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

I rise to speak on this bill at a time in our history when there is no question that investment in roads, rail and telecommunications is absolutely critical. That is something that we can definitely agree on with those on the other side of this House. The bill before the House takes a small but important step in the right direction by clarifying legislative and administrative arrangements for Infrastructure Australia, with a particular focus on cost-benefit analysis and prioritisation. This is something that the last government did not seem to know very much about. But to understand the importance of this and how the last government treated it, we need to look at the broader problem.

In my own electorate of Hume, people intuitively know we have underinvested in infrastructure, particularly in roads, rail and telecommunications, in recent years. For instance, the Barton Highway between Yass and Canberra is of grave concern to many of my constituents, as it is to me. Understandably, commuters ask: if we pay our fuel taxes, why can't we see funding to fix roads in our area? The infrastructure backlog in Australia has been variously estimated at somewhere between $455 billion and $770 billion. These numbers are almost big enough to rival Labor's debt burden. A 2012 Infrastructure Australia report to COAG identified over $70 billion worth of priority projects that we should be moving on immediately. They also identified that we are falling behind on maintaining our existing road and rail. So there is a big backlog not just in new projects but in maintenance.

Again in my electorate of Hume we saw a complete failure of investment under the recent Labor government. The NBN failure is well known, and we saw that loud and clear. It has been talked about at length in this House. We have also seen transport infrastructure failure, and a nice example—or not so nice example, as the case may be—of that is the Hume Highway which 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.

Addressing this backlog is made even more critical when we look at the emerging trends in the Australian economy. First, we are clearly facing a dramatic slowdown in mining investment in this country. Mining investment grew from around $30 billion at the beginning of this century to up to $120 billion a year in the last 12 months or so. It is now falling away dramatically, aided by the antimining policies of the previous Labor government. On top of that, we have frugal consumers and we still have a relatively high dollar. Without infrastructure investment, in coming years we will not see the sort of growth and prosperity we know we need.

The second trend that we face and we should be deeply concerned about is a productivity crisis. Productivity growth has slowed dramatically in recent years. We know that capital productivity, in particular, is at the heart of this. We are not making enough investments, despite what we hear from those on the other side. We did not see enough investment in the last few years, and we have not made investments in the right capital projects. That is very clear. So Australia faces a significant challenge in the coming years. Whilst our exports are growing strongly and we are set to continue to grow those exports strongly, we will need to lift our rate of productivity growth if we are to continue to enjoy the 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 that declining productivity growth. He said:

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 went on to say:

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.

Those of us who come from regional communities know that connectivity is king, and good connectivity comes from good infrastructure. Unfortunately, Labor did little to address these issues. Most importantly, Labor's infrastructure investment processes were totally politicized and lacked rigour. We know that good infrastructure investment decisions need to be depoliticised. We know that we need the rigour of cost-benefit analysis. That is something the Labor government failed dismally to achieve, and let me illustrate that. Only 14 per cent of Labor's stimulus expenditure was spent on productive infrastructure, and, of the $80 billion of stimulus expenditure, none—not one dollar of it—went to Infrastructure Australia for approval.

What irony there is in what we have just heard from those opposite about the way Labor looks up to Infrastructure Australia and to cost-benefit analyses. We need transparency and independence in our infrastructure investment. This year the Productivity Commission said:

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 …

… 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.

That was with reference to what we have seen over the last seven years of the Labor government. We know Infrastructure Australia was effectively marginalised by the Labor-Greens government, as most famously evidenced by their pre-election approval of the Parramatta to Epping Rail Link project, which did not feature on IA's list of priority projects. The Deputy Prime Minister has pointed out:

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.

What hypocrisy we are hearing from those opposite. Labor's road and rail funding projects, its big-spending response to the global financial crisis, and its infrastructure election promises were all announced without being assessed by IA. We need look no further than the NBN for a clear example of that kind of investment, with a significant impact—a huge impact—on the government's balance sheet. There was no cost-benefit analysis. We saw extreme politicisation. Indeed, it turns out that that decision was made on the back of a serviette.

We also know there is a serious problem with project funding and financing in this country. In the absence of an intervention from this government, state underinvestment in infrastructure is absolutely inevitable. Again, the Productivity Commission report I referred to earlier notes that the Commonwealth has a comparatively wider and more efficient tax base, despite heavier levels of investment from the states and territories. This has led to large transfers from the Commonwealth to the lower levels of government for the purpose of financing infrastructure. But, as Moody's told us late last year, state and territory debt levels have ballooned since 2008 and are projected to increase into the foreseeable future. That will limit the funding state governments can provide for infrastructure. Ironically, though, the financing challenge does not arise because of a lack of money available for infrastructure. We heard from the Minister for Trade and Investment this morning that many private sector investors say there is plenty of money sitting on the sidelines waiting to be invested. 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 the infrastructure. So, 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, funding and prioritising transport infrastructure.

Let me turn now to the solutions to these very difficult problems. Our government has committed to delivering massive transport infrastructure investment—$50 billion by the end of the decade, the equivalent of eight Snowy Mountains Schemes. This new infrastructure will drive $125 billion of spending across the continent and support the next wave of national prosperity. Understanding the importance of this to jobs and productivity, the government has made significant commitments to additional road and rail funding in the recent budget. Of particular importance, we are providing incentives for the states to recycle assets—privatising assets they currently own and reinvesting the proceeds in new roads. This Asset Recycling Fund we will build the finances to support this government's record package of infrastructure investment; $5 billion has been committed to provide financial incentives over five years to the states and territories to sell assets and reinvest the proceeds. It will leverage significant investment by the private sector and create massive new opportunities for investors.

Whilst these are extremely important and constructive policies, we will need to go further to fund the infrastructure gap. Born and bred on the land, over many years I have had cause to unpack the issue of regional road funding, and road and rail funding more generally. I have come to the conclusion that we need to go further in solving all this. There is a remarkably simple way to do that, and that is a user-pays system that guarantees that money goes back to the owners of the roads. We already have the key elements, paid through our fuel prices, right now. Whether we drive a truck or a car, every one of us pays a certain amount of excise per litre of fuel purchased. However, the current system has two problems. First, the money collected in fuel excise and registration fees does not go directly back to the roads, and it should. We have started to change this in the latest budget by hypothecating—allocating directly—the increases in the excise back to road funding, but this is just the beginning. At the moment the owner of the road is not directly paid for their role in building and maintaining that road, whether it is the local council or the state government or even the federal government. I think we should be doing that. To me, this is the single most important principle we could apply.

The second issue is how that user charge should work. Should it be based on every litre of fuel we buy, or the distance we travel or the weight and size of our vehicle? Should we charge more at peak hours in our capital cities, when extra vehicles, particularly trucks, have a big impact on congestion? Moving towards true user charges—something that has been floated in the last 24 hours by Ian Harper, leading the competition review—would allow us to drop the fuel excise, registration fees and traditional road tolls as we embrace a system that better reflects the cost of the vehicle to road maintenance and construction. These changes will not and should not happen overnight or in one hit. We should start with heavy vehicles on targeted roads, and I am confident that we will see that from some states in the very near future. As we prove the model, we should progressively roll it out to other vehicles and across all roads. The benefits of moving down this path are broad ranging. As I said, outlined in the draft report of the competition policy review published this week, we would expect to see a large increase in road investment and easier access to finance. And, importantly, it will take the politics out of allocating road and rail funding as investors, public and private, bet on where the needs are greatest. We should see increased investment in rail where it has genuine competitive advantages as the relative cost of road and rail becomes more transparent to investors—no tolls, no excise, no regos. Some of the smartest reforms are the simplest.

For many years—since about 2007, in fact—we have seen the Labor government fail to sufficiently invest in rail infrastructure and as a government we want to address that. We have said we will invest $300 million in the Melbourne-Brisbane rail link and allocate further investment on the coastal corridor. That will take trucks off the roads; it will support a better drive and a safer drive; and it will mean fewer trucks on the Hume Highway going through my electorate. It will have the benefit of creating regional freight hubs as well. For the grain growers in the wheat belt of New South Wales, 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 deserves better. We are no longer crammed into the back seat of some kind of juvenile joy ride as 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, and we are committed to do. I fully commend this bill to the House.

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