The Government is prepared to use alternative financing to complement traditional grant funding and more effectively use its balance sheet to support Australia's infrastructure needs.

Alternative financing arrangements could include the provision of loans, guarantees and/or equity. In cases where the project is supported by user charging, such arrangements can be used to help mitigate risks, for example, uncertainty regarding likely toll revenues, which might otherwise impede private sector investment.

The Government will ensure that the risks for the Commonwealth are carefully assessed and effectively managed.

A good example of this approach is the Government's commitment to provide up to $2 billion in alternative financing, through a concessional loan, to support the second stage of the WestConnex project in NSW. The Australian Government's concessional loan will provide bridging finance while the project is constructed, with repayment to occur when the project becomes operational and generates revenue. Moreover, the financing will enable the acceleration of this stage of the project by up to 18 months, and complements the $1.5 billion in grant funding that the Government has committed to get the WestConnex project moving.

The Government has requested the Productivity Commission provide advice on the use of alternative financing as part of its current inquiry into Public Infrastructure. This advice will help inform the Government on the further expansion of alternative financing to infrastructure projects in the future.