The Melbourne-Canberra-Sydney-Brisbane high-speed rail (HSR) proposal requires agreement on the method of funding. State, ACT and Commonwealth governments have common interest in providing a modern alternative to currently inadequate rail and air transportation on this intensively busy route. However, proposals to tax lands and towns adjacent to the HSR route are unduly restrictive and costly. The funding impasse seems to explain inaction on what constitutes an essential Australian infrastructure project. 

To stronger or lesser degrees, HSR would increase land values across the whole of Eastern Australia. For cost efficiency, therefore, it should be the federal government which funds the project – as with the 1917 Trans-Australian Railway. This could be done with the governments of Victoria, the Australian Capital Territory, New South Wales and Queensland cooperating by providing the use of their municipalities’ current site value assessments in which increased value from the HSR would be reflected nicely, if ‘hidden’ within their land valuations. A flat rate federal charge on site values, using municipal site valuations, could be levied along with income tax assessments, or separately in monthly instalments.

The Commonwealth government has the power to levy such a tax, as shown by the former federal land tax from 1910 to 1952, and the federal government clearly has an overriding interest in having the HSR project completed successfully. HSR fares would then be a matter of agreement between the states and the ACT. It would be a welcome offset if such a federal levy were to be introduced along with the Henry Tax Review’s proposals to abolish less worthy state and federal taxes.