Joining us today to discuss the NSW Budget is Emma Warren who is a Partner and Sector Leader for the Infrastructure and Transport Team, and Andrew Mansour who is a Partner in the Energy and Infrastructure Team, both at Allens. Emma and Andrew thanks for joining us.

Thank you.

Thank you Kate.

Emma if I can start with you, the NSW Budget highlights its increased focus on transport projects, with over 50% of the $60 billion infrastructure commitment over the next four years actually allocated to the transport sector. This is of course up from 40% in the four years to 2013/14. Is this focus on transport infrastructure likely to continue?

Yeah thanks Kate, look I think to start with it is really good to see a focus in the Budget on transport assets such as road and rail, which obviously reflects the real community and business need for transport infrastructure. For example the Budget provides for a really healthy pipeline of currently committed transport projects like North West Rail Link, $12 billion for the West Connects project, the CBD and South East Light Rail project and the Parramatta Light Rail Project. But the Budget also interestingly references the recent commitment to sell the State owned electricity networks, and while it's not structured to include the proceeds or the projects to be funded from the proceeds, that sale is expected to generate $20 billion after repayment of debt to fund new infrastructure, and the bulk of the projects that are proposed as candidates for that funding are transport infrastructure projects again, and include the Sydney Harbour Rail Crossing, fast tracking the construction of the West Connect Freeway, freeways on the Northern Beaches valued at $3 billion, and at least one billion for regional roads and bridges. So there should be a really strong pipeline of new transport projects should that sale proceed, and that's really important to industry because that means that a proper long term pipeline of transport projects. So because of then investors can better plan and structure their resources for participating in those projects.

Yeah certainly. Well Andrew of course we've seen a lot of talk in the lead up to the Budget about the NSW Government selling the poles and wires, what exactly is the NSW Government proposing to sell and how are they proposing to sell it?

Yeah thank you Kate. Look, as Emma mentioned this Budget while references the sale isn't a Budget about the sale, the Government is taking the poles and wires sale to the next election in March next year. And if they go ahead they will be privatising effectively the distribution networks and the high voltage transmission networks which is all of the State's network assets, except for one. Essential Energy which is the – which is the regional distribution network is not – is not on the cards for sale, and the proposal is that of the total networks 49% will be made available to the private sector by way of a long term lease. While the lease itself is not novel the 49% lease probably is new and the government will have to think carefully about how it structures that to make sure they get the right tax treatment for both, the Government and the private sector.

And Andrew how would the proposed privatisation affect the people of NSW?

Well I – I don't think very much actually, I think if there were any effects it will be positive. I know there's been a lot of controversy about privatisation as there is with any privatisation, but history has shown in other states which have privatised their electricity distribution networks that prices have in fact decreased and that's been the experience in Victoria and South Australia and quite the contrary in NSW and Queensland which are still in Government ownership. So we're probably expecting some efficiencies and some gains and I think people have to realise that these are regulated businesses so the prices are ultimately determined in the context of a regulated environment.

And Emma Premier Baird has said that any proceeds that go from asset transactions go to Restart NSW which is a fund for high priority infrastructure projects in NSW, I guess this seems to be consistent with a trend towards asset recycling more broadly in Australia, what does this trend actually mean for industry?

Yes Kate look this does – it is consistent with the Federal Government's recent announcements about the assets recycling incentive payment as well. And I think again it shows a strong commitment by government at all levels to infrastructure investment and following on from my earlier point you know when you combine that with a strong pipeline of committed and proposed infrastructure projects, it really gives investors and industry participants more confidence about resourcing up and building up a local presence for those that are perhaps overseas investors, to invest in these projects for the long term. So not surprisingly we're seeing quite a lot of renewed interest from overseas investors in infrastructure projects, the US and Canadian pension funds are extremely enthusiastic and so are the major Japanese trading houses who appear to be developing a really keen interest in investing in infrastructure projects. And by way of example on a recent trip to Japan, one of our Allens teams presented to the banks and various trading companies and infrastructure was a major talking point, so we're seeing that level of confidence really translate into true investment. And I think on the other side of the equation that obviously the proposed sales of the existing assets will present an exciting opportunity for investors. So the trend towards asset recycling is really a win/win for market participants.

Yes certainly, well some interesting insights from you both and thanks for talking us through some of the points from the NSW Budget.

Thank you, thank you very much Kate.

Thanks Kate.

That was Emma Warren, a Partner and Sector Leader in the Infrastructure and Transport team and Andrew Mansour, who is a Partner in the Energy and Infrastructure Team, both at Allens. Listeners if you have any questions for either Emma or Andrew you can send them through either using the panel on your screen or otherwise via email to law@brrmedia.com.

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	Allens (8AAR)	Tue, 17 Jun 2014 10:30 pm (UK time)	NSW Budget committed to transport infrastructure
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