Australian governments may have to shed their aversion to public debt in order to help stimulate investment in infrastructure, Reserve Bank deputy governor Philip Lowe said yesterday. This will be made easier, and more efficient, if reliable 'user pays' revenue flows can be generated. "It is no use identifying infrastructure projects with large potential gains if a way cannot be found to finance them," Lowe told the International Association for Research in Income and Wealth conference on productivity measurement yesterday.The RBA's views are of interest in the context of the recently announced Productivity Commission Inquiry that will "look at ways to bring down the cost of infrastructure, including facilitating greater private sector involvement in major infrastructure projects."Lowe told the conference that the infrastructure financing challenge arises not from a lack of money to invest but from the reluctance of investors to take on construction risks, and the uncertainties over charging for use of infrastructure."Given these challenges, the public sector can play an important enabling role, either through the use of its own balance sheet directly or through risk-sharing arrangements with the private sector. "Over recent times, we have seen a number of innovative public-private partnerships that have helped build important pieces of infrastructure in Australia, although some of these have had problems."Lowe suggested that one reason the public sector has been reluctant to play a larger role is an aversion to public debt, which has served Australia very well, but this same aversion has also "limited the appetite" to borrow to build public infrastructure"Looking forward, we need to find a sustainable way in which to finance our infrastructure needs," Lowe said. He said that whichever public sector does the financing, a way must be found to generate a revenue flow from that infrastructure. "One obvious option is user charging that promotes the public good. Not only does this provide a revenue source to pay for the infrastructure over time, but it can help ensure that the infrastructure is used efficiently," he said. "Another option is the use of levies and other mechanisms to generate revenue from those who benefit most from the infrastructure."