Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

I table a revised explanatory memorandum relating to the COAG Reform Fund Bill 2008 and move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

NATION-BUILDING FUNDS BILL 2008

The Nation-building Funds Bill 2008 (the Bill) is part of a package of bills giving effect to the Government’s 2008-09 Budget announcement to establish three new nation building Funds that will provide significant investment in transport, communications, energy, water, education, research and health infrastructure to strengthen the economy. These new Funds build Australia’s infrastructure needs for the future and will assist in addressing Australia’s immediate challenges in response to the global financial crisis, as well as its longer term challenges over the next decade and beyond.

To help shield Australians from the global financial crisis, the Government has announced it will fast track its nation-building agenda. To facilitate this acceleration, this Bill and a consequential amendments bill allow for interim arrangements to begin as early as possible, as investment in critical infrastructure can help secure economic activity in the short term and extend growth potential in the medium to long term.

Contribution to the Funds

The Government is committed to implementing an infrastructure investment program, allocating funds for transport communications, energy, water, education and health. This year, the Government will contribute:

• a total of $12.6 billion to the Building Australia Fund for transport, communications, energy and water infrastructure, including proceeds from the T3 sale and the balance of the Communications Fund;
• a total of $8.7 billion to the Education Investment Fund for education and research infrastructure, including the balance of the Higher Education Endowment Fund; and
• $5 billion to the Health and Hospitals Fund, for health infrastructure.

This is an infrastructure program of historical proportions.

The Government has committed to making future allocations to the Funds as Budget circumstances permit.

Where the Funds are used to finance capital projects in the States and Territories, funding will be distributed through a new Council of Australian Governments (COAG) Reform Fund, which the Treasurer is establishing through the COAG Reform Fund Bill 2008, another component of this package of bills.

Investment of the Funds

The nation-building Funds will utilise the investment framework that has been established for the Future Fund. The Future Fund Board of Guardians will manage the investments of the Funds.

Rigorous evaluation of projects

Spending from the Funds on specific projects will be subject to rigorous evaluation by independent advisory bodies.

In view of the Government’s commitment to strengthen the Australian economy in the face of the global financial crisis, this Bill and a consequential amendments bill allow for interim advisory bodies for the Education Investment Fund and the Health and Hospitals Fund to be established as soon as possible.  These interim bodies will provide a report to Government in December.

For the Building Australia Fund, the Government has previously indicated that Infrastructure Australia, the independent statutory council headed by Sir Rod Eddington, will produce an interim report in December on a National Infrastructure Priority List.

The advisory bodies will assess projects against evaluation criteria, which are being developed by portfolio Ministers – interim evaluation criteria are also being developed to allow work to commence as soon as possible.

Budget consideration

Consistent with the Government’s economic security strategy to strengthen the Australian economy in the face of the global financial crisis, the Bill permits me, as Finance Minister, to determine a drawing rights limit for spending from the Funds covering the period up to 30 June 2009. This will enable work in key infrastructure areas to commence before 1 July 2009. To apply rigor and transparency to spending from the Funds prior to the 2009-10 financial year, the determination will be made in writing and tabled in the Parliament.

The Funds will be established as ‘special accounts’ in the Consolidated Revenue Fund, meaning that any amounts credited to the Funds represent amounts that have been appropriated and clearly committed for future expenditure on infrastructure.

From 2009-10, the Government will consider proposals as part of the Budget process. Transparency and scrutiny for payments from the 2009-10 financial year onwards is provided by the Government including a general drawing rights limit in the Appropriation Acts. The general drawing rights limit will restrict the total amount that may be paid out in a financial year to support relevant infrastructure expenditure. This is intended to provide the Parliament with a mechanism by which it may oversight the rate at which the amounts are being expended for investment in infrastructure.

Payments from the Funds

Portfolio Ministers will be responsible and accountable for payments made from the Funds in relation to projects brought forward within their portfolio responsibilities, which is consistent with the usual Commonwealth financial management arrangements. Importantly, it will allow for portfolio Ministers to be responsible for the delivery of projects, including the meeting of project milestones.

Conclusion

With this Bill, we begin a new era of investing in Australia’s short, medium and long term needs. These Funds are important to address the challenges Australia faces. The Funds demonstrate the Government’s commitment towards building the nation’s capabilities.

The Funds provide a crucial financing source for investment in critical nation-building infrastructure needs.

This is a government that responds quickly at a time of global financial crisis. We intend to invest and build for the future.

NATION-BUILDING FUNDS (CONSEQUENTIAL AMENDMENTS) BILL 2008

The Nation-building Funds (Consequential Amendments) Bill 2008 supports the establishment of the new Nation-building Funds: the Building Australia Fund, Education Investment Fund and Health and Hospitals Fund.

As detailed in my earlier speech, the Nation-building Funds build Australia’s infrastructure needs for the future.

This consequential amendments Bill will allow for interim arrangements to begin as soon as possible to implement the Government’s Nation-building Funds. This will allow the Government to fast track the nation-building agenda in response to the global financial crisis.

The investments of all three Nation-building Funds will be managed by the Future Fund Board of Guardians. The Government will close the Communications Fund and transfer its balance to the Building Australia Fund. The Government will also close the Higher Education Endowment Fund and transfer its balance to the Education Investment Fund.

I will now discuss the material changes in the Bill.

The Bill repeals part 9C of the Telecommunications (Consumer Protection and Service Standards) Act 1999, which establishes the Communications Fund, and repeals the Higher Education Endowment Fund Act 2007.

The Bill also makes the necessary amendments to the Future Fund Act 2006, the Income Tax Assessment Act 1997 and the Telstra Corporation Act 1991 reflecting the closure of the Communications Fund and Higher Education Endowment Fund.

Consequential amendments extend the Future Fund Act’s operation to deal with the Future Fund Board of Guardians’ duties in relation to the Building Australia Fund, Education Investment Fund and Health and Hospitals Fund.

COAG REFORM FUND BILL 2008

The COAG Reform Fund Bill establishes the COAG Reform Fund for the purpose of disbursing funds to the States and Territories. The COAG Reform Fund forms part of this Government’s modernisation of federal financial relations and complements the nation-building funds.

Where the Building Australia Fund, the Health and Hospitals Fund or the Education Investment Fund is used to finance projects by the States, money will be channelled from the nation-building fund to the State or Territory via the COAG Reform Fund. The COAG Reform Fund will also be used to disburse funding provided in future budgets to the States and Territories for areas of specific reform.

Payments through the COAG Reform Fund will require a written agreement between the Commonwealth and the recipient jurisdiction, setting out the terms and conditions of the payment. These terms and conditions will include payment amounts and performance benchmarks, the achievement of which, in the case of National Partnership reward payments, will be assessed by the independent COAG Reform Council. Where the COAG Reform Fund is used to disburse grants from one of the nation-building funds, terms and conditions of financial assistance will be contained in written agreements made under the Nation-building Funds Act 2008.

Full details of these measures are contained in the explanatory memorandum.

Debate (on motion by Senator Evans) adjourned.

Ordered that the resumption of the debate be made an order of the day for a later hour.