The Statement of Shared Intent by Australia’s governments on infrastructure investment is a win–win for government, business and the community because important infrastructure can be funded by recycling mature assets that can be owned and operated by the private sector while taking pressure off constrained budgets, Business Council of Australia Chief Executive Jennifer Westacott said.
The conditional federal funding for infrastructure in the deal is a welcome development. It is entirely appropriate that, in return, the states should be required to recycle funds from existing infrastructure assets where it is feasible to do so.
Recycling capital means that private investors, such as superannuation funds, can play a greater role in infrastructure provision while freeing up scarce government funds to pay for new transport and utility services in our growing cities and regions.
Recycling capital is a sensible way for governments to fund public infrastructure in a time of fiscal constraint. It creates opportunities for private management discipline to drive efficient provision of infrastructure and improve service performance.
The Statement of Shared Intent is a good start and will now need to be backed by a more detailed agreement.
A coordinated approach will be needed to manage the potential sale of a number of large capital assets in an orderly way. Governments must also ensure that appropriate regulatory frameworks are in place that promote efficient investment and safeguard consumers in the relevant infrastructure markets.
How the funds will be spent is also vitally important. The new federal funding contribution and the funds raised by the asset sales must be directed into well-designed projects that are demonstrated to have the highest net economic and social benefit to the community.
Infrastructure Australia will have a critical role to advise the federal government about project priorities and to ensure cost–benefit analysis is undertaken and published.
In designing new infrastructure projects, governments should give priority to applying user pays models and creating opportunities for private investment to further limit the call on public spending.
For further information contact:
Scott Thompson, Director, Media and Public Affairs
Business Council of Australia
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