Tony Abbott’s announcement of coalition policy to raise $20 billion in funding for infrastructure projects through a public bond issue has the support of the Housing Industry Association.
The Coalition plans to have the Office of Financial Management examine an ‘Infrastructure Partnership Bonds Scheme’, which will see upwards of $20 billion raised from Australians through the issuing of bonds with lucrative returns and tax advantages. This is seen as helping fill the “$700 billion infrastructure deficit” the Liberal party claims Australia faces.
The Housing Industry Association has come out in support of Mr Abbott’s plan, with the plan a reflection on of conclusions on the Urban Infrastructure Summit the HIA held last week according to HIA Chief Executive, Association, Mr Graham Wolfe.
“Infrastructure bonds issued under an appropriate framework offer a viable method of funding the much needed investment Australia requires, a point HIA emphasised at the conclusion of its Urban Infrastructure Summit held last week,”he said. “The need for alternative funding options extends beyond just large scale projects that are on Infrastructure Australia’s radar”
HIA’s MR Wolfe believes the infrastructure bonds proposed by Mr Abbott need to extend to support residential development, not just infrastructure, with the current user pay system inequitable.
“The funding of urban infrastructure for residential development also requires urgent attention to move Australia away from the current highly inequitable ‘user pays’ funding model.” he said.
Tony Abbott’s planned investment bond scheme would attract a 10 percent rebate on earnings from the bond, irrespective of the tax status or rate of the taxpayer. Following from this, these infrastructure bonds would save two thirds of the tax payable on the interest from these infrastructure bonds.
“As an international expert at HIA’s Urban Infrastructure Summit confirmed, a funding model based on municipal bonds issued in the US presents is a viable option for funding Australia’s residential infrastructure requirements.”
“To adequately address Australia’s future investment needs, the use of infrastructure bonds as a funding mechanism needs to incorporate the residential sector,” Mr Wolfe added.
