Wednesday, 9 December 2020
Infrastructure, Transport and Cities Committee; Report
On behalf of the Standing Committee on Infrastructure, Transport and Cities, I present the committee's report, entitled Fairer funding and financing of faster rail: inquiry into options for financing faster rail, together with the minutes of proceedings.
Report made a parliamentary paper in accordance with standing order 39(e).
by leave—Cast your mind to the future and consider where Australia could be in 2050 or in 100 years time if we had unlimited access to the infrastructure we need to grow. Imagine high-speed rail linking our major metropolises and connecting new, vibrant regional cities in commutable times. Imagine replacing the world's busiest air corridors with low-emission electric-powered trains with travel times from doorstep to doorstep in less time than is currently achieved by air. Imagine relieving our major cities of the burden of overcrowding while increasing our capacity for growth through a strategic plan of decentralisation, and the infrastructure required to deliver this dream. Imagine generating affordable housing for generations to come, a modern iteration of a Commonwealth of Australia with homeownership a foundation of a fair distribution of wealth through fair market mechanisms, wage earner competing with wage earner to secure a home.
It sounds far-fetched, but this could be possible with sustainably funded infrastructure. Finding that silver bullet was the purpose of this inquiry. Our inquiry considered evidence that documented the awesome power unleashed on property values when impacted by infrastructure and rezoning. When new infrastructure like rail is announced, the land prices always rise dramatically. Currently, this dramatic price rise provided by taxpayer funded infrastructure is pocketed by the lucky landowner. Harnessing this growth is essential to equitably fund infrastructure by requiring those who profit from taxpayer funded infrastructure contributing a fair share.
The pivotal question must be one of fairness. Is it fair for the taxpayer to fund infrastructure that creates great wealth for landowners, speculators and developers? Should the taxpayer receive a fair return when their money is invested? Is it fair that we leave future generations to pay for our spending today? Evidence provided to this inquiry documented that land in Western Sydney that was zoned as agriculture was valued at under $2,000 per acre 20 years ago. That land has increased in value through the announcement of the Badgerys Creek airport. Its associated infrastructure and rezoning has raised the value of land close to proposed metro stations to over $10 million per acre, an increase of an astounding 500,000 per cent. The trend we have witnessed will therefore result in greater wealth for some at the expense of taxpayers. Properly levied, these phenomenal uplifts would have funded the very infrastructure that created the uplift in their property values.
Professor Andrew McNaughton noted that uplift within 500 metres of a metro rail station is significant; however, the uplift around faster or high-speed rail can extend over much greater areas and be far more dramatic. Professor McNaughton was the technical director of High Speed 2 in Britain, and more recently has consulted for the New South Wales government on faster rail. He advised most strongly that before making any more announcements of future infrastructure projects, governments must secure the current value of lands on which they wish to make a charge because after the announcement it is too late. If this compounding trend continues, the proposed $100 billion infrastructure investment will result in a great debt burden for future generations while creating unimaginable wealth for some. This would result in a compounding of the negligence by governments for over 100 years in failing to represent the people of Australia by not gaining a fair share of wealth created when investing Australian taxpayers' moneys.
When we started this inquiry, at the very end of 2019, we wanted to find a way to better fund critical infrastructure. As we conclude it, at the end of 2020, we need to find a way. In 2020 we have seen Australia's first recession in nearly three decades. In response, the Australian government has committed to billions of dollars worth of infrastructure as stimulus, resulting in debt that will last for generations. I would like to extend my thanks to everybody involved in this inquiry, from the people and organisations who took time to share their expertise, to my colleagues on the committee, my able deputy chair and friend, the member for Solomon, Luke Gosling, and the secretariat, Stephen Boyd, Casey Mazzarella, Stephanie Woodbridge and especially Samantha Mannette. Like everything else in 2020, COVID-19 played havoc with this inquiry, by cancelling hearings and even postponing the inquiry for a few months. It is to the credit of the secretariat that this report exists at all.
This committee has previously recommended that a value-capture model be designed and utilised in Australia, which has either been ignored or received token acknowledgement. Before it was an opportunity. Now it is an imperative. We find ourselves at a crossroads. On one road is more debt, ad-hoc infrastructure and a limping recovery. On the other is dynamic growth, sustainable infrastructure and opportunity. It should not be hard to see that business as usual will not serve our citizens fairly. The conclusion is obvious, that the Australian government working with state, territory and local governments should secure land values before announcements and develop an infrastructure levy mechanism that is just, equitable and fair to sustainably fund infrastructure and provide relief for taxpayers now and in the future—a master funding plan for a master plan of infrastructure, settlement and recovery. In the words of Professor Andrew McNaughton, 'We must act now'. I commend the report to the House.
by leave—The House of Representatives Standing Committee on Infrastructure, Transport, and Cities inquiry report into options for financing faster rail is, as the chair has said, timely and important. Fast rail between Australia's major capital cities and regional centres should be a bipartisan national objective. The report notes the federal government's role in rail projects is not limited to funding, it also has a leadership role to play in facilitating rail projects by providing strategic coordination between the different levels of government, the private sector and other key stakeholders. Because we're a federation, delivering these projects will involve negotiation across all levels of government. For example, land use planning is shared between different levels of government and rezoning is a local responsibility. The committee heard that there is scope for the government to work more with state, territory and local governments, to build on current mechanisms like the city deals we have in my electorate, in Darwin, and in Hobart, in Geelong and in Adelaide.
Value capture was a major focus of this report. It's a way for governments to fund part or all of costs for infrastructure projects. It is regrettable, as the chair has said, that in cases like the Western Sydney City Deal, governments have failed to value-capture extraordinary uplifts in property values in the area. Value capture should be incorporated organically into infrastructure projects to ensure that governments fairly capitalise on taxpayer funds that are invested. I commend the recommendations. I am personally, and we on this side of the House are, committed to using infrastructure spending and projects for nation-building. In his budget reply speech, the Leader of the Australian Labor Party, Anthony Albanese, made this clear when announcing Labor's creation of a National Rail Manufacturing Plan as part of our 'A Future Made in Australia'.
This plan will undertake a national audit of passenger train capacity and condition; develop our rail procurement and manufacturing strategy; and assess how we can grow jobs and bolster research and development and collaboration with innovation initiatives and organisations.
The plan will reinstate the important role of the rail supplier advocate, cut by those opposite in 2013, to help SMEs identify export opportunities and get a foot in the door with government purchasing bodies. Having said that, I want to pay tribute to the constructive bipartisan tone and, hopefully, outcomes of this important committee report.
Working closely with the member for Bennelong, who is a good friend—and I appreciate his sterling work in this inquiry process—I want to put on the record that his serve, his backhand and endurance were as impressive in this committee process as they were on the tennis court. His commitment to ensuring fairness is extraordinary. Fairness for Australian taxpayers from federal infrastructure projects is one that I support and which I hope his colleagues will also support.
Finally, I want to thank my Labor colleagues on the committee: Andrew Giles, the member for Scullin; and Joanne Ryan, the member for Lalor. I appreciate their counsel as our committee went through its important work on this inquiry. Thank you.