Turf wars within the Turnbull government have sidelined Infrastructure Australia and weakened the nation's project pipeline, says shadow infrastructure minister Anthony Albanese, despite industry participants welcoming the creation of a new financing agency.
"It's absurd that you have two ministers and a renamed parliamentary secretary here yesterday – who's in charge? No one," Mr Albanese told The Australian Financial Review National Infrastructure Summit in Sydney on Thursday.
Infrastructure Minister Darren Chester, Urban Infrastructure Minister Paul Fletcher and Assistant Cities Minister Angus Taylor all addressed the summit on Wednesday.
The creation of an Infrastructure and Project Financing Agency (IPFA) in the Department of Prime Minster and Cabinet, separated both from Infrastructure Australia and the Department of Infrastructure, was a "diabolical idea," Mr Albanese said.
Labor has pledged to scrap the IPFA if elected and use the money to re-establish a "major cities unit" in Infrastructure Australia.
Mr Taylor on Thursday defended the IPFA, saying the government needed people who knew how to attract more capital into infrastructure.
"There is a wall of money wanting to get into transport infrastructure projects. What we don't have is projects being structured in a clever way by the federal government to attract that.
"We have not, in this country, invested in public transport infrastructure with private sector finance on the scale that is necessary now to get these sorts of projects up. We need private sector capital coming in.
"To be a financier – which we have to be – without having financial skills and capacity is mad. That's what Albo is proposing. He says economists are going to be investors. I love economists – that's my background – but they're not investors.
"We need people who know how to attract capital, how to structure projects to attract capital at a pace and on a scale that we have never done before."
Mr Albanese argues that under the former Labor government, Infrastructure Australia had helped develop projects with the private sector, including the Gold Coast light rail system, G:link, but that the Turnbull government had cleared its board of "dangerous radicals" such as businessman Rod Eddington, Moorebank Intermodal Company chairman Kerry Schott and IFM Investors chairman Garry Weaven.
Dr Schott told the summit on Thursday it was a "curious decision" to put the new financing unit in the Department of Prime Minister and Cabinet rather than in Infrastructure Australia.
"When you're designing a project at the government level – and I can talk about this from my Moorebank experience – you really do need to work out what the government financing role is within a project like that, but that's something that is probably better done at the Infrastructure Australia level with the projects that are on their list and have got the tick," Dr Schott said.
Paul Oppenheim, chief executive of infrastructure developer Plenary, said the group was "open-minded" about the IPFA and encouraged the federal government to consult on how to best focus the agency.
"Use it to provide capital that is otherwise unavailable," he said. "For example, very long-term patient capital that will take growth-orientated risks for sub-market returns. Any resulting acceleration of infrastructure delivery can only be a good thing."
Garry Bowditch, executive director with the University of Sydney's John Grill Centre for project leadership, said the establishment of the IPFA was a sign that Infrastructure Australia's focus on project risk had been "underwhelming".
"The idea of just dropping money on a project and then leaving it has left us with projects which are really not relevant to what Australia needs."
The IPFA would be useful if it made the government scrutinise the long-term performance of infrastructure assets more closely, but it should be located in Treasury or the Department of Finance, Mr Bowditch said.
"The risk of off balance sheet liabilities associated with the financing of infrastructure projects needs to be heavily scrutinised by those who have the expertise, which is not in the Department of Prime Minister and Cabinet.
"I think the industry has got too used to having lazy cash given to them without the accountabilities of performing."
Steve Lambert, executive general manager of capital financing at NAB, said the new unit would not be useful if it undertook only projects that could be done by the private sector.
"Our first question of the agency is how does it work with Infrastructure Australia and where are the skills and also how does it work with the states?"
The new agency was not likely to increase the price of private sector debt, but it would make it harder for the private sector to get the volumes of deals they would like, Mr Lambert said. There was no problem getting financing or funding for infrastructure projects, he added. "We see a lot of interest not just from domestic banks and fund managers but also from overseas investors in quality projects.
"The challenge is always around quality projects, trying to find them – there's a lot of competition in the market."
