Pat Conroy (Charlton, Australian Labor Party) Share this | Hansard source

The government is seeking to amend the Infrastructure Australia Act to implement their election promise, supposedly, that major infrastructure projects over $100 million have a cost-benefit analysis applied, as well as minor changes to the structure of the act. As the shadow minister has already indicated, Labor will move amendments to the Infrastructure Australia Amendment (Cost Benefit Analysis and Other Measures) Bill 2014 to ensure that the government keep their promise to make sure projects are assessed and Infrastructure Australia has published its evaluation before funding is allocated and to ensure the proper processes of Infrastructure Australia are retained through requiring Infrastructure Australia to approve a standard method for preparing cost-benefit analyses and strengthening transparency and public disclosure of project assessments.

If we can take a step back in this debate, everyone is in furious agreement that infrastructure investment is a crucial part of our economic investment. Infrastructure investment is an enabler for further economic activity and, quite frankly, besides providing improved quality of life, is making it easier to travel around this country and to promote economic activity. We are looking for other drivers of economic growth as the mining boom comes off and we are seeing a dramatic reduction in capital expenditure by that sector.

Too often, we in this place are criticised for our disagreements, for the perception that bipartisanship is lacking. However, this is a public policy area where both sides of the House should agree. Labor understands the fundamental importance of sound infrastructure investment to ensure continued economic growth and to increase productivity. We believe that government should make sensible investments in nationally significant infrastructure and that this should be done in a timely and cost-effective way. This is, of course, why Labor created Infrastructure Australia: to give us an independent and transparent blueprint for our current and future infrastructure needs. There should be bipartisan support for Infrastructure Australia.

I now turn to the Liberal amendments to the Infrastructure Australia Act. It is entirely appropriate that the form and functions of Infrastructure Australia are reviewed and that options for reform are considered, particularly when these reforms enable more thorough assessment of proposals and more efficient delivery of projects. But to seek, as this bill does, to require a cost-benefit analysis to be conducted for major projects only after the Commonwealth has decided to invest more than $100 million does not meet this objective. Furthermore, it is a direct contradiction of their own election commitment, which clearly stated:

… we will require all infrastructure projects worth more than $100 million to undergo a cost-benefit analysis.

There is a clear tendency for this Liberal government to say one thing before an election and to do another afterward, but we believe that with Labor's help we can actually help them keep this promise. They have broken plenty of promises on changes to pensions, education, healthcare funding and superannuation. Now they are trying to break a promise on cost-benefit analysis for infrastructure projects—but, with Labor's help, we can help them keep their promise.

Labor's amendment will adjust the government's trigger point for a cost-benefit analysis from the $100 million of Commonwealth investment as outlined in the bill to the capital value of the entire project. To do otherwise would mean the government plans to commit the money before checking whether or not it is a good idea. Not only does this fundamentally undermine the current role of Infrastructure Australia, it will not produce the best outcomes for the community.    It is a simple notion: assess first, fund later—not the other way around.

It is a sad fact that the current way that this bill is constructed is symptomatic of this government's approach to infrastructure. They are more concerned with headline announcements, funnelling cash out the door, getting the Assistant Minister for Infrastructure and Regional Development, as the member for Perth indicated, into a high-visibility vest to announce things, rather than looking at what projects actually stack up. It is pure common sense to say: you assess a project before you decide whether to fund it. And to assess a project you need to set an appropriate trigger point based on the total capital value of the project, not the desired level of Commonwealth investment—and that is what Labor's amendments seek to do.

Labor is also seeking to amend the land Transport Infrastructure Act to require that payment for major projects can only be made after Infrastructure Australia has published its evaluation. We will also seek to require Infrastructure Australia to approve a standard method for preparing cost-benefit analyses and to strengthen transparency and public disclosure of project assessments. This is basically a commitment to consistency and transparency of project assessments. This is the only way to ensure all stakeholders are confident that the investment is sound. This has been called for by regulators, including the ACCC and the RBA, advisers such as the Productivity Commission and the sector more broadly, including IPA, BCA, UDIA, Moving People Coalition and environmental and community NGOs. This is vital if we are to continue the central position Infrastructure Australia has in the heart of infrastructure investment decisions.

When Infrastructure Australia was established by Labor, in 2008, it was determined that the agency should evaluate the business cases of projects, project finance options, including private/public partnerships, and manage the probity process. Now we are seeking to expand that to provisions around cost-benefit analyses. But if we do this we must do it through a proper process, not after the government has made a decision to fund, but as a precursor to any government funding decisions. To do otherwise would not only give a blank cheque to the government but it would revert to the blatant pork-barrelling approach of the Howard government, where we would see worthy projects that by all other standards were completely necessary and viable overlooked to instead favour projects with base political returns, often to the National Party. I will return to that later in my contribution.

In this case a government that could be investing in public transport is choosing to ignore that sector completely. The sad fact is that the Abbott government does not believe in funding public transport, no matter how beneficial a project may be. It will not be built, because it will not be subject to a cost-benefit analysis, because it will not have been funded. This is a circular argument that is not only illogical but will leave Australia in a much worse condition.

We only have to see this poor approach to infrastructure investment in a few projects that have already been approved by this government. The Abbott government has approved massive projects such as the East-West link, Westconnex and the Perth Freight Link, none of which have been subject to a proper cost-benefit analysis. The member for Perth highlighted the many issues with the Perth Freight Link, and I will not traverse that area again. But in the case of the East-West link and the Westconnex around $3.5 billion has already been delivered to the states for these projects well in advance of construction actually beginning. The one case that actually had a cost-benefit analysis, the East-West link, had a cost-benefit ratio of 0.8, which means that for every $1 of public investment in this project it will deliver 80 cents of economic return. We are spending $1 to make 80 cents. It is bizarre. Not even Minister Truss would see that as a good return on taxpayers dollars. Yet they are going ahead with this project, rushing headlong into committing money before the Victorian state election.

Not only do we look at the faulty cost-benefit analyses and the faulty funding of these projects, but they are able to spend this $3.5 billion by cancelling funding for two approved public transport projects that would improve the liveability of some of our major cities and would make a major contribution to our national infrastructure.

In contrast, Labor is committed to sensible and transparent investment in infrastructure projects, principally through Infrastructure Australia. The inaugural chair of Infrastructure Australia, Sir Rod Eddington, described the new organisation as follows:

It introduces a bold new approach to identifying, planning, funding and implementing infrastructure of national significance across Australia. It also introduces rigorous and robust economic analysis of infrastructure investments prior to government decision-making.

It is a sensible and transparent approach to infrastructure investment, and we are rightly proud of this direction, as we are proud of our broader record in infrastructure investment.

When the previous Labor government came to office, Australia was ranked 20th in the OECD for spending on infrastructure as a proportion of GDP. After six years in office, because of Labor's significant level of investment, Australia was ranked first. These investments include doubling the roads budget to $46.5 billion; investing $13.6 billion in urban rail infrastructure, which is more than all our predecessors combined; investing $3.4 billion in the rail freight network; and lifting road grants to local government by 20 per cent. This is in stark contrast to the Abbott government, which has frozen the indexation of financial assistance grants to local government for the next three years, meaning that grants will not be increased in line with CPI and population increases. I challenge the members on the other side, particularly those members in large regional electorates with a lot of crumbling road infrastructure, to explain this abhorrent decision to their local councils, which will be bearing more and more of the burden of maintaining roads that are crumbling as we speak.

As a representative of a regional area, I know that strategic investment in infrastructure is a major economic driver that helps to grow the capacity of areas such as the Hunter. Of course, the responsibility of both funding and delivering infrastructure lies overwhelmingly with the states, and there are a number of projects that, if left to the New South Wales government to fund solely, would never get off the ground. But there are some great examples of infrastructure investment by the last government in the Hunter region that make great sense and will contribute to the economic and social wellbeing of the Hunter region. Principal amongst them is the $1.7 billion Hunter Expressway. This is a shining example of the capacity of federal and state governments to work together to deliver a piece of infrastructure that is a remarkable benefit to the Hunter region. I would like to acknowledge the work of both the member for Hunter and the then minister, the member for Grayndler, for their efforts in bringing these projects to fruition. Importantly, in stark contrast to the East-West link, this had a positive cost-benefit analysis. This had a cost-benefit analysis of around five. For every dollar spent on it, it was going to return $5 of economic activity. We are seeing that contribution already in my region. And I was very happy for the Deputy Prime Minister to open the project. It is good that he was there and he got to see this great piece of infrastructure that they got to complete—and I acknowledge their efforts in completing it.

A second piece of local infrastructure in the Hunter region that benefitted from the Labor government, and I hope can benefit from future governments, is the Glendale transport interchange. This project is a vital piece of infrastructure for the fast-growing western suburbs of Newcastle and northern Lake Macquarie. In this one suburb 6,000 additional residences are coming into a suburb that already has a 10,000 strong industrial estate. We have a very large shopping centre with one exit and entry and we have regular traffic jams that back up for several kilometres. So, further investment, building on the $37.5 million already committed by all levels of government to this piece of infrastructure, is very necessary.

But broadly we must approach infrastructure investment through using sound economic analysis—using cost-benefit analyses and looking at the analyses first and the funding second. Otherwise we are in dire risk of returning to a much poorer sort of infrastructure policy development, infrastructure policy development exemplified by the Howard government in their regional rorts affair. The regional rorts affair saw $1.3 million given to a Queensland dairy that went bust less than a month later; $500,000 for a North Queensland hotel with bikini-clad barmaids. If a business wants to operate in that area, that is fine. If people want to go in there and have a drink, that is fine. I question why you need half a million dollars of Commonwealth funding to promote it. We also saw $6 million for an equine centre in Tamworth that was supposedly given on the basis that Tony Windsor would not have an association with that particular centre. Best of all, we saw $5.7 million for a heritage railway that went bust twice, had a derailment and had its bridge burn down.

These are classic examples of infrastructure investment under the last coalition government, infrastructure investment led by the National Party, and I applaud the National Party for wearing its heart on its sleeve. They fight hard for money for their areas. Often it is without justification or it is at the expense of projects that are more justified by cost-benefit analysis. But they owned their pork barrelling. They fight for their pork. They get their pork—$5.7 million for a heritage railway that burns down, derails and goes bust twice.

Mr Chester interjecting—

The parliamentary secretary loves the smell of bacon in the morning, and he is proud of that. I applaud their effort because they are honest about the fact that they are putting economic analysis second behind political imperatives. The unfortunate thing is that they are controlling infrastructure investment for a national government. Labor's amendments try to reverse that. Labor's amendments try to help the coalition to keep an election promise to do a cost-benefit analysis before they make their infrastructure investments, before they repeat their mistakes on the East West Link. These amendments should be supported by the coalition. This is an important bill which can be rescued. It can improve the way Infrastructure Australia operates and the way investment is made in this country. I commend Labor's amendments to this bill.

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