Federal Treasurer Joe Hockey latest bright idea of using Australian Government guarantees to “lure” greater private sector investment into new public infrastructure is definitely innovative, but it’s certainly not original.
It’s what the former Labor government was already doing.
If Mr Hockey had bothered to read the 2013 Budget Papers, he would have seen that we were offering such guarantees to make it easier and cheaper for private sector investors to raise the capital needed to build two mega-public transport projects: the $9 billion Melbourne Metro and Brisbane’s $4.5 billion Cross River Rail.
The government guarantees, together with the regular ‘availability payments’ we were prepared to make, would have significantly reduced risk, given investors a fixed long term rate of return and ensured the delivery of this much-needed new infrastructure by years.
The risk-adverse super industry found these arrangements particularly attractive.
But unfortunately, both projects were scrapped by the incoming Abbott Coalition Government, which remains ideologically opposed to providing any Federal funding for new public transport infrastructure.
I have a simple message for Mr Hockey: Labor has already done the hard policy work on infrastructure financing; it’s now time for his Government to match our strong record of delivery.
The former Labor government also put in place new tax measures to encourage investment in projects of national significant – a real opportunity for private investors to be involved in financing Australia’s long term infrastructure needs.
In fact, as a result of our far-reaching reforms and record capital works program Australia went from 20th to 2nd on the international league table which ranks countries according to their level of infrastructure investment as a proportion of national income.