“But in reality, the risk was very high. The flow wasn’t government money, it was traffic – so there was a user-pays risk combined with very high debt level so the stress came on the asset.” Investment banks have been criticised for high-cost infrastructure projects in the past. However, the asset class is not so much risky as complex and illiquid, says Nick Rowe. Caveat emptor will now be the mindset of infrastructure wannabees. The collapse of the $1.1 billion Lane Cove Tunnel in late-January has stripped the last shreds of the emperor’s clothes off the asset class, and Australia will have to learn from experiences in the UK, the Netherlands and South Africa to re-cut the financial coat to fit the available cloth.
Institutional investors have broadly welcomed the advent of a mandatory climate disclosure regime, but the reality is they face a slew of new and complex governance, risk management, planning and testing requirements. It is little wonder HESTA CEO Debby Blakey has called the net-zero push the "biggest transition any of us will be involved in".
Russell BakerAugust 16, 2023
