Home' Future Building: The Australian Infrastructure Review : December 2010 Contents 74 futurebuilding DECEMBER 2010
Chris Lynch pointed out the unsustainable nature of the
quarter-acre block, and the need for better planning. The panellists
all stressed the importance of increasing the density of urban
environments and extracting greater effciencies from existing
The panel also endorsed the proposition that private sector
involvement is critical to getting infrastructure off the ground, as well
as boosting productivity. The point was made that superannuation
and pension funds also need to be tapped for their investment
potential in infrastructure, particularly mature infrastructure, which
governments should be looking to divest so they can re-invest in
new infrastructure. The group also emphasised the importance of
using existing infrastructure as effciently as possible.
In a well-received and detailed presentation, Stockland
Managing Director, Matthew Quinn, quickly weighed in on the
population debate, cautioning against limiting immigration, urging
policymakers to instead focus on delivering better functioning
infrastructure and improving housing supply, rather than trying to
cap population growth. A strong vision for Australia was also one of
his key concerns. 'What are we going to look like?' he repeatedly
asked his audience.
Quinn told attendees in no uncertain terms that alleged national
'overcrowding' is 'a complete and utter nonsense,' indicating that
denser cities and better planning would accommodate population
Quinn predicted that Australia's population will climb to more
than 32 million by 2050, even if immigration numbers decrease.
Even so, systemic undersupply of housing runs the risk of pushing
up property prices, thereby eroding the country's position as a
desirable destination for potential immigrants.
Quinn added that by the end of the decade, Australia's housing
market will be in defcit by 800,000 dwellings, and that smaller
houses may be a solution. He pointed out that Australians are
accustomed to living spaces that are, on average, 83 square metres
per person, compared with 32 square metres in the UK, and that
planning laws need to include smaller plots to increase density and
meet growing demand for more modest homes as consumers curb
spending and repay debt.
The immigration debate's erroneous focus on boat people has
meant that a proper discussion about the benefts delivered by a
growing population is being lost. Quinn added that people need to
understand that without immigration, only 1.9 workers will support
each retiree by 2050, down from fve in 2010. If current levels of
immigration continue, the number will be approximately 2.7.
The next speaker was Michael Carapiet, Executive Chairman
of Macquarie Capital and Macquarie Securities, who provided
delegates with a comprehensive overview of the current
infrastructure market from a demand, funding, and risk return
perspective. The bottom line was that sustaining Australia's growth
would require a $500 billion investment over the next decade.
Carapiet said that although the Federal Government is 'trying
hard' and currently funding $20 billion of the required $50 billion
per annum investment, there is still a signifcant funding gap,
leaving a big role for the private sector to play. He argued that there
was a wealth of private sector capital available with an appetite for
Carapiet told the sector's leaders that globally, US$18.4 billion
had recently been committed for the infrastructure sector, that
there was US$40 billion in available capital across the top 20
infrastructure fund managers, and that Australian superannuation
funds were currently holding some A$1.3 trillion. Superannuation
funds currently invest about fve per cent in infrastructure, but
research indicates that if that fgure were to increase to 15 per
cent by 2020, there would be a further $240 billion in potential
He urged policymakers and industry to continue to work
to enhance the attractiveness of the asset class, if this wealth of
available capital is to be tapped.
Carapiet noted that debt market conditions are improving
and lender appetite is returning, with the margins back to what
is considered the ‘new normal’ post-GFC. In terms of attracting
private investment, he struck a note of caution, reminding Australian
governments that they are operating in a global environment where
there are multiple opportunities for investors, so deal certainty,
contract structure and risk allocation is of critical importance.
Despite poor economic conditions in Europe and the USA,
Carapiet presented case studies showing that PPP deals are still
being undertaken in those regions.
Above left to right:
The Hon Anthony Albanese, Federal Minister for Infrastructure
John Dorrian, RREEF
Tony Shepherd, Transfeld Services
Quinn told attendees in no uncertain terms that
alleged national 'overcrowding' is 'a complete and
' indicating that denser cities and better
planning would accommodate population growth.
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