Australia may be getting another government backed financier - if the Labor Party returns to power at the next general election.Infrastructure Australia will have its mandate widened to provide loans and guarantees for projects under an approach modelled on the way the Clean Energy Finance Corporation operates.Bill Shorten, the ALP leader, yesterday pledged to allocate A$10 billion for the purpose.In a fact sheet published yesterday, Shorten said Infrastructure Australia "will be given a new financing mandate that will mobilise private sector finance by participating with loans, loan guarantees and equity investment."The IA financing facility, "if needed [will] deploy a combination of guarantees, loans or equity to get new projects started provided they meet stringent criteria."Shorten said "this is not a grants program … it will only offer loans, loan guarantees and equity where there is market failure and where projects are expected to deliver a return on its investment."The public policy rationale and business case behind any form of finance, beyond a direct grant however, may be tenuous.In March 2014, the Productivity Commission concluded there was no shortage of private sector capital to support investment in infrastructure and few reasons to support the sector with an infrastructure bank.In a report written at the time, the Commission noted there were US$25 billion of project bonds placed in global markets in 2012, almost double the level in 2011.  Bank project loans were US$289 billion in 2012, with substitution between loans and bonds.The commission said it endorsed the view expressed by the Office of the Infrastructure Coordinator, "that banks are considered to be pricing greenfields risk appropriately and equity investors are willing to take on and price refinancing risk arising from the provision of short-term bank loans.""Similarly, there is generally a sufficient appetite from both the equity and debt markets to finance commercially-sound public infrastructure at a reasonable rate of return reflecting the risk in the project, provided there is a funding stream available to support the finance," the Commission said."The lack of private sector appetite to finance public infrastructure projects appears to be mainly driven by reluctance to take on greenfields patronage risk," which the commission said "can be overcome by governments providing a commensurate funding stream through availability payment models.""Overall, there appears to be no shortage of private sector capital that could potentially be deployed to finance public infrastructure in Australia for commercially-sound projects." The Commission said there was a risk the establishment of an infrastructure bank would create pressure to fund projects that would otherwise not pass a cost-benefit assessment, simply because there was capital available at any given time.