Warren Truss (Wide Bay, National Party, Leader of the Nationals) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

The purpose of the Infrastructure Australia Amendment Bill 2013 is to strengthen the role of Infrastructure Australia, as an independent, transparent and expert advisory body through a change in its governance structure and through better clarification of its functions.

This government is committed to ensuring that Australia has the productive infrastructure we need to meet the challenges ahead.

Australia's future growth will be significantly influenced by our capacity to deliver more appropriate, efficient and effective infrastructure and transport. Investment in nationally significant infrastructure is central to growing Australia's productivity and improving the living standards of Australians now and in the future.

To maximise productivity improvement through investment, funding must flow to projects that yield the highest benefits. Therefore, it is critical to base project selection on rigorous analysis and sound planning to avoid wasteful investment. The government recognises that Australia needs improved planning—coordinated across jurisdictions—to underpin investment decisions and regulatory reforms.

We are, therefore, focussed on long-term planning based on robust, evidence based findings through a greater understanding of the critical issues facing Australia's infrastructure and land transport system.

While the government fully supports Infrastructure Australia in its role as a key advisor to government on infrastructure project and policy reforms, it is committed to strengthening it by restructuring its governance, clarifying the scope of its responsibilities and entrenching its role as a key adviser to government.

Infrastructure Australia was established by the former government in 2008 as an independent advisor to governments in an effort to eliminate the short-term cycle in project prioritisation and to develop a national view on infrastructure priorities and policies.

Infrastructure Australia, however, has not been successful in fundamentally changing the way projects are identified as national priorities. Whilst it has delivered priority project lists, projects are derived from state and territory government project proposals and the prioritisation is based on the extent to which the project business case is advanced rather than the extent to which the project will contribute to improved national productivity.

Moreover, the current structure of Infrastructure Australia does not provide the degree of independence and transparency needed to provide the best advice to government about the infrastructure priorities that will reverse Australia's productivity slide.

The bill will re-establish Infrastructure Australia as a separate entity under the Commonwealth Authorities and Companies Act 1997, which will provide for an independent governing entity that is both legally and financially separate from the Commonwealth.

It will strengthen its independence, improving Infrastructure Australia's ability to build strong relationships with state and territory governments and industry, which are collectively responsible for delivering and managing much of Australia's infrastructure assets.

Notwithstanding the proposed changes, Infrastructure Australia will remain an advisory body only. It will not be the decision-maker in terms of funding allocation. That responsibility, rightly, will remain with governments.

The change in governance structure will allow Infrastructure Australia to better demonstrate transparency and rigour in its prioritisation of projects and its advice on policy reforms while facilitating a level of independence from governments.

The changes to Infrastructure Australia's governance structure include:

Improvement in the quality and transparency of advice is expected to assist government in its investment decision making, ensuring funding is directed to projects that return the greatest productivity improvement.

In respect of the board, the breadth of skills and experiences of the board members will be the same as is currently the case for the Infrastructure Australia council and the existing council members. They will also be considered for reappointment to the board.

In addition, the board will be required to produce an annual report to the Minister for Infrastructure and Regional Development, which will be made available to the Council of Australian Governments. The report will detail Infrastructure Australia's achievements; report on progress against its deliverables and its findings in respect to its policy reform analysis; and set out the forward work program.

This bill also refines and clarifies the functions of Infrastructure Australia thereby better enabling the organisation to focus its resources to delivering the government's reform program in the timeframes required and in a manner that will achieve the desired outcome.

The government's proposed changes to enhance Infrastructure Australia's existing functions include:

(a) conducting evidence based audits of Australia's current infrastructure asset base, in collaboration with the state and territory governments, which would be revised every five years;

(b) developing in 2014 a 15-year infrastructure plan for Australia, with this plan being revised every five years:

(i) the plan is to clearly specify infrastructure priorities at national and state levels, based on rigorous and transparent assessment;

(ii) the plan is to include clearly defined service standards for project delivery, identify short- and long-term productivity gains as well as any complementary projects required to maximise productivity gains;

(iii) the plan will recommend infrastructure projects on the basis of a transparent and rigorous cost-benefit assessment of their viability;

(iv) a project pipeline should clearly articulate a timeframe in which projects will be brought to market commencing with those projects of highest productivity value;

(v) this work is to be developed in close consultation with state and territory governments, but should not solely rely on submissions from state and territory governments and third parties;

(c) review all projects seeking Commonwealth funding worth more than $100 million (including transport, water, telecommunications, energy, health and education sectors and excluding defence projects) and publish the reasons for its decisions.

Infrastructure Australia, in undertaking its functions, will be required to take into account broader economic considerations such as environmental sustainability and safety issues.

The recommended changes to Infrastructure Australia's governance structure and the additional functions will be met from within the existing appropriation for Infrastructure Australia.

Furthermore, as the proposed amendments to the governance structure of Infrastructure Australia are mechanical in nature, there are no regulatory or financial impacts on business and the non-for-profit sectors.

In terms of consultation, the government has consulted with Commonwealth government agencies, Infrastructure Australia, key industry infrastructure stakeholders and state jurisdictions over the last 12 months.

Changing Infrastructure Australia's governance structure by abolishing the infrastructure coordinator role within the legislation with a chief executive officer position, will require a consequential amendment to the Income Tax Assessment Act 1997 (ITA Act).

Under the ITA Act, the infrastructure coordinator is responsible for designating infrastructure projects eligible for the tax loss incentive. The bill provides for a suitable person or persons to be determined by the Minister for Infrastructure and Regional Development, in consultation with the relevant Treasury Portfolio minister, to fulfil this role.

This change will need to occur simultaneously with amendments to the Infrastructure Australia Act 2008 to ensure the function maintains its authority. The proposed consequential changes have been developed in consultation with the Treasurer, the Hon. Joe Hockey MP, who has legislative responsibility with the ITA Act.

In summary, the government is committed to broadening the current infrastructure reform agenda in collaboration with jurisdictions and industry to improve productivity and drive economic growth.

The government's infrastructure reforms aimed at reducing duplication, streamlining approval processes, improving planning and coordination across all levels of government and stimulating investment are critical in a fiscally challenged environment so that we can maximise our current resources and thereby minimise the pressure to rely entirely on investment as a means to raise productivity.

The reform to Infrastructure Australia is a key component of this broader reform package and is critical in better enabling it to deliver quality independent advice. The government will rely on this advice when considering priority projects, which is important to improving productivity.

The government will remain focused on delivering critical infrastructure, ensuring we are getting value for money for our investments and will be dedicated to embracing and increasing innovation in project delivery.

The government is committed to building the infrastructure of the 21st century and these reforms to Infrastructure Australia will help us in achievement of this goal.

The government will lead the way, but we recognise that to drive this change, we must be in partnership with the construction and investment communities. This co-investment of not only capital, but of shared will and vision, will be the basis for building our nation and improving the living standards of our people.

Debate adjourned.