Infrastructure Australia on the right track
Infrastructure funding has risen up the political agenda, as Federal Labor proposes a $10 billion ‘concrete bank’ and the Prime Minister looks at innovative financing options.
Leader of the Opposition Bill Shorten has announced plans to transform Infrastructure Australia from a “passive body receiving proposals”, to an active participant in the infrastructure and financing market.
“Just as the Reserve Bank of Australia is the independent authority at the centre of monetary policy, Infrastructure Australia will be at the centre of capital investment, driving results that are in the national interest,” Shorten said during an address to the Queensland Media Club last week.
The Property Council of Australia welcomes Labor’s plan, with chief executive Ken Morrison saying the Opposition was “on the right track”.
“Strengthening Infrastructure Australia and broadening its mandate to include a capital financing function is a smart approach,” Morrison says.
“We wholeheartedly support any move to depoliticise infrastructure project priorities and boost certainty around project delivery.
“Investing in the future of our growing cities has to be a top priority for government – at all levels – and it is extremely encouraging to see this confirmed as a focus for both major parties federally.”
Meanwhile, Prime Minister Malcolm Turnbull has confirmed he will be “an infrastructure Prime Minister” that supports “all infrastructure on the basis of its merits” during the announcement of a federal grant of $95 million to extend the Gold Coast light rail line (pictured).
The Australian Financial Review reports that Turnbull is looking into “more innovative approaches” such as tax increment financing.
The Prime Minister says that governments needed to “look creatively at how we capture the value that arises from the increase in property values and the improvement in the utility of adjacent land from the building of infrastructure”.
According to Morrison, tax increment financing overcomes the two highest hurdles infrastructure projects face: finding sizeable upfront capital and getting all levels of government working together.
“The beauty of tax increment financing is that it secures funding from additional revenue streams without the need to levy new taxes,” he says.
“It’s is an approach that uses economic growth to fund projects and we strongly encourage the Australian Government to further explore this opportunity.”