Infrastructure and productivity are key issues for the federal government in 2012, the 2011 Committee for Economic Development of Australia (CEDA)/Business Spectator Big Issues survey revealed this week.
It followed an Australian Institute of Company Directors (AICD) survey last month in which directors ranked infrastructure the biggest short-term issue for the government.
This debate has important implications for institutional investors.
There is a view that federal and state governments should do much more to encourage the larger superannuation funds to invest more in unlisted infrastructure assets.
Infrastructure Australia's report to the Council of Australian Governments in June 2011 said: "The need for a new funding paradigm [for infrastructure projects] is especially critical. Without change in this area, Australia will not secure the infrastructure it needs. There will be a long list of ideas that cannot be delivered, leading to community frustration."
The CEDA survey, based on 1100 responses, ranked "ensuring adequate infrastructure" the most important issue for securing Australia's prosperity, followed by fiscal policy, education and industrial relations.
"Extreme infrastructure bottlenecks and population-related pressures in Australia's capital cities emphasised the need to deliver timely public infrastructure," it said.
Asked how the federal government could improve Australia's productivity performance, respondents nominated better planning from government on infrastructure delivery; adequate federal and state funding for infrastructure; clarity in federal-state roles; greater use of public-private partnerships; and state governments accepting greater levels of debt to fund infrastructure.
In the AICD Directors' Sentiment Index survey, 83 per cent of respondents nominated infrastructure as the priority short-term issue for the government.
A whopping 86 per cent of those surveyed said government spending on infrastructure was "far too low" or "a little too low". Just over half of directors disagreed that building the National Broadband Network was positive for business.
Within the infrastructure sector, directors nominated water supply, roads, telecommunication networks, green energy sources and ports as the top five areas needing investment.
The CEDA and AICD surveys both delivered a stinging assessment of the government's public policy performance.
CEDA survey respondents gave the government an average rating of 2.3 out of five for its effectiveness across all policy areas.
The lowest average ranking was for how the government's decisions had affected the regulatory burden on companies.
The survey said: "While the federal government was rated as most effective on fiscal policy, generally policy decisions in 2011 were considered ineffective by the majority of respondents."
The AICD survey ranked the minority government as the top challenge for business, followed by poor consumer confidence. Low infrastructure spending was another top-five concern.
The message from these and other business groups is clear: more astute infrastructure investment will help solve Australia's productivity problem and improve confidence in the government from a business perspective.
The big question is what role superannuation funds can play in helping address an infrastructure backlog estimated at more than $700 billion, and what government incentives are needed to encourage more institutional investment in early-stage infrastructure projects.
Tony Featherstone is a former BRW managing director. He moderated panel discussions on the AICD Directors' Sentiment Index in November.
