Policy doubts scare investors

POLITICAL uncertainty is the biggest risk factor for Australia’s largest infrastructure investors as state and federal politicians bicker and change their minds about energy policy and major projects.

According to a survey of the 26 largest investors in infrastructure projects, the large investors are “spooked by rapid and unpredictable political interventions”.

During the year the per- centage of these large investors that were highly likely to invest in Australian projects fell from 94 to 70 per cent.

The survey by Perpetual Corporate Trust and Infrastructure Partnerships Australia said political risk was the big concern, followed by the closely related sovereign risk.

“Australia’s solid reputation as an infrastructure investment destination is being eroded, as investors take stock of increasingly unpredictable political interventions, perpetrated by national and state governments,” Perpetual executive Chris Green and Infrastructure Partnerships chief executive Brendan Lyon said.

“A staggering 66 per cent of investors report that they are not optimistic about Commonwealth Government infrastructure policy,” the survey said.

Their major concern centred around tax arrangements and the “emergence of bizarre policies” that would mean tax payer contributions compete against private investment.

The energy sector was the most worrying, 74 per cent said there was too much uncertainty. This was based on “unilateral federal interventions’’ in upstream gas, network price regulation, wholesale generation and potentially retail energy supply, the survey found.

About half the 26 largest investors are headquartered overseas, with half based in Australia. Between them, these investors manage or own global infrastructure assets valued at $220 billion.