Powered by MOMENTUM MEDIA
investor daily logo

Underfunded infrastructure hurting growth: academic

  •  
By Miranda Brownlee
  •  
2 minute read

“Major underinvestment” in essential transport infrastructure has led to a yearly decline in Australia’s national productivity growth rate, according to the ADC Forum.

Professor John Stanley, chair of the forum, a non-profit think tank, said investment in transport infrastructure has fallen behind by $250 billion since the mid-1980s, which has led to a decline of between 0.2 and 0.5 per cent in productivity growth. 

“As a nation, we have failed in the area of infrastructure over many years,” said Mr Stanley. “It is important for us to come together to tackle the issue and recapture our lost potential.”

Australia needs innovative and new approaches to the way infrastructure is funded, he said.

==
==

IFM Investors' global head of infrastructure debt, Robin Miller, also said infrastructure investment is tied with productivity, as reported by InvestorDaily in December 2013. 

Using infrastructure debt funding for the development of infrastructure will improve the “economic capacity and productivity of the nation”, he said. 

Mr Miller added, however, that domestic infrastructure debt was being hindered by the liquidity needs of the super system, a patchy asset supply and a weak relative value imperative.

In October last year, the Association of Superannuation Funds of Australia's director for investments and economy, Gordon Noble, said he also believes the biggest challenge for superannuation funds in terms of infrastructure debt is liquidity, especially since the “ability of superannuation funds to hold illiquid assets is only going in one direction”. 

In the past, there has also been a shortage of well-structured deals within Australia, he added. 

Speaking at a Centre for Independent Studies luncheon in November 2013, Treasurer Joe Hockey said the government will not have the capacity to fund all of Australia’s infrastructure requirements.

 “Australia must find ways to encourage and facilitate more private sector investment in infrastructure in order to address our infrastructure needs,” he said. 

“Ultimately, we have to have a medium- to long-term infrastructure plan to stimulate economic growth, [and] to give job stability and certainty to address the challenge of rising unemployment.”

Underfunded infrastructure hurting growth: academic

“Major underinvestment” in essential transport infrastructure has led to a yearly decline in Australia’s national productivity growth rate, according to the ADC Forum.

investordaily image
investordaily image
ID logo

Comments powered by CComment