Privatisation key to funding new infrastructure: IA report

Infrastructure Australia (IA) has called on governments to consider selling commercially viable, publicly owned assets to the private sector to fund new infrastructure. The recommendations were outlined in a report: Australia’s Public Infrastructure - Part of the Answer to Removing Infrastructure Deficit.

IA identified more than $100 billion of commercial infrastructure assets on Australian government balance sheets, including electricity generation, transmission and distribution.

“Today, the costs to government of operating and maintaining these assets often far outweigh the benefits to the community of retaining these assets in government ownership,” an IA media release said.

According to the report, many of these assets could be sold relatively quickly and under current policy settings. It gives the example of the Sydney Desalination Plant, which raised $2.3 billion - $300 million more than it cost to construct. The net proceeds funded new infrastructure such as roads, hospitals and schools.

“Governments around Australia need to explore new methods of financing and developing the infrastructure needed to improve national productivity. If we are to build on and sustain the living standards of all Australians, governments need to recognise that they cannot bridge the current funding gap,” said National Infrastructure Coordinator Michael Deegan.

Australian Industry Group (Ai Group) Queensland Director Matthew Martyn-Jones said the report aligns with Ai Group’s position that privatisation of energy assets is needed to increase productivity and improve Queensland’s economy.

Martyn-Jones said that Ai Group has already called for Powerlink to be privatised, as well as other large power generation companies. “The debate should never have been about whether or not to privatise but what to privatise and how,” Martyn-Jones said.

“As outlined by IA’s report, the costs to governments of operating and maintaining these assets frequently far outweigh the community benefits of retaining these assets in government ownership,” said Martyn-Jones.

The full IA report is available here.