CRAIG COMMENTS

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An Economic Impact Assessment should be carried out before any major project receives approval.
About thirty years ago, the State Government enacted legislation requiring that an environmental impact statement be prepared for every major project. The object was to ensure that all alternatives, including the alternative of doing nothing, are considered before a project is approved.

It makes sense that an Economic Impact Assessment should also be carried out. There have been a number of instances of governments undertaking projects where the financial benefits, or burdens, have fallen unevenly on the community. Almost without exception, the benefits have gone to the ares of high population and the burdens have been passed on to areas of low population density.
Intangible and emotional issues can cloud the assessment of environmental effects but, with the use of modern technology, it is practicable to assess economic effects.

The intention can best be illustrated by considering two government initiatives of recent years.

1. Federation Square

This purpose of this project is to commemorate the centenary of Federation and it is appropriate, although not vital, that any such project should be situated in the capital city. Nevertheless, there is no doubt that some sections of the community will benefit from the project.
Plans for Federation Square will incorporate restaurants, bistros and cafes designed to excite all palates, and retail stores with offerings in keeping with the cultural and multimedia themes of the site. It is hard to believe that the project will not substantially enhance the value of properties in the City of Melbourne. Yet the Melbourne City Council is contributing only $60 million out of a total cost rapidly escalating to $400 million.

2. Native vegetation

Legislation was enacted 10 years ago to ban the clearing of native vegetation. The purpose of the legislation was to protect the environment of the country in which we live. To some extent, native vegetation absorbs harmful emissions emanating from the city. By its very nature, the ban applied only outside the capital city. It had an adverse financial impact on the owners of property affected by the ban as they were no longer able to develop their properties as they had planned.

There was no compensation paid to the property owners, nor to the Councils that that have to administer the legislation. The legislation will also have an adverse effect on Councils' rate revenue.

These two projects that have been entered into "in the public interest" demonstrate the need for an economic impact assessment that will investigate the costs and benefits of government actions on various sectors of the community. It wound still remain for a government to determine whether those sectors should be compensated or charged as the case may be.

National Competition Policy can never be complete without an assessment of this kind. Governments are by far the largest influence on the economy and their actions can distort fair competition.

page last edited: 07-Sep-2001