Logistics News

Sell your assets, IA tells govt

Infrastructure Australia releases a report calling on government to fund critical logistics infrastructure by selling off its assets

By Anna Game-Lopata | October 19, 2012

Infrastructure Australia has released a report calling on government to fund critical logistics infrastructure by selling sell off its assets.

Released yesterday, the Australia’s Public Infrastructure – Part of the Answer to Removing Infrastructure Deficit report identifies more than $100 billion of commercial infrastructure assets on the Australian government’s balance sheets.

They include airports, roads, water services, ports, freight rail and electricity generation, transmission and distribution.

The report argues
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.

National Infrastructure Coordinator, Michael Deegan says if Australia is to build on and sustain our living standards, governments need to recognise they cannot bridge the current funding gap.

“Governments around Australia need to explore new methods of financing and developing the infrastructure needed to improve national productivity,” Deegan says.

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 states.

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,” the report says.

While Deegan adds some members of the community have genuine concerns about the private sector owning or controlling infrastructure that has long been in public hands, he says there is strong evidence such concerns can be addressed.

“Appropriate regulatory structures [can be used] to maintain service levels, provide pricing protection to consumers and environmental standards,” he says. I

“In addition, social objectives can be effectively and transparently provided for through community service obligations.”

Federal Infrastructure Minister Anthony Albanese says the IA report is a significant contribution to the debate and further discussion about the sale of state assets to fund infrastructure will take place with the relevant ministers at next month’s Standing Committee on Transport and Infrastructure (SCOTI) meeting.

“Hpwever the government would warn that asset sales must take the community with them,” a spokesperson for the department tells SupplyChain Review.

“You only need to witness the significant backlash against the Bligh government in Queensland following the sale of public assets which did not have the support of the community.”

Thespokesperson confirms the government has no plans to privatise
the Australian Rail Track Corporation (ARTC),
Australia’s only commonwealth-owned asset.

Previous ArticleNext Article
Send this to a friend