Working group releases Infrastructure Funding report in Australia
The Infrastructure Finance Working Group (IFWG) has released a report highlighting a few recommendations for the public sector to increase infrastructure spending in Australia. The IFWG was established to identify current barriers to attracting infrastructure finance and to develop options to encourage greater private sector investment.
To prepare this report the IFWG has consulted stakeholders on current practices related to infrastructure finance and funding in Australia and drew on relevant international experiences.
The following final recommendations are pointed out in the mentioned report:
Recommendation 1: Governments should implement targeted measures such as user charges to enhance price signals to better balance supply and demand, and to increase the funding available for infrastructure investment.
Recommendation 2: State and Territory governments should identify and monetise suitable public assets, allowing the freed up capital and avoided debt repayments to be recycled/invested into infrastructure projects.
Recommendation 3: The Australian Government should give a higher priority to infrastructure funding in the immediate-term to achieve positive reforms that will get nationally significant projects to the market in the short-to-medium term.
Recommendation 4: For appropriate projects, the Australian Government should consider the greater use of alternative funding models, including co-funding availability payments alongside State and Territory governments.
Recommendation 5: Governments should utilise appropriate models to drive revenue from the broader benefits delivered by major infrastructure projects, such as value capture for transport infrastructure.
Recommendation 6: The Australian Government should strengthen its linking of infrastructure funding to State and Territory governments implementing agreed reforms including changes that increase their capacity for investment.
Recommendation 7: Australian governments should prepare 20-year infrastructure strategies, with a common framework and timeframe across jurisdictions, allowing for the development of a clear and strategic national hierarchy of infrastructure plans.
Recommendation 8: Long-term infrastructure strategies should be used to develop a more transparent, robust and funded pipeline of infrastructure projects and must include an early indication of the likely financing and funding sources, enabling the public and private sectors to efficiently deploy capital and resources.
Recommendation 9: Governments should reduce procurement costs and coordinate procurements across jurisdictions.
Recommendation 10: Governments should take a more flexible approach to the allocation of risk, including demand risk, for high net public benefit projects that have the capacity to generate revenue streams from users.
Recommendation 11: In the short term, governments should adopt a flexible approach to refinancing risks, as the tenor and cost of debt pose an ongoing challenge to greater involvement by the private sector in the financing of infrastructure.
Recommendation 12: To encourage financial institutions such as superannuation funds to further invest in long-term assets such as infrastructure, the Australian Government should examine the structure, regulation and taxation of retirement income products and the way in which they may impact on the demand for long-term
Recommendation 13: The Australian Government should remove unnecessary regulatory barriers that currently impede retail corporate bond issuance in Australia as a way to diversify the sources of debt.