Plans to generate more social and economic value and to implement value capture mechanisms will be required on major state precinct projects, public land development and capital investments in Victoria as the government in that state seeks to derive greater value from significant public investments.
Released by the Victorian Major Projects Minister Jacinta Allan, the Value Creation and Capture Framework will require agencies to include value creation and capture (VCC) plans to maximise social, economic and environmental opportunities on major precinct, public land developments and capital projects across the state.
Despite covering both value creation and value capture, the framework makes a clear distinction between the two.
Value creation, it said, refers to the practice of looking beyond the narrow focus of a specific individual project and thinking about wider opportunities which can be leveraged as a result of the project.
This could include, for example, business and employment opportunities through efforts to utilise local expertise; social benefits through creation of more public housing, social infrastructure or recreation facilities or environmental benefits such as greater energy or water efficient or adoption of climate change adaption measures.
Beyond the direct economic and tangible benefits associated with removing nine level crossings and building five new stations, for example, the Caulfield to Dandenong Level Crossing Removal Project featured a design involving elevated rail which not only achieved a reduction in noise throughout the corridor and surrounding area but also enabled the retention of trees, the opportunity to plant new and larger species and the edition of 225,000 sqm of parkland and seventeen kilometres of bicycle paths, the framework said.
In addition, the framework also requires agencies to seek opportunities for value capture – whereby taxpayers ‘capture’ a portion of the uplift in values of residential and/or commercial land which results from government investment in significant public and infrastructure projects and applies this toward the cost of building the project.
This can be achieved through measures such as additional taxes and levies on properties within given catchment areas, sale or lease of land or development rights or other measures such as developer contributions.
Set to be mandatory in the case of precinct or land development projects which are assessed by the government as having significant potential for value creation and/or capture along with high value capital investment construction projects, the framework sets out plans which must be prepared for each type of project.
For precinct projects, no detailed VCC plan will be required as a whole but project sponsors will need to prepare a strategic VCC plan outlining VCC opportunities for the precinct as a whole.
For public land redevelopment and capital works construction projects, strategic VCC plans will be required early within the business case development process followed by more in-depth VCC plans within the full business case.
Describing the framework as Australia’s first plan to generate maximum value out of public sector projects, Allan said the framework would help to leverage public investment in major developments.
“The Framework sets out how the Labor Government will harness its record investment in infrastructure to generate benefit for taxpayers and broader social benefits – like jobs and skills, the better use of surplus land, as well as better housing, community facilities and open space,” Allan said.
“This will provide a clear picture for business and the community of the types of value capture and creation initiatives the Government will support.”