
The status of Australian transport infrastructure has not improved substantively since 1999. Research based on constant price statistics shows that although the monetary value of infrastructure construction has increased, it has simply kept pace with economic expansion and population growth, the two key factors determining the demand for infrastructure services.
4.6
Engineers Australia observed that ‘well managed infrastructure and infrastructure services give rise to substantial economic externalities that underpin productivity growth essential to continued improvement in Australia’s standard of living’. It argued that ‘the value of an overarching plan is that incremental progress on solving connectivity problems can be achieved in the knowledge that related matters are also covered by the plan’. It identified eight key planning principles that should underpin transport connectivity:
Infrastructure must be managed to advance socio-economic goals not political ones.
Infrastructure planning without land use planning is not sensible
Infrastructure planning is integral to governing not an optional extra
Infrastructure is not the exclusive preserve of governments, the private sector is a key player
Infrastructure must be managed sustainability and over its full expected life
Infrastructure governance must be rigorous and must be de-politicized
ICT enabled infrastructure delivers more value for money, especially in coordinated system
Short term acquisition practices should be discarded in favour of whole of life considerations.
4.7
Engineers Australia noted that Infrastructure Australia had recommended that State and Territory governments ‘deliver long term regional infrastructure plans’, and that the Australian Government ‘prioritise investment in regional infrastructure where the population is growing quickly and where the bulk of our regional economic growth can be found’. Engineers Australia strongly endorsed these recommendations, expressing astonishment that they were even necessary. Mr Kaspura stated:
So we are consistently making that point that land use planning and infrastructure planning must be integrated and there must be some long-term perspective for the community, for investors and for politicians about where infrastructure should be heading, given the way our population growth and the growth of our cities is coming together.
4.8
The Council of Mayors (SEQ) thought that ‘the integration of infrastructure planning and land use planning is vital’, that it was ‘critical to the cost effective provision of infrastructure and efficient urban form’. The Council of Mayors (SEQ) also argued that:
As well as integration between infrastructure provision and land use, it is highly desirable for the planning of national and state infrastructure to be integrated with local infrastructure delivery and local land use planning to achieve the greatest possible efficiencies.
4.9
The Council of Mayors (SEQ) believed it desirable for there to be ‘a strong, linking relationship between the national and state-wide infrastructure planning, regional planning and local strategic planning’. It stated that ‘only through this process will integrated planning and genuine, mode-neutral transport connectivity be achieved’. Moreover, the Council of Mayors (SEQ) stated that:
Infrastructure funding should not only be considered in relation to responding to forecast growth and development, but should also be considered as a catalyst for planned development (e.g. opening new development opportunities) and preferred urban development scenarios (e.g. a significant modal shift to public transport use).
4.10
Consult Australia observed that ‘when carefully integrated with land use planning, transport infrastructure has the potential to leverage the public’s infrastructure investment to achieve other complementary benefits’. Benefits of integrated transport-land use planning included:
Reduced traffic congestion and more travel options
Increased housing options created by new residential development
Lower housing construction costs and a greater supply of housing
Improved public transport services and reduced journey-to-work times
Increased jobs opportunities for employees and a larger pool of workers for companies
More compact urban form and improved urban amenity
More efficient use of existing urban land and public infrastructure.
4.11
Consult Australia noted that it was ‘now widely accepted that investment in well-conceived transport infrastructure generates economic benefits that exceed costs’.
4.12
Mr Michael Apps, Executive Director of the Bus Industry Confederation of Australia (BIC), urged a focus on ‘land-use management, planning and integrated transport’. He argued that to date, planning of our cities was not what it needed to be:
In our view, up until where we are at the moment state and local governments have not done very well, and our cities are not running or functioning efficiently, or liveable. They are still good, but if we look to a 20-, 30- or 40-year horizon and keep doing the same things we are doing now, we are not going to be in a good position.
4.13
Professor John Stanley, also representing the BIC, identified ‘key elements in terms of structuring our cities that we need to focus on if we want them to be highly productive, socially inclusive and with a low footprint’. He stated that ‘strong CBDs are really important in terms of the agglomeration benefits that they generate’; and noted that ‘we also need a small number of high-tech, knowledge-based hubs throughout our middle suburbs’. He urged a ‘focus on large urban regeneration opportunity sites, the way London has done’; and argued for a new focus on ‘transit corridors’, stating:
Vancouver—this is probably the best example around the world—has over half of its population growth happening in major transit corridors, not just around stations but through those whole corridors. In that process you are actually setting up a city that is going to function more efficiently and be more productive as well. It is not something that we have done well in Australia.
4.14
Professor Stanley observed that ‘we are not really all that good at doing our land-use transport planning in Australian cities at the moment,’ and that ‘some of the projects that are being put up are probably not the projects you would think are the best ones for those cities if you really were to take an integrated approach to the planning’. He argued that there were ‘national benefits from this process of our cities working better’, and that ‘the federal government needs to be involved in the process at the strategic level’. He stated:
The Commonwealth government really has an interest in this because you actually get a lot of the benefits from a more productive economy, and that is the reason you need to be at the table. You get 30 per cent every time anybody sneezes!
4.15
Professor Stanley also highlighted the need for funding agreements between different levels of government to cover major infrastructure developments. He recommended the Government look at the Swedish model:
It is a really interesting way of lining up the national, county and local governments across funding of major infrastructure initiatives. It is a really interesting model.
4.16
The Australian Local Government Association also stressed the importance of coordinated planning, highlighting the need ‘for integrated planning and funding mechanisms that involve all levels of government working together to deliver better ways of building and maintaining much needed community infrastructure’.
4.17
Stressing the need for integrated planning, Professor Sue Holliday noted that ‘if transport does not support existing and proposed land uses a city will fall behind in terms of its economic productivity due to congestion, long commute times, inefficiency in terms of freight performance’. She argued that:
If major new transport infrastructures are proposed unrelated to existing land uses, it is likely that business and residents will respond by moving land uses to benefit from the enhanced accessibility whether by road or rail.
4.18
Focussing upon Sydney, Professor Holliday noted that ‘the city’s infrastructure is 40 to 50 years old and operating beyond its planned capacity’:
We do not have the governance arrangements or leadership in place to help us agree on a vision for the long-term future of our city. As a result, changes are piecemeal, short term and reinforce past patterns. Our cities are on the edge of failing.
4.19
Professor Holliday proposed ‘a genuine partnership organisation with a mandate and a funding mechanism to develop an integrated city vision and the authority within government to raise and allocate funds for implementation’. She saw a need for ‘senior elected representatives to provide leadership including mayors, and ministers who are decision-makers with authority to commit’.
4.20
The Planning Institute of Australia (PIA) supported:
… an integrated planning and decision making framework where land use planning processes fully account for the transport implications and requirements of our towns, cities and regions, noting that transport and development are not two separate things but two facets of the same challenge (i.e. transport is land use planning).
4.21
PIA thought that this was important because ‘transport planning and investment decisions continue to occur with an inadequate understanding of the land use and development consequences of such decision making’.
4.22
PIA also emphasised the need for long term planning. Its president, Mr Brendan Nelson, stated:
I think any plan the federal government considers really needs to have a time period of 30 to 50 years. It needs to focus on a future population. For example, the Planning Institute of Australia is developing a position paper on Australia—‘Journey towards Australia @50 million’. It is a document which we will be releasing in the coming weeks. It is not intended to provide all the answers but it is intended to actually articulate some of the challenges that we are going to have to deal with as a nation as we continue to grow. It is not a question about a big Australia or a small Australia: it is a fact that we will grow to 50 million. We are growing at the moment at around 400,000 a year. It is just a matter of when.
4.23
Mr Nelson noted that ‘if we are in a situation where we have a clear plan around our cities and we have a clear plan where our infrastructure investment is going to be, then everyone knows there is consistency, certainty and confidence for the development sector’. Long-term planning would ‘help improve the economic productivity of our cities, because people will have the certainty and confidence to invest in them’. He believed it was more important in the first instance to focus on cities rather than the regions, stating that ‘having a clear plan for our cities will allow us to focus in on the areas where, particularly, most of the infrastructure spending is allocated’. He thought that ‘the role of the Department of Infrastructure and Regional Development, which has had its toe in the water for some time, needs to be broadened and focused into more of a focus around cities’. Mr Nelson also thought that ‘we need to have an authority or some form of commitment to a long-term plan which does transcend one term of parliament’.
Long-term planning
4.24
AECOM highlighted the need for long term strategic planning, stating that it was ‘critical for mitigating future land costs of infrastructure’. It noted that ‘the benefits of long term, strategic planning include the ability to avoid costly compulsory acquisition programs which occur when sites and corridors for critical infrastructure are taken for incompatible uses’. AECOM observed that ‘improved transport connections and supportive land use plans create agglomeration opportunities for businesses, lifting the demand for and value of land, and generating economic activity that multiplies tax revenue’. It stated that ‘transport and development are not separate issues, but two facets of the same issue. Addressing one without the other will miss the advantages and opportunities presented by both’.
4.25
Mr Ian Bell, Director of Financial-Architects.Asia Pty Ltd, highlighted the need for very long term vision. He noted that transport infrastructure was designed to operate for very long periods of time—in excess of 100 years—but was expected to pay off in shorter timeframes, creating a bias towards some transport modes over others. He stated:
The use of seven per cent real discount rates means that you automatically cut out most of your long-term decision making, you automatically favour and bias the system towards projects that can pay their way in a 20- to 30-year time frame. For example, do a motorway and put a toll on it.
4.26
Mr Bell noted that the Sydney-Newcastle railway had been built over 125 years ago, ‘yet we go into evaluations of rail projects and we expect them to pay off over 30 years. I mean, be real.’ He also advocated ‘government borrowing for infrastructure’.
4.27
Mr Brett Casson, Digital Infrastructure Leader with Autodesk Australia, made a similar observation about the planning focus in Australia, stating that there was ‘an enormous focus on the short-term planning, design and construction here’. Citing the experience of working on High Speed Two in the UK, he observed that ‘one of the things that they recognise is that this project leaves, probably, a 150-year legacy’. He noted that ‘the 10 years that it is going to take to plan, design, deliver and construct really are insignificant when you look at the 150 years that it is going to take to operate and maintain’.
4.28
Consult Australia stated that it made sense ‘that infrastructure assets that last 50 years or more should be based upon long-term comprehensive planning and funding strategies’, and that governments ‘must do more and better long term planning’. It urged that the ‘benefits of a longer-term view of infrastructure investment, and governments’ vital role in facilitating those longer-term benefits as part of a vision for our cities and regions, needs to be re-established’. Consult Australia highlighted the benefits of transformational investments such as the Guggenheim Museum in Bilbao (Spain) and the Sydney Opera House. It observed that ‘there is no doubt that this is a similarly “transformational investment” that has been recouped both economically and culturally in the decades that have followed—though this would not likely have been reflected in any cost-benefit analysis’.
State and local government planning
4.29
Several state and local governments highlighted current initiatives to achieve integrated planning outcomes. The Government of South Australia advised that a ‘world-class, new planning act is currently working its way through the South Australian Parliament’, and that it would ‘enable planning controls and compulsory acquisition powers that provide urban renewal authorities with the ability to undertake widespread urban renewal programs where necessary’. The Queensland Government noted that the Draft State Infrastructure Plan sought ‘to strengthen the link between regional planning and infrastructure planning’, ensuring that ‘regional planning and regional transport planning appropriately protects corridors and combines land-use, infrastructure and economic development planning’. The City of Melbourne stated that its Transport Strategy 2012 emphasised ‘the importance of integrated transport and land-use planning and highlights the value of transport to the city’s economy’. The City of Melbourne observed that:
In 2011 more than 50 percent of journeys to work in the City of Melbourne were by public transport (Australian Bureau of Statistics, cited in City of Melbourne, 2014). Journey to work by car to the municipality decreased by ten per cent between 2001 and 2011 (Australian Bureau of Statistics, cited in City of Melbourne, 2014). Public transport, cycling and walking are the City of Melbourne’s preferred methods of transport. The Transport Strategy 2012 seeks to increase the connections and service performance of these modes to transport people to and around central Melbourne to support economic growth.
4.30
Highlighting the potential tensions between different levels of government over planning, the City of Melbourne observed that the ‘Victorian State Government’s Plan Melbourne aspires to foster more localised living across the metropolitan area through a compact mixed-use urban morphology’, but that ‘this will not be achieved without the right governance to drive it’. It considered that, ‘in order to maximise chances of effective implementation’, the governance model needs to be ‘tailored to current needs, be targeted at the right scale and should drive greater role clarity for all entities involved in urban management’. The City of Melbourne stated that ‘fundamental to any successful urban governance model must also be a genuine partnership with local government’.
Regional planning
4.31
The importance of regional planning was also highlighted in the evidence presented to the Committee. The Committee for Geelong called on the Australian Government to take a leadership role in ‘developing a national policy for second-tier cities’. Ms Kirsten Kilpatrick, representing the Committee for Geelong, stated:
We are of the opinion that there needs to be a specific strategy, vision and articulation about Geelong’s future as a city, not in the broader context of the region. What that means is we need to have a conversation about the infrastructure needs for our city and bring together that conversation about how it integrates. The value capture about funding fits into that. One of the things we are talking about is the governance framework—what is the infrastructure that needs to be put in place to support future population of our city? Not that I am suggesting this will be the actual figure, but whether we have a city of about 500,000 or a million people, one of those fundamental questions is: how do we support those people in that city? What is the infrastructure that needs to underpin that? Transport is imperative to helping that movement network around the city.
4.32
The Committee for Geelong was ‘actively seeking improved road and rail connections throughout Victoria, and particularly between Melbourne and Geelong’. It supported ‘an integrated transport planning system which delivers a cost effective, efficient and sustainable movement of people and freight in and around the city and across the State’.
Limits of master planning
4.33
The concept of master planning was, however, criticised by several witnesses. Professor Peter Newman did not believe the Australian Government should be involved in the master planning of cities. He regarded master planning as ‘a state role’. He indicated that strategic criteria drawn up by the Australian Government could clarify the planning process, making ‘transparent where that money is going and how best to use it’, but it would not focus on specifics of individual projects. Professor Newman stated:
In relation to the idea of a strategic light rail plan, for example, you could do it but you would not want to make it so specific that you said exactly where it was going and all that sort of thing. Get the broad scheme of where corridors should be linked in some way in the centres, but then get bids from the private sector on how best to do it.
4.34
Mr Martin Butterworth, Managing Director of Space Syntax Limited, questioned the whole concept of master planning, noting that many of the problems we are now dealing with, such as congestion, are the result of master planning failures:
We have put all the eggs in one basket and the congestion we have in Western Sydney is because we are planning it. We are not actually doing the opposite and solving the problem; we are actually making more and then asking the federal government to spend more money to try to fix up what we have got wrong.
Corridors
4.35
An essential part of long-term planning for transport connectivity is the preservation of infrastructure corridors. In its submission, AECOM noted that ‘protecting transport corridors well in advance of need is good for long term planning and can significantly reduce land acquisition costs when projects are eventually developed’. AECOM noted, for example, that:
… high speed rail corridors require minimum 30 metre wide corridors stretching thousands of kilometres to accommodate two dedicated tracks for their exclusive use. In addition, HSR trains travel in excess of 350 km/hr, requiring a much wider turning radius than conventional suburban or intercity rails.
4.36
AECOM stated that ‘major infrastructure requires appropriately aligned and adequately sized land corridors to ensure its cost effective delivery and maintenance of infrastructure assets’. It suggested the use of overlay zoning to reserve corridors:
Overlay zoning provides one method of reserving land for a proposed corridor by reducing the risk of significant development occurring within the corridor. Overlay zoning allows existing uses to continue while notifying land holders and the public of its future public need. Regulations are attached to the overlay zone to help guide development in the corridor, such as avoiding major construction projects.
4.37
AECOM noted, however, that:
While these zones can help preserve corridors and reduce acquisition costs, infrastructure delivery agencies may be required to purchase land ahead of need if landowners are financially disadvantaged by the overlay zoning. Upfront funding of these programs is therefore frequently required.
4.38
The Government of South Australia observed that all jurisdictions have ‘systems that can deliver escalating levels of protection for future infrastructure land, depending on the timeframes and maturity of the project’. It noted that these systems had broadly similar characteristics, being:
Identification of an indicative route in strategic planning documents.
Zoning (or planning overlays) of a more discrete (but sometimes still quite wide) corridor for ‘future infrastructure’ or something similar, which tends to restrict development and can introduce some rights for compensation in most jurisdictions (this happens under planning legislation).
Identification of a clearly defined corridor of land under transport legislation, which generally also introduces compensation rights of one kind or another.
Negotiated (voluntary) acquisition (usually by a transport agency, who in some cases may lease the land back to the owner until it is required for development).
Compulsory acquisition—ideally only used once a project is imminent as there are much higher financial and social costs involved.
4.39
The South Australian Government noted that the ‘core issue is that generally that once any form of firm identification or protection is introduced for a piece of land, so are compensation rights for the existing land owner’.
4.40
The Committee for Geelong observed that ‘long term transport planning necessitates designating land for future transport uses’. It acknowledged that ‘preserving rail and transport corridors for development in the future is critical’, but also highlighted the need for ‘accommodating “temporary” uses during the period when the land is not being used for the designated purpose’. The Committee for Geelong stated that ‘leasing land owned by the relevant agencies is the most logical option, but a clear understanding about the future use of the land is required’.
4.41
The ACT Government believed that for important pieces of infrastructure ‘it would actually assist states to have the federal government ensuring that a state government cannot just sell off corridors’. It suggested that:
… if the Australian government wants to be serious about protecting corridors of national significance then maybe there needs to be some co-ownership in terms of purchasing land or securing lands in some way—some sort of reservation over lands.
4.42
With regard to HSR, the ACT Government indicated that ‘one of the things that the Australian government could consider doing is actually having some skin in the game in protecting the corridors’.
4.43
The need to protect the HSR corridor was raised as a matter of urgency by several individuals and organisations. Financial-Architects.Asia highlighted increasing land values along the entire east coast corridor as a potential threat to HSR as the cost of acquiring land would only increase over time. It stated:
What this tells us is that the history of Australia’s examination of HSR makes a very compelling case for Government taking extremely seriously the notion of reserving and acquiring land for a HSR corridor even if it does not proceed to determine its technological choice, the finer details of its route and connections and the timing of decision to proceed with construction.
4.44
The ARA believed that ‘priority needs to be preserving the corridor, and then looking at how we fund it’, noting that before governments could count on the potential benefits of land sales and value capture they ‘must first preserve the corridor’. Ms Emma Woods, representing the ARA stated:
I understand at the moment that the current route includes, I think, 144 kilometres of tunnels, so the longer that preservation takes, and the more development that continues in that time—we obviously risk corridor preservation costing more.
4.45
Mr Alan Thompson, of the Transport Australia Society, agreed, stating that:
We should get state and federal governments to consciously preserve the corridor—and have that in legislation—and then start to look at all the value capture within that corridor even if the train is not actually going to be built over that length.
4.46
The Hon Tim Fischer highlighted the need for urgent action on corridor preservation, noting that ‘Capital City HSR “corridor close out” continues to occur, notably with some near disgraceful planning approvals around outer Melbourne, especially the suburban muddle unfolding at Donnybrook’. He told the Committee:
But as you are focusing on high-speed rail, I will leave you with the thought: it is now or never. The corridors are being gradually occupied, even around Donnybrook, where some dreadful estates have been allowed to creep in and are very close to encroaching on the logical corridor north and north-east of Tullamarine to, ultimately, Canberra and Sydney. You need to be aware that there are land usage problems already around Tullamarine, which, I would strongly submit, are germane to your high-speed rail studies.
4.47
Dr Philip Laird observed that Australia needed ‘land for corridors, not only for a future high-speed rail, which has been recognised in many reports, but also for upgrading existing systems to medium-speed standards at least’. He highlighted the graduated roll-out of the Shinkansen network in Japan, which ‘opened in 1964, a 517-kilometre Tokyo-Osaka link’, but which was now about 2,800 kilometres, with ‘every year or two another hundred kilometres or so is rolled out’. He stated: ‘We cannot do it all at once, but we should start with corridor protection’.
4.48
Dr David Adams, Director of Strategex Pty Ltd, emphasised the need for long-term thinking stating:
Corridors are very difficult to get because they are long and thin. If you have to go through a brownfield area, it is almost impossible to get a corridor. So the proposition was to look at the corridors that we need out till 2050, based on the settlement patterns that we think the country ought to have out to 2050, reserve the corridors now for shared infrastructure, whether it be road, rail, power, water, gas, hydrogen—I mean, let’s think ahead—or optic fibre, and make the corridors wide enough, so that when we need the infrastructure in 20, 30 years time we do not have to go and tunnel it. The price of land is rising very quickly and if we do not have the corridors we have to tunnel. That keeps pushing out the date at which it is possible to build these things because the costs of tunnelling basically cripple most infrastructure projects.
4.49
The Department of Infrastructure and Regional Development (DIRD) noted that it had been ‘working with the relevant jurisdictions around the corridor’, but that ‘the jurisdictions are responsible for the corridors’. It stated:
Our focus has been on those areas that are most at threat and they tend to be most at threat from other development. Those tend to be the areas in the urban centres. We are looking at working through their own planning and zoning requirements to make sure that they have got the mechanisms available to them to look at what they need to do to preserve the corridor.
4.50
DIRD noted that most jurisdictions were hesitant about committing to the reservation of land because ‘that can often involve outlaying large sums of money to purchase the land. Where they can use other mechanisms to make sure that it is safe from development that is the course most of them are taking.’ With regard to working with the states and territories over the preservation of HSR corridors, DIRD stated:
They are working with us cooperatively. The phase 2 report also outlines a proposed route but there is also variability in that route. It did not get down to identifying where exactly the track would go. As I said, until that work is done, it is making sure we both preserve the corridor and leave ourselves planning room to make sure we come up with ultimately the best alignment. So it is the art of the possible: you do not want to get to reservation and paying for land when in fact the route you may ultimately need is not exactly that.
4.51
DIRD noted that the Australian Government’s current focus is ‘directed to engaging with the governments of New South Wales, Victoria, Queensland and the Australian Capital Territory to determine their level of interest in HSR, and to seek to confirm, preserve and protect the corridor’. It regarded these as ‘necessary steps before any decision could be taken to proceed with a HSR project’, and observed that:
These measures will be determined by individual jurisdictions and could include planning mechanisms and instruments which ensure that any impacts on the identified corridor are considered in land use and development planning, processes and approvals.
Coordination and funding
4.52
Aside from the important role of government in planning transport connectivity, there is also an important role for government in the areas of coordination—particularly between the various jurisdictions and different levels of government—and funding. The was a range of views presented regarding the role of government—and particularly the Australian Government—in the development and financing of transport connectivity.
4.53
Brisbane City Council viewed collaboration between different levels of government as critical to infrastructure development, stating:
Sustainable cities and regions can only be achieved through all levels of government and other stakeholders collaborating and contributing to the planning, funding and delivery of infrastructure. Council looks forward to continuing to work with the Australian Government in these efforts.
4.54
PIA believed that the Australian Government had a leadership role in shaping Australia’s cities, ‘through the provision of infrastructure, protection of values of national significance and development of a clear national growth strategy which focuses on spatial productivity, liveability and sustainability’. PIA suggested that Infrastructure Australia be required to consider financing and funding issues, such as value capture, in its assessment of projects. It also proposed placing ‘Federal funds appropriated for urban infrastructure purposes into an Urban Infrastructure Fund’, with projects being ‘assessed against the goals of the National Urban Policy before funds are released’.
4.55
In its issues paper, Are we there yet? Value capture and the future of public transport in Sydney, the Committee for Sydney suggested that:
It may be appropriate for the Federal Government to decide that it will only contribute funding to strategically important city transport projects in jurisdictions that have appropriate value capture funding mechanisms in place.
4.56
It suggested that the Australian Government could ‘incentivise good practice in terms of value capture mechanisms’ by linking funding to ‘the policy or institutional reform they wish to see within states. After all, “he who pays the piper calls the tune”’. The Committee for Sydney noted that ‘most effective methods of value capture—those that achieve the goals of capturing value in an efficient, equitable and proportionate way—rely on different levels of government working collaboratively’. Collaboration between different levels of government was the key to success:
Our government institutions will also need to change their thinking and change the way they operate. Each level of government will have a role to play in planning and financing our public transport. The current disjointed and siloed approach will need to be challenged and overthrown.
4.57
KPMG thought that the role of the Australian Government was ‘to provide the right incentives, encourage better planning and economic prioritisation, and reward the Local and State governments that choose to go the extra mile’. KPMG suggested that the focus should be upon ‘getting the better mix of programs and projects that are truly beneficial in the way they boost productivity and growth’, increasing ‘the overall size of the pie, rather than just the way the pie is sliced’. This included exploring new funding mechanisms, including value capture:
As previously mentioned, Australia has already had experience with local and city-wide value capture methods. The role of the Commonwealth government here is to encourage State and Local government to explore all these types of funding arrangements to be explored fully when funding applications from the Commonwealth are sought so that the burden is reduced and that the best projects are brought forward.
4.58
The ARA proposed that the Australian Government consider ‘developing a policy to implement a form of value capture with all new public transport projects’ and that it ‘complement this policy with one that encourages transit-oriented developments’. It suggested that the Australian Government might also ‘consider whether it stipulates the inclusion of value capture as a requirement in providing Federal funds to public transport projects’.
4.59
Both Goodman and AECOM highlighted recent reviews by Infrastructure Australia and the Productivity Commission which pointed to deficiencies in the current governance and funding arrangements surrounding the provision of infrastructure. In its submission, Goodman stated:
The current system within Australia of identifying necessary infrastructure and the collection of revenue and allocation of funds for the delivery of infrastructure is dysfunctional, creating an infrastructure deficit in Australia estimated at $300 billion (Infrastructure Australia 2012). According to the Productivity Commission’s 2014 report on public infrastructure, ‘institutional and governance arrangements for the provision of much of Australia’s public infrastructure are deficient and are a major contributor to unsatisfactory outcomes’.
4.60
Goodman also pointed to research which found that:
Fragmented institutional structures and governing arrangements are one of the biggest obstacles to the establishment of value capture funding mechanisms in Australia. Although the federal and state governments are responsible for setting broad strategies and policies, implementation and administration of these policies falls principally to the state and local governments.
4.61
Goodman believed that ‘the introduction of value capture funding mechanisms in this country will require specific action at various levels of government’. It viewed the principal role of the Australian Government in the implementation of value capture mechanisms as being ‘to develop national legislation, standards and guidelines to remove any obstacles to their use by state and local governments’. It believed that discussion ‘about infrastructure funding should be made part of the COAG debate’. Goodman urged Australian Government leadership, stating:
The challenge of reforming all levels of government to co-ordinate their regional and state infrastructure planning and delivery should probably, logically and practically commence with the Federal government using its current grants system to impose non-commercial contractual and performance outcomes on state governments that seek financial assistance for infrastructure projects.
4.62
Goodman also believed that the Australian Government needed to consider its own role in value capture:
Instead of an ad-hoc grants approach that is not transparent and lacks commitment to a stable and sustainable expenditure on infrastructure, the Commonwealth needs to consider hypothecating into a separate infrastructure fund, that proportion of income tax, capital gains tax and GST that is related to value improvement in property values. That might go some way to demystifying the conjecture around value capture.
4.63
The Strategic Intelligence Group (SIG) noted that ‘implementing a value capture framework for funding transport infrastructure development would open new partnership opportunities between all levels of government’. It believed that the Australian Government had ‘a critical role in identifying, prioritising and evaluating major transport needs for Australia; and this should be reflected in its infrastructure appraisal process including its means for allocating funding’. SIG proposed that the Australian Government develop, promote and implement ‘a national value capture framework, designed to ensure national consistency and reduce any anomalies between different states and territories’. SIG noted that to implement this framework, ‘legislative changes are likely to be required at each level of government’.
4.64
Mr John Marinopoulos, Managing Director of SIG, emphasised the importance of tying funding to outcomes:
When state governments are seeking funds from the federal government—or when councils are seeking funding from state governments—they can understand that there are certain requirements to make sure that they have met those hurdles around value creation and, then, value capture for everyone to understand the benefits that they are seeking. This is just a parallel of what Infrastructure Australia did many years ago when we had a cost-benefit analysis; this is the extension of that.
4.65
Mr Marinopoulos thought that it ‘would be very good to be able to have a state-wide policy in all different states, and also the Commonwealth’, that ‘allows people to understand the types of things that are expected of proponents and central agencies to be able to provide back to the different tiers of government‘.
4.66
Mr Alan Thompson, representing the Transport Australia Society, supported placing conditions on federal infrastructure funding, stating that such conditions could ‘be a very powerful way of getting good results without totally overturning the Constitution and overriding the states’. Mr Chris Johnson, CEO of Urban Taskforce Australia, agreed, noting that while it was ‘the Commonwealth’s role in a lot of this is to contribute funding … it needs to be tied funding with certain requirements and outcomes’.
4.67
Mr Brett Casson, Digital Infrastructure Leader with Autodesk Australia, urged a more nuanced approach to policy development and implementation, stating:
I think there are a couple of things that we need to consider. We have to be very careful not to—again, to use an analogy—hit the states with a stick to say: ‘You must do this, otherwise you won’t get the funding for this.’ I think it has to be a much more pragmatic approach. It is a very important approach, because it brings together disciplines that historically have not really played ball with each other through that design, construction and operation of life cycle.
4.68
Consulting firm Arup stressed the need for ‘a consensus leadership approach’, which they conceded ‘is not necessarily an easy thing’. Mr Justin Madden, former Minister for Planning in the Victorian Government and a Senior Consultant with Arup, stated that:
The federal government is often in the funding space. There are certain responsibilities where they deliver directly, but often it is the funding mechanisms that come out of federal governments. I think it has the ability, just by virtue of where it sits, to bring people to the table and engage different levels of government—whatever the persuasion of that government is—to agree to a series of principles or a gateway mechanism that could really deliver a net benefit to the community and work better for government, at the end of the day, as well.
4.69
Mr Madden noted that for all the useful work COAG did, ‘the agreements are made at a very high level but the devil is in the delivery and the detail’. He continued:
I have seen on occasions, and it is still the case, where COAG will agree to something but the implementation of it can be diabolical at a local level because of trying to get cross-jurisdiction agreement. Do you rise to the highest level, or do you fall to the lowest level, in terms of what the standard is, or what you are agreeing to, and its implementation? That is a very difficult challenge. It is part of that federation model, which is probably one of the key issues that, to some extent, holds us back.
4.70
He emphasised the importance of a single gateway to coordinate planning and funding, citing the success of planning for the Olympics as an example of what might be achieved:
If there is one thing that is a continuous theme in this space and in the discussion is the notion of a single gatekeeper. Whether that is a single authority or an agency or a portfolio minister, whatever it might be, but a single gateway would allow you to do a lot more in this space. To come back to the Olympics as a model, when Olympic Games, or something of that magnitude, are delivered then there is often a single authority but it has various levels of government involved in that authority and it often has legislative and regulatory mechanisms to oversight that delivery. It is slightly different in that the Olympic Games has to deliver a whole lot of infrastructure but it also generates revenue. Ticket sales are different from the sort of the revenue that we are talking about here but that concept where there is cross-government and cross-party commitment to deliver the infrastructure through an agency is a key issue. That is why Olympic Games often get a lot of infrastructure delivered by that cross-party, multilevel government support through a single agency and a single gateway and that is why it is probably successful and that is why countries often use Olympic Games as a mechanism to deliver these things rather than deliver them through traditional levels of government or traditional mechanisms.
4.71
The Council of Capital City Lord Mayors thought it ‘critical that tiers of government work together to plan for and implement transport and urban domain changes’; and believed it important ‘for all levels of government to collaborate on potential value-capture mechanisms, and how they might be implemented in each city’. It noted that:
The structure of urban governance in many Australian cities places the responsibility of metropolitan planning and infrastructure design on the State/Territory Government. Therefore, State/Territory Government planning and transport authorities are likely to play a central role in the establishment of valuecapture mechanisms tied to city-wide infrastructure projects.
4.72
The Council of Capital City Lord Mayors suggested that ‘State/Territory and local governments could work together to develop overarching place-based strategies for new hubs created by the provision of infrastructure such as high speed rail’. It believed that ‘communities need to be able to access the infrastructure—especially in outer metropolitan areas to connect with jobs and services’.
4.73
The City of Port Phillip supported ‘the development of consistent guidelines to forecasting property value uplift and assessing value capture for use at both the Commonwealth and State levels of government’. It believed the Australian Government ‘could enable this through the required legislative and regulatory changes, ideally as part of a framework that includes a standardised and consistent methodology for use in cost benefit analyses’.
4.74
The City of Port Phillip also supported ‘the concept of value capture mechanisms being applied at the appropriate level of government to fund transport and other infrastructure’. It stated:
A consistent and transparent approach to infrastructure funding through value capture is required. As a key administrative action, standard methods of assessing value capture should be introduced to cost benefit analysis guidelines at the national level (e.g. Infrastructure Australia), to enable consistent methodology to be applied in all jurisdictions. This consistency is particularly important given the ongoing role that Infrastructure Australia will play in the assessment and funding of major infrastructure projects.
4.75
The ACT Government observed that ‘nearly everything that the Australian government does touches cities in some ways’, thus providing ‘a fantastic opportunity for the Australian government to encourage certain outcomes in cities by the way it invests in cities’.
4.76
Mr Andre Kaspura, representing Engineers Australia, noted that Infrastructure Australia had recommended the ‘consolidation of all Commonwealth funds that are directed towards infrastructure into one integrated fund’, and that the Australian Government ‘use its position as a funder of infrastructure to leverage broader change in infrastructure and institutions’.
4.77
In its submission, the Queensland Government noted that there was already a high level of coordination with regard to planning between the state and federal governments. It stated:
The Council of Australian Governments (COAG) Transport and Infrastructure Council (TIC) has agreed to a long term vision for infrastructure and transport in Australia. Its membership includes representatives of all three levels of government and its work is focussed on advancing a collaborative approach to “infrastructure and transport systems and services that enhance Australia’s productivity, competitiveness and liveability”.
Queensland is an active participant in the TIC, the related senior official groups the Transport and Infrastructure Senior Officials Committee (TISOC) and the Infrastructure Working Group (IWG). The work of TIC includes developing sustainable, efficient funding and delivery models.
4.78
Similarly, the Brisbane City Council highlighted the coordination between state and local government in Queensland:
There is already quite a bit of coordination. As I said, there is a South-East Queensland regional plan, which has a number of concepts in it, such as transit oriented development. It sets in place requirements for the way in which the region will develop. As a requirement of satisfying state interests, in preparing our planning scheme we are required to go through a state government review. That has been consistent with the regional plan and that has set in place a pattern of land use for Brisbane which sets the shape of the city going into the future. That is entirely consistent with the planning from state government in a regional plan. So, in terms of planning and the outcomes, the state interests have been satisfied and met. The land-use pattern which we have in place is a fairly efficient pattern based on nodes and corridors and really making the most of our infrastructure. So, on that basis, the state’s requirements and Brisbane City Council’s requirements are closely aligned.
4.79
Nonetheless, Brisbane City Council noted that the coordination was not always perfect. Citing the example of the upgrade of the Gateway Motorway, Council observed that:
What we are saying in that example is that, if there had been a better coordinated approach to the project itself and the wider impacts, we could have had a better result where council would not have had to find $140 million that we did not actually have in our the forward planning of our budget process and the forward years.
4.80
Mr Chris Johnson, Chief Executive Officer of Urban Taskforce Australia, thought it would be good to have a national approach to infrastructure planning and governance, but the national approach needed ‘to calm down a little bit the kind of glint in the eye that a lot of smaller local government authorities have got—that this is a federal government endorsed approach to loosen up planning rules so that they can make money’. He was concerned that local councils were ‘throwing out the rule book and saying, “We’ll go up, up and up and the more money we can get the better”’. He believed that there was ‘an ethical problem in terms of a planning system across metropolitan areas’, that ‘approval authorities now seem to be moving more into a role of trying to encourage more development, not for urban design benefits or anything but to raise funds’.
4.81
Mr Johnson wanted ‘a structure around this that makes it a fair playing field for landowners, the development industry and, ultimately, planning authorities’. He believed that it was important for the state governments rather than local governments play a leading role. He stated:
There is a fundamental governance issue and our position would be that in those areas the state government should be the dominant planning body to determine those issues, because then there can be a direct dialogue with the Commonwealth about funding and about outcomes. Councils may well not like that, but it gives some discipline to the way it happens.
4.82
Citing the example of Sydney’s North West Rail Link, he observed that ‘if the state government is spending billions of dollars putting the North West Rail in, the state government should determine the planning envelopes et cetera around it’, not local government. Mr Johnson believed that:
…there needs to be through the three layers of government some rigour to this that puts a discipline to it. Our members do not want to find that there is a local government levy, a state government levy and a federal government levy and then no development occurs.
4.83
DIRD saw the Australian Government’s role as twofold. The first was ‘informed investment’:
Currently the Australian government has committed over $50 billion in public infrastructure investment to transport infrastructure. It is in the interests of the government and the Australian taxpayer to ensure that this investment is well targeted and reflects best value for money. In part, this involves ensuring that, where practical and fair, those who directly benefit from major infrastructure investments also contribute to the cost of infrastructure.
4.84
The second was ‘in supporting all Australian governments to make efficient and effective decisions around the provision of infrastructure’. DIRD noted that:
In recent years, the Australian government has led reforms in consultation with state and territory governments designed to achieve this outcome. These include improving our project assessment and selection processes, increasing the robustness of infrastructure cost estimation, and harmonising regulation across jurisdictions. The department has led most of this work on behalf of the government. The department recognises that there remain a range of areas for further reform in infrastructure, and we welcome the recent contributions to this national conversation by Infrastructure Australia through its 15-year plan and the Harper competition policy review.
4.85
DIRD believed that the ‘implementation of value capture mechanisms, which generally involve the imposition of land and property taxes or the sale of state government owned assets, primarily sit with state and local governments’. It suggested that ‘while the Commonwealth can help support these governments to identify and deliver opportunities for value capture funding, it has limited capacity to directly intervene’.
4.86
The Treasury noted that most infrastructure projects were, ‘at best, citywide-type projects’, and did not call for uniform funding solutions at a national level. Moreover, most of the existing revenue mechanisms which could be used in value capture operated at a state and local level. According to the Treasury, ‘it is not obvious that a Commonwealth tax is going to be any better than those’.
4.87
DIRD acknowledged that in the past governments had not done planning well, and that there was a history of poor coordination between jurisdictions. It believed that the Commonwealth should focus on funding levers rather than tax changes to promote better outcomes, saying to state, territory and local governments, ‘“We’re not going to give you funding unless you do, perhaps, X, Y and Z”’. Nonetheless, the Department urged caution in the use of funding levers, ‘because governments will still want these projects to be delivered’:
We need to think about how we can actually use those mechanisms so that you are actually working out what the right roles of the three governments are, and how you can actually get that framework to work cohesively knowing who actually has what levers.
Hypothecation
4.88
The question of whether revenue raised from infrastructure investment, whether directly or by means of value capture, should be hypothecated to infrastructure funding was also raised in the evidence presented to the Committee. Hypothecation is the dedication of the revenue from a specific tax or taxes to a particular expenditure purpose.
4.89
Mrs Emma Woods, representing the Australasian Railway Association (ARA), expressed support for hypothecation, stating:
We believe that if you are going to generate the value and you are going to capture that value from a transport project it makes sense that you put back into transport infrastructure. So, rather than put it back into general funds, we think it makes sense. We think it would also help sell it to the community. And if you are saying, ‘we are going to capture X percentage and we anticipate we will generate X dollars, and those dollars are going to go into a dedicated fund and we are going to reinvest it either back into the system itself or into the next public transport infrastructure project, whatever that might be,’ we think that would help it to be transparent but also create the case for the public accepting value capture.
4.90
The ARA believed that ‘the benefit to providing a reliable and dedicated source of revenue is that long term planning can then occur’.
4.91
A range of witnesses regard hypothecation as essential to value capture. The Committee for Sydney stated that funds collected through value capture ‘are hypothecated to the project they are designated to fund’. This was to ensure that ‘partners in the project are able to plan effectively over the lift of the project—but also to achieve public buy-in to the model—removing the potential for the accusation that value capture is a “cash-grab”’.
4.92
Property group Charter Hall made a similar point, stating:
As a significant national landlord across office, retail and industrial properties, Charter Hall is keen to ensure that any uplift in property-related tax revenues received by local and state governments as a result of improved transport connectivity are apportioned to the provision of infrastructure and related services, and not directed to consolidated revenue.
4.93
Goodman suggested that ‘instead of an ad-hoc grants approach that is not transparent and lacks commitment to a stable and sustainable expenditure on infrastructure’, the Australian Government needed to ‘consider hypothecating into a separate infrastructure fund, that proportion of income tax, capital gains tax and GST that is related to value improvement in property values’. That approach would ‘go some way to demystifying the conjecture around value capture’.
4.94
In the context of the development of the airport at Badgerys Creek, Professor Sue Holliday proposed that the new airport be linked to HSR and the value capture of developing a ‘city’ on the airport land (owned by the Australian Government) be hypothecated to the cost of providing the HSR service. She stated:
It would be an excellent case study of value capture. The Badgery’s Creek site should not be wasted on only developing an airport, which the private sector can easily deliver. Its public value should contribute back to a piece of nation building infrastructure that the private sector alone cannot deliver.
4.95
Mr Peter Thornton, Managing Director of Transportation Associates Pty Ltd, gave qualified support for hypothecation, stating that he thought that ‘mechanisms that do hypothecate some of that value uplift back to pay for the infrastructure that has created them is justifiable’. He suspected, however, ‘that it could be a very tricky mechanism, and a difficult mechanism’, and preferred to focus on a simpler mechanism for capturing value—the direct purchase and sale of land.
4.96
Mr Peter Olah, Executive Director of the Council of Mayors (SEQ) saw hypothecation as a partial solution. He stated:
We are not talking a complete hypothecation, because it is not a perfect model and there is no incentive if governments do not get to keep some of that money to spend on other things, so inevitably it will be a partial return on that expected or modelled growth.
4.97
Mr Olah further noted that ‘in local government land there is some genuine concern around a model that involves any form of land tax that potentially hits the one revenue base of councils to fund state infrastructure’.
4.98
The Business Council of Australia was sceptical of hypothecating future revenues, noting that ‘hypothecation provides additional complexity to government budgets, and may result in additional inefficiencies’.
4.99
Dr James McIntosh, Principal of LUTI Consulting, rejected hypothecation. He did not believe that the ‘Australian market is designed, in its current ad valorem tax system, to implement hypothecation of these taxes’:
There are issues with redistributing Commonwealth taxes towards discrete projects in a hypothecated sense. You could do it with a state based tax but with the Commonwealth it is too hard. I would say a first pass with all projects is that we should understand what net benefit is generated by projects and how that can be attributed to the different tiers of government and have grant allocations commensurate with it.
It often sounds really important to ‘hypothecate’ and ‘ring-fence’ money. But that term is only important if you are going to use it to go through and, say, repay a bond issue or have a financing mechanism associated with it. If it is a grant based model, then we do not need to hypothecate.
Different approaches to government involvement
4.101
Different approaches to the role of government in the development of transport connectivity were presented to the Committee. Mr Thornton believed it was ‘the job of government to oversee the creation of transport infrastructure and to choose the means to do that’. He stated that ‘at the end of the day it is government who is the lender of last resort, but, more than that, it is government that carries the responsibility that whatever systems are created have continuity’. He believed the best way forward in developing transport connectivity was for government to develop the infrastructure, create the value, then sell it to the private sector. Regarding HSR, he stated:
The main three east coast states have to be involved, but I think it has to be driven from government down. There is a lot of testing to be done to find out where your risk point is and you can say, ‘Yes, government is prepared to take the risk on this.’ As an example, it might be, say, that government is prepared to take the risk on acquiring a certain amount of land in certain strategic locations because it is committed to this project; and, by acquiring that land, government will then add value to it. In the same way as the Commonwealth added value to airport sites in its various different ways by various improvements until they had a value to the private sector, the government will add value and then, at some point, will be confident that it will be able to on-sell that to the private sector.
4.102
On the other hand, Dr David Adams, Director of Strategex Pty Ltd, thought the private sector should take the lead. He explained:
There is a long-term role for government in planning to an extent, but the first role for government is to try and get the appraisal guidelines right, for a start, and then get the market frameworks right so that the market can actually deliver these long-term transport solutions, rather than perennially relying on bureaucrats and consultants doing benefit-cost assessments, which are a third-best method of assessing infrastructure.
4.103
In its submission, the Curtin University Sustainability Policy Institute (CUSP) presented the Entrepreneur Rail Model, which advocated private sector development of transport connectivity, with the role of government being to facilitate private sector development. The Entrepreneur Rail Model envisaged several functions being retained or adopted by government:
Land acquisition and assembly
Network coherency and integration
Zoning land use changes, so as not to prohibit re-development
Urban design and building standards.
4.104
Professor Peter Newman, Director of CUSP, explained that:
Government’s role in this is to do the land assembly to ensure that there is fare-system integration, but they should not get in the way of saying exactly where a railway should go because that may not be where the best land development opportunities are. This is, in fact, how trams and trains were originally built, and it is now the way in which they are built, managed and operated in Japan, in all of their cities, and in Hong Kong. The difference with Hong Kong is that that is a government based process but with a largely entrepreneurial private sector dominated agency that now runs Melbourne’s rail system, for example—the MTR. The Japanese system, however, is more like what I am suggesting.
4.105
CUSP observed that the solution to funding transport connectivity ‘is found in land development around stations’:
If enough land can be found to enable redevelopment by the private sector to sell and lease buildings around stations, or to redevelop jointly with private owners or government for mutual benefit, then they can create the capital to enable them to build the rail line, to own it and to operate it. This is the Entrepreneur Rail Model.
4.106
CUSP stated that it was ‘important that a government bidding process is controlled by Treasury as the central agency required to ensure private sector funds are attracted to achieve public-good goals’:
Treasury would ensure consortia are evaluated by financial criteria, land development criteria and transit criteria, in an integrated way. This cannot be done by a transit agency as their emphasis on choosing the routes in detail first will not optimise land development opportunities so the rail will not get built.
4.107
CUSP stated that ‘a transit agency’s only task in our model is to ensure transit system compatibility with any new rail lines’. CUSP believed that:
The delivery process will require the powers of a redevelopment agency to provide government’s role in land acquisition, zoning and land assembly to unlock the latent value in land development around the stations.
Collective bargaining
4.108
Another issue raised in the evidence presented to the Committee was that of ‘collective bargaining’—different jurisdictions combining together for the purpose of coordinating infrastructure procurement, especially the purchase of rolling stock. The ACT Government thought collective bargaining ‘an interesting concept to think of for the future’. Citing its own light rail procurement, it noted that:
Had we had others tendering at the same time or there was some sort of collective approach which had the support of the federal government, then may be it would have put extra competitive pressure to get an even better deal.
4.109
Professor Peter Newman liked the idea of collective bargaining, believing that it was ‘something that the federal government could play a role in significantly, because there are ways in which we could get economies of scale together that could create a much better rail industry in Australia’. He saw the advantages of using it to develop and promote technological innovation, generating expertise and technologies in Australia that could then be sold for export.
4.110
Mr Alan Thompson, of the Transport Australia Society, endorsed collective bargaining, noting that the ‘idea of using one template for rolling stock has actually worked in Australia’:
Think of the modern carriages that run up and down the motorway between Perth and in Joondalup. I think Perth was first and then Brisbane tacked onto the back end of that. Brisbane had a different paint job but essentially the same carriages internally, and that got them a much better price. They were not so proud that they felt they had to have something different. They were happy to go for the same project—two Holdens, if you like, rather than one Holden and one Ford. That was a very good deal for them. I think light rail rolling stock could be a very similar proposition.
4.111
Dr Patrick Yu, Chief Executive Officer of the Centurion Group, also endorsed the concept, stating:
We would be very happy to participate in the competitive tender or expression of interest with all other light rail carriage suppliers. We had already thought and planned this. We believe, if we were so lucky as to win—there could be two or three such manufacturers in the country manufacturing to the same standards set by yourselves. We are already thinking about taking over some of the land to be vacated by BHP in the Illawarra. Because, remember, we are doing the outer port extension with NSW Ports. We would put our factory there … and if a light rail manufacturing facility can be built—because we have the technology—we would be good for probably 2,000 or 3,000 jobs, and we could lower the cost per carriage by 50 per cent.
4.112
Mr Peter Olah, Executive Director if the Council of Mayors (SEQ), was less sanguine about the benefits of collective bargaining. Highlighting his experience with the State Transit Authority in New South Wales, he stated that he was ‘yet to see a circumstance where governments in procurement achieve genuine economies of scale’. In his experience, ‘the bigger a government capital order, especially for items involving any form of technology, it ends up adding cost rather than saving’. He stated that ‘in simple terms, it is arguable that providers see governments coming when they put big orders together’. Mr Olah also identified an ‘Australian tendency, especially in transport, to over specify’:
An example could be a metro system in, say, Hong Kong that looks to order a new set of carriages. Because it uses standard metro carriages it will have availability from, potentially, dozens of global suppliers, very cheaply because they are not changing anything from off the rack, whereas in Sydney you are, effectively, inventing a space shuttle every time you order a new train—hence the cost.
4.113
Within the context of the discussion of collective bargaining another proposal was put forward—a single national ticketing system. In her evidence to the Committee, Ms Paula Lawrence, Executive Officer of the Peri Urban Group of Rural Councils, commented:
I was interested in your comments about light rail and, perhaps, a common tendering for carriages. Certainly, another thing that would be worthwhile throwing into that mix would be common tendering for a consistent ticketing system across Australia. If we are going to go down the path of bulk buying carriages, we may as well get everyone on board with the one ticketing system.
Committee conclusions
4.114
The evidence presented to the Committee highlighted the importance of integrated transport and land-use planning to the successful development of transport connectivity. Planning transport without reference to land use and vice versa leads to sub-optimal outcomes. Integrated planning has significant benefits, not least of which is matching transport to land use in a manner which optimises both, thereby increasing returns on investment. This benefits landowners, developers and governments.
4.115
There is a need for long-term planning horizons. Transport infrastructure, by its very nature, involves the creation of assets with a very long operational life, potentially in excess of one-hundred years. Infrastructure planning—and funding—needs to take this into account. Financing of infrastructure projects—and estimated returns—should be based on the expected service life of the asset. This will ensure that the cost-benefit comparison of different transport modes will be done on a fair basis.
4.116
Corridor preservation, especially for major projects such as HSR is very important. The ability to protect corridors ensures that transport infrastructure will follow the optimum route. Failure to protect corridors will mean compromises in planning and significant increases in cost. In addition, there has to be consistency in the management of corridor preservation between jurisdictions to ensure consistent outcomes. This is especially important in dealing with infrastructure that crosses jurisdictional boundaries, such as HSR. The Committee also supports the use of overlay zoning, which protects transport corridors in the longer term, while allowing compatible land uses in the short term. This is important given the very long lead times between conception and construction in large scale projects.
4.117
A high level of coordination between different jurisdictions, between different levels of government, and between government and industry is a prerequisite to successful outcomes, both in planning and funding. This is especially true in relation to projects that cross jurisdictional boundaries and involve different levels of government, such as HSR. The role of the Australian Government in providing leadership is particularly important, as is its ability to leverage outcomes through control of funding. Coordinating planning and procurement by linking funding to planning and outcomes is an effective tool for coordination of transport infrastructure development.
4.118
The evidence presented to the Committee highlighted a need for close coordination of funding arrangements between different levels of government and the tying of funding to planning and outcomes. The potential for the Australian Government to enforce coordination and discipline on other levels of government was emphasised by some; the need for a cooperative approach by others. Everyone, agreed, however, that it was in no-one’s interests to have different levels of government seeking funding solutions in isolation from each other. The concept of master funding—the creation of a single bucket of money drawn from a range of sources—hypothecated to the development of transport infrastructure was raised with the Committee. The Committee can see value in the idea of master planning, master funding, and the creation of transport connectivity plans directly linked to dedicated funding sources. This will ensure the integrity and viability of transport infrastructure.
4.119
The hypothecation of funding draws a direct connection between the wealth created by transport infrastructure investment and the investment itself. It is justified where the infrastructure creates investment or where the infrastructure will generate a significant increase in investment and economic activity over a longer period of time. Linking infrastructure funding to wealth generation through hypothecation provides both certainty and discipline in planning. Without hypothecation we will commit the sins of the past, allowing developers to build beyond the capacity of our infrastructure, which eventually congests, then finally occludes, investment.
4.120
The Committee further notes that value capture provides a mechanism by which planning and funding can be intimately linked, ensuring effective and efficient transport connectivity outcomes. The Committee believes that a bonding alignment agreement between the three levels of government should be established that maximises value capture revenues. It is important to form this unity of purpose so that the full potential of value capture is realised and is not compromised by any level of government acting in a way that is contrary to the interests of the agreed goal. A further alignment that considers stakeholder land owners and developers fairly and equitably will optimise outcomes for all levels of government while providing clear and continuous streams of opportunities with strong elements of certainty, stability and growth.
4.121
The Committee does not have a view on whether planning and funding should be driven primarily by the public sector or the private sector. Nonetheless, the Committee is aware that where once transport infrastructure development was dominated by the public sector, in recent years increasing levels of private sector interest, money and expertise have emerged and should be utilised. Whether in the form of the Entrepreneur Rail Model or the Centurion proposal for HSR, the opportunities for private sector engagement are real, and provide opportunities for the provision of transport infrastructure in a timely and cost-effective way.
4.122
Likewise, the Committee considers there are significant savings to be obtained from the collective bargaining of procurement for vehicles and rolling stock. Governments should examine whether efficiencies can be achieved through the coordinated procurement of vehicles and rolling stock for transport infrastructure, such as new bus fleets, which would more likely have national operability. The Committee supports Australian Government funding of transport infrastructure being conditional on standardising rolling stock through a centralised procurement facility, ensuring best price or opportunities for local manufacturing when critical mass is projected.
4.123
The Committee believes that consideration should be given to:
the creation of a single lead agency to coordinate infrastructure planning and funding;
the creation of a common infrastructure fund, based on the quarantining and hypothecation of infrastructure related revenue—a master fund;
the development of an infrastructure master plan, to be accompanied by an urban plan of development, zoning and facilitation of building approvals;
infrastructure corridor reservation;
promotion of private sector involvement in the development of transport connectivity; and
coordinated procurement of materials, vehicles and rolling stock for transport infrastructure.
4.124
The Committee recommends that the Australian Government, in conjunction with state and territory governments, develop a system for coordinating the planning and funding of major infrastructure projects across all levels of government, including the quarantining and hypothecation of funds to projects, the allocation of funds to projects being contingent upon compliance with prescribed planning and funding requirements.
4.125
The Committee recommends that the Australian Government, in conjunction with state and territory governments, examine whether efficiencies can be achieved through the coordinated procurement of vehicles and rolling stock for transport infrastructure, particularly in relation to new bus fleets. This coordinated procurement should ensure, when practicable, that Australian materials and products, skills and services are maximised in project delivery.