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Focus: Bill to establish Cross River Rail Delivery Authority

24 October 2016

In brief: The Queensland Government has introduced legislation to establish the Cross River Rail Delivery Authority, an independent statutory body charged with delivering the Cross River Rail project and the wider economic developments along the project's corridor. Partner Nicholas Ng (view CV), Senior Associate Matt Thomas and Associate Brydon Wang consider the legislation and its implications. 

 
 

How does it affect you?

  • The establishment of a Cross River Rail Delivery Authority (the Authority) is central to the Queensland Government's plans for the delivery of its 'highest priority infrastructure project', the Cross River Rail project.
  • The proposed mandate for the Authority is broad and extends to both the delivery of below-ground rail infrastructure, as well as associated above-ground transit-oriented developments around Cross River Rail stations.
  • The Authority is to be supported by the Cross River Rail Delivery Fund, which will allow the Authority to raise debt and equity funding and utilise funds to implement its functions and powers.
  • Industry and the wider community await further information regarding funding models for the project, including potential for value capture and value-sharing mechanisms (such as renewing and repurposing surplus and underutilised State land), which are proposed to be the subject of community consultation. 

Background

In identifying a preferred framework for the Authority, the Queensland Government reviewed delivery models used on a number of other national and international projects including the Barangaroo Delivery Authority (NSW), Linking Melbourne Authority, Crossrail Limited (UK) and HS2 Limited (UK). The review identified a trend towards establishing statutory bodies or companies over creating a project office within government, but did not identify a 'consistent model' for delivery of major projects.1 Ultimately, the preferred solution was a statutory body established under special purpose legislation, as it permitted:

  • arm's length distance from government and political cycles;
  • a direct reporting line to the responsible Minister;
  • perpetual succession;
  • involvement of entities or partners external to the Queensland Government to enhance governance processes (including participation by the federal and local governments); and
  • carrying out certain functions in a commercial manner including specifying its own funding model.2

The Government anticipates a cost of around $50 million to establish the Authority.

Functions and powers of the authority

The Authority's powers represent a consolidation of powers currently distributed across a number of state government agencies to deliver both rail infrastructure and exploit commercial opportunities associated with the development of Cross River Rail stations.

Clauses 12 and 13 of the Cross River Rail Delivery Authority Bill 2016 (Qld) (the Bill) set out the functions of the Authority, namely:

  • planning and developing the cross river rail priority development area;
  • procuring and delivering the cross river rail project and other transport-related projects;
  • identifying opportunities to facilitate economic development;
  • consulting with relevant entities about funding development; and
  • giving advice to the Minister or a relevant entity in relation to economic opportunities related to the Cross River Rail priority development area, the Cross River Rail project and other transport-related projects.

The Explanatory Notes to the Bill provide additional details regarding why these functions are necessary, outlining three implementation phases:

1 Readiness for market – Authority to secure government funding commitments and develop work packages and procurement plans.

2 Procurement – Authority to run the Expression of Interest and Request for Proposals stages for each work package.

3 Construction and contract management – Authority to oversee the performance and contract management of the relevant construction contracts.

The Authority is to carry out its functions 'as a commercial enterprise' to the extent practicable3 and is given broad powers to:

  • enter into contracts;
  • deal in land or other property;
  • appoint agents and attorneys;
  • engage consultants or contracts;
  • charge a government agency a fee for services or facilities it supplies; and
  • do anything else necessary or convenient to be done in performing its functions or exercising its powers.4

However, the Authority will still have non-commercial community service obligations.5

The Authority's power to deal in land is intentionally broad and does not require direct connection between the cross river rail project, and permits secondary projects providing services or facilities for 'users of infrastructure and facilities provided as a result of the cross river rail project or a transport-related project'.6 This provides the Authority greater flexibility to adopt a more 'transformative' approach to developing projects.

The Authority also has power to compulsorily acquire property in relation to the Cross River Rail projects the Authority will deliver, subject to payment of compensation under the Acquisition of Land Act 1967 (Qld). Where the Authority seeks to acquire land for 'transport-related projects' ancillary to the Cross River Rail project, the acquisition process would be subject to Parliamentary disallowance.7

Funding and governance requirements

Clause 59 of the Bill establishes the Cross River Rail Delivery Fund (the Fund). The Authority is permitted to expend funds to deal in land, provide infrastructure, facilities or services, administer its functions, and pay fees to administer the Fund. The Fund can comprise debt or equity funding under the Statutory Bodies Financial Arrangements Act 1982 (Qld) and funds received by the Authority in the course of carrying out functions or exercising powers under section 115 of the Economic Development Act 2012 (Qld). The Minister and Treasurer can also direct the Authority to pay a sum into the Cross River Rail Delivery Fund. These arrangements, coupled with the Authority's broad powers and functions, allow the Authority significant flexibility to assume a central role in financing, procurement and delivery of the Cross River Rail project when compared to the role of the public sector on other major infrastructure projects procured under 'traditional' Public Private Partnership models.

The Authority must comply with financial management requirements imposed under the Financial Accountability Act 2009 (Qld), including preparing a budget that is approved by the Board members and the Minister annually, with the Board tasked with ensuring the Authority complies with strategic plan and operational plan under the for each financial year.

In addition, the Authority will be subject to annual reporting requirements on the efficiency and effectiveness of its performance in achieving key financial and non-financial objectives set by the Board annually.8 Operational plans for each financial year must also state community service obligations that are subject to approval by the Minister.

Comments

The funding model for the Cross River Rail project, which has an estimated delivery cost of $5.4 billion, is not settled. The Queensland Government has indicated that funding the project will involve a combination of contributions from all levels of government (which includes an in-principle commitment of $800 million from the Queensland Government), third party finance and value-sharing mechanisms.9

The business case for the Cross River Rail project prepared by Building Queensland in June 2016 included six potential value-capture funding options: 

  • a $2.6 billion public transport infrastructure tax on South East Queensland property owners;
  • a $1.22 billion vehicle registration levy;
  • a $1.2 billion car park levy/congestion tax;
  • a $1.08 billion ticket surcharge to be borne by public transport users;
  • a $1 billion land tax on neighbouring property owners; and
  • $285 million in increased rates on nearby properties.10

Deputy Premier Jackie Trad has since ruled out the car park levy/congestion charge and the vehicle registration levy as potential funding options, but stated that it was the 'role of the new [Authority] to evaluate the four remaining options.'11  

It remains to be seen if one of the four remaining funding options or a new funding model will be selected after the Authority is established. The Explanatory Notes to the Bill state that value-sharing options will be canvassed with the public before the final funding model is developed.12 

Footnotes
  1. Explanatory Notes, Cross River Rail Delivery Authority Bill 2016 (Qld) 2.
  2. Ibid.
  3. Cross River Rail Delivery Authority Bill 2016 (Qld) cl 13.
  4. Ibid cl 14.
  5. Ibid cl 29.
  6. Ibid cl 19(1)(b).
  7. Cross River Rail Delivery Authority Bill 2016 (Qld) cl 20(1)(b); see also Explanatory Notes, Cross River Rail Delivery Authority Bill 2016 (Qld) 4 and 13.
  8. Cross River Rail Delivery Authority Bill 2016 (Qld) cl 72. 
  9. Queensland Government, 'Palaszczuk Government commits $800 million to kick-start Cross River Rail' (Media Statement, 27 June 2016).
  10. Tony Moore, 'Cross River Rail: Qld opposition slams govt over 'sneaky taxes' in business case' (29 June 2016) Brisbane Times.
  11. Tony Moore, 'Cross River Rail levy: Trad rules out two of 'six secret taxes' in business case' (29 June 2016) Brisbane Times.
  12. Explanatory Notes, Cross River Rail Delivery Authority Bill 2016 (Qld) 6.

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