Reports by two key economic advisers to government today reinforce the need for ongoing energy market reform and set out a compelling case for selling publicly owned infrastructure assets to the private sector to improve the operation of those businesses and provide resources to fund overdue new infrastructure projects.
The advice is contained in Infrastructure Australia’s report Australia’s Public Infrastructure: Part of the Answer to Removing the Infrastructure Deficit and the Productivity Commission’s Draft Report on Electricity Network Regulatory Frameworks.
The expert advice to government to sell its infrastructure businesses is consistent with calls by the Business Council of Australia to prioritise privatisation as a means to run the businesses more efficiently and free up scarce public capital to invest in the improved infrastructure and services which are urgently needed by a growing population.
The BCA’s recent report Pipeline or Pipe Dream said that securing Australia’s future prosperity would be best achieved through private ownership of infrastructure businesses so long as it is consistent with objectives to reward efficient investment and protect consumers.
Government ownership should only be preferred where it is clearly demonstrated to be in the public interest. Government’s role should be to set policy and regulation that achieves these aims.
“A shortfall in funding is probably the most pressing challenge for delivering the next wave of infrastructure needed in Australia’s cities and fast growing regional centres”, Business Council President Tony Shepherd said.
“Governments should now move to sell the identified assets once they are satisfied there is a sufficiently robust regulatory regime in place to protect consumers and encourage efficient investment, which in some sectors is already in place and in others will require further reform,” Mr Shepherd said.
“Government no longer needs to own infrastructure businesses where the private sector is capable of owning and operating businesses in a competitive or well regulated environment.
“With the appropriate regulatory oversight the private sector can achieve efficiencies and bring innovative ideas to the table and this will ultimately mean better services and reduced costs to consumers over time.
“Asset sales would also provide government owners with a significant cash injection that can be used to clear the transport and social infrastructure backlog in our cities and regions.
“The positive experience of the privatisation of energy assets in Victoria demonstrates the benefits clearly, and reinforces that in the minds of consumers this debate has clearly moved on in Australia,” he said.
Mr Shepherd called on all levels of government to review their holdings of infrastructure business assets in light of today’s reports and identify further options to unlock funds from assets sales that can be used to grow Australia’s productive capacity and provide services to the community.