Gavin Marshall (Victoria, Deputy-President) Share this | Link to this | Hansard source

The committee is considering the Asset Recycling Fund Bill 2014 and a related bill as amended. The question now is that subclause 13(2) and subclauses 34(4) to (6) stand as printed.

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

These amendments on clauses 18 and 24 on sheet 7486 are being moved together, and items (10) and (13) deliver transparency that is otherwise absent from the bill.

The CHAIRMAN: Would you like to seek leave to move them together and then move those amendments?

I seek leave to do so.

Leave granted.

I move these amendments on sheet 7486 together:

(7) Clause 18, page 17 (after line 23), at the end of subclause (1), add:

Note: See also section 21A.

(10) Page 19 (after line 24), at the end of Subdivision B, add:

21A Cost benefit analyses to be made public

     If a direction is made under subsection 18(1) in relation to a grant for an infrastructure project, the Infrastructure Minister must:

  (a) table in each House of the Parliament, within 14 sitting days of that House after the direction is made, a copy of the evaluation by Infrastructure Australia provided to the Minister under section 19; and

  (b) within 14 days of the direction being made, ensure that the following information about the project is made available on the Infrastructure Department's website:

     (i) a description of the project;

     (ii) when the project is to start and is likely to be completed.

(11) Clause 24, page 20 (after line 26), at the end of subclause (1), add:

Note: See also section 28A.

(13) Page 22 (after line 28), at the end of Subdivision C, add:

28A Cost benefit analyses to be made public

     If a direction is made under subsection 24(1) for the purposes of making infrastructure payments for an infrastructure project, the Infrastructure Minister must:

  (a) table in each House of the Parliament, within 14 sitting days of that House after the direction is made, a copy of the evaluation by Infrastructure Australia provided to the Minister under section 25; and

  (b) within 14 days of the direction being made, ensure that the following information about the project is made available on the Infrastructure Department's website:

     (i) a description of the project;

     (ii) when the project is to start and is likely to be completed.

These amendments are identical and require the infrastructure minister to make public the supporting information behind the project that is approved for a grant or payment. The infrastructure minister will be required to table the Infrastructure Australia evaluation in both houses of parliament within 14 days of approval. Further details of the project will also be required to be posted on the department's website. Consistent with Labor's approach in government and in other bills before the parliament, through these amendments Labor will ensure that the evidence before the minister's funding decisions is open to the public. This includes cost-benefit analysis. This is consistent with concerns raised by many stakeholders. It is also consistent with coalition policy. Items (7) and (11) are consequential references.

If there is one thing that has been argued consistently for some years, that is the need for openness and accountability in relation to big infrastructure projects. If you look at what is happening with WestConnex at the moment in New South Wales, you will see that decisions have been made to go ahead with a multibillion-dollar project without any Infrastructure Australia overview or any Infrastructure Australia agreement, and with no cost-benefit analysis in place. So this is to deal with that. This is to make sure that the public are getting value for money. This is to make sure that there is openness in the infrastructure development of this country. It is absolutely essential that these amendments ensure that what is being done is in the national interest—not in the interests of the National Party and not in the interests of the Liberal Party, but in the interests of the nation. These are important amendments and go a long way to ensuring that we have transparency and accountability.

Given that it is coalition policy, I assume the coalition government will be supporting these amendments. These are important amendments that the public need to have in place to ensure that the public purse is well looked after, to ensure that there is no pork-barrelling going on and to ensure that experts deal with these issues and we do not do as we are doing in New South Wales at the moment, and that is career forward with a project like WestConnex which has no clear benefit, no analysis of the problems, does not look at how the problems can be dealt with and has no cost-benefit analysis.

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

Mr Chairman, could you or Senator Cameron make clear which amendments Senator Cameron has batched together. The Australian Greens support the principle in the amendments that the Labor Party have brought forward that have been mysteriously omitted from the government's original bill. Senators will note that these amendments are entirely consistent with amendments we moved and successfully passed back to the other place a couple of weeks ago when we were debating Infrastructure Australia.

If provisions like these had been law before the last budget, it might have been possible to save the Commonwealth government from the expensive and embarrassing commitment of $925 million for the doomed Roe Highway extension in the southern suburbs of Perth and gargantuan budget commitments like that, particularly if they are screeching at every press conference that there is a budget emergency and that they cannot waste a cent of taxpayers' money, to these kinds of foolhardy projects that are very strongly opposed—and Senator Cameron named WestConnex and there is the east-west tunnel in Melbourne; they are right across the country. If we had these sorts of sensible provisions for transparency in place before the last budget was tabled we might have saved the government a lot of embarrassment and the taxpayer a lot of money. I am happy to support these amendments.

The CHAIRMAN: Senator Cameron, can you confirm which ones you moved.

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

It was amendments (7), (10), (11) and (13) on sheet 7486.

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

The government does not support these amendments. These amendments only add red tape with no additional benefit and they risk delaying the delivery of critical infrastructure that will enhance the long-term productive capacity of the economy. The opposition's amendments are about increasing duplication and are disruptive of parliamentary processes. They stand in the way of the government building a stronger, more prosperous economy and investing in new infrastructure.

The CHAIRMAN: The question is that opposition amendments (7), (10), (11) and (13) be agreed to.

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

I move opposition amendment (8) on sheet 7486:

(8) Clause 18, page 18 (lines 5 and 6), omit "Minister who recommended the specification of the grant (see section 19)", substitute "Infrastructure Minister".

This is a very simple amendment but an amendment that is simply common sense—that is, that we consolidate infrastructure approvals with the Minister for Infrastructure. There should not be too much of an argument on this. It simply says that infrastructure approvals are with the minister.

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

If the government were to put it to us that this is effectively a drafting error that is being cleaned up, I would accept that. I do not know whether this was intentional or not. It is a common-sense amendment that the Australian Greens will support.

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

I will be talking to opposition amendments (8), (9) and (12) together, and I thought that Senator Cameron might want to seek leave to deal with them together. It is up to him.

The CHAIRMAN: No, that cannot occur.

Okay. These amendments only add red tape with no additional benefit. This is an unnecessary additional process which will mean the states would have no confidence that the Commonwealth would make payments in accordance with already signed national partnership agreements. The government is confident that the current bill has robust accountability and governance arrangements. The coalition has already committed to Infrastructure Australia undertaking an assessment of cost-benefit analyses for our major investment decisions that receive Commonwealth funding of over $100 million. This includes the government's budget commitments. State governments will undertake their own cost-benefit assessments as part of decision-making processes to privatise assets and reinvest in new infrastructure. These are rightly matters for the states. It makes no sense to duplicate cost-benefit processes at a federal level. The proposal to use disallowance mechanisms against payments to the states would block or delay funding from the Asset Recycling Fund for critical infrastructure. This would dilute the incentives of the asset recycling initiative and set a precedent which would have serious impacts on Commonwealth-state relations. The Commonwealth government will assess whether asset sales and infrastructure projects are eligible for incentive payments based on the criteria in the national partnership agreement. These criteria were agreed by all state premiers and include that a clear net positive benefit can be demonstrated and that projects will enhance long-term productive capacity of the economy.

The CHAIRMAN: The question is that opposition amendment (8) on sheet 7486 be agreed to. The committee divided [16:17]

(The Chairman—Senator Marshall)

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

I seek leave to have amendment (9) on sheet 7486 and amendment (12) on sheet 7486 joined for this amendment.

The CHAIRMAN: To be honest, it would be easier for me to leave it the way it is, because both of those amendments are being sought to be amended and it would be neater if we could do them in separate batches. But I am in the hands of the committee.

David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Link to this | Hansard source

Both of those are subject to amendments by me and I would be happy for them to be considered together, because the amendments relate essentially to the same thing.

The CHAIRMAN: As long as we get leave for you to move your amendments to the amendments together as well. Is leave granted?

Leave granted.

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

I move opposition amendments (9) and (12) on sheet 7486 together:

(9) Clause 19, page 18 (lines 7 to 16), omit the clause, substitute:

19 Recommendations about grants payments

(1) The Finance Minister must not make a direction under subsection 18(1) in relation to a grant for an infrastructure project unless the Infrastructure Minister has recommended that a direction be made.

(2) The Infrastructure Minister must not make a recommendation under subsection (1) in relation to a grant for an infrastructure project if:

  (a) capital expenditure on the project is $100 million or more; and

  (b) Infrastructure Australia has not done both of the following:

     (i) given the Minister an evaluation of the project (see subsection (3));

     (ii) advised that there are likely to be productivity gains from the project.

(3) Infrastructure Australia's evaluation of an infrastructure project mentioned in subsection (2) must:

  (a) contain a cost benefit analysis of the project, including an estimate of the productivity gains from the project; and

  (b) set out any other matter that Infrastructure Australia considers relevant to the project.

(4) The Infrastructure Minister must not make a recommendation under subsection (1) in relation to a grant for an infrastructure project if:

  (a) the grant is for expenditure incurred under the National Partnership Agreement on Asset Recycling; and

  (b) the grant does not relate to a transaction that the Treasurer has approved by legislative instrument.

(5) An approval under paragraph (4)(b) must specify the State-owned assets, or the parts of State-owned assets, to the sale of which the transaction relates.

(12) Clause 25, page 21 (lines 4 to 7), omit the clause, substitute:

25 Recommendations about payments

(1) The Finance Minister must not make a direction under subsection 24(1) for the purposes of making infrastructure payments for an infrastructure project unless the Infrastructure Minister has recommended that a direction be made.

(2) The Infrastructure Minister must not make a recommendation under subsection (1) in relation to infrastructure payments for an infrastructure project if:

  (a) capital expenditure on the project is $100 million or more; and

  (b) Infrastructure Australia has not done both of the following:

     (i) given the Minister an evaluation of the project (see subsection (3)); and

     (ii) advised that there are likely to be productivity gains from the project.

(3) Infrastructure Australia's evaluation of an infrastructure project mentioned in subsection (2) must:

  (a) contain a cost benefit analysis of the project, including an estimate of the productivity gains from the project; and

  (b) set out any other matter that Infrastructure Australia considers relevant to the project.

(4) The Infrastructure Minister must not make a recommendation under subsection (1) in relation to infrastructure payments for an infrastructure project if:

  (a) the payments are for expenditure incurred under the National Partnership Agreement on Asset Recycling; and

  (b) the payments do not relate to a transaction that the Treasurer has approved by legislative instrument.

(5) An approval under paragraph (4)(b) must specify the State-owned assets, or the parts of State-owned assets, to the sale of which the transaction relates.

Amendment (9) and amendment (12) are critical amendments that place proper processes around approvals given to projects by the infrastructure minister. These are preconditions to grants or payments from the Asset Recycling Fund, including under the Asset Recycling Initiative. That initiative proposes a Commonwealth contribution to a state or territory totalling 15 per cent of the reinvested proceeds from a privatisation. The bill provides no criteria for deciding how scarce Commonwealth funds will be prioritised to competing projects. Labor's amendment proposes to fix that. As the Parliamentary Library has noted in its Bills Digest, the strong selection criteria that Labor applied under the Building Australia Fund has not been replicated in this bill. As this bill proposes to empty out the BAF, these amendments will retain independent and transparent approval processes around project selection by requiring Infrastructure Australia to green-light projects of over $100 million in value. Good governance follows the money.

These amendments are also consistent with the Treasurer's intent to recycle privatisation proceeds into productivity-enhancing infrastructure. They are consistent with Labor's amendments to the Infrastructure Australia Amendment Bill and those we have moved for the Land Transport Infrastructure Amendment Bill. These amendments are also consistent with the broad call for independence and transparency of project advice from important stakeholders, such as the Business Council of Australia, Infrastructure Partnerships Australia, the Urban Development Institute, the Bus Industry Confederation, and the Tourism and Transport Forum. These amendments align with the Productivity Commission's recent finding in its interim report on funding of public infrastructure.

This is one of the Productivity Commission's findings I agree with. It says:

The overriding message of this draft report is the need for a comprehensive overhaul of processes in the assessment and development of public infrastructure projects.

In the case of either a grant, item (3), or a payment, item (6), to a state, territory or other entity in respect of a project greater than $100 million in value, the infrastructure minister must first have received an evaluation of the project from Infrastructure Australia and advice from it that the project is likely to produce productivity gains. IA's evaluation must include a cost-benefit analysis of that project.

Additionally, for a project involving the privatisation of a state or territory owned asset and recycling of the proceeds into another asset, the infrastructure minister cannot recommend a project unless the Treasurer has approved the privatisation transaction as eligible for a Commonwealth contribution from the asset recycling fund. The mechanism for this approval will be via a disallowable instrument for each transaction. This proposed change reflects Labor's view that there are good and bad privatisations. Labor believes that the Commonwealth should not reward states, for instance, for selling assets in a fire sale or without adequate regulatory protections.

David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Link to this | Hansard source

by leave—I move amendments (1) and (2) on sheet 7532, together:

(1) Amendment (9), subclauses 19(4) and (5), omit the subclauses.

(2) Amendment (12), subclauses 25(4) and (5), omit the subclauses.

The effect of these two provisions, (9) and (12), in Senator Cameron's amendment on sheet 7486, is to put into legislation a requirement for evaluation of infrastructure projects by Infrastructure Australia—projects of $100 million or more that are funded from the asset recycling fund. That evaluation includes, in particular, cost-benefit analysis. I support that provision.

The agreement between the Commonwealth and the states already agrees that cost-benefit analysis be done, and both sides of politics have a view that Infrastructure Australia is relatively independent. That is a necessary condition, I think, for projects of $100 million or more. We are talking about taxpayers' money here. I have heard the government talk many times about the NBN and the absence of a cost-benefit analysis. It is very important that investments of this size have cost-benefit analysis. However, there is also a provision for Commonwealth funding for projects under the asset recycling fund to require approval by legislative instrument. I oppose this provision as funded projects should not be limited to projects approved by the Senate. That unnecessarily politicises it. My argument is that a cost-benefit analysis is required. I am concerned that, without that, the potential for pork-barrelling exists. Bringing it back to the Senate for approval is unnecessary politicisation.

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

I might speak to both of Senator Leyonhjelm's amendments since they have been put as amendments to Senator Cameron's amendments. I will indicate the Australian Greens position on them both at the same time, just to save a bit of time. With respect to Senator Leyonhjelm's acknowledgement that there needs to be transparency, and therefore agreeing with some of what Senator Cameron has produced, we strongly agree that there needs to be a much greater degree of transparency, but the Australian Greens go further. When we talk about transparency, it is not simply about tabling inadequate documents; it is about giving this chamber the opportunity to review some of those decisions, which come at enormous cost to taxpayers. Quite frankly, this is an expression, in my view, of distrust in the way that this government is handling infrastructure disbursements and the way that the former Howard government handled them—basically parachuting vast—

Ian Macdonald (Queensland, Liberal Party) Share this | Link to this | Hansard source

But the Gillard government was fine.

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

Senator Macdonald, that is a useful interjection. Ms Gillard and Prime Minister Rudd introduced Infrastructure Australia to prevent you and your colleagues, through you, Chair—

Honourable senators interjecting—

The CHAIRMAN: Order! I would ask senators not to interject and I would ask you, Senator Ludlam, to address your remarks through me.

People have been asking Senator Macdonald not to interject for hundreds of years!

The CHAIRMAN: Yes, I have drawn his attention to that too. You have the call, Senator Ludlam.

Best of luck with that! That, effectively, Infrastructure Australia place some of these investment decisions at arm's length from politics. We are now seeing, effectively, the reversal of that policy—an attempt to gut Infrastructure Australia's independence that was rebuffed, amended and returned to the House of Representatives by this place in a quite collaborative way. I strongly support these amendments. We will not be supporting the LDP amendments because, effectively, it takes the teeth out of the transparency. It is not good enough to come in here and just put a document on the table, because people talk all sorts of rubbish about benefit-cost ratios and so on. These amendments need teeth. So we will be opposing the LDP amendments. We will be supporting the opposition amendments so that this parliament does get the final say on investment decisions of this scope.

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

I have already indicated that we did not support the underlying opposition amendments because we do not believe that it is appropriate in the context of these projects to give parliament the authority to disallow investments in infrastructure because of the uncertainty it creates in the context of Commonwealth-state relations around very important and significant infrastructure projects.

I would just say to Senator Leyonhjelm that if he is under the impression that there would be no cost-benefit analysis undertaken if Labor's amendment does not get up, that is not right. There is actually a cost-benefit analysis that is taking place and it appropriately takes place at the state level. The Labor Party amendment is seeking to double up by essentially having a cost-benefit analysis at the state level and then another cost-benefit analysis at the federal level. We think that is unnecessarily doubling up. It seeks to usurp the responsibility of the states in relation to these sorts of projects, which is why we appreciate the intent of these amendments to the amendments, put forward by Senator Leyonhjelm. They would still leave in place opposition changes that would add to project approval times and administrative overheads. I might just flag that, when this bill goes back to the House of Representatives the government will not be in a position to accept the bill, as it is being amended by the Senate.

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

Labor opposes these amendments. The amendments effectively make this parliament indifferent to the assets sold by states in order to access the 15 per cent Commonwealth privatisation incentive. It does so by removing the oversight of the House of Representatives and the Senate proposed in Labor's amendment. Labor believes it is appropriate and an important protection to allow the parliament to scrutinise asset sales on a case-by-case basis before taxpayers' money is spent. Many state-owned assets should not be sold. Given that this then leads to an argument about what should replace these state-owned assets, you look at what is happening in New South Wales now. You see that there was simply an announcement by the coalition that WestConnex would be built. There has been no attempt to have any transparency with respect to the cost-benefit analysis on WestConnex. The more people look at what is happening with WestConnex in New South Wales and in Sydney, the more they are concerned that this was simply a case of trying to deal with an election promise from the state government and the federal government. At the last estimates hearings, I asked a specific question of the department: had a cost-benefit analysis been undertaken in relation to WestConnex? They said no and that it was an election promise.

So if anyone in here thinks that we should just simply allow state or federal governments to deliver on election promises without a proper cost-benefit analysis and proper scrutiny by this parliament, they are not acting in the interests of the parliament, the nation or proper infrastructure builds in this country.

We are sick and tired of the pork-barrelling that went on under the Liberal coalition government when they were last in power. There was no analysis as to what should be done. Billions of dollars were spent on pork-barrelling, when Engineers Australia, AiG and the Business Council of Australia were crying out for properly analysed infrastructure deals that would have improved the productivity performance of this nation.

It is so important to ensure that these amendments go through as they stand and not as proposed by Senator Leyonhjelm. This will simply water down our overview, oversight and capacity to act in the national interest.

As you have seen in the past, many times state governments do not act in the national interest, the state interest or the constituents' interests. We want clear and unequivocal overview that gives us an opportunity to test not only the cost-benefit analysis but whether this is a pork-barrelling initiative or an initiative that is in the national interest. If you are interested in the national interest, you will oppose Senator Leyonhjelm amendments.

Ian Macdonald (Queensland, Liberal Party) Share this | Link to this | Hansard source

I would be failing in my duty as a senator for the state of Queensland or indeed as a senator at all if I let the absolute and abject hypocrisy that you have heard from the last two speakers go unchallenged. Could I just remind those who were here—and for those who were not here, can I tell them—of the fact that after the 2010 election the Labor government, with the full support of the Greens political party, did pork barrel after pork barrel after pork barrel and went nowhere near Infrastructure Australia, let alone this parliament. They did not go anywhere near Infrastructure Australia. What hypocrisy of the last two speakers, saying that we need to do this!

I have come into this debate recently, but I think the coalition should support Senator Leyonhjelm's amendment in the hope that Senator Cameron's amendments do get up, because Senator Cameron's amendments are bad but they would be better if Senator Leyonhjelm's amendment to the amendment were carried so that you did not have to bring it back and have 76 senators deciding on which assets should be sold around Australia. It is just crazy.

In this rare instance I will do what the majority of our side is going to do, but I would urge them to think about Senator Leyonhjelm's argument—

Opposition Senators:

Opposition senators interjecting—

Ian Macdonald (Queensland, Liberal Party) Share this | Link to this | Hansard source

You may well laugh. The Greens political party would never exercise a free vote on anything. Of course, as for the Labor Party senators, they know that, if they did that, they would be out of the Labor Party the very next day. That is one of the reasons I cherish my membership of the Liberal Party.

Kim Carr (Victoria, Australian Labor Party, Shadow Minister Assisting the Leader for Science) Share this | Link to this | Hansard source

You're a great vote winner for Labor!

Ian Macdonald (Queensland, Liberal Party) Share this | Link to this | Hansard source

Senator, my result at the last election might tell you something different. Senator McLucas's team struggled to get two quotas. The team I led, the Liberal National Party, achieved three quotas in its own right and did better than any other state coalition group in the country.

Opposition senators interjecting—

The CHAIRMAN: Senator Macdonald, please resume your seat for a moment. The Senate should come to order. I would like people to cease interjecting, and I remind the Senate of the question before the chair. Senator Macdonald.

I personally think that Senator Leyonhjelm's amendments are good amendments—in the expectation that Senator Cameron's amendments might get up. I will be voting against Senator Cameron's amendments because they are the typical sort of rubbish and hypocrisy you get from the Labor Party. But can I just return to the two previous speakers. Immediately after the 2007 and 2010 elections, the Labor Party just pork barrelled and pork barrelled and pork barrelled. When challenged they said, 'We promised this in the election. That's why we're not sending it to Infrastructure Australia.' But to hear Senator Cameron and Senator Ludlam you would think that they sent anything to Infrastructure Australia or indeed to anyone else—except the people they were paying off. For Australia's biggest ever infrastructure project, the National Broadband Network, there was no cost-benefit analysis, no Infrastructure Australia, no anything. The gentleman who used to be in charge of Infrastructure Australia—I thought he was a very good man, and I am sorry he left the organisation—used to say time and time again at estimates: 'Yes, the NBN should have come to us. It's the biggest infrastructure project in Australia but we were specifically excluded from it.'

There is no point in rehashing old battles today except to say the abject hypocrisy of the two previous speakers needs to be yet again highlighted. But I would not be doing my job as a senator for Queensland if I did not expose that hypocrisy and indicate that I believe that the government in the state that I represent, Queensland—and I could say the same for the state governments of New South Wales, Victoria, Tasmania and Western Australia—will responsibly—

Senator Lines interjecting—

How would you know? I understand that you are from Sydney and you were parachuted into Western Australia. So what would you know about Western Australia?

The CHAIRMAN: Senator Macdonald, I would ask you to address your remarks through the chair and ignore the interjections. And I would ask those interjecting to cease interjecting.

I and most of my Senate colleagues have confidence in our state governments to deal with assets that are owned by the states and by the people of those states—through their taxes and through the governments they elect—without it having to come back to this chamber and have the likes of, with all due respect, Senator Cameron deciding whether it is a good idea for my state to sell something. I do not think Senator Cameron has ever even been to Queensland. What would he know about the decisions and the relevance of the sale of assets in my state?

The CHAIRMAN: The question is that amendments (1) and (2) on sheet 7532, which amend amendments (9) and (12) on sheet 7486, be agreed to.

Question negatived.

The CHAIRMAN: The question now is that amendments (9) and (12) on sheet 7486 be agreed to.

Question agreed to.

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

I move Australian Greens amendment (3) on sheet 7487 revised:

(3) Page 23 (after line 10), after Division 4, insert:

Division 4A—State-owned essential services

29A State-owned essential services

     A grant or payment mentioned in this Part must not relate to a transaction that relates to the sale of State-owned assets that provide essential services.

This amendment effectively carves out essential services as being prohibited from the privatisation bender that the coalition appears to be embarking on. At the very least, with some of the accountability measures that the Greens, the Palmer United Party and other cross benchers have supported, we have raised the bar for some of the proposed privatisations that this government seems to be so obsessed with. I acknowledged in my contributions at the outset that we would not be supporting the bill. But we believe that, if the bill is to become law, some things should simply be off the table.

The amendment states:

A grant or payment mentioned in this Part must not relate to a transaction that relates to the sale of State-owned assets that provide essential services.

Under the Constitution, the states have responsibility for water, electricity, gas and other utilities. These are things that the private sector cannot easily provide. I have already outlined why the Greens and countless economists do not support the privatisation of state owned assets, particularly assets that provide essential services, and that is that they effectively have two characteristics: they supply essential goods and services and their core business is a natural monopoly.

One of the examples—which I think actually had cross-party support in the end, after Mr Turnbull, at the time as opposition leader, took the portfolio on from Senator Minchin—was that bringing the natural monopoly aspect of infrastructure, like the NBN, back into public hands is strongly in the public interest and then you let the market in at the retail level. At least the essential services can be accessed by a budget estimates committee and you can interrogate or cross-examine officers of these utilities and there are very clear lines of transparency and accountability. As soon as you privatise things, or even start outsourcing to a significant extent, things start disappearing behind blankets of commercial-in-confidence and you lose the ability to call people before budget estimates committee. In effect, you are giving up an important part of your democracy. When something goes wrong—when the lights go out; when water mains burst; when the file server goes down—what you really want underlying service provision are very clear lines of responsibility in the authority and democratic control and oversight over things such as upgrades and maintenance.

So the Greens, along with the majority of Australians, are completely opposed to handing over essential services—and that includes utilities and emergency services—to private operators. This amendment simply seeks to ensure that, in the event that this bill does pass this parliament, state-owned essential services like power, water, ambulances, firies and so on, are not services that can be privatised through this initiative. Some things should simply be off the table.

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

I indicate that the Labor will support this amendment. We have worked collectively with the Greens on this amendment. This amendment seeks to prevent grants of payments under the Asset Recycling Initiative—that is, the 15 per cent initiative in respect of privatisation that are for state assets that provide essential services. By definition, 'essential services' provide the essentials of life. It is most important that transactions involving these assets not be sold in a fire sale atmosphere. In this respect, Labor notes the comments by the ACCC Chairman Mr Rod Sims to the effect that it would be keeping a close eye on state privatisations in the face of this incentive.

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

The government does not support the amendment to prevent incentives being funded by the sale of essential services. The decision as to what assets to sell to fund new infrastructure is entirely a matter for the states, as it should be. State and territory governments are best placed to decide which infrastructure and services are most efficiently provided by the private sector. The Australian government does not wish to dictate this out of Canberra or believe that it is in a position to do so on an informed basis.

Question agreed to.

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

I move Australian Greens amendment (4) on sheet 7487 revised:

  (4) Page 24 (after line 12), at the end of Part 2, add:

Division 6—Toll roads

30A Toll roads

     Financial assistance granted as mentioned in this Part must not be expended on toll roads.

This is a very simple amendment that states the following:

Financial assistance granted as mentioned in this Part must not be expended on toll roads.

Having followed the Abbott government's directive and privatised everything that is not nailed down, state governments cannot then fold the money—effectively the bribery fund established by the Abbott government—to assist the private sector in taking the public good of the road network and privatising it effectively in the form of a toll road.

I mentioned before why it is so dangerous to put natural monopolies or essential services in the hands of entities that are more interested in private profit than public benefit. Toll roads are probably the keystone example of why it is a dopey idea. This is not coming out of some economics textbook; this is lived experience of people across the country. Fortunately, in Western Australia, Senator Cormann and I do not have to worry about finding ourselves on a toll road and not having the proper pass or the proper change or even the offensive idea of something as basic as a road suddenly being put into private hands. That has been kept out of Western Australia—and long may it stay so. Other states have not been quite so fortunate—for example, Sydney's Cross City Tunnel and the Lane Cove Tunnel.

Here are the greatest hits of the Cross City Tunnel. Here is why it is so dumb to privatise or effectively try to toll natural monopoly infrastructure. It does not work. They wrote into the contracts that the government would not construct competing public transport infrastructure. So much for the free market. If you try to privatise a natural monopoly you end up having to do profoundly anticompetitive things for it to remain profitable. So they wrote into the contracts that no-one could over-build a private road with public transport. What a disgrace! No wonder these things are so unpopular.

The traffic authority was forced to abandon its traditional job of servicing the public's need and instead they closed streets around the tunnel and forced traffic underground through the tunnels and the toll gates. Remarkable! That is what you have to do to make a toll road work. Private profit in the public interest can go to hell. The tunnel then went into voluntary administration, and, of course, the owners blamed the government—and then you go straight into litigation. It was a complete disaster. My New South Wales state colleague Mr David Shoebridge MP said at the time:

This is a classic case of a failed public-private partnership which was based on an anti-public transport, an anti-alternative transport model which was never going to be sustainable.

Even if you are not interested in buying into the public transport debate—and you think everyone should always drive everywhere—the idea that you would close alternate roads to force people into a private toll road is, I think you would agree, reasonably offensive.

So let's carve that out and ensure that, in the event that state governments do embark down this path that the Abbott government seems to be forcing them down, we do not end up subsidising private profit in toll roads. I commend this amendment to the chamber.

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

Labor will not support this amendment. We are not anti-roads. Road are important for so many communities around this country. Appropriately built roads with appropriate analysis are so important. This amendment seeks to prevent the 15 per cent incentive applying in the case of toll roads. Unlike the government, which stubbornly refuses to fund urban passenger rail projects, and the Greens party, which unreasonably rages against roads, Labor supports the mode of best fit. Labor believes that, if a toll road project stacks up under IA evaluation, it is potentially deserving of support.

One of Labor's amendments requires that major projects are evaluated by Infrastructure Australia as being productivity enhancing, so there should be no prior constraint on the types of new productivity-enhancing major projects that could be supported by the Commonwealth initiative. It is so important in many areas that roads are built. If they are toll roads, they have to go through the appropriate analysis and, if they meet that analysis, then we should give appropriate consideration to them.

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

The government does not support the amendment to prevent incentive payments being used to fund the construction of toll roads. It is for the states and territories to decide what arrangements they enter into to provide the modern infrastructure of the 21st century that they consider important to their economic growth. State and territory governments are best placed to make decisions about what arrangements for providing services and infrastructure represent the best value for money for those they represent.

The CHAIRMAN: The question is that amendment (4) on sheet 7487 revised be agreed to.

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

I move Greens amendments (1) and (2) on sheet 7487 revised:

(1) Title, page 1 (line 1), before "establish the Asset Recycling Fund", insert "encourage privatisation and".

(2) Clause 1, page 1 (line 7), omit "Asset Recycling Fund", substitute "Encouraging Privatisation (Asset Recycling Fund)".

For the benefit of senators not closely following the debate, this is the final amendment, which may or may not be subjected to a division. They are very simple amendments but very important ones. They are amendments of honesty. They change the title of the bill. The government discovered that Greens like recycling. So they invented the cute phrase 'asset recycling', which I think is hilarious. We are substituting in the name of the bill 'Asset Recycling Fund Bill' with the 'Encouraging Privatisation (Asset Recycling Fund) Bill, for reasons that will be fairly obvious to everybody by now. Setting up a fund to effectively bribe states and territories from a $12 billion infrastructure fund by using this 15 per cent incentive, as all senators would be aware by now, is not a particularly good idea. I think the very least the government could have done would have been to give the bill an honest title. I strongly commend this amendment to the Senate.

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

The government does not support amending the title of the bill as indicted. The proposed changes do not reflect the bill's objectives. Privatisation is only a means to an end where it is appropriate. Privatisation is not the primary objective of the bill or the initiatives it supports. The government is keen for states to release capital from assets better managed by the private sector and it wants to encourage the states to use the proceeds of those sales to build greenfield infrastructure, infrastructure in which the market would not necessarily invest without government participation but infrastructure which is nevertheless important to Australia's economic growth.

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

Labor supports the amendment.

Question agreed to.

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

by leave, I move Australian Greens amendments (1) and (2) on sheet 7496, together:

(1) Clause 1, page 1 (line 6), omit "Asset Recycling Fund", substitute "Encouraging Privatisation (Asset Recycling Fund)".

(2) Entire Bill: Omit "Asset Recycling Fund Act 2014" (wherever occurring), substitute "Encouraging Privatisation (Asset Recycling Fund) Act 2014".

Question agreed to.

The CHAIRMAN: The question now is that these bills stand as printed, as amended, and be agreed to.

Question agreed to.

Asset Recycling Fund Bill 2014 and Asset Recycling Fund (Consequential Amendments) Bill 2014 reported with amendment to the titles; report adopted.