The Minister for Infrastructure and Transport, Anthony Albanese, has today released a report calling for wide-ranging reforms to how we pay for essential infrastructure.
The report, Infrastructure Finance and Funding Reform, was prepared by an expert group of industry and senior public sector representatives. The experts argue that the private sector is a willing infrastructure partner but a lack of projects is impeding greater private sector involvement in infrastructure investment. They point to the need for a sustained period of reform by all levels of government to get the market moving.
Over the six years to 2013–14, the Australian Government committed an unprecedented $36 billion to Australia's transport infrastructure. However, population growth and change and the ageing nature of many of our infrastructure assets are seeing infrastructure needs rise dramatically.
Established by the Federal Minister for Infrastructure and Transport, Anthony Albanese in June 2011, the Infrastructure Finance Working Group was tasked with identifying options to reform infrastructure financing and providing advice on the use of private finance, user charges and alternative finance models to provide public infrastructure.
The experts call for a three-pronged approach: major reform of infrastructure funding, improved infrastructure planning to provide a deep pipeline of projects that give industry certainty, and steps to encourage more flexible and efficient markets that attract private investment.
While user charges are one approach discussed, the experts go further, calling for a reform of government balance sheets to create the capacity to invest in new infrastructure assets. They point to opportunities to augment the traditional grant-based approach to infrastructure funding with co-funding between the Commonwealth, states and private sector on nationally significant Public Private Partnership (PPP) projects, to get these to market more quickly.
They also identify the need for regulatory reform to decrease the costs involved in bidding for PPP projects, both to reduce overall project costs and remove barriers to entry for new players. Bid costs in Australia are typically 0.5–1.2 percent of project value—anywhere between 25–45 percent higher than in the comparable Canadian market.
"A deep pipeline of infrastructure projects will provide industry with certainty and create the conditions for private investment in projects," says the Infrastructure Coordinator, Michael Deegan.
The experts also call for the identification of alternative sources of finance, such as superannuation funds, to build on the already strong interest from this segment of the investor market in established "brownfield" assets.
The Infrastructure Finance Working Group comprised leaders from the finance, infrastructure and government sectors, including Jim Murphy (Australian Treasury, Chair), Ross Rolfe (Alinta Energy, Deputy Chair), David Byrne (ANZ), Brendan Lyon (Infrastructure Partnerships Australia), Mike Mrdak (Department of Infrastructure and Transport), Dr Paul Schreier (Department of Prime Minister and Cabinet), Pauline Vamos (Association of Super Funds of Australia), Julian Vella (KPMG), and Stephen Williams (Royal Bank of Scotland).
The full report is available at:
For media enquiries, please contact Michael Deegan, Infrastructure Coordinator, on 0412 447 048.