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Is high speed rail our national boondoggle?

By Alan Davies - posted Wednesday, 13 April 2016


  • It would cost taxpayers a generation's worth of public infrastructure funding and thereby deny a large number of far, far more socially useful projects.
  • The environmental benefit would be marginal at best. It would be one of the most expensive ways imaginable of reducing carbon emissions.
  • The major beneficiaries of this public largesse would be business travellers who can and should pay their own way.
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  • There's little sense in using public funds to replace one form of public transport (airplanes) with another (trains) along Australia's east coast.
  • Nor is there much sense in using public funds to largely eliminate a competitive industry (aviation) so that a monopoly industry (HSR) can potentially dominate east coast travel.
  • There's little regional development benefit from shifting urban sprawl from the outer suburbs of the major cities to the outer suburbs of regional centres.

Mr Turnbull's emphasis on value capture is almost as problematic. He likes to imply it's some sort of overlooked hollow log overflowing with private sector funding. The suggestion is HSR will cost taxpayers hardly anything; or as Government MP John Alexander said yesterday, "we can have our cake and eat it too"!

It's important to understand that value capture isn't some remarkably clever or magical way of getting business to finance east coast HSR. It's not some alchemy that Mr Turnbull knows because of his business background.

It's an idea that's been around for ages and is fraught with practical and political difficulties because the "capture" bit requires the government to levy a tax on any increase in land value that might result from HSR.

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It's a con because it's only ever likely to make a very small contribution to the capital cost of HSR (see Is value capture the silver bullet for funding infrastructure?).

Even the Government's independent adviser, Infrastructure Australia, acknowledges value capture has a limited role:

Value capture is a potentially useful source of incremental funding alongside conventional user charges and taxpayer allocations. Even a small percentage of total project cost recovered from beneficial land holders can make a marked difference to the funding case for an investment.

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This article was first published on Crikey.



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About the Author

Dr Alan Davies is a principal of Melbourne-based economic and planning consultancy, Pollard Davies Pty Ltd (davipoll@bigpond.net.au) and is the editor of the The Urbanist blog.

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Creative Commons LicenseThis work is licensed under a Creative Commons License.

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