Investing in infrastructure will soon be much more attractive to superannuation funds following the Budget announcement that many of the roadblocks will be removed.
The Government has said it will introduce tax provisions for infrastructure projects of national significance up to a cap of $25 billion and remove the continuity of ownership test and same business test.
It has also said it will uplift early stage losses by the government bond rate for select projects.
The Association of Superannuation Funds of Australia (ASFA) chief executive Pauline Vamos said these Budget announcements have the potential to establish a new model for the development of infrastructure in Australia.
“There is no doubt, to date, that there have been many roadblocks to the broader superannuation industry investing in infrastructure,” she said.
These have been the lack of an investment pipeline, a lack of consistency of process between States, sovereign risk and the expenses involved in preparing bids, Vamos said.
Financial Services Council chief executive John Brogden said the amendments to the change of ownership tests would remove a tax anomaly and recognise that infrastructure projects are long-term investments.
Mercer’s managing director and market leader David Anderson welcomed the increased transparency around financing infrastructure projects, but added he would like to see additional measures to attract further private sector participation.
Industry Funds Management, which manages $9 billion in the infrastructure sector, also welcomed the announcement, stating the tax concessions would help attract the large pool of capital from superannuation funds.
Global head of infrastructure Kyle Mangini said the challenge for governments ahead would be to bring more investment opportunities to the market given the capital available, the investor interest and the imperative of the country to enhance its infrastructure.
