As a Sydney construction recruitment company specialising in placing labour hire candidates with major projects right around the country, we find that our success is closely tied to continued investment in infrastructure projects of a certain scale. That being the case, we take an active interest in how major infrastructure projects are funded.
In June 2013 the former Federal Minister for Infrastructure and Transport published a report calling for broad reforms that would improve funding capacity for vital infrastructure projects. Needless to say, we paid attention.
Prepared by a number of experts in finance, infrastructure and the public sector, the report found that the private sector was, in principle, a willing infrastructure partner but that a shortage of projects was blocking private investment.
Owing to Australia’s population growth and change, a more comprehensive and inclusive approach to infrastructure financing was deemed to be in order. Despite the Australian government committing an unprecedented $36 million to Australia’s transport infrastructure over 2013-14, further investment will be required to meet our transportation needs.
The Infrastructure Finance Working Group (IFWG) was established in June 2011 by Minister Albanese to address these points. The IFWG was tasked with exploring ways to improve the capacity of governments to invest in infrastructure projects and to explore possible improvements in the manner that the private sector typically invests in infrastructure.
The IFWG recommends (1) major reform of infrastructure funding processes, (2) improved infrastructure planning that results in a deeper pipeline of projects and contributes to certainty in the industry, and (3) introducing steps to develop more flexible and efficient markets so as to attract more private investment.
The IFWG examined reforms to:
• Government balance sheets to create the capacity to invest in new infrastructure assets;
• Augment the traditional grant-based approach to infrastructure funding with co-funding between the Commonwealth, states and private sector on nationally significant Public Private Partnership (PPP) projects, to get these to market more quickly;
• Decrease the costs involved in bidding for PPP projects, both to reduce overall project costs and remove barriers to entry for new players;
• Identify alternative sources of finance, such as superannuation funds, to build on the already strong interest from this part of industry in established “brownfield” assets; and
• Governments implementing targeted measures, such as user charges, to enhance price signals to better balance supply and demand, and to increase the funding available for infrastructure investment.
Overall, encouraging private sector investment in major infrastructure projects makes good commercial sense and will serve to bring more stability to construction recruitment.