Nick Minchin (SA, Liberal Party, Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

I rise on behalf of the coalition to speak on the Nation-building Funds Bill 2008, the Nation-building Funds (Consequential Amendments) Bill 2008 and the COAG Reform Fund Bill 2008. These bills provide the legislative framework for the government’s budget announcement to create the Building Australia Fund, the Health and Hospitals Fund, and the Education Investment Fund. The COAG Reform Fund Bill provides the government with the mechanism for channelling funding to respective state governments.

The BAF, as it is known, is aimed at providing capital investment in transport, communications, energy and water infrastructure. The fund will have an initial capital of $12.6 billion. This figure comprises $7.5 billion from the 2007-08 Howard government surplus; proceeds from the second instalment of the sale of T3, thanks to the then finance minister and courtesy of the Howard government, and of course opposed by Labor at every step of the way; and the balance of the coalition’s Communications Fund, another Howard government initiative.

We need only look at the government’s budget announcement to determine the initial aspirational level of this Building Australia Fund. According to the government’s budget announcement:

The Government will commit funds from the 2007-08 and 2008-09 surpluses, once realised, to the BAF bringing total funding of the BAF to $20.0 billion. A proportion of future surpluses may be allocated to the fund as appropriate.

It seems very clear to us and the general public that this Building Australia Fund, or BAF, will not even have $20 billion, let alone any greater sum. Of the $12.6 billion currently available, no less than $4.7 billion, approaching half of the fund, is already committed to Labor’s mythical national broadband network, leaving only $7.9 billion in the Building Australia Fund, which, frankly, is not going to go very far at all. Indeed, $7.9 billion is the equivalent of 10 days of federal government expenditure. So the reality is that with the disappearance of future surpluses, as revealed by this new government, and indeed the very real prospect of the budget going into deficit under the Rudd government, these funds really will not amount to much at all. Indeed, it appears that the government has now become so desperate that we read in today’s newspapers that it is considering setting up its own nationalised bank to help bail out the Labor state governments, which so criminally wasted the last 12 years of economic prosperity, having absolutely nothing to show for it, and are now coming to the Rudd Labor government to be bailed out.

This contrasts with the fact that the coalition government, just 12 months ago, left Australia with a strong and growing economy. Over our period in office, without any assistance whatsoever from the other side, we repaid Labor’s $96 billion in debt, saving the Commonwealth no less than $8 billion per year in interest payments, and left Australia with a $20 billion budget surplus. We fully provided for the Commonwealth’s $96 billion in unfunded superannuation liabilities by establishing the Future Fund, again ultimately saving the Commonwealth some $4 billion per annum. I am personally very proud to have worked with the then Treasurer and to have had ministerial responsibility for setting up and operating the Future Fund, one of the great achievements of the Howard government. The coalition left government with the strongest economy in Australia’s history and one of the strongest in the world. Labor is only able to deliver the funds it now proposes to establish because of the fiscal prudence of the coalition government.

The bills before us give the Future Fund board responsibility for managing the investments of the three funds. It was the coalition that established that board and appointed the current members to it, so we are, of course, fully supportive of the proposed role for the Future Fund and its board, and we are relieved that Labor’s hands have not yet stretched to raiding the Future Fund.

Prior to the last federal election, and with all of that $96 billion of Labor debt repaid, the coalition were able to invest in Australia’s future not only through the Future Fund but also through the Higher Education Endowment Fund and the announcement of our Health and Medical Infrastructure Fund. We created those funds in government to help build Australia’s future, and they were the dividend from 11½ years of strong economic management, the complete repayment of Labor’s debt and the provision for our unfunded liabilities.

I turn now to the funds proposed to be established by Labor. Apart from the Building Australia Fund, the first is the medical infrastructure fund. As I said, this builds on the announcement by the coalition prior to the last election of the establishment of our Health and Medical Infrastructure Fund. The fund we proposed to establish was to commence with an investment of $2½ billion from the 2007-08 surplus and would have been added to with the sale proceeds from the privatisation of Medibank Private, which was our government’s policy and would have occurred under our government. Now, of course, the new Labor government has denied access to that source of funding by abandoning the proposed sale of Medibank Private Ltd. It apparently believes that we should have money tied up in a private health insurance business rather than made available for a fund of this kind, a remarkably odd set of priorities. The capital of the Howard government’s fund was to be preserved in perpetuity and the earnings made available for new capital and medical facilities such as surgical theatres and high-technology medical equipment. This was a very, very important commitment by the coalition that would have strengthened our investment in health initiatives both now and in perpetuity.

Labor’s Health and Hospitals Fund, mirrored by the coalition’s fund and established under this legislation, is being funded from prospective budget surpluses. Initially anticipated to be $10 billion, $5 billion of the fund will be delivered from the Howard government’s 2007-08 budget surplus, and of course the remaining $5 billion is now highly questionable as it was anticipated that it would flow from the 2009-10 surplus. The important point to note is that this fund is not preserved in perpetuity under Labor’s plan and is entirely dependent on Labor running future budget surpluses for it to continue. Given Labor’s history on this matter and their current willingness to abandon fiscal prudence, fiscal surpluses are very far from certain.

Of course, this same issue applies with the government’s proposed education investment fund. Again, this is built on a coalition initiative. I remind the Senate that in the 2007 budget the coalition announced the establishment of the Higher Education Endowment Fund. That fund was a $6 billion investment by the coalition. Again, the capital of that fund was designed to be preserved in perpetuity and its earnings available to build first-class facilities for universities and the education system in perpetuity. As I mentioned, the HEEF, as it is called, is a perpetual fund with the capital to be retained and the earnings spent for capital works and research facilities in our higher-learning institutions. It was warmly welcomed by the higher education sector. It was an ongoing investment by our government in the future of education. It is important to stress that the capital of that fund was to be preserved, not spent, to provide a permanent source of ongoing funding from its earnings—again, in perpetuity.

We see no ongoing commitment from the new government to retain the capital balance in their education fund. Any ongoing benefit from the fund relies on what are increasingly looking like mythical future surpluses. In the government’s budget papers this year, the government said that, on top of the $6 billion in the HEEF, the government will commit a further $5 billion from the 2007-08 and 2008-09 surpluses, once realised, to the EIF, bringing total funding to over $11 billion. A proportion of future surpluses may be allocated to the fund as appropriate. Again, we will have to await the next budget to determine whether there is any funding available for this fund.

Before touching on the raid on the Howard government’s Communications Fund that is also proposed in these bills, I want to touch on our concern about how state Labor governments are going to see these funds. The Parliament Library Bills Digest for the Nation-building Funds Bill states, I think most appropriately:

The states and territories are likely to welcome the three Funds, first because it will be the Commonwealth—and not the states—funding projects and secondly, because the states will see scope to shift costs on the Commonwealth. In other words, expenditure from the Funds may, to some extent, substitute for state and territory investment rather than add to overall investment.

The coalition is extremely concerned about these funds resulting in cost-shifting by the states, particularly in debt-ridden Labor states like New South Wales. If that occurs and there is no mechanism to prevent it, it will result in no net new investment whatsoever. All we will have is the Commonwealth substituting for the broken-down state Labor governments shifting their costs to the Commonwealth.

This legislation, as I mentioned, also closes the Howard government’s Communications Fund. The coalition remains totally opposed to that proposal. The coalition established the Communications Fund in 2005 so that the future of rural and regional telecommunications would be secure. The legislation that established the fund was considered by the Senate at the time of the 2005 Telstra sale legislation. The fund is, again, a fund in perpetuity, with the capital maintained and the ongoing income—expected to be $100 million a year—invested in rural and regional telecommunications.

The Communications Fund was established to fund the government’s response to the recommendations of the Regional Telecommunications Independent Review Committee. The committee was required to commence its first review before the end of 2008, and that occurred under the chairmanship of the highly regarded Dr Bill Glasson. Last September, under the former government, the parliament passed legislation to ensure that the principal of the Communications Fund would not fall below the $2 billion figure and to protect the fund from misuse—as, frankly, was clearly threatened, and is now delivered by the Labor government in these bills.

Earlier this year, the minister introduced legislation to raid the Communications Fund. The bill was referred to a Senate committee for examination but was subsequently withdrawn when the government announced its last-minute budget night plans for this trio of funds. The Rudd government’s proposed amendments to the bill, consistent with the bill from earlier this year, will remove the safeguards that we sought to have in place and constitutes a raid on the Communications Fund. In its submission to the Senate inquiry into the initial legislation to abolish the Communications Fund, the New South Wales Farmers Association appropriately stated:

… any withdrawal, dilution or diversion of the fund and any future interest earned, could have devastating consequences for farm businesses, farm families and rural communities. The fund must be continued, with firm commitments set in place to ensure that current and future telecommunications technologies are available to all Australians in an affordable and timely fashion.

Coalition senators recommended back in April, when the initial legislation was considered, that the bill not be passed and that all moves to strip the Communications Fund be opposed. That remains the coalition’s position. The fund was established by our government and we will oppose Labor’s abolition of the fund as it clearly puts at risk future and in perpetuity investment in telecommunications in our rural and regional areas.

Overall, we are not going to oppose these bills, nor are we going to oppose the fast-tracking of infrastructure spending, which the government has indicated a willingness and enthusiasm for. But we do propose a number of very important amendments: to establish a parliamentary joint committee on nation building; to ensure transparency by ministers in relation to these funds; to preserve the Communications Fund; and to involve the Productivity Commission in assessing the productivity benefits of spending from these funds and the potential for cost-shifting by the states in relation to expenditure from these funds—a risk we see as very high. We also will move amendments dealing with the issue of whole-of-life costs associated with expenditure from these funds. These amendments address significant gaps in these bills, and we earnestly hope the Senate will support them.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I rise today to support the Nation-building Funds Bill 2008 and cognate bills. It has been apparent for some time that Australia desperately needs to invest in infrastructure, and there has been a dearth of that in the last 10 years of the Howard government. There has also been in that time incredible pork-barrelling and failure of many of the public-private partnerships, which delivered us some white elephants around the country that the community is going to long live to regret.

We have now a coincidence of a global financial crisis and the climate crisis. Indeed, we have peak oil as well. There is a recognition that the solution to the financial crisis is actually a solution to the climate crisis and to the adaptation mechanisms that are necessary to deal with peak oil. Broadly that is being called around the world ‘the green new deal’, because what it is saying is that, just as with the Great Depression of the last century when President Roosevelt came out with the New Deal to dig America out of the hole it was in, now we need that to go global with a green new deal. That has been picked up by the new President-elect of the United States, Barack Obama, who has come out saying that the United States will spend in order to generate a clean energy revolution as part of the green new deal. He has allocated $150 billion over the next decade. He is saying that in the context of energy security, but it is certainly in the context of climate change and peak oil—accelerating investment in delivering a electric car, accelerating investment in renewable energy and energy efficiency, thereby building competitive advantage globally in green-collar jobs and revitalising manufacturing as part of the US economy. To that end, the United States and China have just signed a memorandum of understanding to accelerate the development and rollout of technologies in this clean energy revolution.

So the challenge here now is to recognise that the vulnerability in the Australian economy that was created over the last 10 years was a failure to act on climate change, a hollowing-out of the manufacturing sector and a reversion to the days of riding on the sheep’s back, except that in the last 10 years it has been riding on the quarry, digging holes in the ground. The third vulnerability in the Australian economy was the complete underfunding not only in education, in particular, but also in public service infrastructure, education and health, in general. There is a desperate need to address climate change, peak oil and the financial crisis, and so getting together the three funds covered by this legislation to recognise that we need to spend money in Australia for the future is critical. We support it. However, the key will be that we do not see the challenge of responding to climate change in direct opposition to what is happening with investment in infrastructure. If we now go down the path of investing in infrastructure that makes it more difficult to respond to climate change and peak oil then we will have exacerbated the problem. It is absolutely critical that in considering these funds we make sure they are set up with the right kinds of goals and objectives, advisory bodies and transparency in the first instance.

There are new forms of infrastructure which need to be addressed in Australia, and one of them is intelligent networks—that is, the bringing together of the latest intelligence in terms of information technology and the latest in terms of energy technology. If you build a smart grid, for example, you improve your whole energy system performance, you reduce energy losses and you enhance customer service. If you infuse digital intelligence, you will enable horizontal integration of traditional and new sources of power—wind, plug-in hybrid electric cars, solar et cetera—so that you will be able to provide end-to-end insight across all forms of energy, making possible greater levels of repeatability, reliability and security. We need to make sure that when we roll out renewable energy we have an intelligent network that is capable of seeing from one end of the grid to the other, where you can bring on the sources of power at any one time and where you can switch them off, and that means rolling out sophisticated smart meters across the country as well.

At the same time we also need to be extending the transmission infrastructure in Australia in order to be able to deliver a green energy revolution; in order to be able to maximise the opportunities that the private sector is prepared to provide through the new renewable energy in particular. But it requires complementary measures to such infrastructure investment to make it happen so that you have the gross feed-in tariff, you have the energy efficiency measures, you have the mandatory renewable energy target, and you have this infrastructure being put in place in terms of an intelligent network and in terms of the extended transmission. There are ways of investing in that, maybe through the permit finance raised under the emissions trading system or it might be that Infrastructure Australia considers it.

My great fear is that what we are going to see with these funds is the same thinking that has built us the problem we have got at the moment, with unfettered emissions coming from the transport sector and the energy sector in particular. What we have heard about when people talk about these infrastructure funds is new coal ports and new roads everywhere. It is all about maximising our dependence on imported foreign oil and maximising the vulnerability of the Australian economy to its exposure to the rest of the world deciding that they are going to move beyond coal and beyond digging holes in the ground. That is why the Greens will be moving amendments in relation to this bill which will make climate change and peak oil part of the principles of the nation-building fund so that in addressing these criteria, if you like, for national infrastructure priorities, addressing climate change mitigation, adaptation and biodiversity conservation will be one and preparing for the global oil production peak and subsequent decline in oil production is another. It is very sensible that that be included.

I hope that the government is serious about the climate effort and the need to restructure our cities. Our fundamental task now is to redesign Australian cities so that we reduce our dependence on foreign oil. That means a major investment in public transport infrastructure; it also means a major investment in getting freight back on the railway around Australia, which means getting the north-south freight capacity up and running and in place; and it means improving substantially mass transit in the cities.

Relocalisation is again just coming into people’s perspective in terms of adapting to peak oil and climate change. The redesigning of cities needs to be along the lines of making the cities not only more energy efficient but also have better amenity for the people who live in them. So we need everything from better pedestrian access to more cycleways in our cities, to improved public transport, to improved rail access to freight. Then, in regard to the energy infrastructure across the country, instead of seeing infrastructure in terms of more coal ports we need to see it in terms of intelligent networks and extensions to the grid so that we are ready for the renewable energy revolution. Otherwise we will be left behind with our holes in the ground and wondering what happened.

The financial crisis has made it very clear just how vulnerable this economy is to a resource downturn. Look at what has happened. The minute that China cannot buy Australia’s resources, the economy here is exposed. What we are going to see is a reduction in company profits flowing back in taxes into the Treasury. The whole economy here is so dependent on the resource based export market that we are really in a difficult situation and will continue to be. As the rest of the world moves beyond coal, we are in a dire position. That is why it is essential not only that we have these principals in the fund but also that we make sure—in relation to Infrastructure Australia, in particular—that two members overseeing it are people with specific expertise and experience in climate change mitigation and adaptation, in global peak oil production and in the expected decline in oil production and its ramifications. At the moment, you have an outstanding person, Peter Newman, on the board, but the advisory committees need to have that kind of expertise.

In relation to this, we also need to make sure that there is transparency, because if you get expert advisory committees you need to make sure that the community can see what advice was given to the minister. That is important to prevent the pork-barrelling that we have seen, with millions wasted in Australia in the last decade. We are proposing an amendment to make sure that the advice that is given to the minister from those advisory boards is made public in a timely manner so that the parliament can scrutinise it.

The third amendment relates to setting up a joint committee between the House of Representatives and the Senate, in the same way that other joint house committees are set up, with a view to the joint house committee being able to scrutinise the advice that the advisory boards are giving the government. It will be able to scrutinise how the government intends to spend its money and so on—that is in cases where the spending allocation is more than $50 million. That is entirely appropriate. Why shouldn’t a parliament, where a government intends to spend $50 million or more, have the capacity to scrutinise it?

Right around Australia, state and federal governments have in recent times been moving away from what in the old terms used to be public accounts committees. Those public accounts committees used to look at how the people’s money was being spent in the interests of the people. That has been lost in recent times, and there have been a lot of grey areas, particularly because of the popularity of private-public partnerships, and the community has been left out being able to scrutinise where the money is spent. When you talk to people around Australia, they ask the question: ‘What has happened. Why haven’t we got the money that we need to have spent on public hospitals, for example?’ We get back to the old argument of state governments versus the federal government and who is responsible for what. The community is tired of that argument. They just want to know that the money is going to be spent on improving health facilities and health services delivery in Australia. They want to know that money is being spent on education infrastructure, because if you are going to have an intelligent nation—one that is capable of the innovation that we know Australians are capable of—we need to be investing in our people and in our education infrastructure in a physical sense as well.

There is a lot to be done in Australia and it is an exciting agenda. But I do take the point about ongoing funding into these particular funds, because, again, the Australian people expect that after the first rollout of funds there would be consistency and a capacity to keep investing in infrastructure so that we do not have a stop-start process. Given the vulnerability of these future funds, it makes it even more important that in the first allocations we get the most sensible and rigorous assessment to make sure that the investments really are in the national interest and are those of the highest priority; otherwise, it may well be that these funds run dry in the not-too-distant future because of their vulnerability to how well the federal budget is going. I think that is a critical point and why this joint house committee proposal is such a sensible idea. I certainly thank the coalition for their support of the amendment calling for the setting up of a joint house committee to oversee the funds. While some people might say that there are other committees and so on, we are talking about a huge amount of money being spent in the public interest, and if the priorities are as the government is saying—those that are in the national interest and have the greatest urgency—then the committee will be able to oversee that and no doubt be supportive of such investments.

I also would hope for government and opposition support for the amendments that I will be moving in relation to climate change and peak oil. As I indicated, the last thing we want to see is a situation where these funds are used in a way that undermines the effort to address climate change and energy security, rather than accelerating our readiness for a low-carbon economy, and a world which is even more constrained not just by climate but by oil prices. I am sure everybody in this chamber will welcome the time when we have plug-in electric vehicles which are fuelled by renewable energy, and then we will not have vulnerability to foreign oil. That is clearly the direction that the United States wants to head in and that is the direction that no doubt we in Australia want to head in.

I think this could be an enormously exciting time for infrastructure and an exciting time for redesigning Australia’s cities to be more people friendly, to have cleaner air, to be less congested, with better education services for our whole population for whole-of-life learning, with better hospital and health facilities for the country and an increasing shift towards primary health care and the infrastructure necessary for that. But it is not just about buildings for infrastructure. It is also about providing the backbone to the low-carbon economy, which is the intelligent network and the intelligent grid, if you like. It is about having the transmission capacity to make sure that the whole economy is enabled to maximise energy efficiency, maximise energy generation in the renewables and maximise jobs in the green-collar economy.

I note at this point that the CSIRO did some work recently on this. It has the capacity now to audit the skills gap that we have for the green-collar economy. What we have not done is an audit to look at how you would move people from one industry to another, particularly those who are dependent on the coal industry, for example, from the Hunter Valley, in New South Wales, and the Latrobe Valley, in Victoria. You would audit those skills and see what upgrading or conversion of those skills might be necessary so that the gaps in the new carbon economy can be filled with the transfer of those skills. That is so you do not end up with a dislocation; you end up with a just transition out of one industry and into another. I am certainly encouraged by the fact that the city of Geelong recognises that it cannot rely on the car industry in the way that it did, even if the green car is built in the medium term. People in that industry are recognising that one way to use their manufacturing expertise and manufacturing base is to encourage solar and renewable energy to generate jobs and technology there.

We are on the brink of a revolution just as great as the steam engine was and just as great as information technology was. With the coming together of information technology and an energy revolution, we are on the brink of something fantastic. But we must make sure that Australia is not bypassed, which will be the outcome if we focus on coal ports and more roads. That is why there is an urgency to accepting the Greens amendments, to make sure that climate change and peak oil are major considerations in the disbursement of these moneys.

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

I would like to follow on with some comments, in the same vein as those of Senator Milne, about the importance of seeing these funds as essentially a once-in-a-generation opportunity to contribute to the transition to a low-carbon economy that Australia so desperately needs. I would like to preface my remarks by saying that there was an unreasonably short time frame given for the Nation-building Funds Bill 2008, the Nation-building Funds (Consequential Amendments) Bill 2008 and the COAG Reform Fund Bill 2008 to be reviewed. The very brief inquiry of the Senate Standing Committee on Economics essentially heard quite unrepresentative comment and input from only five organisations. There were no independent experts and there were no non-government organisations that were really given the ability to comment in the time provided. So what we are seeking to do, particularly with the foreshadowed amendments and the proposal for a joint standing committee on nation building, is to provide a measure of that accountability which, unfortunately, was lacking in the run-up.

This really goes to the question: what are these funds for? Are they preparing Australia for the challenges of the 1950s or the challenges of the 21st century? That is really what this debate rests on. The global economic crisis has prompted the call for swift passage of the bills, but, given the sums of money involved and the problems that would result from policy of this kind being made on the run, it would be worth taking a little more time than has been allowed to improve the transparency and accountability measures and to reach a consensus on how these funds should be managed and invested, particularly given the concerns that the committee heard from the Australian National Audit Office.

As Senator Milne has said, the overarching principles of the bills that we are addressing today do not touch on the urgent and fundamental priorities of reducing greenhouse gas emissions, adapting to climate change impacts and preparing for peak oil. I think that in the 21st century that is what nation building is really all about. If these principles were to be incorporated, the Nation-building Funds Bill and the COAG Reform Fund Bill would represent a real opportunity to build the infrastructure that we need for this important transition.

This morning was the occasion of the launching of, I think, the first ever Senate inquiry into public transport. I want to make a few comments about the central role that public transport can play, if we are going to be talking about nation building, in refashioning Australia as a renewable economy. In Victoria alone, emissions from the transport sector are growing four times as fast as general energy use. This is not necessary. Not only is an efficient mass transit system an essential component of any carbon reduction strategy, but improving mass transit means Australians will spend less on petrol, waste less time in traffic jams, reduce congestion and be able to access the services that they need. Other benefits of course include clean air, the increased safety of our communities, more open spaces and so on.

What we have now are some of the most car-dependent cities anywhere in the world. They have a very high ecological footprint, but they also come at a very high cost to the people who live there. Our cities rely on the availability of cheap fossil fuel, which will shortly be running out. The dip that we are seeing in world oil prices at the moment, due to the global economic uncertainty, should be seen as very much a transitory stage. It perhaps gives us an opportunity to address peak oil before we are in the midst of an oil shock, when it will be all that much more difficult.

The people who are shouldering the real cost burden at the moment are people living on the outer fringes of Australia’s cities because these areas have vastly less access to public transport services and are thus greatly more vulnerable to the sort of oil price shocks that we are going to be seeing down the line. These are the people who will be left stranded by us if the funds that are to be shortly administered under these bills are not directed to genuine sustainability initiatives. It is in these postcodes—if you look at the most recent figures—that the mortgage defaults are occurring. It is the people stranded on the outer fringes of cities who are most acutely vulnerable to rising transport costs and falling land values. Bringing in public transport and beginning, for the first time, genuine Commonwealth funding commitments to public transport would have quite lasting and quite profound impacts on the way our cities are designed and the way that we live in them. Because public transport, particularly fixed infrastructure public transport like bus rapid transit or light rail, creates high-density cores where people can invest and in which land values improve. In addition, jobs and services can be concentrated close to public transport nodes. That is one way of rescuing land values on the fringes of our cities, rather than leaving people stranded and leaving them to mortgage defaults.

We know, after years of research, that building road capacity does not make public transport a more attractive travel alternative. It does not encourage people to make more sustainable transport choices. The opposite, really, is true. Any gains made on improving public transport patronage are immediately cancelled out by incentives to travel by car. We have seen this in some of the sketchy detail that is available on the bids that the state and territory governments have been putting forward to the Building Australia Fund. One small example is in Western Australia where the new Premier, Mr Barnett, has proposed half a billion dollars worth of Commonwealth funding on further freeways—which we simply do not need—around the airport. This is one of the reasons why we were proposing the joint standing committee to look at the appropriateness of the sorts of bids that are coming through these funds. We were proposing it in order that we do not end up just building infrastructure fit for the 1950s. The minister is required to have regard to the advice that is provided by the various advisory boards but, as yet, no evaluation criteria have been developed to which Infrastructure Australia and other advisory bodies have to apply when giving this advice. The details obviously require some further refinement, and the principles and scope of these evaluation criteria ideally should have been included in the legislation.

As recently as October, in estimates hearings, the department was unable to tell us how they were modelling oil prices and future carbon prices into their evaluation criteria as to which projects would be funded. Obviously, a choice of whether to fund half a billion dollars worth of freeways or urban public transport would rest very, very heavily on assumptions about where the price of energy is going. So we would—very much—like to see the establishment of this parliamentary joint committee as a crucial accountability mechanism so that these funds are put absolutely to their best use, and so that we take full advantage of this once-in-a-generation opportunity.

Ursula Stephens (NSW, Australian Labor Party, Parliamentary Secretary Assisting the Prime Minister for Social Inclusion) Share this | Link to this | Hansard source

I would like to thank those who have contributed to this second reading debate, and I will make some final remarks on this second reading stage of the bills. The Nation-building Funds Bill 2008 and the Nation-building Funds (Consequential Amendments) Bill 2008 give effect to the government’s 2008-09 announcement to establish the Building Australia Fund, the Education Investment Fund and the Health and Hospitals Fund. To provide a mechanism to distribute grants payments from funds to states and territories, the Treasurer has also introduced the COAG Reform Fund Bill 2008 to establish the COAG Reform Fund. With these significant commitments in transport, communications, energy, water, education, research and health infrastructure, the nation-building funds 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. The government will contribute a total of $26.3 billion to the funds this financial year. The funds will be established as special accounts in the Consolidated Revenue Fund, meaning that amounts credited to the funds represent amounts that have been appropriated and clearly committed for future expenditure for the creation and development of infrastructure.

In view of a strong commitment to shield Australians from the global financial crisis, the government will accelerate its nation-building agenda. The legislation allows for the interim advisory board arrangements that have now commenced. Allowing expenditure in critical infrastructure to commence from 2009 will contribute to economic activity in the short term and extend growth potential in the medium to long term. The nation-building funds will utilise and build on the governance arrangements for the Future Fund. The Future Fund Board of Guardians will manage the investments of the funds. So there will be a high level of transparency and accountability associated with both the management and the payments from the funds. For example, the legislation establishes an evaluation framework that provides for rigorous assessment of projects by independent advisory bodies. Projects will need to satisfy rigorous evaluation criteria, and these criteria will be tabled in the parliament as disallowable legislative instruments. There will be a common and rigorous approach in the evaluation criteria framework across the three funds that is consistent with the nation-building objectives of the funds. In line with the government’s overarching principles, projects that are financed from the funds should address national infrastructure priorities, demonstrate high benefits and effective use of resources, efficiently address infrastructure needs and demonstrate that they have achieved established standards in implementation and management.

The government will consider which of those projects will be funded through the budget process and will include details of infrastructure payments in the budget documentation. Parliamentary transparency and scrutiny for payments from the funds will also be provided by the general drawing rights limit which will be included in the annual appropriations acts for financial years 2009-10 onwards. The drawing rights limit restricts the total amount that may be paid out in a financial year to support relevant infrastructure expenditure. This will give the parliament a mechanism by which it may oversight the rate at which amounts are being expended. The portfolio ministers will be responsible and accountable for payments and for the delivery of projects in line with their portfolio responsibilities. The legislation therefore provides for these arrangements and clear policy accountability for payments from the funds. The funds demonstrate the government’s commitment towards building the nation’s capabilities, strengthening the economy and providing critical investment in key areas of nation-building infrastructure. I commend the bills to the Senate.

Question agreed to.

Bills read a second time.