Bridges takes risk to score political points
By Richard Harman (author)
Claims by National’s new leader, Simon Bridges, that he would not tax homeowners to fund big infrastructure projects do not entirely square with plans the last Government was working on.
POLITIK has previously reported that it was planning to do just that as it developed a proposal last year for a toll road from the Whangaparaoa Peninsula to the Upper Harbour Highway on the outskirts of Auckland on its northern side.
Bridges made the claims yesterday in an attempt score political points off the Finance Minister, Grant Robertson, who in a speech on Friday proposed using “Value uplift” targeted rates to obtain more funding for big infrastructure projects in Auckland.
His comments were immediately attacked by both National’s finance spokesperson, Amy Adams and its urban issues spokesperson, Judith Collins, as another example of Labour wanting to increase taxation.
But in trying to rescue them from their political blunder, Bridges may have ended up placing his own political credibility at risk.
By yesterday, Bridges was arguing that National would not agree to any “tax” on homeowners which he said would be a consequence of Robertson implementing value uplift.
“What he (Robertson) is clearly trying to do is tax individual homeowners,” he said.
The first hints that the National Government might be considering value capture came in a speech in Auckland in February last year from then-finance minister, Steven Joyce.
“We want to see more ambitious projects that will have a more positive impact on housing supply over the next five years
“We are also interested in looking at further financing options that bring in private sector capital alongside council and government capital.
“And we will continue to discuss those matters with our fastest-growing councils.”
POLITIK learned that the Government had set up a high powered Ministerial committee to look at ways of funding Auckland transport projects.
That committee was chaired by the Transport Minister, Simon Bridges.
“What it was, was looking at experiences around the world at these really big projects, sort of Waterview tunnel size projects and negotiating for co-funding with potentially large commercial property developers in advance," he said yesterday.
“It was much more in the realm of contractual negotiation.”
In April, a senior Minister gave a background briefing to POLITIK about the work of the committee and other Government moves to find more funding for development in Auckland.`
This was a rather different version from what Bridges offered yesterday.
Discussing light rail proposals for Auckland, the Minister said the-then Government was starting to think much more about wider economic benefits.
“What I mean by that is value uplift,” he said.
“We are starting to get into it a little more deeply.
“When you start talking about that, you are really cooking with gas because you are bringing in genuine private money into a project that wasn't there in the past.
"Public-private partnerships, new financing tools – they are all great, but ultimately it all comes back to the Government to pay.
“But value uplift is saying that where others around it (the development) are going to get a serious windfall from development opportunities; from the wider economic benefits, how do you in an evidence-based way bring them in on a project.
“They may well be every willing to do that because it is a project they weren’t going to get otherwise.”
The Minister cited the London Crossrail project which had seen the City of London have to front up to 27% of the total budget – the rest came from targeted value capture rates.
POLITIK understands that that worked stopped with the change of Government and that very little has been done since.
But clearly, Robertson is proposing to re-start it.
Speaking after the Half Yearly Economic and Fiscal Update presentation last December, Transport Minister Phil Twyford said, "i n relation to the light rail investment, which is a multi-billion dollar investment, we are also exploring a full range of options including PPPs, but in particular, we are actively exploring how we can capture value uplift alongside the light rail and how that can be recycled back into investment.”
It is comments like this which appear to be inspiring Bridges' claims that Labour is proposing to tax homeowners.
Bridges is adamant that value uplift should be used only for large-scale projects.
“There is a difference in kind between looking at how you fund really big projects ahead and looking at how you might co-fund them with developers who want to see these things happen and what Grant Robertson is talking about, which is coming in afterwards and taxing the homeowners for what he wants to do,” he said.
There is a big political risk for Bridges going down this path.
National cannot afford to oppose value capture as a concept.
Bridges may have been drawn into the current debate because his two spokespeople blundered in and he is reluctant to be seen countering them when they have had their jobs for less than a week.
The last Government did not do the work on value capture without reason; it is widely used internationally to fund infrastructure projects.
One commonly quoted example is the Hong Kong metro where the metro operators pay the Government a premium for the right to develop properties along rail line routes which increase in value when the line begins operating.
No future Government would want to rule that method of funding out so there should logically be a limit to how many more political points Bridges can afford to score on this issue.