The New South Wales and Victorian Governments are leading a highly integrated approach to social infrastructure. Governments know they need integrated social infrastructure across transport, health, education and other sectors to create sustainable benefits for the community.
They have also become more adept at working with the private sector on social infrastructure through vital Public Private Partnerships. Governments are much better at ensuring consortia will deliver what they say they will and acknowledge the benefits financiers bring to the table, including extensive due diligence and project monitoring.
Long-term vision brings outstanding social infrastructure
All parties – governments, the private sector and community – must bring long-term vision to social infrastructure. Sydney’s Harbour Bridge is still doing today what it was designed to do in 1932. That type of multi-generational thinking and passion to do the right thing by the community can drive a new era of social infrastructure projects.
Sydney’s $2.1 billion CBD and South East Light Rail is one such project. James Bramley, Asset Director, Asia Pacific at John Laing, says “Sydney Light Rail will reinforce the benefits that outstanding social infrastructure brings to cities.” The 12-kilometre track will reduce traffic congestion, improve traffic flow to and from the CBD and create a one-kilometre pedestrianised zone along George Street in the heart of the CBD when services begin in 2019.
Bramley says Sydney Light Rail is benefiting from Commonwealth Bank’s experience in social infrastructure. That experience is one reason why John Laing and Commonwealth Bank are together on several current and potential infrastructure projects. “Our organisations have a strong reciprocal relationship on social infrastructure and a shared passion to develop assets with long-term community benefits,” says Bramley.
Innovative financing to progress social infrastructure
Commonwealth Bank was instrumental in jointly establishing Australia’s first aggregated funding vehicle for local governments. It enables small, unrated government authorities to access capital markets and achieve cheaper funding for social infrastructure.
Pooling models have enormous potential to provide an alternative source of funding for social infrastructure generally, as well as housing projects to help increase supply of affordable housing for those on lower incomes.
Additionally, the model benefits investors, including superannuation funds. Investors get a higher return than regular capital market investments and the long duration of affordable housing projects suits the investment horizon of superannuation funds.
Making social housing a reality
Social housing is an area Commonwealth Bank is willing to lead. Our strengths in debt markets and social infrastructure can deliver benefits to governments at all levels, the private sector and the community. We want to make social housing projects happen.
Done well, these projects can deliver social outcomes for communities that last decades, while minimising risks for governments and taxpayers.
Chris Jones, from CommBank's Institutional Banking and Market’s infrastructure team, has two decades’ industry experience in infrastructure and utilities financing across Australia and the United Kingdom. Chris has led project teams responsible for many of Australia’s major social and public infrastructure projects.