The Federal budget in May is to prioritise measures that will help states sell off brownfield infrastructure assets, the assistant treasurer Arthur Sinodinos has promised.

Speaking at a Value Alliance gathering in Sydney, Sinodinos said state governments would be offered incentives to use money gained from asset sales for building new assets – spending that would help the economy as the mining boom ends.

The measure has been welcomed by IFM Investors, which forecasts a subsequent “significant” rise in potential assets for superannuation funds to purchase.

In his speech, Sinodinos said infrastructure would be a key area of focus in 2014, despite widespread spending cuts.

“This will help fill some of the growth gap that is coming down the road because growth is sub-trend,” he said. “We are going to do this in a context where we are cutting back on other spending.”

One of the current stumbling blocks for selling infrastructure has been the loss of tax revenue for state governments. Once an infrastructure asset is privatised, the tax revenue switches from the state to the federal government, but a short-term incentive will be put in place to compensate state governments.

Sinodinos believes the public would be more accepting of infrastructure sales, if they knew it was funding new building work.

The government’s proposal has also factored in how to attract investors.

“We are trying to create a pipeline of infrastructure projects with transparent cost/benefit assessments, so if you are investor you have greater certainty,” said Sinodinos.

Michael Hanna, head of infrastructure at IFM Investors, welcomed the government’s plans.

“This is potentially a landmark period for the sector,” he said. “We are expecting a significant increase in deal activity in Australia over the next 3-4 years.”

He named the ports of Melbourne, Freemantle, Gladstone and Townsville as likely deals that could come to market, as well as the electricity distribution and transmission networks of New South Wales and Queensland. He thought that electricity networks alone represented around $40-50bn worth of potential deals.

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