Labor is promising massive reforms to national infrastructure funding to attract private sector investment, including from Australia’s $4 trillion of superannuation savings.
Opposition Leader Bill Shorten says the old way, through the federal budget, had been tried but wasn’t sufficient for the scale of work required.
Nor could state governments be expected to do more with less.
Under proposed reforms by a Labor government, Infrastructure Australia will be at the centre of capital investment in the same manner the Reserve Bank is the independent authority at the centre of monetary policy.
“Our plan is about transforming Infrastructure Australia from a passive body receiving proposals, to an active participant in the infrastructure and financing market,” he says in his speech to the Queensland Media Club.
Mr Shorten outlined a national to-do list of infrastructure projects, including the rail link to the new Sydney airport at Badgerys Creek, Gold Coast light rail, Brisbane cross river rail, Ipswich motorway, Melbourne metro and the Midland Highway in Tasmania.
Mr Shorten says the problem now was that government capital investment in infrastructure was falling and existing projects weren’t clearing because of the high costs, commercial risks, unrealistic expectations on returns and uncertain processes.
To enable Infrastructure Australia to overcome market failures and attract private sector investment, a Labor government would establish a $10 billion financing facility to provide a combination of guarantees, loans or equity investments to get new projects going.
That will provide new and greater certainty to investors and create a powerful incentive for state governments to propose and approve projects.
Once a project is under way and financeable, Infrastructure Australia could sell its equity or debt interests to long-term investors like super funds.
Mr Shorten said some would be sceptical but this model replicated the successful Clean Energy Finance Corporation.
He said this was not a giveaway or a grants program.
“Empowering Infrastructure Australia to take a strict commercial approach based on credible cases will attract more private investment, not crowd it out,” he says.