Department of Infrastructure and Regional Development

Release of the Infrastructure Finance and Funding Reform Report

On 13 June 2012 the former Federal Minister for Infrastructure and Transport released a report calling for broad reforms to build funding capacity for vital infrastructure.

The report was prepared by an expert group of senior finance, infrastructure and public sector leaders. The experts argue that the private sector is a willing infrastructure partner but a lack of projects is impeding greater private sector involvement in infrastructure investment. The report points to the need for a sustained period of reform by all levels of government.

Over the six years to 2013–14, the Australian Government committed an unprecedented $36 billion to Australia's transport infrastructure. However, population growth and change and the ageing nature of many of our infrastructure assets sees infrastructure needs rise dramatically.

Established by Minister Albanese in June 2011, the Infrastructure Finance Working Group (IFWG) was tasked with investigating ways to improve the capacity of governments to invest in infrastructure projects, as well as explore possible improvements to the ways in which the private sector currently invests.

The IFWG calls for a three-pronged approach: major reform of infrastructure funding, improved infrastructure planning to endow a deeper pipeline of projects giving industry certainty, and steps to develop more flexible, efficient markets to attract private investment.

Important approaches examined by the IFWG include reforms to:

  • Government balance sheets to create the capacity to invest in new infrastructure assets;
  • Augment the traditional grant-based approach to infrastructure funding with co-funding between the Commonwealth, states and private sector on nationally significant Public Private Partnership (PPP) projects, to get these to market more quickly;
  • Decrease the costs involved in bidding for PPP projects, both to reduce overall project costs and remove barriers to entry for new players;
  • Identify alternative sources of finance, such as superannuation funds, to build on the already strong interest from this part of industry in established “brownfield” assets; and
  • Governments implementing targeted measures, such as user charges, to enhance price signals to better balance supply and demand, and to increase the funding available for infrastructure investment.

The IFWG comprised: Jim Murphy (Australian Treasury, Chair), Ross Rolfe (Alinta Energy, Deputy Chair), David Byrne (ANZ), Brendan Lyon (Infrastructure Partnerships Australia), Mike Mrdak (former Department of Infrastructure and Transport), Dr Paul Schreier (Department of Prime Minister and Cabinet), Pauline Vamos (Association of Super Funds of Australia), Julian Vella (KPMG), and Stephen Williams (Royal Bank of Scotland).

The full report is available below: