The weight and magnitude of modern day infrastructure projects is causing traditional funding models to buckle.
With urban renewal and transport projects like WestConnex and the Metros now scaling tens of billions of dollars, it is clear that Australia needs to explore alternative, more equitable, methods of capital sourcing.
Value Capture has long been used in the USA and the UK to finance major projects. Over one third of the London’s ‘Crossrail’ project was financed by beneficiaries and a similar portion of San Francisco’s ‘Transbay’. But the concept has until recently faced resistance within Australia.
Joe Langley of Aecom – who is due to speak at the Value Capture in Infrastructure conference in Sydney this March – spoke with Informa ahead of his presentation. He touched on some of the obstacles the model has been facing in Australia and why it is vital for us to open our arms and embrace it.
“We are running out of traditional sources of funding”, he says frankly. “Some of the ongoing transport projects here in NSW will have an extended life of 100-200 years. We can’t pay for that type of long life infrastructure with short term funding mechanisms”.
His thinking is in line with a number of peak and industry bodies and government agencies – e.g. Committee for Sydney, Urban Development Institute of Australia and Productivity Commission – who have already led concerted campaigns urging governments to utilize Value Capture.
The long evolving debate may now be coming to a head with the recent release of discussion papers from Federal and State governments. But there is still a way to go before its widespread adoption.
“There is a lot of confusion in the public discussion in Australia right now”, says Langley. “Some government reports and private sector opinions that have come out recently have demonstrated a misunderstanding of how these methods work in practice. One of the biggest challenges is getting some clarity around the definition of value capture. It’s difficult to have a productive debate on this topic when there isn’t a common agreement on what the terms means or how it is intended to work”.
He acknowledges that a number of stakeholders have “legitimate concerns regarding double taxing” but argues, “Ultimately, if the value to be shared is pegged right, everybody benefits from value capture”.
Helping to break down the barrier of confusion and uncertainty, Langley will lead discussions at the Value Capture in Infrastructure conference, reflecting on overseas success stories and explaining how these can work in an Australian context.
Learn more about the conference and book your place here.