The federal government needs a plan to channel trillions of dollars of untapped private capital toward Australia’s future infrastructure needs, a leading business group says.
As the government considers setting a target for public-private partnership investment, the Business Council of Australia says releasing funding remains a key challenge.
“There is ample private capital available to meet our infrastructure investment needs, including a pool of superannuation funds expected to total $6 trillion by 2037,” BCA chief Jennifer Westacott said in a statement on Friday.
But accessing this depends on a pipeline of suitable projects and the removal of investment barriers.
“This might require governments to provide a stream of funding, or share in the early stage risks, with government’s optimal role decided on a case-by-case basis,” Ms Westacott said.
A BCA-commissioned report highlighted eight areas of reform, including support for the coalition’s idea to recycle funds from asset sales back into infrastructure spending.
The recommendations also support a system of governmental fund-matching and tax incentives.
“Where the real challenge lies is in creating the right policy and regulatory environment,” Ms Westacott said.
Her comments follow the release of an issues paper, outlining the Productivity Commission‘s inquiry into public infrastructure.
The inquiry will look at the provision, funding, financing and costs of public infrastructure projects, including roads, bridges, railways, airports, ports, telecommunication networks and electricity and water utilities.
“There is a view that there is underinvestment in public infrastructure due to barriers to project funding and financing, as well as the costs of construction,” the paper reads.
Already the government has indicated it will make a submission to the inquiry, asking for guidance on setting a benchmark or target for combined public and private infrastructure investment.
The coalition asked for the Commission probe amid budgetary pressures and changes to the delivery model of public infrastructure assets and services.
Submissions can be made up until December 23, with a final report due in May.