Super bodies welcome PC infrastructure report
Proposals from Industry Super Australia (ISA) for funding public infrastructure have gained a nod from the Productivity Commission (PC) as, along with other variants, being worthy of consideration.
The nod towards the ISA proposal is contained in the Productivity Commission's interim report on public infrastructure funding delivered to the Government yesterday which, while noting the enthusiasm of the finance community for funding infrastructure projects, cautions that private financing is "not a magic pudding".
"Nevertheless, some interesting proposals were floated by participants. Most notably, Industry Super Australia has proposed an inverted bid model for equity-raising, based on bidding an equity rate of return for a project," the Commission said. "This model, along with potential variants raised by the Commission, as well as other preferred bidder models, might be worthy of further consideration."
Both the ISA and the Association of Superannuation Funds of Australia (ASFA) welcomed the assessment contained in the PC report, with the ISA chief executive, David Whiteley, claiming that while it was already beyond doubt that superannuation was building Australia, "this report reinforces just how much more can be done if policy makers can finally get it right".
"ISA has long claimed that better connecting our superannuation savings pool with critical national infrastructure is the breakthrough we need, and the PC reinforces that in this important report," he said.
The ASFA gave a more measured assessment, saying it was encouraging to see that the Commission was interested in addressing the impediments to such investment.
"Facilitating investment will require an innovative approach, particularly when it comes to developing debt instruments for infrastructure investment that deliver good outcomes for superannuation fund members," it said.
"International examples demonstrate that it is possible to stimulate capital markets through financial innovation, which is why ASFA said it urges the Government to use the upcoming Federal Budget to explain its thinking on the development of a project finance market. Such a market would help facilitate superannuation fund investment in infrastructure," ASFA said.
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