The Cairns summit of G20 finance ministers has brought about the announcement that the world's leading nations will establish a global infrastructure hub to facilitate the matching of international investors with key projects needed to support economic growth.

Treasurer Joe Hockey, who served as chair of the Cairns summit, hailed the decision after lobbying hard for the establishment of an international infrastructure platform.

“We have committed to develop a database of infrastructure projects to help match potential investors with projects,” he said. “We want to create a knowledge platform to build public sector expertise, and develop standardized documentation to reduce the costs of new investment.”

Infrastructure experts have given their firm backing to the decision, pointing to the manifold benefits provided by the establishment of this kind of cross-border platform.

Matthew Beck, a senior lecturer in Infrastructure Management at the University of Sydney, noted that a global platform for the facilitation of infrastructure investment is sorely needed, particularly given the current shortfall in funds for such critical part of the economy.

Beck pointed out in The Conversation that while superannuation funds are considered excellent vehicles for infrastructure investment, in Australia they put under 10 per cent of their portfolio into this category of asset.

According to figures from the Organisation for Economic Cooperation and Development, the average global level of investment in infrastructure is just one per cent – a paltry amount given the critical role that such assets play in underpinning broader economic growth.

In 2011 the OECD estimated global infrastructure needs for the next two decades to be worth around US$50 trillion, while the Asian Development Bank expects emerging economies in the region to need US$8 trillion in infrastructure investment from 2010 to 2020 just to stay abreast of project demands.

In addition to better matching projects with investors across borders, a global infrastructure hub can help fulfill this funding demand by providing multiple benefits and functions to industry at an international level.

These include serving as a knowledge centre that increases the efficiency and reduces the costs of the bid tendering, preparatory and evaluation stages of a project, helping to develop and propagate innovative financing methods combining public and private institutions, and benchmarking best practices in order to raise the accuracy of project costing.

Beck added that the hub could serve as a global advocate for more uniform regulatory and governance environments, which will significantly reduce uncertainty and transaction costs, and thus boost investor confidence, and willingness to hop on board major projects.

While the Cairns summit has already marked the beginning of a global infrastructure hub, another ambitious initiative receiving vocal support from experts is China’s Asian Infrastructure Investment Bank (AIIB).

The project was first announced in October 2013 by Chinese President Xi Jinping on the eve of the APEC summit in Bali, and is slated for official launch prior to the year’s end.

The new development bank could play a pivotal role in fulfilling the huge unmet demand for infrastructure funding in Asia’s emerging economies.

Andrew Elek, a research associate at the Australian National University’s Crawford School of Public policy, pointed out that the AIIB could play a critical role in making up the shortfall created by political constraints on other multilateral development banks, such as the World Bank and the Asian Development Bank, while still availing itself of the knowledge and expertise of these maturer institutions.

The US has remained tepid at best in its attitude towards the AIIB, perhaps given China’s role as founder. According to sources cited by Elek, it is discouraging other nations from hopping on board the new institution.

Elek said, however, that the US as well as Australia should embrace the potential of China’s proposed bank to serve as an inclusive structure servicing the region’s urgent infrastructure investment needs.

“All Asia Pacific governments should welcome the initiative to set up the AIIB and the opportunity to participate in it,” he wrote in the East Asia Forum. “Wide participation may help ensure that the AIIB can expand rapidly its lending to finance badly needed infrastructure projects while ensuring high quality project preparation and execution.”