17 June 2017
Speech - #2017016, 2017

Address to the Asian Infrastructure Investment Bank

Finance and Capital Roundtable
Jeju, South Korea

**CHECK AGAINST DELIVERY**

  • Thank you Chair (Dr Joachim Von Amsberg, Vice-President, Policy and Strategy, AIIB)
  • Governments often lack the capital to invest in infrastructure and are concerned, understandably and rightly, about rising public debt. 
  • The World Economic Forum estimates the gap between infrastructure demand and investment is about US$1 trillion globally. 
  • That is why good governance, bankable projects and vision by governments and organisations including the AIIB, are key to reducing this gap. 
  • I spoke earlier today regarding Australia's innovative asset regarding program.
  • Under an asset-recycling scheme, governments lease existing infrastructure assets to private companies and invest the proceeds in new infrastructure priorities. How can the AIIB leverage off this in other places, in developing countries?
  • In 2013-14, the Australian Government began a $5 billion incentive program giving state governments an additional 15 per cent of the capital recycled from existing, some might say ageing, assets and reinvested in new projects. 
  • In the three years to 2016, New South Wales leased about $15 billion of infrastructure assets to private investors and allocated about $6 million to new infrastructure, without raising additional public debt.
  • Infrastructure asset recycling manages to fund new projects by addressing the mismatch between government infrastructure promises and the objective of private investors.
  • NSW created an independent agency to oversee its asset-recycling program.
  • The agency is staffed by people with private sector experience - that is, I feel, critical to its success.
  • Senior public figured are on board to guarantee independence.
  • Consequently, the asset-recycling program has received high prices for government assets and new projects have been prioritised based on cost and need.
  • The result ... NSW, after years of debt, now has 672 major infrastructure projects on the go including schools, hospitals and roads - and is now in surplus and Australia's leading state as far as economic growth is concerned.
  • I'd be happy to talk further with any Governors about this and how it could help them if anyone wishes to discuss it further.
  • Thank you.