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Metronet plan warning

Mark McGowan’s Government has been warned about how they might part-fund the cost of Metronet.
Mark McGowan’s Government has been warned about how they might part-fund the cost of Metronet.

The McGowan Government has been warned to be careful in how it uses so-called value capture to fund its keynote Metronet rail plan amid concerns it could be gamed by big developers.

A report by the independent think tank the Grattan Institute says the problems around value capture — higher taxes on properties close to new high-value infrastructure — could undermine the benefits of any project. The McGowan Government has said it wants to use value capture to offset some of the cost of Metronet.

The Turnbull Government has also backed the concept of value capture as a way for States and local councils to fast-track infrastructure.

The Grattan Institute’s Marion Terrill said urban rail was probably the best candidate for value capture, which is often a special levy that captures the increase in value of properties near new infrastructure.

But it had to be remembered there was nothing particularly special about the concept.

“While there’s a lot of talk about value capture you still have to remember it’s still a tax,” she told The West Australian.

“Urban rail is probably the best approach to value capture, and it’s easier if it’s greenfield rather than urban infill.”

A form of value capture was used in the 1890s to build Perth’s Midland railway while it was also used to offset some of the cost of the Sydney Harbour Bridge during its construction in the 1930s.

It has won interest more recently because of the way it has been used in cities such as Hong Kong and Los Angeles to develop new and expensive subways.

Ms Terrill said any government embarking on value capture had to be careful when crafting the new tax to hit only those who directly benefited from a new project.

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