Michael Keenan (Stirling, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

My question is to the Prime Minister. I refer the Prime Minister to the government’s statement confirming that some of the $40 billion from the next two budget surpluses will be channelled into a COAG Reform Fund for expenditure by the states. What portion of the federal surpluses will wind up in the state slush fund? Why should the federal government surplus be used to bail out incompetent state Labor governments?

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

The government at present is engaged with the states, through the Council of Australian Governments, in a fundamental reform of Commonwealth-state financial relations. First of all, what we have done with our state colleagues is engage in a negotiation to collapse the number of specific-purpose payments from something near a hundred to something of a more manageable size. We are doing that because of the enormous compliance costs and therefore waste of taxpayers’ money which exist in servicing each of those individual, fragmented specific-purpose payments. This, of course, was not of interest to the previous government, not of interest to the previous Treasurer, because it was simply allowed to languish there, despite the enormous inefficiencies of the system.

That is one element of reform—collapse the number of specific-purpose payments and cut out the waste and duplication involved in the administration of those payments to the states. We are talking about tens of billions of dollars. The second reform is this: through national partnership payments, we intend to engage with the states and territories on specific new arrangements to encourage new areas of national economic reform in education, in health and in other areas, including Indigenous policy. This, we think, is an intelligent way to bring about a genuine program of long-term reform in the nation. That is why we will be embracing that as one of the frameworks that we will take to the next Council of Australian Governments and the one after that.

I say in passing that we are turning the Council of Australian Governments into a workhorse for the federation, making it work and making it deliver results. Hard and grafting though the negotiations may be, we are producing results on the question of the Murray-Darling, results on the question of elective surgery and results on the question of the deregulation of business overregulation—again left unattended by those opposite because they simply found it too ho hum, too boring and, frankly, too inconsequential to worry about. We do not think that any of those things are inconsequential.

As far as the payments to the three major investment funds for the future are concerned, we have made it quite clear that these are to drive future infrastructure development across Australia—new education infrastructure across Australia, for TAFEs and for universities, as well as for hospitals. As the Minister for Health and Ageing has just said, we are embarking, from the Commonwealth’s point of view, on the single largest investment fund ever seen for the nation’s public hospital system. Those opposite sought to withdraw Commonwealth activity from that area rather than add to it.

Of course, as we deliberate on the use of those funds and consider the applications that come to the government through the advisory mechanism established under Infrastructure Australia, we will be entirely mindful of what co-investment arrangements state governments may wish to embrace. If you want to do something about infrastructure, for example, and the Building Australia Fund, and you want to know what states are going to do off their own kick and what they cannot do, we will not do what our predecessors did and say, ‘So long, urban congestion is not a problem for us and we do not care.’ The member for Higgins famously said that urban water was not a problem and it was simply buck-passed to the states. We have a different view, and that is Infrastructure Australia, the Building Australia Fund, $20 billion and, on top of that, a rational, reasoned approach through the advisory mechanism set up under Infrastructure Australia to properly disburse these funds. We will therefore act on one of the great constraints in the Australian economy.

It is also important in the macroeconomic debate to take away supply-side constraints that have acted on inflation. It is the right course of action. Those opposite should think long and hard about their use of the term ‘slush fund’ in reference to an investment mechanism that will help Australians across the country dealing with challenges on their roads, dealing with challenges in their urban infrastructure, dealing with challenges in their ports and dealing with the fact that they gave this country one of the worst broadband networks in the developed world. It is as slow as the network in Slovakia but not quite as slow as the network in Slovenia. We intend to act on these things. Those opposite choose to bury their heads in the sand. That is why after 12 years of inaction on infrastructure—on investment in education infrastructure and investment in hospital infrastructure—we have a plan for the future. Those opposite have nothing but a rolling excuse for inertia.