Nick Xenophon (SA, Independent) Share this | Hansard source

I unambiguously welcome the Northern Australia Infrastructure Facility Bill 2016. It is an important step towards giving industries in northern Australia, particularly the agricultural sector, access to finance to invest in viable infrastructure projects for which they may otherwise have been unable to attract sufficient investment to get off the ground. To reflect on Senator Lazarus's speech: of course we need to make sure that the money is spent wisely and that there is accountability for that. I know that Senator Whish-Wilson in his contribution made mention of that as well in terms of having either a cost-benefit analysis or another transparency mechanism to ensure that the loans given are there for maximum benefit and are subject to scrutiny of how those loans work out in the longer term. The criteria for investment, all those related issues and the outcomes of those investments need to be considered as well.

Madam Acting Deputy President Lines, I note that in your contribution to this bill you made reference to Carnarvon and areas that were left out of the bill. I understand, from the brief discussions I have had with the minister and representations made to me just last Friday by the peak industry body for horticulture, AUSVEG, that there will be some sensible amendments to that to deal with those issues. I think that is an example of the Senate doing its job. It was not something that was raised in the House of Representatives to any real degree. This is where the debate will take place. This is where those sensible amendments in relation to Carnarvon and other areas in Western Australia can be debated and, hopefully, passed. So that is important.

I just want to make this point. The Joint Select Committee on Northern Australia's report on this bill quite rightly points out:

Northern Australia is a region of vast potential. The development of infrastructure that can generate long-term growth in the population and economy of Northern Australia is crucial in realising this potential.

I want to acknowledge those advocates on both sides of the chamber who have been campaigning for this passionately. I should acknowledge Senator Ian Macdonald, who has been a long-time champion for this, and also the work of someone who I will genuinely miss when he leaves this place: Senator Bill Heffernan, who a number of years ago chaired the Prime Minister's Taskforce on Northern Australia. He was ahead of his time. He spoke with passion and clarity about what needed to be done. It was a position that he held when John Howard was Prime Minister, and it is a pity that his expertise was not used in a bipartisan way. I make that point to say that Senator Heffernan has been an outspoken advocate for developing the North, with his great knowledge of the bush in both the North and the south of this country.

But northern Australia is not the only region with vast unrealised potential, nor is it the only region in desperate need of assistance to generate long-term economic and population growth. I will reflect on that shortly, but I want to point out that I think every Australian should be interested in this bill, because the research material that has been provided to me states that the state of infrastructure in northern Australia has been a recurring issue in a number of reports over a number of years. Senator Heffernan's committee was one of those that looked at that earlier on. The Northern Australian Infrastructure Audit, conducted by Infrastructure Australia, found, for example:

Maintenance backlogs are a feature of the northern road system …

It said:

With limited population and often small industry sizes … it can be difficult to capture the … economies of scale that allow commercially viable infrastructure services at competitive prices.

And it found:

70 per cent of premises in Northern Australia received the lowest broadband quality rating in 2013 …

The Joint Select Committee on Northern Australia inquiry into the development of northern Australia found that in northern Australia:

The absence of economic infrastructure, particularly water, power and transport, impedes opportunities for economic development and liveability …

That is why it is important that we have government intervention in this form. There are some in this parliament—dare I say more so in the coalition, and I do not include the minister, Senator Canavan, in that category—who say, 'Leave it up to the markets.' Well, sometimes the markets fail us. Sometimes some targeted, sensible government intervention can actually assist economic development and make a huge net economic benefit come into play. That is why this legislation is very important.

This bill will provide traditional concessional loans—that is, loans at concessional rates, below market rates—for the construction of northern Australian economic infrastructure. The minimum facility loans will be $50 million, and the financing of eligible projects must not exceed 50 per cent of the total project debt. The parameters are reflected in the draft investment mandate, which proposes $50 million as the minimum amount of financing as a non-mandatory eligibility criterion and would require, as a mandatory criterion, that the finance provided by the facility not exceed 50 per cent of the total project debt. The draft investment mandate also stipulates that the facility must consult Infrastructure Australia when it is deciding whether to provide a project with financial assistance of more than $100 million, which I think goes some way to addressing some of the issues raised by Senator Whish-Wilson. I am not suggesting it addresses them all, but it does nod in the general direction of saying we need to consider the costs and benefits of a particular investment. There must be transparency in this process, but it also indicates the need, where appropriate, for government intervention where the market has failed.

This fund will cost taxpayers a fraction of the $5 billion that is at stake, because they are the terms of the concessional loans. I understand that the financial impact statement for this bill estimates the facility will cost $39.7 million to operate over a five-year period but will generate $40.2 million in fee revenue for the same period. When you consider that the loans will be paid back and they will be prudent investment decisions, this really is a no-brainer. It is a case where targeted investment to build up that critical infrastructure—that critical mass in the North of Australia—and to build up those industries that have so much potential will essentially pay for itself. It seems to me that this is something that the private equity markets were not able to do. It really harks back, I think, to the Snowy Mountains scheme. If we took a cold, hard, economic rationalist view of the Snowy Mountains scheme, I do not think it would pass muster, but when you look at the nation-building implications of that scheme, the long-term benefits, I see parallels between what this bill is proposing and the Snowy Mountains scheme. I hope it is as successful and as nation building.

But it would be absolutely remiss of me, as a senator for the state of South Australia, not to reflect on what is happening in the south of Australia. Northern Australia, as I said, is not the only region with vast, unrealised potential, nor is it the only region in desperate need of assistance to generate long-term economic and population growth. Just today, CommSec's State of the states report ranked South Australia as Australia's equal worst state economy:

South Australia's economy has been ranked as the equal worst of the Australian states after Tasmania nudged upwards to join SA in seventh place.

That is not something to be proud of, and it indicates some very deep systemic issues in my home state of South Australia. I will focus on South Australia.

South Australia has one of the lowest rates of population growth in the nation. From September 2014 to September 2015, South Australia's population increased by only 0.7 per cent. Only Tasmania and the Northern Territory saw lower rates of population growth, increasing by 0.4 and 0.3 per cent respectively. South Australia's population growth is about half of the national population growth. In fact, in the three decades to 2014, South Australia's population grew by 350,000, almost 20 per cent, at a time when the national population grew by 55 per cent. These figures clearly demonstrate that it is not only the north of Australia that needs an injection of capital and population but southern Australia does too.

I have been very happy over a number of months to work with Mark Glazbrook, the managing director of Migration Solutions in South Australia, who is highly regarded as a migration agent, is somebody who has been an industry leader and is someone who I am very pleased to be associated with. We have been working on an economic migration program for those states and territories that have well below the national average population growth and well below the national average economic growth. Clearly those regions—it might be regional New South Wales or regional Queensland—do not have the population growth that is needed for those communities to grow.

We need those solutions and I unambiguously advocate for incentives for economic migrants a lower threshold than the $5 million required for those special investor visa migrants. We have seen several hundred people take those up but mainly in the eastern states. It is important that we have those measures in place to assist those areas of the country which do not have sufficient population growth or economic growth. Even 2,000 business migrants and their families bringing $1 million to $2 million net each to invest in addition to being self-sufficient would provide a multibillion-dollar boost in a state such as mine. There is no question that Australia is a very attractive destination for the rest of the world. Former Prime Minister Abbott—I may have disagreed with him on many things—said that being an Australian is almost like winning the lottery of life. Despite our problems, Australia is still one of the greatest places to live in, I believe. We need to look at economic migration boosts so that we have the population to drive economic growth. I also want to make the point that South Australia does have a long and proud history of farming and agriculture. We are world renowned for our high-quality fruit and vegetables, wine and dairy products to name just a few. Jacobs Creek and Maggie Beer enjoy international reputations and are ambassadors for South Australia's ability to grow and export top-quality goods.

It is important that we do not take the view that it is either/or; we can do both. We need to drive investment and growth in northern Australia with this appropriate sensible government intervention by acknowledging that the markets do not always get it right where there is, if not an element of market failure, an issue of market absence by there not being the funds to develop northern Australia. We also need to acknowledge what will happen in South Australia and what will happen in Victoria for that matter when the automotive sector ceases manufacturing in this country. The Bracks review work by Professor John Spoehr at Flinders University made it very clear that up to 200,000 jobs will be at risk at the end of 2017. That will scar the nation's economy unless we have alternatives in place, unless we move with great haste and with great political will to deal with those issues.

I welcome these bills but we should not ignore the challenges facing those southern states that are languishing in economic and population growth or ignore the challenges ahead in the automotive sector. The shipbuilding announcements and submarine announcements made recently are obviously welcome for the state of South Australia and indeed for the nation. The submarine contract—as welcome as it is—is a wonderful thing for the nation in that we are not going to be building those submarines offshore but it is still a number of years away before we start cutting steel. Those job losses in South Australia and in Victoria will be hitting us very hard by the end of 2017 if not earlier. I would urge the government to take the same sort of thinking, the same sort of foresight it has had in developing northern Australia to consider the existing infrastructure, the potential and the denuding of manufacturing in the southern states, which pose significant challenges to the nation's wealth and to the job prospects for many tens of thousands of South Australians, Victorians and Tasmanians as well. Tasmania has been struggling with power shortages and the like, which have obviously dampened investment and opportunity in that state.

I also make the point that if northern Australia is to grow, it will need things like steel and steel is important. Arrium, based in Whyalla and providing structural steel, is in administration. We cannot afford to lose any of our steel makers whether it is rolling steel at BlueScope or structural steel at Arrium in Whyalla, because that would undermine our manufacturing capacity.

I do not want to bore the minister; he looks a little bit bored and restless. Do not underestimate the importance of our steel sector. I want northern Australia to grow but I also want it to be using Australian steel made at Port Kembla and in Whyalla because once we lose capacity to make steel in this country, we lose our capacity as a manufacturing nation. I look forward to this bill being passed and I look forward to it doing good for the nation but I also look forward to the government acknowledging the deep problems that the southern states have, particularly those states that have been reliant on manufacturing.