Mike Baird’s reported plan to privatise the rail system and hand over the airspace over train stations to private developers would be an outrageous act of economic vandalism.
What’s more, it would be the ultimate betrayal of the transport-poor residents of Western Sydney, who desperately need access to affordable and reliable public transport.
In the 2015 NSW election, Mike Baird made it clear that only way to pay for train lines was to sell off profit-making government assets. It was even given a nice friendly name: “asset recycling”.
Asset recycling, however, is a lazy and short-sighted way to build new infrastructure.
It ultimately imposes financial pain on future generations who have to pay extra tax to make up for the lost revenue from those government businesses.
There are better, more sustainable ways of funding infrastructure.
Governments in other parts of the world have realised that transport infrastructure creates value for the economy.
Conventionally, most of that value ends up in the hands of the private businesses and property owners.
But if governments are able to harness some of those financial benefits, then new public transport assets can pay for themselves over time.
This approach is commonly called value capture, and it’s all about making sure that some of the value created by a new infrastructure project is returned back to the people who are funding it.
The value capture approach can be done a number of different ways – such as applying levies to property owners and businesses that benefit from increased property values.
It can also involve developing land along rail corridors and over train stations to realise the value of those assets (so-called Transit Oriented Developments).
For example, Hong Kong’s MTR (which is majority owned by the Hong Kong Government) is a vertically integrated operation that not only runs trains, it also owns shopping centres and apartment buildings on rail land.
MTR is basically Sydney Trains, Westfield and Meriton rolled into one – and last year made a staggering profit of $3.6 billion.
If NSW were to adopt a value capture approach then the State Government could invest in Transit-Oriented Developments along rail corridors and at stations.
And when new rail lines are built, the property owners and businesses who profit from increased land values could pay a portion of their windfall back to the government to help pay for that infrastructure.
It’s good, sensible policy – increasing densities around transport nodes, providing housing options for people closer to the city, and generating a vital income stream for government.
Labor took the first step towards this approach at the recent NSW Labor Conference – passing a resolution to investigate value capture as a way to fund new public transport projects.
The Baird Government followed suit one week later by announcing a tender process for possible developments over inner city train stations.
But here’s the rub: instead of developing its rail assets in order to reinvest the money back into the system, the Baird Government is looking for private developers to do the work – and take the profits – for them.
This is not capturing value – it’s liberating value and sending it straight into the arms of merchant bankers, property developers and multinationals.
According to media reports, the Baird Government is apparently in discussions about developing the airspace over rail lines with MTR, the Hong Kong-based multinational it has already contracted MTR to run the North West Rail Link.
If there’s any thing to be learned from the Hong Kong experience it’s that rail assets are valuable and can provide an important source of income for governments.
The Hong Kong government must be laughing their heads off at the eagerness of Australian politicians to give them free money.
A Premier for the people would develop inner city rail assets and reinvest the profits back into Western Sydney.
A Premier for the people would also create a government-owned infrastructure manager to build affordable housing along transport corridors.
But if Mike Baird wastes this rolled gold opportunity – and hands it over to the merchant bankers and deal makers - it will prove that he is nothing more than a Premier for the top end of town.
Bob Nanva is the National Secretary of the Rail, Tram and Bus Union.