Home' Future Building: The Australian Infrastructure Review : December 2010 Contents 68 futurebuilding DECEMBER 2010
Transforming Australia: An address to the National Press Club
to slash carbon emissions by 20 per cent,
reduce average journey times in the order of
40 to 60 per cent, and increase the uptake
and sustainability of public transport.
These foreign road charging schemes
show what can be achieved. Australia has
the opportunity to watch closely and learn
from the debate about these schemes, while
we consider their application here.
Of course there are challenges to
implementing this kind of model, because
in many cases there simply isn’t suffcient
capacity on public transport, but a move
to a national system of road pricing should
be viewed as a medium-term option –
and governments would need to get the
alternatives in place frst.
Transport pricing reform does require
careful consideration in terms of equity and
fairness. And these kinds of reforms would
best be achieved with a degree of consensus
between policymakers about the outcomes
that are sought.
Everyone agrees that reforms to transport
pricing require careful and seasoned debate.
But that debate must be started.
Unlocking superannuation and private
The second theme I want to explore
today is the role that superannuation and
private investment must play in bridging
the gap between fnite government balance
sheets -- and the infrastructure demanded
by a developing economy and growing
Cracking the nut on infrastructure
funding will deliver signifcant national
The link between productivity gains and
economic infrastructure investment is well
established and clearly understood.
Put simply, Australia will be unable
to meet its national economic and social
objectives unless superannuation begins to
play a bigger role in infrastructure.
Of course, the apparent symmetry
between national retirement savings and
the backlog of infrastructure projects has
long been a focus, but the right structure
has eluded Australia's policymakers.
The national benefts from fnally
creating a substantial and sustained
link between Australia's $1.3 trillion in
superannuation and nationally signifcant
infrastructure would be substantial.
The Allianz Global Report forecast that
Australia's superannuation will remain the
largest pension market in Asia to 2015, and
Rice Warner estimates that the total pool of
savings within the Australian superannuation
market will reach $3.2 trillion dollars
by 2022 under current policy settings,
before the recent boost in superannuation
contributions is brought to account.
A number of notable leaders in the
superannuation sector -- including Industry
Funds Management, AMP Capital Investors,
Macquarie, RREEF and Hastings Funds
Management amongst others -- have led
infrastructure investment by Australian
superannuation funds to levels currently
estimated at between $40 billion and $65
But despite the leadership of these
fund managers, the average Australian
superannuation fund allocates 29 per cent
of its portfolio to Australian shares and
11 per cent to Australian fxed interest
products, but only fve or six per cent to
Increased superannuation investment
would play an important role in securing
national competitiveness and productivity,
as well as providing a stable investment
class to beneft superannuants.
If funds lifted their infrastructure
allocations to the commonly held upper
limits of fund value, for instance 15 per
cent, a further $240 billion could be made
available to the infrastructure sector over
the coming 13 years -- approximately $18
billion per annum.
[In October], the National Australia
Bank's Deputy Chief Executive, Michael
Ulmer, urged super funds to lift their
commitments, noting that retail banks don't
have the capacity to fund the call for private
Mr Ulmer said, 'Australia is sitting on
$1.3 trillion in superannuation savings
– a fgure set to grow dramatically if the
proposed superannuation guarantee rises
from nine to 12 per cent.'
So what needs to happen to create
this perfect match of superannuation and
The reality is that many things need
to change, but they all start with the basic
premise that if there are more projects for
will be unable
to meet its
begins to play
a bigger role in
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