Fed: Global crisis puts squeeze on major projects

AAP General News (Australia)
04-28-2009
Fed: Global crisis puts squeeze on major projects

By Angela Harper

BRISBANE, April 28 AAP - The global financial crisis has taken the gloss off the prime
minister's Building Australia Fund, with an injection of state and private money now needed,
a forum has heard.

The Building Australia Fund is being used to fund a priority list of infrastructure
projects short-listed by Infrastructure Australia.

Infrastructure Australia chair Sir Rod Eddington told a forum in Brisbane the initial
budget of $20 billion was not enough to fund their wish list.

But even the $20 billion was based on $12.5 billion in the bank and $7.5 billion from
future budget surpluses and times had changed.

"That was where we were when this was set up, but the global financial crisis has clearly
changed the second bit ($7.5 billion)," he told the Committee for the Economic Development
of Australia forum.

"The bottom line is that of the $12.5 (billion) we have from the Building Australia
fund, we would almost certainly ... put $4.5 into the broadband fund."

Sir Rod's team put forward a short list of recommendations in March that the government
was yet to approve, but he thought the approved projects would be released with the federal
budget in May.

"Clearly, the funding that we have for the list we put forward won't get us to where
we want to go," he said.

"I never thought that it would, to be frank."

He said it would be up to the states to try to match funding to get projects off the
ground and there would also be a role for the private sector.

"So, then, there's a question of what matching funding can the states provide, what
role will the government want the private sector to have in this and what subsequent funds
will the federal government be able to commit to the Building Australia Fund," he said.

"Because of the global financial crisis we know finance is being squeezed."

Sir Rod told the forum that if public infrastructure didn't work properly then there
was no option but to privatise as cities couldn't work properly.

"Our job in Infrastructure Australia is to support the private sector ... there are
some real challenges if we want the private sector to step forward and fund and support
the infrastructure that is so essential to our economy and community," he said.

"We need to find a way to engage the private sector above and beyond what we have in place."

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