Political interference 'stymies sales'

With federal and state governments looking to sell assets to fund a new round of infrastructure spending, a key government adviser has warned that poor regulation and political interference have resulted in many assets being unsaleable.

With federal and state governments looking to sell assets to fund a new round of infrastructure spending, a key government adviser has warned that poor regulation and political interference have resulted in many assets being unsaleable.

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.

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