Passenger Rail

Value capture mechanism proposed for Western Sydney Airport line

Western Sydney Airport Line

The NSW government has introduced a draft value capture mechanism on development near two stations on the Sydney Metro – Western Sydney Airport Line.

The Station Precinct charge is in addition to a wider Special Infrastructure Contribution (SIC) plan for the Western Sydney Aerotropolis that has been released for public comment.

It is hoped that the SIC, along with the Station Precinct charge, will go some way to covering the cost of infrastructure to support development in south-western Sydney.

“Turning paddocks into a thriving metropolis around an international airport isn’t a cheap endeavour. It requires a significant investment from all layers of government as well as contributions from landowners,” said NSW Minister for Planning and Public Spaces Rob Stokes.

In total, the charges are expected to fund up to $1.1bn in infrastructure.

“It is the landowners who will benefit enormously from the uplift in value as a result of rezoning who should be contributing to the infrastructure needed, not mums and dads being hit in their hip pocket via tax,” said Stokes.

The Station Precinct charge will apply to defined areas adjacent to the Aerotropolis and Luddenham stations on the Western Sydney Airport Line. The charge is levied as a percentage of the cost of carrying out development, with a one per cent charge on land zoned as “Enterprise” and a two per cent charge on mixed use land.

The proposed cost must be verified by a qualified surveyor.

The total infrastructure bill for the new city to be built surrounding the Western Sydney Aerotropolis is expected to be significant, said Minister for Western Sydney Stuart Ayres.

“The new Western Parkland City could need as much as $100 billion in infrastructure over 20 years which will support a record jobs boom of more than 200,000 new jobs across Western Sydney,” he said.

A draft place-based infrastructure compact (PIC) has been developed to define what infrastructure will be needed.

“The PIC outlines in great detail what infrastructure is needed, where it should be located, when it should be delivered and how much funding it needs from a variety of sources. With this infrastructure assessment, we can ensure the right development takes place in the right areas – backed by the infrastructure needed at the right time.”

The PIC sets out that of the estimated $62bn in capital infrastructure, 43 per cent would come from state and federal government, 13 per cent through customer charges, and 27 per cent, roughly $17bn, would need to be funded by the NSW government and development contributions.

An ongoing Parliamentary inquiry into financing options for faster rail has heard that value capture have been used in international jurisdictions to fund up to the total cost of rail projects. So far, the inquiry has looked at models that have recouped the cost of infrastructure through levies on the increased value of property, rather than construction costs.