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Submission Details My/our Great Idea is for ☒ a permanent use ☐ a temporary use

Tick which theme/objective and the number of the Destination your idea relates to

Theme Objective Destination 1 2 3 4 All

1 Sydney Global Competitiveness

To deliver a hub of export oriented knowledge intensive jobs that can increase Sydney’s global competiveness

☐ ☐ ☐ ☐ ☒

2 Living Bays To deliver enduring, socially inclusive and great places to benefit Sydneysiders and national and international communities.

☐ ☐ ☐ ☐ ☒

3 Housing Choices To deliver housing choices, including affordable housing options, through innovative design and construction, new finance models and new moderate income housing and rental housing models

☐ ☐ ☐ ☐ ☒

4 Transport and Infrastructure

To deliver a world-class mass and active transit and infrastructure solution that unlocks the economic and human potential of the Bays Precinct and demonstrates a model of environmental excellence.

☐ ☐ ☐ ☐ ☒

5 Exemplary Urban Places

To achieve building design excellence and quality urban design in all Destinations

☐ ☐ ☐ ☐ ☒

Title of your Great Idea A Fair Go Funding Model for the Bays

Describe your Great Idea Describe your Great Idea, why it is unique, how it is relevant to The Bays Precinct and, broadly, how it supports the ambition for the Bays Precinct (Limit: 400 words)

The Bays Transformation Plan will require long term, sustainable and equitable sources of funding in order to be fully realised. If well‐designed and delivered, the Plan will not only revitalise the Bays Precinct and serve as a new economic catalyst for Sydney, but will also generate significant long‐term increases in surrounding property values. New infrastructure funding arrangements are required that capture and share increases in land value to provide a stable and long term funding source for essential public infrastructure in the Bays Precinct.The new infrastructure funding system proposed for the Bays would replace Stamp Duty on property transfers, and is referred to hereafter as the Bays Property Tax. The Bays Property Tax would have two components;•  An annual levy of $20 per $1,000 on unimproved land value, as determined by semi‐annual valuations by the Valuer General.•  An annual levy of $10 per $1,000 on capital improvements on the land, as determined by semi‐annual valuations by the Valuer General.The funds collected from the Bays Property Tax would be placed in a dedicated account and used exclusively for renewal of the Bays Precinct, including site remediation, transport and other infrastructure and public domain improvements. The Bays Property Tax would be broad‐based to eliminate the current distortions of land taxes as they are currently applied in NSW and other states. As recommended by the Commonwealth Treasury, the Grattan Institute and other prominent sources, the Bays Property Tax would apply equally to all land uses, would have no exceptions, and would apply as a flat rate on the first dollar of value. Research has shown that Stamp Duty discourages householders from moving to housing that best suits their needs, is a barrier to job mobility and is a particular obstacle to first home buyers. For example, the current Stamp Duty on a $750,000 home purchase is $29,240 paid at the time of exchange, compared to the annual Bays Property Tax of $2,250. Dedicated property tax 

schemes similar to the proposed Bays Property Tax have been used successfully for decades overseas to fund transformative urban renewal and transport projects, including the Denver Union Station urban renewal precinct, Millennium Park in Chicago and London’s Crossrail project. The Bays Property Tax offers an equitable and stable alternative to present regressive infrastructure funding methods.

Does your Great Idea align with Sydney’s Global Competitiveness? How? (Limit: 100 words)

The Bays Property Tax is aligned with Sydney’s global competitiveness because it would improve housing affordability for workers close to key employment centres, remove the distortions Stamp Duty causes in consumer behaviour, and bring taxation methods into line with other OECD countries. For example, around nine percent of taxation in Australia is comprised of property taxes, compared with the OECD average of five per cent. The Commonwealth Government cites Stamp Duties as “the most inefficient taxes levied in Australia” (Australian Government, Tax discussion paper, March 2015).

Does your Great Idea align with Living Bays? How? (Limit: 100 words)

The Bays Property Tax responds directly to the Statement of Principles by identifying a “strong funding and financing strategy” and by providing a “broad source of funding for urban transformation” (Statement of Principles 18 and 19). Importantly, this funding approach is supported by calls from infrastructure funding reform voiced by Commonwealth agencies such as Infrastructure Australia and the Productivity Commission. Because the fund created by the Tax is dedicated to the Bays, the opportunity exists to engage future Bays’ residents in prioritising investment decisions by establishing a locally‐focused and transparent precinct governance and management body.

Does your Great Idea align with Housing Choices? How? (Limit: 100 words)

Housing choice is only possible if housing is affordable. Despite record low interest rates, housing affordability in Sydney has deteriorated over the past year. According to Mood’s Australian Housing Affordability Measure, the share of income needed to make monthly loan mortgage payments declined in Sydney to 35.1% from 32.8% as of 31 March 2015. If Stamp Duty were eliminated as proposed under the Bays Property Tax, home buyers would realise a decrease of four per cent in the cost of purchasing a home in the Bays on a purchase of $750,000.

Does your Great Idea align with Transport and Infrastructure? How? (Limit: 100 words)

Under the Bays Property Tax, a dedicated fund for transport and other infrastructure would be established for the Bays. Because it is paid annually and based upon property value, the Bays Property Tax is more stable and predictable than Stamp Duty, according to the Grattan Institute (Grattan Institute, Property Taxes, June 2015). This would allow transport and other infrastructure providers to plan ahead with greater confidence, and would provide developers and homeowners with greater certainty when making property investment decisions.

Does your Great Idea align with Exemplary Urban Places? How? (Limit: 100 words)

Exemplary urban spaces are enduring, but also require creativity, great design and quality materials. The Bays Property Tax would provide a reliable and sustainable funding source for building and maintaining public spaces. The Bays Waterfront Promenade, for example, will likely take many years to complete and require a substantial investment of public funds. The return on this investment, however, will be a permanent asset to Sydney residents and visitors. The Bays Property Tax can contribute to this legacy by providing a source of initial capital and recurring funding for this key destination.

I/we have attached additional information to support my/our Great Idea ☒ Yes ☐ No

Contact details Name David Barnard

Title Technical Director – Urban Design

Organisation type (if applicable) AECOM Australia Pty Ltd

Email David.barnard@aecom.com

Phone Number 0418 403 092

A FAIR GO FUNDING MODEL FOR THE BAYSThe objective of this Great Idea is to provide an equitable, reliable and sustainable source of funding for Bays’ essential infrastructure.

The Bays Transformation Plan will require long term, sustainable and equitable sources of funding in order to be fully realised. If well-designed and delivered, the Plan will not only revitalise the Bays Precinct and serve as a new economic catalyst for Sydney, but will also generate significant long-term increases in property values. New infrastructure funding arrangements are available that can capture and share a portion of these increases to provide a stable, long term funding source for essential public infrastructure in the Bays Precinct.

The new infrastructure funding system proposed for the Bays would replace Stamp Duty on property transfers, and is referred to hereafter as the Bays Property Tax.

The Bays Property Tax would have two components:

• An annual levy of $20 per $1,000 on unimproved land value, as determined by semi-annual valuations by the Valuer General.

• An annual levy of $10 per $1,000 on capital improvements on the land, as determined by semi-annual valuations by the Valuer General.

The funds collected from the Bays Property Tax would be placed in a dedicated account and used exclusively for renewal of the Bays Precinct, including site remediation, transport and other infrastructure, and public domain improvements.

The Bays Property Tax would be broad-based to eliminate the current distortions of land taxes as they are currently applied in NSW, and serve as a model for wider tax reform. As recommended by the Commonwealth Treasury, the Grattan Institute and other prominent sources, the Bays Property Tax would apply equally to all land uses, would have no exceptions, and would apply as a flat rate on the first dollar of value. Research has shown that Stamp Duty discourages householders from moving to housing that best suits their needs, is a barrier to job mobility and is a particular obstacle to first home buyers. For example, the current Stamp Duty on a $750,000 home purchase is $29,240 paid at the time of exchange, compared to the proposed Bays Property Tax of $2,250 per annum.

Dedicated property tax schemes similar to the proposed Bays Property Tax have been used successfully for decades overseas to fund transformative urban renewal and transport projects, including the Denver Union Station urban renewal precinct, Millennium Park in Chicago and London’s Crossrail project. The Bays Property Tax offers an equitable and stable alternative to present regressive infrastructure funding methods.

Chicago Rivers Edge

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Denver Light Rail

Denver Station

A FAIR GO FUNDING MODEL FOR THE BAYSPAGE 2

A FAIR GO FUNDING MODEL FOR THE BAYS

Does your Great Idea align with Global Competiveness?The Bays Property Tax is aligned with Sydney’s global competitiveness because it would improve housing affordability for workers close to Sydney’s key employment

centre, remove the distortions that Stamp Duty causes in consumer behaviour, and bring taxation methods into line with other OECD countries. For example, around nine percent of taxation in Australia is comprised of property taxes, compared with the OECD average of five per cent. The Commonwealth Government cites Stamp Duties as “the most inefficient taxes levied in Australia” (Australian Government, Tax discussion paper, March 2015).

Does your Great Idea align with Housing Choices? Housing choice is only possible if housing is affordable. Despite record low interest rates, housing affordability in Sydney has deteriorated over the past year. According

to Mood’s Australian Housing Affordability Measure, the share of income needed to make monthly loan mortgage payments declined in Sydney to 35.1% from 32.8% as of 31 March 2015. If Stamp Duty were eliminated as proposed under the Bays Property Tax, home buyers would realise a decrease of four per cent in the cost of purchasing a home in the Bays on a purchase of $750,000.

Does your Great Idea align with Exemplary Urban Spaces? Exemplary urban spaces are enduring, but also require creativity, great design and quality materials. The Bays Property Tax would provide a reliable and sustainable funding source for building and maintaining

public spaces. The Bays Waterfront Promenade, for example, will likely take many years to complete and require a substantial investment of public funds. The return on this investment, however, will be a permanent asset to Sydney residents and visitors. The Bays Property Tax can contribute to this legacy by providing a source of initial capital and recurring maintenance and renewal funding for this and other key destinations.

Does your Great Idea align with Living Bays? The Bays Property Tax responds directly to the Statement of Principles by identifying a “strong funding and financing strategy” and by providing a “broad source of funding

for urban transformation” (Statement of Principles 18 and 19). Importantly, this funding approach is supported by calls from infrastructure reform voiced by Commonwealth agencies, including Infrastructure Australia and the Productivity Commission. Because the fund created by the Tax is dedicated to the Bays, the opportunity exists to engage future Bays’ residents in prioritising investment decisions by establishing a locally-focused and transparent precinct governance and management body.

Does your Great Idea align with Transport and Infrastructure?

Under the Bays Property Tax, a dedicated fund for transport and other infrastructure would be established for the Bays. Because it is paid annually and based

upon property value, the Bays Property Tax is more stable and predictable than Stamp Duty, according to the Grattan Institute (Grattan Institute, Property Taxes, June 2015). This would allow transport and other infrastructure providers to plan ahead with greater confidence, and would provide developers and homeowners with greater certainty when making property investment decisions.

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