The increase in funding for Infrastructure Australia (IA) and expansion of its role, announced in last week’s Federal Budget, has been welcomed by the institutional investment industry.
The $36 million allocated to IA over the next four years should allow the body to review national infrastructure priorities, assess projects and provide advice on infrastructure financing and reforms that promote productive investment in Australian infrastructure, according to the Budget.
It was made clear that IA will work with state governments and the private sector to develop a deeper pipeline of priority infrastructure projects valued at more than $100 million, and are important for the nation’s wellbeing.
The Association of Superannuation Funds of Australia (ASFA) welcomed the funding, saying the Government’s Budget recognised the role that private investment played in developing infrastructure that was in the national interest.
“There has been a lot said about the potential of super funds to finance infrastructure, and we have been speaking with IA and Infrastructure Partnerships [Australia] for a while on this,” said ASFA chief executive, (pictured).
Vamos said the key concern for ASFA was development-stage funding — where superannuation funds were often sought as equity investors — and the use of tax incentives to make these deals more appealing.
“The tax incentives to really encourage funds to invest in greenfield are there,” she said.
“They’re putting a lot more robustness around IA, so what that means is that a pipeline will be developed. The scrutiny of what is in the pipeline, the governance around it and the ownership of it will be part of the new governance arrangements that IA has been asked to put in place. So that means [there is] a bit of a safety net for superannuation funds.”
AIST CEO Fiona Reynolds said these measures to increase infrastructure investment opportunities will provide encouragement for super funds to invest in greenfield deals.
“Super funds have traditionally been heavily involved in infrastrucutre investment to maintain diverse asset allocations. These measures will provide encouragement for super funds to continue to invest in the nation’s infrastrucutre,” said Reynolds.
The Budget’s infrastructure initiatives would help make infrastructure a more attractive investment for superannuation funds and fund managers, said John Brogden, CEO of the Financial Services Council (FSC).