In Australia, the state has provided most of the continent's economic and social infrastructure from first settlement. It has done this directly with appropriations from budgets, with taxation by applying user-pays charges and raising public debt or by using a combination of these methods.50 The difficult capital market conditions of the past 12 months has led to calls for a return to state provision using state debt or tax-preferred bonds and a number of other financing methods.
The traditional options for state financing of infrastructure procurement include the budget framework, taxation and state debt. In the past 40 years, other methods have been attempted - special purpose bonds, state financial assistance, 51 state investment authorities,52 and special-purpose bonds. None of these methods has provided sustainable models for ongoing state financial support for privately-managed infrastructure services. This Part will examine the options for state financing of infrastructure and state participation in public private partnerships with a view to considering how the state can address the difficulties of raising private infrastructure finance at the present time.
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50 From federation, infrastructure was viewed as a public good and with successive interventionist federal and state governments, most infrastructure assets and businesses were owned and managed by state agencies or corporations. Following the recession of 1989-90 and the move to improved microeconomic efficiency that was ushered in by the Hawke and Keating governments in the 1990s, many infrastructure assets and businesses were reformed or privatised. In the past 10 years, private infrastructure provision has assumed much greater significance and state investment has continued its decline in GDP terms.
51 Supported debt model (Queensland).
52 For example, Australian Investment Development Corporation, Queensland Industry Development Corporation.