Infrastructure Australia has scheduled the preparation of a value capture policy paper and has commissioned SGS Economics and Planning to provide a technical advice paper to inform the policy work.

IA’s brief requested a technical paper that will:

- Define the value capture mechanisms relevant to transport or other relevant projects;

- Provide detailed analysis of each mechanism, including how and at which stage of the project cycle each contributes funding and/or financing to projects, as well as from which source funds are drawn;

- Critically assess the applicability (including positives and negatives) of each approach in the Australian context;

- Note barriers to implementation of various mechanisms for capturing value; and

- Discuss in which circumstances each mechanism is most appropriate, with specific attention to the Australian context.

The technical paper has the following content:

- A discussion of the theoretical underpinnings of value capture, including the drivers of property value and value capture implications

- Summary descriptions of various value capture mechanisms, including their application to infrastructure projects, their usual source, and their relationship to the drivers of value

- A discussion of limitations to value capture as presented by some advocates, and a need for caution in any system design or reforms

- An evaluation of value capture mechanisms including a discussion of barriers to the implementation of a more coherent system of value capture in Australia and the identification of six ‘preferred’ possible mechanisms for major infrastructure funding in the Australian context

- More detail on reform ideas with a focus on a betterment levy system where development rights are increased, stamp duty re-engineering to make the system a charge on uplift only where it exists, land tax reform to capture value from investments in state infrastructure and background increases in value from amenity upgrades and population growth and more targeted use of government land ownership to capture value generated through the development and infrastructure provision process

- A conclusion which highlights the promise of value capture mechanisms for major infrastructure funding in Australia, reiterating the ‘preferred’ mechanisms from the evaluation, while pointing out limitations and barriers to their wider use