Advocacy group says residents who live near a rail station should pay more rates
Date
December 24, 2015
Sydney Morning Herald
Residents who live within 800 metres of a new light rail or train station would pay extra council rates, under a model proposed to fund public transport in the future.
In a report released on Wednesday, advocacy group the Committee for Sydney called for residents who lived within a 10-minute walk from new stations to pay a levy to fund the construction and ongoing maintenance of transport routes.
The Committee for Sydney says a 'residential area levy' could be used to fund a light rail route through Green Square.
The Committee for Sydney says a 'residential area levy' could be used to fund a light rail route through Green Square.
Committee chief executive Tim Williams said the annual "residential area levy" would allow the surge in land value which property owners experience when public transport is built nearby to be captured and reinvested into the project.
"It's like a boiling a frog slowly so they don't actually feel the pain," Dr Williams said.
"So it's the idea of a long-term but small annual contribution to the infrastructure. You need a long-term kind of slow release approach so the people don't object. This is a way of getting community buy-in because the levy would actually be the equivalent of buying a couple of crates of beer a year."
'This is a way of getting community buy-in,' says Committee for Sydney chairman Tim Williams.
Public transport is a perpetual drain on the state government's wallet. Ticket sales only cover 33 per cent of Sydney Train's operating costs, according to analysis by SGS Economics and Planning. Fare box revenue covers 90 per cent of operating costs for the London Underground.
As a result, the report said, governments were more tempted to fund motorways than railways because they could regain their costs through tolls.
But well-planned public transport can increase land value by up to 50 per cent and the proposed levy is a form of "value capture" – a broad term for a finance mechanism that aims to seize this windfall gain.
Under the committee's model, property owners within a five-minute walk, or 400 metres, would pay higher council rates, while those within a 10-minute walk, or 800 metres, would have a smaller rate rise.
The report proposed using the levy to fund the construction of a light rail through Green Square, which will become the densest precinct in the country when a flood of development is completed in the next 15 years.
If residents who lived within walking distance of the light rail paid a "special rate" of $400 a year, more than $12 million in revenue could be raised each year to go towards the project.
Even if the land value increased by as little as 10 per cent when the rail line was built, based on the average dwelling price in the area, property owners would receive a windfall gain of about $80,000.
"This is a long-term funding model … for the community that benefits from infrastructure to pay more for it," Dr Williams said.
Value capture has become an increasingly hot topic, with both the state and federal government investigating how it could be used to fund public transport, including the construction of a rail link to the proposed airport at Badgerys Creek.
Sydney Metro Northwest, the high-speed rail line that will run between Rouse Hill and Chatswood, is considered by many as a missed opportunity for "value capture", with land owners along the route experiencing significant untapped gains in land value.
In the past month, the state government has announced that a new light rail from Parramatta to Strathfield via Sydney Olympic Park and the development of a new train station and land in Waterloo would be funded by "value capture" through a Special Infrastructure Contribution.
Dr Williams said the flaw with this model was the levy applied only to developers, rather than the wider community who would benefit from the new transport, and that it was a one-off payment rather than an ongoing revenue stream.
The Committee for Sydney was previously chaired by Lucy Turnbull, the wife of Prime Minister Malcolm Turnbull, who resigned earlier this month to head up the Greater Sydney Commission.
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