Forget PPPs: New Study Finds Better Ways to Find Funds
10 June 2005
New report says infrastructure finance can be found if the Government really got serious
By David Carey
With the lowest historical debt in Australia's history, Strategic Economics, has compliled a report for the public sector unions, which says there are better ways to manage the finance for the backlog in Australian infrastructure. However the report recommends this should be carefully managed by a new national infrastructure body. The report also says it's a mistake to rely on private finance packages supplied through Public Private Partnerships.
The Report is called Financing our Future, says in part:
"We need to reinvigorate the role of the public sector in the provision of public infrastructure. There needs to be a stronger commitment from the three tiers of governments to address our major infrastructure challenges.
There are real advantages in public investment in infrastructure, and there are a range of innovative financing techniques that could increase investment in infrastructure and the efficiency with which it is managed.
Australia has not been innovative enough in financing public infrastructure because of:
o The historic fiscal imbalance between local, state and federal governments, which has centralised most fundraising capacity in the Commonwealth.
o Legal impediments that limit the powers of state and local governments to raise funds.
o A less developed public capital market which has traditionally relied on the expanding tax base for budget funds.
o The dominance of neo-liberalism, which erroneously emphasises the benefits of small government and budget surpluses by both state and federal governments, regardless of the changing needs of the community.
o The tax system is biased against long-term investments in public infrastructure."
Big debate for Labor State Governments.
The public sector unions who commissioned the Report, intend to send a summary to the ALP conferences as well where policy about infrastructure funding is a big debating point.
Most State governments have used Public Private Partnerships to fund and build infrastructure. Nearly all have had to bail out a number of big PPP projects to the tune of hundreds of millions of Public funds.
Many in Government and their political parties are now openly debating if PPPs are the right way to supply infrastructure.
Former Bank Governor says Govts lacked "vision"
The report includes a foreword by Bernie Fraser the Former Governer of the Reserve Bank. Now working as an independent Director for Industry Super Funds, Mr Fraser says that there has to be a national approach.
"Some innovative public funding instruments which have been adopted overseas, should be considered, along with greater recourse to superannuation savings. Industry super funds in particular have a history of investing in infrastructure projects and are keen to increase their exposure as opportunities arise: as investors, tax-payers and consumers of infrastructure services, members of industry super funds have a particular interest in seeing that the chosen funding arrangements strike a reasonable balance from the perspectives of all stakeholders.
There has been a past lack of vision and leadership in the planning and coordination of an effective national response to our infrastructure problems. Perhaps we should not get too excited quite yet, but rising public pressures are generating increased interest in possible national approaches."
The Full Report Financing our Future or a copy of the Summary are available by post from the CPSU - State Public Services Federation, level 4, 160 Clarence Street, Sydney NSW 2000 or on the phone and email below.
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June 2005 contents
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