The investor lens: Australia’s infrastructure investment landscape

Baringa partnered with the Global Infrastructure Investor Association (GIIA) to convene a roundtable discussion with leading global and Australian infrastructure investors on Australia’s attractiveness as a destination for long-term capital.

This discussion, and the perspectives captured in this article were developed prior to the 2026 Middle East energy crisis and tax reform was not discussed as part of the session. This article summarises the themes and positions of the attendees.

A market built for long-term investment

Australia continues to stand out as an attractive market for infrastructure investors, underpinned by a stable economy, a relatively predicable regulatory environment, and one of the deepest pools of long-term domestic capital anywhere in the world. With local superannuation funds and global funds ready to deploy billions, and a decades-long energy infrastructure buildout accelerating to replace coal assets and power emerging industries, Australia offers a scaleable, long-term horizon investment environment characterised by stability and transparency.  

Paradoxically, the very qualities that make Australia attractive to investors are also intensifying competition. A deep pool of domestic and global capital is chasing a relatively small set of opportunities, driving up bid pressure and compressing returns, particularly when compared with markets such as the US. In the energy sector, investors noted that renewable energy auctions routinely attract multiple aggressively priced bids, often motivated by strategic objectives, pushing project valuations to levels many investors now view as unsustainably tight. Across regulated utilities and transport, returns have narrowed further, with some investors describing these sectors as ‘predictably average’ on a risk- adjusted basis, due in part to Australia’s structurally lower risk premiums relative to the US, UK, and EU.

Fierce competition is evident in the mid-market, where consolidation among the largest super funds has seen them shift focus toward larger transactions, leaving $200–300 million deals to a broadening pool of foreign investors and specialist local fund managers. This competitive tension is compounded by uncertainty in Australia’s greenfield public private partnerships (PPP) pipeline. Despite strong political signalling from the Albanese Government and several states around the need to accelerate investment in schools, hospitals and other essential public assets, investors noted that comparatively few projects are being brought to market through traditional PPP structures. While opportunities still exist in select areas, including emerging social and affordable housing investments, these tend to be smaller in scale and require further development to become investable at the levels seen in past PPP programs. As a result, competition for the limited number of contestable greenfield PPPs has intensified. 

Competition is equally intense in brownfield processes, where existing shareholders have been observed exercising their pre-emptive purchase rights through 2025 (e.g. ElectraNet, Sydney Desalination Plant and Adelaide Airport), while nearly every major infrastructure transaction process has been heavily contested. In short, Australia’s appeal is creating the very pressure that continues to suppress returns.

Despite tighter returns and an increasingly crowded market, investor appetite for Australia remains strong. According to the Australian Infrastructure Investment Monitor 2025, 85% of surveyed investors are ‘highly likely’ to invest in Australian infrastructure over the next three years, while 78% believe the market will provide sufficient opportunities to meet their needs - a 10% increase from last year, signalling confidence in Australia’s long-term pipeline. 

Major superannuation funds expect their infrastructure allocations to rise materially over the coming years, with one respondent noting that their capital allocation is set to almost double by 2030 (in absolute terms). Investors continue to pursue Australian opportunities with conviction, citing active work on utility acquisitions, midstream gas as a high-yielding core asset class, and the structural scale of the energy transition, alongside rapid growth in the data centre sector. Foreign institutions are also seeking opportunities to co-invest with local managers, reinforcing the view that Australia remains a highly coveted, if pipeline-constrained, destination for infrastructure capital.

A broader pipeline of medium-term recycling opportunities is also emerging, with assets such as Victoria’s North-East Link, the NBN, and Western Sydney Airport expected to attract significant private interest once stabilised and fully operational. Innovative financing structures could enhance delivery of major undertakings like the buildout ahead of the Brisbane 2032 Olympics. Looking further ahead, stretch opportunities remain across electricity transmission and water networks. 

Unlocking the power of private capital

Minimising costs to consumers through private capital deployment

Intense competition for available assets delivers a tangible dividend to Australian industry and households in the form of lower costs. Compressed returns and disciplined operator performance mean efficiency gains are passed through to consumers, particularly in regulated sectors where pricing frameworks are designed to reflect a business’ true cost of capital. However, this dynamic has natural boundaries – while leaner returns enhance consumer outcomes, returns that tighten beyond a sustainable band risk undermining project bankability and delivery, particularly for complex, capital intensive assets.

Private operators are also extracting greater value from existing assets by using dynamic pricing to smooth peaks and defer costly infrastructure expansions. In Australia, time-of-day road tolls on Sydney’s Harbour crossings, off-peak Opal (public transport) fare discounts, and cost-reflective electricity network tariffs are all designed to shift demand away from constrained windows. Further afield, congestion pricing on the US’ San Francisco–Oakland Bay Bridge reduced peak volumes by ~4–8% and delays by ~15–30%, demonstrating how small shifts in user timing can unlock outsized network benefits without physical expansion. 

Looking ahead, similar benefits could emerge as new users enter the system. Large data centre loads, for example, can help to spread fixed network costs across a broader customer base, improving overall cost efficiency. In urban areas, coordinated precinct-level transport planning, such as using airspace above existing infrastructure, can support new housing supply while making better use of assets already in place.

Effective and adaptive economic regulation will be central to realising consumer benefits. Investors emphasised that clear rules, predictable processes, and coherent delivery models are essential conditions for private capital to scale.

Unlocking government capital

By bringing private capital into the system, governments can free up their balance sheets to focus on new infrastructure and policy priorities. Private ownership or co-investment allow governments to recycle capital rather than hold and operate assets, which is particularly crucial for governments under fiscal pressure, such as Victoria and Queensland. 

Several investors highlighted Australia’s track record in asset recycling as a powerful mechanism for unlocking capital.  New South Wales’ asset recycling program, now more than a decade old, remains one of the most active and successful globally, anchored by the long-term partial leases of its major electricity transmission and distribution networks - TransGrid, Ausgrid and Endeavour Energy. Together with networks, the long-term leases of Port Botany, Port Kembla, and the Port of Newcastle accounted for the state’s AUD 32.7 billion in asset-recycling proceeds as of November 2020. These brownfield transactions enabled the state to reinvest the recycled capital into new transport links, schools, hospitals and community infrastructure, allowing NSW to deliver large scale infrastructure growth without increasing public debt¹. 

The NSW asset recycling case also demonstrates how risk can be allocated efficiently. Private operators invest in upgrades and expansions as part of their lease obligations, taking on performance, operational, and lifecycle risks that would otherwise sit with government. Investors highlighted that private participation enables more efficient allocation of delivery and operational risks, particularly in complex or large-scale infrastructure. Several investors pointed to examples where governments had previously borne construction, cost overrun, or performance risks that private operators are structurally better placed to manage. In the energy sector, for instance, investors noted that private owners of regulated utilities routinely absorb operational and maintenance risks, while also delivering stable service levels and investing incrementally in grid resilience. Midstream gas assets were also cited as high yielding for private owners able to manage commercial, operational, and lifecycle risks more efficiently than government entities. 

When risks are allocated to parties best equipped to manage them, private capital not only steps in willingly, but often delivers stronger performance and better long-term asset stewardship than can be achieved by public ownership alone. 

What’s holding back private capital deployment in Australia?

Despite the scale of available capital and long-term infrastructure needs, the set of contestable opportunities in Australia remains constrained. Structural dynamics are at play here, wherein only a small portion of major assets ever come to market, governments are procuring fewer new projects through private finance (or investing public funds more directly), and complex approvals slow the progression of projects from planning into an investable form. At the same time, asset owners are generally holding long-term, meaning few brownfield assets enter open processes. The result is a market with potential for long-term scale but a comparatively narrow window of near-term opportunities.

Regulatory hurdles 

Lengthy, multi-layered permitting requirements remain one of the most significant barriers to investment. By way of example, investors pointed to an electricity transmission project that began development in 2019 and is still years from construction, slowed by overlapping federal and state approvals, regulator processes, environmental assessments, and local social licence and native title issues. 

The impact of red tape becomes clear when we consider projects unimpeded by these constraints. In Western Australia’s Pilbara region, for example, Mineral Resources’ $3 billion Onslow iron ore development was able to reach production in just three years. Streamlined state approvals, minimal community opposition, and favourable labour conditions enabled a rapid and substantial infrastructure build, including a 150-kilometre sealed and fenced haul road linking the mine to the Port of Ashburton, a fleet of fully enclosed transhippers for offshore loading, crushing and storage facilities, resort-style worker accommodation, a dedicated desalination plant, and a hybrid microgrid to power operations. The pace and scale of this delivery demonstrates how quickly complex infrastructure can be delivered when permitting is efficiently managed and social license considerations are limited. 

The Australian Competition and Consumer Commission’s (ACCC) expanded merger controls are expected to pose a fresh obstacle to infrastructure investment. Under the reforms, acquisitions that meet relatively low monetary or control thresholds must be cleared before closing, with filing fees ranging from $56,800 for a Phase 1 review, to $1.6 million for Phase 2 assessments for transactions valued above $1 billion².  The reforms bring a far larger share of Australian M&A into the ACCC’s purview than in the past, with legal analyses noting that the new thresholds will capture many transactions previously considered routine or low-risk, introducing added cost, time, and administrative burden for investors³.  

Regulators can and do adjust policies when unintended consequences emerge, as with the recent Your Future, Your Super performance benchmark. Amendments to the benchmarking framework will come into play from 1 July 2026, correcting a flaw that assessed super funds’ performance against indices dominated by higher-risk, listed infrastructure assets. Because the benchmark was skewed toward core plus level returns, funds were effectively discouraged from holding core infrastructure associated with safer but lower yields. As a result, funds were pushed up the risk curve and, in some cases, large Australian core assets were acquired by offshore investors not subject to the same benchmark. The updated approach is expected to give super funds greater ability to invest in stable, long-term assets as part of their overall portfolio.

Investors can influence policy when they engage consistently and with strong evidence. For example, the Clean Energy Investor Group (CEIG) has advocated for renewable energy assets to be treated more appropriately within the Your Future, Your Super performance benchmark, arguing that current index construction understates the characteristics of long-duration clean energy projects. APRA has acknowledged these concerns and signalled further refinements in future consultations. When industry highlights genuine distortions, regulators have shown a willingness to review and adjust frameworks to support long-term investment.

Labour shortages and land access constraints 

Labour shortages are now a critical constraint on project delivery and investment appetite in Australia. This is particularly visible in the energy sector, where investors highlighted that the extremely limited pool of skilled line workers on the east coast makes it almost impossible to resource the scale of transmission build required. The mining sector’s ability to outbid infrastructure for skilled labour exacerbates labour shortages, with fly‑in fly‑out workers commanding high wages and drawing capability away from essential infrastructure projects. An ageing workforce further shrinks the pipeline of skilled labour, while restrictive union environments add further complexity, delay, and additional cost. 

Land access constraints are also materially increasing the cost and complexity of transmission development. AEMO, Australia’s grid planner, has uplifted transmission unit cost assumptions by around 25–55% since the 2024 ISP and now includes explicit allowances for route realignments to avoid socially, environmentally, agriculturally, or culturally sensitive areas. These adjustments place land access and related social licence considerations squarely among the determinants of cost and deliverability for transmission projects.

On the ground, community opposition, social licence requirements and native title considerations frequently stall projects before construction can begin. Investors noted cases where private freehold landowners sought compensation far exceeding the underlying market land value, inflating project budgets and adding further delays. Recent commentary from NSW Premier Chris Minns underscores how acute land access barriers have become; in late 2025 he stated publicly that the government would ‘consider compulsory land acquisition’ to progress the Narrabri Gas Project and associated pipeline easements if voluntary agreements with landholders could not be reached.  Victoria has already taken steps to address persistent land-access barriers, passing legislation in August 2025 that allows authorised officers to forcibly access private farmland for priority transmission projects such as the Western Renewables Link, which is pivotal to Victoria’s energy reliability and decarbonisation agenda.

Complex government models

Government delivery models and interventions are also creating uncertainty for investors, particularly in the energy sector, where fragmented and shifting state policies create an unpredictable investment landscape. States have taken varying approaches to energy security, extending the life of ageing coal plants, commissioning government-built peaking capacity after supply shortfalls, and establishing new public entities to support investment. While often well-intentioned, these interventions typically arise to fill gaps in the broader policy framework, adding to cross-state inconsistency and reducing long-term clarity for private capital. 

The broader question of crowding in versus crowding out investment is important when assessing the role of government in the private sector. While the presence of state-owned entities can blur the boundary between public and private investment, there are examples of government models that have effectively catalysed private capital. The Clean Energy Finance Corporation (CEFC), Australia’s green energy bank, was highlighted as a successful case of crowding in, operating with a clear commercial mandate and partnering alongside investors without distorting market incentives. 

Positioning Australia for success

Private infrastructure investment remains one of Australia’s most effective levers for delivering high-quality essential services. It frees up public balance sheets and shifts delivery, operational, and lifecycle risks to parties best equipped to manage them. The combination of deep domestic capital pools and strong competition across platform investors puts Australia in an enviable position, wherein private investors stand ready to partner with governments and communities to deliver necessary infrastructure – often at competitive cost-of-capital rates for end users, thanks to the highly contested nature of the market. 

Realising this potential will require deliberate action. Australia must confront the structural constraints delaying projects and driving up the cost of development and construction, including protracted and fragmented permitting processes, tightening merger controls, persistent labour shortages, land access barriers, and an increasingly complex array of government delivery models. Addressing these issues is essential, not only to unlock private capital at the scale required, but to ensure that the benefits of private investment flow fully to citizens, businesses, and government alike.

_{1 Financing greenfield infrastructure through the sale of brownfield infrastructure}  

_{2 Merger Reform Update 2025: Filing Fees, Notification Forms & Transitional Guidance}

_{3 Merger reforms: a mandatory and suspensory merger regime; Australian Merger Control: What the New ACCC Merger Reform Regime Means for M&A | King & Wood Mallesons; Australia’s new merger regime: what you need to know | Gilbert + Tobin}