Value capture

Options, challenges and opportunities for Victoria

In this policy paper, we outline the options, challenges and opportunities for implementing value capture in Victoria.

Value capture is a form of infrastructure funding that helps align the cost of infrastructure closer to those that benefit. Value capture mechanisms seek a contribution from businesses and individuals who privately benefit from government investment or planning decisions.

Our goal is to help the community understand the concept of value capture. We also provide advice to the Victorian Government on how to make greater use of value capture funding mechanisms.

Key findings

• To make the funding mix fairer, we can use some of the windfall gains from those that benefit to help pay for infrastructure.
• Value capture is unlikely to fully fund a project, but it can help contribute to some of the costs.
• In Victoria we use value capture funding now but there are opportunities to expand their use. These should be considered on a case-by-case basis.
• Value capture should not change project priorities.
• Action can be taken now to improve the use of value capture.

Recommendations

• Move towards greater use of value capture. A range of options is available for increasing the use of value capture  including expanding and using existing mechanisms more consistently.
• Take action to improve how value capture is used. Government should develop a clear value capture policy and pilot a value capture betterment levy on a major
• As part of a value capture policy, a process should be developed for consistently assessing and applying value capture to projects on a case-by-case basis. This process should align with existing project planning, development and delivery processes.
• Careful design of value capture mechanisms such as land and betterment levies can improve the funding mix for major infrastructure projects. Deciding when to use and implement any value capture mechanism is important.
• Work with local councils and the Australian Government to ensure value capture approaches meet local infrastructure needs. Approaches should also reflect that state infrastructure investment and planning changes create economic activity that accrues to the Australian Government through tax revenue.
• Build community support for value capture. The success of any value capture approach relies strongly on building broader community understanding of the concept, as well as support for its application to specific projects.