Cookies on Pinsent Masons website

Our website uses cookies and similar technologies to allow us to promote our services and enhance your browsing experience. If you continue to use our website you agree to our use of cookies.

To understand more about how we use cookies, or for information on how to change your cookie settings, please see our Cookie Policy.

Australian PM announces $2 billion infrastructure fund for the Pacific

Australia’s prime minister Scott Morrison has announced that the country is to set up a A$2 billion fund to support infrastructure development across the Pacific Region.12 Nov 2018

In a speech last week Morrison said the country would create the Australian Infrastructure Financing Facility for the Pacific. The facility will cover infrastructure development in the Pacific countries as well as Timor Leste.

“It will use grant funding combined with long term loans to support high priority infrastructure development,” said Morrison. “This will also enable these projects to leverage broader support. It will invest in essential infrastructure such as telecommunications, energy, transport, water and will stretch our aid dollars even further.”

Infrastructure law expert Jeremy King of Pinsent Masons, the law firm behind Out-Law.com, said the fund needed to earn a return as it was investment rather than official development assistance.

“One would hope that the new fund’s mandate would be to undertake a robust base case financial model and technical feasibility study for each new project at the front end, and work with sovereign governments to restructure projects on a solvent basis at the back end, if things go wrong,” King said.

Australia is already the biggest supplier of aid to the Pacific region, spending US$6.6bn since 2011, outstripping China’s $1.3bn spend, according to data produced by think tank the Lowy Institute.

King said China’s aid spend did not include investment by Chinese state-owned enterprises and contractors in projects located in the Pacific. 

“That number would be closer to A$10bn in recent years, and spans mining, hydroelectricity generators, aquaculture, forestry and real estate developments,” he said.

“This is consistent with China’s ‘one belt, one road’ initiative. Part of the initiative involves China connecting the globe via a modern, maritime version of the Silk Road,” King said.

Morrison said in his speech that it was essential Australia’s ties with the Pacific continued to grow stronger. He announced that the government would ask the Australian parliament to give export financing agency Efic an extra A$1bn in callable capital and a more flexible infrastructure financing power to support investments in the region with “broad national benefit for Australia”.

The new measures would enhance Efic’s ability to support Australian small and medium enterprises to be active in the Pacific region, Morrison said.

Recent Infrastructure Experience