Graham Perrett (Moreton, Australian Labor Party) Share this | Hansard source

I rise to speak on the Asset Recycling Fund Bill 2014, which could more accurately be called the 'Taxpayer Funded Privatisation Cheer Squad Act 2014'. This bill, along with the cognate bill, is part of the coalition's election commitment to encourage privatisation. It comes out of the philosophy of the Liberal and National parties that basically says that anything owned by the public is bad and that anything owned privately is good, as detailed by the member for Grayndler. The Asset Recycling Fund would be established by this legislation, which would be a dedicated investment vehicle providing financial assistance and incentives to the states and territories to create new productive infrastructure. I have not gone through the legislation in great detail to see how productive infrastructure would be determined or what assets would be sold.

This is an interesting piece of legislation in terms of looking at the philosophy of the two major political parties in Australia—the Labor Party and the coalition. I will touch on the details of the legislation and then go to some of the philosophical questions it raises. The bill contains five parts. Part 2 establishes the Asset Recycling Fund. Part 3 sets out the responsibilities of the Future Fund Board in determining how to invest the funds of the Asset Recycling Fund and in determining the nature of those investments. Parts 4 and 5 set out the reporting obligations and the delegations.

The motivation for this legislation arose from the findings of a Productivity Commission inquiry which suggested that there is increasing caution amongst private investors to commit to public infrastructure projects, particularly after some high-profile commercial failures: CLEM7, AirportlinkM7, the Lane Cove Tunnel and the Sydney Cross City Tunnel. It is always a difficult venture when private investors build income-producing assets that might have a life cycle of 30, 50 or 100 years. Private equity firms or other countries' future funds that purchase these assets can make the wrong decisions. The CLEM7 was a classic case of relying on the wrong advice or poor decision making to determine the number of vehicles per day that would make use of it and the income it would generate, and I think there is some ongoing litigation arising from that.

The legislation before the chamber aims to encourage private companies to fund and run public infrastructure, particularly transport. It gives an incentive to states and territories to sell assets, including transport infrastructure, and then use the money from the proceeds of the sales to build new productive assets. Fifteen per cent of the asset value of the sale will be used to fund the new infrastructure.

There is $5.9 billion in the Asset Recycling Fund, $2.4 billion of which comes from the Building Australia Fund and $3.5 billion of which comes from the Education Investment Fund. Additional money will come from the sale of Medibank Private. It will be interesting to see whether the kitty will eventually run out. More importantly, it will be interesting to see whether the way governments in the past have traditionally funded public infrastructure—under the ALP it was either 50 per cent or 80 per cent—will be offset by the financial contribution of 15 per cent of the asset value of the sale being used to fund infrastructure, as set out in this legislation. For making decisions about whether an asset will enhance productivity, be good for jobs and be good for the nation, we put our faith in Infrastructure Australia, whereas the coalition seem to have gone for a different mechanism. I have serious concerns about that.

Regarding the Prime Minister's definition of what an 'infrastructure prime minister' is—I served under two infrastructure prime ministers. Labor has an incredible record when it comes to infrastructure. When we came to government in 2007, Australia was 20th in the OECD in spending on infrastructure as a proportion of GDP. Under the Labor government, we moved from 20th up to first. We lifted funding from $132 per Australian up to $225 per Australian. A lot of that was through that mechanism of Infrastructure Australia, where people who understand the benefits of infrastructure can research and rank proposals before making a decision. Cross River Rail was number one on that list, but sadly the Newman government walked away from that and has come up with a bit of a dog of a project—the BaT Tunnel.

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