Funding Melbourne’s new underground rail link
The newly elected Andrews government in the state of Victoria has lost no time putting its stamp on the future shape of the city of Melbourne, with its funding of the planning stage of the Melbourne Metro Rail tunnel – while fretting about the $9 billion cost.
“Victoria can fund this vital connection, lifting train speeds and frequency throughout the network,” said Karl Fitzgerald (Project Director, Prosper Australia) today.
“Land prices along this route will soar and the government is entitled to use some of this to fund the project through value capture.
“People forget that 30 percent of the Melbourne underground loop was funded by a special city levy on land values from 1963. And the Melbourne Underground Rail Loop Authority ensured city landowners shared a small portion of benefits they gained from the project. There is no reason we can’t do this again.
There are very good studies that prove the merit of this approach. In London, the recent Jubilee rail line delivered £13 billion in windfall gains to landowners within 1000 yards of the eleven new rail stations. Construction costs were just £3.5 billion.
“The rise in land values directly attributable to this civic improvement was enough to pay for the rail link nearly 4 times over.
“The ALP referred directly to land value capture to fund the removal of level crossings in its Project 10,000 election manifesto. We welcome this approach. It is economically sound, fair to taxpayers and, in practice, drives powerful infra- structure improvement by recycling investment funds.
“Doubts remain as to whether the roads-biased Abbott government will assist this vital Victorian rail project. But there is more than enough embedded in land values to fund the cross-city rail – with or without federal help. “
Source: Prosper Australia media release 10 December 2014