Government infrastructure investment

HIA's Position statement

1. HIA advocates the provision of infrastructure to meet community needs and expectations.
2. Infrastructure provision should be planned, developed, and implemented in a coordinated manner by all levels of government, federal, state, territory, regional and local in consultation with the residential building and development industry.
3. Government infrastructure investment should incorporate strategies that take account of the benefits in delivery and costs that can result from integrating land use and transport planning.
4. Infrastructure provision and up-front funding must have a minimal impact on the affordability of new housing. The funding of infrastructure should be calculated over the full life of the asset and recognise future user pay charges that may apply.
5. As beneficiaries of the provision of new infrastructure the whole community should share the cost of that benefit, by funding the delivery through any of the following mechanisms:
• Government direct funding.
• Government borrowings.
• Tax effective infrastructure bonds (including those raised by public subscription).
• Public private partnerships that demonstrate clear public interest.
• General rate levies across the whole community or
• User pay charges.
6. Where up-front infrastructure charges and levies on residential development currently exist governments should provide discounts of such charges and levies where it is demonstrated private entities have delivered other net community benefit assets.
7. Value capture funding mechanisms are not supported as they represent a tax on development which distorts the property market and impacts on housing affordability.
8. Governments should:
• invest in new technology driven infrastructure and
• lead the way by removing institutional barriers to infrastructure funding and development.

Background

• The timely delivery of infrastructure drives regional growth, employment and housing development opportunities. Productivity enhancing infrastructure is good policy.
• Governments have a responsibility to implement infrastructure programs to sustainably support anticipated growth in a manner that ensures the investment cost is shared equitably across the whole community.
• Since the early 1990s various state governments have pursued a policy to eliminate debt and in doing so have effectively transferred the cost for the delivery of public infrastructure, particularly local, onto new home buyers resulting in an artificial increase in the price of a new dwelling.
• In doing so, many state governments have recorded substantial budget surpluses – significantly funded by relatively high rising property taxes and infrastructure expenditure cutbacks.
• Governments at all levels have taken a position to reduce borrowing funds for public infrastructure.
• This position has seen a slowdown in the delivery of large infrastructure projects while at the local level there has bene a shift of costs to place the burden of funding community infrastructure directly on new home buyers.
• Local governments are increasingly being challenged to deliver community infrastructure on a limited funding base, against increasing land prices.
• Charges on new home construction to directly fund the delivery of local, regional and state infrastructure have increased in cost and scope over the last decade.