The Committee has examined the role of transport connectivity in stimulating development and economic activity in major urban areas, and in regional Australia, with a particular focus on:
the benefits of transport connectivity—especially in relation to transformative technologies such as high speed rail;
the economic benefits of improved transport connectivity, particularly through value creation and uplift;
the role of government in coordinating improved transport connectivity; and
the role of value capture and other economic instruments in delivering transport infrastructure.
Transport connectivity
The evidence presented to the Committee highlighted the importance of improved transport connectivity to the economic and social wellbeing of Australia. Improved transport connectivity allows greater accessibility to employment and markets, and cost savings in terms of reduced transit times, less traffic congestion and reduced transport costs. The key benefit of improved transport connectivity is its transformational effects—making cities and regions more accessible, more liveable and creating opportunities for economic development that could not otherwise exist.
Carefully planned, multi-modal, transport systems promise to make cities more efficient and liveable. The creation of new transport corridors and nodes has the dual advantage of creating more efficient use of constrained urban space while offering opportunities for wealth creation. Rapid transit public transport creates the opportunity to create value and use that value to pay for the development of public transport—value capture.
Improved transport connectivity is also critical to regional development. It provides opportunities for decentralisation and the creation of new centres—rebalancing patterns of settlement. Greater regional connectivity will promote the development of regional areas, make relocation to these areas more attractive and reduce growth pressures in major cities.
A key to greater transport connectivity, especially in regional areas, is the development of high speed rail. This has the potential not only to improve connectivity between existing major cities, but allow the creation of new centres closely connected to those cities and each other—thereby achieving economic transformation by rebalancing the pattern of settlement. The Committee believes the time has come for the Australian Government to seek expressions of interest for the development of high speed rail in eastern Australia. It also believes that the potential of other technological innovations, such as Hyperloop and Austrans, should be explored.
The Committee was also presented with evidence highlighting the ongoing importance of road transport to both urban and regional Australia. It supports the ongoing investigation of new technologies which can make road use safer, cheaper and more efficient, including development of autonomous vehicles, low-emission vehicles, and smart road infrastructure.
Property development—creation of value
Value creation is one of the key purposes and outcomes of improved transport connectivity. The creation of value, and its capture, has the potential to provide the means to pay for enhanced connectivity. The evidence presented to the Committee indicated that there was a strong, though not consistent, correlation between improved transport connectivity and uplift in property values. One key to consistency is effective planning; another is the successful modelling of transport benefits. Planning for value creation is the basis for improved transport connectivity. The Committee believes that value capture has the potential to make a considerable contribution to the cost of new transport infrastructure through the capture of increased property values that directly result from improved connectivity.
Role of Government
The evidence presented to the Committee highlighted the importance of integrated transport and land-use planning to the successful development of transport connectivity. Integrated planning has significant benefits, not least of which is matching transport to land use in a manner which optimises both. The need for long-term planning horizons was also stressed.
Corridor preservation, especially for major projects such as high speed rail is also very important. There needs to be consistency in the management of corridor preservation between jurisdictions to ensure consistent outcomes. Overlay zoning, which protects transport corridors in the longer term, while allowing compatible land uses in the short term, is a potential solution to corridor management.
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. 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 potentially an effective tool for coordination of transport infrastructure development. The Committee supports 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. The allocation of funds to projects would be contingent upon compliance with prescribed planning and funding requirements. The Committee also supports developing a system for coordinating procurement of materials, vehicles and rolling stock for transport infrastructure.
Value Capture
The evidence presented to the Committee indicates that value capture potentially provides a mechanism by which planning and funding can be intimately linked, ensuring effective and efficient transport connectivity outcomes. A broad range of potential value capture mechanisms could be applied in an Australian context, although different mechanisms are best applied by different levels of government, and a high degree of coordination is required.
Capital gains tax is the primary means through which the Australian Government currently captures value uplift, but owner-occupied dwellings are exempt from capital gains tax. The Committee notes that there is scope for the Australian Government to design a new value capture mechanism, to apply in cases where the value of privately owned property in defined geographical areas increases as a result of a combination of new transport infrastructure and rezoning of land. This new mechanism could be offset against the capital gains tax liability incurred by the owners of commercial property.
There is also potential for the Australian Government to develop a toolkit of potential value capture mechanisms that could be applied at the federal, state and local levels. Application of appropriate value capture mechanisms could be a condition of federal funding for infrastructure projects. The Committee supports the negotiation of City Deal-type agreements with the various state, territory and local governments. The Committee also supports developing value capture models that can be applied to major infrastructure projects (such as high speed rail) and with a consistent and coordinated approach to the application of value capture for such projects. In so doing, the Australian Government should be prepared to act as the single point for the collection of value capture revenue.