Adequate infrastructure investment is a challenge for Australia,
and as Linda
Evans tells BRR Media, superannuation funds could offer a
solution if the risk/return equation can be solved.
There have been some recent calls for superannuation funds to
ensure they have a lot of liquidity in those funds. One of the
challenges that presents for funds looking to invest in
infrastructure assets is that the nature of infrastructure assets
is that they are long-term assets, and the benefit from holding
those assets come from being able to get significant returns over a
long period of time.
During that ownership you have to invest to upgrade and to add
additional capacity and those are what are called lumpy
investments, so they'll add on much more capacity than you need
in the short term, so you really need to hold for a long term to
get the value coming from those investments. So the more liquidity
that you need in a superannuation fund, the less the level of
infrastructure investment because of those competing tensions.
That issue is complicated in Australia, particularly for retail
superannuation funds, because members can shift their money between
funds on very short notice, and that's a bit of a difference
from the position with the Canadian pension funds - in Canada, most
people are on defined benefit schemes so that the superannuation
fund can predict much more reliably when those funds are going to
Are there any other barriers to infrastructure investment and
how could this be improved?
Infrastructure Australia's done a really good job of
prioritising the projects that are put to it for it to consider,
but it doesn't have the ability to actually identify projects
of its own motion that it thinks would be appropriate for
investment, and I think that would be a really important
development. It would give Infrastructure Australia a broader role
and having an independent organisation like Infrastructure
Australia identifying priority projects would be particularly
The other issue that's really important is managing the
upfront utilisation risk. We've seen that be a very significant
issue for a number of projects recently and toll roads are the
classic example. We need to find a way to better manage that issue.
We've seen with WestConnex there have been some innovative
proposals that seem to be looking to address that and I think
governments should be encouraged to look to that kind of a
That sounds like a good idea Linda. Thank you so much for
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