Infrastructure Recycling Code for Insider Pleasing

Part of our Evolving Economics Enews Series, our fortnightly’ish update on our latest news, views and events. Sign up!

 
Steve Wall

Value Capture Privatisation Agenda 

The Federal Government's $5billion infrastructure recycling program continues with governments lining up to sell off the crown jewels. Our leaders are adamant such privatisations (even if for extended leases) are better for the economy than selling infrastructure bonds to the market. This is despite the major ratings agencies saying this week that the $30bn Hockey Budget impasse will not affect our credit ratings. So why the rush? Perhaps we should take bets on what the investment banks will claim as commissions?

Queensland's Newman government announced this week it planned to sell $37 billion worth of assets to pay down public debts. This will save a mooted $1.3bn in debt-based yearly interest payments. The privatisations in power, the ports and commercial water will see higher charges passed onto business and consumers in about five years time, just long enough for the mainstream to forget.

The cost shift reflects today's preference to push once public debts onto the people, where private debt is more profitable for some. Perhaps the political playbook reads 'debt, danger -> privatisation, profits'. The public finance system operates under a sense of planned obsolesence, this latest 'urgency' just one of the many swoops on the common-wealth that our forebearers so diligently built up.

Meanwhile some politicians are so desperate to jump on the infrastructure bandwagon that 'creative' funding sources such as using our superannuation to underwrite new projects are being considered. This is despite tollways failing repeatedly to cover the million dollar per metre costs. User pays is a bankrupt model that would be dead in the water in a genuine democracy. 

These same leaders look the other way at the incredible windfall gains delivered to some of Australia's most profitable development companies, particularly those surrounding new infrastructure.

The pricetag of a new train station has skyrocketed to a minimum $50 million. The towering William’s Landing station in the west of Melbourne goes even further at $80 million. If the connecting overpass bridge is included, this one station totals $110 million.

Governments of this era prefer this immense cost to be paid by the general taxpayer.

Thanks largely to planners (not economists), the term Value Capture is rising in prominence. This concept addresses the incredible windfalls handed to those landowners benefitting from the locational advantage of a train station, for example. These beneficiaries should pay their fair share. 

The ALP has announced they will engage in Value Capture. It it not yet clear how extensive this will be. But it is at least a step in the right direction. With the $600 million Mernda rail line extension announcement, the pressure is on government to finance such extraordinary costs in the most efficient manner possible.

Perhaps today's politicians can reference how past generations financed so much of our existing rail network.

We have prepared the following resources to share with your local MP:
Historical examples of Value Capture 
A literature review of twelve high profile reports supporting Value Capture. 
More trains – here's how A5 flyer
Our recent NSW Ipart submission, full of topical issues. Particularly relevant to Sydney. Listen to the conservative agenda – the barrow has begun to remove public contributions to PT operations. If only the benefits to surrounding land owners were to replace the revenues, rather than a higher GST. 

Please share these with your networks. More soon.

 
Kristina Alexanderson

Renegade Economists

Our new mixcloud page highlights recent interviews that can easily be embedded in your website. More extensive show notes have been provided on our earthsharing website.

Recent interviews include Prof Michael Hudson on the role of think tanks sculpting public opinion. Please read the transcript to hear insights on how Bill Clinton got off his impeachment, the 1970s tar sands plans, the Koch Brothers rent thefts and as usual with Michael, much more. 

Other recent interviews include Rowan Groves (Fishermans Bend Network Committee) on the rush job behind the new Montague precinct, and damaging commentary on yet another tool for rampant property speculation – Property Options

Subscribe to the weekly podcast so you can listen as you garden, wash dishes or commute past all those locations you are keeping an eye on. 

 
James Popsys

ABCs Vote Compass

For the last few years the ABC has been using online interactions to monitor public interest in election policy. Check this latest survey which covers all the key issues including transport, health, detention, mental health. Missing anything? Not one mention of housing policy. Extraordinary. There is room to comment at the end. 

 
James Popsys

Rounding Off 

In case you missed Prosper's press swoop following David Collyer and Philip Soos's Senate Housing Affordability presentation, see the press highlights here. We look forward to seeing you at David's Englobo event on the 21st. 

There's no two ways about – we live in an age of rampant profiteering from the worth of the earth. We share this information in the hope these economic advantages will become common knowledge again. Life is more than a paper cutout. To all the recent new members, we thank you. 

Karl Fitzgerald and the office team

 

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https://prosper.org.au/2014/10/10/infrastructure-recycling-code-for-insider-pleasing/