Australian Prime Minister Malcolm Turnbull joined forces with governors of US states to forge an infrastructure investment alliance in the world’s largest economy and abroad during the National Governors Association Winter Meeting held in Washington, DC.

 

Turnbull’s speech to more than 40 US governors and Puerto Rico on February 24 came just after Turnbull met with President Donald Trump in the Oval Office.

Turnbull said that Australia aims to work with US states in developing domestic infrastructur, including airport and toll-road modernization, as well as work together in Asia and other foreign markets such as the Middle East and North Africa (MENA).

Turnbull, who attended the NGA Winter Meeting with a delegation made up of Australian state premiers and business leaders, said Australia is keen to participate in Trump’s proposed US$1.5 trillion infrastructure fund by sharing its experience in infrastructure “asset recycling” invented by the Melbourne, Australia-based sovereign wealth fund, Macquarie Group.

A senior White House official said the Trump administration is proposing a US$1.5 trillion fund to be leveraged from an initial US government expenditure of US$200 billion

A senior White House official said the Trump administration is proposing a US$1.5 trillion fund to be leveraged from an initial US government expenditure of US$200 billion.

Already leading the way for a US-Australian infrastructure partnership is Melbourne-based Transurban Group, which operates the I-95 and I-495 Express highway toll lanes in northern Virginia and is eyeing any new US toll road opportunities.

In an interview with Capitol Intelligence, Transurban North America president Jennifer Aument said Trump’s infrastructure fund can generate up to US$250 billion in private sector funding to rebuild and modernize US highways, bridges and tunnels.

She said foreign investors in US infrastructure must overcome the fact that the United States is 50 separate markets and take a long-term investment approach.

“I think one of the big challenges we have seen for foreign investors who try to operate in the US is they come in and have unrealistic expectations on how quickly things can move forward,” Aument said.

The Carlyle Group, the giant Washington, DC-based private equity fund, is also the likely global partner for any Australian-US infrastructure investment partnership.

Carlyle co-CEO Glenn Youngkin said he always tells major foreign funds who love to invest in emerging markets that the “greatest emerging market opportunity around the world today is to invest in US infrastructure.”

During the US Chamber of Commerce-hosted America’s Infrastructure Summit, Carlyle’s Youngkin said America’s leading private equity group is already eyeing US$25 billion in US airport privatizations and public-private partnerships. Carlyle is already involved in the modernization of New York’s JFK International Airport Terminal 1 and the upcoming privatization of St. Louis Lambert Airport located next to Ferguson, Missouri.

During an interview with Capitol Intelligence at Politico’s State Solutions forum held on the sidelines of the National Governors Association winter meeting in Washington DC, Alaska Governor Bill Walker said one of his main goals was to once again make Anchorage’s Ted Stevens International Airport a major Asian hub.

While Ted Stevens remains an important cargo hub for Asia– it ranks as the fourth-busiest airport in the world by cargo traffic, after Hong Kong, Memphis, and Shanghai–Pudong – the lack of an international expansion strategy by Alaska Air CEO Brad Tilden has prevented Ted Stevens from achieving its full potential as an international hub.

However, Walker said he was willing to consider a P3 solution for Ted Stevens involving the state’s massive Alaska Permanent Fund being a co-investor with a foreign SWF fund such as Singapore’s Temasek, or even China’s SWF, China Investment Corporation (CIC).

The privatization of Alaska’s Ted Stevens Airport would be the second in the United States after Mexico’s Mexico’s Grupo Aeroportuario del Sureste SAB de CV took over San Juan, Puerto Rico’s Luis Muñoz Marín International Airport.

The historic alliance between Australia and US governors was forged through the leadership of National Governors Association chairman and Nevada Governor Brian Sandoval, who brought not only Turnbull but also Ghana President Nana Akufo-Addo and IBM CEO Ginni Rometty.

It is more than likely that that the nascent US-Australia alliance will involve Asia’s other infrastructure giant, Singapore.

Singapore’s SWF Temasek is already setting itself up to become a leader in US transport P3s both for its direct ownership of Singapore’s global port operator PSA International Ltd. and its majority stakes in Singapore Airlines and interest in Basel, Switzerland-based listed airport duty free giant, Dufry AG.

In a brief statement to Capitol Intelligence during a recent state visit by her husband, Singapore Prime Minister Lee Hsien Loong, with US President Donald Trump, Temasek CEO Ho Ching said the fund “may look” at co-investing in Trump’s planned US$1.5 trillion infrastructure fund.

Lee’s Oval office meeting with Trump on October 23 was highlighted with the announcement that Singapore Airlines would purchase from Chicago-based Boeing Co some 20 777-9s and 19 787-10s aircraft for a total deal value of US$13.8 billion.

The Sinaporean premier, in a move stressing the Southeast Asian island state’s close ties with US business leaders, participated in an interview conducted by Carlyle Group Co-Founder and Co-Chairman David Rubenstein at an Economic Club of Washington DC event just ahead of his meeting with Trump.

The Trump administration’s laissez faire foreign economic policy has begun setting the foundation for a US-Asian alliance between the United States, Australia and Singapore with geo-political ramifications that will undoubtedly extend beyond private sector investment in airports, roads and ports.