OPINION: Easy target

By: Steve Skinner


The trucking industry is bracing itself for a planned jump in road user charges

OPINION: Easy target
Higher fuel tax and rego charges recommended...

 

At the time of writing the State and Federal transport ministers have recommended a 5 per cent increase over two years, in the form of higher fuel tax to the feds and higher rego charges to the states.

Still, that’s better than the 11 per cent figure which was being bandied about before their recent Transport and Infrastructure Council meeting, right?

Well yes, assuming the owners of trucks and cars and motorbikes and train commuters are the only beneficiaries of federal and state spending on roads and rail lines.

But they’re not. What about all the owners of land that increases in value when governments build a major road or rail line nearby, making the land vastly more attractive to developers? For the land owners it’s like winning the lottery, except they often don’t have to pay much tax on it, if they pay any tax at all.

Many tens of billions of taxpayer dollars are being spent in the big cities on new roads and rail lines. But how much extra in current taxes like GST, stamp duty and capital gains tax are the federal and state governments collecting from the land-owning beneficiaries who are enjoying windfall gains in land value?

Our bet is it’s nowhere near the extra revenue that’s going to be collected from the trucking industry.

For years we’ve been hearing rhetoric from state and federal governments on both major sides of politics about the necessity of "value capture".

Value capture is like "user pays", which every truck operator knows a lot about (the most recent version is toll roads that can’t be avoided). But in this case it’s "beneficiary pays".

Under most definitions it involves taxing a portion of the unearned increase in land values that comes with government spending on transport infrastructure. There are many possible ways of doing it, including a broadened land tax which just about every economist in Australia is in favour of.

But none of the value capture methods being widely advocated by academics, government departments and business groups are as easy as simply slugging the trucking industry with higher charges.

Value capture is politically difficult. Who likes a new tax? Much easier to whack the general taxpayers as usual, and truckies.

And sure, state governments might sometimes charge developers usually low one-off "infrastructure contributions" towards the cost of new regional roads, or sell the "air rights" for development above new railway stations, but most economists don’t regard these as fair dinkum types of value capture.

 

((subhead))

Reneging on taxing land owners

Back in 2016 in these pages we rather naively reported that value capture would have to happen if state governments wanted federal help with big transport projects.

That was based on one of the Federal Government’s newly-released "Principles for Innovative Financing" of transport, which said -- and still says: "The funding shares from the Commonwealth and the state and territory governments should be determined after taking into account contributions made by the beneficiaries."

The Queensland Government told us in a fairly enthusiastic statement at the time: "Value capture is a tool that governments everywhere are investigating. The Australian Government now requires value capture to be considered in the assessment of publicly-funded transport projects.

"Value capture, if used appropriately, could help Queensland deliver more essential infrastructure sooner, improving the lives of Queenslanders and driving economic growth."

But what did Queensland do with its first big opportunity to implement value capture? It squibbed it, for the $5 billion-plus Cross River Rail project.

As a result, the Feds refused to give Queensland any money for the project. Same for Victoria’s $10 billion Melbourne Metro. They stuck by their principles.

But the Feds apparently caved in and gave Victoria $5 billion towards the planned $13 billion Melbourne Airport Rail Link – with no value capture related to uplifts in land value that’s visible on the horizon so far. And they handed NSW nearly $2 billion towards the similarly value capture-free $12 billion Sydney Metro City and Southwest rail project.

And there’s no sign yet of any uplift-related value capture for the $7 billion North South Rail Link to Western Sydney Airport, for which the Feds are coughing up half the money. That’s despite the fact that a big consortium of land-owning developers even offered to contribute to the cost.

The $100 million business case for that rail line hasn’t been done yet, so the cart is going before the horse.

Both governments are pledging the rail line will be finished before the airport opens in 2026. But even the Federal and NSW Government’s own advisers say the airport rail line won’t even be needed until sometime in the 2030s. In their ‘Western Sydney Rail Needs Scoping Study – Outcomes Report’, transport bureaucrats say fast buses will be able to do the job on the $4 billion worth of new roads that are going in to service the airport. Government advisory body Infrastructure Australia says the same thing.

Those roads and the rail line are already inflating the values of surrounding land, and as one planning expert puts it, the horse probably bolted on taxing lucky landowners once these huge infrastructure decisions were announced and the land value speculation started.

So next time governments want to grab a bit more out of the pockets of truck owners and their drivers, ask yourself this: is everybody footing their fair share of the transport infrastructure bill?

You can read the author’s research report on value capture for the University of Sydney’s Henry Halloran trust here.

You can also follow our updates by liking us on Facebook

 

Trucks For Hire | Forklifts For Hire | Cranes For Hire | Generators For Hire | Transportable Buildings For Hire