Australia will seek foreign infrastructure money

Significance

Tax cuts were announced earlier this month for foreign investment in infrastructure, including transport, energy, water and communication. The move follows concerns that spending on infrastructure is too low for Australia’s projected population growth.

Impacts

• The stimulus does not involve any new spending and will require the support of state governments, which co-fund some projects.
• Tax concessions will help ease a competitive disadvantage faced by foreign investors, but there will still be market barriers.
• Uncertain confidence in the current government could depress foreign investor interest.
• If it maintains the budget surplus, the government will keep backbenchers’ support.