Value capture and public transport in Fremantle

Published on Thu 10 November 2016 4:40pm

Mr Wilson (4:40pm) — In Fremantle and in metropolitan areas around Australia we face some common and interrelated challenges. Urban sprawl has meant that people seeking new and affordable housing are often pushed to the edge of our cities and they are therefore dislocated from jobs and services.

They also bear the heaviest travel burden in both time and cost. Our challenge is to avoid further unnecessary sprawl and to provide much better public transport and to do so at a time when capital for infrastructure funding is tight. In that sense, it is a familiar problem, and we have wrestled with it for some time. How do we support urban infill? How do we create innovative and diverse housing and how do we deliver increased density on the basis of high-quality design, better transport options and more liveable neighbourhoods?

One emerging solution is an infrastructure funding model called value capture or value creation, which seeks to draft in private sector investment to help create urban rail projects. As a representative of a community that is affected by congestion, which needs careful urban development, based around public transport, I am interested in the potential of this mechanism to deliver on those needs. The idea of value capture, which I am glad to see is now an inquiry topic for the Standing Committee On Infrastructure, Transport and Cities is essentially to use the land value increase that inevitably comes with new public transport to fund that infrastructure. In that sense, it is not only a smart way to fund new transport options but it is also inherently more fair. Why should government alone and the taxpayer bear the cost of light rail, for example, if the immediate effect of such a project is to dramatically improve the value of private assets? Once upon a time, we expand our cities around public transport, with trams and trains coming first and land development following in due course. Unfortunately this changed when cars and buses took over as the dominant transport mode in the post-war period. Whatever freedoms we may experience as private vehicle users, the dominance of the car has led to sprawling cities, congestion, pollution and vast amounts of hardscaping.

My electorate is relatively well served by hard rail through both the Perth to Fremantle line and the Perth to Mandurah line, but the east-west links are poor and there is a need to support the proper pursuit of infill development with a more comprehensive public transport network. As always, the task is to plan for and to pay for it. The government should lead that process. We should be prepared to explore and apply new solutions. That is why we need to look seriously at value capture, which makes it possible for the private sector to invest in urban rail and undertake land development at the same time. In essence, value capture allows government to guide the urban development project as a whole with infrastructure funding, perhaps, delivered through a bond that could be sustained by appropriately calibrated land taxes, which increase as the land value increases. Alternatively government can shape the project through a public-private partnership that is founded on private investment underwriting the delivery of the transport infrastructure in return for the higher development yield. This is the model that might be better described as value creation. It is of course possible to have a combination of both.

Internationally, this land based private sector approach is how they build railways in Japan and Hong Kong. It has been used to underwrite a number of rail projects in the US and it was applied to help fund the cross rail project in London, which is the biggest infrastructure project in Europe. While it is clearly on the agenda here in Australia we have not yet seen it put into practical use and I am hopeful that will not be the case for much longer.

In my electorate we have two possible rail corridors with redevelopment potential that could attract a value capture or value creation approach. The first runs south from Fremantle along the Coburn coast, through Spearwood, and then turns east out to Coburn central where this line would meet the existing Southern Railway. The second corridor runs east west along South Street from the Fremantle CBD through a major redevelopment area being planned in my old stomping ground of Beaconsfield. It connects the subcentres of Hilton and Kardinya to the Murdoch Activity Centre, which already comprises Murdoch University and Fiona Stanley Hospital.

I want to record my gratitude to Professor Peter Newman for his advice and expertise in this area. Very few people have made such a considerable contribution to understanding and implementing the principles of good urban design, both in Australia and around the world—especially in relation to the transformative potential of public transport. Peter Newman is a Fremantle treasure. We are proud of his work and we want to share in that kind of future. We want to see more public transport and we want to see rail, in particular, criss-crossing the South Metro region.

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