Market intervention and policy uncertainty could threaten Australia’s reputation as the preferred global destination for infrastructure investment, according to a new report.
The Australian Infrastructure Investment Report from Infrastructure Partnerships Australia (IPA) and financial services group Perpetual Corporate Trust has found that 90 per cent of investors remain highly likely to invest in Australia.
However, it has slipped from first place to their as preferred global destination for investment according to the report.
The report surveyed 33 market participants that collectively own or managed infrastructure investments worth over a $380 billion about investing in Australia. Of the survey respondents, 97 per cent were already invested in Australian infrastructure with 64 per cent owning at least half of these investments in Australia.
Participants said roads, water infrastructure and social infrastructure were the most attractive assets for investment.
The report found that Australia’s stable economy, knowledgeable market participants and strong track record of infrastructure business was what attracted investors.
IPA Chief Executive Adrian Dwyer said while Australia still performs well among its international peers as a leading destination for infrastructure investment, the country’s reputation is hard won and easily lost.
“Investors are increasingly alarmed by threats of market intervention, abrupt and recurring regulatory reviews, as well as frequent changes in Australia’s political landscape,” Mr Dwyer said.
“Governments should see this report as a canary in the coal mine. We have a clear warning that interventions and regulatory uncertainty are hurting investment and hurting Australians,” he said.
Perpetual Corporate Trust General Manager – Managed Fund Services Vicki Riggio said despite the undercurrents of uncertainty, investors are continuing to invest in Australian infrastructure.
“It’s troubling to see increasing levels of caution around investing in our infrastructure markets however the strength of our reputation, our track record and stable economy continues to buoy investment intentions in our market, at least for now,” Ms Riggio said.
“This year, investor intentions are higher than ever, and they are expressing a willingness to invest larger amounts. Although technological change and policy uncertainty is undermining investment in energy, we’re seeing increasing focus on social infrastructure projects that meet environmental, social and governance objectives.”
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