Using value capture to fund infrastructure is popular among economists. By better aligning costs with beneficiaries, it promotes better decision making on the value of investment and is fairer for taxpayers. The Value in Value Capture, a new bulletin released today by Frontier Economics economists Ben Mason, Warwick Davis and intern Lauren Savige follows on from an earlier bulletin on value capture. We discuss what has happened in the intervening years and why now, more than ever, value capture should be embedded in funding infrastructure projects.
"It's timely to re-examine this now. Australia has a clear medium and long-term infrastructure pipeline but constraints on government spending after the COVID-19 pandemic mean we need to look more at funding structures such as value capture", says author Ben Mason. Taxpayers will be dealing with the government spending that has been committed to mitigate the effects of COVID-19 on the economy for many years to come. While there is a clear stimulus angle to infrastructure investment in the recovery period following the pandemic, value capture opportunities should not be overlooked. Moving to a beneficiary pays model will make infrastructure investment more equitable and productive.
Our 2016 bulletin “Value Capture: Bypassing the Infrastructure Impasse”, discussed the benefits of value capture mechanisms such as land uplift levies, the sale of development rights and change of use charges to help fund infrastructure in Australia. We also noted the reasons why, at that time, value capture wasn’t being widely used.
