Financing The Infrastructure Of The Future

The current Liberal Government has presided over a collapse in infrastructure investment in Australia. ABS figures show public sector engineering work has fallen by 20 per cent compared with the last quarter of the Labor Government in 2013.

Infrastructure Australia estimates the economic cost of underinvestment in Australia’s roads, rail links and ports will reach $53 billion a year by 2031 and become an increasing drag on growth.

Labor will take the politics out of infrastructure and put the nation’s interest at the heart of nation building again. We will empower Infrastructure Australia to become an active participant in the infrastructure market, working with State Governments and brokering deals to bring nation building projects to fruition.

To deliver a stable and ongoing pipeline of infrastructure into the future, Labor will also give Infrastructure Australia an independent financing capacity and balance sheet to jumpstart the development of new projects.

Establishing an independent, funded project broker that is able to structure projects and work programs to reflect risk will provide greater certainty for investors and incentivise States to propose projects and clear approvals.

Under a Shorten Labor Government, Infrastructure Australia will be given a new Financing Mandate that will mobilise private sector finance through a range of instruments including loans, loan guarantees and equity investments.

A more active role for the Federal Government has been called for by a broad range of public finance experts as well as private sector investors and the business community.

Operating in a similar way to the Clean Energy Finance Corporation, Labor’s new Infrastructure Australia will have a $10 billion financing facility, if needed, to deploy a combination of guarantees, loans or equity to get new projects started provided they meet stringent criteria.

Using a conservative analysis prepared by Infrastructure Partners Australia, a $10 billion infrastructure investment will directly create approximately 26,000 jobs and add around an extra $7.5 billion every year to Australia’s GDP.

This is not a grants program. Empowering Infrastructure Australia in this way will attract more private investment – not crowd it out.

It will only offer loans, loan guarantees and equity where there is market failure and where projects are expected to deliver a return on its investment. This ensures that there is flexibility in financing arrangements to deliver the most efficient and effective arrangements on a project by project basis.

Labor won’t just talk about infrastructure; we will ensure it actually gets built by boosting Infrastructure Australia with an independent financing facility to make smarter investments that can get our cities and regions moving again.

Click here for more information about Labor’s positive plan.