Australian budget targets private infra investment

Australia’s federal budget for 2011-12 includes tax measures designed to attract more private investment into infrastructure projects. The changes are designed to address early-stage tax deductions becoming void after a change of ownership, and those deductions losing value over time due to inflation.

Australian treasurer Wayne Swan said the measures would remove barriers to investment in nationally significant public infrastructure by reducing the uncertainty that lengthy and complex projects can face.

The changes would see investors able to access tax losses when there was a change of ownership or in the business structure of the project. The value of any accumulated losses would be maintained by indexing them to the government bond rate.

The budget also sees the expansion of Infrastructure Australia, which plans and coordinates cross-border Australian infrastructure projects, with the provision of A$36 million (€27 million; $39 million) in extra funding over four years (an increase of almost 40 percent over current funding levels).  

In addition, it was announced that Infrastructure Australia is working on the establishment of a new Infrastructure Financing Group of public and private sector advisers which will identify further areas that need to be worked on around the private financing of infrastructure.

In a statement, Deloitte infrastructure tax partner Neil Ward said: “We are pleased to see the Federal Government recognising the importance of private sector investment in large scale public infrastructure projects. The new tax incentive, national construction schedule and Infrastructure Financing Group will provide significant encouragement to the private sector in Australia and overseas to invest in some of Australia’s strategic infrastructure projects.”

However, in the same statement, Ward said the decision to defer a feasibility study for the F3 to Sydney Orbital Link was a “missed opportunity” and “disappointing”. The study into the feasibility of the proposed road project – connecting the F3 and Sydney Orbital roads – would have cost A$150 million.