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good track record of both delivery and raising capital
in the markets.
MB: In conclusion, Nick, you've mentioned
before that we've got a consensus, but we need
to make sure others hear it. One of the issues is
recycling capital, selling existing assets and using the
revenue to create new assets. A classic example is the
Queensland Government selling the Golden Casket
lottery and using that money for infrastructure. It was
well received, it was logical and it was overdue. The
public is still hesitant, or needs better education on
the value of recycling capital. What are some tips?
NG: I've got no tips at all. I have failed to persuade
the body politic in New South Wales.
I do think you have to start from the outcomes,
both in market and consumer terms, and in
infrastructure user terms. I don't think we've done
that very well in talking about the impact of changes
in the electricity market -- the sale of assets in New
South Wales and Queensland in terms of future
electricity price pressure and in terms of capacity to
create some balance sheet space.
You do have to start with the bene ts to the
consumer. We tend to say a bit from our point of view
that it's good for productivity. Productivity sounds
like more work for less pay to the average punter. I
think the word productivity is not well developed in
a public sense.
The reality is, of course, that vested interests,
particularly the unions in the case of electricity assets,
are very determined, more for philosophical and
emotional reasons than practical reasons, because I
think they have very little to lose.
I think you need to go to the consumer bene t
and work back, rather than starting from the industry
broadly de ned and working forward, which is what
we tend to do.
MB: James, your notion behind the privatisation
effort: is the sting out of the debate yet?
JS: The advantage in the United Kingdom is that
you only get your capital receipt once, and it's right
at the beginning. We are 20 years past the capital
receipt, so no one talks about the issue of capital
receipts when talking about privatisations in the
To me, the thing that bedevils infrastructure
investment when it's funded within the public sector
is political cycles and political changes of mind, and
the short-term thinking that comes with that and the
fact that capital budgets are set for a maximum of
What we have to do is create long-term funding
cash ows for infrastructure, which allow people
to plan over the long term. And that is incredibly
dif cult in a publicly funded environment, but much
easier within a privatised, regulated utility structure.
For example, the British water industry has
delivered £80 billion of investment over the last 20
years: a consistent £4 billion a year. The main debate
we are having now is about the impact that the ve-
year regulatory reviews have on the investment cycle.
Reforms are being looked at to smooth out the
investment curve within the regulated utilities, and to
avoid the mobilising and demobilising of the supply
industry around the regulatory reviews and the
inef ciencies that this creates.
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