Industry Super Australia (ISA) has made a detailed submission on its inverted bid model to the Productivity Commission (PC) in response to the PC's inquiry draft report.
The inverted bid model recommends early equity involvement in infrastructure projects, not just early contractor involvement.
It argues the advantage gained from contractor involvement is more than offset by lack of involvement by the equity owner-operator in asset design, cost, service delivery and asset management, the cost and time consequence of multiple tenders and the lack of competitive tension steering design innovation.
The submission comes as the PC supported ISA's proposals for funding public infrastructure last month, saying it was worth considering along with other variants.
The inverted bid model is a "transparent and competitive process for the selection of private partners for the design, financing, construction, maintenance and/or operation of public infrastructure", ISA said in its submission.
ISA has also proposed a risk-sharing agreement with the long-term equity partner, including a bidding project internal rate of return (IRR) in the funding competition, which would be changed into an agreed revenue equivalent before the project starts.
This is so that equity investors do not receive fees of any kind and their return comes from the proper management of the asset over its lifetime.
ISA is due to give evidence to the PC inquiry on infrastructure today.
