DCD WKP(2014)2 ADD PROV.pdf

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Table 1. Australia’s Institutions and Instruments on Support to Private Investment in Infrastructure

Role in Promoting Private Investment for
Developing Country Infrastructure



Primarily supports the improvement of the
enabling environment for private sector
investment in infrastructure, with a focus on Asia
and PICs in particular



Supports investments by Australian companies
in developing country infrastructure, if it is part of
the export supply chain




Comparative Advantage
Australia, together with the United Kingdom, is the most active user of PPPs among OECD countries for
financing and operating its domestic infrastructure, particularly in the transport and energy sectors. Dedicated PPP
units at both the state/province level and the federal level are in place to promote PPPs. At the domestic level,
Australia’s dedicated PPP units place strong emphasis on capacity building for local administrations involved in
PPPs. This is mirrored in its focus on supporting the enabling environment for private infrastructure in developing
countries through technical assistance. Australia views this extensive domestic experience with preparing and
managing PPPs as its comparative advantage in promoting them in Asian countries.
Furthermore, Australian long-term institutional investors, such as pension funds, have been investing in
infrastructure since the 1990s. Together with Canadian institutions, Australia has the highest allocations from
institutional investors to infrastructure in the world. Over half of Australian long-term institutional investment is in
domestic infrastructure, enabled by the mature PPP market, a lack of restrictive regulations, and a stable political
environment. Australian investors tend to outsource to open-ended infrastructure funds rather than invest directly, as
well as prefer to invest in privatised assets. More recently, Australian long-term investors have been increasingly
looking to invest in emerging economies. In this context, DFAT’s work on improving the enabling environment for
private investment in infrastructure in developing countries becomes crucial from the investors’ perspective.
Throughout its G20 presidency, Australia plans to prioritise the promotion of private investment for
infrastructure, including for developing countries. This will include an examination of what is needed to improve (1)
investment environments, (2) financial intermediation of savings to productive investments, (3) planning and
prioritisation of investment projects, (4) risk-sharing arrangements between the public and private sectors (through
PPPs), (5) efficiency and effectiveness of existing multilateral development banks and public resources; and (6) the
role of multilateral development banks in catalysing private finance, including possible innovative funding
mechanisms. Within the G20, there is co-operation with the OECD on the Institutional Investors and Long-Term
Investment Project, which aims to encourage infrastructure investment by long-term investors such as pension funds
and sovereign wealth funds. Such investors offer the potential of delivering a larger and more diversified source of
infrastructure financing. The relevant OECD-G20 taskforce will focus on the implementation of the G20-OECD
High-Level Principles of Long-Term Investment Financing by Institutional Investors, which cover a broad set of
factors that influence the institutional investors’ willingness to invest.
Co-operation with Other Actors
In its policy on private sector development for developing countries, Australia stresses the importance of
co-operating with other actors. A substantial number of its projects aimed at improving the enabling environment for
private investment have been co-financed with multilateral agencies such as the Asian Development Bank (AsDB)
and the International Finance Corporation (IFC).