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Minimise the cost to future generations

In addition to maximising the growth and development opportunities I outlined in my last blog, governments should also seek to capture some of the windfall land value uplift that will occur with the opening of a high speed rail line. 


Land value capture was considered to fund the development of Central Station in Sydney in the 2013 HSR Study.  We consider that land value capture, and other forms of beneficiary pays funding, should be applied for all stations and their precincts on the line, plus for all new urban centres that will be created along the line, and more generally for all major urban areas that will be developed in the corridor.

As we have already outlined, high speed rail induces a large increase in travel demand.  But access to high speed rail is severely constrained it has few stations that are long distances apart to get the benefit of fast speeds.  The combination of increased demand and relative scarcity of stations means there is considerable value uplift of land near high speed rail stations.


Leveraging land value capture will reduce the amount of debt that governments need to take on in order to fund high speed rail infrastructure.  This will help overcome what has arguably been a primary reason why Australia has not invested in high speed rail to date – that is the high debt that ends up being passed on to future generations. 

NSW, Victoria and the ACT governments already have policies in place that enable land value capture from investment in new transport infrastructure.  These arrangements are intended to provide a more equitable means of distributing the costs and sharing the benefits of publicly funded infrastructure.  They are designed to capture the windfall gains from land rezonings from their unintended beneficiaries.  They are intended to contribute to the cost of urban and transport infrastructure


The NSW Government has examined and confirmed that value sharing (also known as land value capture) can provide a significant source for funds for major transport projects.  Modelling has shown that value sharing could contribute up to 12% to a project within metropolitan Sydney, based on 30% of the land value uplift being attributed to the project.  

Used effectively, value sharing arrangements can provide processes and planning frameworks for developing stations and station precincts.  Proceeds could be applied to provide social and affordable housing and fund local roads and infrastructure, in addition to being a significant source of funding for high speed rail infrastructure.

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