Friday, 14 November 2025

 Richard WELCH (North-Eastern Metropolitan) (12:13): My question is to the Minister for the Suburban Rail Loop. Minister, over what timeframe does the government forecast it will recoup the $11 billion that will supposedly be captured through value capture?

 Harriet SHING (Eastern Victoria – Minister for the Suburban Rail Loop, Minister for Housing and Building, Minister for Development Victoria and Precincts) (12:13): Thank you, Mr Welch, for that question and the continuation of your interest in these matters. I am not sure if you saw recent commentary from the federal infrastructure minister Catherine King.

David Davis interjected.

Harriet SHING: You did see it, Mr Davis. It is good to know that you are across the detail as well.

David Davis interjected.

Harriet SHING: You are definitely across it. One of the things that I did actually want to point out to you is that just yesterday the federal infrastructure minister Catherine King said, ‘This is a project that is –

David Davis: On a point of order, President, this is a very narrow question. As I heard the question, it seemed to relate just to the value capture portion. There was a simple question as to how long the payment time will be.

The PRESIDENT: The minister has only been going for a short time, and I would not want to pre-empt where she was going.

Harriet SHING: Good grief, Mr Davis, you seem not to be interested in the way in which we are going to be delivering Australia’s largest housing and transport infrastructure project.

When Minister King said, ‘This is a project that is happening,’ as you have indicated that you read, and then went on to say:

… It actually means you can connect across and around the city in a different way –

and it will –

… make new hubs for housing, for commercial, industry, as well as really changing the way people live in the city.

She was in fact referring to a project of between $30 billion and $34.5 billion, which is on time and on budget.

Mr Welch, it is really good. I went and had a look yesterday, after the question that you asked, at the business and investment case of 2021. I have tabled that a couple of times and given you many copies of it, and it appears, Mr Welch, that you almost made it to page 360. Just for the avoidance of any doubt, feel free to look at the copies that I have tabled. There is a section, 17.2, ‘Financing strategy’, and ‘Addressing timing mismatch’, at 17.2.1, which says – and this has already been tabled for the benefit of everybody playing along at home.

The value generated by SRL and the funding associated with value capture mechanisms will be realised over many years. While some forms of value capture can contribute a portion of direct funding towards capital costs, this is likely to represent a relatively small proportion of overall funding requirements.

In that context, one of the key challenges of using value capture mechanisms as a capital project funding source is the timing mismatch between when funding is required (construction costs) and when funding sources will be received (likely over a much longer term).

Financing upfront capital costs by borrowing can help to address this mismatch and create a source of upfront funding, which requires a financing strategy.

Engagement with various parties including government stakeholders and private investors has been undertaken as part of developing the –

funding and finance –

Strategy. Feedback from this process has informed the identification of potential value capture funding mechanisms and an appropriate financing strategy.

It then goes on to refer to typical sources of financing.

Mr Welch, I would definitely commend this part of the business and investment case to you. You are somebody with a background as a finance bro. It should be something that interests you in terms of understanding a little more detail on, including increasing cost of financial and risk requirements between the state, the Australian government and the private sector. I am really looking forward to continuing to engage with you on this project, as I hope you will back it in, as everybody else seems to.

 Richard WELCH (North-Eastern Metropolitan) (12:16): I thank the minister for that answer. Noting the lengthy time that will be required to capture $11 billion in value capture, as you have just said, and the interest that will gather on top of that money once borrowed while we are waiting for that value capture, I am curious to know: is the government’s financial modelling for this project based purely on capturing and repaying the $11 billion, or does it also cover the interest that will accrue on top of that $11 billion?

 Harriet SHING (Eastern Victoria – Minister for the Suburban Rail Loop, Minister for Housing and Building, Minister for Development Victoria and Precincts) (12:17): Thank you very much, Mr Welch. It would then appear that you did not go on to read any further parts of the business and investment case, because it does go on to talk about how similar models have been developed and delivered that actually do make sure that productive infrastructure, when it is delivered over a period of its duration, is actually able to fully offset the cost associated with funding proportions of that particular productive infrastructure. Mr Welch, again, given your background in finance, I find it really surprising that, notwithstanding your concerns about the duration of the project, you are unable to see what the long-term benefit will be. Again, Mr Welch, I would commend to you the business and investment case. It sets out what this means by way of intergenerational change: the way in which value will crystallise over time, the way in which this will return a significant business case ratio of between $1.1 and $1.7 for every dollar invested. Mr Welch, get on board, because everybody else is.