Parking Levy policy and Urban Amenity

The previous post advocated inclusion of Macquarie Park into the Parking Levy Act list of leviable districts.  It is an anomaly of history and the recency of the development of Macquarie Park that has resulted in it being the one major Sydney employment centre which is not subject to the levy.

Competitive Neutrality
In contrast, North Sydney is subjected to the highest tier levy of $2200 per parking space per year yet it is broadly comparable to Macquarie Park in terms of quantum of office space and employment intensity (approximately 800,000sqm each):

The Sydney CBD is the other Tier 1 district.  A Tier 2 rate of $800 per year applies to smaller employment centres like Bondi Junction, Parramatta and Chatswood.  North Sydney and Macquarie Park are competing centres for office based, knowledge worker employment and it is a distortion of the competitive playing field if North Sydney is subject to the Tier 1 rate whilst Macquarie Park is left out all together.  The absence of a levy on Macquarie Park has resulted in higher returns to property owners and consequently higher levels of development at Macquarie Park, at the expense of of Parramatta, Chatswood and North Sydney.  As seen in the above table, the rent per square metre at Macquarie Park remains significantly below these other centres partly because of it's exemption from the parking space levy, which at a parking ratio of 1 parking space per 40sqm office space would be $56sqm (at the Tier 1 levy rate).  Hence, the addition of the parking levy would result in Macquarie Park's rents rising from 321psqm to approximately 380psqm, bringing it closer to it's nearest competitors at Chatswood and St Leonards.

The migration of office employment away from Chatswood, St Leonards and North Sydney and to Macquarie Park in the past two decades has been to the detriment of public transport use, because (as seen in the previous post), Macquarie Park has rail mode share one half to one third of these competing employment centres.  It is also not a surprising correlated finding that the arterial roads in Macquarie Park are some of the most congested in Sydney.  So there are important wider public interests in ensuring competitive neutrality.

One concern would be the adverse impact on Macquarie Park property owners.  This could be ameliorated by offering them a higher degree of mixed use development rights (as much of Macquarie Park is currently zoned for commercial development only, which has lower profitability than residential development).  Again this will bring Macquarie Park onto a neutral playing field with other North Shore centres, where commercial development does have to compete to a greater extent against residential uses, and which are seeing high levels of residential conversion as a result.

Use of Proceeds to form Public-Private partnerships
There are approximately 30,000 off street parking spaces in the Macquarie Park corridor (not including the further 5000 parking spaces within Macquarie University grounds).   Applying the Tier 2 rate to Macquarie Park would raise about $24 million per annum, or applying the Tier 1 rate would raise about $66 million per annum.  These amounts are not insignificant, as $24 million is sufficient to service interest on an investment of $800 million (assuming 3%pa interest), and $66 million is sufficient to service interest on an investment of $2.2 billion... either sum could provide very significant infrastructure, including a light rail line from Parramatta to Macquarie Park.

This could either be done through a form of public-private partnership or by a debt guarantee provided by State or Federal government (that is repaid from the parking levy proceeds).  According to TfNSW, the Inner West Light Rail extensions and enhancements, the Southwest Rail Link and bus T-ways were amongst the projects funded through the parking space levy in the past:

Project Contribution to Southwest Rail Link	Contribution $38.53
Light Rail Extension to Lilyfield	$16.00m
Contribution towards the North - West Transitway	$50.00m
Jubilee Park Boardwalk Access and Remediation of Light Rail under bridges and viaducts	$4.14m

Another significant past application of these funds has been for the provision of park and ride facilities.  TfNSW Projects Department has typically been the organisation to manage the construction process.  However (as would be expected given TfNSW does not have retail & local amenity expertise), this has resulted in relatively poor aesthetic and amenity outcomes, with massive and visually intrusive parking lots next to railway stations that are detrimental to urban activation of station precincts:

Photo: having massive stand alone parking lots is detrimental to amenity and urban activation

The Government should outsource the expenditure of park & ride funds to third parties in an auction process, where any number of third parties (be it local councils, shopping centres, etc) have the ability to submit bids for the provision of commuter parking spaces at a nominated cost per parking space.  This has been done to some degree in relation to the cooperation between TfNSW and Kuringai council in relation to Lindfield's park and ride, but it needs to be a much more systematic auction process - not an ad-hoc project-by-project collaboration as it currently the case.  Macquarie Capital was commissioned in 2008 to prepare a report into exactly such a system, but this seems to have fallen by the wayside... was this a result of a distracted and terminal NSW Labor government, and then followed the disruption of a change of government in 2011?

As an example of how commuter parking should be working, this is the sort of project that TfNSW should be outsourcing it's Parking Levy funds to, provided it stacks up in a competitive auction process: