Funding Melbourne’s new underground rail link


Media Release

“The Andrews government has lost no time putting its stamp on the future shape of Melbourne, funding the planning stage of the Melbourne Metro Rail tunnel – while fretting about the $9 billion cost.

“Victoria can fund this vital connection, lifting train speeds and frequency throughout the network,” Karl Fitzgerald Project Director, Prosper Australia said today.

“Land prices along this route will soar and government is entitled to use some of this to fund the project through value capture.

“People forget 30 per cent of the Melbourne underground loop was funded by a special city levy on land values from 1963. The Melbourne Underground Rail Loop Authority ensured city landowners shared a small portion of benefits they gained from the project. There is no reason we can’t do this again.

There are very good studies that prove the merit of this approach. In London, the recent Jubilee rail line delivered £13 billion in windfall gains to landowners within 1000 yards of the eleven new rail stations. Construction costs were just £3.5 billion.

“The rise in land values directly attributable to this civic improvement was enough to pay for the rail link nearly 4 times over.

“The ALP referred directly to land value capture to fund the removal of level crossings in its Project 10,000 election manifesto. We welcome this approach. It is economically sound, fair to taxpayers and, in practice, drives powerful infrastructure improvement by recycling investment funds.

“Doubts remain as to whether the roads-biased Abbott government will assist this vital Victorian rail project. There is more than enough embedded in land values to fund the cross-city rail – with or without federal help.



  1. David John18-12-2014

    The project sounds good.

    However the funding concept is worrying for people in small business who will have to pay extra rates/taxes which hasn’t been taken into account by them and in their advanced years, to find the extra money will be difficult.

    The Prosper funding solution is a good one. However it requires more bureaucracy to handle the book work and the project could be better and more cheaply funded by a more efficient taxing system, namely “Credit or Debit Taxation” .

    It must be remembered that most people buy a property to live on and the fact that their property value improves does little for their quality of life. Why should they have to relocate?

    Bureaucrats need to get out into the small is beautiful arena.

  2. Karl Fitzgerald
    Karl Fitzgerald07-01-2015

    Hi David,

    thxs for your post. Small business pays far higher in extortive rents than any minor Land Value Capture policy may result in. Check our Speculative Vacancy report to see some 22.3% of commercial properties are lying vacant. The CBD has significant vacancies. The LVC will apply some pressure on putting these properties into play, putting downward pressure on rents.

    The least bureaucracy of any tax is required in administering a value capture system. Indeed the majority is already in place via the council rating system.

    And the Debits – Credits tax?!! A trumped up sales tax that is far less efficient than any land based charge. Talk about adding burden to the small business sector in favour of big business and property speculators???
    Ahh the debate continues!

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