Asset managers want the government to take a practical approach to infrastructure projects and not commit just to projects that are easy to sell to the electorate.
They want the government to create a pipeline of projects that are commercially viable, asset managers said at an Association of Superannuation Funds of Australia presentation yesterday.
"I think the challenges that we are faced with have nothing to do with finance; there is money around," Colonial First State Global Asset Management asset manager Mark Rogers said. "It is a whole bunch of other things: it is vision, it is public policy, it is regulation."
Rogers said that the current state of infrastructure in Australia could be represented by a number of buckets.
"You have a bucket wish list, which is essentially 101 things you need to build before you die. It's the big bucket, it is massive," he said.
"Infrastructure Australia and the State governments have done a good job filling that with ideas. [But] it is a wish list; it doesn't really translate into reality," he said.
"But at the other end of the scale we've got this other bucket. I like to call it the KFC bucket. It is a little bucket and effectively what you've got in this bucket is a whole bunch of deep-fried goodness."
"They are projects that have come to market that families love to dig into, that are politically palatable. They are things like the Inner West extension," he said.
But Rogers said the gap between the wish list of projects and the list of projects under way is too large to be workable.
"What we need is a laundry bucket. You need to have a bucket that sits in the middle of this. What we need is a roll-up-your-sleeves bucket," Rogers said.
Industry Funds Management global head of infrastructure Kyle Mangini agreed that funding is not the main problem facing infrastructure investments.
"There is plenty of money to invest in Australian infrastructure and if it is not done through superannuation funds it will be done by some of the Canadian funds, or sovereign wealth funds," he said.
"The question is not how we finance assets, but how we pay for assets. Whether it is tolls or privatisation, none of these are particular popular."
"That is the issue at hand: everybody wants to go to heaven, but no one wants to die," he said.
The government announced in the federal budget in May this year a package of tax provisions and investment incentives to support investment in infrastructure projects by superannuation funds, worth about $25 billion.
It also promised to establish an infrastructure financing group of private and public sector advisers to identify further areas for work around private financing of infrastructure.
These measures have been welcomed by the sector, but asset managers now want to see the creation of a workable pipeline to translate the plans into viable projects.
"Most of these projects have economic merit, but are they commercial viable?" Mercer partner Karen Chester said. "If they are not commercial viable then there is really not a role for superannuation fund to invest in them," she said.
