Senator Bridget McKenzie is entirely correct: by cancelling a comprehensively broken mega-project, the Albanese government expects private equity to survive without a bottomless public money pit.
I was halfway through a rather robust flat white at a private dining club in Double Bay with a senior partner at a major global asset management firm when we saw the tragic news.
Senator Bridget McKenzie, the Nationals shadow minister for infrastructure, had just taken to the microphones to announce that the Albanese government had abandoned the beleaguered inland rail project connecting New South Wales with Queensland. In doing so, McKenzie rightly noted, Labor has "sent a chill through the infrastructure pipeline investment community."
The absolute gall of it. The sheer, unadulterated economic vandalism of looking at a bottomless taxpayer sinkhole and deciding not to throw another fifty billion dollars into it.
For those of you outside the rarefied air of high finance, you might hear the word "beleaguered" and mistakenly think, "Ah, a failing project that is hemorrhaging money, missing its milestones, and failing to connect the places it was supposed to connect." But in the infrastructure pipeline investment community, "beleaguered" is a term of endearment. It means "reliable." It means "a multi-decade annuity for our shareholders, wholly insulated from the actual delivery of a functioning railway."
By cutting the project, the Labor government has broken a fundamental social contract: the solemn promise that the Australian taxpayer will endlessly underwrite the financial modeling of private equity firms, regardless of whether a single piece of steel is ever laid on the dirt.
McKenzie correctly observed that "people were surprised and shocked and dismayed at this announcement." I know these people. They are the honest, hardworking venture capitalists who had factored those government rail subsidies into their divorces. They are the multinational consulting firms who had already leased premium office space in Brisbane just to study the feasibility of the environmental impact of the delay of the track-laying.
It is deeply traumatizing for an infrastructure consortium to wake up and discover the tap has been turned off just because a project is massively over-budget and fundamentally broken.
As McKenzie warned, "no project would now be safe from some future government turning off the tap." Just let that sink in. Imagine living in a country where the tap of public funds might be turned off simply because the thing being funded is an unmitigated disaster. It is a chilling prospect. It is practically Soviet.
What is the point of a government if not to act as a permanent, unquestioning guarantor for private-sector overruns? If the state won't fund beleaguered, failing projects, who will? The private sector? Don't be ridiculous. The private sector is there to harvest the tap, not to be the tap.
Let us examine the so-called "failures" of the inland rail. Critics point out that it is vastly over budget, geographically confused, and completely stalled. But these critics lack vision. They fail to understand that the purpose of a multi-billion-dollar infrastructure project is not to move freight from Melbourne to Brisbane. The purpose of a multi-billion-dollar infrastructure project is to move capital from the Treasury to the Caymans. In that respect, the inland rail was performing flawlessly.
The Senator also noted that Labor is "cutting the wrong things, not the things that are going to drive a productive economy." She is entirely correct. A productive economy is one where highly educated consultants are paid ten thousand dollars a day to write four-hundred-page reports on why the rail alignment through the Condamine floodplain is technically impossible. That is GDP. That is economic motion. Actually finishing the railway would just put all those consultants out of work. Is that what Anthony Albanese wants? To see hardworking McKinsey associates queuing at Centrelink?
The infrastructure investment community is a delicate ecosystem. It requires warmth, certainty, and a complete lack of accountability to thrive. When a government abruptly demands results—or worse, a return on investment—it introduces a toxic element of risk into a sector that has spent decades carefully lobbying risk out of existence.
Next month, I will be hosting a charity gala to raise awareness for the chilled investment community. We are asking everyday Australians to donate whatever they can—perhaps a percentage of their PAYG tax—to a relief fund that will be distributed directly to the shareholders of the multinational engineering syndicates who tragically lost their endless inland rail contracts. It is the least we can do to keep them warm.