ALP key infrastructure policy positions and opportunities for investors
Sarah Shaw
Investment opportunities abound
As shown in the table below, we see significant infrastructure investment over coming decades in Australia. Just the detailed Net Zero and emission reduction plans present a huge long-term investment opportunity within the energy sector, with emphasis on supply, security and energy transition.
There are multiple domestic and international listed stocks which have, and will continue to, capitalise on the infrastructure opportunity in Australia. We see Transurban, along with other global toll road operators, as a potential partner in future road investment, whether it be through investment in their existing roads, unsolicited investment proposals or future privatisations. APA Group and Iberdrola are amongst several listed organisations that have highlighted the opportunity set within the domestic energy sector and are eager to participate and facilitate generation, energy transition, transmission and distribution solutions.
|
Topic |
Australian Labor Party (ALP) |
|
Infrastructure investment plan |
No specific overall investment $ target but general stated goals: ‘Plans to invest in roads, rail, ports, and high-speed broadband’ |
|
Net Zero emissions target |
Yes, 2050 |
|
Interim (2030) emissions reduction target |
National emissions to be 43% below 2005 levels by 2030 |
|
Energy transition to a Net Zero budget |
Estimated required investment of at least ~A$76b by 2030 (A$24b public sector/A$52b private sector) |
|
Energy policy focus |
Focused on batteries, solar, hydrogen and carbon abatement |
|
Generation mix |
Renewable energy to grow to 82% of total energy generation by 2030 |
|
Energy prices |
Retail electricity bills are forecast to be $275 pa lower by 2025 (-18%) and $378 pa by 2030 (-26%) |
|
Transport[i] |
Planning for ~A$50b investment in transport projects (2019 est, Grattan) |
|
Water |
No specific $ investment target for water. Plan to invest A$34m towards establishing a ‘National Water Commission’[ii] |
|
Telecommunications |
Upped the Coalition’s A$480m commitment by A$270m (total investment of A$750m) and a further A$2.4b projected to expand full-fibre National Broadband Network (NBN) access across the country in all states and territories[iii] |
Impact on economic growth and the listed infrastructure sector
Increased infrastructure spending is not only occurring in Australia but also very broadly around the world. This spending is a clear positive for both the global economy and the listed infrastructure sector.
In terms of global economic growth, a November 2020 International Monetary Fund (IMF) research paper argues that a synchronised infrastructure investment push could invigorate growth, limit scarring, and address climate goals. The IMF believes that, when many countries act at the same time, public infrastructure investment can help lift growth domestically and abroad through trade linkages. This looks to be occurring at present.
The listed infrastructure sector is also a clear winner from increased public sector spending. It:
- boosts economic growth and labour efficiency, which is good for all businesses but especially those infrastructure businesses which form the ‘arteries’ of the economy;
- creates potential new opportunities for the private sector to co-invest alongside government or invest in place of governments; and
- on a longer-term basis, potentially provides a bigger pool of infrastructure privatisation candidates.
By Sarah Shaw
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