G20 Executive Talk Series

September 2016

Infrastructure Investment

Authored by: Robert Milliner

Global Infrastructure Hub:
Connecting Global Insights to Unlock Infrastructure Potential

There are many and varying estimates of the global infrastructure investment gap. However, they are all consistent in indicating that it is large and not closing on current policy settings.

In November 2014, G20 Leaders agreed a new initiative to lift quality public and private infrastructure investment (the ‘Global Infrastructure Initiative’), including the establishment of a Global Infrastructure Hub (‘Hub’) to be based in Sydney, Australia. The Hub was given a four-year mandate from the G20 to lower barriers to investment, increase the availability of investment-ready projects, help match potential investors with projects, and improve policy delivery.

This mandate was to be achieved through:

■ Developing a knowledge-sharing network to aggregate and share information on infrastructure projects and financing between governments, international organisations, multilateral development banks, national infrastructure institutions, and the private sector.
■ Addressing key data gaps that matter to investors.
■ Developing effective approaches to implement the voluntary G20 Leading Practices on Promoting and Prioritising Quality Investment, including model documentation covering project identification, preparation and procurement
■ Sharing best practice approaches to build the capacity of officials and improve institutional arrangements for infrastructure.
■ Developing a consolidated database of infrastructure projects, connected to national and relevant multilateral development bank databases, to help match potential investors with projects.

Australia, China, Mexico, New Zealand, the Republic of Korea, Saudi Arabia, Singapore and the United Kingdom fund the Hub. The Board comprises representatives of six G20 countries as well as two independent directors. Australia is Chair of the Board for the term of the Hub’s mandate, represented by the Secretary to the Australian Treasury.

Unlocking Infrastructure Potential, Globally
The strategic vision of the Hub is to transform investment processes and thereby strengthen and enhance the global infrastructure market. Although this is an ambitious goal within the Hub’s initial term, it is short by government and infrastructure standards.

To attract the trillions of dollars needed in infrastructure investment to fuel global growth and create jobs, we need better information about what’s working and why.

So what is holding back increased investment in infrastructure? The answer isn’t necessarily the same for all markets.

By facilitating knowledge sharing, highlighting reform opportunities and connecting the public and private sectors, the Hub has the ambitious goal to increase the flow and quality of opportunities for private and public infrastructure investment in G20 and non-G20 countries.

The barrier is not a lack of funding, but rather the need for more infrastructure projects that are well-prepared and investment ready.

An Ambitious Program
The barrier is not a lack of funding, but rather the need for more infrastructure projects that are well-prepared and investment ready. Therefore, a priority for the Hub is to facilitate a better supply of quality, bankable infrastructure projects to the private sector. This involves focusing on what reforms, planning approaches and risk management strategies will drive investment.

To achieve this the Hub:

■ Has surveyed a range of global private investors with respect to gaps in information and data that may be acting as a barrier to efficient infrastructure markets.
■ Is quantifying the overall projected infrastructure needs on a country and sector level.
■ Has created an online guide to existing infrastructure initiatives, organizations and documentation to connect existing resources and improve coordination at the national, regional and multilateral level.
■ Is creating a tool, the Capability Framework, to assess the extent of development and maturity of a country’s infrastructure market. The Hub has also started identifying global best practices and aims in order to benchmark existing (country-specific) capability. The Framework will enable national infrastructure bodies to identify priority areas for policy reform, with the aim of increasing the pipeline of projects and attracting more private capital. This will allow countries to target areas which may currently be limiting private investment in their national infrastructure.
■ Has developed a new Report on Recommended Risk Allocation Principles,to be published as a ‘companion piece’ to the 2016 edition of the World Bank Group’s Report.
■ Is developing a global database that would track projects through various stages from project conception to operation to improve the visibility and understanding of government infrastructure projects by the private sector.

Other initiatives with regard to proposed leading practices are also being developed; including potential initiatives related to project prioritisation and identifying infrastructure projects best suited for private sector participation.

More information about the Hub, its mandate and the latest infrastructure reform initiatives can be found on: www.globalinfrastructurehub.org

Robert Milliner is an independent non-executive director of the Global Infrastructure Hub and a Senior Adviser, International Affairs at Wesfarmers Limited, Senior Adviser at UBS and Senior Adviser to the Secretary-General of the International Chamber of Commerce. He is also an independent director of the and AusNet Services Ltd, Chairman of the Board of the Foundation for Young Australians and a director of the

Australian Charities Fund.

He was the B20 Sherpa for Australia for 2014 and has continued to represent Australia in the B20 as a member of the Turkey B20 Steering Committee (2015) and the China B20 International Cooperation Committee (2016).