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SELLING off Melbourne Water and Melbourne Port assets could provide an $8 billion cash injection for the State Government to reinvest in new infrastructure projects.
A report from ANZ has identified more than $112 billion of assets that could be sold by State and Federal governments to fund the nation’s next round of much needed infrastructure investment.
A cashed-up $1.75 trillion superannuation and wider private sector also claim to be ready to snap up any good existing Australian infrastructure that is put on the block.
This comes as the Abbott government releases a draft report from the Productivity Commission report into public infrastructure that urges an overhaul of the system to attract more private sector funds and generate better returns for taxpayer dollars.
The introduction of a user-pay system for motorists using roads, along the lines of systems now in place for trucks and heavy vehicles was one of the most contentious recommendations.
Prime Minister Tony Abbott said he supported “an element of user pays” for road funding, but hosed down suggestions the federal government would back the plan.
“I understand that there is some suggestion … about putting GPS into every car. That certainly is a novel suggestion by Australian standards and it’s not something that this Government is considering,” he said.
The next two years have been identified by political and business leaders as the key period to bring these assets to the market.
The Productivity Commission report to Assistant Infrastructure Minister Jamie Briggs however warns billions of taxpayer dollars had been wasted by governments on badly planned public infrastructure in the past.
The report highlights savings of at least $1 billion a year if better procedures are put in place. Private-sector funding however is not the “magic pudding” solution and will only deliver returns if implemented in a structured and fiscally disciplined manner.
ANZ’s global head of infrastructure David Byrne forecasts around $220 billion of new infrastructure needs to be built by 2020 — with the greatest focus on upgrading the ageing road and rail systems around the major cities.
“The timing appears right for a new wave of Australian infrastructure privatisations. Market demand for these assets is strong and there is an unequivocal desire to repair state balance sheets,” he said.
The key state owned assets in Victoria identified by ANZ as being ripe for sale are the $5 billion Melbourne Port — which both major parties agree should be sold after the state election — and Melbourne Water.
The water companies key assets such as pipes and treatment plants — seen as the most likely to put up for sale — are valued by the bank at around $3 billion.
The Melbourne Water company including the retail arm is valued at around $8 billion, according to market sources
Most of the other $112 billion in assets identified by ANZ as ripe for sale by 2020 are located in New South Wales and Queensland.
Industry Super Australia chief executive David Whiteley said the “sky is the limit” if the setting can be got right.
Public hearings will be held next month ahead of the release of the Productivity Commission’s final report in May.
This article first appeared on www.heraldsun.com.au
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