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Government to reconsider infrastructure spending

The Federal Government’s model for financing infrastructure projects entirely with taxpayers is soon to be replaced, putting the onus of contribution on those set to benefit most from improved infrastructure – developers.
According to the Wall Street Journal’s Vera Sprothen, critics are voicing their disapproval of a system which allows Australian taxpayers to fund investment in roads, rail, waterways, marine ports and airports in full – an investment of 1.6 per cent of GPD, the highest of all major OECD countries
“We’re spending money, but we’re losing value,” said Joe Langley, a director in Sydney engineering firm AECOM Technology’s infrastructure advisory unit.
Sprothen noted criticisms of the current system, “Concerns are growing that Australia is letting private investors profit too much from higher land and property values generated by the new transportation project.
“Australia lags behind places like Hong Kong, London and Denver, which use mechanisms to ensure private real estate developers – not just the public purse – help pay for infrastructure.”
Solutions proposed include following models used successfully elsewhere, including ‘value capture’, whereby developers help pay for projects in return for the opportunity to profit off the increased land value.
The Federal Government announced in November that value capture is a direction it is considering, and the days of infrastructure projects being fully funded by the public purse are nearing an end.

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