In 2013, the Australian Government initiated an inquiry into ways to encourage private financing and funding for major infrastructure projects, including issues relating to the high cost and the long lead times associated with these projects.

Undertaken by the Productivity Commission, the inquiry considered costs, competitiveness and productivity in the provision of nationally significant economic infrastructure and examined ways to:

  • address any barriers to private sector financing, including assessing the role and efficacy of alternative infrastructure funding and financing mechanisms, and to recommend mechanisms and operating principles to overcome such barriers;
  • reduce infrastructure construction costs.

A draft report released by the Productivity Commission on the 13th March 2014 has identified an abundance of flaws, mythologies and forgone opportunities in infrastructure financing, funding and procurement.

The Commission draft outlines a proposed process for improving infrastructure investment across all levels of government; and as a consequence attracting increased private investment.

The Commission also proposes to examine further a number of potential improvements to financing mechanisms for infrastructure, including options proposed to address specific concerns related to the role of superannuation funds in greenfields projects.

The report specifically devotes thought to road user pricing, both the scope for institutional reform and the opportunities for future pricing of new and upgraded roads investment.

On infrastructure costs, the draft report finds these could be significantly reduced through the adoption of better practice procurement processes by governments.

The Commission is seeking written feedback on the draft report by 4 April, and will hold public hearings in early April. A final report will be provided to the Australian Government in late May 2014.

Further information can be found on the Productivity Commission’s website