2018 CCF Victorian Infrastructure Outlook Report 1 | Page 40

2018 Victoria Infrastructure Report
Figure 3.4 Public Net Debt as a Proportion of GDP (%): International Comparisons
Source: IMF Datamapper
Increased Commonwealth infrastructure funding has
been joined by new infrastructure funding at the State
Government level, particularly in Victoria and New South
Wales, where the proceeds from long-term asset leases
are being recycled into new infrastructure development,
along with windfall proceeds from property taxes as
these states reap the benefits of stronger population and
economic growth. Further long-term leases of public
assets are expected over coming years at the national
level given the perceived success of capital raising to date,
including potentially the entire $16.8 billion WestConnex
toll road in Sydney before construction is completed. 9
While Western Australia and Queensland have so far shied
away from “asset recycling” as a capital raising initiative
for financing productivity-enhancing public infrastructure,
this option remains open to future governments given the
number and size of assets still under public ownership.
9
While asset recycling is helping to solve infrastructure-
financing issues at the state level, the solution is not
costless. As demonstrated by the Federal Court’s August
2017 ruling on pricing at the recently-privatised Port
of Newcastle 10 governments need to do a better job in
balancing the aims of maximising sale proceeds (of what
are often essentially monopoly assets) and ensuring
strong regulation of these assets post sale so that
future users (and broader economic activities) are not
disadvantaged by unreasonable price increases.
Ultimately, long term, sustainable public funding for
infrastructure still requires sensible tax and expenditure
reforms.
http://www.smh.com.au/nsw/sale-of-entire-westconnex-motorway-project-on-table-for-government-20170524-gwc2n2.html
http://www.theherald.com.au/story/4859740/ugly-hit-that-came-back-to-bite-port/
10
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