Press Release: Australia's Public Infrastructure—Part of the Answer to Removing the Infrastructure Deficit

18 October 2012

Australia faces a significant infrastructure deficit and associated funding task.

Today, Infrastructure Australia called on governments to examine the sale of commercially viable, publicly owned assets to the private sector, in order to fund critical, new infrastructure. This approach is outlined in a new report: Australia's Public Infrastructure—Part of the Answer to Removing Infrastructure Deficit.

Infrastructure Australia has identified that more than $100 billion of commercial infrastructure assets on Australian government balance sheets. These assets include airports; roads; water services; ports; freight rail; and electricity generation, transmission and distribution. Today, the costs to governments of operating and maintaining these assets often far outweigh the benefits to the community of retaining these assets in government ownership.

“Governments around Australia need to explore new methods of financing and developing the infrastructure needed to improve national productivity. If we are to build on and sustain the living standards of all Australians, governments need to recognise that they cannot bridge the current funding gap,” said National Infrastructure Coordinator, Michael Deegan.

According to the report, many assets in the energy, ports, regional airports and freight rail sectors could be sold relatively quickly and under current policy settings. The report identifies these sectors as having the most capacity to provide funding for new economic infrastructure.

Australia's superannuation industry is also well placed to purchase these assets—providing a real opportunity to achieve all the potential benefits of a sale while maintaining ownership of these assets across a broad cross-section of the community.

The report identifies a number of successful asset sales that have generated real community value, such as the recent refinancing of the Sydney Desalination Plant which raised $2.3 billion, $300 million more than the cost of constructing the plant. After repaying the debt incurred in building the plant, the net proceeds from the refinancing have been provided to Restart NSW allowing government to fund the building of critical new infrastructure such as roads, hospitals and schools.

“Infrastructure Australia recognises that some members of the community have genuine concerns about the private sector owning or controlling infrastructure that has long been in public hands. There is strong evidence that those concerns can be addressed through appropriate regulatory structures that maintain service levels, provide pricing protection to consumers and environmental standards. In addition, social objectives can be effectively and transparently provided for through community service obligations,” said Mr Deegan.

For media enquiries, please contact the National Infrastructure Coordinator on (02) 8114 1900.