Australian Infrastructure Landscape at a Glance | FTI Consulting

Australian Infrastructure Landscape at a Glance

Corporate Finance & Restructuring

May 29, 2015

In 2008 Infrastructure Australia was set up as a statutory body to advise on and prioritise infrastructure projects and spending and yet by 2015, the size of the infrastructure deficit in Australia still remains an unknown quantity. However, economic pundits, politicians and business leaders do agree that the gap is significant. The budgetary constraints that governments around Australia, at both Federal and State levels face in 2015, only further highlight the fact that it is impossible to continue to bridge this gap indefinitely. There is a growing realisation that new methods of infrastructure delivery will be required to improve economic productivity and meet the demands and living standards of a growing population in Australia.

One of the ways to meet this growing demand in the short term is the transfer of commercially viable, publicly-owned assets to the private sector, which would enable governments to recycle the proceeds into new infrastructure such as hospitals, schools and transport, which would reduce the gap further. However, it is not a straight forward task and it is important when transferring infrastructure assets to the private sector, that governments protect the community across a range of issues, especially as many publicly-owned infrastructure assets have monopoly characteristics. As the recent election result in Queensland demonstrates, the community holds significant concerns that private owners of such assets will increase prices and earn monopoly profits at the expense of service standards. However, appropriate regulation can prevent the abuse of monopoly power.

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