Asset recycling enables the Government to boost its available funds by either selling or offering a long-term lease of underutilised, inefficient, or surplus public infrastructure to investors in the private sector.
In exchange for the sale or lease of those assets, the Government can receive a large up-front, lump-sum payment.
Capital received from divestment can be used to revitalise existing assets, or fund new and critical infrastructure needs that might otherwise have been unfunded or funded using more traditional methods such as raising taxes or increasing public debt.
New South Wales
Since 2012, asset recycling has been one of the core principles of Australia's New South Wales Government property policy.
The NSW Department of Premier and Cabinet says that "real property assets are only held by Government when required, and in the form necessary, to support core government service provision."
Australia's asset recycling has extended to the sale or long-term lease of public assets including ports, "poles and wires" electricity assets and its land titles registry, and has reached a combined value of A$53 billion.
Former NSW premier Mike Baird campaigned at the 2015 election on a platform of infrastructure investment, of which the recycling of assets was the method to achieve this.
Baird's re-election demonstrated that asset recycling and new infrastructure funding mechanisms can be economically effective as well as politically popular - but they take leadership and vision.
A recent report on asset recycling by Property NSW showed overwhelming support for the NSW Government's policy of recycling property assets to fund infrastructure and better services.
Of those surveyed, 71 per cent said they favoured leasing or selling under-utilised assets over more traditional measures, such as raising taxes or increasing levels of public debt.
Interest from the US
During his visit to Australia earlier this year, United States Vice-President Mike Pence told business leaders that the Trump administration hoped to emulate the Australian model of infrastructure asset recycling as part of the President's US$1 trillion infrastructure plan.
New York's LaGuardia Airport was cited by Pence as one example of an asset that had the potential to be redeveloped with the injection of private funds.
LaGuardia is so badly in need of upgrades, expansion and improvements that President Trump has referred to it as "like from a third world country", contrasting it (and other US airports) to the "incredible airports" in Dubai, Qatar and China.
Upgrading Circular Quay
It is estimated that the number of jobs in the iconic Circular Quay precinct in Sydney will increase by around 4500 in the next 30 years.
The ferry wharves and adjoining promenade were built in the 1940s and are nearing the end of their life. They are also not compliant with the Disability Standards for Accessible Public Transport.
For these reasons, they are considered long overdue for a facelift.
In order to fund the upgrade, Property NSW is divesting commercial assets that are considered not core to service delivery or of long term strategic importance.
This includes the sale of rights to the ground lease rental income at Darling Quarter for 30 years, for an upfront payment of A$192 million ($215m).
The revitalisation of Circular Quay will support new construction jobs, and the upgrades will deliver improved transport services and an enhanced retail offering for workers and visitors, boosting economic growth and tourism to the precinct.