Richard Marles (Corio, Australian Labor Party) Share this | Hansard source

I rise to speak in support of the Australian Business Investment Partnership Bill 2009 and the Australian Business Investment Partnership (Consequential Amendment) Bill 2009. I do so with pride, as I stand on the side of this parliament which is acting swiftly and decisively to bolster the Australian economy against the biggest economic shock that the globe has seen since the Second World War. This measure is one of a suite of measures which have been taken by this government to bolster this economy. We have acted swiftly and decisively, and the actions that we have undertaken have been watched with commendation around the world. They stand in such stark contrast to what we see on the other side of the House and to what we have just heard from the shadow Treasurer. At a time of national crisis, when we might have expected some bipartisanship in policy across both sides of politics to deal with it, instead we see rank politicking and scaremongering from the opposition. That was in evidence in the speech that we just heard from the shadow Treasurer, as he seeks to characterise what we are doing now as the establishment of a bank. What we are actually doing is putting in place a short-term temporary measure to get this country through what is the worst global economic crisis that we have seen since the Second World War.

This bill does three things: it establishes the Australian Business Investment Partnership Ltd, it provides for an appropriation by government to the Australian Business Investment Partnership and it also provides for the ability to establish a guarantee on extra debt issued by ABIP in the future. There is a consequential amendment to the Corporations Act so that ABIP, the Australian Business Investment Partnership, is exempt from holding an Australian financial services licence. The aim of this bill is to restore confidence in Australia’s commercial property sector by providing a vehicle where finance can be made available in circumstances where there are viable commercial property projects which have had their finance withdrawn or risk their finance being withdrawn. The commercial property sector employs 150,000 Australians, and Treasury predicts that if nothing is done then the global credit crunch and the reduction in demand will put 50,000 of those jobs at risk—nearly one-third of the sector. So this is a $4 billion plan to build Australia’s future and to support Australian jobs through the creation of the Australian Business Investment Partnership.

It is a temporary measure. It is not the establishment of a bank but a temporary measure to support viable commercial projects. Foreign banks and, indeed, second tier banks in this country have played—and we hope will continue to play—a very important role in financing commercial property projects. But the sad fact is that the global economic crisis has impacted upon our economy such that foreign banks may find themselves withdrawing money from viable commercial property projects because they are seeking to repatriate that money to their home countries. This creates a tightening in conditions which will last through the rest of 2009. It is a tightening of conditions that persists for the entire economy but is particularly felt within the commercial property sector because of the highly leveraged nature of that sector. The sudden withdrawal of finance from a commercial property project risks the possibility of an investor in such a project being required to sell that property in a depressed market.

The market stability of the commercial property sector is at stake in what we are discussing here this evening and, indeed, that flows on to the stability of the property market more generally. Therefore, the value of superannuation funds is also at stake—the value of the life savings of superannuants. Making sure that we have a robust commercial property market is, in one aspect, essential to ensuring that those superannuation funds continue to maintain their value as best they possibly can in this difficult economic time. The commercial property market is fundamental to our nation’s economy, and the government, through this measure, is providing certainty and stability to a very important sector of our economy. We cannot afford to sit still and do nothing, which is what is being advocated by those on the other side of this House. We need to take extraordinary measures which befit the extraordinary time that we find ourselves in. Ian Harper, of Access Economics, said as much:

In normal times, the Government ought have no business lending to property or to anything else, but these are extraordinary times.

Aaron Gadiel, from the Urban Taskforce, said:

Without action we would lose valuable jobs, income and development that our community desperately needs. For every $1 million spent in construction, 27 jobs are created.

So the government needs to protect the interests of good Australian businesses, we need to protect the interests of this very important sector in the Australian economy and we need to ensure that investor confidence is not eroded by the uncertainty which characterises global capital markets at the moment.

Just last week, I had the privilege of opening a commercial residential building on Geelong’s waterfront. This is a building which has a significant commercial aspect. It is these kinds of buildings which may be the beneficiaries of finance from these funds going into the future. I want to tell the story of Edgewater because it gives us a snapshot of the significance of this industry to the economy of Geelong and a snapshot of the significance of this industry to our nation’s economy.

The Edgewater development was a $66 million investment that provided work for a hundred construction workers for two years as they built this property. But what is really significant is that it will also provide ongoing employment for 50 workers on a permanent basis—people employed in the retail outlets on the ground floor of this property. It is a property which has retail outlets on the ground floor and apartments on five floors above that. The Edgewater building is a very significant step forward in property development in Geelong. It brings a range of retail outlets, principally eateries and cafes, to Eastern Beach Road, which is the main thoroughfare along the Geelong waterfront. It will turn this thoroughfare into one of the great boulevards in our country and will provide life, a sense of energy and a buzz to that area which will greatly enhance the city of Geelong. With that buzz and that vibrancy come jobs, and it is a really important development which not only adds to the quality of life in Geelong but also provides employment to so many people who live in Geelong.

It is an example of the fact that, prior to the global economic recession coming into being, Geelong was experiencing something of a construction boom. Hundreds of millions of dollars of investment on an unprecedented scale was reshaping Geelong’s waterfront and central business district. Several major jobs—including, for example, the $100 million TAC headquarters—have been completed. So, too, has the Westfield shopping centre, which has been a revelation in revitalising the CBD in the Geelong area. These construction projects have been significant drivers of construction jobs and have also provided long-term jobs in Geelong beyond the construction of those buildings. The building of these buildings is, in a sense, the most obvious manifestation of vibrant economic growth within a city—certainly within Geelong.

But those involved in the construction and commercial property sector within Geelong now tell me that the sector is starting to slow dramatically. At least half-a-dozen major commercial projects that were about to get underway have been put on the backburner because of the current economic climate, and that will inevitably have an impact upon jobs—both short-term jobs in construction and ongoing jobs in running whatever is the outcome of that construction work. And what is happening in Geelong is being repeated in many regional centres and major cities across Australia.

This bill brings certainty in a sector and in a year when many things are so uncertain, when people are so nervous about what the future holds and when we are already starting to see the effects of the credit crunch not only in this sector but also in many other industries. The Australian Business Investment Partnership will work as follows. There will be an initial financing of $4 billion to ABIP, which includes a $2 billion appropriation as a result of this bill from the Commonwealth along with half a billion dollars from the four major banks. There will also then be the ability to provide a guarantee of loans of up to $26 billion in the future, creating a financing vehicle of up to $30 billion. ABIP will lend for two years—two years only—and this is to deal with the immediate issue of the global economic crisis which we are confronted with.

In financing commercial property ventures it will be limited to the refinancing of Australian commercial property assets on commercial terms when withdrawal of funding by a lender threatens the refinancing of the loan. It will focus on completed commercial property investments and partly completed projects with secured precommitments such as retail shopping centres, commercial office blocks or industrial property. It will not be able to be used to provide for the refinancing of loans from the four major banks.

ABIP will be established as a company. It will have a board of five members consisting of one from each of the four major banks and one from the government, with the government member as the chair of ABIP. It will be subject to a number of stringent requirements, such as providing for the composition of an expert board and governance requirements of the board which require that all resolutions are made unanimously with the exception of enforcement resolutions. Even enforcement resolutions can only be made with an 80 per cent majority vote which must include the government member as part of that majority. Any major bank in the loan facility must continue its participation in the loan facility, and there are other parameters which will exist around ABIP’s operations. All of this will be put in place to ensure that there is minimal risk of exposure to Australian taxpayers in the establishment of ABIP.

This is an important intervention at this time. It is important government support for a vital sector of our economy which drives employment. We cannot stand idly by as the global economic recession continues to operate upon our economy. We cannot walk down the path which is being offered by those on the other side of the House, which is essentially a path that leads nowhere, a path that is about doing nothing. Confidence in our action—confidence in government action—will breed confidence in this sector. That is what this bill is all about, and in breeding confidence in this sector we will ensure the jobs of tens of thousands of Australian workers, which is so important during this global economic crisis.

Debate (on motion by Mrs Mirabella) adjourned.

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