The government committed $5 billion to new Asset Recycling Fund as part of the federal Budget, with the fund set to commence on 1 July 2014.
The fund will be used to make payments to states and territories whenever they sell existing infrastructure assets and reinvest the proceeds in new infrastructure.
Labor this week proposed an amendment to the laws that would give parliament the authority to disallow states and territories the bonus (15 per cent) on a case-by-case basis.
In a joint letter to both houses of parliament, ASFA and the IPA argued the legislation as it stands provides "an important incentive for states to get on with the job of finding the money the country needs for new infrastructure".
The lobby groups said asset recycling is a "proven way of marshalling the billions of dollars that governments need to break the infrastructure backlog".
Superannuation fund members also stand to benefit from asset recycling, said the letter.
"As more Australians enter retirement, this will drive demand for assets with reliable income streams, such as port infrastructure and energy networks," it said.
"Superannuation funds stand ready and willing to invest, but there has not been a consistent pipeline of suitable projects," said the letter.
The letter acknowledged "community concern about how the assets will be managed in the future".
"In this regard there is a natural symmetry between the interests of superannuation funds, who want to achieve sustainable, long-term returns, and the interests of the community, who want to ensure these assets are managed responsibly and for the long-term benefit of society," said the letter.
"The sale of public assets is the only way for Australia’s states to repay their debts and catch up on infrastructure.
"Every Australian stands to benefits from recycling money from old assets to fund the infrastructure we need to make the country grow again," said the letter.
