A potential $140 billion uplift in the value of residential land which is close to train stations that are proposed as part of a high-speed rail project on Australia’s east coast could make a significant contribution toward paying for the project’s construction, a new analysis has shown.

In its latest report, the UNSW City Futures Research Centre has analysed the uplift that is expected to occur in the value of land which will surround new stations along the proposed high-speed rail network between Melbourne and Brisbane.

It concluded that for residential properties alone, the land which surrounds stations along the line would experience a value uplift of between $48 billion and $140 billion as a result of the line and stations being built.

This would accrue from both an uplift in the value of existing properties along with a planning-related uplift for land which is rezoned to residential use around the stations.

Should part of this gain be captured (see below), the researchers argue that this could help pay for the cost of the line.

First considered in the 1980s, high-speed rail (HSR) along the east coast of Australia has been on the drawing boards for many decades.

In 2013, the HSR 2 report which was prepared for the Australian Department of Infrastructure and Transport proposed two HSR lines running from Melbourne to Sydney and from Sydney to Brisbane along with spur lines to Canberra and the Gold Coast.

Under that proposal, the system would comprise 1,784 kilometres of dedicated track including 144 kilometres of tunnels along with 20 stations.

Four of the stations would be city centre stations (Melbourne, Canberra, Sydney, Brisbane) whilst four others would be city peripheral stations (one in Brisbane, two in Sydney and one in Melbourne) and the remaining twelve would be regional stations.

Travel times would be slashed to 39 minutes from Sydney to Newcastle, 64 minutes for Sydney to Canberra, 2 hours 44 minutes from Sydney to Melbourne and 2 hours 37 minutes from Sydney to Brisbane.

In addition to providing a practical and effective transport ‘spine’ between cities on the east coast of Australia (home to about 80 percent of the Australian population), the project is expected to unlock massive potential for regional development with connection to cities along the rail corridor.

According to that report, the line would cost $114 billion to build. Construction on the Sydney to Canberra Link would commence in 2027.

In their report, researchers said that at least part of the construction cost could be paid for by capturing a portion of the value uplift which the line would generate in regard to land which is located within the vicinity of the 20 aforementioned stations.

Known as ‘value capture’ this concept sees taxpayers capture a portion of the value uplift which new infrastructure delivers in terms of land values and use this to help pay for the cost of construction.

This can occur through means such as betterment levies, developer charges or taxes on property transactions.

Such policies are commonly used oversees.

For its $27.9 billion Crossrail project, for example, the Greater London Authority in the United Kingdom implemented a ‘Business Rate Supplement’ which is expected to contribute $7.7 billion toward the project’s cost.

With respect to HSR specifically, the research team acknowledges that the amount of uplift which can be captured will depend upon the value capture policy frameworks and structure which are adopted.

Nevertheless, Professor Christopher Pettit, Director of UNSW City Futures Research Centre, said opportunities for value capture should not be underestimated.

“If you were to capture a substantial proportion of this value uplift, it could pay for a huge amount of the HSR,” Pettit says.

“You would be looking at tens of billions of dollars just from the residential value uplift alone, without even factoring in commercial, industrial and other beneficiaries.”

Pettit stresses that not all of the funds raised through value capture need be applied directly to the cost of the project.

Indeed, he says that some of the funds could go toward other initiatives such as housing affordability schemes.

The report also recommends that further research be conducted into the use of value uplift financial instruments, the formulation of a national settlement plan, and creating a national cities institute to ensure the maximum benefits realisation of an HSR network across Australia.

Such initiatives would help to reduce long-term emissions and to ensure that liveable, sustainable, productive, and resilient cities are planned along the route.

Pettit says the overall value of the project should not be underestimated.

“Australia is in an excellent position to capitalise on this infrastructure that would be transformational for the nation,” he says.

“If Government were to make a significant investment into the HSR, it would show strong leadership and vision and set up future generations of Australia into 2060 and beyond.”