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Co-founder & CEO of AllenWargent property buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place), and CEO of WargentAdvisory (providing subscription analysis, reports & services to institutional clients).
4 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.
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Friday, 28 March 2014
Tens of billions earmarked for infrastructure
A bit rough on Victoria, perhaps, since the state has already sold off many of its assets, but a significant boost for the Australian economy, and particularly for the states with assets to sell off.
This is what the economy needs as the population booms: infrastructure spending.
States will not be allowed to use proceeds from asset sales to pay down debt.
Instead, funds must be spent on infrastructure, and spent quickly.
"Federal Treasurer Joe Hockey says he has struck a ''historic agreement'' with state treasurers that will create tens of billions of dollars of new infrastructure across the country.
The Commonwealth has promised to provide an ''asset recycling pool'' of money that will be used to encourage state governments to sell their public assets and recycle that money into new, economy-boosting infrastructure.
The pool will be used to give states an extra 15% of the sale value of their assets but state governments will only receive the extra money after signing a bilateral agreement with the federal government promising to use the proceeds from privatisation to invest in new projects.
''We need to fill an infrastructure hole in the economy and we need to do it fast,'' Mr Hockey said on Friday.
''The net outcome will be tens of billions of dollars of new additional infrastructure in Australia.''
State governments will need to show the Commonwealth what infrastructure projects they would like to build and the federal government will judge each project on its merits before handing them any money.
''This is a blank sheet of paper for a project proposal but, obviously, there needs to be a net benefit to the economy, it needs to be result in more jobs and it needs to be a good use of money,'' Mr Hockey said.
State governments will not be allowed to use the money to pay down debt.
The 15% bonus from the federal government will only be paid on the amount of asset sales reinvested in ''productive infrastructure''.
Announcing the decision on Friday, Mr Hockey conceded some states would get more money from the pool than others because some states had more public assets to sell.
The decision angered Victoria, which has already sold many of its assets.
Victorian Treasurer Michael O'Brien said his state's previous history of privatisation ought to be recognised.
''We would certainly prefer that there had been some recognition that Victoria, and other states including South Australia, have done a lot of the heavy lifting when it comes to economic reform and asset recycling,'' Mr O'Brien said.
But Mr Hockey said he was not interested in history, saying he had to ''deal with the challenge that lies before us''.
The money will only be available until June 30, 2016, to encourage state governments to start selling assets quickly.
The money will be paid out over a five-year period, with the expectation that some asset sales will take years to bring to fruition."