The establishment of a new infrastructure fund is one of the key points to come out of the tax reforms announced by the government yesterday.
The government said it would create the ongoing infrastructure fund on the back of a new 40 per cent super profits tax on mining companies.
The tax will be introduced from July 2012, at which point the government will create the fund and make annual contributions of $700 million from 2012/13 and $5.6 billion over the next decade.
“The infrastructure fund will help build the roads, rails, ports, electricity and water supply and other facilities needed to unlock Australia’s resource wealth,” Minister for Resources and Energy Martin Ferguson said.
The new fund expands on the government’s $22 billion investment in the nation’s infrastructure announced in the 2009/10 budget.
The government will consult closely with the states on the establishment of the infrastructure fund, Ferguson said.
UBS Australia chief economist Scott Haslem said the establishment of the fund should be positive for companies in the mining services, construction and infrastructure sectors.
“This clearly is an attempt by the Commonwealth to use some supernormal resource profits to be put back into the economy to build infrastructure over time,” Haslem said.
“Generally, it should improve the efficiency of the economy if we are building more infrastructure and it should be positive for companies in that space – being mining services, construction and infrastructure.”
AMP Capital Investors chief economist and head of investment strategy Shane Oliver said it made sense to use extra funding coming from the resource super profits tax to address Australia’s infrastructure needs.
“Ultimately it will benefit the mining companies,” Oliver said.
“Beyond the mining companies other beneficiaries will be construction and engineering companies, obviously because they are involved in the increased infrastructure spending, but also building material companies given increased demand for building materials.”
The Association of Superannuation Funds of Australia chief executive Pauline Vamos said securing infrastructure development is vital for the long-term productivity and growth of the Australian economy.
“The important thing about the infrastructure fund is that it will need to focus on new infrastructure,” Vamos said.
