Part 3

It seems to be assumed that large scale infrastructure projects with long payback periods can only be funded by government. However, this is not necessarily the case. Imagine if a very large listed infrastructure trust were to be created. State and Federal government could sell their mature infrastructure assets to the listed trust in return for paper which they could sell into the market to meet their funding requirements. Assets could be sold at appropriate values. Assets would be grouped according to type (power stations, ports, airports, bridges, toll roads, buildings etc) and 5 year management contracts would be let to tender by appropriately qualified groups - the Lend Leases and Leightons - who would manage each asset group in accordance with national objectives. Assets that have outlived their usefulness would be sold by the managers in accordance with responsible guidelines.

There are huge amounts of equity capital sitting unused on the sidelines right now, in super funds, investment institutions and in private hands. This capital would eagerly seek to invest in a, say, $500 billion or $1000 billion listed infrastructure fund comprised of mature assets delivering market returns. The infrastructure fund could support a bond market to offer secure returns to investors interested in such instruments.

Most importantly, the fund could invest in long term long payback investments using the financing capacity of the fund to invest at the margin. For example, if the fund were of, say, $1000 billion in size, it would be relatively easy for it to invest, say, $50 billion per year in long term infrastructure assets such as a gas pipeline from the NW shelf or similar assets

Part 4

It is notable that many, if not most, of the major infrastructure assets of the past were funded by government. Setting up a fund of the type proposed here would allow harvesting of the assets of the past to fund the assets of the future. It would address the need for long term planning. It would provide a means of financing new assets. It would ensure capable and effective management of assets. It would avoid the risk of monopoly exploitation. And it would do all this through accessing private capital, sheltering governments from the need to get involved in financing.

It would also help solve the funding problems of state governments in that they could access value locked up in their asset portfolios.

No doubt those wiser than me will see many reasons why such a fund should not, or could not, work. My view though is that the idea deserves at least some consideration.

Greig, Michael of Adelaide is right, growth is over.
The game changed last year.
All effort should now be on infrastructure that will be more energy
efficient. We should stop all export of energy and use what we have
to prepare for the coming difficult times.
Greig, I think you belong to the "Business as Usual" group such as
politicians who still cannot say the words Peak Oil.
It happened last year around May, June.

Want a hint ? start plotting GDP, the ASX and the price of oil from 2007.
When you see the price of oil shoot up put your money & any
investments into gold and store in your mattress. I am only half joking.