Angus Taylor (Hume, Liberal Party) Share this | Hansard source

Being from a rural electorate and from a rural upbringing, off-road is a term I use often. Like many popular words, its meaning has been distorted over time. It is no longer just a descriptor for being away from the main road. Its new meaning is more along the lines of rough and rugged, pumped up with adrenaline, hooliganish and out of control. So off-road is a term I would like to use to describe the former Labor government. I would comfortably use that term in that context. Not only did they go off-roading at the wheel of the Australian economy for six long years, they blew the tyres, cooked the radiator, stalled in top gear and ended up floating down the proverbial stream.

Despite the glossy ads, we all know about the damage bill when you go off-road. The challenge before us is to get our economy back onto the straight and narrow. While the way forward is achievable, there is a major shift needed. The coalition budget before the House is a contribute-and-build budget. Today I want to talk about the build. The government is establishing an asset recycling fund to build the finances to support historically high infrastructure investment for Australia. Under this legislation, financial incentives will be provided to the states and territories to sell existing assets and reinvest the proceeds into productive economic infrastructure and into providing the additional investment dollars to fast-track nationally significant projects.

At this time in our history, there is no question that infrastructure is absolutely critical. The infrastructure backlog in Australia has been variously estimated at somewhere between $455 billion and $770 billion. These are numbers big enough, almost, to rival Labor's debt burden. A 2012 Infrastructure Australia report to COAG identified over $70 billion worth of priority infrastructure projects that we should be moving on immediately. They also identified that we are falling behind on maintaining our existing road and rail.

As I said in the House quite recently, there are two very good reasons why we need high-quality infrastructure and significant infrastructure investment. First, we are facing a dramatic slowdown in mining investment in this country. We are seeing mining investment, which had risen from something like $30 billion up to $120 billion, falling away dramatically because of the policies of the previous Labor government. We have frugal consumers and we have a high dollar. Without infrastructure investment, we will not, in coming years, see the sort of growth and prosperity we need. The second reason is that we face a productivity crisis. Productivity growth has slowed dramatically in recent years. We know that capital productivity is the heart of the problem. We are not making enough investments and we are not making investments in the right capital projects.

So Australia faces a significant challenge over the coming years. Whilst our exports are growing strongly and are set to continue to grow strongly, we will need to lift our rate of productivity growth if we are to continue to enjoy the types of increases in our standard of living that we have grown used to. In a speech in November 2013, the Deputy Governor of the RBA, Philip Lowe, emphasised the potential for infrastructure investment to address Australia's declining productivity growth. He said:

… the Australian economy faces a substantial challenge. Over the next decade or so, if we are to achieve anything like the type of growth in real per capita income that we have become used to, then a substantial increase in productivity growth will be required. We can no longer depend on a rising terms of trade and favourable demographics to make us richer. If this lift in productivity growth does not take place, then we will need to adjust to some combination of slower growth in real wages, slower growth in profits, smaller gains in asset prices and slower growth in government revenues and services – in short, slower growth in our average living standard. So the debate about productivity should not be seen as an esoteric one just for economists. Productivity growth matters and it matters a lot to our future living standards.

Mr Lowe went on to say:

In the years ahead, it is unlikely that Australia's comparative advantage will lie in the production of standardised mass-produced manufactured goods for the global market. Instead, we have tremendous opportunities in a range of more specialised high value-added goods and services, where it is the quality of our ideas and the quality of our execution that is the key. Whether or not we can seize these opportunities depends critically on our human capital and our infrastructure.

Later in his speech, he said:

The benefits of investment in transportation infrastructure are well known. Some of these are quite obvious, while others are more difficult to see, although no less important. Among the more obvious benefits is a reduction in travel times and costs for both people and goods. There can also be favourable social impacts through reducing travel stress and increasing the connectedness of communities. And there are environmental benefits as well.

Unfortunately, Labor did little to address these issues.

We know that good infrastructure investment needs to be depoliticised and we know it needs to focus on costs and benefits. That is something that the Labor government failed dismally to achieve. We have heard in this House that only 14 per cent of Labor's stimulus expenditure was spent on productive infrastructure. We saw that, of the $80 billion of stimulus expenditure, none of it—not one dollar of it—went to Infrastructure Australia for approval. We need transparency, rigour and independence in our infrastructure investment.

The Productivity Commission's 2014 report, Public infrastructure, stated:

There are numerous examples of inferior project selection and inadequate assessment of the costs and benefits of public infrastructure projects … In particular, government decisions can become politicised and may be based on inadequate information and assessment of the costs and benefits of projects …

Inferior investment decisions are not unique to governments … However, when the government makes mistakes regarding large public infrastructure projects, the consequences are felt more broadly by the community and taxpayers, often for long periods of time.

In March last year, Fairfax business journalist Adele Ferguson authored an editorial in TheSydney Morning Heraldin which she discussed Infrastructure Australia. She said that the ALP government had created Infrastructure Australia to 'eliminate pork barrelling by creating a priority list of infrastructure projects based on a cost-benefit analysis and advising on major policy reforms'. However, we know that Infrastructure Australia was effectively marginalised by the Labor-Green government, as most famously evidenced by Labor's pre-election approval of the Parramatta to Epping Rail Link project—which did not feature on IA's list of priority tasks.

In an article in The Australian in February this year, Deputy Prime Minister Warren Truss wrote:

WHEN Anthony Albanese set up Infrastructure Australia in 2008 he made it his personal lapdog, largely answerable to him.

IA was sidelined on any real decision-making, forced to play catch-up and chase its tail to justify projects Labor had already announced without consulting its expert advisory body.

Labor’s road and rail funding projects, its big-spending response to the global financial crisis, its infrastructure election promises, were all announced without being fully assessed by IA.

We need look no further than the NBN for a clear example of poor infrastructure investment, with a significant impact on the government balance sheet. There was no cost-benefit analysis and we saw extreme politicisation of investment in infrastructure. Indeed, we know that the decision was made on the back of a serviette.

In the absence of an intervention from this government, state under-investment in infrastructure is inevitable. As the Productivity Commission report I referred to earlier notes, the Commonwealth has a comparatively wider and more efficient tax base, despite heavier levels of investment from the states and territories. This has already led to large transfers from the Commonwealth to the lower levels of government, for the purpose of financing infrastructure. As an October 2013 report from Moody's demonstrates, state and territory debt levels have ballooned since 2008 and are projected to increase into the foreseeable future. This will further limit the funding that state governments can provide for infrastructure.

It is clear that the experts endorse our infrastructure focused budget. On budget night, Infrastructure Partnerships Australia said:

This is a very strong budget, because it makes difficult revenue and expenditure decisions, allowing Canberra to fund an unprecedented $50 billion investment in economic infrastructure.

Chief Executive Brendan Lyon also commented that over the forward estimates the Abbott government's total infrastructure investment represents around a $9 billion increase compared to the last five years. He noted:

The states will always have a central role in funding and providing public infrastructure, but with high levels of debt and substantial operating deficits, a higher and sustained level of national investment alongside the states is warranted.

So it is clear what the experts say. It is clear that they are on our side.

We recognise that there are still challenges ahead. Philip Lowe rightly points out that a key challenge is to ensure there are strong systems of governance in place so that money is spent wisely. That is why we restructured Infrastructure Australia. The second key challenge is the ongoing funding of projects beyond the large expenditure we committed to in the budget. It is no use identifying infrastructure projects with large potential gains if a way cannot be found to finance them.

The financing challenge arises not because of a lack of money available to invest in infrastructure. Many private-sector investors tell us—tell me—that there is plenty of money sitting on the sidelines waiting to be invested in infrastructure assets. The issue is more a reluctance of investors to take on the construction and patronage risks and/or the difficulties of charging for the use of infrastructure.

Looking forward, we need to find a sustainable way in which to finance our infrastructure needs over the long term. Regardless of whether it is the private or public sector doing the financing, it is likely to be easier if we consider different options for pricing and funding transport infrastructure. User-pay models have emerged for all other utilities—water, electricity and telecommunications. We need to seriously consider broader user-pay models for all roads, with hypothecation of revenues not just for roads in general but also, perhaps, for the owner of the specific road. The technology is now available, and the benefits are clear. Not only will this increase investment in high-growth and congested roads but also it will better regulate road use, encouraging commuters to find alternatives when there is significant congestion.

In a report for Infrastructure Partnerships Australia, Deloitte has shown how this can work and, most importantly, how it will help regional areas, despite claims by some to the contrary. As a society, we have a lot riding on finding a way to pay for the infrastructure we need to boost our productivity and improve our living standards.

Those of us who come from regional communities know that connectivity is king, and good connectivity comes from good communications infrastructure and good transport infrastructure. In my electorate of Hume we saw a complete failure of investment during those Labor years. The NBN failure is well known. It has been talked about at length in this House. We have also seen transport infrastructure-investment failure. The Hume Highway is now basically a conveyor belt of trucks in the evenings. We see the B-doubles going from Melbourne to Sydney and back, because rail has failed.

For many years, since about 2007, in fact, we have seen the Labor government fail to sufficiently invest in rail infrastructure on that corridor. We as a government have said we want to address that. We want to address that with our $300 million investment in the Melbourne-Brisbane rail link and with further investment on the coastal corridor. That will take trucks off the road, it will support a better drive—a safer drive—and will mean fewer trucks on the Hume Highway. It will have the benefit of creating regional freight hubs throughout my electorate.

For the grain growers in the wheat belt of NSW, this will give many options they do not have today. They will be able to send their wheat to Newcastle, Port Kembla, Brisbane or Melbourne. The Barton Highway is also a failure of the previous Labor government. We are upping investment in the highway, including development of a staged duplication plan. Finally, our significant investments in black-spot and Roads to Recovery programs are important responses to a dire infrastructure backlog.

The Australian public deserve better. We are no longer crammed into the back seat of some kind of juvenile joy ride like we were under the Labor government. The grown-ups are back at the wheel. We know that good infrastructure investment needs to be de-politicised, and we know it also needs to focus on costs and benefits. This is something the Labor government failed to do. Through an Asset Recycling Fund we will build the finances to support this government's record package of infrastructure investment. Five billion dollars has been committed to provide financial incentives over five years to the states and territories, to sell assets and reinvest those proceeds. This will leverage a significant increase in private sector investment and create massive new opportunities for investors. I fully commend this bill to the House.

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