Is Real Estate the Key to Funding Australian Urban Rail? 1

Wednesday, October 16th, 2013
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Cross River Rail Project
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While planning experts have rebuked the Coalition’s aversion to federal funding for urban rail, others have pointed to the possibility of using the proceeds from surrounding property as a means of making such projects more economically viable.

Despite Tony Abbott’s promise to become Australia’s “infrastructure prime minister” prior to the election, his view that the federal government should not be responsible for investment in urban rail infrastructure has drawn fire from some of the country’s leading cities experts.

Jane-Frances Kelly and Paul Donegan, specialists in urban development from the non-partisan Grattan Institute, recently called Abbott’s aversion to federal spending on urban rail troubling and said roads alone will not be sufficient to remedy the growing congestion and transportation issues blighting Australia’s big cities.

They point to inadequate transportation infrastructure in the country’s largest population centres, where lengthy commute times have severely eroded the quality of life for many working Australians – particularly those living in peripheral suburbs.

International experts point, however, to attractive alternatives for funding transportation infrastructure which dispense with the need for large-scale public investment.

During the halcyon era of railway construction in the US and Britain, private companies managed to turn huge profits via gains in the value of land they bought up adjacent to transportation corridors. Rail companies in Japan and Hong Kong continue to employ this model to shore up their profitability.

Japanese companies make rail projects profitable via the creation of what are referred to as “rail integrated communities,” which employ train stations as hubs at the centre of high-density, mixed-use community developments.

The Hong Kong metro system is considered by Sir Edward Lister, the London deputy mayor for planning, to essentially be a property company which uses the subway system as a means of increasing the value of its neighbouring land holdings.

Unfortunately, however, it appears unlikely that Australia’s local governments will adopt swift action for the introduction of similar models to remedy any imminent shortfalls in federal funding for rail.

Campbell Newman

Queensland Premier Campbell Newman

In New South Wales, Premier Barry O’Farrell has been censured for commissioning a surfeit of needless reviews since his election to office in March 2011 which critics say have impeded the state government’s effectiveness. This has recently impacted infrastructure, with O’Farrell requesting in September that Graham Bradley, the new chair of Infrastructure NSW, put together a paper on the future direction of the organization – essentially a review of a review body.

Down in Victoria, the ambitious 2013 metropolitan plan for the city of Melbourne have been pilloried by Michael Buxton, professor of environment and planning at RMIT University, for its failure to shift spending from roads to public transportation and link it to land use, as well as poor choice of future growth areas and lack of funding for infrastructure.

According to Buxton, the Victorian government’s radical deregulation of its land use planning system has left it unable to control the future direction of urban development, control of which now rest in the hands of private concerns preoccupied more with making money from foreign investors than the state capital’s future viability.

In Queensland, Premier Campbell Newman recently unveiled ambitious plans for a Brisbane Underground railway line – essentially a reworking of Labor’s Cross River Rail Project, which enjoyed the acclaim of engineers and bureaucrats and was listed as the nation’s No.1 public infrastructure priority by Infrastructure Australia.

While Newman says the reworked Cross River Rail project will come in at less than half the initial price tag of $8 billion for the original version, skeptics say it nonetheless remains destined to join the long list of unrealized plans for remedying Brisbane’s traffic woe which have been churned out by both government and academic bodies over the past two decades.

Critics point to a lack of apparent means for funding the project, with only vague mention by Newman of joint investment by the state and private sector, as well as the hostility of Queensland’s sizable rural constituency towards government spending on big-ticket infrastructure projects for the city.

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  1. Andrew Jirik

    One problem we have is that both the Fed and many of the states are having trouble with their own financial positions. To remedy this, private investment will almost certainly be a key element.