Innovative way to fund infrastructure welcomed
A way to finance the delivery of infrastructure used extensively in the US and the UK, known as tax increment financing, is a proven model that would work in Australia, according to a major PwC study commissioned by the Property Council of Australia.
Chief Executive Ken Morrison welcomed reports in the Australian Financial Review earlier this month that the Federal Government is considering this infrastructure funding mechanism.
“Infrastructure delivery is lagging behind the needs of our growing cities but tax increment financing is a way to dramatically speed this up,” Mr Morrison says.
“This model overcomes the two highest hurdles infrastructure projects face: finding sizeable upfront capital and getting all levels of government working together.
“The beauty of tax increment financing is that it secures funding from additional revenue streams without the need to levy new taxes.
“It’s is an approach that uses economic growth to fund projects and we strongly encourage the Government to further explore this opportunity.
“Tax increment financing is something we have been looking at for some time and in 2008 we commissioned PwC to crunch the numbers on two key case studies.
“The results of that study clearly demonstrated that it is a model that stacks up financially and could make a major contribution to funding new infrastructure in Australia.”
Our economy is in transition, and the industry’s contribution is more important than ever before. The nation needs new jobs, new homes and workplaces, and a stable, sustainable foundation driving economic activity.
Property touches the lives of all Australians, yet many people are unaware of the vital contribution the industry makes to jobs, retirement savings and to the strength of the Australian economy.
To counter this, we have embarked on our first ever public campaign to tell the industry’s story and make the case for letting property grow the economy.