Australia is set to be home to a new hub which world leaders estimate could support up to $US 2 trillion in infrastructure investment between now and 2030 after the proposal to establish such a facility won backing from world leaders at the G20 summit in Brisbane.
In their Communiqué following the summit, G20 leaders announced they had agreed to establish a Global Infrastructure Hub set to be based in Sydney, which will not in itself fund projects directly but will facilitate information sharing and collaboration between the private sector, governments, large institutional investors and international organisations.
Welcoming the agreement, Prime Minister Tony Abbott said the role of the private sector in bridging public infrastructure gaps could not be underestimated.
”Demand for infrastructure investment over the next decade will outstrip the funding capacity of governments alone so private sector involvement is critical,” Abbott said.
Set to operate as a separate legal entity with a seven member board, the new hub will have a four year mandate to help countries improve their general investment climates, reduce barriers to investment and grow their project pipelines.
To help match investors with projects, the hub will also develop a consolidated database of infrastructure developments, which will be connected to national and relevant multi-national development bank databases.
Whilst Australia will contribute the bulk of the funding for the new hub, the United Kingdom, China, Saudi Arabia, New Zealand, South Korea, Mexico and Singapore have all pledged their support (details yet to be determined) whilst the IMF, OECD and a number of multilateral banks have indicated their readiness to bring their skills and experiences to the hub.
Private sector organisation will also be able to contribute funding once suitable governance arrangements have been worked out.
The agreement follows research by the B20 group of business leaders, which estimated that the hub would support an additional $2 trillion in infrastructure capacity, add $600 billion to world gross domestic product and support 10 million jobs by 2030.
The new initiative is a big win for the Prime Minister, who won office on the promise of becoming an ‘ infrastructure prime minister’ and who has set about reforming the national infrastructure body and providing incentives for states to use asset sales as a means to free up funds for new infrastructure investment.
Outside of infrastructure, the G20 set targets of lifting the total value of Gross Domestic Product in G20 countries by at least an additional two percent by 2018 and reducing the gap between men and women in labour force participation rates by at least 25 percent between now and 2025.