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PPPs and up-front cash

October 22nd, 2005

I only recently caught up with the fact that the Cross-City Tunnel and other PPP projects in NSW involve upfront payments (in this case around $100 million) from the private parties to the Road and Traffic Authority. I haven’t had time to work through the implications of all this, but it certainly raises a lot of questions.

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  1. still working it out
    October 22nd, 2005 at 19:30 | #1

    Explains a lot.

  2. Harry Clarke
    October 22nd, 2005 at 20:27 | #2

    In the Age this morning a group of senior Labor figures are recorded as lobbying the State Labor Government to approve the development of a $4 billion urban project in the midst of Melbourne’s ‘green wedge’ on behalf of a Malaysian consortium. Ex State Minister David White and ex-Keating MP Neil O’Keefe are working as lobbyists for the Malaysian group.

    I assume this attempt to gain public assent for rezoning (privatising?) green belt land is different from a PPP with upfront payments.

    I haven’t had time to work through the implications of all this (either) but it (also) certainly raises a lot of questions.

    The ink has barely dried on the Melbourne 2030 urban policy (a half-decent effort to limit sprawl in Melbourne) and these lobbyists are seeking to rip the policy to shreds.

  3. Dave Ricardo
    October 22nd, 2005 at 20:35 | #3

    Harry, I thought you’d be in favour of urban sprawl. Those new estates are where the Howard-loving aspirationals live.

  4. Harry Clarke
    October 22nd, 2005 at 21:21 | #4

    David, Get stuffed.

  5. October 23rd, 2005 at 00:09 | #5

    Without wishing to take anything away from the economy of the above exchange, I grow nostalgic at the resurrection of the pre-modern practice of sellling taxes. Old Corruption, were’ve you been buddy?

  6. Dogz
    October 23rd, 2005 at 08:21 | #6

    I have little sympathy for the so-called “urban planners” when it comes to things like green belts. In Adelaide we have vast tracts of greenbelts – completely unused land that merely forces people to commute huge distances, or cram into claustraphobic housing near the city centre.

    New land for housing is as rare as hens teeth, so prices stay astronomical. It is outrageous in a country with the population density of Australia that the government/bureacracy is allowed to manipulate development in this way. The public by-and-large hate it but it is rammed down our throats by the so-called planning “experts” in the bureacracy.

  7. Harry Clarke
    October 23rd, 2005 at 09:04 | #7

    Dogz, An advantage of greenbelts is their amenity value as recreational areas. That they force up prices of land encourages urban consolidation and the development of satellite towns. An urban landscape that is consolidated can enjoy higher levels of amenities (parks etc) but also allows a city to draw more on public transport and less on the private car.

    Moreover its not necessarily ‘experts’ forcing an unwarranted non-market solution. That road use is mainly unpriced (and the provision of infrastructure generally underpriced) encourages cities to be excessively large, encouraging sprawl.

    High land prices in Australia are not inconsistent with our low overall population density. A large part of the Australian population live in a few cities along the highly urbanised eastern coastal strip. As such we should not treat urban land as an abundant cheap resource.

  8. October 23rd, 2005 at 18:48 | #8

    Selling or farming taxes, or even offices, is only corrupt when it is done under the counter, selling what is not one’s own. But the standardised form wasn’t corrupt, and neither is this (assuming, for the moment, that these things actually do belong to the government and not to the people).

    But even so, there is a problem; not one of corruption but of violating the canons of taxation, to do with predictability and efficiency. There is much loss and compliance cost here, deadweight in general, and also people cannot plan their affairs to best advantage if they don’t know what hidden catches will burst upon them from time to time. But hey, it’s a good idea to burn down a house to roast a pig if it’s not your house.

  9. Dogz
    October 24th, 2005 at 11:12 | #9

    Harry Clark,

    If only.

    Adelaide’s greenbelts are almost completely unused. As recreational areas or otherwise.

    First there’s the parklands, which on the east and south side of the city are home to the odd kite flyer, jogger, and dog pooper walker, but are essentially dead. On the west side they’re literally dead with the huge west-end cemetry, and otherwise a look of neglect, dotted with the odd group of drinking aboriginals and that is all. In both cases it is because there is no development in or around the parklands: no cafes or restaurants to attract people. The northern parklands fare better but they’re the exception that proves the rule: there is stuff to do in and around the sections of the parkland between the city and north adelaide.

    Then there’s the greenbelt south of the city that separates the satellite southern suburbs from the rest of the city. It is just a huge tract of totally unused land. Noone ever goes there – the only way you could use the land would be to pull up in your car and jump the fence.

    Then there’s the east. and the hills. But I won’t bore you, except to add that the engineered satellite cities in Adelaide are home to the lowest socio-economic groups. No-one wants to live there because of the isolation.

    And don’t tell me expensive urban land is somehow natural when people camp out overnight just prior to a new land release in order to put a deposit on a $200,000 block that’s no bigger than a postage stamp. It’s only expensive because supply is so tightly controlled. It suits the developers and the government, but it doesn’t suit anyone else.

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