BUILDING NATIONS SYMPOSIUM THE BENEFITS OF CAPITAL RECYCLING MIKE BAIRD CHIEF CUSTOMER OFFICER, CORPORATE & INSTITUTIONAL BANKING NATIONAL AUSTRALIA BANK OCTOBER, 2017 © BNZ 2017 | PRIVATE & CONFIDENTIAL | BUSINESS UNITS

The Challenge

Infrastructure: Market Opportunity Supportive Macro Environment Significant Global Market Clients Going Global 2016 Global Infrastructure Finance Market Deal locations of NAB’s top 20 clients 2010 - 2016 High domestic population growth: +400k p.A. , reaching 40m in 20551 USA 40% UK Global population growth with a rising middle class Oceania Russia 25% UAE Ageing & out-dated infrastructure across the developed world Canada Italy 15% Govt budget constraints driving greater private sector involvement Spain France Global infrastructure needs of $94 trn 2016-2040 ($3.7 trn per year)2 Asia: $50.8 trillion ($2 trn p.a.); US: $12.4 trn ($500bn p.a.); Europe: $14.8 trillion ($590bn p.a.), Oceania: $1.9 trillion ($79bn p.a.) 15% Transition to a low carbon economy Other 5% 1UN Department of Economic and Social Affairs, World Population Prospects, 2015 Revision 2Global Infrastructure Outlook, Oxford Economics, 2017

Global debt levels General Government Net Debt (%GDP) Global Government Debt (%GDP)

A Solution Asset Recycling in NSW

NSW in 2011: Financial Constraints ‘The Challenge’ Net Debt Levels of $32bn NSW net debt of $32bn in 2011 State deficit of $8bn in 2011 AAA credit rating placed on watch Unemployment rate above national average and among highest in the country Economic growth below national average and among lowest in the country Infrastructure backlog of $30bn Deficit of $8bn Average Unemployment Rate - 2005-11 Australia 4.8% NSW 5.2% Source: ABS, NAB

Asset Recycling Process: Infrastructure NSW Established July 2011 to assist the NSW Government identify and prioritise critical public infrastructure Expert Advice Independent and strategic advice to the NSW Government to make sure NSW gets the infrastructure it needs Turning world class plans into world class projects Projects NSW Projects assurance Monitoring NSW’s infrastructure program to keep it on track and deliver outstanding results to the community Accelerating priority projects that boost the economy through the NSW Government’s dedicated infrastructure fund Restart NSW Urban Public Transport Urban Roads International Gateway Regional Transport PRIORITIES Water Education Health Energy

Asset Recycling: 2013 onwards Port Botany & Port Kembla $5.1bn NSW Poles & Wires1 $34.1bn Port of Newcastle $1.8bn NSW Land & Property Information $2.6bn $53.5bn Gross proceeds Non-exhaustive Sydney Desalination Plant $2.3bn Asset Recycling Initiative Payments $2.2bn Electricity Generators $2bn 1. Includes proceeds from Transgrid ($10.3bn), Ausgrid ($16.2bn) and Endeavour Energy ($7.6bn)

Re-investment of proceeds Sydney Metro (Rail) $7bn WestConnex (Road) $1.8bn Major Stadia Network (Sports Infrastructure) $1bn Sydney Opera House renewal (Cultural) $600mn New Assets Non-exhaustive Arthur Philip High School + Parramatta High School $100mn Westmead Hospital (Health Infrastructure) $750mn Pacific Highway Upgrade (Regional Roads) $400mn

Economic benefits in NSW NSW now NSW GSP vs. Australia GDP Growth NSW GSP trending above national GDP Sydney commanding the skies with more than 50% of all cranes in Australia NSW employment growing faster than the rest of Australia Asset recycling initiative to boost the NSW economy by ~$300 billion in just over 20 years, 100,000 jobs by 2035/36 (Deloitte) Total Employment Growth 1 Crane Index: Sydney vs. AUS Capital Cities Source: ABS, NAB, Rider Levett Bucknall Oceania (Q2 2017) 1. Year on year and seasonally adjusted

2017/18 NSW Budget Coverage

The NZ Opportunity

The NZ Opportunity ‘The Challenge’ NSW: A case study Infrastructure Pipeline Infrastructure Pipeline NSW now: a case study NSW: A case study Social Housing Dunedin Hospital Waikeria Prison Penlink East West Link Auckland Light Rail Ministry of Defence Infrastructure 4.6% unemployment Triple A credit rating Net debt -$7.8bn Budget under control Funded infrastructure program for a generation Ageing infrastructure network: $80 billion infrastructure need over next 20 years1 - Growing population: +50% of NZ population growth over next 20 years will Ageing infrastructure network Ports of Auckland Watercare Auckland Airport Potential opportunities Govt budget constraints: net debt ~24% GDP Ageing infrastructure network 1Global Infrastructure Outlook, Oxford Economics, 2017

Thank you MIKE BAIRD CHIEF CUSTOMER OFFICER, CORPORATE & INSTITUTIONAL BANKING NATIONAL AUSTRALIA BANK OCTOBER, 2017 © BNZ 2017 | PRIVATE & CONFIDENTIAL | BUSINESS UNITS