1. 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

2. The Challenge

3. 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
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 ($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

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

5. A Solution
Asset Recycling in NSW

6. 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
Australia
4.8%
NSW
5.2%
Source: ABS, NAB

7. 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

8. 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)

9. 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

10. 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

11. 2017/18 NSW Budget Coverage

12. The NZ Opportunity

13. 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

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