The debate about Capital Metro in Canberra, Australia, has focused on net impact (with analysis suggesting 60% of benefits consist of wider or indirect economic benefits). But who gains and who loses potentially?
Light rail done well in Potsdam, Germany (Source: Gregor H. Mews)
Earlier this year, researchers at the University of Canberra Health Research Institute undertook a literature survey of studies of existing light rail projects globally, identifying potential wider co-benefits (economic, social and health related) of such projects. Assuming, as the literature suggests, that value uplift (increase in land value) directly attributable to light rail is marginal because so many other factors affect land value, but value capture (the capacity for attracting development finance) is strong, we offer:
(a) The likely biggest winners, from largest to smallest:
- The ACT government. Government-owned land value, and the number of dwellings along the corridor, will increase, driving up government revenues. (Netting out coverage of project costs). Of course ultimately these revenues will be spent across the ACT community but the benefits to individuals, dispersed across 300 000+ taxpayers, are difficult to extrapolate right now.
- Property developers. The property industry will enjoy the value capture benefits of the project by leveraging the public investment in light rail, especially with an improved ability to attract finance at lowered cost.
- Property investors. Property investors along the corridor will gain from higher property values in response to increased demand for apartment accommodation in the city. ABS data show that new unit development in the ACT had a 32 per cent increase in new projects between 2014 and 2015, highest of all construction classes.
- Gungahlin ‘edge’ residents. Research shows that single corridor rail projects such as the Capital Metro will actually benefit residents living on the outer edge of Gungahlin (and rural residential areas over the border), especially if the park and ride facility at the Gungahlin town centre terminus is free. A recent Australian Automobile Association study showed that in Canberra, the total cost of car ownership is just under $300 per week, the cheapest for capital cities. So Gungahlin edge commuters who currently travel the furthest to the city by car can benefit from travelling by car to the Gungahlin terminus, catching the light rail into town, then traveling to the terminus on uncongested roads and speeding along the tram route to their work. Over-the-border residents have light rail access without paying rates.
- Auto commuters along the route. Commuters who choose to continue to travel to work by car along the tram route will also gain a marginal net benefit from reduced congestion.
(b) The likely losers, from smallest to largest:
- Some ACT residents (excluding Gungahlin) living more than 1 kilometre from the tram. Those unable or unwilling to walk or cycle to a tram stop will contribute to the project through taxes but not benefit from either value uplift or enjoy tram travel time savings. (As the network expands beyond its first phase more residents will benefit).
- Already active travellers who currently live along the corridor (especially renters). The rate of active travel is highest in the inner north of Canberra. Many residents choose to live in these suburbs to be able to enjoy close proximity to employment and services. Light rail provides no additional benefit to them but does lead to higher housing costs.
- Some small and medium enterprises along the corridor. Research shows that one of the biggest economic effects of light rail is changing the mix of commercial activity along the corridor. Some firms will gain but the others will lose since some retail outlets and services may be forced to close or move out of the area.
- Rail users with complex travel tours. A travel tour refers to the number and diversity of activities that a user undertakes during a daily commute. The simplest tour is a return trip from home to work. More complex tours are undertaken by families with young children. The single corridor design of Capital Metro will not be able to cater for all the activities undertaken by families needing to visit many destinations during a typical working day. These groups will likely have to continue to own cars until most activities (e.g. afterschool activities) are relocated closer to the rail route – unlikely to happen any time soon.
Existing private renters, especially lower and fixed income. Research shows that economic activity along light rail corridors is largely captured by the gentrification of adjacent land up to 1 kilometre from tram stops. This is often facilitated by government policies to do with zoning and incentivising development. While governments can put in place programs to support those on public housing, residents in the rental market are often forced out through higher rates and therefore are the biggest losers.
About the authors
Dr. Andrew MacKenzie is an Devotee of Urban Synergies Group as well as a Assistant Professor with the Faculty of Arts and Design, University of Canberra and Dr. Cameron Gordon is an Adjunct Associate Professor with the Health Research Institute at the University of Canberra and both were principal investigators on the study above. Both can be contacted through info (at) urbansynergiesgroup.org .