Text size Follow us on Twitter Find us on Facebook

Fancy government financing could still cost the taxpayer

The Grattan Institute's Marion Terrill writes in The Conversation (1.6.17) that the federal government keeps coming up with new ways to finance infrastructure, but it isn't clear they will shift the cost or risk away from government.

'No sooner is one complicated financing idea from the government batted down, than another one pops up. We can expect more of them, now that the federal budget has established a new Infrastructure and Project Financing Agency.

'We’ll get “innovative” financing options for everything from the massive Inland Rail project, down to a bond aggregator to finance community housing. The idea is that we get new public assets, but the money spent is rather marvellously “off balance sheet”.

'The problem is these financing schemes are not very good at meeting the government’s stated aims of minimising the public subsidy for public infrastructure and transferring risk effectively.

'... In the end, the government’s own principles are clear, and they should be followed: project financing should minimise the level of public subsidy needed to deliver the project; and where risk is borne by the private sector, it should be transparently priced and deliver clear value for money for the taxpayer.

'So let’s hear more detail about these government guarantees – the promises that bind future governments, whether it’s with Inland Rail, “bond aggregators” or tax increment financing, or the next “innovative” financing idea that pops up.'


Previous : Next


© 2022 The T J Ryan Foundation

TJ RYAN FOUNDATION LIMITED ACN: 165152625 ABN: 78 165 152 625 info@tjryanfoundation.org.au
Registered office: SOUTH BRISBANE QLD 4101 Regulator: Australian Securities & Investments Commission