Stuart Robert (Fadden, Liberal Party) Share this | Hansard source

The Nation-building Funds Bill 2008 and related bills establish three separate financial assets funds: the Building Australia Fund, the Education Investment Fund and the Health and Hospitals Fund, similarly structured to the existing Future Fund. It is a great privilege to follow the member for Wakefield. I can only hope that we give him a funny hat, a funny wig and a funny nose and call him Bobo, because his speech was completely and utterly funny. But I will move on to the more serious aspects of the bills. The Building Fund will have initial capital of $12.6 billion, with $7.5 billion from the 2007-08 surplus of the Howard years plus the proceeds from T3 of the Howard years and the balance of the Communications Fund—of the Howard years as well. The education fund will have $8.7 billion, with $2½ billion from the 2007-08 surplus of the Howard years and the remainder from the closed Higher Education Endowment Fund. That is from the Howard years too! The health fund will have $5 billion, which is entirely from the 2007-08 surplus. That is from the Howard years too!

Thus these funds will have $26.3 billion at their inception on 1 January 2009, of which not a single dollar has been raised by the Rudd government. If you had thrown 10c in, at least you could have said you had done something. But you just have $26.3 billion from the Howard years. By all means, Member for Wakefield, roll out and say the Howard government did nothing. They left you $26.3 billion to spend. Let us reflect on history. In 1996, when the Howard government took over and faced a $10 billion hole and a $96 billion legacy, what percentage of GDP was being spent on infrastructure? What was it? It was 2.3 per cent. When the Howard government lost the election last year, what percentage of GDP was being spent on infrastructure? It was 5.4 per cent. Member for Wakefield, you might want to get out that funny hat and that red nose after all. The government should be thankful to the previous government for their prudent financial management. I wish you would stand up and say: ‘You know what? Thanks.’ You should say thanks for the $26.3 billion that you are going to spend on infrastructure and that you have not put a single cent towards.

Other funding is from mechanisms set up by the Howard government. While the bill allows for future surpluses to be placed in the fund, we all know—and Access Economics has confirmed it—that the imprudent financial management of just 12 months of this government has made it highly unlikely that there will be any surplus funds. What about the $10.4 billion? We took on faith, on trust, that any responsible government would do a regulatory impact statement and some modelling to ensure that the desired stimulus would be achieved by the spending. You can imagine our surprise to discover none of that was done. Access Economics has made it clear that future Labor budgets will be in deficit—if the current budget is not in deficit now.

At the announcement of the budget, the Treasurer said he expected the Building Australia Fund to receive $20 billion in instalments over the next two years and the education fund to receive $11 billion in investment. There has been not a single cent from this Labor government budget. As the member for Wakefield leaves the chamber he could at least throw us 10c to put in the fund. He could at least make some contribution for Labor. Perhaps 5c, Member for Wakefield. Is that too much to ask? Obviously, we are not looking at a fund that will continue to pay dividends towards infrastructure; we are just looking at rapidly depreciating funds—money the Howard-Costello government left the Rudd government. Of course, the Rudd government will do what all Labor governments do—it will spend.

The history of these funds is telling. The coalition originally set up the Higher Education Endowment Fund so that budget surpluses achieved through sound economic management were put aside so that future generations could enjoy the benefits of improved facilities. Only the interest from the fund was to be spent, while the capital would continue to grow with additions from future surpluses. As the capital would grow so would the interest, thus increasing the pool every year. The Rudd government has completely ruined this fund. Their fund is simply a convenient location to temporarily park money so they can spend the whole lot on some short-term political purpose. A fund that was supposed to grow over time will now be whittled away in record time and with little hope of future capital injections. The case of the higher education fund is indicative of all funds. They are currently massively underfunded because the Labor government has not put in even 5c, let alone 10c.

The Communications Fund was set up to assist rural Australia with telecommunications infrastructure. This fund is also being raided. Again this fund was set up with systems in place to protect the principal, but now all moneys are clearly fair game and could go anywhere. An investment in the future of rural telecommunications is being whittled away. What is the future of rural communities under this Labor government? The Communications Fund should remain a separate entity to ensure that rural Australia is not disadvantaged.

Labor have shown how serious they are about communications through their absolute bungling of the national broadband network. In the lead-up to the election 12 months ago, Labor promised hand on heart that within six months it would have selected a tender for its proposed national broadband network and would commence construction before the end of 2008. According to my watch it is 26 November. I do not see a tender closing, I do not see a preferred supplier selected and I do not see any network being started.

Running costs for all projects funded by these funds will have to come apparently from state and territory budgets. Running costs will be high for health, research and education projects because of staffing and will be modest to high for transport, energy, communications and water projects. This is a little reminiscent of the computers for schools project. The federal government funding did not reflect the actual costs. It was a great election pitch. They stood up holding the tool of the future—a laptop—and promised that every secondary school student would have access to one. Suddenly it became every second child. Although $1 billion is being allocated, the $3 to $4 billion of on-costs are apparently not being considered, and states such as New South Wales are now pulling out of the program altogether.

This government is not levelling with the Australian public about processes and outcomes. We need greater transparency and public release of all relevant information relating to proposed and successful projects. Investments may replace previously planned state and territory public works for no net economic gain. The Governor of the Reserve Bank has said:

… it is still important for fiscal measures to pass the ‘good policy’ test.

That is stating the bleeding obvious. Of course, all measures should pass a good policy test. He also said:

Poor public policy proposals should not be accepted simply because they are presented as boosting short-term aggregate demand.

The Rudd government is going down the same path as the failed New South Wales Labor government with debt, costly white elephants and budget deficits.

This nation-building fund does not include provisions to ensure transparency so that all decisions can be shown to be worthy, to be truly beneficial and to have been investigated thoroughly by the Productivity Commission. All reports to the Minister for Finance and Deregulation from the advisory boards and the Future Fund board should be made public—that is called transparency. What is needed is full disclosure of the results of the cost-benefit analysis for those projects recommended and for those rejected, including all data, assumptions and modelling used. It also means full transparency of public-private partnership contracts. Furthermore, the government has precluded using the funds to pay for any ongoing running or maintenance costs, including staff costs, saying: ‘Where specific projects have an ongoing cost component it is intended that such funding would be sourced through other means. This could include direct funding from the budget or funding by the states or territories as part of the COAG reform agenda.’

The splitting of capital costs and ongoing maintenance costs could lead to instances where the whole-of-life costs of an asset are not properly considered when these funds are being invested. A whole-of-life asset cost means that the cost of the project is considered over its lifetime—so it includes not just capital but ongoing maintenance, replacement and service costs. A recent example where a whole-of-life asset costs approach was not undertaken is Labor’s computers in schools policy. I think they have rolled out about two or three per cent of them, which is not bad since you have been government for 33 per cent of a term.

The potential also exists for state governments to simply take infrastructure projects off their own books and bid for federal funds. Let us look at that great example of governance, the New South Wales Labor government. In its recent appalling mini-budget the Rees government listed four infrastructure priority projects that they had submitted to Infrastructure Australia and that will only proceed before 2012 if they are substantially funded by the Commonwealth. A week before the mini-budget the intention was that these projects would be 100 per cent funded by the state government. The Labor state governments are clearly looking to these slush funds to bail them out of the moribund position they have dragged themselves into.

The funds allow decisions to be made without information being made public. The Department of Finance and Deregulation claims that it would breach commercial confidentiality to do otherwise. However, it is standard practice in other countries, including North American and Scandinavian nations, for information to be disclosed and for companies to have to undertake public discussions on their bids—for example, in the United States private sector companies have to appear before Senate and House congressional committees. The issue of transparency has been further affected by the revelations reported in the Sydney Morning Herald on 6 October this year that former New South Wales Premier Morris Iemma was told not to apply for funds for the north-west metro as there were ‘no votes in it’ for federal Labor.

Concerns that these moneys could be used as a slush fund were further exacerbated by claims in the Age on 3 October that the original legislation was pulled by Minister Albanese because it gave him insufficient ministerial discretion over how the money would be allocated. I wish this government well and the nation wishes them well—the nation prays that they will do well—though it looks like they will do what every Labor government before them has done: they will spend and spend and spend, and put the nation into deficit. That is not the intent of this legislation and it is not the direction that the government should be going in.

See this speech in context