Nickolas Varvaris (Barton, Liberal Party) Share this | Link to this | Hansard source

I am very pleased to be speaking on the Asset Recycling Fund Bill 2014 and the Asset Recycling Fund (Consequential Amendments) Bill 2014 today. This initiative is a bold and necessary component of Australia's infrastructure future. The bills propose that the government can sell public assets, such as Medibank, with the resulting proceeds going towards much needed infrastructure investment projects. The Asset Recycling Fund is scheduled for commencement on 1 July this year. The coalition is proud to be the government that is actively responding to our infrastructure crisis. The last six years have seen infrastructure growth all over Australia stagnate under procrastination and delay. The coalition, under our two infrastructure leaders, the Prime Minister and the Minister for Infrastructure and Regional Development, is making a historic investment in the budget this year to get on with building Australia's infrastructure.

For too long, our infrastructure needs have not kept up with population growth. This has detrimental effects for Australia as a competitive international player, for economic certainty and for the lives of fellow Australians. Congestion on roads bearing the heavy burden of traffic is costing our economy $15 billion a year, and weak productivity growth from a range of factors is threatening the stability of our future living standards. Infrastructure development and implementation is top priority for this government. Years of procrastination and delay threaten current and future economic prosperity. The undeniable truth is that we must act now. We have to break the complacency that was paralysing our infrastructure growth and resolve the infrastructure backlog. The coalition is getting on with the job, as per our election promise, of building the roads of the 21st century by committing to existing projects. We will not be wasting further time and funds on consultation and analysis while not actually rolling anything out.

I think what Macquarie Group Executive Director, Jim Miller, said previously really homes in on this point:

We have this inertia where everyone is pointing to each other. The Commonwealth is pointing to the States; the States are pointing to the Commonwealth. Meanwhile we haven't achieved anything.

This is the differentiating factor between members on this side of the chamber and those opposite. Instead of leaving such important decisions solely to other parties to figure out how to get the project going, the coalition's budget figures constitute a historic infrastructure investment and prove that we have listened to stakeholders and gotten stuck into the job of building the roads and transport of the 21st century within just eight months of being in government. The critics might say the coalition is merely committing to existing projects by the Labor government. But, ultimately, there is a big difference between commitment and action. The coalition is about action and getting the job done.

I note from the recent Infrastructure Australia report that urgent reforms are needed to address our growing population in all areas of Australia. Sir Rod Eddington, Chairman of Infrastructure Australia, said:

Focusing on the right reforms will help us to use existing infrastructure more efficiently … and involve private players more in the ownership and management of traditionally publicly owned assets by recycling capital to fund new infrastructure … These reforms, however challenging, will leave Australians better off—with more capable Governments, better planned infrastructure that meets their needs, and more sustainable, affordable transport options.

The good news for Sir Rod and for Australians across the nation is that a core element of the government's Economic Action Strategy is the commitment of an additional $11.6 billion in the budget for the Infrastructure Growth Package. I also wish to refer to the draft report of the Productivity Commission produced in March of this year which notes:

Efficient public infrastructure plays a key role in a competitive and productive economy and the ongoing funding and financing of infrastructure development in Australia is therefore of critical importance.

I proudly support the $5 billion contained in the budget to establish the Asset Recycling Initiative, which will provide incentive payments to states and territories that sell assets so that proceeds can be reinvested to fund essential infrastructure right around Australia. This is a win-win scenario. This record level of investment in infrastructure by a Commonwealth government reflects our resolve to get things done, because that is what we were elected to do. Delaying infrastructure is harmful to the national interest and will ultimately impede long-term economic prosperity.

In my electorate of Barton, residents are already benefiting from the actions of an effective government. Through smart investing and modes of financing, stage 2 of WestConnex is set to begin early next year, with the Commonwealth and state governments working together. This is an $11 billion project that will greatly benefit the constituents and motorists in my electorate. The project received a $1.5 billion commitment from the coalition to the state of New South Wales and a further $2 billion as a concessional loan to accelerate the delivery of stage 2 by up to 18 months. This innovative reform of finance is the type of creative financial solution we have needed for a long time, and it has taken a coalition government to deliver it.

The WestConnex is one of the largest transport infrastructure projects in Australia. The project will deliver 33 kilometres of new and upgraded motorways linking Western and South-western Sydney with the city, Sydney Airport and port precincts. It will remove traffic in that motorists can bypass busy CBD streets and go underground. An estimated 3,000 trucks use these existing roads daily and this development will mean their travel times will be reduced and the traffic burden placed on local roads will ease.

Beyond addressing motorist needs, the WestConnex will deliver more than $20 billion dollars in economic benefits to New South Wales with a further 10,000 jobs created during the construction period. This is outstanding and testimonial to what an efficient infrastructure government can achieve. Projects like these can continue to operate right around the nation with the onset of the Asset Recycling Fund.

Initiatives like these are essential to reducing infrastructure construction costs and address any barriers to private sector financing. The last six years of the Rudd-Gillard-Rudd government have seen our infrastructure stagnate with high congestion on local roads. The Productivity Commission's draft report on public infrastructure highlighted poor project selection and poor planning as some of the major constraints on Australians receiving the infrastructure they need, and that is very disappointing. If we are to prosper and create economic certainty for all Australians now and into the future, we must get on with delivering the roads, ports and means of transport for all Australians immediately.

The budget constraints now and into the future mean we are facing infrastructure deficits exacerbated further by the previous five record deficits under the Labor government. Further, we have layers of bureaucracy that stifle infrastructure growth and development—for example, nearly 600 different local, state and territory governments along with commonwealth government and infrastructure departments. This is creating inefficient and slow development from ideas to reality, meaning our projects take a long time to get off the ground and therefore become unattractive to potential investors.

The coalition is committed to working constructively with state counterparts to address needs and move projects forward in a timely fashion. The Asset Recycling Fund will tap into potential private investor funding to alleviate the burden on traditional government revenue. Members of the opposition are against user-pay models, but infrastructure can only be funded through either increases in tax, increases in borrowings or user charges. Because of the large debt and deficit we are in and the tax revenue languishing from changes to demographics, asset recycling is a viable and necessary option to address our chronic infrastructure shortage. Unless a government is innovative and prepared to confront the challenges that lay ahead, Australia will continue to face a chronic undersupply of infrastructure. Everyone has to contribute to these investments because there simply is not a surplus of money.

The coalition fully recognises this, and we are committed to tackling these challenges head on. Members of the opposition may counter by saying these are all the things they have done whilst they were governing. Unfortunately, their track record speaks otherwise. As mentioned earlier, the WestConnex project is not new, and Labor had the chance for years to do right by the people of Barton and New South Wales. But it never kicked it off.

Further west of the WestConnex, the Parramatta-Epping rail link was delayed by seven years until a coalition government came into power. Another infrastructure fiasco was the National Broadband Network, costing in the billions and still not having reached their targeted numbers well and truly after the initial rollout phase. Any government that spends the hard-earned dollars of taxpayers is accountable for the outcomes of their investment. These projects should ultimately enhance the lives of constituents and respond to their needs.

To further highlight the enormity of support for this bill—which should illustrate the dire straits we were left in regards to infrastructure—states and territories all signed the National Partnership Agreement on Asset Recycling at the Council of Australian Governments meeting on 2 May this year. This signed agreement with state and territory counterparts means that for every dollar of government investment it will harness a return of $8 for infrastructure revenue. The Asset Recycling Initiative will leverage close to $40 billion of new infrastructure investment from the states and territories.

This unanimous support for the agreement demonstrates that state and federal levels of government can work together. Ultimately, the real outcomes of the coalition's record spending on infrastructure investment aside from roads, rail and urban transport is that people benefit by having more time back in their personal lives. We must not forget that initiatives like an asset recycling fund which goes on to fund important road projects and improve logistics has a very real benefit in terms of human value for all Australians. Less time spent on congested roads means more time at home and with family. Fewer heavy vehicles in the CBD means urban transport can get from A to B faster, carrying passengers who can spend less time stuck in traffic and more time doing the things they enjoy. Weekends can be freed up for personal time as opposed to waiting in traffic.

The big winners of the coalition's infrastructure spend and Asset Recycling Initiative are the people and families that make up our society. Giving time back to people and families who are already time poor is important, and this will be achieved with the coalition's growth package. I commend the bill to the House.

Lisa Chesters (Bendigo, Australian Labor Party) Share this | Link to this | Hansard source

In rising to speak to this bill I want for a moment to pay credit to the government for their creative writing skills and the name of the Asset Recycling Fund Bill 2014. How do they come up with this stuff? Operation Sovereign Borders, Enhancement Removal Program for Regional Post Boxes, Asset Recycling—do they sit around? Is there a whiteboard? Is there a competition amongst the backbenchers? How do they come up with this stuff? At the end of the day, asset recycling is purely and simply privatisation. It is the sale of public assets so private enterprise can make a profit from them. It is not anything new; it is straight out of the modern Liberal playbook.

In short, this bill intends to provide an incentive for state governments to privatise their assets and then recycle the proceeds into new infrastructure projects. As I said, this is not new; this is what Liberals and Nationals do when they get elected. They sack public servants and sell off public assets as quick as they can. It is a throwback for many Victorians to the era of Jeff Kennett. In office, Jeff Kennett immediately instituted budget cutting measures and a privatisation program. In fact, Jeff sacked over 50,000 public servants. In his first three years of office he closed 350 government schools, cut 7,000 teaching jobs and sacked thousands of school cleaners on Christmas Eve. Kennett also sold off billions of dollars worth of Victorian public assets. And he did this, he claimed, because of a budget emergency—again, language straight out of the Liberal Party handbook that we hear again today in this chamber. Kennett privatised state owned services, including electricity and gas utilities, the ambulance service and prisons, as well as other services. The sale of gas and electricity raised $29 billion when it was sold to private enterprise.

Whilst nobody disagrees that in the short term this money did go into the budget, the longer-term economic cost to the people of Victoria still raises questions about whether this sale was worth it. Putting electricity generation and distribution into private hands neither reduced the price of electricity nor helped the broader public interest. Since privatisation, electricity prices to the consumer have gone up by 50 per cent—and to think that members opposite are upset about the price on carbon. Where is the critique of the cost of privatisation? Who led the revolt against Kennett, and who is leading the revolt against this government, but people in regional communities? Regional communities were the first to vote Kennett out. They were the first to stand up and say that they did not support the sale of public assets. They did not believe that they would get good services in the bush if public assets are privatised.

And I share their fears. That is why I support the amendments moved by Labor in the House and in the Senate that will require as a precondition for the spending of Commonwealth funds on the asset recycling initiative (a) an Infrastructure Australia assessment of the new infrastructure that includes a published cost-benefit analysis and (b) the tabling of a disallowable instrument for each privatisation or reinvestment transaction. It is important for our communities that we ensure that there is strong oversight when it comes to the sale of our public assets. Regional Australians fear the fire sale of public assets, because where is their representation? Where are the Nationals on this? In opposition they are quite happy to say, 'We'll stand up for the bush', but the moment they get elected into government they crumble to the city based Liberals when it comes to public assets. They flounder and agree with silly terms such as 'asset recycling' and agree with the Liberals in their agenda to sell off assets. I call on the members who represent regional communities to stand up and to support Labor's amendments, because these amendments are the only ones that will truly ensure that people in the country will be represented when it comes to their public assets. If the states seek to gain from the sale of public assets or the assets recycling program it should be subject to the measures as outlined in Labor's amendment.

In the state of Victoria there are not many assets left after Kennett's big privatisation bender of the early 90s. But there is one: there is still the Port of Melbourne. And on that particular one, only a week ago Jeff Kennett actually argued that the state government should proceed immediately to sale and that not selling it was 'politically dead'. Well, politically dead is not a good enough reason for the sale of a public asset and is another reminder of why it is so important that we have oversight when it comes to the sale of our public assets. Whilst the port remains one of the last significant public assets on the Victorian books, it is important to note that the Victorian government has made noises publicly about this program and in this House we have not forgotten it. They are so concerned about this particular program that they have actually made a submission to the Productivity Commission. The Victorian government is so worried that Victoria could be disadvantaged under the plan because so many public assets were sold off in the 1990s that in their submission Victoria argued that the privatisation push of the Kennett years has left the state with less scope to benefit from this measure. They argue that any such incentive payments must also provide financial rewards for past efforts in selling off public assets. Is this state government for real? Once you have sold them off they are gone. What do they not understand about how the market works? Yet they are arguing that they should be rewarded for their past efforts.

These comments are not surprising from a government that is becoming increasingly chaotic and increasingly dysfunctional. Just to touch very quickly on an example of how dysfunctional this government has become in my area of Bendigo, it appears that if you want to get funding right now from this government all you have to do is ring up the local paper—a very good paper, the Bendigo Advertiserand if they run a front-page story about your particular issue then within days you will get a visit from the Premier and a visit from the education minister promising funding. That is exactly what we saw happen to the Kalianna Special School this week and exactly what we saw happen to the Annie North project. And good on them for speaking out about the lack of investment from the Liberal government in the state of Victoria. But it is a bad way to do policy if local schools and local organisations have to be on the front page of their local paper to get funding. The secret is out now, and watch every front page of the Bendigo advertiser and watch the state government throw money desperately trying to win the next state election. It is another reason that it is so important that these amendments are adopted. These decisions about infrastructure should be independently assessed and recommended by Infrastructure Australia.

We all know that the Liberals are obsessed with Melbourne metro based transport projects, leaving electorates like my electorate out in the cold when it comes to decent infrastructure funding. We have our own fair share of projects—regional infrastructure projects, roads projects and rail projects that we also need funding for. Yet the Libs and the Nats in the state of Victoria continue to champion a dud tunnel, the east-west tunnel, with little precious funding left available for vital regional infrastructure and rail projects. This one project demonstrates why it is so important that Infrastructure Australia should be involved in the approval of any major projects. This is one project that we have heard of today in this House and that we have seen reported in the media that lacks the transparency around the decision making that is required for major infrastructure projects.

Instead of allocating the $8 billion in funds to our regional highways, arterial roads and local roads that are falling apart and riddled with dangerous cracks and potholes, the money has been allocated to what has been described as a dud tunnel. The tunnel does not solve the congestion problems of Melbourne. There are very few people in Melbourne who need to go from east to west. People in the east and the west need to go to the city.

There is no design yet, or even a mark on the map, showing where this tunnel will pop out. Why? Because we have a state election, and who wants to be the sitting MP who has to go around door knocking saying, 'My government has decided to knock down your house so that the tunnel can pop out in your back yard.' This is the problem with policy decisions that are made on a whim, and it is another reminder about why we have established Infrastructure Australia and why these decisions should be independently assessed by Infrastructure Australia.

After the last election the Prime Minister was reported in The Age as saying that he did not even need to see the business case for the East West Link. The journalist went on to report in The Age that over $1.5 billion in funds would go to this tunnel without the Prime Minister even seeing the full business case. How is that a good way to do good governance and ensure that taxpayers are getting value for money?

The government is making this advance payment to the state of Victoria to help fast-track the project and make their budget look good before the next state election. Is that how desperate the Liberals have become to prop up a dysfunctional and chaotic state government. If there were one example that demonstrated that there is a need for greater transparency, it would be the East West Link project of Melbourne. There are so many major regional infrastructure projects that need urgent attention, and not just to help families get from A to B but also to help our products get from the north of the state to the ports. The Mildura freight rail project is one that comes to mind. Other projects are the Calder Highway upgrade to the north, completing the Calder Freeway upgrade to freeway standard the whole way from Melbourne to Bendigo, and the Bendigo Airport upgrade. These are just a few of the many projects that could benefit from regional infrastructure funding. Instead, the Liberal obsession with Melbourne means that these projects are delayed.

But where are the Nationals? Standing on these roads and at the airport during the election period, Mr Truss was happy to visit Bendigo Airport during the election period, but since the election he has not been back. He did not even have the time to meet with the council, who he met during the election period, when they were here a few weeks ago. These vital projects are standing still because the government has its priorities wrong when it comes to infrastructure funding. These problems are being ignored in favour of Melbourne projects.

Good road and rail links are critical to supporting regional communities. If our farmers are to get their product to market they need a decent regional infrastructure system. Right now this government is not prioritising it in the regional parts of Victoria. The only major transport project that Central Victoria will benefit from in the next few years is the Regional Rail Link, which was funded and started by former federal and state Labor governments. Yet I note that in a few months Denis Napthine and Warren Truss will probably be there cutting the ribbon to say, 'Job well done.' Well, it is not a job well done for the Liberals and Nationals, because they were not the ones who allocated funding to it. They were the ones who simply sat back and watched money that Labor allocated in government to see the building of this project. They have an opportunity right now to start planning for the next regional rail project, the Mildura freight rail upgrade. But we have not yet seen this government prioritise that project.

Without the amendments moved by Labor, asset recycling is a bad deal for states. Given that the federal government already provides at least half the funds for many projects, where does the 15 per cent incentive sit when it comes to the 50 per cent allocation. There is a problem with the maths when it comes to this particular bill.

I urge the members of the House to support Labor's amendments, because only through these amendments will we actually get genuine transparency and ensure that, if there are sales of private assets, the funding goes towards projects that really will make a difference to Australia and, in particular, regional Australia.

Michael Sukkar (Deakin, Liberal Party) Share this | Link to this | Hansard source

I was really pleased to follow the member for Bendigo in her contribution to this debate, because the member for Bendigo spoke at some length about her opposition to the state coalition government's policy in respect of the sale of the Port of Melbourne Corporation. There were a couple of minutes there where the member for Bendigo spoke stridently against that proposed sale. I suppose the problem for the member for Bendigo is that she should probably speak to the state Labor opposition leader, Daniel Andrews, who, in November 2013, committed the Labor Party, if elected, to sell the Port of Melbourne Corporation. So there we have it. The member for Bendigo has repudiated sensible state Labor party policy, where they were brought kicking and screaming to accept that the sale of the Port of Melbourne Corporation would be very positive. So, Member for Bendigo, I think you have a little bit of explaining to do when we head back to Victoria. I also suspect that it is another case of saying one thing in Canberra and another thing when we all head home to our electorates.

Before I start my contribution on the Asset Recycling Fund Bill 2014, I want to assure the member for Bendigo that nobody in Victoria—certainly nobody in the outer east of Melbourne where the seat of Deakin lies—refers to the East West Link as 'the dud tunnel'. She might be concerned about the inner-city Greens and the internal Labor Party fights that will happen with respect to—

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Minister for Agriculture) Share this | Link to this | Hansard source

On a point of order, Mr Deputy Speaker: you cannot preface your remarks by saying, 'Before I get to the bill I want to say this,' and claim you are being relevant to the bill. The member, by his own admission, is not being relevant to the bill.

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

There is little bit of latitude.

Michael Sukkar (Deakin, Liberal Party) Share this | Link to this | Hansard source

I commend the member for Hunter for trying to save the member for Bendigo, but nothing will save her from the woeful contribution she just made.

People in the eastern suburbs of Melbourne, in my seat of Deakin, greatly appreciate the Asset Recycling Fund Bill which we are here to debate today. Let us remember that this is an agreement that the federal government was able to strike with every single state government, including state governments of the other political persuasion. So I find it very surprising that the amendments being sought here are not being repudiated by those opposite. This bill, and the Asset Recycling Fund, is a key component of ensuring that we meet our commitment to give Australia the infrastructure of the 21st century—something we spoke about ad nauseam during the election campaign and something we have spoken about ad nauseam since forming government.

What sets us apart from the Labor Party is that we do not send out endless media releases or make endless announcements. I do not follow New South Wales politics that closely, but—gee whiz—I can recall that many infrastructure projects being announced three, four or five times. Even in my own state the Labor Party does it. There is no shame. They will announce the same infrastructure project time and time again—without any credible way to fund it. The Asset Recycling Fund will ensure that we have the means to deliver on our promises.

The fund is designed to provide incentives and support for our state and territory governments to sell their existing assets and invest the freed-up capital into new productive infrastructure—infrastructure that will provide the foundations for a more productive economy. I could not believe the member for Bendigo—she was almost rewriting Labor history when bemoaning privatisations. I think we need to sit her down with former Prime Ministers Hawke and Keating. Perhaps she can educate them on the mistakes they made when implementing their very important privatisation agenda. It shows you just how far the once great Labor Party has retreated from what it was.

The Asset Recycling Fund will start with an initial commitment of $5.9 billion. This money comes from uncommitted amounts in the Building Australia Fund and the Education Investment Fund and will be managed by the Future Fund Board of Guardians. The Asset Recycling Fund builds on earlier coalition government measures to create future funds—thanks, as we know, to former Treasurer Costello—to benefit current and future generations by providing long-term investments in our future economic development, not just spending money with the next election in mind. These are not short-term measures. They are for the long-term benefit of the nation.

In the 2014-15 budget, the coalition government, unlike Labor, invested a fair dinkum $50 billion into key infrastructure projects. I have been very gladdened to read that that $50 billion investment will support more than $125 billion of construction activity once you take into account private sector and other sources of funding. In other words, a $50 billion commitment by this government, which is unprecedented, unlocks an additional $75 billion of private investment.

Over the last few years, much has been made by members opposite about the need for investment in infrastructure projects. Every question time, it seems, the former infrastructure minister interjects in some sort of desperate attempt to salvage some kind of legacy—but I can tell him that that legacy has been shot out of the water, so he should just give up. We on this side of the House will deliver on our promise of modern infrastructure. It is a key part of our Economic Action Strategy to boost jobs along with investment. Again, it was something we spoke about ad nauseam before the last election.

Building the roads of the 21st century is a crucial step and I am very proud that prior to the election, through advocacy from Victorian federal members—or federal candidates, as I was—we were able to secure a $1½ billion commitment in relation to the East West Link. This is an unprecedented investment in crucial infrastructure for Victoria. Again, the member for Bendigo referred to it as 'the dud tunnel'. She should probably speak to the former Labor state government and former Labor Premiers John Brumby and Steve Bracks, because the East West Link, the most crucial infrastructure project in Victoria, was first identified by the former state Labor government through their Eddington review in 2008. The member for Bendigo has effectively repudiated Daniel Andrews, the current opposition leader; the last two state Labor premiers of Victoria; and two great prime ministers—Bob Hawke and Paul Keating. I think that shows you exactly what has happened to the Labor Party.

In addition to the $1½ billion that was committed pre-election, we recognised, in order to unlock Melbourne's west and to provide a second river crossing in Victoria, that stage 2 of the East West Link needed to be accelerated too. Clearly stage 1, with our $1½ billion commitment, will kick it off and get it started this year. But the additional $1½ billion for stage 2 is recognition that, in order to have an entirely integrated road system in Victoria, that second river crossing—in addition to stage 1 of the East West Link—is going to be absolutely necessary. So there we go. We have $3 billion committed by this government to ensure that the East West Link, stages 1 and 2, starts immediately.

Another huge advantage for the Victorian economy—not just once the road is completed, because we know there will be massive benefits for businesses and commuters—is that during the construction phase of stages 1 and 2 of the East West Link over 6,000 construction jobs will be created. That is why responsible union leaders in Victoria have been desperately making pleas to the state Labor Party to get behind the East West Link. I suspect that secretly they wish it happens. They want the hard decision taken away from them. I can promise the Labor Party that, yes, we will make the hard decision. In fact, it is not that hard; it is a very positive announcement for Victoria. There will be 6,000 new jobs during the construction phase of the project.

What is the big problem with the East West Link? The problem is, for residents of Deakin, Aston and Menzies and people who live the eastern suburbs, the Eastern Freeway effectively ends at an inner-city street at Clifton Hill. This project will ensure that Deakin residents commuting to the airport, across town for work in the West, or even into the inner north or the CBD, will no longer have to sit on the Eastern Freeway for hours on end. A stark example of that is that every Sunday afternoon, when I am making my way to the airport during a sitting week, I sit on Alexandra Parade at the end of the Eastern Freeway for the better part of half an hour. This is on a Sunday afternoon. So I absolutely appreciate it when my constituents complain to me about the time they spend on the Eastern Freeway.

This is a huge fillip for the Victorian economy, it is a huge fillip for jobs growth and, importantly for the residents of Deakin, the East West Link will ensure that the eastern suburbs are no longer forgotten and that the eastern suburbs have the infrastructure they need—not only for small businesses but also for everyday mums and dads. Quite frankly, the time you spend on the freeway often determines whether you get home to bathe your children, give them a kiss or read them a book before they go to bed. It is real life for these people. If we are able to save mums and dads—and all family members—time commuting, there are productivity benefits but there are also deeply-felt personal benefits for everybody.

The Asset Recycling Fund is the culmination of an historic agreement between the Commonwealth government and the states, including Labor states. Clearly, there is bipartisan support for it, if you put aside the endless opposition we get from members of the federal Labor Party. It makes sense. Recycling assets and ensuring that those funds from privatisations are contributed to productivity-enhancing infrastructure should not be anything new. There should not be anything particularly novel to members opposite, except that it is very positive. If it is novel to those opposite, then they should read the legislation and consider it, because it makes complete sense.

If asset recycling means that rather than having endless media releases, endless photo opportunities which the Labor Party was so good at for six years, we start delivering projects—we have men and women on the ground with projects actually happening—it will have a huge fillip for the broader national economy, not just for the Victorian economy, and will have long-term benefits on the economy through more efficient freight movement and productivity of our citizens.

I congratulate the Victorian state government for working hand in glove with us, in respect of our investment in the East West Link, because it has indicated to the Victorian people that when you have state and federal governments who do not endlessly squabble, things can be delivered. Ultimately, my residents in Deakin want to see action. They want to see things happening. They do not want to see blame shifting from one level of government to another. The $3 billion we are committing to the East West Link—and countless other infrastructure projects around the country—will be a huge shot in the arm for the Victorian and national economies. I therefore commend the relevant minister for this historic Asset Recycling Fund and congratulate him for being able to negotiate this with each of the states.

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

I was somewhat shocked to hear the member for Deakin say the word—not using the words 'asset recycling'. It slipped out; he could not help it; he could not keep it contained. The word 'privatisation' slipped into Hansard. He wandered off the focus-group tested 'asset recycling', the Orwellian attempt by the Liberal Party's spinmeisters. They thought privatisation sounded bad: 'We'll call it asset recycling.' So we get this Orwellian bill. It does not have one dollar extra in infrastructure. All it does is link what was already in the budget in infrastructure spending—under Labor—to a privatisation scheme.

Of course, Labor is not against the selective privatisation of some assets. Indeed, in the Hawke-Keating years there were some privatisations—Qantas and the federal airports come to mind. We have always taken a selective view, a public interest view, a public good view, of this issue. The problem with those opposite is that they always approach privatisation as a matter of ideology.

Labor's two proposed amendments to this bill are, firstly, to allow Infrastructure Australia assessment of new infrastructure as productivity-enhancing projects, and that includes a published cost-benefit analysis; and, secondly, the tabling of a disallowable instrument for each privatisation and reinvestment transaction. That is for very good reason, because there are sensible privatisations and then there are what the Liberal Party do, which are ideological privatisations.

We see an inability of the language in this bill—and indeed in the language used by this government—to just be honest and talk straight with the Australian people. It is one of their government's problems in terms of the co-payment. We saw the member for Hume getting in a bit of strife today. It is one of the Prime Minister's problems. It is the reason he now has to write to pensioners across the country, presumably to right some wrongs, to fix up some communication issues. This bill is about the encouragement of states to privatise their assets willy-nilly. There is a 15 per cent reward. There is a smaller contribution than states normally put into infrastructure, which is normally either 50 per cent or 80 per cent. The government is putting in a small reward so that some state governments go on a privatisation frenzy—not in the public interest, not selectively looking at assets in the public interest, but simply selling things off willy-nilly.

We know what Liberal state governments do when they get any sort of encouragement in this area. I can tell you what happened in South Australia. In the nineties we saw the Olsen government sell many assets that the state had, willy-nilly. They sold the state TAB for $50 million. That sounds like a good outcome, except that it earned $50 million a year. They sold it to the Queensland TAB. Apparently there is some risk involved in gambling revenue, so they got that one off their books. That privatisation continues to plague the racing industry in my state to this day. To this day it is regretted. It was a foolish privatisation. It was a privatisation which was in no way in the interests of the taxpayers of the state of South Australia. When the ideological test is applied, we get some pretty bad outcomes.

The Olsen government also leased our electricity assets. This was not just unpopular; it also did not live up to the expectations. An article by Tory Shepherd in The Advertiser on 21 February this year carried the headline, 'ETSA sale cost South Australia $2b as prices soar, says damning report on privatisation'. That report was by Professor Quiggin, who is quoted as saying, 'South Australia is really Exhibit A in privatisation leading to higher prices.'

I would just warn those opposite that it is all very well to be a cheer squad for these sorts of privatisations, but I can assure them that often the rhetoric catches up with you when reality hits. There are other reports, such as one by Dr Phillip Toner from the University of Sydney in 2012, in which he noted, 'South Australia, which has a fully privatised electricity industry, has the highest prices of all states.' He also noted, 'New South Wales electricity prices increased largely due to a massive increase in capital expenditure from the mid-2000s.'

It is an interesting point about New South Wales power prices. We know that power prices are a big issue for the public—a very big issue indeed. I would not blame any person across the country for being worried about electricity prices. But most of this is about privatisation or, in the case of state owned assets, in the preparation for their eventual privatisation. In John Quiggin's report Privatisation of Queensland electricity assets: A preliminaryevaluation, he notes:

In South Australia, privatisation was advocated in the 1990s on the basis that it was necessary for participation in the National Electricity Market. Far from reducing prices, the result was to raise them to the highest levels in Australia.

This was due in part to massively increased distribution charges. As the SA Essential Services Minister, Lew Owens noted in an interview with ABC Stateline (2003):

The simple explanation for that is in addition to the wholesale energy price you have to add the network charges for the poles and wire businesses.

They are dearer in SA because the assets were revalued back in 1996 prior to privatisation and locked in by legislation.

That is a very important observation by Lew Owens, who was the Energy Regulator in South Australia. In the run-up to the privatisation of electricity assets, state governments typically fatten the pig before market today. They do that by gold-plating the infrastructure and by raising the prices that consumers pay. That is how South Australia ended up not just with the highest prices in Australia but, as was reported on 21 March 2012 in The Advertiser, 'South Australia's power prices set to become the highest in the world says Energy Users Association of Australia'.

Dr Jensen interjecting—

We hear the member opposite interjecting. They had a pretty fair go in terms of those power prices at the time. They were out there every day beating up on the straw man that was the carbon price, but of course the main culprit in those price rises was network charges; it was the cost of poles and wires being passed on to consumers. That is a direct result of the privatisation of what was a natural monopoly—the poles and wires. This is noted in a more recent report of February 2014, and in another one by Dr John Quiggin, Electricity privatisation in Australia: A record of failure. He notes on page 12:

In some cases, governments have sought to increase the sale price of assets by raising costs to consumers in the lead up to privatisation, or by allowing price increases after privatisation.

You cannot blame the entities that buy these assets for trying to gouge what are natural monopolies. Those opposite come into this chamber and talk about asset recycling; what they really mean is privatisation. They put in place a bill that has not one extra dollar for infrastructure and yet they claim the infrastructure is a result of the privatisation. Then they make all sorts of claims about how these things will benefit taxpayers and consumers, who are one and the same. I can tell you that we have heard these tales before in the South Australian context. We have seen dramatic and detrimental effects on taxpayers and consumers. That is why you cannot be too much of a cheer squad for privatisation; why you cannot be too much of an ideological advocate for privatisation. You have to apply rational thinking to it rather than just charging down a particular path. You have to be selective, when you are dealing with state governments, about what you will reward and what you will not reward. That is the reason for Labor's amendments.

This is an infrastructure con in so many ways. We hear the Prime Minister and others talking about him being the 'Infrastructure Prime Minister'. If you look at my electorate, that is almost certainly not the case. The electrification of the Gawler to Adelaide rail line is a very important project for moving into town commuters who live in the outer suburbs of Adelaide or in the town of Gawler, which is a large regional centre, and many people come in from the Barossa Valley and further up the track, such as wheat belt towns like Mallala and Kapunda, where I grew up. The rail project would be efficient and sensible. It would help people, would take cars off the road rather than putting cars on the road and would give people a far better commute. I lived in Gawler some years ago, and I drove to town every day. I can tell you it is not a pleasant commute; you spend a lot of time in the car. It is much more pleasant to go along on a train where you can read, relax and have a bit of time out and not focus on the traffic. That project was cancelled by the Abbott government. They do not want anything to do with public transport no matter how much sense it makes. That is a blow not just to my state but to jobs in my state and to the northern suburbs of Adelaide, which has been the victim of so many of this government's decisions, especially in terms of the automotive industry. We see the impacts of the Treasurer chasing Holden out of the country—something I talked to the House about once before. Now we see the impact of them cancelling important economic infrastructure for the state of South Australia—

Mr Pasin interjecting—

The member for Barker visited the Barossa Valley recently he cannot work out that the very people who live there use the trains in Gawler. He comes in here and he yells and barks and bleats, but his government—the government he is a part of—has cancelled this important project. I am reliably informed he has told his Liberal Party preselectors that he is going to be a minister within two terms. That is what he has claimed to the good preselectors of Barker. I hope that he fulfils that—perhaps he can knock off the member for Mayo and put this project back on track. He will be a hero to South Australia but, if he cannot, I hope his preselectors come after him. I cannot imagine a more joyous thing to do.

To conclude, this bill is in so many ways a complete con. It does not put an extra dollar into infrastructure. It does not put one single extra bit of tar or roadway down that would not have otherwise been put down. It takes the word 'privatisation' and then substitutes it with 'asset recycling', an Orwellian term that is designed by a Liberal Party focus group. This bill hides the fact that in so many areas this government has turned the clock back, particularly in public infrastructure and particularly in my electorate and in South Australia. Like so many things that this government does, it is a complete and utter sham. Only Labor's amendments can make this bill any better.

Dennis Jensen (Tangney, Liberal Party) Share this | Link to this | Hansard source

The difference between Labor and Liberal philosophies is the difference between good enough and never enough. The Asset Recycling Fund Bill will turn lazy assets into hardworking assets, increasing returns and securing our children's quality of life well into the future. The country is in a mess because the Labor government battered her with a mining tax, a carbon tax, pink batts, school halls, the NBN and so on. Today, this responsible coalition government has to think smarter about how we all do business. Interest payments on Labor's debt are $1 billion per month—or $2,000 annually for a family of four. It is time to stop beating up on the country and time to start getting excited about her prospects. The Asset Recycling Fund is an exciting first step in paying down the debt and clearing off the Labor deficit legacy.

The Commonwealth will provide states and territories with incentive payments of 15 per cent of the sale price of privatised assets with the returns to be re-invested into new priority infrastructure projects. The Commonwealth funding program is capped at $5 billion. The positive interest on the fund alone will make a significant contribution to paying off the monthly national credit card bill. However, more importantly, the asset recycling bill provides proof that this government is living up to its word to give hope, reward and opportunity to the Australian people and to deliver the roads of the 21st century. It is exciting to think that inert capital of underperforming assets will become liquid and available to the marketplace. This freed-up capital will inspire the genius of the market to deliver real solutions of those desperately short of 21st century infrastructure.

Let's not fool ourselves about what this bill is and what it does. This bill is liberal because it believes in incentive—it gives states incentives to take a long, hard look at everything they own. Every person on the street knows that a good return is dictated by risk and reward. The most stinging point is that there are those in Labor ranks capable of questioning the central premise of what we are debating today—namely, if our state and federal asset is chugging along, producing a nominal net return of two per cent—is that good enough?

Let me speak here of the specific good from this legislation for my electorate of Tangney and for Western Australia. The Perth Freight Link is made possible through this bill. This is a comprehensive plan to get heavy-goods vehicles from the port to the airport. The Perth Airport and surrounding areas serve as a major passenger and freight network hub for the Perth metropolitan area. The need for this project has been driven by the expected doubling of passenger air travel and the road freight task over the next decade, coupled with proposed consolidation of the Perth airport terminals. Figures I have suggest 11 per cent annual growth for 2013 in use of runway 21, the southern runway of Perth Airport. Further traffic will be generated by industrial developments in the southern part of the airport and in the surrounding areas of Kewdale and Forrestfield and from commuter traffic in the eastern and south-eastern suburbs of Perth. The Perth Freight Link will stop the nonsense of stopping at 33 sets of lights, as is the current situation. The importance of Perth Airport cannot be overstated in the Western Australian context: think of the FIFO worker, the online shopper and the high-value-add exporter.

One aspect of this project that interests me greatly is the envisaged public-private dynamic. For the first time the Commonwealth and Western Australian governments will be seeking opportunities for private sector co-contribution towards a major road project. The Perth Freight Link has an estimated cost of $1.6 billion, with $925 million contributed by the Commonwealth. Private sector co-investment will ensure maximum value is achieved from taxpayer dollars with minimal impact on the federal budget.

With industry and government investment, Perth Freight Link is expected to establish the Roe Highway as the preferred east-west freight link in Perth. To support and sustain a growing population and economy, developing freight links that clear congestion and ease pressure on existing roads will provide significant productivity uplifts for Perth. Increasing the productivity of our workforce is the only way to secure our current standard of living, and to ensure our global competitiveness.

Perth Airport is growing. For example, based on figures of total departures between 2007 and last year, Perth Airport has grown by 61 per cent. Western Australia demands and deserves a clear and well-thought-out plan not just for this decade, but for many decades to come. It is expected that Perth Freight Link will be opened by 2021.

WA government estimates indicate that the Roe Highway extension will deliver benefits of $5.20 for every dollar invested; and the Stock Road and High Street improvements will provide $1.70 in benefits for every dollar invested. This game-changing project would never have been delivered under the previous Labor government, which remains opposed to this vital freight link.

But the good news for WA does not stop at the Perth Freight Link. The coalition government is also delivering the Perth Airport Gateway, the Swan Valley by-pass, the Great Northern Highway upgrade, North West Highway upgrades, as well as Tonkin Highway upgrades.

In sum, this bill introduces incentive and asks the states: 'Why are you holding this asset?' and 'Is it really necessary?' The aim of this bill is that we turn that lazy two per cent into a strong six per cent return. This will enable us to pay down the Labor debt and stop paying the $1 billion-a-month interest payments on that debt. Not only this, but in turn, it will provide a springboard of capital from which new companies, ideas and ventures can be attained. This coalition government believes in free enterprise, believes in ideas and believes in people. So the liquidation of lazy assets will be transferred to a pool, a fund as set up by this bill, and moneys can be added and attached by interested parties and individuals.

Initial funding will come from the uncommitted funds in the Building Australia Fund, $2.4 billion, and the Education Investment Fund, $3.5 billion, that were established in 2009. Further contributions will come from the sale of Medibank Private and other potential privatisations. Through the hard work, dedication and vision of the Prime Minister, Treasurer and Finance Minister, this pool of moneys, joined as it surely will be by other moneys, will be able to provide people across Australia with the roads of the 21st century. That is the plan. It was a key part of a document called 'Our Plan—Real Solutions for all Australians'. We launched our plan in 2013 and now in government we are executing that plan—keeping our promises to the Australian people, as we said we would. This is what good governments do, and Labor will never understand that We said we would stop the boats, and we have. We said we would reduce red tape, and we have. We said we would fix the budget disaster, and we are. This bill will not fix everything overnight, but what an important first step it is. It is, in essence, a pure marker of enabling legislation. It is creating incentive and cutting waste—that is what this bill is about; that is what the Liberals are all about.

Labor would never dream of putting something like this before the House. It is akin to cutting off their right arm, and that is the arm from which they eat the union's cake. There is no-one in this place who can honestly say that a commercial enterprise can stay fit by eating cake. State assets have always been less competitive, more regulated, less effective and less efficient than their private sector counterparts or comparisons. In brief, as we have seen time and time again in this place, the Labor Party are incapable of taking the hard decisions. The Labor Party are congenitally incapable of putting Australia's interest ahead of their own party political interest. Shame, Labor, shame.

We face a significant challenge. The previous government delivered five budget deficits, totalling $195 billion. Their last budget was another $123 billion worth of projected deficits. We have implemented some structural savings in this budget, which will start low and slow and which will build over time. What we are looking to do in this bill is to sell assets which, whether in public hands or in private hands, will continue to provide services to the Australian community and which we believe the private sector would provide more efficiently and more cost effectively. We will reinvest the proceeds from the sale of those assets. We will recycle, if you will, by investing them in new productivity enhancing infrastructure. So we have got infrastructure, existing assets, which we can sell and which will continue to provide benefits to the Australian economy and to the Australian community. We think the private sector would be able to do it better and we would be able to invest the proceeds from those sales in strengthening our economy into the future.

In the final analysis, it is about smarter choices and hard decisions. 'Smarter choices' means being cognisant of the extremely benign global monetary environment and the cheap money policies being enacted across many OECD countries. Smarter choices means knowing when to 'hold'em' and when to 'fold'em'. When talk of tapering is on the table, it might be time to make hay. Sell at the top of the market: this could be as good a price as we will get. Lazy logic says that you should keep depreciating the dirty old rust bucket until it falls over, because it still throws a two per cent return. It might cost a tonne in between but it still throw off two per cent. Labor's lazy logic says that we should keep these unproductive, uneconomic assets because we own them now, and we always should own them, because we always did. This is absolutely perverse. It is a lazy logic born of a fundamental distrust of the free market. It is a lazy logic born of a fundamental distrust of the Australian people. As a wonderful warrior woman once said:

The only problem with socialism is that you eventually run out of other people's money.

As this bill, the Asset Recycling Fund Bill 2014, will support the Asset Recycling Initiative, provides incentive payments to states and territories for the sale of assets if the proceeds are reinvested in productivity enhancing infrastructure, it is critical that we hurry up and pass this bill. This fund will expedite strategic and nationally significant infrastructure. To quote that famous Irish Liberal , and Leader of the Irish Home Rule Party, Charles Stewart Parnell:

No one can say to his nation, 'Thus far shalt thou go and no further'.

Similarly, I challenge any Labor member here today to look their constituents in the eye and say that they purposefully opposed this bill, that they purposefully opposed progress and the building of new roads in their electorates. This great nation will march on. It must.

The Liberal plan is ready and we are acting on our mandate. Our solid and terrific mandate is to see our Real Solutions plan enacted and to return hope, reward, and opportunity to all Australians and to build a safe, secure Australia. We will succeed. We will succeed because history always sides with those with better ideas, and ultimately those with the right solutions. Those right solutions for fixing Australia's deficit and disaster are the Liberal's Economic Action Strategy—a strategy we outlined in the Real Solutions documents all those months ago. Real results do not have to be really hard. All it takes is for Labor to give up their lazy logic and back our plan to get Australia back on track. We have done it before, and we will do it again.

Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Link to this | Hansard source

The Asset Recycling Fund Bill 2014 and related bill are very bad bills. Once again they are a great example of 'Howardian' language. This is the language of the Howard government, which used to give titles to bills which meant the complete opposite. I am reminded of the More Jobs, Better Pay Bill, which was, of course, a title given to a bill that actually cut unemployment benefits. I am also reminded of Work Choices. Wasn't that a wonderful use of Howardian language for the naming of a bill—Work Choices, whereby the most vulnerable in our society were given no choice? They were forced into taking contracts and conditions that cut their award wage.

Here we have it again in the Asset Recycling Fund Bill 2014. When I saw this title, I thought: 'Gee, that's an interesting title for a bill. I wonder what this bill is about.' I read the explanatory memorandum and then I saw it—privatisation

This is exactly what this bill is about: privatisation. I thought to myself, 'why can't they just say that this bill is about selling government assets—selling assets owned by the people of Australia?' But no—because this government are all about deceit. They are first-class—tick—when it comes to deceit of the Australian people. It was Tony Abbott, now Prime Minister, who said before the election, 'no cuts to education, no cuts to health, no changes to pensions and no cuts to the ABC and SBS'—yet that is exactly what has been done in the current budget. What is worse is that the Prime Minister says that these are not broken election commitments, and that there is no deceit at all of the Australian people. Well, the Australian people would be horrified to know that the Commonwealth is encouraging the states to sell assets that are owned by the taxpayers of Australia, and offering a financial incentive for them to do so—a 15 per cent payment on the sale value, which has been described by Chris Aulich, a professor of public administration, as a 'bribe'. There is an expert in public administration and in the sale of public assets describing what this government is doing as a bribe—and that says it all, about this government's approach to infrastructure development in Australia.

These assets—electricity, gas, water, transport, health, and education assets—are not owned by the Abbott government; they are owned by the people of Australia. They are government assets that deliver government services. They return dividends to the Australian public, which allow them to invest in schools, in roads, and in education. In my state of New South Wales over the last couple of years, the energy assets have been returning $1 billion in revenues to the people of New South Wales—and that money has been used to upgrade hospitals, to build new schools and to upgrade schools. To think that these assets that are owned by the Australian people are going to be sold—importantly, without any due diligence and without consideration of what is in the national interest; just so that a government can secure a 15 per cent payment, or a bribe, as described by Chris Aulich, on the asset—is somewhat horrific. It is akin to someone selling the family home to get a 15 per cent windfall, and then renting for the rest of their life and, over time, paying more for an asset that they once owned. It does not make any sense. Governments should not be paying other governments to sell assets that are owned by the Australian public.

These two bills, the Asset Recycling Fund Bill 2014 and the Asset Recycling Fund (Consequential Amendments) Bill 2014 represent the complete failure of this government to develop any plan to invest in infrastructure for the nation's future. Labor believes that the federal government should take a leading role in working with states and territories to fund nation-building infrastructure projects, including setting government standards to allow decisions to be made in the national interest, not according to a political cycle. Labor will be moving amendments in the House which would ensure that the Building Australia Fund requires that the minister may not recommend a proposal for Commonwealth funding unless the minister has considered advice from Infrastructure Australia as to the merit of the project and, particularly, as to its contribution to enhancing our nation's productivity. That is the basis on which Australia should be making investments in assets on the back of the sale of other assets.

Further, we will move an amendment requiring the finance minister to table a disallowable instrument, for each privatisation or re-investment transaction that the government deems eligible for the incentive payment, as a precondition to the payment of Commonwealth funds. This is to ensure that there is some due diligence to this process. We cannot allow a blank cheque for this government to do deals with states, and to allow those states to completely sell off assets without any sort of due diligence being done—with the carrot being provided of a 15 per cent windfall on the asset sale price. It is almost immoral—to think that a government would make such an encouragement, in a piece of legislation such as this, to sell off assets that have been owned by the Australian people for centuries and have returned dividends that fund additional government services.

Given that the federal government often provides at least half of the funds for many projects, the replacement of direct support of that nature with a 15-per-cent incentive that allows the federal government to withdraw from the historically large commitments that were made by Labor is a backward step. It is a sneaky and underhanded withdrawal from proper scrutiny of investment and planning for infrastructure in this country. This is an initiative that should sit on top of—it must sit in addition to—the high level of federal commitment under Labor to funding nation-building projects in road, rail and other nationally significant infrastructure. The federal government's refusal to fund nation-building urban passenger rail projects remains a major failure. These should be funded even-handedly, following independent advice from a transparent decision-making body. Failure to do so distorts state decision-making and leads to sub-optimal productivity outcomes. The Abbott government is on very shaky ground when it comes to investment in infrastructure. An article in The Sydney Morning Herald on 12 June reports that:

The Abbott government has been accused of pork-barrelling after analysis of the budget's infrastructure spending revealed Coalition electorates are favoured for new money by a ratio of three to one.

A Fairfax Media analysis of the Abbott government's 2014 budget has calculated that, of the new projects announced and funded, just under three-quarters were in Coalition electorates.

But it does not end there. The Herald goes on to report that, in comparison, the majority of projects which lost federal funding in the 2013 election—because of course we know the government reduced the amount of expenditure on infrastructure—were in non-Liberal electorates, such as the Metro Melbourne Rail Link in Victoria.

This politicisation of infrastructure is sad and petty. It is also harmful to our nation's development and, importantly, it is harmful to productivity-building infrastructure in this country. Labor is happy to stand on its record with respect to investment in infrastructure; in fact, we are quite proud of what we achieved as a government in the six years that we were investing in infrastructure. Our record, and the facts, speak for themselves. When Labor came to government, Australia as a nation was 20th in the world—20th in the OECD in terms of spending on infrastructure as a proportion of GDP. By the time we left government, Australia was No. 1 in terms of the amount of money spent on infrastructure as a proportion of GDP—a great indication of Labor's investment in infrastructure. We lifted the funding from $132 per Australian to $225 per Australian. We created Infrastructure Australia to research and to rank proposed infrastructure projects based on their potential to add to economic productivity; and we delivered a national port strategy and a national freight strategy.

Let us have a look at what the coalition has done since they have come to government. Almost all of its package is re-announcements of Labor-funded projects. I had to laugh in question time yesterday when the Minister for Infrastructure and Deputy Prime Minister was up here talking about so-called new projects that had been invested in by this government. Of course, he cited the Port Botany rail freight project, which happens to be in my electorate, and which I happen to know is almost completed. It is almost finished—it is being built as we speak, but the Deputy Prime Minister claims this as a new infrastructure project being invested in by this government. That is a great symbol of the approach of this government when it comes to infrastructure and the claims they are making, and of the deceit they are perpetrating on the Australian people.

This government also refuses to invest money in public transport, dumping Brisbane's Cross River Rail project, the Perth public transport package and the Melbourne Metro, and is in the process of gutting Infrastructure Australia by giving the minister the power to exclude classes of infrastructure from its consideration and to prohibit the publication of research. This point was confirmed by Infrastructure Australia representatives just two weeks ago in a Standing Committee on Infrastructure and Communications hearing into public infrastructure in Australia. In that hearing they confirmed that the minister is now able to direct Infrastructure Australia not to look at a particular proposal—which may be in the nation's best interests, which may improve productivity and which may be a passenger rail program—just because the minister feels that way. That is not the way to develop infrastructure and to develop the productivity of our economy.

Labor doubled the roads budget to $46.5 billion, and upgraded 7,500 kilometres worth of roads. We lifted local government roads grants by 20 per cent. The coalition has committed to Melbourne's east-west rail link and Sydney's WestConnex project without a cost-benefit analysis. Here they are saying 'Infrastructure Australia plays a valuable role, it should be involved in assessing the value of infrastructure projects; it should apply cost-benefit analysis principles'. Certainly when I was a member of the Senate the finance minister used to make quite a deal of the importance of a cost-benefit analysis before any government project is undertaken—and here they are in defiance of their own election promises and in defiance of their own rhetoric when it comes to assessing infrastructure.

They have shamelessly re-announced Labor projects such as the Gateway North in Brisbane and the Bruce and Pacific highway upgrades. If you drive up the Pacific Highway these days, you will find the Bulahdelah bypass has just been completed. You will go through the Kempsey bypass, you will see the Ballina bypass which has just been completed, and you will see the Woolgoolga bypass being constructed. These are all projects that Labor funded and put in place, and that Labor is building. I used to laugh, because I used to be the duty senator for that particular area, and I would go up there to open various stages of the Kempsey bypass, and Andrew Stoner, the deputy leader of the government in New South Wales, was always there claiming that this was a New South Wales government-invested project and trying to steal the media associated with the project. That must be something that runs in conservatives' blood in this country, because that is exactly what has occurred again. The disease has spread to Canberra, because that is exactly what is occurring with infrastructure and this government—they are stealing the credit for projects that were put in place and that were built by Labor governments and trying to claim them as their own.

In rail, Labor committed to more investment in urban rail infrastructure than all of its predecessor governments combined since Federation—$13.6 billion invested in rail projects by the Labor government, which says it all about our commitment, particularly to passenger rail projects; and $3.4 billion in the rail freight network over six years. We also rebuilt more than one-third of the network—4,000 kilometres of track. So these are bad bills. They are dressed up as asset recycling bills when in fact they are justifying privatisation of assets that are owned by the Australian people. It is a deceit perpetrated on the Australian people in the name of privatisation.

Ewen Jones (Herbert, Liberal Party) Share this | Link to this | Hansard source

I rise with great pride to speak about the Asset Recycling Fund Bill and the Asset Recycling Fund Consequential Amendments Bill. We went to the election in 2013, and 7 September saw us elected as the government for Australia. We took four main promises to that election. No. 1 was to axe the carbon tax. That should be the easiest thing in the world to do, because we had bipartisan support—Kevin Rudd lined it up and shot it dead. It was gone. He had laid it down and put it to death. That would be the easy part. So we came in here and we passed the bill. Funnily enough, we asked the member for Hughes, who was in the last parliament, if he was ever under any misconceptions about our position on the carbon tax—we had always said it was going to go. But Labor, of course, had a few views on that sort of thing. When we came in here, Labor said they were going to terminate the carbon tax. But when the Minister for the Environment, Greg Hunt, stood up and presented the repeal bill, Labor voted against it—and they are still voting against it. So, whilst it has been passed in here, it is sitting over in the other place. But I will give that one a tick.

Our second big one was to stop the boats. It has been six months without a boat. With a little bit of steel in the spine of the minister involved, he stood up and meant what he said. He went to the party room and he sold us on what we were supposed to do—and we have stopped the boats. We are actually shutting down detention centres in this country at the moment, so we can give that one a big tick.

The third one was to build the roads of the 21st century, and that one is on its way. I do not think there is anything surer than Warren Truss with the bit between his teeth. Jamie Briggs, the Assistant Minister for Infrastructure and Regional Development, has been all over the country telling us what we are going to do, how we are going to do it and the amount of money we will be spending. I was on the record in 2010 admitting and conceding that Labor spent more on infrastructure, including roads, than the Howard government did. I was on the record saying that. We will spend more than the Labor government did, just as the Howard government spent more than the Hawke-Keating government. The Hawke-Keating government spent more than the Fraser government. The Fraser government did not spend more than the Whitlam government, though—no-one spent more than the Whitlam government!

The fourth promise was to fix the budget. That is on its way. That is what the budget is all about. Our first budget is responsible. Everyone's shoulder is to the wheel. We have a national narrative for where we as a country want to go. We want to go back to the days when we lived within our means. I have always said that no business returns to profit by shutting its doors. Similarly, no federal government budget returns to surplus by shutting down the economy. It is a delicate balancing act that we have to have.

There was still a real growth in spending in this budget of 2.7 per cent. Those opposite will stick to their mantra of spending growth in real terms needing to be two per cent. They had to cut another 0.7 per cent further just to get to where they wanted to be. They said for the last six years that spending would be cut to two per cent growth in real terms. They never actually achieved it. Of course, they also said that they would bring the budget to surplus a number of times. I am an auctioneer and I can count pretty high and pretty fast but—by jingo!—there is a bit of work to be done to try to keep up with the number of times they did that.

How do we keep the economy moving? How do we keep the economy going? How do we make sure that we do not stall the economy? An example is in Townsville, where we have state support for the ring road. The coalition government have brought forward the second part of that project. We want it done in one fell swoop because the local contractors want to make sure that the work is being done. That sort of tenacity and forward-looking and forward-thinking management by your minister and assistant minister on infrastructure spending is something that should be held in high regard. Instead, it is met with derision from the other side.

The Queensland government faces probably the biggest task in this country after nearly 20 years of Labor rule. It has a massive debt and deficit issue, far greater in real terms than the Australian government. If you talk to Queensland Treasurer Tim Nicholls, he understands the challenge. The capacity of state governments over generations to earn and increase their own income has been wound back. Tim Nicholls, the state Treasurer, will tell you straight away that he does not like stamp duty and payroll tax but, if you take those away, he will not collect any money to bring into the state coffers. It must be very tempting for state governments, though, because they are faced with debt and deficit problems, to sell assets and simply retire debt. That would be a very tempting thing to do—to simply retire debt and try to get rid of the Labor memory as quickly as possible. This is what these bills address. It is about the benefit. It is about having an asset and what comes of that asset. Yes, we should be retiring debt. But, no, we do not want to stall the economy. There should be a pay-off and there should be benefit for it.

When Treasurer Joe Hockey was in Townsville he was asked what he needed to see. He was asked what, if he were to be the nation's Treasurer, he wanted to see. He said, 'I want to see cranes in the sky. I want to see dozers pushing dirt. I want to see work being done, because we have to build stuff. We have to make sure that we are being productive and producing infrastructure.' It is not just infrastructure. Anyone can build school halls. It needs to be infrastructure that provides greater access for trade and commerce. That is what we need. That is where we want to be focused.

When Andrew Robb was in Townsville he said not only do we have to be spending more money on infrastructure but we have to think about how we fund it. Every country in the world has an infrastructure deficit. So we have to try to figure out how best to address it. There is no way in the world that a government can just come straight out and spend the money. Maybe those opposite could! But no government with any sort of responsibility could just come out and spend the money to get our infrastructure up to date. So how do we maximise the best terms? How do we do the most we can for our dollar? It is by engaging in the private sector and engaging foreign capital. That is how we have to do it. The Asset Recycling Fund Bill is part of our response to that. These are the positive measures that we as a country and government will take to make it more alluring and profitable for state governments of the day who hold these assets to reinvest in their states and in their local communities.

There are some technical aspects of this bill I would like to walk through. The Asset Recycling Initiative taps into private sector investor interest in established brownfield assets—those are established assets, such as ports or electricity companies, with proven earnings—in order to fund new infrastructure projects. You will find that companies such as superannuation firms do not want to invest in greenfield sites because they would be risking the superannuation of our workers forever. Where something has a genuine business case, that is what superannuation firms will invest in. They will not invest in greenfield sites.

The Australian government is establishing the Asset Recycling Fund as a dedicated investment vehicle for providing financial assistance and incentives to states and territories to create new infrastructure that boosts economic growth. We are boosting economic growth in Queensland. In Townsville, say, if the state government was to sell the Townsville port and part of that money went into investing in new infrastructure, that could lead to new commerce, which would lead to more people moving to Townsville, leading to people buying cars and building and buying houses, and there would be stamp duty and registration—the money churn that goes through the community.

The Asset Recycling Fund will be established from 1 July this year. This will allow funding to flow to infrastructure priorities and promote productivity and generate economic growth. The infrastructure growth package will build Australia's infrastructure for the 21st century. In the budget the Abbott government delivered a record $50 billion for infrastructure investment commencing with an initial $5.7 billion and the government is committed to adding to the fund over time.

If you speak to the trade minister when he travels overseas, he says that he hosts roundtables and at those roundtables they have serious investors and all sorts of infrastructure discussions. What they want to know is whether Australia will change the rules. We had lots of investment here in the mining boom and then suddenly we brought in the mining super profits tax which turned into the mining rent tax—it's the vessel with the pestle, not the chalice from the palace! It was just a bit of a hodgepodge of bills and that sort of thing which led capital investment to flee overseas. Andrew Robb, the Minister for Trade, has been told that if we are serious we will provide the ground rules and those are the rules under which we want to invest. What he is trying to say to those people overseas is that we are serious. The Prime Minister, the foreign minister, the defence minister and the trade minister were all overseas last week with key clients, key countries around our region and around the world, and they were saying that we are open for business. We are speaking with a coherent message.

The Asset Recycling Fund will support the Asset Recycling Initiative which will provide incentives for states and territories to sell existing assets and invest in new infrastructure that supports a more productive economy. That is the key here. This sends the message that Australia is open for business all the way through. This historic agreement with the states has the potential to raise close to $40 billion of new infrastructure funding around the country. That is what we have to be doing here.

The fund's purpose will be to have an explicit purpose consistent with government's investment in productivity enhancing infrastructure, so it will not just be about building marine parks or shutting down fishing industries or anything like that. You will not be able to use it for that. The establishment of the investment fund will allow capital amounts to be invested by the Future Fund Board of Guardians to earn interest that will also be available to fund investment in infrastructure. This funding comes from uncommitted money in the Building Australia and Education Investment Fund—$2.4 billion from the Building Australia Fund and $3.5 billion from the Education Investment Fund. The Asset Recycling Fund also allows for the new fund to be credited with proceeds from the sale of Medibank Private and with the proceeds of any further privatisation initiatives.

The key here is to look at who is looking after us. We have a bit of a history when it comes to putting money away. We have got the Future Fund which was looked after by Peter Costello at the time. He put the money there to start off with. That has gone pretty well with money in the bank to make sure that public servants have their superannuation paid for and guaranteed, and that is a pretty serious investment.

Payments to states and territories will be made through the COAG Reform Fund. Once again, there are lots of checks and balances all the way through there. The project funding for the Asset Recycling Fund to cover payments to states and territories through COAG Reform Fund will require the approval of the finance minister following recommendations made by the Treasurer or the Minister for Infrastructure. So the Asset Recycling Fund will have Future Fund Board of Guardians. The Treasurer and the infrastructure minister will have the responsibility for ensuring that funds that pass through the COAG Reform Fund special account and the infrastructure portfolio special account are expended in a manner consistent with the purposes of the fund as set out in the legislation.

We have a track record when it comes to these things. In places like Townsville we need infrastructure spending. We need to make sure that it is funded. We need to be able to fund it as well as we possibly can and get as big a bang for our buck as we possibly can. When it comes to Townsville, we are delivering on infrastructure at our university. We are delivering $42 million for the Australian Institute of Tropical Health and Medicine. We have got the ring road going through—another $160 million—and there is the investment brought forward of $120 million for the Joint Logistics Hub at Townsville under construction as we speak. There is the Vantassel Street bypass. It was approved in 2010. It was supposed to start but we had a flood in 2011 so the federal government pulled funding for flood relief in Townsville and put it into flood relief in Brisbane. That is what Labor's infrastructure minister did. That is what Labor's infrastructure minister thought of North Queensland when it came to infrastructure there.

All in all I am very happy with what is happening here. I think that we have to be smart with what we are doing and I think that with the leadership we have shown here and the management that we will put in place, this is a great move for Australia. I thank the House.

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

I am pleased to make a contribution on the Asset Recycling Fund Bill. In beginning I would be remiss not to comment on the contribution from the member for Herbert who lectured this side about stable ground rules and predictability—this from the party of regional rorts. This from the party that changed infrastructure legislation to take away from an independent expert body, Infrastructure Australia, the ability to grant tax concessions for designated infrastructure investments and grant those powers to the Deputy Prime Minister who presided over the regional rorts affair. The hypocrisy and the chutzpah of The Nationals on regional rorts and infrastructure investment is beyond belief. But I will give it to the member for Herbert: he said all that he said with a straight face, and I respect his ability to do that.

I am pleased to make a contribution on these bills, and the purpose of these bills—let's make no bones about it—is to encourage state and territory governments to privatise assets and recycle the proceeds into new infrastructure. Labor is moving two sensible amendments to the bills. The first requires that the minister may not recommend a proposal for Commonwealth funding unless they have considered advice from Infrastructure Australia as to the merit of the project, especially its contribution to productivity. The second requires that the finance minister table a disallowable instrument for each privatisation or reinvestment transaction that the government deems eligible for the incentive payment as a precondition for the paying of Commonwealth funds. In relation to the substantive nature of these bills, Labor believes that the federal government does need to provide leadership in collaboration with our states in funding nation-building infrastructure projects. Government standards are important in this process in ensuring that decisions on investment are made in the broad national interest and not in the interests of political parties. The work of Infrastructure Australia is critical in this regard, and I will elaborate on this further in my contribution.

Labor recognises that asset recycling can be beneficial in certain circumstances and not in others. It is the obligation of the individual state and territory governments to make these determinations in consultation with their communities. The federal government of course already makes a very substantial contribution to many infrastructure projects, and Labor is of the view that it is a retrograde step to replace the substantial direct contribution with a simple 15 per cent incentive. If you are going to have a 15 per cent incentive, that cannot be an excuse for the federal government to retreat from infrastructure funding in other ways. Labor believes that this new asset recycling approach must be in addition to the very substantial levels of federal government funding in nation-building projects. Anything less will have a dire consequence for economic growth and prosperity in this nation. It is also worth noting the record investment in infrastructure that occurred under Labor—and this was delivered without state governments privatising their public assets to pay for it.

All sides of the House agree on the fundamental importance of infrastructure investment to the Australian economy. It is of vital importance that governments invest in roads, rail, ports and airports. The World Economic Forum's Global Agenda Council on Infrastructure makes the very important point that the cost of building infrastructure is vast but the cost of failing to make these investments is incalculable. The OECD correctly identifies that upgrading infrastructure drives competitiveness, boosts trade and promotes economic growth. So, investing and building new infrastructure as well as improving existing infrastructure is fundamentally important to growing our economy and improving productivity. And of course the completed and upgraded infrastructure assets deliver enormous benefits for the economy and our society as a whole. The OECD has also noted that new ways of infrastructure financing are needed. And, as I have said previously, asset recycling can be an appropriate vehicle to fund new assets and infrastructure.

Labor has proposed amendments that enhance this purpose. These are having Infrastructure Australia assess the new infrastructure as 'productivity enhancing' and the requirement to table a disallowable instrument for each privatisation or reinvestment transaction. These ensure that this asset-recycling vehicle is appropriate and is in the national interest. And it is important that we include Infrastructure Australia in this process, because, since its creation in 2008, Infrastructure Australia has made a very important contribution to the way the federal government makes decisions on infrastructure investment. In the year Infrastructure Australia was created, its chair, Sir Rod Eddington, said of the new body:

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 disappointing therefore that the current government is seeking to undermine its effectiveness and operation. It is clear that the Deputy Prime Minister wants a return to the days of infrastructure investment decisions being made on the basis of coalition electoral advantage and not the broader national interest. If the federal government is to pursue this asset recycling model, it is essential that Infrastructure Australia remain involved in the process. The amendments we are proposing ensure that it does.

The amendment, which will ensure that, before approval, Infrastructure Australia provides an assessment that the new infrastructure is 'productivity enhancing, including publishing a cost-benefit analysis, greatly strengthens the bills. In speaking on the asset recycling bills, it is relevant to highlight Labor's approach to infrastructure investment and what we have seen from the coalition since they have come to government. Those of us on this side of the House are rightly proud of our record of achievement in infrastructure investment. Because of this record investment, Australia has gone from being ranked 20th out of 25 in the OECD to being ranked second in terms of spending on infrastructure as a proportion of gross domestic product. This is a great achievement. It is an achievement that the last Labor government and the then Minister for Infrastructure should be rightly proud of. And it is a very important statistic: because of Labor's investment, Australia is ranked second among the nations of the developed world in terms of infrastructure investment.

And let's looks at what the results of that investment have been. The roads budget doubled to $46.5 billion; local government road grants were lifted by 20 per cent; $13.6 billion was invested in urban rail infrastructure, more than all Labor's predecessors combined; and $3.4 billion was invested in the rail freight network. As well as these investments, the fundamental importance of infrastructure to Labor can be seen in the fact that we appointed the first-ever dedicated Minister for Infrastructure and created Infrastructure Australia.

Now, let's compare Labor's record with what the Abbott government has done in just nine months. They are re-announcing projects that have been funded by Labor; they are refusing to invest money in public transport; they have cut almost $1 billion out of financial assistance grants to local councils for roads; and they have cut $52 million to reserve a corridor for high-speed rail on the east coast and shut down the high-speed rail advisory group. What a pathetic start from a man who wants to be known as the infrastructure Prime Minister. And it is no surprise, because those on the other side have form on this issue. This is the coalition that delivered the regional rorts affair. We cannot forget the cheese factory that was funded and closed down, the rail line that burnt down, the half-million-dollar grant to Coonawarra Gold for a project that was never built, and my personal favourite: the pet food factory that never opened. Think of all those pets that are going without food now because of the regional rorts affair! And that is the track record of those on the other side. They have not met a barrel of pork that they have not wanted to get their hands into.

This is important in the context of infrastructure in my region of the Hunter. On speaking on this issue, we need to be very conscious of the needs of the Hunter Valley, which is a high-growth region and provides a very strong economic contribution to our economy. The Hunter benefitted greatly from the previous Labor government's historic infrastructure commitments. The Hunter Expressway is the biggest infrastructure project ever undertaken in the region. The $1.7 billion expressway, funded by Labor, has recently been opened. Its benefits are significant. It cuts travel times between Newcastle and the Hunter Valley by up to 25 minutes and provides an easier and more direct route to the Port of Newcastle for heavy vehicles.

The coalition's neglect of the Hunter is apparent in the recent budget. In the budget lock-up, when local Hunter journalists enquired about infrastructure funding in the budget for the Hunter, Treasury officials referred them to the Hunter Expressway project. These officials were apparently not aware that the Hunter Expressway was funded by the Labor government in the 2009-10 budget, and had been open and operating for several months. This demonstrates the complete lack of commitment to Hunter infrastructure from those on the other side. When they were questioned about it, the only project they could point to was a $1.7 billion project funded and built by Labor.

That is not the only important piece of infrastructure in my region that we should be discussing. The Glendale Transport Interchange is the most important infrastructure need, not only in my electorate of Charlton, but for the whole of the Hunter Region. Close to $40 million has been invested in this project from all levels of government. I am proud that although the infrastructure concerned is primarily the responsibility of the New South Wales government, the previous federal Labor government has invested $12.5 million towards the project. This funding is being used to complete major road works in preparation for the construction of the Pennant Street Bridge and rail overpass. This is a very large project that will take a considerable amount of time and resources to complete.

The second stage of the interchange will require further significant funding. Unfortunately it appears that no additional funding was allocated to this project in the recent New South Wales budget. The New South Wales Liberal government has already committed some of the proceeds of the privatisation of the Port of Newcastle to light rail infrastructure in the inner city of Newcastle. However, the residents of western Newcastle and western Lake Macquarie, which I represent, are equally entitled to an allocation of funding from the privatisation. Given Glendale is the most important infrastructure project for the Hunter, it would be inexcusable for the state government not to direct further funding to complete the interchange.

The Port of Newcastle was sold for $1.7 billion, in excess of double what the Liberal government thought they would get for it, yet they are recycling less than $350 million of that to the region. It is only fair that the Glendale Transport Interchange, the most important piece of infrastructure in the region, is built with the proceeds from the port, a port built on transport of goods that have come from the western suburbs of Newcastle, from Westlake Macquarie and from up the Hunter Valley. Residents there will directly benefit from the Glendale Transport Interchange. If this is an example of asset recycling under the coalition I am very worried about what they will do in future, because it demonstrates again that they have only contempt for the Hunter and only pay lip service to the region.

The high-speed rail is another example of this contempt. High-speed rail is a fair way off in terms of being economical, but Labor did the right thing in government. The member for Grayndler allocated $52 million to feasibility studies and put together a working group to look at preserving a corridor. These are all important projects which mean that when high-speed rail becomes economical on the east coast we will be ready to move. This will be a revolutionary project for the east coast and my region in particular. If it were feasible to commute daily to Sydney in less than two-and-a-half-hour to three-hour each way, that can only be good for my region. It would grow the economic base and the population and really secure the future of Australia's sixth largest city.

But the coalition have thrown all of that away by abandoning this effort. They should be in a position where they understand that advance planning is incredibly important. The Badgerys Creek announcement this year, welcomed by people on my side, could proceed only because in the 1980s the visionary Hawke Labor government preserved the land, did the planning and set aside the zoning of the land so that the project could go ahead when the time was right. Those on the other side take no lessons from history, unfortunately.

Another area where they show contempt for my region is the Resources for Regions program run by the New South Wales Liberal government. It is another example of asset recycling, which is what we are debating in this bill. The Resources for Regions program aims to support regional and rural communities affected by mining by addressing infrastructure constraints. Local government areas that are identified as being mining affected communities are eligible to apply for funding from the program. The New South Wales government recently added the local government areas of Cessnock, Maitland and Newcastle to the list of council's eligible for funding. Late in the process they are only adding Cessnock, Maitland and Newcastle to this program for mining affected areas. I cannot think of any local government areas that are more the heart blood of mining than these areas, except for one, which is the Lake Macquarie City Council LGA, which is yet to be added to this list. I am proud of the fact that there are six operating coal mines in Charlton. I would, however, ask the New South Wales government to explain how a council that has six operational mines within its boundaries is not a mining affected community. Perhaps the Hunter Liberal MPs can explain this to my constituents. It is outrageous that Lake Macquarie Council is not eligible for this program, and it again demonstrates that the Liberal Party only pays lip service to the Hunter Region.

To conclude, Labor is of the view that in certain circumstances asset recycling can have merit, but of course state and territory governments have to determine this with their communities. The amendments moved by my colleague the member for Grayndler improve and strengthen the bills. The involvement of Infrastructure Australia in assessing productivity enhancements is important and vital to avoid the regional rorts we saw under the last coalition government. Having a disallowable instrument means that this parliament has the final say on how Commonwealth funding is allocated. God forbid those on the other side who want to support the privatisation of a hospital.

I can assure my constituents that whatever the fate of these bills are, and whatever the future intentions of the New South Wales government are, I will continue to lobby for improved infrastructure in Charlton, most particularly the Glendale Transport Interchange, the most important infrastructure priority in all the Hunter region.

I commend the amendments to the House.

David Coleman (Banks, Liberal Party) Share this | Link to this | Hansard source

I am very thrilled to speak on the Asset Recycling Fund Bill 2014, a very good piece of legislation. I will start by responding to some of the remarks of the member for Charlton. He is always a colourful contributor in this place. The problem with the previous government's approach in this area, as in so many others, was to announce a whole lot of projects and do absolutely nothing about funding them. We have seen this right across the board, but nowhere more so than in infrastructure.

The list of projects is a list of infamy. In Western Australia, there was the Great Northern Highway and the North West Coastal Highway—neither were funded by Labor. In South Australia, there was the APY Lands road network—not funded under Labor. In Queensland, there was the Cape York regional package—not funded. In New South Wales, there were a number of projects: Bolivia Hill, Mount Ousley, the Tourle Street Bridge duplication and, close to the member for Charlton, the Scone level crossing—all unfunded projects. One of the first things this government had to do in this infrastructure space was fund these projects. It is all well and good to put out a press release, to stand at the relevant intersection, shake hands with someone and say, 'This is going to happen,' but unless you actually fund the project, it cannot happen. The alternative to funding it is to just borrow more money and increase the debt level of this nation. That of course is something we would not countenance. So there is a very clear contrast.

The bill we are discussing today is a very good piece of legislation. In a very practical way it encourages the states to recycle their assets and to invest in new productive infrastructure. The fund has some $5.9 billion in it—a very substantial amount indeed. The fund will provide additional funding of 15 per cent when a state seeks to invest in an infrastructure project after recycling an asset. The combination of that 15 per cent incentive with a fund of about $6 billion means that, if the fund is fully utilised, there will be $40 billion of additional infrastructure investment. This is important because these are big, expensive projects and it is not always easy to find the funds to make them happen. A 15 per cent incentive will be very effective in pushing projects across that line of viability, projects that otherwise might not have happened.

Rather than creating a whole new bureaucracy, setting up a new department or setting up lengthy negotiations with the states, the Asset Recycling Fund provides a very simple signal to the states: if you are willing to invest in important capital expenditure, we will stand there right beside you and provide a 15 per cent incentive. That will be critical because, as I said, many projects are just short of that line; 15 per cent will tip many of them just over it.

Infrastructure is important economically because it is the economic gift that keeps on giving. Once you put in place a critical piece of infrastructure—whether it is a road, a port or any other similar facility—once you make that difficult decision to invest, in many cases, many billions of dollars, that piece of infrastructure is then there for the long run. If it is a road, say, it delivers for you on day one, it delivers for you a year down the track, it delivers for you a decade down the track and it delivers for you many decades down the track.

Think about some of the iconic infrastructure in our nation's history. Think about the Sydney Harbour Bridge, for example. What an extraordinary piece of infrastructure that is. In the 80-plus years since its construction, it has generated incalculable economic benefits for the people of Sydney and for the nation more generally. Then there is the Snowy Mountains scheme, another well-known example. Closer to the present day, there is the M4 highway in Sydney. Imperfect though it is—and we are going to fix that with the WestConnex—it has undoubtedly had an enormous impact in opening up Western Sydney to economic growth. We have seen many business precincts pop up along the M4. That would not have happened had the road not been there. With those business precincts—with the warehouses and the factories—come the jobs. Ultimately, why do we care about economic growth? We care about economic growth because economic growth means jobs, and infrastructure means economic growth. That is why it is so important.

There is no question that infrastructure is important. I suspect even those opposite would acknowledge that basic point. But those opposite have shown an inability to take the really tough decisions in this space. There has been no harder or more important decision in infrastructure than the decision to build an airport in Western Sydney. Western Sydney has been crying out for an airport for decades. The original identification of the Badgerys Creek site occurred back in 1969. I was born in 1974, so for my entire life there has been a proposal to build an airport at Badgerys Creek. We all know that there are complexities associated with building a new airport. As a consequence of those complexities, the project did not get approved. It did not go forward. It took the Prime Minister, with his vision of infrastructure for the nation and for Western Sydney, to bite the bullet and make that hard decision.

Frankly, I think the vast majority of people in Sydney know we had to do it and know it was the right decision. There is a strong level of community support—and so there should be. Badgerys Creek is going to be a huge economic boon for Western Sydney. There will be 4,000 jobs in construction. That is great, but of course construction only goes on for so long. What is arguably more important is the ongoing economic benefit—the ongoing infrastructure improvements, the productivity improvement, the fact that you will be able to get freight into Western Sydney more quickly and at lower cost. What does that mean? More freight comes in and so you get more economic activity in Western Sydney, with more material moving through those warehouses. When more material moves through those warehouses—because it can move around so efficiently—what happens? More jobs. That is why it matters.

The best forecast is for an extra $60 billion in GDP by 2060. That is an important figure, but these figures can sometimes be a bit abstract. What does it really mean? It means a huge number of new jobs for Western Sydney. It also means that for Kingsford Smith Airport—a loyal servant of the nation for many decades—there is a reality about what it can and cannot do. It can only grow so far. The approval of a second airport means that we all recognise that Kingsford Smith has a logical capacity. That capacity will be reached fairly soon and Badgery's Creek will help to fill the void.

Badgery's Creek is accompanied by the Western Sydney roads package. This is a critical development. Bringelly Road, Northern Road and Elizabeth Drive are all roads that have not kept pace with the growth of Western Sydney. My colleagues the member for Macarthur and the member for Lindsay, whose electorates are directly involved in this, have been articulate advocates for the need of an upgrade of that infrastructure. A $3 billion project will be great for the area.

It is also great to see the cooperation of the state government. The Commonwealth is providing some 80 per cent of funding for the Western Sydney road project, and the state is providing 20 per cent. This is a good common-sense example of governments rolling up their sleeves and getting things done. That is what the people of Western Sydney and Australia generally want to see.

Closer to my electorate, the government has made a very important infrastructure commitment in stage 2 of the WestConnex. Most critically for my electorate, this means the duplication of the M5 East. The M5 East can be an incredible frustration to drive on. It is only two lanes. This will make four. It is the main arterial road from the south-western part of Sydney into the city—from the Beverly Hills interchange, which is in my electorate; the duplication going towards the city. Best estimate from the department is that it will save 25 minutes for people travelling to the city in peak hour. That is an enormous benefit from a productivity perspective and from a family-life perspective, because it means people get home quicker at the end of the day. That can only be a good thing. So there is great cooperation with the state government.

There is a $1½ billion direct injection from the Commonwealth and a concessional loan of $2 billion, which has really helped. As we discussed before, with these projects, it is often about tipping them over the edge and making them happen, and that $2 billion concessional loan has got WestConnex and the M5 duplication over the line—so much so that the development will start next year and the project will be completed within five years. These are lengthy projects, and that is a very good time frame.

WestConnex will be a tremendous benefit and is consistent with the government's overall approach to getting the economy moving again. We see a similar situation in environmental approvals, where the Minister for Environment has stepped forward and provided approvals for some $400 billion of projects that were sitting idle under the previous government in a maze of indecision, red tape and bureaucratic malaise. The Minister for the Environment last year, prior to Christmas—one of the first things he did on taking office—stepped in and said, 'These are critical and massive job-creating projects, and we are going to enable them to happen.' At the end of the day, that is the critical role of government: enabling things to occur in the economy. The government has great limitations on what it can do regarding direct intervention in the economy, and so much of that is best left to the private sector. What we can do—and what we are doing, through this infrastructure package—is enable private-sector investment.

We are not used to that in my state of New South Wales, because in 16 years we had a state Labor government. We had more announcements about infrastructure than the births, deaths and marriages page. There were all sorts of things that were going to happen. I have to say, we did as a populace, the people of New South Wales, become a little cynical. The Parramatta-Epping rail link was announced with much fanfare; we literally lost count of the number of times. There were so many hard hats, so many fluro vests, so many announcements and so much happening. At the end of the day, people will judge governments on their results—as they should—and the infrastructure results in New South Wales, in that sorry period between 1995 and 2011, were just appalling. That is why it is so great to see the emphasis on infrastructure, from the New South Wales government working hand in hand with the Commonwealth, in this asset-recycling area.

One of the fundamental commitments of the government prior to the election was to build the roads of the 21st century. We know that we need that. We know that for too long difficult infrastructure projects have been put in the too-hard basket. This government, through a combination of direct investment, incentives for states to invest and getting rid of arbitrary and excessively regulated approval processes so as to allow the private sector invest, is going to build the roads of the 21st century. WestConnex is a critical one for my electorate and this bill will assist in that tremendous government initiative.

Shayne Neumann (Blair, Australian Labor Party, Shadow Minister for Indigenous Affairs) Share this | Link to this | Hansard source

I am speaking in relation to the two bills before the chamber: the Asset Recycling Fund Bill 2014 and the Asset Recycling Fund (Consequential Amendments) Bill 2014, which would create the Asset Recycling Fund, the ARF. This would provide financial assistance and incentives to the states and territories to invest in infrastructure. It is the result of a national partnership agreement reached by the first ministers of the states and territories on 2 May this year.

The bill proposes that the Commonwealth provide states and territories, which privatise their assets and recycle the proceeds into new productive infrastructure, an additional 15 per cent of the reinvested sale proceeds to the cost of new infrastructure. It must be remembered that there is no new money here. It does not contain any new funding at all. In fact, it puts aside a bucket of money—$2.4 billion of uncommitted funds from the Building Australia Fund and $3.5 billion of uncommitted funds from the Education Investment Fund. In listening to speaker after speaker from the coalition, you would think that billions and billions of dollars in new money was being rolled out in this fund, but it is just a recycling of federal government funds which we created when we were in government.

The government said they intend to make further contributions to the Asset Recycling Fund from the privatisation of Medibank Private and other privatisations, unnamed. We created the Building Australia Fund, the BAF, and the Education Investment Fund, the EIF, to fund land transport and education infrastructure respectively, and those funds were doing precisely that. The proposed ARF has similar governance provisions to those of the BAF and the EIF, as managed by the Future Fund.

We do not believe these bills in their current form adequately maintain the governance standards that we introduced for the BAF and the EIF. The shadow minister, the member for Grayndler, has circulated proposed amendments that relate to governance standards, with proper cost-benefit analysis published by Infrastructure Australia and a disallowable instrument requirement for the Treasurer so that greater parliamentary oversight is a precondition of payment of Commonwealth government funds.

Concerns about this legislation were raised in the Senate Finance and Public Administration Committee inquiry by the Australian Technology Network of universities: Curtin University, University of South Australia, RMIT University, the University of Technology Sydney and Queensland University of Technology. They teach about a quarter of a million students in higher education campuses around the country. They looked at this legislation and expressed some concern about it and about the winding up of the BAF and the EIF, especially as 59 per cent of the initial funding for the ARF comes from the Education Investment Fund, which those universities have benefited from in the past. We know that higher education is going to be more expensive under this government. The ATN asked: if the purpose of the ARF closely aligns to the purpose of the Building Australia Fund, without proper public transport spending, what protection will there be for future higher education research and education related infrastructure spend? There was no response from the government to that.

I recall a coalition policy at the last election—a so-called five-pillar economy—about research in higher education and world-class education. What they are doing here is taking away money from those areas. But that is to be expected from a government that does not even have a science minister. And anything to do with climate change or research or innovation or creativity seems to get abolished. If it is a body, organisation or group that is doing some public service, some social and economic good, and it has any of those terms in it, it was abolished in MYEFO or indeed in the budget. These bills are silent in relation to future research and education related infrastructure spending. It is typical.

We heard those opposite criticise us about infrastructure. We have a proud record with respect to infrastructure. I can recall many occasions in the last six years, in the time I have been in this place, where coalition members voted again and again against infrastructure spends, whether it was the necessary funds for recovery after the floods in South-East Queensland and the cyclones in North Queensland or the nation-building response we had to undertake as a result of the global financial crisis—which those opposite think is a myth, a bit like the Loch Ness monster. We had to spend that money to keep 250,000 people in jobs and to keep the economy going and avoid recession. Again and again we put forward bills in this place in relation to an infrastructure spend to keep jobs in place, to help rural and regional areas and urban areas with rail, transport, infrastructure for councils and regional and local community infrastructure funding. We proposed the nation-building economic stimulus, with the BER. In the last six years in this place, those opposite, who were critical of us in government, voted against all those things.

When we came into power in November 2007 we massively increased the infrastructure spend. We were ranked 20th and by the time we left office we were ranked No. 1. In dollar spends we lifted infrastructure from $132 to $225 per Australian. For Queensland it is even better. We reversed the blockages on productivity and infrastructure the coalition government refused to address—ports, road, rail. They did not fund an urban rail project north of the Tweed; there was nothing in Queensland. When we were in government we spent more money on urban transport than was spent by every government in the history of the Commonwealth of Australia. We saw it as a priority to get people to commute to their places of work by public transport rather than car. It is good for the economy and it is good for the environment. We doubled road funding to $46.5 billion. We upgraded 7,500 kilometres of local roads. We increased grants to local governments through Roads to Recovery by 20 per cent. In my area, Ipswich City Council got $6.5 million in Roads to Recovery grants—more than they had ever seen before.

It was not just that. As I said, we committed $13.6 billion to urban rail infrastructure. We saw that as a priority. We invested heavily in the national rail freight network—some $3.4 billion over six years. We rebuilt more than a third of the whole network. We are talking about more than 4,000 kilometres of track. We invested $64 billion in infrastructure and we committed tens of billions of dollars to further nation-building if we were re-elected. We also faced the terrible disasters that I referred to not just in Queensland but in Victoria and other states, including the fires and floods in Western Australia. We addressed those issues. We ended the utterly shameless pork-barrelling that those opposite undertook. The ANAO report on regional rorts was quite damning of the Howard government.

We started investing in regional and rural communities. We set up Infrastructure Australia to get rid of inefficiency and increase efficiency in the economy, and we put a priority on jobs and productivity. The Abbott government have ignored my electorate since they have been in power. The Abbott government never talk about the last section of the Ipswich Motorway, and the Howard government refused to build it. The Ipswich Motorway was the most important road project west of Brisbane. We spent $3 billion to upgrade from Dinmore to Darra. Up to 100,000 vehicles a day can travel on that road at the most congested times. We are talking about 100,000 vehicles a day potential. What did we do? It was planned, designed, built and opened under a Labor government. It was not just about turning up for a photo opportunity—it was done. You can drive on it any day of the week. It is important. The service roads took 25 per cent of the traffic off the Ipswich Motorway. When the coalition voted against the Ipswich Motorway project west of Ipswich, the Blacksoil Interchange, we funded it. We partnered with the then state Labor government and that project, the Ipswich Motorway, created and sustained up to 10,000 jobs during the global financial crisis. There were 300 jobs created and sustained on the building the Blacksoil Interchange—$54 million there. To the credit of the LNP state government in Queensland, they have come to the party and that project will be opened later this year. That is critical for the 40,000 vehicles a day and the commuters in rural and regional areas not just in Ipswich and Brisbane but in Toowoomba, the Lockyer Valley and the Scenic Rim and Somerset regions. We, under a Labor government, did what the coalition government refused to do.

My concern is that this 15 per cent—it will not be 75 per cent; it will not be 50 per cent—will be the basis of Commonwealth government infrastructure contributions in the future. That is what I expect will happen. This government has abandoned whole areas. The Prime Minister is very good at saying that he is the Prime Minister for this and that. For example, he is the Prime Minister for women, but he has very few women on the front bench over there; he is the Prime Minister for Indigenous affairs, but he will cut $534.4 million in programmatic funding for health, education, justice and other programs for Aboriginal and Torres Strait Islander people; and he is the infrastructure Prime Minister, but he cuts rail projects, like the Brisbane Cross River Rail project in Queensland and the rail link in Victoria. The government see that as a state responsibility. They keep rolling out projects such as the inland rail freight project, saying they are their projects. We were funding them. They are a continuation of what we were doing. There are no new dollars in this bill. It is a fake and a fraud. They are claiming projects that are being built but that the Labor government designed, budgeted for and funded.

This legislation is really about a right-wing privatisation binge typical of coalition governments. We see that in Queensland, my home state. We have seen the most despicable, disgraceful propaganda by the LNP and Campbell Newman on a $33 billion privatisation binge they are about to undertake. It did not do Anna Bligh and the Labor government much good when they tried to privatise assets in Queensland, so I do not think it will do Campbell Newman and the LNP government much good when they go to the polls by March next year. The consultation was not genuine at all. It was bogus; a predetermined consultation process. The majority of Queenslanders by the public response, even on the dummy website, the bogus website, opposed it. A recent poll found that 47 per cent of respondents would be less likely to vote for the Queensland LNP government if they continued their drive towards privatisation of state assets. They spent $6 million of Queensland taxpayers' money on an elaborate consultation program that was called Stronger Choices, and it was a flop. The people did not want it. They did not want to privatise assets, but the LNP decided to do it anyway. Organisationally, if the LNP in Queensland had any integrity it would front up with a cheque for the taxpayers of Queensland from their own campaign coffers and put it back into consolidated revenue.

This was an LNP propaganda campaign with a fancy website and incessant ads. When I was travelling around the country, I found the ads everywhere interstate. As a shadow minister, I was travelling in different states and would see the ads on TV channels. They were not even directed solely to Queensland. There were fliers in the mail. We even saw information kiosks in my electorate at the Riverlink Shopping Centre in North Ipswich which referred to a so-called $80 billion debt and annual interest costs—it was untrue. It was simply misleading and an overtly political campaign. It was completely misleading. The budget papers in the Queensland government reveal that the gross debt under Campbell Newman has increased by $14.6 billion—or $833,000 per hour under the state LNP government. In my electorate, in Ipswich, unemployment has gone up from 5.3 per cent to 12.3 per cent under Campbell Newman. So much for asset recycling. They privatised by stealth. They did not tell the people that they were going to undertake privatisation. There are organisations and bodies in Queensland that have been privatised repeatedly, but the government has undertaken these big campaigns to privatise the big stuff, such as the big energy companies.

There is $33 billion on the table. The people do not want this legislation. There are amendments that need to be considered, and the shadow minister will put them. This bill has real flaws. The whole privatisation commitment of this government is about an ideological right-wing, free-marketeer, buccaneering system. It will not be copped by the public in Australia. If the Queensland government thinks it can get away with that, wait until March next year and we will see how they go.

Paul Fletcher (Bradfield, Liberal Party, Parliamentary Secretary to the Minister for Communications) Share this | Link to this | Hansard source

I am pleased to speak on the Asset Recycling Fund Bill 2014. This very important bill will establish the Asset Recycling Fund, which is a dedicated vehicle to facilitate investment in new infrastructure. It will operate by providing financial incentives to state and territory governments to sell existing assets and to reinvest the sale proceeds into additional infrastructure. I want to cover three points in the time available to me tonight. Firstly, Australia's infrastructure has significant deficiencies, and there is a backlog of projects which need to be commenced. Secondly, these deficiencies are of considerable public policy importance and, thirdly, this bill establishes a mechanism which will help to facilitate investment in new infrastructure.

If I turn firstly to the proposition that we have a significant deficiency in the state of our infrastructure in Australia it is no exaggeration to say that this is one of the common themes of public policy commentary in Australia today. We can look at numerous sources of data; for example, the World Economic Forum's 2010-11 Global Competitiveness Index ranks Australian infrastructure at 22nd out of 139 countries. However, as Infrastructure Australia pointed out, when you look at the measures that are more relevant to Australia, our ranking is in the 30s and 40s. Our total capital stock expressed as a proportion of our GDP is below the average of OECD countries, and the position has been getting worse with public investment in infrastructure as a proportion of our GDP declining in recent years. These figures confirm the anecdotal impressions that many of us would get as we go through the shiny new airports in many Asian countries. We are being eclipsed in Australia by the infrastructure spending of many developing countries, such as China and the Middle East. All of us, I am sure, have had the experience of travelling through a modern, large, well-planned airport in Asia—I can mention Hong Kong airport opened in 1998, Bangkok opened in 2006, Singapore's Changi or numerous airports in China.

It is somewhat depressing to return to Australia and disembark at Kingsford Smith Airport with its rabbit warren of successively-added gates and the unedifying experience of being forced through the duty-free perfume and cigarettes before reaching the overcrowded immigration control area. The unflattering comparisons do not stop at airports, as anyone who has used either urban or long-distance railways in Japan or China or Singapore knows only too well. According to a 2010 report by the OECD,

Australia faces a shortfall in infrastructure which could worsen with the demand pressures exerted by the mining boom, population growth and environmental concerns.

Similar conclusions were reached by Engineers Australia, an organisation which prepares a comprehensive annual scorecard of Australia's infrastructure position. Its 2010 report card ranks some critical sectors as 'poor' and the overall position in Australia as merely 'adequate'. A report a couple of years ago by Infrastructure Partnerships Australia cites estimates of Australia's 'infrastructure investment task' as ranging from $455 billion in a 2008 report by ABN Amro to $770 billion estimated by Citigroup. The recent Productivity Commission draft report into public infrastructure, issued earlier this year, cites a range of other estimates, including a $300 billion estimate by Infrastructure Australia in 2013. So it is clear that there is a range of bodies opining that Australia has a significant infrastructure shortfall. There appears to be a broad consensus that this shortfall has arisen over quite a number of years, due to continued under-investment.

Let me turn next to the proposition that this is a matter of considerable public policy importance and something that government and, indeed, the community ought to be very concerned about. The consequences of this under-investment are being felt in many areas of our economy and our society: the growth in exports from Australia is placing strain on our ports; there is congestion in our cities exacerbated by population growth and changing demographics; our electricity infrastructure is under pressure; and there is continuing investment needed to support key industries, including mining. There are a range of other reasons for the lack of investment in infrastructure and, therefore, the deficiencies in infrastructure are putting increasing pressure on our economic performance and on our social wellbeing.

There is a clear and direct link between infrastructure and our national productivity performance. One of the best historical examples to explain the connection between infrastructure and productivity is the investment made by the US government in the interstate freeway system in the 1950s. This was originally justified as a defence measure, but it had huge productivity benefits, because it reduced the delivery times for goods and expanded the geographic area within which any one company could cost effectively supply customers, and therefore increased the intensity of competition to the benefit of consumers and to the benefit of overall economic efficiency. There is quite a considerable economic literature on the productivity spin-offs from the US interstate freeway system.

Sir Rod Eddington in 2011, as the chair of Infrastructure Australia, noted that:

Productivity has slowed as a direct result of infrastructure shortfalls—time lost in travel, delay at ports, lost production due to water restrictions.

So the economic case for increased investment in infrastructure is a very strong one, but there is also a strong equity and quality of life case to be made. John Kenneth Galbraith, the well-known US economist—actually born in Canada, for the pointy heads—in the 1950s coined the term 'Private Affluence, Public Squalor' to convey the idea of a rich society which under-invests in its public infrastructure. His point was that this harms social cohesion and results in a society which fails to reach its full potential. If congested roads mean that you face a longer travel time to work, you are wasting time sitting in traffic, rather than being with your family or in pursuing other activities meaningful to you. That wasted time obviously has a substantial economic cost, particularly when multiplied by the millions of people in the same position, but it has a very real social cost as well. Therefore one of the most important things governments can do to improve the quality of life of the people they serve is to deliver good quality infrastructure.

Let me turn therefore to the proposition that this bill lays out an effective mechanism to facilitate investment in new infrastructure. It is an effective mechanism which recognises that much of the day to day work of planning and, indeed, funding major infrastructure projects occurs at state government level but that there is an important role for the federal government in supporting the states in the work that they do. It is the mechanism contained in this bill to address that issue and to support and encourage the states which is a particularly noteworthy piece of public policy innovation.

The measures in this bill and the scheme which will be established are, in my view, very much in the tradition of some of ideas argued by the well-known Yale University economist Robert Shiller, who a few years ago wrote a book called Finance and the Good Society. His argument, essentially, was that the reputation of finance as a sector has not been that good following the 2008 financial crisis; but that, in fact, on reflection, the role of the finance sector is of the first importance in delivering economic and social welfare. To quote from one particular book review which summarised the argument, the reviewer noted that Shiller:

… makes a powerful case for recognizing that finance … is one of the most powerful tools we have for solving our common problems and increasing the general well-being.

One of the examples that Shiller gives is the importance of mortgages—the fact that through the invention of this financial instrument it becomes possible for most people to afford a home, even though very few of us are in a position to pay the full capital cost of a home when we first we want to buy. I would argue that, consistent with the notion that clever financial thinking can deliver important social benefits, the essence of this bill is to establish a fund which will be used to offer incentives to the states to recycle their assets. It recognises that the states—all of them—have significant assets on their balance sheets, many of which can be sold. At the same time, the states and, indeed, the nation face a very large task in funding all of the new infrastructure that is required. Therefore, if we can recycle the existing assets, if we can monetise those existing assets, and take the proceeds to fund the provision of new infrastructure assets there is a very significant social welfare benefit to follow as a consequence. The mechanism set out in this bill to achieve that public policy objective is to establish the Asset Recycling Fund, and this will be a dedicated investment vehicle with a focus on providing financial incentives to the states and territories to create new infrastructure.

The Asset Recycling Fund will be managed by the Future Fund Board of Guardians. It is important to note that this board of guardians has a proven track record in managing investment portfolios in the public interest. It has been responsible for the management of the Future Fund. In 2006, the balance in that fund stood at $64 billion and, as at 31 March this year, it stood at $97 billion. So it is a significant achievement in managing that particular fund, and that expertise is now to be deployed to manage the moneys that will make up the Asset Recycling Fund. The initial balance of this fund will be $5.9 billion and there will be further credits to come into the fund in the future. It will be used to help fund investment that expedites nationally significant infrastructure; it will also fund payments to local and territory governments under the Roads to Recovery program. This is a mechanism to unlock the balance sheets of the states to target investment in productive economic infrastructure. It is consistent with and facilitates the delivery of the government's Infrastructure Growth Package announced in the 2014-15 budget.

The Abbott government has come to power with strong commitments in relation to infrastructure, and this bill lays out a specific and effective public policy measure to give effect to the policy commitments that we have made. On this side of the House, we believe that delivering modern infrastructure is a crucial part of the government's Economic Action Strategy to boost economic growth and prosperity, increase productivity and create thousands of new jobs.

The Asset Recycling Fund will be seeded with $2.4 billion from the Building Australia Fund and $3.5 billion from the Education Investment Fund. Over time, it is likely that there will be sources for additional funds to come into the Asset Recycling Fund—for example, should there be Commonwealth assets which are privatised. The consequence of the moneys being put into this fund is that they will then be available to be paid to state governments under incentive arrangements, which will in turn encourage the states to look for opportunities to monetise existing assets and to take the proceeds from those assets and reinvest them in vitally needed infrastructure—infrastructure in road, in rail and in other areas. This can in turn deliver not only the economic efficiency and productivity benefits that I have spoken about and for which infrastructure is so important but also those vital social benefits, because people are required to spend less time in their car and so have more time left to spend with their family or doing other things of importance to them.

I conclude with the observation that the question of refreshing and renewing Australia's infrastructure is very much on the national public policy agenda. There is widespread agreement that our infrastructure is deficient and there is a backlog of projects which needs to be commenced. The Abbott government is getting on with that work, and this bill establishes an additional public policy mechanism to underpin that work by establishing a significant fund which will allow moneys to flow to infrastructure priorities to improve productivity and generate economic growth. There are great economic and social benefits to be captured for our nation if we can find the best ways to fund and build the world-class infrastructure we need, and the mechanism set out in this bill is an important way of achieving that public policy objective.

Joanne Ryan (Lalor, Australian Labor Party) Share this | Link to this | Hansard source

I rise tonight to speak on the Asset Recycling Bill 2014 and related bill. Governments everywhere are exploring the possibilities that asset recycling may deliver. In a high-growth electorate such as mine and having met with the National Growth Areas Alliance this morning, I am acutely aware that the provision of infrastructure is vital.

During the time of the previous Labor government, Lalor and many other growth corridor electorates did benefit from infrastructure investment. In Lalor, specifically, funding was provided through local councils for community centres, libraries and local road project There were also capital investments into TAFE and university. The rollout of the NBN commenced, and our local hospital received funds to expand facilities. All of these investments were much needed in our high-growth area. Locally, we benefited from major infrastructure investment. The federal government contributed $3.2 billion for the regional rail link, set to increase rail access for both business and passengers—a project that will deliver economic benefits to Victoria. This project, currently underway, is being delivered ahead of time and on budget. Those working on this project should be rightly proud of that achievement. And why is this project being delivered in this cost-effective and timely way? Because of Labor's initiatives during its term in government—that is why.

When Labor came to power in 2007, it inherited an infrastructure mess; it was more than an infrastructure mess really—it was an infrastructure disaster. The current infrastructure minister was there during the Howard days, so he will not find it difficult to remember the Regional Partnerships Programme rort scandals. We on this side well remember the millions of taxpayer dollars wasted on projects in regional areas—projects that had dubious merit. The word profligate has been thrown around this chamber much in recent days by those opposite; in error, I might say. But here we have a clear history. So what are some of the memories of the coalition government's infrastructure disaster? Projects like the cheese factory in Wangaratta which was awarded $22,000 in government assistance—despite the fact that it had shut its doors. That one comes to mind, as does funding provided to an ethanol plant in Gunnedah: taxpayer funding was provided, but it actually produced no ethanol. The minister must also remember the $600,000 federal government grant given to struggling Queensland company Beaudesert Rail—against the advice of corporate administrators, and in breach of the program's own criteria. These examples are not a ringing endorsement of the coalition's capacity to handle infrastructure. Back in 2005, the Business Council of Australia acknowledged how cracked the Howard government's infrastructure funding system was, and called for a massive overhaul. As part of their Infrastructure Action Plan for Future Prosperity, the council reported:

…that the current state of Australia’s most fundamental infrastructure – supporting all elements of the transport network, energy and water supplies, and the basic facilities to support growing and spreading urban communities – is in urgent need of reform, repair and expansion.

They went on:

We are at the crossroads in terms of infrastructure development as a result of poor institutional arrangements and policy choices. Changes are required to alleviate current capacity constraints, and provide additional capacity to support high growth in the years ahead.

Let me repeat that, Deputy Speaker: 'as a result of poor institutional arrangements and policy choices'; 'changes are required'. This was after, or during, the years that the coalition were in charge of this country. And so, as is always the way, it was Labor who acted on the failures of that system. It was Labor who were determined to create an infrastructure funding system where government could make decisions based not on lobbying but on hard evidence about a project's worth; about a project's value to the community—and not on the basis of an electoral strategy. It was Labor who announced that, if elected to government, we would create a statutory body to create a balanced and strategic blueprint for future funding, and that is what we did with the Infrastructure Australia Act in 2008.

Infrastructure Australia was created to enact evidence based decision-making; to deal with policy and regulatory matters; to drive reform on legal, tax, planning and infrastructure finance; to evaluate the business cases of projects and project financing options, including private-public partnerships; and to review the adequacy of Australia's infrastructure, identify the gaps, and prioritise the nation's projects. Its first task was to undertake a nationwide audit of Australia's infrastructure, and then to form a priority list for the future. Only infrastructure projects which met a minimum rate of return—determined through rigorous cost-benefit analysis and review—were recommended. With Infrastructure Australia, Labor showed leadership by investing in nationally significant projects and by ensuring lasting reforms. Let us not forget that it was under a Labor government that infrastructure spending grew from $132 to $225 per Australian. It was under Labor that Australia rose to No. 2 in the OECD rankings by the scale of the investment made in fixed capital. And it was under Labor that the total annual investment in our nation's roads, railways, ports, energy generators, water supply facilities and telecommunication networks hit a record $58.5 billion in 2011-12, equivalent to 4 per cent of GDP. We on this side of the House invested, not to gain cheap political points but because, after years of inaction under the Howard government, it was what this country needed. Key to all of this was Infrastructure Australia, because their informed, evidence-based analysis and advice ensured that we were investing in the infrastructure that would drive national growth and productivity. But informed, evidence-based analysis is not what the current government is about.

Along with some of my colleagues, I met this morning with representatives of the National Growth Areas Alliance, an alliance of local councils that serve the high-growth communities around Australia. This alliance, which understands infrastructure needs and which has put considerable time and effort into preparing reports for government, has received no feedback on its submissions. I repeat, this alliance has provided government with valuable information and it has received no feedback. What does this tell us about our current government? It tells us that the coalition government seems intent on making decisions that have no basis in well-developed planning, and that they are not intending to listen to groups from across this country. Take, for example, my home state of Victoria: in the recent federal budget, over $3 billion was allocated for the second stage of the East West Link. One billion of this will flow into Victoria's coffers in just a couple of weeks. In a recent senate estimates hearing, it was revealed that this project has no business plan. You heard correctly—no business plan. The project has not been examined by Infrastructure Australia. It was also revealed that the estimated cost-benefit ratio was lower than the proposed upgrade for the Western Ring Road, a project that was not funded; indeed, a project to which some current funding is now being redirected. There are no detailed plans for the east-west project and no details about the land or houses that will need to be compulsorily acquired, and no information about the road's final alignment. There is no detail about where this tunnel will come up; no detail about when it will see the light of day. There are no details about whether the road will be tolled.

The state government provides hollow words about the benefit to the people in the west of Melbourne, but those who live and work locally are having trouble making any kind of accurate analysis due to the lack of detail. This project is years away from being shovel-ready, but this federal government has seen fit to allocate $l billion to the Victorian government. Something about this does not feel right. The chat around town is that the federal government made these funds available due to its nonsensical rule about not funding rail infrastructure. The original Metro rail link, a project that was planned and researched over many years, with a strong endorsement from Infrastructure Australia, has now been junked in favour of the current Metro light plan. Transport is a big issue in my electorate. In fact, Wyndham City Council is running a campaign to 'get Wyndham moving', because people in my electorate are commuting to work for two or more hours a day, whether it be by road or rail. To fund a project that there is no detail for and to plainly ignore the Metro rail link project, which has been endorsed by experts, is a slap in the face for my community.

So back to the asset recycling bill. Asset recycling can have merit in certain circumstances. I suggest that merit can be determined through careful and detailed planning and deep consultation with the community. This bill, however, does not seem to have those checks and balances at its core. This bill also has the potential to dilute the historically high level of federal commitment to infrastructure funding, a level achieved under Labor. At the recent meeting between Joe Hockey and the state and territory Treasurers, it was reported that Victoria left the meeting 'very disappointed'. The Victorian Treasurer, Michael O'Brien, pointed out that this asset recycling plan has very little benefit for Victoria, as the state has very few assets left to sell. Victoria sold off many of its key assets during the Kennett years of the 1990s. Michael O'Brien indicated he was disappointed the state would receive no credit for the hard decisions of the past. Apparently, the federal Treasurer made it very clear he was not prepared to look backwards.

Last year The Melbourne Review ran an article discussing the benefits of privatising the Port of Melbourne. It makes the case for asset recycling in a positive way, but it also provides this caveat:

Victoria's competitiveness and wealth are inextricably tied to the health of our infrastructure ... With considered investment in projects that are genuinely economically sound, the process of commercialising Victoria's public assets would enhance our state's growth immensely.

There are three words that stand out in that statement: 'genuinely economically sound.' This government wants to be known for its infrastructure. Many a time we have heard the Prime Minister say that he will be the Prime Minister for infrastructure, as if saying it will make it happen. If that is so, and if this government wants to be remembered for successful infrastructure projects, then this government needs to heed advice such as that given out by The Melbourne Review last year.

The asset recycling program appears to offer very little for Victoria. It appears that, as this government refuses to look backwards at the asset sales that have occurred in Victoria, Victoria will miss out on infrastructure spending under this bill. I also have some very real doubts about the way this government is interacting with Infrastructure Australia, and whether they are taking into account the evidence-based information that they are being given in the decisions they are making. Nothing I have heard in this chamber gives me confidence that this bill will ensure good service and good infrastructure for Victoria, or good service or good infrastructure for growth corridors nationally. In particular, I have very little faith that this bill will deliver for my community in Lalor.

David Gillespie (Lyne, National Party) Share this | Link to this | Hansard source

I rise to talk about the Asset Recycling Fund Bill and the consequential amendments bill. The value of infrastructure and productivity to individuals, communities, cities, states and nations is the essence of this bill. Some people do not quite understand what asset recycling and unlocking the value of assets means, so I will explain that process. Infrastructure, whether it be road infrastructure, telecommunications, dams, ports, rail lines, hospitals, schools or utilities, delivers improvements in lifestyle, in amenity and in production. The better that infrastructure is, the better the productivity. In particular, transport links and telecommunication links need to be fast and efficient, because if they are not fast and efficient everything becomes more expensive. The old saying that 'time is money' really does apply in this space. The longer it takes our producers to get products to market, the more costs increase, and our competition gets an advantage. The less competitive we are, the less income there is for our nation and citizens. Poor infrastructure that is not efficient means more expense, so our products become more expensive, which in turn means our competitors get an advantage. That is really important, because one in five jobs comes from trade internationally. Increasing our productivity means that people will end up paying less for goods and services. Poor productivity means goods and services become more expensive, so the cost of living goes up. Productivity gains bring the cost of living down. People are not connecting productivity gains with cost of living, but that is what we as a nation have to do.

The second thing that this asset recycling addresses is unlocking value. Unlocking value means realising the value of one's asset. The states have many assets that hold value for them, but that value is not realised in a financial sense. In the early years of our Federation, and subsequently, the world economy and the Australian economy were quite different to what they are now. Many initiatives that we had—such as establishing major utilities and energy systems, transport bodies such as Qantas, banks such as the Commonwealth Bank and the state banks and things such as the old GPO, which became Telecom Australia—were bankrolled and run by governments. But both state and federal governments have vacated that space to a degree already. Most of these exits have been spectacular successes. You only have to look at what has happened to the Commonwealth Bank since it was sold off by the nation to see that. You only need to look at how Telstra has grown over the years since it was sold off to see that.

Initially, the scope, extent and capital required government involvement, but now we have a different world. We have huge amounts of capital available in this country both in private banks and in super funds that private enterprise could marshal. If the value of these assets were realised enormous amounts of infrastructure could result. Private enterprise now has the capability and the finances to run energy systems. It has demonstrated that time and time again. Previous governments have used the realisation of things such as Telstra and the Commonwealth Bank to pay off huge national debts. You only have to look at the debt that was left behind by the Keating government to see that. The asset sales—Qantas, the Commonwealth Bank and Telstra—delivered most of the reduction in debt. Look at what happened with the Commonwealth Serum Laboratories. Private enterprise used that intellectual capital and expanded it around the world. We now have a world leader in that as well.

This is why our Asset Recycling Fund has been created. It has been created to facilitate financial incentives for the states and territories to sell or lease their existing assets so that they can realise a financial windfall and reinvest that in their own new infrastructure. The Asset Recycling Fund will be created by rolling the funds from the Education Investment Fund, the proceeds of the Building Australia Fund and the proceeds from the sale of other assets, such as Medibank Private, into this fund. The fund will be administered by the managers of the current Future Fund. We should have a lot of confidence because when that was created it was at about $60 billion and now it is worth over $94 billion. So they do a good job at it. National partnership agreements, both in asset recycling and infrastructure, will guide this through the COAG process.

How does this initiative work? What is its value to the states? The value is that the Commonwealth passes to the states from this fund an extra 15 per cent on the value of their realised asset. So it is an incentive program for them to do that, but it is not just done willy-nilly. The asset recycling initiatives must demonstrate a clear net positive benefit to the states and the nation and enhance long-term productivity and the productive capacity of the economy. Also, where possible, the private sector should be involved to leverage the public sector money that is going into the project and add it to private capital as well. This leveraging of $50 billion of federal capital, added to state capital, together with private capital investment should support funds of up to $125 billion.

This is for solid state infrastructure. It is not the back-of-the-poster infrastructure that is delivered willy-nilly, such as the pink batts fiasco or the overpriced school halls fiasco where instead of the Keynesian economic multiplier effect we had an economic dividing effect. Good, solid taxpayer money went into overpriced and very ineffective school halls. It was the odd school infrastructure project that delivered value for money. These projects that we are encouraging the states to be involved in will deliver long-term, solid infrastructure. There will not be any 'cash for clunkers' in this scheme.

We will have real, lasting infrastructure, such as the Pacific Highway duplication, which will start soon in the Lyne electorate and head further north to the Queensland border. It is going to deliver, because all of the products that we ship in and out of the Lyne electorate will be coming and going on efficient freeways. It is going to reduce travel times, making transport costs cheaper. It is going to bring more tourists into the Lyne electorate. We have this huge, burgeoning south-east Queensland market of potential tourists who will come further south if they are not caught in traffic jams and on single-lane, winding and dangerous highways. You can see what has happened with the freeway coming through the Tweed down to Ballina and Byron Bay; it has opened up exponentially to the south-east Queensland market. We want it to keep coming down to Coffs Harbour and then down to Port Macquarie. Already the tourism market in our area has changed because of the duplication south of the electorate from Sydney. We now have not only week-long tourists, we also have people who come for three days or two days because it is within a three- or four-hour zone of Sydney, or even closer if you are coming up from Newcastle or the Central Coast.

As for other solid infrastructure that will be delivered out of this fund, we have the Roads to Recovery funding. In the Lyne electorate we have a lot of very poorly maintained roads which certainly can do with the Roads to Recovery funds that they are going to get out of this process. $16 million of federal money—up to $17½ million if you include the GST—is coming out of this to fund repairs to the Bucketts Way. If you add the Thunderbolts Way, which is another linkage into the Gloucester Valley, there is another $3½ million, so that is about $20 million of road infrastructure delivered locally into areas in the Lyne electorate.

These will not be like the school halls and the pink batts infrastructure that disappeared into the ether. This will be lasting infrastructure which will deliver long overdue benefits in the local economy as well as the state-to-state commerce that I have mentioned with the Pacific Highway. So I commend this bill to the parliament because of all the potential benefits that will flow from asset recycling. The state government in New South Wales will be able to deliver new schools and new hospitals because of the benefit they will gain from recycling the value of the money that they realise out of this asset recycling process. I commend the bill to the House.

Andrew Leigh (Fraser, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

The Harvard philosopher Michael Sandel once said that he was for a market economy but not for a market society. I think that is a good way of characterising the differences between the two sides of the House on the question of privatisation. The perspective of the Liberal and National parties has always been a theological belief in the value of privatisation. Those on that side of the House believe in a market society. They believe that inherently privatisation is always good.

Those of us on this side of the House take a much more pragmatic view to privatisation. It was the Hawke government that privatised Qantas and the Commonwealth Bank, but it has also been Labor which has stood up against bad privatisations. We have to admit in a debate like this that there is such a thing as a bad privatisation. Privatisation of the British rail network is a classic example, a privatisation which ended up with consumers bearing higher prices and getting inferior services. So when we are considering privatisations, it must be on a case-by-case basis. Yes, we should look at the revenue that flows from privatisation but we also need to consider the situation of the asset. Is it a natural monopoly? Is it the kind of thing where there is going to be contestability in the market? Is the asset itself a natural role for government or is it something where we might expect the private sector to get more efficiencies? These are the questions that this side of the House asks on an issue like privatisation.

At the heart of this Asset Recycling Fund Bill is the notion that an incentive payment of around 15 per cent of the value of the asset multiplied by the share of that sale price that is invested by this state into certain other assets should be returned to the state as an incentive payment. But as a number of University of Queensland economists, Flavio Menezes and John Quiggin chief among them, have highlighted, it is quite unclear whether this incentive payment is of appropriate size. One of the things it depends on is whether companies are in fact going to pay company tax revenue which is of that scale.

Let me step back for a moment. The notion of paying an incentive payment has at its heart the principle that a government entity does not pay company tax. Once the asset is sold to private investors, they begin to pay company tax. The Commonwealth gets company tax and returns a portion of that to the state. But that argument only holds if the company actually pays a reasonable rate of tax. If it has very large deductions, and we have seen some of the potential loopholes in the company tax system arising in the debate over the base erosion and profit shifting, then it is not going to be the case that the Commonwealth gain in company tax is 15 per cent of the sale price of the asset. We need to be very clear that this is only a very small share of what states have had ripped away from them by this Commonwealth government—$80 billion ripped out of schools and hospitals as a result of this latest budget—and it will be a very small share of that which states see returned to them in the form of this incentive payment.

The idea of an incentive payment is not new. It has been floating around in the ether of Treasury and Finance for nigh on two decades just waiting for a buyer. The idea found a gullible buyer in the form of the Prime Minister and the Treasurer who, when they walked into office, bought an idea which had been considered and rejected by the Keating government, the Howard government, the Rudd government and the Gillard government. So you cannot help thinking that the Abbott government is somewhere in the position of someone who finds themselves having inadvertently purchased the Sydney Harbour Bridge. They have bought an idea which so many others had rejected. And the reason they have bought this idea goes back to that Michael Sandel distinction between a market economy and a market society.

If you believe in a market society, if you believe that the private sector always does things better than the public sector, then invariably you are going to be tempted to pay states to privatise. But if you take a more pragmatic approach to privatisations, as we on this side of the House do, then I think you are much more likely to be sceptical of privatisations, to want to see the business case for a privatisation, to take the view that if it does not stack up on its own merits then the federal government should not be paying the states to privatise an asset that they would not otherwise have privatised.

Debate interrupted.