The University of Sydney Business School has proposed that governments’ require superannuation funds to invest in infrastructure development in return for what it describes as the “generous” tax concessions currently enjoyed by the sector.
An Infrastructure Australia audit has found that the demand for public transport will nearly double while congestion on Australia’s roads could be costing the economy more than $ 53 billion a year by 2031 without massive new investment in transport infrastructure.
In a commentary titled “Infrastructure Financing: Following the Money”, the School’s highly respected Institute of Transport and Logistics Studies (ITLS) says long term retirement funds are a “good match” for the nation’s long term infrastructure needs.
“The shrinkage of the general tax base as a source of financing for infrastructure services has been accompanied, since 1992, by an increase in another form of compulsory and heavily incentivized savings, superannuation levies,” says the author of the commentary and the Chair of the ITLS Board of Advice, Dr Alastair Stone.
The commentary goes on to suggest that superfund investments in infrastructure projects could be protected via government guarantees while a user pays system of charges would provide funds with a return on investment.
“The application of the accepted user pays policies provides the money flow to service investors,” writes Dr Stone. “We also have the history of governments providing putative guarantees to financially faltering infrastructure projects that are seen to be critical.”
“So to a superannuation investor, a debt instrument to finance infrastructure projects within a designated regional economy, with government backing, would have to be pretty attractive,” he concludes.
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