Anthony Albanese (Grayndler, Australian Labor Party, Shadow Minister for Infrastructure and Transport) Share this | Hansard source

The Asset Recycling Fund Bill 2014 is a part of the Abbott government's ongoing attempt to con Australians about the level of its commitment to infrastructure investment. On a superficial level, it sounds like the government is doing something. Indeed, part this legislation creates a fund which the government proposes to fund new infrastructure proposals in the 2014-15 budget.

But there is a real problem here. The budget includes no new money for infrastructure. The few new projects are being funded by cuts to existing road and rail projects. But more than anything else, this bill is about an attempt by the Commonwealth to flick pass responsibility for nation-building to state governments. This will be done using the centrepiece of this legislation, the $5 billion so-called Infrastructure Recycling Initiative. This fund will be available for two years. State governments willing to privatise public assets and spend the proceeds on infrastructure projects will be eligible to access the fund for a 15 per cent premium on the price of the project. The creation of this fund mirrors the political story of the entire 2014-15 budget. It is a story about a Prime Minister who is cutting spending, because he is obsessed with small government. At the same time, he is attempting to paint himself as a high-rolling big spender on infrastructure. Because of the incompatibility of these positions, the Prime Minister is desperate to pass responsibility for cuts onto other levels of government.

Last month's budget was something of a masterclass in the flick pass. For example, the $80 billion in cuts to health and education spending are federal cuts, but the states will have to deliver them. They will have to bear the political backlash out there in the community while the Prime Minister washes his hand and demands public acclaim for fiscal rectitude. In the same way, cash-strapped councils will have to wear the political pain of the Prime Minister's billion dollars in cuts to financial assistance grants to councils.

The legislation before us is of apiece with this buck-passing mentality. It seeks to impose greater responsibility for infrastructure on states while this coalition government seeks the credit. The funding sphere is a political minefield of privatisation of public assets. The extent to which this is a political issue is highlighted by the fact that it is not called a privatisation initiative; it is called recycling where states will be asked to take significant political risks for the privilege of accessing a 15 per cent bonus. This asset recycling initiative is a fancy-sounding name for privatisation of state assets and a reduction of Commonwealth spending on infrastructure.

I notice that the government claims that the $5.9 billion that will go into this proposed fund is new. That is blatantly untrue. The $5.9 billion was stolen from two existing infrastructure investment funds. The first, the Building Australia Fund, was established by Labor to provide investment in transport, communications, energy and water infrastructure. The second, the Education Investment Fund, was also created by Labor and was designed to fund infrastructure investment in education and research.

The abolition of the Education Investment Fund comes on top of its $5.8 billion of cuts to higher education and student support. The abolition raises serious questions about this government's commitment to the long-term sustainable funding of infrastructure for teaching and research at Australia' public universities. Without systematic and sustainable funding for research infrastructure, Australia will not be able to attract the best and brightest researchers in the world nor commit to significant long-term research and commercialisation projects done by our competitors.

The Building Australia Fund and the Education Investment Fund delivered real, direct investment in productivity-driving infrastructure. Decisions about grants from these funds were subject to rigorous process. Projects funded from the Building Australia Fund had to be ticked off by the independent Infrastructure Australia to ensure that investments had genuine potential to add to national productivity. In the case of the Education Investment Fund, a specialist committee of independent experts exercised similar oversight and the previous government acted on the expert advice.

The infrastructure recycling initiative is being presented today as a new means to leverage extra investment—that is, investment that would otherwise not occur—but it is a con. The fund itself is being bankrolled by a raid on the two existing investment vehicles, not a single new dollar, as a result of this legislation that is before the parliament today.

Let me put it another way: the government is dumping plans for actual direct investment in nation building and will use the money gained to pay the states to do its job. So, whether it is hard infrastructure in terms of transport infrastructure or investment in science and education institutions to boost our contribution to productivity, this government is abandoning both in terms of direct investment.

Let me say again that the Commonwealth contribution to projects bankrolled by this fund will be the 15 per cent premium on the value of the infrastructure project but, under existing arrangements, the Commonwealth consideration to infrastructure projects is either a fifty-fifty share with the states or in some cases an 80-20 split. So let's be honest: this fund is a cost-cutting measure at least as it relates to the Commonwealth budget. Most importantly, there are no checks and balances in this legislation to ensure that the projects funded by this asset recycling fund represent value for many. That is why the opposition today will be proposing amendments aimed at restoring the proper processes in decision making about infrastructure.

The fund is an emblem for this government's political cowardice and lack of vision both when it comes to actual investment and to probity standards. The term 'asset recycling' is a different way of saying privatisation: the sale of existing public assets that are owned by the Australian people. I am neither for or against privatisation full stop, but it must be considered on a case-by-case basis. Sometimes it might be appropriate to sell a public asset but it is always vital to balance the short-term benefit of selling assets against the long-term downside of losing the revenue stream for that asset. Once the asset is sold as a one-off, the revenue stream is gone, so you can weaken the long-term fiscal position of government through a short term act. That is why privatisation is not always popular with voters. It involves real political risks. Taxpayers are sensitive about the idea of what some people call selling off the family silver. They know that in many cases a windfall gain is made at the cost of a long-term revenue stream.

The Prime Minister understands the political risks involved in privatisation for state governments, so he knows that the sting of any voter backlash associated with this fund will be felt by the states, not the Commonwealth. It is a case of all care but no responsibility. I predict that future public complaints by state governments, particularly by coalition governments, about inadequate roads or public transport will be met by a standard prime ministerial response from the government, 'It's not my fault. 'It's the fault of the states.' I offered them access to the Asset Recycling Fund, which was already in place in terms of money with the Building Australia Fund and the education infrastructure funding. This is just part of the mirage that was the government's so-called infrastructure initiatives in the budget in May, and you do not need to be Nostradamus to make this prediction.

I watched for nearly a dozen wasted years as John Howard amassed a massive infrastructure deficit by behaving as though infrastructure was none of his business. When I was sworn in as infrastructure minister, Australia was ranked 20th in the OECD for investment in infrastructure as a proportion of GDP. When I left, we were first as a result of the record investment that the federal Labor government put into nation building. Mr Howard was a determined federalist who provided no leadership on nation building. He found it easier to use surpluses, driven by the mining boom, to curry electoral favour with middle-class welfare than to actually invest in the future of this nation. After all, state premiers were always on hand to use as whipping boys if anyone complained about inadequate infrastructure. We have already seen it with this government's approach to public transport infrastructure where they have withdrawn every single dollar from every public transport project around the nation that was not already under construction.

The coalition's preparedness to identify problems is exceeded only by their enthusiasm for passing them onto other levels of government. Rather than achieving actual progress, the government would rather retain power by dissolving lines of government responsibility and by playing the blame-game. While Labor builds the nation for the benefit of all, those opposite oppose nation building and actually have legislation before the Senate to remove the term 'nation building' from any involvement in infrastructure. They believe that infrastructure is just about marginal electorates.

Another problem with this new fund is its potential to distort the infrastructure market, because the window of opportunity for the privatisation of state assets is only two years and could encourage fire sales. It could give states an incentive to make poor decisions in their haste to get a piece of this action. This fund could lead to a crowding out of the infrastructure market for two years. Where you have more possibilities for investment than would otherwise be the case at the one time, you will get a lower price to taxpayers from the sale of those assets. Again, that is not a problem for the federal government, but it would be a problem for state governments.

The question of how governments fund infrastructure is always critical. In office Labor worked with states to deliver funding for their proposals. We also created taxation arrangements designed to encourage private sector investment in infrastructure—arrangements that this government has made no effort to utilise. Above all, we had faith that our creation of Infrastructure Australia to provide proper process for infrastructure decision making meant that our projects would add to national productivity. They were projects that yield productivity gains for themselves over time. They create jobs and they create economic activity that boosts government revenues. Some, like investments in urban rail, add to the amenity of cities and drive further productivity gains. They encourage people to leave their cars at home or move closer to their workplaces. That is why we funded all 15 projects that were identified as a priority by Infrastructure Australia. Whether it be projects like the Majura Parkway, or the Hunter Expressway, or whether it be rail projects like the regional rail link, we funded them on the basis of proper advice.

The Prime Minister, though, has put forward a budget in which none of the new projects that have been funded have been identified as priority projects by Infrastructure Australia. At the same time the Prime Minister believes that changes put forward to the Infrastructure Australia legislation would undermine its independence, and we are seeking to move amendments in the Senate to fix up this flawed legislation.

The government's approach to infrastructure spending in the 2014-15 budget is wildly out of kilter with their rhetoric. If you judge the Prime Minister by his words, you might believe that he was committed to infrastructure investment. He has been out there with re-announcement after re-announcement claiming that projects that had been underway for years were somehow new. We heard the Deputy Prime Minister, yesterday, trying to claim the Moreton Bay Rail Link, which was first promised in the Queensland parliament in 1895. But it took a federal Labor government in partnership with the Queensland state Labor government and the local council to ensure that it occurred. In terms of that, the fact is they have announced projects which were funded in budgets by the previous Labor government, including the Inland Rail project. The study was done, the commitment was given in 2010 and funding of $300 million was in the 2011 budget for the Inland Rail line. They have announced exactly the same funding, exactly the same time frame, and they pretend that somehow it is something new.

The new projects are being funded by cuts to existing road projects, like Melbourne's M80 and Tasmania's Midland Highway, as well as the cancellation of urban rail investment including the Melbourne Metro and Brisbane's Cross River Rail Project. The Prime Minister scrapped these projects because he has an ideological aversion to public transport. He outlines that in his book Battlelines where he makes it clear that in his view there simply are not enough people who want to go from one destination to another to justify anything other than the use of a car. The fact is, we cannot deal with urban congestion in our cities unless we have both rail and road. That was recognised by Infrastructure Australia, which is why it recommended funding for both of those projects that was in place.

The Prime Minister also said before the election that they would have cost-benefit analysis of all projects of $100 million or more. That promise seems to have gone the same way as: 'No cuts to health or education or the ABC.' The fact is that in the budget that they put forward, where they say there is a budget emergency, they have advanced $1.5 billion for the East West project in Melbourne, this month, including $1 billion for stage 2 that is not due to commence this financial year or next financial year but the financial year after that, if they ever work out where it is actually going to go. It is an extraordinary advance payment to the Victorian government, which is of course facing an election.

Their rhetoric regarding infrastructure is designed to distract Australians from the real heart of the budget—the broken promises, the savage spending cuts and the unfairness. Here is this government's message to Australians: 'Never mind that you won't be able to see a doctor anymore. You'll be able to drive on a brand-new road that Labor funded three budgets ago.' They made a statement of claim that within 12 months there would be cranes in the sky for these projects that do not have planning, have not been through environmental assessment and do not have cost-benefit analysis.

The problem for the government is that they spent so much time saying no to everything and being relentlessly negative that they did not craft alternative policies and did not craft an alternative vision for the nation, which is why, when they came to government, we saw the budget—for the first time since 2008—not include a single new dollar for the Bruce Highway or the Pacific Highway over the forward estimates. There is not a single new dollar for rail freight, yet the minister for infrastructure and his errand boy, the assistant minister, have been busy re-announcing projects on these two highways and other projects, pretending that they were not previously funded by the former, Labor government.

The government has also ignored its own promises about the integrity of processes surrounding investment decisions. The government said before the election that it would work with Infrastructure Australia to ensure probity in selecting which infrastructure projects would attract Commonwealth support, and yet we know that with the Perth Freight Link project there is no plan, no design and no cost-benefit analysis at all. We know that because the WA state government says that is the case. We believe that the Infrastructure Australia model got it right, but the government has introduced legislation, which it gagged in this place, to allow it to dictate IA's research agenda. The amendments would allow it to order IA to ignore certain classes of infrastructure, such as public transport. The amendments would allow it to gag Infrastructure Australia by preventing publication of its independent research. So, within months of its election, the government is creeping away from its commitments to probity. In a recent video, produced shamefully for political purposes to align with the D-Day commemorations, the Prime Minister threw away all pretence. He complained about 'analysis paralysis', which he said was preventing infrastructure projects from going ahead. What he was really saying was: 'Don't worry about proper analysis.' If the Prime Minister's word means nothing to him, he can take that up with the electorate.

In the meantime, we are stuck with this bill. While process is an inconvenience to be swatted away on that side of the House, the opposition will be moving amendments which will hold the government to its own claimed principles. The first would require that no project could be funded from this new fund unless it has been the subject of a full cost-benefit analysis ticked off by Infrastructure Australia and is in keeping with the government's own commitment that they would have proper analysis for any project in receipt of more than $100 million.

The second amendment relates directly to projects that are being funded by states via asset sales, thereby earning the 15 per cent premium. It would require the finance minister to table a disallowable instrument for each privatisation transaction as a precondition to eligibility for it to attract an incentive payment. It is aimed at empowering this parliament to hold the government to its own promises. Again, if the government is serious about funding genuine productivity-enhancing projects properly assessed by independent experts, it should have no difficulty with this amendment.

Several projects funded in the budget, including the Perth Freight Link, Melbourne's East West Link and Queensland's Toowoomba Second Range Crossing, are being funded even though Infrastructure Australia is yet to see full cost-benefit analysis. We are setting up a mechanism to make sure that the government's rhetoric is matched by the legislation. They need to be held to account so that we do not have absurdities like this $1½ billion advance payment to the Victorian government on behalf of taxpayers. What sort of budget slashes health through the Medicare co-payment, education by abandoning the Gonski reforms, and public transport projects on the basis of 'These measures need to be made because there's a so-called budget emergency,' but gives $1½ billion to sit in the Victorian government's bank account for no purpose other than making its budget look better prior to the election later this year? It stands in stark contrast to what the assistant minister said in a speech on 6 June. He said:

… we are driving the state governments very hard to give us timetables to ensure that we're meeting the expected time of delivery of these projects. That we're hitting milestones, that we're only making payments to states when they actually deliver the milestones, that they're not getting money in their bank account prior to milestones being delivered …

Not only are there no milestones for the East West project; they do not know where the tunnel is going to emerge for stage 2. It is not even a line on a map, but they are giving them billion dollars this year. That is why these amendments should be supported by the entire parliament. They are respectful of proper process; they are also a requirement when public money funds projects that will drive productivity gains.

Labor's approach in government was to engage in real nation-building. It was to establish proper processes with Infrastructure Australia. We also got on with investment: we doubled the roads budget; we increased the rail budget by more than 10 times; and we rebuilt a third of the national rail freight network, including cutting six hours from the trip from Melbourne to Brisbane and nine hours from the journey from the east to the west coast.

I am very proud of the fact that we committed more money to urban public transport from 2007 until 2013 than all previous Commonwealth governments combined from Federation to 2007. We planned and funded the Moorebank Intermodal Terminal, delivering major productivity gains to Sydney and taking 3,300 trucks off the road every day—a project expected to generate about $10 billion in economic benefits through increased productivity, reduced freight costs, reduced traffic congestion and better environmental outcomes.

The current government ran ads in the 2010 election campaign opposed to the Moorebank Intermodal Terminal. That is the opportunism we saw from those opposite. Compare that with the approach of the government—spurning the advice of Infrastructure Australia and introducing legislation to undermine its independence, and failing to increase investment in infrastructure spending, merely taking money away from projects that have been properly assessed and giving it to projects that are done on the back of an envelope. This bill avoids direct infrastructure investment while setting up the states and councils as the scapegoats of the future, when people begin to see the results of its underinvestment. Unless Labor's amendments to this bill are accepted, the government will have successfully created a vehicle for pork-barrelling and doing favours for its friends in coalition state governments.

Given the record of infrastructure underspending and pork-barrelling of the previous coalition government, surely this nation can do better than simply winding back the clock. By creating this incentive fund—taking money that had already been allocated for proper nation-building investment, through the Building Australia Fund, and for proper investment in our future, through education and science research and innovation, through the education investment fund—what the government is seeking to do is reduce its own involvement in the provision of infrastructure by paying the states and the private sector to do the heavy lifting.

There is, of course, a role for private sector investment. That is why we created the infrastructure investment tax incentive, a scheme that would provide, through the Infrastructure Australia process, an incentive in terms of changes to tax arrangements to encourage investment by the private sector—not just in greenfield infrastructure but also in brownfield assets. We introduced that in last year's budget. It came into effect at the end of last year, but this government seems oblivious to it.

We do not have a view on this side of the House that public sector is automatically bad and private sector is automatically good. That is the view of some of those opposite. They just want government to get out of the way in terms of government involvement in infrastructure. The consequences of that will be a reduction in investment and a scheme which will provide an incentive for state governments to privatise assets. Let me say this: if an asset is worthy of privatisation it needs to stand on its own merits. A top-up figure of 15 per cent over a period of just two years is a distortion of that process. If it is indeed in the longer-term interest of the state which owns that asset—through the people, at the end of the day—then we should not be distorting that process.

This nation needs Commonwealth leadership on infrastructure. It does not need a government that ignores the advice of independent experts and consults the electoral map to inform its investment decisions. The last thing it needs is a return to the blame game that characterised the former government. Process is important, which is why we need to ensure that this legislation is amended to allow proper processes: proper assessments of projects plus accountability to this parliament by ensuring there is a disallowance instrument. I will be moving the amendments when it comes to consideration in detail and ask the House to support those amendments then. (Time expired)

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