Home' Future Building: The Australian Infrastructure Review : Volume 8 Number 1 Contents futurebuilding
Enfield. If that line is out of action for whatever reason, we’ll
have big issues. It is a ‘no brainer’ for Government to invest a
relatively small sum to duplicate the line.
One area in which we are very actively engaged with the
Federal Government is Inland Rail. Not connecting Inland
Rail to the Port of Brisbane seems to be very short-sighted,
and we will continue to engage with them on this issue going
MC: We’re seeing continued growth, both domestic and
international, at Melbourne Airport. Getting the right framework
for investment in transport, both to and from the airport, and
runway infrastructure is essential.
DW: Michael, you talked about that wall of capital that you
have available to invest. We are seeing the Government talking
about the use of Commonwealth equity and debt in infrastructure
investment with the Infrastructure and Project Financing
Agency (IPFA). Infrastructure Partnerships Australia has come
out very strongly against the IPFA. From a practitioner’s point
of view, what do you see as the risks and pitfalls? What would
the collective panel message be to the Commonwealth around
the use of Commonwealth equity and debt in infrastructure
investment and the IPFA itself?
MH: On the face of it, we don’t have a major problem with
it. We invest alongside local, state and national governments
all over the world in several major investments, including
Manchester Airports Group, Vienna Airport and Ausgrid, and
this has worked extremely well.
Our experience on the whole has been very positive, provided
that there is a clear objective for government involvement. In
addition, the government needs to have capable people around
the table, with long-term perspective and an understanding of
the value of private capital.
We don’t have an issue with the Federal Government doing
the same; however, it’s the first time they’re going to be doing
it for many years. The track record has also been mixed in the
past. The ‘first cab off the rank’ is Western Sydney Airport, and
that’s a big step to take. Understanding exactly how to do that,
what capability they have, and getting an understanding of the
Government’s structure and overall objective is critical.
Being able to extend that beyond the single project to other
things will also be a challenge. It’s unclear what the Government
wants to achieve and how they want to be involved, whether it’s
with equity or debt. So, in broad terms, it’s positive, but there’s
a large question mark alongside it.
DW: Any other comments on the IPFA?
DC: I agree with Michael’s comment. It’s really about
governments being very clear around what the objectives are, and
assessing what the broader consequences of any interventions
are. This needs to be articulated to all key stakeholders.
DW: Michael, any follow-up comments, or comments on
the Badgerys Creek–type model, WestConnex and other more
complicated transactions coming to market?
MC: In line with what Michael said, it is early days, and
there are question marks; however, there are many examples
of governments undertaking early-stage development where it
was exactly what the industry needed. How they execute it will
be the more difficult part of the policy process. We hope to see
that evolve with input from the industry.
DW: One of the more wicked policy issues we’re seeing
is around energy security, which would seem to be a natural
investment home for institutional investors. If you all had a
message to policymakers about energy policy and the way
forward, what would they be?
DC: I think that certainty is key for any investment decision.
While there is uncertainty in what the future looks like, it’s difficult
to allocate capital to that part of the infrastructure spectrum.
MC: Investor confidence and a long-term perspective are
key. My message would be to not bypass the proper policy
development process for short-term populist decisions.
MH: I think that message, Michael, is key across every
sector, and not just in the energy sector. We’ve voted with our
feet, here in Australia and offshore, in exiting energy generation
assets because the market is just so dynamic and in a high
state of flux. We are long-term, core infrastructure investors.
Once we start seeing significant uncertainty and volatility, we
will do a fundamental review of our assets and businesses, and
consider divesting to those better placed to manage the risks.
We have exited on both fossil fuels and renewables
because we don’t have that long-term stable policy perspective
or framework in place to give comfort to our investors that these
are sound investments for the next 20 or 30 years.
DW: What are your views on the issue of political risk and
recent actions by the Australian Competition and Consumer
Commission (ACCC), and their impacts on businesses?
DC: It’s inevitable that there will be some commercial
tension between infrastructure owners and operators. A balance
also needs to be struck that accounts for both the commercial
interests of your investors and the monopoly market power you
have. Getting that balance right is an art, and it’s very difficult to
have a prescriptive mechanism that achieves this; however, that
balance is important for maintaining all infrastructure investors’
social licence to operate.
MC: I won’t respond specifically on that case, but generally,
when you’re looking at any investment long term, you need to
do your due diligence. You need to work out what your business
plan is, and ensure that it’s executed and priced accordingly.
MH: We often hear about shared benefits of private
ownership across the community. There’s the perennial battle
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