Anthony Albanese (Grayndler, Australian Labor Party, Shadow Minister for Infrastructure and Transport) Share this | Link to this | Hansard source

The Asset Recycling Fund Bill 2014 is a part of the Abbott government's ongoing attempt to con Australians about the level of its commitment to infrastructure investment. On a superficial level, it sounds like the government is doing something. Indeed, part this legislation creates a fund which the government proposes to fund new infrastructure proposals in the 2014-15 budget.

But there is a real problem here. The budget includes no new money for infrastructure. The few new projects are being funded by cuts to existing road and rail projects. But more than anything else, this bill is about an attempt by the Commonwealth to flick pass responsibility for nation-building to state governments. This will be done using the centrepiece of this legislation, the $5 billion so-called Infrastructure Recycling Initiative. This fund will be available for two years. State governments willing to privatise public assets and spend the proceeds on infrastructure projects will be eligible to access the fund for a 15 per cent premium on the price of the project. The creation of this fund mirrors the political story of the entire 2014-15 budget. It is a story about a Prime Minister who is cutting spending, because he is obsessed with small government. At the same time, he is attempting to paint himself as a high-rolling big spender on infrastructure. Because of the incompatibility of these positions, the Prime Minister is desperate to pass responsibility for cuts onto other levels of government.

Last month's budget was something of a masterclass in the flick pass. For example, the $80 billion in cuts to health and education spending are federal cuts, but the states will have to deliver them. They will have to bear the political backlash out there in the community while the Prime Minister washes his hand and demands public acclaim for fiscal rectitude. In the same way, cash-strapped councils will have to wear the political pain of the Prime Minister's billion dollars in cuts to financial assistance grants to councils.

The legislation before us is of apiece with this buck-passing mentality. It seeks to impose greater responsibility for infrastructure on states while this coalition government seeks the credit. The funding sphere is a political minefield of privatisation of public assets. The extent to which this is a political issue is highlighted by the fact that it is not called a privatisation initiative; it is called recycling where states will be asked to take significant political risks for the privilege of accessing a 15 per cent bonus. This asset recycling initiative is a fancy-sounding name for privatisation of state assets and a reduction of Commonwealth spending on infrastructure.

I notice that the government claims that the $5.9 billion that will go into this proposed fund is new. That is blatantly untrue. The $5.9 billion was stolen from two existing infrastructure investment funds. The first, the Building Australia Fund, was established by Labor to provide investment in transport, communications, energy and water infrastructure. The second, the Education Investment Fund, was also created by Labor and was designed to fund infrastructure investment in education and research.

The abolition of the Education Investment Fund comes on top of its $5.8 billion of cuts to higher education and student support. The abolition raises serious questions about this government's commitment to the long-term sustainable funding of infrastructure for teaching and research at Australia' public universities. Without systematic and sustainable funding for research infrastructure, Australia will not be able to attract the best and brightest researchers in the world nor commit to significant long-term research and commercialisation projects done by our competitors.

The Building Australia Fund and the Education Investment Fund delivered real, direct investment in productivity-driving infrastructure. Decisions about grants from these funds were subject to rigorous process. Projects funded from the Building Australia Fund had to be ticked off by the independent Infrastructure Australia to ensure that investments had genuine potential to add to national productivity. In the case of the Education Investment Fund, a specialist committee of independent experts exercised similar oversight and the previous government acted on the expert advice.

The infrastructure recycling initiative is being presented today as a new means to leverage extra investment—that is, investment that would otherwise not occur—but it is a con. The fund itself is being bankrolled by a raid on the two existing investment vehicles, not a single new dollar, as a result of this legislation that is before the parliament today.

Let me put it another way: the government is dumping plans for actual direct investment in nation building and will use the money gained to pay the states to do its job. So, whether it is hard infrastructure in terms of transport infrastructure or investment in science and education institutions to boost our contribution to productivity, this government is abandoning both in terms of direct investment.

Let me say again that the Commonwealth contribution to projects bankrolled by this fund will be the 15 per cent premium on the value of the infrastructure project but, under existing arrangements, the Commonwealth consideration to infrastructure projects is either a fifty-fifty share with the states or in some cases an 80-20 split. So let's be honest: this fund is a cost-cutting measure at least as it relates to the Commonwealth budget. Most importantly, there are no checks and balances in this legislation to ensure that the projects funded by this asset recycling fund represent value for many. That is why the opposition today will be proposing amendments aimed at restoring the proper processes in decision making about infrastructure.

The fund is an emblem for this government's political cowardice and lack of vision both when it comes to actual investment and to probity standards. The term 'asset recycling' is a different way of saying privatisation: the sale of existing public assets that are owned by the Australian people. I am neither for or against privatisation full stop, but it must be considered on a case-by-case basis. Sometimes it might be appropriate to sell a public asset but it is always vital to balance the short-term benefit of selling assets against the long-term downside of losing the revenue stream for that asset. Once the asset is sold as a one-off, the revenue stream is gone, so you can weaken the long-term fiscal position of government through a short term act. That is why privatisation is not always popular with voters. It involves real political risks. Taxpayers are sensitive about the idea of what some people call selling off the family silver. They know that in many cases a windfall gain is made at the cost of a long-term revenue stream.

The Prime Minister understands the political risks involved in privatisation for state governments, so he knows that the sting of any voter backlash associated with this fund will be felt by the states, not the Commonwealth. It is a case of all care but no responsibility. I predict that future public complaints by state governments, particularly by coalition governments, about inadequate roads or public transport will be met by a standard prime ministerial response from the government, 'It's not my fault. 'It's the fault of the states.' I offered them access to the Asset Recycling Fund, which was already in place in terms of money with the Building Australia Fund and the education infrastructure funding. This is just part of the mirage that was the government's so-called infrastructure initiatives in the budget in May, and you do not need to be Nostradamus to make this prediction.

I watched for nearly a dozen wasted years as John Howard amassed a massive infrastructure deficit by behaving as though infrastructure was none of his business. When I was sworn in as infrastructure minister, Australia was ranked 20th in the OECD for investment in infrastructure as a proportion of GDP. When I left, we were first as a result of the record investment that the federal Labor government put into nation building. Mr Howard was a determined federalist who provided no leadership on nation building. He found it easier to use surpluses, driven by the mining boom, to curry electoral favour with middle-class welfare than to actually invest in the future of this nation. After all, state premiers were always on hand to use as whipping boys if anyone complained about inadequate infrastructure. We have already seen it with this government's approach to public transport infrastructure where they have withdrawn every single dollar from every public transport project around the nation that was not already under construction.

The coalition's preparedness to identify problems is exceeded only by their enthusiasm for passing them onto other levels of government. Rather than achieving actual progress, the government would rather retain power by dissolving lines of government responsibility and by playing the blame-game. While Labor builds the nation for the benefit of all, those opposite oppose nation building and actually have legislation before the Senate to remove the term 'nation building' from any involvement in infrastructure. They believe that infrastructure is just about marginal electorates.

Another problem with this new fund is its potential to distort the infrastructure market, because the window of opportunity for the privatisation of state assets is only two years and could encourage fire sales. It could give states an incentive to make poor decisions in their haste to get a piece of this action. This fund could lead to a crowding out of the infrastructure market for two years. Where you have more possibilities for investment than would otherwise be the case at the one time, you will get a lower price to taxpayers from the sale of those assets. Again, that is not a problem for the federal government, but it would be a problem for state governments.

The question of how governments fund infrastructure is always critical. In office Labor worked with states to deliver funding for their proposals. We also created taxation arrangements designed to encourage private sector investment in infrastructure—arrangements that this government has made no effort to utilise. Above all, we had faith that our creation of Infrastructure Australia to provide proper process for infrastructure decision making meant that our projects would add to national productivity. They were projects that yield productivity gains for themselves over time. They create jobs and they create economic activity that boosts government revenues. Some, like investments in urban rail, add to the amenity of cities and drive further productivity gains. They encourage people to leave their cars at home or move closer to their workplaces. That is why we funded all 15 projects that were identified as a priority by Infrastructure Australia. Whether it be projects like the Majura Parkway, or the Hunter Expressway, or whether it be rail projects like the regional rail link, we funded them on the basis of proper advice.

The Prime Minister, though, has put forward a budget in which none of the new projects that have been funded have been identified as priority projects by Infrastructure Australia. At the same time the Prime Minister believes that changes put forward to the Infrastructure Australia legislation would undermine its independence, and we are seeking to move amendments in the Senate to fix up this flawed legislation.

The government's approach to infrastructure spending in the 2014-15 budget is wildly out of kilter with their rhetoric. If you judge the Prime Minister by his words, you might believe that he was committed to infrastructure investment. He has been out there with re-announcement after re-announcement claiming that projects that had been underway for years were somehow new. We heard the Deputy Prime Minister, yesterday, trying to claim the Moreton Bay Rail Link, which was first promised in the Queensland parliament in 1895. But it took a federal Labor government in partnership with the Queensland state Labor government and the local council to ensure that it occurred. In terms of that, the fact is they have announced projects which were funded in budgets by the previous Labor government, including the Inland Rail project. The study was done, the commitment was given in 2010 and funding of $300 million was in the 2011 budget for the Inland Rail line. They have announced exactly the same funding, exactly the same time frame, and they pretend that somehow it is something new.

The new projects are being funded by cuts to existing road projects, like Melbourne's M80 and Tasmania's Midland Highway, as well as the cancellation of urban rail investment including the Melbourne Metro and Brisbane's Cross River Rail Project. The Prime Minister scrapped these projects because he has an ideological aversion to public transport. He outlines that in his book Battlelines where he makes it clear that in his view there simply are not enough people who want to go from one destination to another to justify anything other than the use of a car. The fact is, we cannot deal with urban congestion in our cities unless we have both rail and road. That was recognised by Infrastructure Australia, which is why it recommended funding for both of those projects that was in place.

The Prime Minister also said before the election that they would have cost-benefit analysis of all projects of $100 million or more. That promise seems to have gone the same way as: 'No cuts to health or education or the ABC.' The fact is that in the budget that they put forward, where they say there is a budget emergency, they have advanced $1.5 billion for the East West project in Melbourne, this month, including $1 billion for stage 2 that is not due to commence this financial year or next financial year but the financial year after that, if they ever work out where it is actually going to go. It is an extraordinary advance payment to the Victorian government, which is of course facing an election.

Their rhetoric regarding infrastructure is designed to distract Australians from the real heart of the budget—the broken promises, the savage spending cuts and the unfairness. Here is this government's message to Australians: 'Never mind that you won't be able to see a doctor anymore. You'll be able to drive on a brand-new road that Labor funded three budgets ago.' They made a statement of claim that within 12 months there would be cranes in the sky for these projects that do not have planning, have not been through environmental assessment and do not have cost-benefit analysis.

The problem for the government is that they spent so much time saying no to everything and being relentlessly negative that they did not craft alternative policies and did not craft an alternative vision for the nation, which is why, when they came to government, we saw the budget—for the first time since 2008—not include a single new dollar for the Bruce Highway or the Pacific Highway over the forward estimates. There is not a single new dollar for rail freight, yet the minister for infrastructure and his errand boy, the assistant minister, have been busy re-announcing projects on these two highways and other projects, pretending that they were not previously funded by the former, Labor government.

The government has also ignored its own promises about the integrity of processes surrounding investment decisions. The government said before the election that it would work with Infrastructure Australia to ensure probity in selecting which infrastructure projects would attract Commonwealth support, and yet we know that with the Perth Freight Link project there is no plan, no design and no cost-benefit analysis at all. We know that because the WA state government says that is the case. We believe that the Infrastructure Australia model got it right, but the government has introduced legislation, which it gagged in this place, to allow it to dictate IA's research agenda. The amendments would allow it to order IA to ignore certain classes of infrastructure, such as public transport. The amendments would allow it to gag Infrastructure Australia by preventing publication of its independent research. So, within months of its election, the government is creeping away from its commitments to probity. In a recent video, produced shamefully for political purposes to align with the D-Day commemorations, the Prime Minister threw away all pretence. He complained about 'analysis paralysis', which he said was preventing infrastructure projects from going ahead. What he was really saying was: 'Don't worry about proper analysis.' If the Prime Minister's word means nothing to him, he can take that up with the electorate.

In the meantime, we are stuck with this bill. While process is an inconvenience to be swatted away on that side of the House, the opposition will be moving amendments which will hold the government to its own claimed principles. The first would require that no project could be funded from this new fund unless it has been the subject of a full cost-benefit analysis ticked off by Infrastructure Australia and is in keeping with the government's own commitment that they would have proper analysis for any project in receipt of more than $100 million.

The second amendment relates directly to projects that are being funded by states via asset sales, thereby earning the 15 per cent premium. It would require the finance minister to table a disallowable instrument for each privatisation transaction as a precondition to eligibility for it to attract an incentive payment. It is aimed at empowering this parliament to hold the government to its own promises. Again, if the government is serious about funding genuine productivity-enhancing projects properly assessed by independent experts, it should have no difficulty with this amendment.

Several projects funded in the budget, including the Perth Freight Link, Melbourne's East West Link and Queensland's Toowoomba Second Range Crossing, are being funded even though Infrastructure Australia is yet to see full cost-benefit analysis. We are setting up a mechanism to make sure that the government's rhetoric is matched by the legislation. They need to be held to account so that we do not have absurdities like this $1½ billion advance payment to the Victorian government on behalf of taxpayers. What sort of budget slashes health through the Medicare co-payment, education by abandoning the Gonski reforms, and public transport projects on the basis of 'These measures need to be made because there's a so-called budget emergency,' but gives $1½ billion to sit in the Victorian government's bank account for no purpose other than making its budget look better prior to the election later this year? It stands in stark contrast to what the assistant minister said in a speech on 6 June. He said:

… we are driving the state governments very hard to give us timetables to ensure that we're meeting the expected time of delivery of these projects. That we're hitting milestones, that we're only making payments to states when they actually deliver the milestones, that they're not getting money in their bank account prior to milestones being delivered …

Not only are there no milestones for the East West project; they do not know where the tunnel is going to emerge for stage 2. It is not even a line on a map, but they are giving them billion dollars this year. That is why these amendments should be supported by the entire parliament. They are respectful of proper process; they are also a requirement when public money funds projects that will drive productivity gains.

Labor's approach in government was to engage in real nation-building. It was to establish proper processes with Infrastructure Australia. We also got on with investment: we doubled the roads budget; we increased the rail budget by more than 10 times; and we rebuilt a third of the national rail freight network, including cutting six hours from the trip from Melbourne to Brisbane and nine hours from the journey from the east to the west coast.

I am very proud of the fact that we committed more money to urban public transport from 2007 until 2013 than all previous Commonwealth governments combined from Federation to 2007. We planned and funded the Moorebank Intermodal Terminal, delivering major productivity gains to Sydney and taking 3,300 trucks off the road every day—a project expected to generate about $10 billion in economic benefits through increased productivity, reduced freight costs, reduced traffic congestion and better environmental outcomes.

The current government ran ads in the 2010 election campaign opposed to the Moorebank Intermodal Terminal. That is the opportunism we saw from those opposite. Compare that with the approach of the government—spurning the advice of Infrastructure Australia and introducing legislation to undermine its independence, and failing to increase investment in infrastructure spending, merely taking money away from projects that have been properly assessed and giving it to projects that are done on the back of an envelope. This bill avoids direct infrastructure investment while setting up the states and councils as the scapegoats of the future, when people begin to see the results of its underinvestment. Unless Labor's amendments to this bill are accepted, the government will have successfully created a vehicle for pork-barrelling and doing favours for its friends in coalition state governments.

Given the record of infrastructure underspending and pork-barrelling of the previous coalition government, surely this nation can do better than simply winding back the clock. By creating this incentive fund—taking money that had already been allocated for proper nation-building investment, through the Building Australia Fund, and for proper investment in our future, through education and science research and innovation, through the education investment fund—what the government is seeking to do is reduce its own involvement in the provision of infrastructure by paying the states and the private sector to do the heavy lifting.

There is, of course, a role for private sector investment. That is why we created the infrastructure investment tax incentive, a scheme that would provide, through the Infrastructure Australia process, an incentive in terms of changes to tax arrangements to encourage investment by the private sector—not just in greenfield infrastructure but also in brownfield assets. We introduced that in last year's budget. It came into effect at the end of last year, but this government seems oblivious to it.

We do not have a view on this side of the House that public sector is automatically bad and private sector is automatically good. That is the view of some of those opposite. They just want government to get out of the way in terms of government involvement in infrastructure. The consequences of that will be a reduction in investment and a scheme which will provide an incentive for state governments to privatise assets. Let me say this: if an asset is worthy of privatisation it needs to stand on its own merits. A top-up figure of 15 per cent over a period of just two years is a distortion of that process. If it is indeed in the longer-term interest of the state which owns that asset—through the people, at the end of the day—then we should not be distorting that process.

This nation needs Commonwealth leadership on infrastructure. It does not need a government that ignores the advice of independent experts and consults the electoral map to inform its investment decisions. The last thing it needs is a return to the blame game that characterised the former government. Process is important, which is why we need to ensure that this legislation is amended to allow proper processes: proper assessments of projects plus accountability to this parliament by ensuring there is a disallowance instrument. I will be moving the amendments when it comes to consideration in detail and ask the House to support those amendments then. (Time expired)

Steve Irons (Swan, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Asset Recycling Fund Bill 2014 and the Asset Recycling Fund (Consequential Amendments) Bill 2014. We have just heard from the member for Grayndler, the former minister for infrastructure, who has made some interesting comments in his introductory speech.

This government has made an unprecedented commitment to infrastructure and the legislation we are debating today forms a key part of that commitment. In just a few months since being elected, the government has shown its intent and strategic approach to infrastructure across the country. With its decisions on massive visionary projects such as the Western Sydney airport infrastructure package and the Perth Freight Link, which impacts my electorate of Swan, this is already in stark contrast to the previous minister's approach of untargeted and unfunded spending with no strategic plan or direction.

In fact, I would suggest that nowhere in Australia is this government's commitment to infrastructure more apparent than in my electorate of Swan currently. But this bill takes the government's approach to a new level. It provides for future infrastructure through a recycling program involving federal financial incentives for the sale of mature assets by the state governments where the proceeds are directed into new infrastructure. This will potentially see a generation of new infrastructure projects across the country. It has the backing of the states—including, it seems, Labor controlled South Australia—as the premiers can see the advantages of the bill. Yesterday we saw proposals by the New South Wales government and, in May, Treasurer Nahan of Western Australia referred to a likely asset sale process in the state budget. So there is plenty of support from all sides, except, it seems, the other side.

It seems from the former minister's speech that the Labor Party in this place is not fully behind this legislation and the previous speaker, the member for Grayndler, has indicated they will be moving some amendments. We will not be supporting those amendments, which attempt to put a roadblock on this legislation. We know Labor's commitment to infrastructure is untargeted and chaotic. We know that the member for Perth, who is in the chamber at the moment, is the chief opponent of the Perth Freight Link project which will link the Kewdale-Welshpool industrial area with the ports. We know that the member for Grayndler made Gateway WA conditional on mining tax revenue which did not exist. We know that the record of the previous government on delivering broadband infrastructure in WA was the worst in the country. We also know that there was no interest or intention of funding the Manning on-ramp in my electorate of Swan.

Labor's position on this legislation would make new projects more difficult and it would hold back new infrastructure projects in Australia. The previous speaker, the member for Grayndler, also talked about cost-cutting analysis and processes and cost-benefit analysis. It just amazes me when you look at what they did with the NBN and the process they went through there on the back of a drinks coaster. He said there might be a panic sale of assets. But when Labor came in and they wanted to start some of what they called their infrastructure spending and kick things along, they looked at any project that they said was shovel ready. There was no cost-benefit analysis. They just went straight into that. The pink batts is another prime situation, with the royal commission currently looking at that. So how they can sit there and talk about the processes of how things should be done after their previous record of six years just amazes me.

The coalition have increased the infrastructure spending by 55 per cent over the period to 2018-19 compared to under Labor, whereas the previous speaker said we had not. Labor had no great record on public transport. The former minister did not realise that 50 per cent of public transport in Australia is by bus on roads. Seventy per cent of all domestic passenger movements within Australia—by car or bus—occur on roads, whereas he was slating the current Prime Minister as not being interested in any rail infrastructure. The shadow minister says asset recycling will discourage investment in public transport. But as today's minister pointed out just the other day, the Commonwealth is doing a lot of heavy lifting in road funding, allowing states to bring forward other public transport projects. In fact, since the coalition was elected, the states have committed $25 billion to major public transport projects.

This bill establishes an Asset Recycling Fund of $5.9 billion initially. The Asset Recycling Fund, as outlined in this year's budget, is being established to provide incentives to states and territories to invest in new infrastructure projects that boost economic growth. The $5.9 billion is sourced from uncommitted money in the Building Australia Fund and the Education Investment Fund. I note the government is committed to adding to the ARF over time, including through the proceeds of the sale of Medibank Private and with proceeds from any further privatisation initiatives. The ARF will support the Asset Recycling Initiative, which encourages the sale of brownfield assets such as ports or electricity companies with proven earnings to private sector investors, freeing up more funds for infrastructure projects. To encourage funds to be spent on infrastructure projects, the Commonwealth government will provide payments of 15 per cent of the sale price of privatised assets to state and territory governments, on the condition that the proceeds of the sales are reinvested in productivity-enhancing assets. The sale of ports in New South Wales and Queensland Motorways highlights the interest of the private sector to invest in brownfield assets.

The consequential amendments will apply to the COAG Reform Fund Act 2008, the Future Fund Act 2006, the Nation-building Funds Act 2008 and the DisabilityCare Australia Fund Act 2013. These amendments will allow for the fund to be managed by the Future Fund Board of Guardians, who have an exemplary record of managing investment portfolios for the government, and for the funds to be distributed through the COAG Reform Fund.

Delivering modern infrastructure is a key part of the government's Economic Action Strategy to boost economic growth, increase productivity and create thousands of new jobs. Overall, the 2013-14 budget unveiled the biggest ever spend for infrastructure in our nation's history: $50 billion. Our plan will leverage greater co-contributions from the state governments as well as, for the first time in WA, co-contributions from the private sector. Encouraging investment from the private sector is the best way to ensure that taxpayers get the most infrastructure advancements that their money can provide. By changing the way that infrastructure projects are financed through partnering with state and territory governments and leveraging private sector investment, Australia is set to receive $126 billion worth of investment in productivity-enhancing infrastructure over the next 10 years. This new infrastructure will help relieve congestion which is believed to be costing our economy $15 billion a year. It will create jobs and tackle pollution. Investing in infrastructure is an investment in the future.

Initiatives such as the ARF are of particular importance in my state of Western Australia ,where the transition of the mining boom from production phase to development stage creates unique challenges. A key aspect of the coalition's budget is to roll out an infrastructure plan that adequately deals with this change and that creates jobs for the thousands of construction workers, as well as the many engineers, designers and professionals who play an important role in the delivery of major projects. It would be irresponsible not to aid the creation of jobs that ensure these highly skilled and experienced people remain in Australia, contributing to our economy.

With this in mind, the Western Australian Treasurer, Mike Nahan, spoke of his government's plans for an 'orderly program of assets sales' in the 8 May state budget. He outlined the state government's plans to consider the sale of a number of brownfield assets including the Kwinana bulk terminal and the Utah Point facility at Port Hedland. The Treasurer went on to note:

The Government’s continuing ownership of the Perth Market Authority, the TAB and the Water Corporation’s assets, such as its wastewater treatment plants, will also be reviewed.

Revenue derived from the sale of these assets will be directed to two areas: the reductions of the state's debt levels and to contribute to the cost of new infrastructure.

The Commonwealth and WA state government have a track record of working together to deliver much-needed infrastructure to the people of Western Australia. In the 2013-14 budget the government continued this tradition by making a record $4.7 billion commitment to funding infrastructure in WA. As I said before, some of the best examples of this co-operation lay within my electorate of Swan. Projects such as the Perth Freight Link and Gateway WA, both funded by the state and Commonwealth governments, will allow growing cities like Perth to move into the future comfortable in the knowledge that they have the capacity to support a growing population and continued high exports on their roads.

Unlike those opposite we have committed to funding these projects without a mining tax. The Labor Party somehow thought they were funding these projects from a tax that did not raise any money. I know the member for Perth is in the chamber, and she has stated before that she does not support the mining tax and recognises that it disproportionately affects the people of WA. It is a pity that her colleagues do not agree with her.

The Perth Freight Link carries a price tag of $1.6 billion, of which the Commonwealth will fund $925 million, the state government will cover the remaining 20 per cent of government contributions and the private sector will fund the remaining amount—approximately $400 million. Despite economic research which shows that for every $1 invested in the Perth Freight Link it will return $5 in economic benefits, this project would never have been funded by a Labor government. Even now, after years of research showing that this project will increase productivity, create jobs and improve the road network, it is still not supported by those opposite. In fact I see the member for Perth in the chamber, and she recently called this proposal 'a scandalous squandering of taxpayers' funds.' I would like to remind the member that the debt and deficit levels in this country have reached a point where the government is now paying over $1 billion dollars per month in interest. The interest bill paid by the government between 2010-11 and 2013-14 on gross debt is over $46 billion dollars. The government could have funded almost the entirety of its infrastructure package with what is wasted on interest payments. That is, in my opinion, a real squandering of taxpayers' funds.

Despite ongoing protest from those opposite I am pleased to note that it's not only the WA state government who recognize the opportunity that ARF grants give them to invest in long-term productivity-enhancing projects. Just today the New South Wales Treasurer, Andrew Constance, announced in the New South Wales budget that a long-term lease of 49 per cent of the state's electricity network assets will assist with funding a comprehensive package of new infrastructure programs. This package includes $400 million for the Parramatta light rail, $5.2 billion for the North West Rail Link and an extra $100 million for the Hunter Infrastructure Fund, to name a few. The budget includes significant investment in road, rail and public transport, further disproving the claims from those opposite that the coalition's plans will discourage investment in rail or public transport.

The Coalition promised to build the roads of the 21st century, and it is legislation such as this which will see us do just that for the benefit of our economy and our nation. As the assistant Minister pointed out on 6 June, our infrastructure plan is not a GFC-style pink batts program or a school halls program but a well-planned program about building productive infrastructure. Increased funding and the encouragement of investment in infrastructure will provide benefits in both the short and long term by creating jobs, easing congestions and ensuring prosperity for generations to come.

I know I have spoken in this place about Infrastructure in my electorate before. One in particular is the Manning Road on-ramp and Canning Bridge vision, about which I had a meeting with the minister for transport, Dean Nalder, last week. We discussed that and talked about opportunities that might arise from this particular infrastructure fund for things like a Manning Road on-ramp, which I know the member for Perth was supportive of many years ago. I congratulate her for that interest she took in that particular area, because it now is becoming a safety issue for many people in that part of the electorate.

I see that the member for Perth is going to speak next. Maybe she might like to tell us some of the reasons she is so focused on delivering infrastructure nobody wants, particularly the South Perth train station. That was built into the forward estimates in her time. As someone who lives in South Perth and for many of the other residents there, it is something that is not required and something that is not wanted. Something like the Manning Road on-ramp is what most of the people in my electorate of Swan would look forward to. If the opportunity arises, it would be great if we saw that come to fruition in the near future.

We heard from the previous speaker as well how supportive they are of infrastructure funding. I remember quoting from an executive from Perth Airport who initially spoke to the minister for infrastructure in the previous government when he was looking for funding for, at first, the Gateway project. The response from the minister at that particular time was not supportive; it was saying, 'So you guys want another handout.' That type of attitude from those opposite is the reason why they need to support this bill and get on with the job.

I commend this bill to the House.

Alannah Mactiernan (Perth, Australian Labor Party) Share this | Link to this | Hansard source

So many fallacies, so many fantasies and only 15 minutes in which to address them all. I want to start by strongly supporting the contribution by the member for Grayndler. He gave, I think, a very cogent analysis—

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for External Territories) Share this | Link to this | Hansard source

Erudite.

Alannah Mactiernan (Perth, Australian Labor Party) Share this | Link to this | Hansard source

erudite and cogent analysis of how this legislation is in fact going to encourage suboptimal decisions on dealing with assets. I will get onto the specific questions of the member for Swan in a few minutes, but I just want to make this general statement that it is very easy for politicians. They want to sound like they are being financially sound and financially prudent and they talk about privatising assets and using those assets to reinvest without any real detailed analysis of where, in fact, that is going to take us financially, whether or not that stacks up when we analyse this. The member for Swan is running away, because he knows I am just going to tell him about all his errors on Roe Highway stage 8.

Mr Irons interjecting—

It is true. I take great pride in the fact that after decades of stalling on Roe Highway I was minister when we completed Roe Highway stage 4, Roe Highway stage 5, Roe Highway stage 6 and Roe Highway stage 7. But we were not prepared to commit to Roe Highway stage 8, because it simply did not make sense. It did not make sense when we saw the trajectory of the Fremantle Port development moving to the outer harbour and given our understanding that the basin of the port was going to be at its final stage some time between 2017 and 2020 and that a new container facility south of Roe Highway would need to be built. So, quite frankly, not only is developing Roe Highway Stage 8 a problematic process environmentally, but economically it does not make sense. It does not make sense to spend $850 million on five kilometres of road going to a port that is actually going to be moving south within a year after the opening of that road.

Putting that to one side, I want to talk about this issue of asset reinvestment and how easy it is to adopt a mantra that makes it sound like you are being commercially sensible and commercially sound when in fact you are being the exact opposite. Now, there are cases where it does make sense to sell assets. Very often government will acquire assets and engage in development simply because the market is not strong enough. In the early stages of a development, government may need to invest in something that subsequently, when the population grows and matures, is a function that can be quite properly supported by the private sector. But making decisions in this area requires very, very detailed analysis. It depends on where the numbers fall and what the risks are in each individual case. First of all we have to look at the actual price received. When you sell something off, it is not money for jam. You are actually selling an asset. And quite often we see cash based reports in the budget that will show the sale of an asset as improving performance. We have all of this additional revenue that has come in because we have sold the asset, even though we may have sold that asset at a very poor price. Even when we are doing accounting on an accrual basis we might see a positive result where we get more than book value for an asset, even though that is in fact far less than its actual value. And hopefully I will have some time to tell the story of the great failed privatisation of the Perth freight network.

We also have to look properly at the revenues lost and make a rational assessment as to whether it is cheaper to borrow than to lose the income stream concerned. Interestingly, the member for Swan was going on about the level of debt and using the raw numbers of debt. That really has become a disingenuous obsession of the government. But we know that in making an intelligent assessment of where an economy is, where a government is, we look at net debt-to-revenue ratios. You do not just look at debt; you look at debt to revenue. Of course, if you are selling off your revenue-generating assets you might be reducing your net debt but you are also reducing your revenue. So you do need to make a careful calculation about whether or not the revenue you lose is actually going to be properly compensated for. The Western Australian government is now talking about selling the Utah Point Berth in the Port Hedland port. The rate of return on capital across the Port Hedland port is about 14.2 per cent. We do not have access to the more detailed information, but if we put the evidence together the rate of return on revenue in Utah Point would be much higher than that. That is the facility that is really bringing home the bacon for the Port Hedland Port Authority. But even if you accept it at 14.2 per cent, compare that to the current state bond rates, which vary from about 3.75 per cent to eight per cent. We could actually borrow a lot less than the sacrifice of that income that we are getting from Utah Point. So, we are getting a much higher rate of return than we are paying in interest. if you are being sensible, if you are being really prudent, you will say to yourself, 'Does it really make sense for us to sell this?'

For those reasons, we are deeply concerned that these privatisations be subject to a proper cost-benefit analysis so that for each one of those we do a detailed and proper analysis of just what that return will be and how it is going to impact on the net debt-to-revenue ratio rather than the financially simplistic and irresponsible approach of just focusing on the debt level. We are also particularly concerned that the 15 per cent bonus in itself—the supplement that is on offer by the federal government, and which does not enhance the amount of money available for infrastructure, because that could easily be given by way of a grant—has the potential to be a great distortion in itself. And it has the potential in part to become a subsidy to the private sector as state governments are prepared to discount the price in order to attract the supplement. We stress that the amendments we are putting up are very much designed to ensure that we have a much more economically rational discussion about the assets that are being proposed for sale, and whether or not that is in fact in the best interests of the taxpayers.

But I think it is also important to understand that the potential risks of privatisation go well beyond the problem of ensuring that we get a good return on assets and that we do not unnecessarily sacrifice highly profitable revenue streams for a short-term boost in debt levels to enable brand-new projects to be announced. I want to talk about a couple of facilities, one of which is the Utah Bulk Loading Facility, which I referred to a bit earlier. This facility was built by the government in the Port Hedland port with the aim of providing a facility for the junior miners. For those who are less familiar with Port Hedland, it is a port that understandably has traditionally been dominated by BHP. Like many ports in WA, there has been a bit of an unfortunate history in terms of access by third parties to this infrastructure, even though the infrastructure might notionally be controlled by government. When FMG was attempting to become a player in the iron ore industry, BHP very much played hardball to keep FMG out. With the strategic intervention of the then government, FMG got its place in the sun, but, alas, FMG did much the same thing to the entrants attempting to come in behind it. The development of a facility like the Utah bulk-loading facility was in part a way of dealing with that.

My concern is that this facility, even if it is sold for a good price and we get a good return on it, could fall into the hands of someone who was in fact ultimately a player and who had a strategic interest in keeping third parties out, and we have certainly seen this happen in the grain freight industry. Whilst that might be to the economic benefit of that company it is not going to be of economic benefit to the region, to Western Australia and to Australia. It is very important to understand this, particularly in relation to ports. The ports on the west coast, where we have very difficult marine conditions, are located where they are because they are the optimal places to site safe berthage. It is not like building a supermarket. If you want to compete you cannot just open one down the road. It is very difficult and complex to find a site where it is cost-effective to build such a facility. We really need to understand the long-term implications for regional development from these privatisations.

I note that the member for Swan talked about the state treasurer's proposal to sell Kwinana Bulk Terminal. This is pretty incredible given Mr Barnett's comment just before the last election that the one thing he would not be privatising is the Fremantle ports, and of course the Kwinana outer harbour is one of the Fremantle ports.

I want to talk briefly about a classic failed privatisation and how the need to be seen to bring down the debt levels, but clearly not looking holistically at the budget, can be a complete disaster. We had a situation in the late 1990s where another wheat farmer who had control of the transport portfolio spent a motza on roads leading everywhere. The budget was in great crisis and he came up with this great proposal to sell off the freight rail network. They said they would sell off the grain freight network and make heaps of money so that they could continue building more roads. We warned at the time that this would lead to cherry picking, with a great deal of focus by the private provider on the tier one lines, those lines on which there was a great deal of freight, whereas the smaller lines would basically be left to rot and not properly maintained, and ultimately the operator would walk away from those lines. We were assured that that would never happen, but we did not believe it. Ultimately, everything we predicted has in fact happened. The amount of money we got for the sale of this asset did not even cover the book value. So there was in fact no actual net benefit at all asset-wise to the state. But we had a situation that has required subsequent governments, federal and state, to invest $360 million of taxpayers money in an attempt to keep the freight network going and, in particular, to keep the tier three lines going. Much to the chagrin of the farmers we see that freight coming off the rail and onto the roads is creating mega road hazards and making many country towns and outer metropolitan roads very unsafe, requiring vast sums of money be spent. So it was a massive result of cost-shifting. It was a short-term political fix that over a decade later the people of Western Australia are still picking up the tab for. I urge the government to support these amendments. They are absolutely critical to getting a proper economic understanding of where we are going with privatisation.

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

Being from a rural electorate and from a rural upbringing, off-road is a term I use often. Like many popular words, its meaning has been distorted over time. It is no longer just a descriptor for being away from the main road. Its new meaning is more along the lines of rough and rugged, pumped up with adrenaline, hooliganish and out of control. So off-road is a term I would like to use to describe the former Labor government. I would comfortably use that term in that context. Not only did they go off-roading at the wheel of the Australian economy for six long years, they blew the tyres, cooked the radiator, stalled in top gear and ended up floating down the proverbial stream.

Despite the glossy ads, we all know about the damage bill when you go off-road. The challenge before us is to get our economy back onto the straight and narrow. While the way forward is achievable, there is a major shift needed. The coalition budget before the House is a contribute-and-build budget. Today I want to talk about the build. The government is establishing an asset recycling fund to build the finances to support historically high infrastructure investment for Australia. Under this legislation, financial incentives will be provided to the states and territories to sell existing assets and reinvest the proceeds into productive economic infrastructure and into providing the additional investment dollars to fast-track nationally significant projects.

At this time in our history, there is no question that infrastructure is absolutely critical. The infrastructure backlog in Australia has been variously estimated at somewhere between $455 billion and $770 billion. These are numbers big enough, almost, to rival Labor's debt burden. A 2012 Infrastructure Australia report to COAG identified over $70 billion worth of priority infrastructure projects that we should be moving on immediately. They also identified that we are falling behind on maintaining our existing road and rail.

As I said in the House quite recently, there are two very good reasons why we need high-quality infrastructure and significant infrastructure investment. First, we are facing a dramatic slowdown in mining investment in this country. We are seeing mining investment, which had risen from something like $30 billion up to $120 billion, falling away dramatically because of the policies of the previous Labor government. We have frugal consumers and we have a high dollar. Without infrastructure investment, we will not, in coming years, see the sort of growth and prosperity we need. The second reason is that we face a productivity crisis. Productivity growth has slowed dramatically in recent years. We know that capital productivity is the heart of the problem. We are not making enough investments and we are not making investments in the right capital projects.

So Australia faces a significant challenge over the coming years. Whilst our exports are growing strongly and are set to continue to grow strongly, we will need to lift our rate of productivity growth if we are to continue to enjoy the types of increases in our standard of living that we have grown used to. In a speech in November 2013, the Deputy Governor of the RBA, Philip Lowe, emphasised the potential for infrastructure investment to address Australia's declining productivity growth. He said:

… the Australian economy faces a substantial challenge. Over the next decade or so, if we are to achieve anything like the type of growth in real per capita income that we have become used to, then a substantial increase in productivity growth will be required. We can no longer depend on a rising terms of trade and favourable demographics to make us richer. If this lift in productivity growth does not take place, then we will need to adjust to some combination of slower growth in real wages, slower growth in profits, smaller gains in asset prices and slower growth in government revenues and services – in short, slower growth in our average living standard. So the debate about productivity should not be seen as an esoteric one just for economists. Productivity growth matters and it matters a lot to our future living standards.

Mr Lowe went on to say:

In the years ahead, it is unlikely that Australia's comparative advantage will lie in the production of standardised mass-produced manufactured goods for the global market. Instead, we have tremendous opportunities in a range of more specialised high value-added goods and services, where it is the quality of our ideas and the quality of our execution that is the key. Whether or not we can seize these opportunities depends critically on our human capital and our infrastructure.

Later in his speech, he said:

The benefits of investment in transportation infrastructure are well known. Some of these are quite obvious, while others are more difficult to see, although no less important. Among the more obvious benefits is a reduction in travel times and costs for both people and goods. There can also be favourable social impacts through reducing travel stress and increasing the connectedness of communities. And there are environmental benefits as well.

Unfortunately, Labor did little to address these issues.

We know that good infrastructure investment needs to be depoliticised and we know it needs to focus on costs and benefits. That is something that the Labor government failed dismally to achieve. We have heard in this House that only 14 per cent of Labor's stimulus expenditure was spent on productive infrastructure. We saw that, of the $80 billion of stimulus expenditure, none of it—not one dollar of it—went to Infrastructure Australia for approval. We need transparency, rigour and independence in our infrastructure investment.

The Productivity Commission's 2014 report, Public infrastructure, stated:

There are numerous examples of inferior project selection and inadequate assessment of the costs and benefits of public infrastructure projects … In particular, government decisions can become politicised and may be based on inadequate information and assessment of the costs and benefits of projects …

Inferior investment decisions are not unique to governments … However, when the government makes mistakes regarding large public infrastructure projects, the consequences are felt more broadly by the community and taxpayers, often for long periods of time.

In March last year, Fairfax business journalist Adele Ferguson authored an editorial in TheSydney Morning Heraldin which she discussed Infrastructure Australia. She said that the ALP government had created Infrastructure Australia to 'eliminate pork barrelling by creating a priority list of infrastructure projects based on a cost-benefit analysis and advising on major policy reforms'. However, we know that Infrastructure Australia was effectively marginalised by the Labor-Green government, as most famously evidenced by Labor's pre-election approval of the Parramatta to Epping Rail Link project—which did not feature on IA's list of priority tasks.

In an article in The Australian in February this year, Deputy Prime Minister Warren Truss wrote:

WHEN Anthony Albanese set up Infrastructure Australia in 2008 he made it his personal lapdog, largely answerable to him.

IA was sidelined on any real decision-making, forced to play catch-up and chase its tail to justify projects Labor had already announced without consulting its expert advisory body.

Labor’s road and rail funding projects, its big-spending response to the global financial crisis, its infrastructure election promises, were all announced without being fully assessed by IA.

We need look no further than the NBN for a clear example of poor infrastructure investment, with a significant impact on the government balance sheet. There was no cost-benefit analysis and we saw extreme politicisation of investment in infrastructure. Indeed, we know that the decision was made on the back of a serviette.

In the absence of an intervention from this government, state under-investment in infrastructure is inevitable. As the Productivity Commission report I referred to earlier notes, the Commonwealth has a comparatively wider and more efficient tax base, despite heavier levels of investment from the states and territories. This has already led to large transfers from the Commonwealth to the lower levels of government, for the purpose of financing infrastructure. As an October 2013 report from Moody's demonstrates, state and territory debt levels have ballooned since 2008 and are projected to increase into the foreseeable future. This will further limit the funding that state governments can provide for infrastructure.

It is clear that the experts endorse our infrastructure focused budget. On budget night, Infrastructure Partnerships Australia said:

This is a very strong budget, because it makes difficult revenue and expenditure decisions, allowing Canberra to fund an unprecedented $50 billion investment in economic infrastructure.

Chief Executive Brendan Lyon also commented that over the forward estimates the Abbott government's total infrastructure investment represents around a $9 billion increase compared to the last five years. He noted:

The states will always have a central role in funding and providing public infrastructure, but with high levels of debt and substantial operating deficits, a higher and sustained level of national investment alongside the states is warranted.

So it is clear what the experts say. It is clear that they are on our side.

We recognise that there are still challenges ahead. Philip Lowe rightly points out that a key challenge is to ensure there are strong systems of governance in place so that money is spent wisely. That is why we restructured Infrastructure Australia. The second key challenge is the ongoing funding of projects beyond the large expenditure we committed to in the budget. It is no use identifying infrastructure projects with large potential gains if a way cannot be found to finance them.

The financing challenge arises not because of a lack of money available to invest in infrastructure. Many private-sector investors tell us—tell me—that there is plenty of money sitting on the sidelines waiting to be invested in infrastructure assets. The issue is more a reluctance of investors to take on the construction and patronage risks and/or the difficulties of charging for the use of infrastructure.

Looking forward, we need to find a sustainable way in which to finance our infrastructure needs over the long term. Regardless of whether it is the private or public sector doing the financing, it is likely to be easier if we consider different options for pricing and funding transport infrastructure. User-pay models have emerged for all other utilities—water, electricity and telecommunications. We need to seriously consider broader user-pay models for all roads, with hypothecation of revenues not just for roads in general but also, perhaps, for the owner of the specific road. The technology is now available, and the benefits are clear. Not only will this increase investment in high-growth and congested roads but also it will better regulate road use, encouraging commuters to find alternatives when there is significant congestion.

In a report for Infrastructure Partnerships Australia, Deloitte has shown how this can work and, most importantly, how it will help regional areas, despite claims by some to the contrary. As a society, we have a lot riding on finding a way to pay for the infrastructure we need to boost our productivity and improve our living standards.

Those of us who come from regional communities know that connectivity is king, and good connectivity comes from good communications infrastructure and good transport infrastructure. In my electorate of Hume we saw a complete failure of investment during those Labor years. The NBN failure is well known. It has been talked about at length in this House. We have also seen transport infrastructure-investment failure. The Hume Highway is now basically a conveyor belt of trucks in the evenings. We see the B-doubles going from Melbourne to Sydney and back, because rail has failed.

For many years, since about 2007, in fact, we have seen the Labor government fail to sufficiently invest in rail infrastructure on that corridor. We as a government have said we want to address that. We want to address that with our $300 million investment in the Melbourne-Brisbane rail link and with further investment on the coastal corridor. That will take trucks off the road, it will support a better drive—a safer drive—and will mean fewer trucks on the Hume Highway. It will have the benefit of creating regional freight hubs throughout my electorate.

For the grain growers in the wheat belt of NSW, this will give many options they do not have today. They will be able to send their wheat to Newcastle, Port Kembla, Brisbane or Melbourne. The Barton Highway is also a failure of the previous Labor government. We are upping investment in the highway, including development of a staged duplication plan. Finally, our significant investments in black-spot and Roads to Recovery programs are important responses to a dire infrastructure backlog.

The Australian public deserve better. We are no longer crammed into the back seat of some kind of juvenile joy ride like we were under the Labor government. The grown-ups are back at the wheel. We know that good infrastructure investment needs to be de-politicised, and we know it also needs to focus on costs and benefits. This is something the Labor government failed to do. Through an Asset Recycling Fund we will build the finances to support this government's record package of infrastructure investment. Five billion dollars has been committed to provide financial incentives over five years to the states and territories, to sell assets and reinvest those proceeds. This will leverage a significant increase in private sector investment and create massive new opportunities for investors. I fully commend this bill to the House.

Andrew Giles (Scullin, Australian Labor Party) Share this | Link to this | Hansard source

In rising to make a contribution to debate on the Asset Recycling Fund Bill 2014 and the Asset Recycling Fund (Consequential Amendments) Bill 2014, I will start by reflecting on two aspects of the contribution of the previous speaker, the member for Hume. He referred to the position of the experts, in terms of this government's approach to infrastructure provisions, as being 'clear'. I agree with him in so far as that, but the conclusion he seeks to draw is simply not tenable. What the experts want out of a Commonwealth government's approach to infrastructure provision is transparency and adherence to a strong evidence base which meets the productivity challenge of Australia. That is little in evidence under this government, as I and other Labor speakers have said on many occasions since the election when we have debated infrastructure in this chamber.

I also note that the member for Hume did effectively set out, I believe, the scale of the infrastructure backlog we confront in Australia today and its relationship to the productivity crisis and challenge we must confront head-on if we are to preserve our standard of living. Insofar as he made those remarks in setting out the challenge, I am entirely in agreement with the member for Hume. But, in agreeing with him in that regard, I see a very different path forward for the role of the Commonwealth with respect to infrastructure.

I have spoken regularly in this place about Commonwealth spending in infrastructure. This is partly because I represent an outer suburban electorate, an electorate that requires considerable investment in infrastructure across all asset classes. I am very pleased to say that under Labor it received its fair share. I have also spoken about Commonwealth spending in infrastructure because I believe the Commonwealth government has a vital role, a key role, in investing in the infrastructure of our cities—a role this government appears to be in denial about, even though it goes to the very heart of the productivity challenge that we face, as well as to pressing concerns about liveability, sustainability and of course equity.

More generally, I am concerned to see Australia, through the Commonwealth, secure our infrastructure future in real rather than rhetorical terms, and delivering, not passing the buck to other tiers of government. In addressing these bills—I should make clear that I am also in support of both amendments foreshadowed by the member for Grayndler—I believe it is important to place them in their proper context: how our self-described infrastructure Prime Minister is going about meeting this great productivity challenge Australia faces.

I now turn to the provisions of the bills before us in turn. I note that the purpose of the Asset Recycling Fund Bill is to establish the Asset Recycling Fund as a dedicated investment vehicle with a focus on providing financial assistance and incentives to states and territories to create new productive infrastructure. The purpose of its companion bill is to make the consequential amendments required to other statutes to enable the effective operation of the fund. In short, these bills provide an incentive to privatise state or territory owned assets and to recycle the proceeds into new productive infrastructure.

While it has been said that this is the only recycling members of this government are inclined to support, I should point out that this clearly is not so. They are more than happy, as the member for Grayndler has set out, to recycle and rebrand Labor infrastructure and investment as their own work. Of course, to talk of recycling in this context is another example of this government's recourse to Orwellian language. When we talk about recycling, we are of course talking about privatisation.

The Commonwealth contribution is to provide the state or territory with an additional 15 per cent of the reinvested sale proceeds of the cost of infrastructure projects. These bills are the vehicle for putting into effect the National Partnership Agreement on Asset Recycling, which was signed by all state and territory leaders in May this year.

Under the main bill the fund will receive an initial contribution of $5.9 billion at commencement, comprising uncommitted funds from the Building Australia Fund and the Education Investment Fund. Both these funds were formed by the former Labor government to fund land transport and education infrastructure projects respectively. So the money in this fund is of course Labor money. Under both of these Labor funds, projects to be funded by the portfolio minister were subject to recommendations by an advisory board as to their merit, and crucially this requirement is not duplicated in the legislation before us now. This is a major omission and a major concern.

Privatisation is, to me, far from a self-evident good, although I should point out that Labor is not opposed in all circumstances to the privatisation of certain public assets, and we will consider and have considered proposals on a case-by-case basis. We will support privatisation only where it is in the public interest to do so following proper independent scrutiny of this process. A case in point is Victorian Labor's proposed leasehold privatisation of the Port of Melbourne in order to fund vital transport infrastructure to replace one-third of Melbourne's level crossings with underpasses or overpasses to increase safety. I am personally very comfortable in supporting this decision. As alluded to earlier, clearly Labor governments of South Australia and the ACT have signed the Asset Recycling Initiative.

As far as Commonwealth spending on infrastructure goes, in government Labor clearly leads the way, as of course it should. We saw this in the funding of nation-building infrastructure projects, including setting governance standards that allow decisions to be made in the national interest, not on the whims of the National Party or indeed narrow electoral concerns more broadly. Labor lifted infrastructure spending at the Commonwealth to record levels and, under the previous government, saw Australia rise from 20th in the OECD in terms of spending on infrastructure as a proportion of GDP to first. We did so without privatisation funding this and without passing the buck to other levels of government. On a per capita basis, I note we were talking about an increase in funding from $132 per Australian to $225.

This is not a debate about privatisation or spending on infrastructure. At issue here are questions of process, oversight and governance. All of these factors are essential in ensuring that the infrastructure that Australia needs gets built and that Australian taxpayers now and in the future get good value for money in contributing to a more productive economy and enhanced liveability.

Labor's mechanism for achieving these goals was the creation of Infrastructure Australia, the purpose of which has been to research and rank proposed infrastructure projects based on their potential to add to our economic productivity. This was the implementation of an election commitment, of course. The current governance arrangements are for the Infrastructure Australia Council, the remit of which is set out in the Infrastructure Australia Act, to provide advice to the minister. Additionally, the Infrastructure Coordinator was established to assist the council in the performance of its functions. The previous minister made decisions based on advice of this independent panel. The point of this process was to depoliticise infrastructure spending and importantly also to decouple the infrastructure cycle from the all too short political cycle—the long term and the short term—and to establish a framework, an integrated policy approach for the provision of infrastructure in a strategic manner. This is what I believe nation building should look like. It is Labor's approach.

One major piece of infrastructure that Labor committed to and budgeted for was the Melbourne Metro rail link. This was part of an overall investment in urban rail that represented more investment in urban rail infrastructure than that of all of Labor's federal predecessors combined since Federation—over $13½ billion. Stage 1 of this project was identified by Infrastructure Australia as ready to proceed. Infrastructure Australia describes the project as:

… a project that is expected to shape Melbourne’s future transport network and land use patterns. The preferred option presented could achieve up to 30 per cent capacity increase in the urban passenger rail network however the project cost is approximately equal to the benefits.

It is not just Infrastructure Australia and federal and state Labor who are in favour of the Melbourne Metro proceeding. Tourism & Transport Forum Chief Executive Ken Morrison has said that the Melbourne Metro project needed to be funded more swiftly, stating:

We urge the government to look at ways to fund the project so it can commence as soon as possible.

Committee for Melbourne Chief Executive Officer Kate Roffey has also backed Melbourne Metro and urged its urgent funding, saying:

… we believe waiting until the end of the decade is too long.

This is about ensuring that taxpayers get value for money and making sure the projects that are the most necessary go ahead. It would be a tragedy for Melbourne if the Melbourne Metro is replaced by a half-baked option, which appears likely to be the case should the people of Victoria not get the government they deserve at the end of this year and not get support from a Commonwealth government that is prepared to invest in our cities and especially urban passenger rail.

In Melbourne we are seeing what happens when this process is turned around, with the what can only be described as bizarre announcement by the Prime Minister of funding for the East West Link, or perhaps the east-east tollway, as it should be described. The Prime Minister has not seen, and as far as I am aware no Victorians have seen, a business case for this proposal. The decision to fund roads like the east-east tollway breaches another one of the Prime Minister's so-called fundamental election promises—too many broken to count by now. This promise was to subject any infrastructure project worth more than $100 million to cost-benefit analysis. For this project, the Prime Minister will give the Victorian government advance payments of $1.5 billion by the end of this month, despite having produced no business case and despite the fact that $1 billion of this money is for stage 2, construction of which will not begin until 2015-16 and for which we do not even have a map. This breaches another commitment to refuse to hand out money for states unless milestones on planning and construction have been met. This is an absurdity that Labor's amendments would prevent.

A secret report prepared by the construction firm Veitch Lister for the Linking Melbourne Authority in June 2003 obtained by The Age found that East West Link will trigger huge increases in traffic on key sections of Melbourne's road network with parts of Hoddle Street, already a disaster, amongst the worst hit. The modelling reveals hundreds of thousands of motorists face more rather than less congestion as a direct result of this $6-8 billion project. Melbourne University planning expert Alan March was quoted as saying the money being spent on the road would be better invested in public transport, health or education. Dr March warned that international evidence suggested that such projects tended to add to traffic problems over the long term. He said:

All of the evidence all over the world suggests these sorts of projects are unlikely to fix things in the longer term … It is as if the government is determined to press ahead with a truck-based transport system at all costs irrespective of the impact on the rest of the city in the longer term.

I could not agree more. Why cannot money from the fund established by these bills go towards urban rail? Perhaps this is yet another reason that oversight of infrastructure spending has been reduced and politicisation increased. I remember the Prime Minister wrote in his book Battlelines of 'kings in their cars', and so presumably the rest of us are peasants on public transport to our Prime Minister. The then Leader of the Opposition and now Prime Minister made some strange remarks before the election in asserting that 'the Commonwealth had no history of funding urban rail' and that 'it is important that we stick to our knitting—and the Commonwealth is knitting when it comes to funding infrastructure such as roads.' This sums up this government's approach to this debate. It is just a triumph of the 'I reckon' school of public policy making, with the two coalition parties working hand in hand—the ideologically blinkered, who cannot abide public transport, and their friends in the National Party, the party that brought us regional rorts. We saw that under Howard and we will see it again. The Australasian Railways Association Chief Executive Officer Brian Nye described Mr Abbott as demonstrating that he 'simply doesn't understand public transport.'

Mr McCormack interjecting—

Clearly, the Prime Minister is not alone amongst members opposite. Mr Nye also said that this refusal to fund urban rail 'should send shivers down the spine of commuters everywhere'—as it does, in Scullin and I am sure right across Australia's cities and towns. Mr Nye pointed out that public transport use has almost doubled in Australian cities in the past decade and that more investment is needed to keep our cities from grinding to a standstill over the next 20 years. Grinding to a standstill—what would that mean for the productivity challenge the member for Hume spoke so eloquently about only a few minutes ago? Mr Nye asked:

Clearly not everyone can afford an inner city car parking space, so how does Mr Abbott propose our growing population will get to work each day if he refuses to fund public transport?

Mr McCormack interjecting—

That is a good question, and it is very disappointing that the parliamentary secretary has no interest in the circumstances of four out of five Australians and more than 84 per cent of our economic activity. This is a very good question. In particular, it is a good question for the constituents of Scullin, Lalor, Makin, Newcastle, Wills and Chisholm—particularly outer suburban constituents who have little option other than to drive, because jobs are increasingly located near the CBD at the moment, despite the tight financial constraints many of them live under. I note recent work has highlighted the cost-of-living impact. The cost-of-living impact of effectively requiring outer suburban residents to drive is something that the members opposite were very keen to talk about in opposition but they have little to say about it in government.

In conclusion, it is vital that both amendments proposed by the opposition are supported. This would go some way to bridging the massive chasm between the rhetoric of the government's position on infrastructure and the dismal reality that is condemning Australia's cities and Australia's productivity more generally to a second-best future.

Bruce Scott (Maranoa, Deputy-Speaker) Share this | Link to this | Hansard source

It being almost 1:30pm, the debate is interrupted in accordance with standing order 43. The debate may be resumed at a later hour.