Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Hansard source

I rise to speak on the Northern Australia Infrastructure Facility Bill 2016 and Northern Australia Infrastructure Facility (Consequential Amendments) Bill 2016. The Greens support increased government investment in public infrastructure. We think this is vital to Australia's future. If we had our plan implemented, which was only launched last Friday by myself and Adam Bandt, the member for Melbourne, we would see government spending—through debt raising and the issuance of infrastructure bonds—of up to $75 billion around this country on productive infrastructure. We support the concept of governments playing an active role in the lives of Australians. In fact, we believe there is now a historic opportunity, with interest rates and the cost of capital as low as they have ever been and likely to remain low for some time, for the government to step in and issue long-term bonds with government backing of up to $75 billion of financing.

On our calculations—and the numbers we have used were based on extensive evidence collected by a Senate select committee which looked at infrastructure financing—we believe this would push our debt-to-GDP ratio up to the levels of around 25 per cent that we had under ex-Prime Minister John Howard. That would still give us a good buffer of five per cent. We heard evidence from Saul Eslake, for example, that we could have up to 30 per cent of debt to GDP in this country before it would impact on our AAA credit rating. That gives us a substantial amount of money and opportunity for nation building and for investing in infrastructure, not just in Northern Australia but right around the country. If we could redesign our infrastructure planning and approval process and put in place a financing facility and process to encourage developments at local, state and federal government levels and attract the big pool of investment out there in the private sector—through superannuation funds and self-managed super funds, through corporates who want to invest in infrastructure, and through the Australian people—and if we could somehow tie those two together, then now would be a significant, historic opportunity for a nation-building exercise in infrastructure.

I want to make it really clear here today that we support increased government investment in productive infrastructure. We see it as being vital to Australia's future. In fact, the evidence the select committee collected from spokespeople such as Professor John Hewson said the same thing: get out there and borrow money, take a 15- to 20-year view and invest in infrastructure right across the country. We heard evidence from the Productivity Commission, Standard & Poor's, Ernst & Young, self-managed super funds, industry super, Citibank and major investors that there is an appetite out there in the private sector and in the investment sector to look at infrastructure projects. The problem is that they are not investing because they have a very high expectation of returns from infrastructure. They are very interested in what are called greenfields investments—investments that are mature and can already provide revenue and cashflows. Unfortunately, right around the country we have a big infrastructure gap: a pipeline of greenfields projects at local government level, state government level and federal government level that need to be financed. That gap varies depending on who you speak to. The evidence we heard in the committee showed a very large variation, but some respectable institutions said that around the country it is up to $750 billion or potentially $1 trillion—and that is in existing projects that have already been put up for financing and funding. We do not fund anywhere near that amount on an annual basis in this country. It is more like $20 billion, and that is combined state, federal and local government.

How do we actually get money moving in Australia? How do we actually get the nation built for the kids who are here today? This is all about intergenerational equity. This is about taking a long-term view on building our nation, investing in a large number of small projects at local government level that can be bundled into portfolios that bonds can be issued against. A lot of those things can be monetised through a whole range of different means that the committee explored, including changing the taxation system, value capture and changes to rates. All of these things can be funded from the local government level all the way up to the federal government level.

The federal government could play a really important role in raising finance, making low-interest loans to state governments and local government and, of course, issuing municipal bonds and green bonds. We could actually take Australia to being 90 per cent renewable by allocating money, for example, towards renewable energy infrastructure. There is so much we could do if we could raise money right here and right now. The issue comes down to this: is 'debt' a dirty word? Unfortunately, a lot of the political rhetoric we here in this chamber is that it is—that we have a debt problem. There is the old furphy that somehow a government's budget is the same as a household's and that it has to be constantly repaid down to zero. That is actually not the case. Governments can play a very active role in the lives of Australians—much more than we do now.

We would like to see an infrastructure bank or fund set up right around the country to help invest in projects that will not only lift productivity but create jobs and pay dividends to communities—social and environmental dividends as well as economic dividends. Under our structure we would like to see Infrastructure Australia revamped. We have outlined all this. It is bold and brave and it is going to take a little bit more detail, but we would like to see the Department of Infrastructure and Regional Development rolled interest o a new Infrastructure Australia. We would like to see a process where they independently assess a pipeline of projects from right around the country, from the local government level all the way up; where they use triple-bottom-line assessments and have cost-benefit analyses that are transparent, available and put up for public view, not hidden away from the public, with the commercial-in-confidence excuse used for not providing that information.

You cannot totally depoliticise infrastructure spending. We are elected by the Australian people to spend their money in the best way possible. But if an independent Infrastructure Australia made those assessments and made them public then a minister and a political party would need to explain why they chose to fund a particular project and put it through the infrastructure bank and why they went against independent assessments.

In relation to the bill we have before us today, why can't we have transparent independent assessments and cost-benefit analyses for what this fund is going to invest in?

This is essential. What we heard, interestingly enough, from the investment community and the business community is that the key reason they are not putting the potentially hundreds of billions of dollars they have in savings into infrastructure, especially greenfields infrastructure, is the lack of transparency around the selection process at government level, because the cost-benefit analyses are not detailed and they are not provided to the public. This spells trouble for them. That is why the expected risk premiums, or expected returns on their investments, are so high. Isn't it odd that we have a cost of capital in this country on long-term bonds around two per cent, yet infrastructure funds in this country and corporates who invest in infrastructure expect a return of at least eight per cent on their investment? Why aren't governments out there borrowing at two per cent and helping fund these projects? That way, they can co-invest with the private sector, the investment sector and local government, who desperately need this money—not just in the big cities but all around the country, including in rural and regional areas. The federal government can play a role as financier and we can have a system that is robust and transparent in this country, that is respected by the business community, that is respected by all levels of government and that provides a process whereby we can actually get money moving in Australia and get investment in infrastructure right around the country.

Acting Deputy President Sterle, I note that we have some Nationals senators in the chamber today. Unfortunately they did not appear, like you and I did, at the Rural and Regional Affairs and Transport References Committee inquiry into regional capitals, where we went to places like Geraldton, and many other regional cities, and heard about their lists of infrastructure needs and the amount of underfunding that we are seeing in rural and regional Australia. We went to Rockhampton. Unfortunately Senator Canavan could not be there that day. This was when he was newly minted in his role as Minister for Northern Australia. We missed you there, Senator Canavan, because we heard from Rockhampton stakeholders—the local government, the chamber of commerce—and they were telling us about why there is this infrastructure gap in their region and why they urgently need funds.

The Senate has done a great job, in a couple of committees, in collecting the evidence that we need to put together a long-term holistic plan to get money moving in Australia, to get it out to the regions. It is not just the big cities. Let us be honest: this government is entirely focused on big iconic projects in big cities. The Productivity Commission has said that actually the best thing we have got going for us is bundling together the thousands of small projects that need financing around this country—from local swimming pools through to power stations, pipelines, dams, women's shelters—because that will be attractive to potential investors. We heard so much evidence about the things that are needed in the country. We just need the ability to fund and finance these projects.

So we do not have a problem with the principle of setting up a fund that government can finance to look at investing in productive infrastructure. What we do not want to see is a fund that is used for pork-barrelling, a fund that will pick winners based on the politics of the minister and the department of the day. We do not want to see a fund that lacks transparency, that will not provide details of all the decisions that it makes. That is not the way Australians want to see their governments spend their money. That is irresponsible. But it is also not what the business community want to see. It is not what stakeholders want to see.

We heard evidence, when we went around the country, of money that has been spent already around regional development funds—the very specialist funds the government has got set up—and the lack of consultation with state and local governments in how that money is spent. We heard about the politicisation of that money. In fact, Mr Acting Deputy President, when we were in WA we heard that, around the by-election in Canning, some money went into helping renovate a local golf club, when money was desperately needed in Geraldton for setting up a new university campus to try and raise the level of education in the area.

If we had a holistic process that was independent and looked at these things in a very systematic way and then put those projects up to a government for funding, or to an infrastructure bank, we would have a much more efficient process. I suppose where I am going with this is: why aren't we doing this for the whole country? An infrastructure Australia fund would be a good start. A northern Australia fund would have $5 billion for the north of Australia. I happen to come from a southern state, being Tasmania. Where does my state fit into a nation-building program trying to get money moving? Where do South Australia and the bottom of Western Australia and even Victoria fit into this? I am not as interested in those states as I am in my own, of course, being purely self-interested as a Tasmanian senator, but the point remains: why can't we have a process like this for the whole country, but a better process than this, a process where we have potential for co-financing with investors, like super funds, industry super? Canadian super funds are the biggest investors in Australian infrastructure. I am not sure if you are aware of that, Mr Acting Deputy President. They are the biggest private investors in Australian infrastructure. Their pension funds are set up to make it easy for them to take 15-year views on investing in projects. Industry super have got to the point where they not only invest in infrastructure in Australia and overseas; they now manage projects. So we have got a big pool of investment out there in our super funds and self-managed super funds that are looking to invest in building in Australia. They are looking to invest in building communities and building jobs.

While we have a proposal before us today to spend $5 billion on the north of Australia, why don't we think bigger and why don't we think better? Let us think bigger and let us think better. There is no better time than now to have a vision for building this country, to borrow and to lock in at historically low rates—one or two per cent interest rates. We are seeing negative interest rates overseas. If we can convince the business community and the investment community to lower their expectations around what they expect to get on infrastructure, if they finally understand the cost of capital is only going to be a few per cent, then we can actually start getting money moving in this country and get jobs—invest in our local communities, invest in our environment, invest in transitioning Australia to a clean economy, invest in transitioning Australia to a low-emissions economy and a smarter economy.

The problem with speaking like that is that I do not want to sound too much like the Prime Minister, but, at the end of the day, the Greens have always talked about being clean, green and clever. That phrase was coined first by Senator Milne in Tasmania in 1992: 'clean, green and clever'. This is something that we could all do if we actually took a visionary approach to this.

The amendments that the Greens have put up—and these are reflected in Senator Siewert's dissenting report, which she put into the committee report—are that we want to see the NAIF Bill amended to exclude any proposal which is substantially linked with fossil fuel or nuclear projects. We want to see the bill amended to ensure that all proposals are subject to a rigorous independent cost-benefit analysis which includes environmental, climate, cultural and social costs, which I would have thought was a very reasonable basis for any expenditure of taxpayer money. The private sector want to see this kind of thing transparent and publicised before they go investing in these projects, because they know that projects that are highly politicised are highly controversial. It leads to reputational risk when they are involved, and it leads to a higher cost to capital. It makes business sense to put this data out for public perusal.

We want to see the bill amended to ensure that the federal government cannot delegate responsibility for project approvals under the Environment Protection and Biodiversity Conservation Act to state and territory governments. And we want to see the bill amended to ensure that the investment mandate for NAIF includes the requirement that all proposals are consistent with the principles of ecologically sustainable development. This is not just a greenie thing; this is actually good business practice. Most investors are thinking now about the triple bottom line. They are thinking about their risk, and they are adjusting their rates of return and their expected rates of return on their investment based on these risks. These things in our modern day and age, in a climate constrained world, in a world where community and social licence are important to investment, are something that should be incorporated not just in business decisions but in government decisions.

If this is a government driven fund, which it will be—$5 billion—these are things that should be considered by us, because the taxpayers in this country who put up the money that is going to be diverted into building this nation, be it in northern Australia or be it elsewhere, also expect the highest possible standards. They do not want to see governments pork-barrelling. They do not necessarily want to see them picking winners. I know we cannot totally depoliticise infrastructure spending. I thought we could, but, after the committee evidence I have heard, I realise that is not entirely possible, because we are elected to do a job for the Australian people. This is the kind of thing we need to see more of, but we need to be able to do it better, and we need to do it bigger.

The Greens have a plan, which we have now announced, which is based on extensive evidence that we have collected in the Senate select committee. I know that Labor also has a plan for an infrastructure bank, a concrete bank, that is not too dissimilar to what the Greens have proposed. It is a lot smaller and possibly nowhere near as expansive. Nevertheless, the idea is still a good one.

I hope, Senator Canavan, that the Prime Minister puts a little bit more meat on the bones of his announcement he made on Friday about a new way of looking at funding and financing infrastructure. We certainly would be very keen to hear the detail on that, and no doubt that will be announced with the budget in the next couple of days.

So we will be moving amendments to this bill. We support the principle of governments investing in public infrastructure. We think: good on you. The government needs to get more involved, and this is vital to Australia's future.