The following outlines the concerns of the Peri Urban Group of Rural Councils regarding the use of this style of funding for infrastructure projects in rural and regional areas. We have also previously provided similar comments to the Federal Parliament through the Standing Committee on Infrastructure, Transport and Cities.
Read the pugrc-value-capture-funding-response-to-infrastructure-vic
Peri Urban Group of Rural Council’s Position on Value Capture
The PUGRC has considered the role of value capture in delivering greater investment into infrastructure in Australia. We can see the merit of utilising this model of funding infrastructure in metropolitan areas where the population and business density results in a greater pool of beneficiaries for a project.
However, we believe that the populations and business owners of rural and regional Australia are already paying “above the odds” for basic infrastructure and sub-quality services (NBN, mobile coverage, unsealed roads). The communities and Councils of these areas are faced with a significant infrastructure gap, and we believe the use of a value capture model in rural and regional areas would further exacerbate the infrastructure challenges of these communities.
Significant investment into infrastructure is urgently required to bring these areas to a level of appropriate infrastructure parity with regional cities and urban areas.
It is important to note that investment into the rural and regional areas will deliver returns over much longer timeframes and generally through demographic and generational change. These changes include greater access to education, training, employment, lower out of areas employment, lower rates of youth unemployment and improvements to health and wellbeing.
There is a great opportunity to support the sustainable growth of the regions and to stop the spread of unliveable, overcrowded cities, by simply investing into areas adjacent to the major cities and providing a viable alternative to major city living.
Our three basic concerns with value capture are:
1. The basic premise of value capture is that those who live or work next to the infrastructure are those who will gain the most out of the infrastructure being funded. However, in rural and regional areas, this is generally not the case as the major beneficiaries are from the wider community and often removed from the project.
2. If value capture is used to fund infrastructure in rural and regional areas, there would likely be insufficient capital in those communities to contribute to the required infrastructure.
3. Rural areas require a cross funding model that transfers excess capital from metropolitan areas to rural areas to fund infrastructure that benefits both communities equally.
We are concerned that a value capture funding model will ensure that relatively wealthy metro areas will reap the benefit of past State Government and community infrastructure investment whilst rural areas will struggle to find the funding for future infrastructure. We believe the rural areas would be left well behind their city cousins in economic development, transport access and ultimately social equality.
Areas of support / agreement with the research and value capture model:
1. Ensuring community support for value capture projects. We support the inclusion of the community in discussions around utilising value capture, and the building of support for its use on particular projects.
2. The development of a consistent process for applying and utilising value capture. This is critical to ensure that the model is applied equitably and there is transparency around projects and funding levels from beneficiaries of the projects.
3. Case by case assessment of the use of value capture. As noted in the research paper, value capture is not a magic bullet for transferring the costs of infrastructure to neighbours and Local Government nor will it suit all projects. We support the notion that this would be considered on a case by case basis with other funding streams available for rural and regional projects where the beneficiaries are the whole community or the application of the model would result in an unjust financial impost on neighbouring beneficiaries.
Recommendations:
1. Limit the use of value capture to projects in urban and metropolitan areas unless they have been designated as “State Significant” in rural and regional areas.
2. Develop and implement the Standard Developer Contributions (DCP) for use in rural and regional areas. This will enable an increase in the contributions made to infrastructure by developers. Currently many rural and regional Councils rely on Section 173 agreements which can be difficult to negotiate, contribution amounts can be difficult to justify and the agreements can be difficult to enforce.
Conclusion:
We congratulate Infrastructure Victoria for commissioning this important piece of research on value capture. It is a model that can be applied successfully in particular contexts within metropolitan areas. We urge you however, to recognise the limitation of this type of funding in a rural and regional context and to ensure that other funding mechanisms remain in place for these Councils and communities.