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12 months ago the NSW Government had already committed to the creation of a light rail network around Parramatta and an extension of the Sydney Metro from Chatswood to Sydenham. But the question remained: which alignments will it choose? At the time, the favourites were a light rail line to Macquarie Park and a metro line via Sydney University.
However, since then the Government opted for a metro line via Waterloo and light rail to Sydney Olympic Park over the previously mentioned alignments. Among the reasons given were the capacity for value capture and the potential for development of new homes.
Parramatta City Council’s proposed 4 light rail lines. Click to enlarge. (Source: Western Sydney Light Rail Network: Part 2 Feasibility Report, p. 6 – no longer available online)
“The light rail corridor will activate a priority growth area and there is an opportunity for the government to share in the value uplift that will occur along the corridor. A Special Infrastructure Contribution will be implemented, with the levy expected to be set at around $200 per square metre of gross floor area of new residential developments subject to consultation.” – Transport for NSW (8 December 2015)
“[Light rail] will be a game changer for Sydney’s second CBD – the preferred route provides the most opportunity for new jobs and urban renewal.” – Rob Stokes, Planning Minister (8 December 2015)
“Waterloo metro station will be the catalyst for the delivery of an additional 10,000 homes and thousands of new jobs in the precinct for families who live in the area.” – Rob Stokes, Planning Minister (16 December 2015)
The first reason given of value capture, involving the contribution to construction costs of new infrastructure by those who benefit from that new infrastructure when their property values rises, is not a new one; but has been gaining in momentum by bureaucrats and politicians at both the State and Federal levels including Prime Minister Malcolm Turnbull. The primary advantage is the ability for new infrastructure to pay for itself, freeing new projects from the constraints of government budgets. The primary limitation is that it tends to be overstated, with Alan Davies arguing that its benefits are modest.
Artists impression of light rail through Sydney Olympic Park. Click to enlarge. (Source: Westline Partnership.)
The second reason given of potential for new development has arisen due to concerns over housing affordability. Government could address this by either curbing demand (such as reigning in negative gearing/reducing capital gains tax concessions) or increasing supply (often by removing constraints on development due to insufficient infrastructure).
The former policies on demand are almost exclusively in the domain of the Federal Government, while the latter on supply are almost exclusively in the domain of the State Governments. These pressures have shifted Government policy making in recent years, with decisions made based on what will maximise housing construction.
Sydney Metro will include a station at Waterloo, which will also see the Waterloo area undergo significant urban renewal. Click to enlarge. (Source: Transport for NSW.)
The net result of all of this is a change in Government priorities. The new priority is all about how to enable the construction of the most housing possible, at the lowest cost to Government possible.
Each of these feeds into the other. Additional housing construction provides additional stamp duty revenue to the Government. Lower net costs allows more infrastructure to be built resulting in more potential housing.
However, it has also meant that transport goals have fallen in priority. In these cases that translates into less connectivity for Sydney and Macquarie Universities as well as Macquarie Business Park.
Chalk it up as a win to the Planning Department and a loss to Transport for NSW.
Transport Sydney 
(1) Value Capture
This objective limits alignments to areas where the NSW government wants to dump high-rise residential “developments” to mainly house immigrants yet to arrive. The proper objective should of course be to REPLACE EXISTING car traffic. Light rail must therefore be funded by taxing motorists.
(2) Affordable housing
Value capture will certainly INCREASE the cost of housing and will therefore reduce housing affordability.
(3) Housing analysts warn that the property bubble will burst any time. All these investments are mainly driven by Chinese investors. The Chinese government has now started to crack down on capital flight because the foreign reserves are diminishing. It is unwise to expect that future residential high rise projects will provide the funds for transport infrastructure. At best, light rail development would then follow the ups and downs of property cycles, not a good approach for longterm infrastructure planning
(4) Waterloo vs Sydney Uni
That one has to choose between the two shows how wrong the conversion of heavy rail to metro is (Epping – Chatswood – Barangaroo (will be flooded in this century!) – Bankstown). A proper metro plan would leave the heavy rail system untouched and be free to connect whatever important destinations are in that area.
(5) Agenda of privatisation
Behind all this is that the government wants to move its responsibilities to the private sector so that it is no longer subject to criticism of infrastructure failure. We see this approach already in Epping and I put it in this post:
No ticket to ride at Sydney train station
http://crudeoilpeak.info/no-ticket-to-ride-at-sydney-train-station
(6) Needless to say governments have no idea that we are going to have another oil crisis before 2020. The longer oil prices remain low, the deeper the crisis because of lack of investments in new oil fields
IEA in Davos warns of higher oil prices in a few years’ time
http://crudeoilpeak.info/iea-in-davos-2016-warns-of-higher-oil-prices-in-a-few-years-time
And that coming crisis cannot be fixed by printing money. Offshore projects take 5-6 years time before the 1st oil flows. US shale oil has already peaked in 2015 and the time is running out – for 15 years already – and the government is still busy with unnecessary projects like the heavy rail to metro conversion which will do NOTHING to bring motorists out of their cars.
Rather than the Planning Department, I think it is more likely it is UrbanGrowth that is driving the transport agenda. It has also been instrumental in truncating the Newcastle heavy rail line. It remains to be seen what influence it will have on transport options through the Bays Precinct in Inner Sydney.
It’s a sad indictment on the State Government’s planning process when it has allowed a government property development agency such as UrbanGrowth to overly influence its transport planning agenda. It seems that future transport planning is now contingent upon the level of potential value capture in greenfield development sites, rather than a current need for improved transport infrastructure for established urban business and educational centres which are not well serviced.
Ray, while I’m not opposed to value capture in principle, I share your concerns – and this issue isn’t confined to greenfield sites.
The decision to choose Waterloo over the University of Sydney for the final metro station (even though the government admitted the latter would generate greater patronage for the metro) and plans for associated redevelopment of the neighbouring public housing estates along with the selection of the Olympic corridor for the WS light rail demonstrate that the potential for value capture at brownfield sites is just as likely to affect the choice of public transport routes and stations as it is for greenfield sites. If anything brownfield sites are more attractive for value capture proponents – unlike greenfield sites there is usually at least some infrastructure already in place and it’s easier to sell (both literally and metaphorically) the higher densities involved in a brow fields location close to the CBD than at the urban fringe.
The problem is that value capture has had a meteoric rise from being shunned by governments (who are always pushing councils to reduce S94 levies to pay for the local infrastructure required for new development, or redevelopment) to initially being a useful tool to capture some of the windfall gains of developers along routes chosen and prioritised on the basis of sound planning principles and then to this latest incarnation, in which the opportunities for value capture determine both routes and priorities.
Apart from the issue of the distortion of planning and transport priorities I’m concerned at the potential for corruption in this process. NSW has (rightly in my view) banned political donations from developers. One possible way around this could be for developers influence the choice of a route and station location by offering to pay for the development of that station if it is located next to land owned by the developer and if the developer’s plans for high-rise development on that site are approved.
Whether or not you can call this corrupt, the end result is that we will get new PT infrastructure but it won’t necessarily be in the best places to reduce private vehicle use and congestion – and as you suggest Ray, it will bypass existing established communities and centres which have limited potential for redevelopment and hence value capture.
I think ‘value capture’ would be more relevant where land is rezoned for a higher use because of the introduction of upgraded transport infrastructure. It would be difficult to quantify an increase in value for land generally in an established area without any change in zoning and planning controls. Hence in established areas, for example Eastwood as a major destination on a potential light rail link from Parramatta to Macquarie Park, it is essential that planning controls are enhanced to justifiably capture some of the increased value arising from government planning decisions.
It’s basically lack of imagination – or wilfully disregarding lower cost projects in favour of flashy vanity projects which have the added advantage (to the govt) of privatisation. Value could be captured at Waterloo to add an extra station to the Airport line, and value could be captured at Olympic Park to convert the “events” spur to a permanent high frequency near metro extension of the inner west line. Both much cheaper alternatives than the current proposals that would free up investment for alternatives
Any idea what’s happen to calls for another station in Alexandria (between Waterloo and Sydenham)?