Political interference 'stymies sales'
The lack of investment options in Australia has resulted in local superannuation funds controlling a large swath of the privatised British water industry, for example, but the poor state of the local water industry limits investment prospects here.
"The reason the water industry in Australia can't be sold is the regulatory regime instils no confidence, with state regulators, political interference to avoid price rises before elections [and] prices not set in an orderly manner," economist Kerry Schott told an Infrastructure Partnership conference on Friday.
"National regulation would open up the possibility of privatisation."
Dr Schott said there was a considerable number of assets similarly constrained from being sold. As a result, a new round of microeconomic reform was needed to unlock some of these assets and investment possibilities, she said.
Dr Schott is a former senior official with the NSW Treasury, was Sydney Water chief executive and is on the board of Infrastructure Australia and NBN Co. She is also a key adviser on the sale of NSW power generators.
Industry officials estimate there is upwards of $100 billion of state and federal government assets that could be privatised, which would free up funds needed to upgrade infrastructure.
The prospective slowdown of the national economy as resource sector spending declines over the next few years is putting pressure on government to look to new areas of spending to help the economy transition, experts told the conference.
Projects on the drawing board include the East-West Link in Melbourne and WestConnex and the M2 to F3 links in Sydney.
Frequently Asked Questions about this Article…
Many government assets in Australia are unsaleable due to poor regulation and political interference. These factors create a lack of confidence among potential investors, making it difficult to sell these assets.
Political interference, such as avoiding price rises before elections, disrupts the orderly setting of prices and undermines investor confidence, which in turn stymies the sale of government assets.
Regulation plays a crucial role in asset sales. In Australia, the current regulatory regime does not instill confidence, which limits the possibility of privatisation and makes assets unsaleable.
National regulation could open up the possibility of privatisation by creating a more consistent and reliable regulatory environment, which would boost investor confidence and facilitate asset sales.
Industry officials estimate that upwards of $100 billion could be raised from privatising state and federal government assets, which would provide funds needed for infrastructure upgrades.
The prospective slowdown of the national economy, particularly as resource sector spending declines, is putting pressure on the government to explore new areas of spending to help transition the economy.
Projects currently on the drawing board include the East-West Link in Melbourne, and the WestConnex and M2 to F3 links in Sydney, which are part of efforts to upgrade infrastructure.
Kerry Schott is a key government adviser on asset sales, with a background as a former senior official with the NSW Treasury and Sydney Water chief executive. She is also on the board of Infrastructure Australia and NBN Co.
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