Unlocking Funds to Get us Moving
02 June 2014
The private sector gives us more bang for our buck. With congestion costing our economy $15 billion a year, and weak productivity growth risking future living standards, we must unlock the pipeline of infrastructure investment that has been ignored for too long.
That is why the Australian government's infrastructure investment program breaks the mould. It unlocks an investment pipeline that will help build the infrastructure for the 21st century.
Our program invests a record $50 billion in productivity enhancing infrastructure. However, by partnering with state governments and leveraging private sector investment through innovative financing models, Australia is set to receive a $126 billion investment in productivity enhancing infrastructure.
Yes, we have continued commitments that the former government had made.
However, by utilising innovative ways of financing, we are accelerating delivery of key projects and getting new ones off the drawing board.
There are two projects in particular that reflect this the WestConnex project in Sydney and the Perth Freight Link in Western Australia.
For WestConnex, we have agreed to provide a $2 billion concessional bridging loan to the NSW government the first ever for a major road project to bring forward construction of Stage 2 by 18 months.
Not only are we delivering on our $1.5 billion election commitment for Stage 1, we are delivering on our promise to fast-track infrastructure investment through innovative financing.
In Western Australia, the $1.6 billion Perth Freight Link will be delivered in partnership with the private sector. This will be the first road project in WA that will be secured by toll revenue.
The Perth Freight Link will deliver a high-standard freight connection to the Fremantle Port. Economic analysis suggests the new link will deliver over $5 in economic benefits for every $1 invested.
Simply, this project would not be going ahead without a commitment from the government to invest and a willingness to partner with the private sector.
What is even more exciting about our infrastructure program is that we expect to support new, productivity-enhancing projects through the $5 billion Asset Recycling Initiative.
Under this program, the government will provide incentive payments of 15 per cent of the sale price of privatised assets to state and territory governments, on the condition that the proceeds of sales are reinvested in new productivityenhancing assets. This will include public transport.
We know the superannuation industry would like to increase its exposure to infrastructure as an asset class, in recognition of its ability to deliver long-term stable earnings.
The Asset Recycling Initiative taps into private sector investor interest in established “brownfield” assets that is established assets such as ports or electricity companies with proven earnings in order to fund new infrastructure projects.
In fact, we have already seen an appetite from the private sector to invest in existing infrastructure through the sale of ports in NSW, and Queensland Motorways.
The proceeds of the sale of existing assets plus the 15 per cent incentive payments will free up billions of dollars for a new wave of infrastructure investment.
Further, this government isn't simply handing over cheques and hoping that projects are delivered. We are instituting reforms to get more for less and more quickly.
The government is reforming Infrastructure Australia to make it more independent and to work with the states to improve future infrastructure planning.
We have asked the Productivity Commission to report back later this month, with a path forward to improve the timeliness and cost of major public infrastructure, as well as considering alternative funding methods.
And the Council of Australian Governments has already agreed to reduce red and green tape to ensure infrastructure is fast-tracked and not held to ransom by professional protesters.
To ensure projects are built as quickly as possible, I have also announced that I will be overseeing the delivery of key projects with my state ministerial counterparts.
What we announced in the budget was a comprehensive plan to build the infrastructure for the 21st century.
By making the right infrastructure choices today, we are building a stronger economy for tomorrow. And by unlocking private sector investment, we are delivering these projects faster and less cost to taxpayers.
Jamie Briggs is the federal Assistant Minister for Infrastructure and Regional Development.