The great sale

Infrastructure Australia (IA), an industry body, has challenged governments across the country to take a good look at their balance sheets with an eye to divesting over A$100 billion (€79 billion; $103 billion) of infrastructure assets.

In a report released late last week – titled Australia’s Public Infrastructure: Part of the Answer to Removing Infrastructure Deficit – IA identifies billions of dollars of assets across sectors that would make good candidates for private sector ownership.

It argues that “today, the costs to governments of operating and maintaining these assets often far outweigh the benefits to the community of retaining these assets in government ownership”.

A rough sector-by-sector estimate suggests there are A$66 billion of power assets, A$60 billion of water assets, A$9 billion of ports, over A$1 billion of airports and up to A$4 billion of rail assets that could be put on the auction block. In total, the government could net up to A$140 billion in equity from a cross-sector asset pool with an enterprise value of some A$219 billion.

IA says that many assets in the energy, ports, regional airports and freight rail sectors could be sold relatively quickly and without any legislative changes. Money from the asset sales could then be used to fund new infrastructure projects across the country.

The industry body points to May’s 50-year lease of the Sydney Desalination Plant to a consortium of the Ontario Teachers Pension Plan and Hastings Funds Management as a good example of this. The A$2.3 billion deal allowed the New South Wales government to help seed its infrastructure fund, Restart NSW, after paying down the debt incurred in building the desalination plant.

IA is also encouraging Australia’s superannuation funds to bid for these assets, in what would become a “virtuous circle” of ownership. “The growth of Australia’s superannuation system provides a real opportunity to achieve all the potential benefits of a transfer to the private sector while still being owned by a broad cross-section of Australians,” IA highlights.