Regulatory reform the top priority: Eddington

INFRASTRUCTURE expert and News Corp director Sir Rod Eddington has said senior business leaders in Australia believe the costs of doing business are rising and industrial relations uncertainty is holding them back.

By InvestSMART · 23 May 2012

By InvestSMART ·
23 May 2012

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"If you listen to people like chief executives, this is people like Jac Nasser, the chairman of BHP ... they're pretty clear: it's more expensive to get things done, the industrial relations uncertainty is real," Sir Rod, chairman of the federal government advisory body Infrastructure Australia, said yesterday.

Sir Rod said regulatory reform was essential to boost Australia's short- to medium-term productivity.

"If you talk to people in the space ... they'll tell you the things that worry them are duplication of the environmental assessment process between the federal and the state government ... higher bid costs and disproportionately complicated bidding processes," he told an Australian British Chamber of Commerce lunch.

"They'll talk about some of the challenges they feel in industrial relations ... and the way they believe that's a step backwards. They'll talk about regulation as it relates to 'green tape', as opposed to red tape.

"My point is that if you want real short-term productivity improvements, it's regulatory reform."

The Infrastructure Partnerships Australia chairman, Mark Birrell, also stepped up calls for small Australian super funds to merge in order to gain the funds and expertise to invest in infrastructure, noting that sovereign wealth funds and offshore pension funds recently snapped up the Melbourne toll road operator ConnectEast.

"Two-thirds of [Australian] superannuation funds have no investment in infrastructure they'll have investments in real estate, hotels and things like that but not infrastructure," Mr Birrell said.

"And one of the reasons for that is that many of those funds are too small to have the internal skills to be able to research.

"We need amalgamation of super funds so they have greater scale, they'll have greater reach in terms of dealing with high quality assets."

Sir Rod and Mr Birrell were upbeat on the prospects for Australia's education sector, Mr Birrell tipping it could leapfrog iron ore and coal to become Australia's top export earner within decades.

"Putting infrastructure money into universities I think is an absolute no-brainer," he said.

Sir Rod also drew attention to the work of the infrastructure finance working group set up by the government to find better ways to get private sector capital into infrastructure projects. "You can't just hope that someone's going to come along and sprinkle pixie dust and things will happen," he said. "We need the right investment vehicles, the right constructs to ensure capital flow."

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Frequently Asked Questions about this Article…

Why is regulatory reform being called Australia’s top priority for improving productivity?

Sir Rod Eddington and other business leaders say regulatory reform is the quickest way to lift short- to medium-term productivity. They point to costly duplication—such as overlapping federal and state environmental assessments—and complicated bidding processes that push up bid costs and slow projects down.

How does industrial relations uncertainty affect the cost of doing business in Australia?

According to Sir Rod, senior executives (including figures like Jac Nasser of BHP) report that industrial relations uncertainty makes it more expensive to get projects done and is holding investment back. That uncertainty can increase project costs and discourage private sector participation in infrastructure.

What do people mean by 'green tape' versus 'red tape' and how can that impact infrastructure projects?

'Green tape' refers to environmental and related regulations; 'red tape' is general bureaucratic burden. The article highlights concerns that duplication of environmental assessment processes between federal and state governments and overly complex rules (green or red tape) increase costs and slow infrastructure bidding and delivery.

Why are experts urging small Australian superannuation funds to merge for infrastructure investment?

Mark Birrell notes many small super funds lack the scale and internal skills to research and manage infrastructure investments—two‑thirds reportedly have no direct infrastructure holdings. Merging would give funds greater scale, expertise and reach to access high‑quality infrastructure assets.

How have overseas investors shown interest in Australian infrastructure?

The article cites the sale of Melbourne toll road operator ConnectEast to sovereign wealth and offshore pension funds as an example of strong overseas appetite for Australian infrastructure assets, illustrating competition for such opportunities when local funds lack scale.

Could Australia’s education sector become a major export opportunity for investors?

Both Sir Rod and Mark Birrell expressed optimism about education, with Birrell suggesting it could overtake iron ore and coal to become a top export earner within decades. They argue that directing infrastructure money into universities and education facilities makes strategic sense for long‑term growth.

What is being done to attract private capital into Australian infrastructure projects?

The government set up an infrastructure finance working group to explore better ways of getting private capital into projects. Sir Rod says the focus should be on creating the right investment vehicles and constructs so capital will flow, rather than hoping investors will simply turn up.

As an everyday investor, what should I watch for regarding regulatory reform and infrastructure opportunities?

Pay attention to policy moves on regulatory reform and industrial relations, as these can affect project costs and timelines. Watch consolidation trends among super funds (which can change who invests in infrastructure), sales of large assets like ConnectEast to overseas buyers, and initiatives from the infrastructure finance working group that may create new private‑investment vehicles.