Making infrastructure investment more equitable and productive

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.

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. In a 2016 bulletin “Value Capture: Bypassing the Infrastructure Impasse”, we 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. In this follow-up bulletin, we discuss what has happened in the intervening years and why now, more than ever, value capture should be embedded in funding infrastructure projects.

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