Home' Future Building: The Australian Infrastructure Review : Issue 1 Contents futureb
with more and more of them retreating from the Australian market,
increasing the likelihood of there being a potential funding gap for
Macquarie had foreseen the potential downturn and acted early
to access a large and diverse bank and equity group, an approach
which helped AquaSure maintain a strong investor base despite
A crucial part of the success of the package was the very close
working relationship AquaSure enjoyed with the State of Victoria.
The State provided a vital contingent guarantee to act in the role of
'lender of last resort' to ensure the project did not stall.
According to Mr Miller, "There was simply not enough liquidity
resulted in the possibility of the State acting as potential lender of last
resort. The State of Victoria was very responsive and was able to not
only read the markets and competitive bid dynamics, but adapt well
to the changing market conditions. As a result, the state was able to
provide a contingent facility in case not all of the debt underwritten
by AquaSure was syndicated."
The state's lender of last resort status did not have to be called.
Capital, the book runners (National Australia Bank and Westpac), the
DSE as the state's representative and other project sponsors, resulted
in oversubscriptions of more than 50 per cent.
project risks allocated to the private sector, while seeking an interim
solution to address the liquidity gap during the bid phase.
"We saw oversubscription in the syndication process as a
strong market testament to a sound infrastructure initiative and a
availability payments from a AAA-rated government entity," said Mr
The role of the Victorian Government was critical. While its
created in the project was fundamental. "This allowed us to get a
head-start on the project despite the tough conditions of the GFC,"
said AquaSure's chairman, Chloe Munro. "The remarkable success of
the syndication process showed both the strength and soundness of
and the PPP model adopted by the Victorian Government."
The successful outcome refuted claims by opponents of the
modern PPP procurement approach that the model would be
rendered unviable by changes in global capital markets. The success
"The successful selection of a preferred tenderer shows
governments in NSW, Queensland and South Australia that they too
can continue to deliver projects in the aftermath of the GFC," says
Infrastructure Partnerships Australia's executive director, Brendan
In his keynote speech at the National Infrastructure Awards,
Sir Rod Eddington said underlying changes to the demands on
government revenues meant that the infrastructure investment
government revenue or government debt. He said that it has become
infrastructure', as 'soft infrastructure' - such as health and education --
is taking up a larger share of the budget. In 1972, social infrastructure
was just under 30 per cent of total government spending - it is now
60 per cent. He added that the private sector needed to take a larger
role in building infrastructure.
The use of the PPP model is therefore likely to become an enduring
mechanism for infrastructure investment in the coming decades.
According to Mr Lyon, "Wonthaggi was the world's largest PPP
since the GFC and the successful partnership between the Victorian
Government and the private sector showed the maturity and world
class skills operating in the Australian public and private sectors. The
taxpayers, protecting the state against cost and time blowouts.
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