Budget changes won’t spark infrastructure investment

Infrastructure manager Minerva Advisory has pouredcold water on recent tax incentives to make it easier for infrastructureinvestment in Australia, saying the Government needed to fundamentally changethe structure of underlying investment.

Speaking at a BNP Paribas Investment Partnersand Antin Infrastructure breakfast in Melbourne, managing director of MinervaLee Burnell said the tax incentives announced in the last budget were notenough to encourage investors to invest more in core infrastructure.

“There are not enough deals available to satisfythe domestic appetite for infrastructure, and I think importantly, theredoesn’t seem to be a solution bridging the gap,” Burnell said.

Heavy investment was needed in greenfieldinfrastructure, but offering tax incentives did nothing about the problems oflack of operating history, construction risk, and the lack of early revenue, hesaid.

While the biggest super funds in Australia werecapable of funding infrastructure projects because of their sheer size, smallerfunds and institutional players were unable to secure exclusivity in aninfrastructure project because of the scarcity of smaller deals available,Burnell said.

That made it likely that participants wouldincur breaking deal costs, he said.

That was a real problem for both investors andfund managers, Burnell added.