Drought spells opportunity

By Charlie Corbett
Thu 15 Feb 2007

Australia's worst drought for 100 years will provide a host of money-making opportunities.

Australia's worst drought for 100 years will provide a host of money-making opportunities for financiers, infrastructure managers and contractors, according to a recent report from investment bank Citigroup.

The report said federal and state governments' belated attempts to solve Australia's water crisis would result in billions of dollars worth of spending.

"Australia has been slow to adjust to the longer-term impact of climate change, with both state and federal governments only providing a notable lift in water industry capital expenditure during the past couple of years," it said.

However, momentum is shifting quickly.

Citigroup highlighted the Federal Government's announcement last month that it would spend $11 billion to improve water use efficiency and the Queensland Government's planned $7 billion splurge on water infrastructure.

It said following countries such as the United Kingdom down the privatisation road would improve efficiency and provide good business for fund managers.

"In the UK around 80 per cent of the efficiencies extracted out of the privatised water industry were passed on to consumers, with the remaining 20 per cent going to the private sector asset manager," the report said.

It also said state governments could issue debt to fund specific projects.

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