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Infrastructure funding needs more thought

By Graham Young - posted Tuesday, 7 July 2015


How do you finance new state infrastructure when you have taken the pledge not to use debt or increased taxes?

There is no doubt that Queensland needs new infrastructure with population growth amongst the highest in the developed world, but the cost of that infrastructure is in the billions.

For example, the cross river rail link, comes with a price tag starting at $2.5 bn.

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The new state government promises to be innovative in finding a solution, but from the flotilla of kites that flew Tuesday, and immediately nose-dived and crashed, promises and performance are still wide apart.

First up was a suggestion of levies or betterment taxes, almost immediately disowned and replaced with the idea of unlocking extra value from government assets, like the GoPrint land at Woolloongabba, as a result of new infrastructure.

Flogging off government land to pay for infrastructure is not a new concept. (It also looks and smells like privatisation).

In 1882 the Queensland government financed railways by granting government land to the builder paying a rate of 100 acres per one mile of track.

Without the line the land had little value and it was the government’s land to grant. So the uplift in the value of the land caused by the railway paid for the railway.

But these situations are rare, and probably confined to a rapidly developing and largely empty country, where aboriginal rights counted for little.

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The cross river tunnel does not fit these criteria.

In the first place, the benefit, is likely to be general to the population as a whole, not to a specific area.

There may be a couple of extra train stations, and possibly the one in town will attract some pedestrian traffic that wouldn’t have otherwise existed, but the uplift in value from the shopping this might generate is unlikely to meet more than a fraction of the cost of the construction.

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An edited version of this was published in The Courier Mail.



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About the Author

Graham Young is chief editor and the publisher of On Line Opinion. He is executive director of the Australian Institute for Progress, an Australian think tank based in Brisbane, and the publisher of On Line Opinion.

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