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Councils place a bet every way on trams funding

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Lord Mayor Martin Haese says inner city councils are “strongly” against any tax hikes on their constituents to pay for an extended Adelaide tram network, but “open-minded” about a beneficiary-pays funding scheme.

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Haese met privately with Transport Minister Stephen Mullighan and representatives from nine inner-city councils during his Light Rail Summit at Town Hall yesterday.

Haese told InDaily after the summit that the councils resolved they were “uniformly not in favour of new taxes on our community”.

However, “we’re very open-minded [about] funding options”.

Mullighan suggested yesterday that extensions to Adelaide’s tram network could be partly funded by a “value capture regime”, under which nearby property owners, councils and/or developers that would benefit financially from the tram extension – through increased land values – would help pay for the multi-billion dollar AdeLINK tram extensions.

But Haese said that councils needed “considerably more information” about such a funding scheme.

He said that if it could be demonstrated that “as a consequence of federal and state government funding” the tram extension would, indeed, increase nearby land values, “value capture” was “something we could explore”.

Haese said councils wanted to see concrete data about the degree to which property values could increase as a result of extending the tram network.

He acknowledged that if property prices did increase because of AdeLINK, local councils would enjoy a windfall of increased rates revenue.

However, funding the project “doesn’t necessarily fall within the remit of local government”.

“Of course there would be a level of benefit for local councils,” Haese said.

But “we are by no means in a position to suggest that we’d be looking to our local communities to contribute”.

He said and any “community” contribution would have to be subject to a “no-disadvantage test” and extensive consultation.

“We principally believe this is a Federal Government [responsibility],” Haese said.

“We would like to see some significant buy-in by the Federal Government.”

But Mullighan told yesterday’s summit he had received “clear indications” 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 … in a way that they can contribute to the delivery of these tram extension projects.”

The State Government's map of the five proposed tram route extensions that make up AdeLINK.

The State Government’s map of its proposed AdeLINK tram network expansion.

The major achievement of yesterday’s summit, according to Haese, was consensus among council representatives, who had each agreed “in principle” that they were in favour of rolling AdeLINK out across metropolitan Adelaide.

“This is a very important step one,” said Haese.

“We had nine inner city councils all agreeing on light rail.”

SA Executive Director of the Property Council Daniel Gannon said it was rare to see “an alignment of all the planets” with the State Government and local councils pushing for an expanded tram network, the federal Opposition promising to co-fund it and a Prime Minister who is interested in funding public transport generally.

However, Gannon – a former advisor to State Liberal Leader Stephen Marshall – said the politics of a “value capture” funding scheme could become “quite hysterical, quite quickly”.

“Value capture means that if you build a tramline … the owners of those properties [contribute],” Gannon said.

“There are all sorts of political problems involved,” he said.

Gannon said instead of a “value capture” scheme, the Property Council favoured a Manchester-style “city deal” in which all levels of government sign long-term contracts, locking them in to multiple infrastructure projects identified as having the potential to improve productivity and employment.

He said such a scheme would grow the South Australian economy as a whole by giving investors certainty about infrastructure projects and “the total tax take will increase” without additional charges to property owners and developers involved in “value capture” schemes.

Adelaide tram network extensions ‘an election issue’

Haese and Mullighan both told summit delegates yesterday that the tram network extension would be a federal election issue when Australia goes to the polls in July.

Haese told InDaily he hoped the State Government’s $4 million study of the business case for the AdeLINK tram extensions – supported by inner-city councils – would be complete in “coming months”, especially because it was, yesterday, 70 days until the upcoming federal election.

Earlier this month, federal Labor’s Transport spokesperson Anthony Albanese said the party would help fund AdeLINK, if elected.

Mullighan declined to say, when asked by reporters yesterday, which part of the tram network extension the State Government wanted to do first.

But Haese said he had been a “long advocate” for an “almost immediate” extension of the tram along North Terrace, to connect the old and new Royal Adelaide Hospital sites.

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