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No free ride: Govt flags “community” contribution to SA tram extensions

Transport Minister Stephen Mullighan says extensions to Adelaide’s tram network could be partly funded by a “value capture regime”, with contributions from nearby property owners, councils and/or developers.

Apr 21, 2016, updated Apr 21, 2016
An expanded Adelaide tram network will need contributions from everyone, says the SA transport minister. Photo: Nat Rogers/InDaily

An expanded Adelaide tram network will need contributions from everyone, says the SA transport minister. Photo: Nat Rogers/InDaily

“Value capture” schemes have been used around the world, particularly in the US since the 1960s, to ensure that the financial beneficiaries of large transport projects – including property owners and developers – pay some fraction of their windfall to help build them.

Mullighan warned that governments were “at grave risk” of losing public support for an extended tram network if they failed to effectively manage public discussion about plans and funding.

“Understandably, communities are very sensitive about the prospect of a value capture regime, which may impact what their contribution towards this sort of infrastructure may be,” Mullighan told delegates at Lord Mayor Martin Haese’s Light Rail Summit at Town Hall this morning.

He told the summit that, “if we don’t get our discussions right with the community, we can be at grave risk of losing the groundswell of community support that we currently have to pursue these plans”.

However, he said, “there’s no free ride with this”.

“It’s critical now that all of us are prepared to put our shoulders to the wheel – not just getting the plans right, but also being prepared to contribute to bringing these projects into our communities,” he said.

“We’ve certainly had a clear indication from the Federal Government that they don’t expect that it will only be the state … and Federal Government who will be funding these infrastructure improvements.

“They want opportunities explored to capture some of the benefits that communities will experience from this infrastructure, and have those benefits captured in a way that they can contribute to the delivery of these tram extension projects.”

Mullighan told reporters this morning: “for businesses, for retailers [and] for people who are wanting to live in the city, trams bring enormous benefits to all of the area that they run through”.

However, Mullighan said he was “very, very reticent to jump to a [particular funding ] solution” because of the sensitivity of the issue.

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Technical director of services firm AECOM Joe Langley, invited to Adelaide to address the summit, told InDaily yesterday that under “value capture” funding schemes, “the people who use the infrastructure … [are] identified and mechanisms are put in place to charge them” and different “value capture” models are used for individual projects around the world.

He said that property owners living nearby new transport projects will see an uplift in value, sometimes around 12 to 13 per cent.

He said “value capture”  “doesn’t increase development costs, at all, it just means [benefits aren’t] pocketed in a windfall”.

And he emphasised that it did not constitute a “tax”, but rather a levy on direct financial beneficiaries.

A value capture funding scheme was supported by former transport and infrastructure chief Rod Hook last year.

Mullighan said he was pleased the tram extension would be a topic of public debate at the upcoming federal election.

“I am very, very happy now that this is a legitimate area of debate for a federal election campaign between two parties that are seeking to make good on their credentials in this area,” he said.

“I’m very, very pleased to say that we have a coalition government, at any level, that supports public transport investment, and that supports trams in particular.”

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