Article Categories: Speeches, Infrastructure, The Economy, Funding
I rise to speak on the Nation-building Funds Bill 2008 and related bills. We are here debating a set of bills that is at least eight months overdue. The fact is that there has not been one decision in 12 months on infrastructure—not one decision. It has been a lost 12 months for Australia at a very critical time. In this critical time there has not been one decision on infrastructure. Labor said they had a plan. We heard it all last year during the campaign. We heard it all this year. They have a plan. It turns out that the plan was to set up a committee to devise a plan—a committee! We have had ministers put in place, we have had departments of infrastructure and we have had committees put in place, but no decisions—no action. Instead of action, all we have heard from those opposite is endless denigration of the former government. We just heard it from the previous speaker, the member for Eden-Monaro—10 minutes of his 20 minutes were just denigration of those opposite. There is no contribution—it is all talk and no action.
What we have seen, contrary to all the denigration and the misrepresentation that we have heard from the other side already in this debate, is that total infrastructure spending in Australia in constant 2007 dollars rose from $21 billion in 1996 to $56 billion in 2007, an increase from nearly three per cent of GDP to 5.4 per cent of GDP. That is action. That is not talk; that is not committees. That is a significant and massive growth in infrastructure spending as a proportion of GDP over 11½ years. It gives the lie to the Rudd government’s pathetic mantra. We have heard it again and again tonight in this chamber.
To make that happen, the former government had to fix a few things. In referring to this I would like to scotch this absurd notion peddled by the government that the former government did nothing to set Australia up for the future. Of course the opposite is the case and it is why the Prime Minister can strut his stuff on the world stage and say to the rest of the world, ‘Australia is better placed to deal with the consequences of this financial meltdown.’ Why? There is only one reason and it is that the former government spent 11½ years fixing the mess they inherited and then setting us on a course to have the strongest economy in the OECD. Those facts are overlooked time and again.
We had to start by fixing Australia’s financial infrastructure when we took over in 1996. We paid off $96 billion of government debt. This government would have been confronted with an extra $8½ billion in interest payments this year solely from that debt if the former government had not paid it off—$8½ billion a year. That is $100 billion extra out of taxpayers’ money to pay interest over the last 12 years. That is $100 billion available to spend on infrastructure and on services to create jobs for Australians, and we have seen a lot of those created. We turned around a culture of running massive deficits under the previous Labor administration and we replaced it with a culture of running budget surpluses.
The coalition fixed up other financial infrastructure. It created an independent Reserve Bank, a step which I think has meant a lot to the healthy condition in which Australia finds itself at the moment. The former government introduced rules to govern our financial sector through APRA and ASIC. We fixed up many regulations in the financial area. We got some commonsense and some judgement into the nature of rules governing our financial sector. Those rules are now the envy of others in the Western World who have failed to do likewise. We have had major reform of the indirect tax system, which gave states a huge growth tax to fund vital infrastructure and other commitments. Unfortunately, Labor state governments have presided throughout the country and they have not made use of that money. In fact, we have the situation in New South Wales where it is a total embarrassment, a total disgrace. It is criminal the way in which they have mismanaged that economy, misused the huge amounts of money that have been made available to that and other state governments around the country who have not taken advantage of that money and not shouldered responsibility for their part of the infrastructure bargain.
The former government had to fix up defence infrastructure. It had been massively wound back by the former Labor government. The coalition brought about 47 per cent growth over 12 years from $10.6 billion in 1995-96 to $22 billion in 2007-08. It had been sadly neglected. Infrastructure refers to many areas of the economy. Defence is an area where we have massively increased investment in infrastructure, bringing about 47 per cent growth which was very necessary. I would have thought the former speaker, the member for Eden-Monaro, of all people would have had some appreciation of the increase in defence spending and the pathetic position that our former government found itself in when it came into office in 1996 in terms of defence spending and infrastructure.
Another area of infrastructure that we had to deal with was workplace infrastructure, workforce infrastructure. We brought that into the 21st century. Again, it was a situation which was holding Australia back. The Australian waterfront was modernised. The coalition brought about a 60 per cent improvement in productivity with average crane rates increasing from 17 movements per hour to world’s best practice of 27 or 28 movements per hour. We were a joke in the world. We were ridiculed. The Japanese, a major customer, complained endlessly about conditions on our waterfront—the unreliability and the cost. That was massively turned around. It took the former government to take tough decisions not easy decisions, not just talk and no action but tough decisions to turn that around and create productivity improvements, and to increase the capacity of Australian industry to build, grow and create jobs.
We established the ABCC. It led to a massive reduction in working days lost per thousand employees due to industrial action. It plummeted from 37.4 days lost in late 2005 to just 1.7 in mid-2007—a massive improvement In the construction area, so critical to capitalising on the mining boom of recent years, productivity was increased markedly because of the introduction of the ABCC and the workplace changes, so much so that it resulted in a staggering 1.5 per cent boost to Australia’s GDP, or over $5 billion each year. Add that to the $8½ billion a year in interest savings on the debt that was paid off by the previous government and you are talking real money. That is more money in those two initiatives alone than we are seeing in the Building Australia Fund, which the government has talked up and talked up but does not even have the funds in there which equate with the savings each year that the coalition made from those two initiatives.
And of course we introduced much greater flexibility into our workforce through the 12 years of the Howard government. All of this resulted in the lowest unemployment rate in 33 years; a youth participation rate ranked second among OECD countries; a real increase of nearly 22 per cent in wages over and above inflation; $38 billion for infrastructure for our roads and rail system via AusLink 1 and 2; funds available for other necessary transport infrastructure; a $10 billion water infrastructure fund; a $60 billion Future Fund; $6 billion higher education fund; and $20 billion surpluses. All of that generated off the back of real reform to infrastructure: financial infrastructure, defence infrastructure, workplace infrastructure and other forms of infrastructure in this economy.
The bill that we are debating has enabled the government to establish three separate financial asset funds: the Building Australia Fund, the Education Investment Fund and the Health and Hospitals Fund. The building fund will have $12.6 billion in it, with $7.5 billion coming from the 2007-08 surplus and the remainder from T3 proceeds and the balance of the Communications Fund. The education fund will have $8.7 billion, $2½ billion from the 2007-08 surplus and the remainder from the closed Higher Education Endowment Fund. The health fund will have $5 billion, which is entirely from the surplus of 2007-08. There is a $14.7 billion shortfall on what the government initially predicted. What that means is that not one dollar generated by the Rudd government will be spent from all of these funds that we are talking about and debating. Every dollar allocated to these funds was created by the former Howard-Costello government. Every dollar to be spent was inherited by the Rudd government. They spent two years talking up what they would do with infrastructure, only to populate the funds totally with moneys generated by the former government, yet they do not have a skerrick of embarrassment. You would think they would be embarrassed by that.
The prospect of additional funds is doubtful, given the demand on government funds that is coming down the line. Most of the surplus has been spent and we must not see the government starting to put its fingers into other pies around the budget. The AusLink funds must not be reassigned to other projects. Watch this space—watch this government try and financially engineer some changes and do some tricky things. The test of this government will be its ability to put not Howard-Costello government dollars but Rudd government dollars into these funds. That will be the test of this government over the next one, two and three years. How many Rudd government dollars will be generated and put into these funds? That is the test.
The coalition has said it would take a very hard nosed approach to evaluating this legislation and any projects which emanate from it. We must satisfy ourselves that the hard earned surplus will be spent wisely and not as a Labor slush fund to bail out failed Labor states. Now that the government has wiped $40 billion off its forward estimates there is much greater emphasis on the need for quality investments. That is very important now that there is probably only $7 billion a year over the next two or three years in the road, rail and ports fund to fund the hundreds of billions of dollars of infrastructure projects that have come into Infrastructure Australia. It means that the quality of every decision is paramount. To get that we must have transparency and full disclosure of the results of cost-benefit analyses for projects recommended and for those rejected, including all data, assumptions and models used. It also means there must be transparency in PPP contracts.
Slush fund concerns are exacerbated because the original legislation was pulled. This legislation was in the House on the blue sheet and it was pulled because, as we understand it, the minister for finance was concerned about the minister for infrastructure requiring greater ministerial discretion. No wonder we are worried about this money being used and abused! We have also seen the Prime Minister and the Treasurer instruct the New South Wales government to abandon the $12 billion North West Metro proposal in Sydney because there were no votes in it for Labor. The government is attempting to circumvent the evaluation process by not even allowing some projects to be submitted to Infrastructure Australia. We do not even get a chance to assess some of these projects. There is grubby politics being played already and we have not even got the funds set up. No wonder we are worried about these funds being spent to bail out failed Labor states and going into some sort of slush fund for the Labor Party. We will look at every project and run a fine toothed comb over it, because we are concerned about the potential for this to be used as a slush fund.
We remain concerned that state governments may also simply remove infrastructure projects off their own books and bid for federal funds. The recent New South Wales minibudget maps out a whole lot of projects and says in black and white, ‘We will only proceed before 2012 if these are substantially funded by the Commonwealth.’ These are projects that have historically been the overwhelming responsibility of state governments. Now New South Wales is saying: ‘Forget that. None of these projects will go ahead unless they are overwhelmingly funded by the Commonwealth.’ This is why we have foreshadowed several amendments. The insertion of transparency clauses to require the public disclosure of all documentation, evaluation criteria, business cases, cost-benefit analyses, advisory board evaluation against criteria relating to the projects and reports to the finance and advisory boards. This is critical—and do not tell us that there are commercial-in-confidence issues. This is mandatory in the United States and in Scandinavian countries and it is common practice around the world. People should be able to see the basis on which decisions have been taken. We are also looking for analysis which supports any project to be made public before final decisions are taken by the Rudd government.
In their submission to the Senate committee considering these bills, Infrastructure Partnerships Australia said they ‘would like to see the funds set up to have the greatest transparency possible’. That is critical. In the amendments that will be put to the Senate, given the significance the government has rightly attached to the need to see strong productivity outcomes from any project, we will propose an amendment requiring that money only be spent on projects that have been analysed by the Productivity Commission and that commission reports be published.
The bill also precludes funds for ongoing running or maintenance costs. This is a serious deficiency, one that was corrected in AusLink projects but now has been reversed with these bills. That is why we are proposing a clause which requires that all project funding decisions ensure that there are financial commitments from all asset owners and stakeholders to meet the whole-of-life asset costs. A hospital costing half a billion dollars requires half a billion dollars of revenue each year for expenses. Those costs are ongoing and that hospital cannot function without that money.
To make a decision based on the capital costs without looking at the whole-of-life asset costs is just ridiculous and naive, and we have seen that happen already. This government has already got form. We saw it with the case of computers, about the only infrastructure thing they have done this year. They had a billion-dollar project. What they had not thought of were the costs of implementation, maintenance and ongoing costs, which are in the order of something like $2 billion. Schools all around the country have got boxes of computers lined up in corridors because they cannot use them. New South Wales is bailing out of the program. This is naivety. This is lack of experience and understanding. These things have to be dealt with properly. In every case there should be an opportunity to see that the whole-of-life asset costs have been built into the project and that there are guarantees about ongoing funding commitments, otherwise we will have empty coliseums all over this country. That is what we will end up with.
There is no recognition in this bill of the problems associated with up-front payments. As a consequence, we will seek an amendment which will prohibit the payment of up-front fees on projects. Over recent years we have seen the ridiculous situation in New South Wales where they have treated infrastructure projects as a revenue source. With the cross-city tunnel, $100 million was required to be paid up front before one sod was turned on the project by the private operators. In that one day another dollar was added to the toll before the project even started. This was seen as a revenue-raising activity. It has compromised many projects. This bill should have a provision which requires the prohibition of the payment of up-front fees for projects.
The Rudd government came to office 12 months ago saying they had a strong plan for Australia’s infrastructure, yet there has not been one decision in 12 months. They are one-third of the way through their term. This is unacceptable. They are standing here beating their chests about what they have done and what they have not done. This is symptomatic of what we are seeing right across so many government areas. They are all talk and no action.
In 12 months there has not been one project. After 12 months we get this bill, which has got serious deficiencies in transparency and in many other aspects. The legislation must be amended to ensure a totally transparent process. We cannot have a situation where hard-earned taxpayers’ money becomes a slush fund to bail out failed Labor states—and haven’t we got some of those around the country! Anything less than this would be a disaster: we must have transparency; we must have a bill which looks to the wise and sensible management of these hard-earned moneys so that we can put in place infrastructure to see jobs created and people’s welfare protected.
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