Wednesday, 26 November 2008
Nation-Building Funds Bill 2008; Nation-Building Funds (Consequential Amendments) Bill 2008; Coag Reform Fund Bill 2008
Debate resumed from 25 November, on motion by Mr Tanner:
That this bill be now read a second time.
In the lead-up to the last election, there was a mood in the community that the vast revenue generated by the mining boom had largely been wasted by the Howard government and that that government had been given an incredible opportunity to use those revenues to provide for our future and, in particular, to provide for infrastructure that would generate future economic and social wellbeing but that that opportunity was passing us by as a nation and that government in particular. I think that mood was spot on, and it is particularly obvious now. Chris Richardson from Access Economics referred to the Howard government as engaging in:
… the usual ill-disciplined blowout of tax cuts and big spending during the boom—
having partied during the good years, we now face the hangover.
I guess that is particularly apparent now as we face both the hangover of the previous government’s policies and the impacts of the global financial crisis. It is in this context that I am proud to support the Nation-building Funds Bill 2008 and cognate bills as a pivotal part of the government’s Economic Security Strategy and an investment in Australia’s economic future.
This bill gives effect to one of the central parts of the government’s 2008-09 budget by expediting the establishment of key nation-building funds—the Building Australia Fund, the Education Investment Fund and the Health and Hospitals Fund—which will finance improvements in critical economic and social infrastructure in areas like transport, communications, higher education and health. These funds will allow the Commonwealth government, often in partnership with the states through the new COAG Reform Fund, which is another component of this package of bills, to meet the infrastructure needs of the Australian economy in areas essential to the capacity of the economy—things like transport, communications, education and training. These bills have been fast-tracked to ensure that Australians are shielded from the impacts of the global financial crisis through a historic investment in nation-building that will ensure our economic security today and into the future.
The investments being made by this government are significant. This year the government will contribute a total of $12.6 billion to the Building Australia Fund for use in areas like transport, communications, energy and water, and infrastructure, which includes proceeds from the T3 sale and the balance of the Communications Fund; it will contribute a total of $8.7 billion to the Education Investment Fund for education infrastructure, including the balance of the Higher Education Endowment Fund; and $5 billion to the Health and Hospitals Fund for health infrastructure. The government has committed to making future allocations to these funds as budget circumstances permit.
These three funds are particularly important examples of the government’s approach to nation building. They are designed to invest in infrastructure areas that stakeholders agree currently have substantial gaps. In my own electorate, you can see that places like Gawler are really busting at the seams in terms of growth. I am sure that people in that town will recognise the importance of investment in the area of transport, road and rail and in other areas that are important engines of economic development, such as education. The government has already contributed $451 million to the Northern Expressway project—a project which will make travel to and from Gawler much quicker, particularly to the city and to Port Adelaide. It will take about 13 minutes off the trip to Port Adelaide. It will take a lot of the freight traffic that is currently going down Main North Road and Heaslip Road. Projects like this will undoubtedly have a huge impact on growing Australian regions and are undoubtedly worthwhile projects.
Investment in infrastructure is not only the right economic policy for now; it is the right economic policy for the future because it stimulates investment in critical areas and immediately encourages economic activity. It means jobs for people in local areas—places like Gawler and Elizabeth. I want to mention, in particular, the NEXY project. This project is thanks to some of the contracts that have been put in place by the state government, which is managing the project. About 70 young and Indigenous people from the local area are being employed on that project. So that is 70 young people who are getting a start in civil construction. I think it is tremendously important to use these projects to start bringing people into the labour market who previously had some trouble getting into it. Most importantly, projects like these provide extended growth potential over the medium and long term. This means new industries, new innovations and new jobs into the future. That is particularly so in relation to the NEXY project. I think Gawler will expand exponentially in the future. This will be great for the local community, but it will place growing infrastructure demands on the area.
You would expect that, after being so blind to the importance of nation building while in government, those opposite would now try and make amends for their negligence. Unfortunately that is not the case. The opposition seem to want to have it both ways—on the one hand they demand transparency and, on the other, they give us a long list of projects in their electorates which they want funded. Often, there is a duality in their approach. I hope for the sake of our economy in the short and long term that they stop playing political games with these bills and pass the legislation unamended by the end of the year. The bills need to be passed so that funds can be established by 1 January 2009 and work on projects can begin as soon as possible.
For the Building Australia Fund, the government has previously indicated that Infrastructure Australia, the independent statutory council headed by Sir Rod Eddington, will produce an interim report in December on a national infrastructure priority list. That will be a first indication of which projects will be supported in the new year. This bill and the consequential amendments bill allow for interim advisory bodies for both the Education Investment Fund and the Health and Hospitals Fund to be established immediately. These interim bodies will provide a report to government in December on priorities so that immediate investment decisions can be made.
These funds represent immediate and decisive action from the Rudd government to ensure our economic security. But they do not come at the expense of transparency and accountability. These funds are not slush funds to be used to build election majorities in marginal seats; they are serious pillars of a policy committed to building Australia, and they are to be evaluated rigorously by independent advisory bodies. The government is using a number of sources to identify the long-term infrastructure needs of Australia, but the work being undertaken by Infrastructure Australia is perhaps the most important. The funds will utilise the investment framework that has been established for the Future Fund. The Future Fund Board of Guardians will manage the investments of the funds.
Consistent with the government’s Economic Security Strategy to strengthen the economy in the face of the global financial crisis, the bill permits the Minister for Finance and Deregulation, who along with the Prime Minister and the Treasurer is to be commended for foresight in preparing the government’s response to the global financial crisis, to determine a drawing rights limit for spending from the funds covering the first half of next year. This will enable work in key infrastructure areas to commence before 1 July 2009. To ensure transparency in the determination of spending, all determinations will be made in writing and tabled in the parliament.
When Donald Horne famously called Australia the ‘lucky country’, he really meant to say we were the lazy country—that we did not think hard about the future and that we did not invest much in the infrastructure we would need in the future. In that vein, the Howard government was a lucky government. It let Australia’s opportunities pass us by. It did not spend the dividends of 15 years of economic growth—largely a legacy of the Hawke and Keating years—on Australia’s long-term economic security. It simply taxed and spent. It taxed and it spent. It churned, but it did not invest. Today before the House are bills that put Australia’s Economic Security Strategy at the centre of the government’s nation-building agenda. Nation building means investing in transport, in education, in communications and in health care to ensure not just short-term economic activity but long-term economic growth. Nation building means responding quickly to the current economic crisis by increasing our economic capabilities and opportunities over the long term. Nation building means a new era of the Australian people investing in the nation’s infrastructure needs and building for the future. These funds provide for that goal. I commend the bills to the House.
The Nation-building Funds Bill 2008 and related bills establish three separate financial assets funds: the Building Australia Fund, the Education Investment Fund and the Health and Hospitals Fund, similarly structured to the existing Future Fund. It is a great privilege to follow the member for Wakefield. I can only hope that we give him a funny hat, a funny wig and a funny nose and call him Bobo, because his speech was completely and utterly funny. But I will move on to the more serious aspects of the bills. The Building Fund will have initial capital of $12.6 billion, with $7.5 billion from the 2007-08 surplus of the Howard years plus the proceeds from T3 of the Howard years and the balance of the Communications Fund—of the Howard years as well. The education fund will have $8.7 billion, with $2½ billion from the 2007-08 surplus of the Howard years and the remainder from the closed Higher Education Endowment Fund. That is from the Howard years too! The health fund will have $5 billion, which is entirely from the 2007-08 surplus. That is from the Howard years too!
Thus these funds will have $26.3 billion at their inception on 1 January 2009, of which not a single dollar has been raised by the Rudd government. If you had thrown 10c in, at least you could have said you had done something. But you just have $26.3 billion from the Howard years. By all means, Member for Wakefield, roll out and say the Howard government did nothing. They left you $26.3 billion to spend. Let us reflect on history. In 1996, when the Howard government took over and faced a $10 billion hole and a $96 billion legacy, what percentage of GDP was being spent on infrastructure? What was it? It was 2.3 per cent. When the Howard government lost the election last year, what percentage of GDP was being spent on infrastructure? It was 5.4 per cent. Member for Wakefield, you might want to get out that funny hat and that red nose after all. The government should be thankful to the previous government for their prudent financial management. I wish you would stand up and say: ‘You know what? Thanks.’ You should say thanks for the $26.3 billion that you are going to spend on infrastructure and that you have not put a single cent towards.
Other funding is from mechanisms set up by the Howard government. While the bill allows for future surpluses to be placed in the fund, we all know—and Access Economics has confirmed it—that the imprudent financial management of just 12 months of this government has made it highly unlikely that there will be any surplus funds. What about the $10.4 billion? We took on faith, on trust, that any responsible government would do a regulatory impact statement and some modelling to ensure that the desired stimulus would be achieved by the spending. You can imagine our surprise to discover none of that was done. Access Economics has made it clear that future Labor budgets will be in deficit—if the current budget is not in deficit now.
At the announcement of the budget, the Treasurer said he expected the Building Australia Fund to receive $20 billion in instalments over the next two years and the education fund to receive $11 billion in investment. There has been not a single cent from this Labor government budget. As the member for Wakefield leaves the chamber he could at least throw us 10c to put in the fund. He could at least make some contribution for Labor. Perhaps 5c, Member for Wakefield. Is that too much to ask? Obviously, we are not looking at a fund that will continue to pay dividends towards infrastructure; we are just looking at rapidly depreciating funds—money the Howard-Costello government left the Rudd government. Of course, the Rudd government will do what all Labor governments do—it will spend.
The history of these funds is telling. The coalition originally set up the Higher Education Endowment Fund so that budget surpluses achieved through sound economic management were put aside so that future generations could enjoy the benefits of improved facilities. Only the interest from the fund was to be spent, while the capital would continue to grow with additions from future surpluses. As the capital would grow so would the interest, thus increasing the pool every year. The Rudd government has completely ruined this fund. Their fund is simply a convenient location to temporarily park money so they can spend the whole lot on some short-term political purpose. A fund that was supposed to grow over time will now be whittled away in record time and with little hope of future capital injections. The case of the higher education fund is indicative of all funds. They are currently massively underfunded because the Labor government has not put in even 5c, let alone 10c.
The Communications Fund was set up to assist rural Australia with telecommunications infrastructure. This fund is also being raided. Again this fund was set up with systems in place to protect the principal, but now all moneys are clearly fair game and could go anywhere. An investment in the future of rural telecommunications is being whittled away. What is the future of rural communities under this Labor government? The Communications Fund should remain a separate entity to ensure that rural Australia is not disadvantaged.
Labor have shown how serious they are about communications through their absolute bungling of the national broadband network. In the lead-up to the election 12 months ago, Labor promised hand on heart that within six months it would have selected a tender for its proposed national broadband network and would commence construction before the end of 2008. According to my watch it is 26 November. I do not see a tender closing, I do not see a preferred supplier selected and I do not see any network being started.
Running costs for all projects funded by these funds will have to come apparently from state and territory budgets. Running costs will be high for health, research and education projects because of staffing and will be modest to high for transport, energy, communications and water projects. This is a little reminiscent of the computers for schools project. The federal government funding did not reflect the actual costs. It was a great election pitch. They stood up holding the tool of the future—a laptop—and promised that every secondary school student would have access to one. Suddenly it became every second child. Although $1 billion is being allocated, the $3 to $4 billion of on-costs are apparently not being considered, and states such as New South Wales are now pulling out of the program altogether.
This government is not levelling with the Australian public about processes and outcomes. We need greater transparency and public release of all relevant information relating to proposed and successful projects. Investments may replace previously planned state and territory public works for no net economic gain. The Governor of the Reserve Bank has said:
… it is still important for fiscal measures to pass the ‘good policy’ test.
That is stating the bleeding obvious. Of course, all measures should pass a good policy test. He also said:
Poor public policy proposals should not be accepted simply because they are presented as boosting short-term aggregate demand.
The Rudd government is going down the same path as the failed New South Wales Labor government with debt, costly white elephants and budget deficits.
This nation-building fund does not include provisions to ensure transparency so that all decisions can be shown to be worthy, to be truly beneficial and to have been investigated thoroughly by the Productivity Commission. All reports to the Minister for Finance and Deregulation from the advisory boards and the Future Fund board should be made public—that is called transparency. What is needed is full disclosure of the results of the cost-benefit analysis for those projects recommended and for those rejected, including all data, assumptions and modelling used. It also means full transparency of public-private partnership contracts. Furthermore, the government has precluded using the funds to pay for any ongoing running or maintenance costs, including staff costs, saying: ‘Where specific projects have an ongoing cost component it is intended that such funding would be sourced through other means. This could include direct funding from the budget or funding by the states or territories as part of the COAG reform agenda.’
The splitting of capital costs and ongoing maintenance costs could lead to instances where the whole-of-life costs of an asset are not properly considered when these funds are being invested. A whole-of-life asset cost means that the cost of the project is considered over its lifetime—so it includes not just capital but ongoing maintenance, replacement and service costs. A recent example where a whole-of-life asset costs approach was not undertaken is Labor’s computers in schools policy. I think they have rolled out about two or three per cent of them, which is not bad since you have been government for 33 per cent of a term.
The potential also exists for state governments to simply take infrastructure projects off their own books and bid for federal funds. Let us look at that great example of governance, the New South Wales Labor government. In its recent appalling mini-budget the Rees government listed four infrastructure priority projects that they had submitted to Infrastructure Australia and that will only proceed before 2012 if they are substantially funded by the Commonwealth. A week before the mini-budget the intention was that these projects would be 100 per cent funded by the state government. The Labor state governments are clearly looking to these slush funds to bail them out of the moribund position they have dragged themselves into.
The funds allow decisions to be made without information being made public. The Department of Finance and Deregulation claims that it would breach commercial confidentiality to do otherwise. However, it is standard practice in other countries, including North American and Scandinavian nations, for information to be disclosed and for companies to have to undertake public discussions on their bids—for example, in the United States private sector companies have to appear before Senate and House congressional committees. The issue of transparency has been further affected by the revelations reported in the Sydney Morning Herald on 6 October this year that former New South Wales Premier Morris Iemma was told not to apply for funds for the north-west metro as there were ‘no votes in it’ for federal Labor.
Concerns that these moneys could be used as a slush fund were further exacerbated by claims in the Age on 3 October that the original legislation was pulled by Minister Albanese because it gave him insufficient ministerial discretion over how the money would be allocated. I wish this government well and the nation wishes them well—the nation prays that they will do well—though it looks like they will do what every Labor government before them has done: they will spend and spend and spend, and put the nation into deficit. That is not the intent of this legislation and it is not the direction that the government should be going in.
I rise to speak in support of the Nation-building Funds Bill 2008 and cognate bills. This legislation establishes Labor’s three nation-building funds: the Building Australia Fund, the Education Investment Fund and the Health and Hospitals Fund. This signals an entirely new approach to the way in which we invest in infrastructure in this country—an approach that completely moves us away from the ad hoc approach that was taken by the previous government, the lack of investment by the previous government and the politicisation of many of the decisions that were made in terms of infrastructure investment under the previous government.
There is absolutely no doubt that our infrastructure needs are substantial—whether it is our roads and ports or capital work needed to redevelop our universities or hospitals—and well beyond the means of one level of government. It seems extraordinary when you look at some of the investment decisions over the past 11 years that national infrastructure, the infrastructure that helps develop our productivity, that removes capacity constraints in our economy, was not made an absolute priority by the previous government particularly given the economic circumstances we find ourselves in now. Always the question should be of governments: when we are in good economic times what are we doing to use that money generated in the economy to build for when we are not in good economic times, and that is where we are currently.
Unfortunately this government has been left with the task of investing significantly in infrastructure at a time when the economy is starting to slow. But it is something that we are absolutely committed to getting right and we are absolutely committed to making sure that those decisions we made are in the best interest of the nation, not in the best interest of particular political seats.
Labor has always been a nation-building party and this bill builds well and truly on that tradition. We have chosen to do all we can to invest in areas of critical need, not only to make up for the underinvestment of the previous government but also to tackle the risks associated with the current global uncertainty that we are experiencing. If we are to prosper, we must act now. The Australian government is bringing about real change to the way we look at investing in our nation’s future. This government is committed to responsible economic management and we are committed to smart investment in those areas of the economy that will assist us to grow, investment that builds on this nation’s prosperity.
Over recent months we have seen some uncertainty in the global economy and much of this uncertainty has been stemming from the US subprime market. We are in a strong position to tackle the challenges that come with global economic uncertainty, yet we do require strong economic management to assist us in our challenge. Only last month the Rudd government announced the $10.4 billion Economic Security Strategy, and in my electorate alone as of 8 December we will be delivering relief to some 39,000 people. That is real and immediate support to people who need it most, including pensioners, carers and families.
But we also announced that we intended, as another part of our Economic Security Strategy, to bring forward our nation-building agenda, an agenda we promised and committed to in the lead-up to the last election and a promise that we are delivering on now in this bill. The first of those strategies in bringing forward our nation-building agenda is the Building Australia Fund. This year the government will contribute some $12.6 billion to the Building Australia Fund. The proceeds from the sale of Telstra and the balance of the Communications Fund will be invested in the Building Australia Fund. This funding will be spent on critical economic infrastructure. Currently there is a shortfall in critical economic infrastructure. The Building Australia Fund will finance infrastructure such as roads, rail, ports and broadband. The establishment of this fund is essential if we are to be serious about raising our nation’s productivity capacity, if we are serious about growing industry, and if we are serious about growing our economy.
Earlier this year I spoke in support of the Infrastructure Australia Bill, and I want to commend the work that Infrastructure Australia is doing. The audit that it is undertaking currently into infrastructure across the country is due with the government very shortly—I think some time next week—and it will really signal a very new approach to the way in which government decisions are taken about investing in infrastructure across the country. The Infrastructure Australia Bill established Infrastructure Australia and, as I said, it is advising government on nationally significant infrastructure priorities. It is taking a very sophisticated cost-benefit approach, a nation-building approach, to investments in infrastructure, something that was sorely lacking under the previous government.
The Building Australia Fund that is established in this legislation is subject to rigorous evaluation by Infrastructure Australia. The Building Australia Fund will receive project recommendations from Infrastructure Australia and, as I said, next week Infrastructure Australia will produce its audit of the national infrastructure priority list, something that I am sure has been an extremely difficult task. It is the first time in this country’s history that that has actually been done. We will then be in a situation to assess the infrastructure needs right across the country and it will allow government to make decisions about investing in infrastructure that will benefit the nation as a whole and will help grow the economy as a whole. We now have a situation where the Commonwealth government of Australia is investing in building the nation and building the nation’s prosperity.
The Australian Labor Party has always been a nation-building party. During the election we made a commitment to deliver a national broadband network, which involves an investment by the federal government of some $4.7 billion. It is an absolutely massive undertaking, be in no doubt about that. To build a national broadband network, a fibre-to-the-node network, is a huge project. I would certainly see it as equivalent to, if not even larger than, the building of the Snowy hydro. It is a massive undertaking and it is an extremely complicated thing to do. It is something that is very important that we get right. I understand that there is some impatience in communities about lack of access to broadband, and that has been because of the complete failure of the previous government to invest in significant broadband developments. What they were proposing was a patchy, ad hoc wireless network—totally inadequate technology for regional Australia—that would not have been able to handle what is proposed under this government’s proposal, neither the speeds of broadband nor the coverage of broadband to 98 per cent of Australian households, with the remaining two per cent to get up to equivalent services. It is a massive undertaking and one I feel will be one of the most significant nation-building and infrastructure investments that this country makes. I understand the opposition are playing lots of politics with this at the moment around the timing, but I caution them by saying this is probably one of the largest infrastructure projects that we have ever seen in this country and it is extremely important that the government gets this absolutely right. It will set us up well and truly for not only better broadband speeds but also increasing the capacity of our capital cities and regional areas into the future. It is a very important project.
The second fund that is established under this legislation is the Education Investment Fund. The Education Investment Fund is a major part of our commitment to an education revolution. Since being elected to government, one of our primary focuses has been on the importance of delivering a first-class education system. The buildings in which our education is undertaken are extremely important in terms of growing the sector and growing people’s access to education and quality education. This fund will go a long way to providing finance for capital investment in both higher education and vocational education and training. The federal government’s initial contribution to this fund is $8.7 billion and the funding will go towards investing in local education infrastructure. The fund will incorporate the balance of the Higher Education Endowment Fund along with proceeds from the 2007-08 surplus. In line with all major funds established by the government, we are committed to transparency and we are committed to rigorous evaluation with regard to funding for special projects. That is why the investment in our nation’s future education and training is being assessed by an independent advisory board.
As stated earlier, since being elected to government, the nation has seen the development of a global financial crisis. This crisis cannot be ignored. That is why the Prime Minister, along with the Minister for Infrastructure, Transport, Regional Development and Local Government, Anthony Albanese, announced that the Rudd government would fast-track its nation-building agenda. The government has invited 14 universities to submit proposals to the second stage of the 2009 funding round for strategic investment in capital and research facilities. Those capital investments and particularly the investments into research facilities really will generate lots of benefits to the economy overall. The second stage has been brought forward in line with the federal government’s announcement to fast-track our nation-building agenda.
In my electorate of Ballarat, I am pleased to support the University of Ballarat’s funding bid under the Higher Education Endowment Fund 2009 funding round. The University of Ballarat has met with the Higher Education Endowment Fund board to discuss its application. It has made it through to the second round of funding. The University of Ballarat’s proposed innovation and enterprise centre is a great project and is a strong investment not only for my electorate but also for Australia. The university proposes to build a centre that comprises an IT professional practice facility, an innovation and research hub and a major IBM IT services centre. It builds on the university’s strong partnership with IBM and I think it really will generate not just jobs and income into the local economy, but the research that is undertaken within that facility will generate much growth in the Australian economy overall.
The University of Ballarat Technology Park has gone from strength to strength over the past decade, and I certainly hope that the University of Ballarat can secure endowment funding so that it can continue to grow and prosper and be at the centre of IT services in this country. As I said, I strongly support this project as I believe it is a perfect example of the investment required to build our nation. I commend the University of Ballarat on their efforts to once again secure support from both industry and government in their bid.
From 2009 the Higher Education Endowment Fund will become part of the Education Investment Fund. Under our government’s arrangements, the level of funds available for capital investment in higher education and vocational education and training is greater than under the previous arrangements for the Higher Education Endowment Fund. On top of the Education Investment Fund, the federal government has also delivered $500 million for universities through the Better Universities Renewal Fund. The University of Ballarat has also received a grant of approximately $2.9 million for capital funding under this program.
I am pleased to be part of a government that understands the need for investment in education and understands what happened particularly to regional universities under the previous government, and I look forward—I hope I can look forward—to a positive announcement in relation to the University of Ballarat’s bid. Australia needs a government that is supportive of significant investment in education infrastructure to help drive productive growth and reduce capacity constraints.
The third fund that this legislation establishes is the Health and Hospitals Fund. The federal government will contribute $5 billion to the Health and Hospitals Fund. The government is serious about building a stronger health system for all Australians. Since being elected in 2001, one of the most pressing issues that people contact my office about is access to top-quality health care. Residents do not care who funds health care, whether it be federal, state or territory governments; what they are interested in is being able to access that care when they need it. Residents want all levels of government to work together towards the common goal of improving services for all Australians, and that is what the government is doing.
I support the establishment of the Health and Hospitals Fund because it supports strategic investment in our health system. The establishment of this fund will see capital investment in health services, including renewal and refurbishment of hospitals. Again, given what has happened across the country, it is very difficult for one level of government alone to fund all of the capital needs of hospitals across the country and it is very good to see the Commonwealth government, through the Health and Hospitals Fund, stepping up to the plate in this regard as well. The fund will see investment in medical technology equipment and significant medical research facilities. Never before has there been such a significant investment in health infrastructure.
Like the Building Australia Fund and the Education Investment Fund, spending from the Health and Hospitals Fund will also be subject to rigorous evaluation criteria. The criteria will be assessed by the Health and Hospitals Fund Advisory Board—again, a board that is independent of the political process, independent of government. It was great to see only last week the Minister for Health and Ageing, Nicola Roxon, announce the appointment of Mr Bill Ferris AC as the chair of the new Health and Hospitals Fund Advisory Board. He is someone who is very well respected in this country.
If we as a government are to be serious about the health of the Australian people then as a government we need to provide substantial funding for projects that provide significant benefits. And that is what we are attempting to do.
The infrastructure investment program overall will help protect Australians from the impact of the global financial crisis. These three funds are part of the government’s agenda to build this nation. This is an agenda that was put to one side under the previous government. We have an infrastructure investment program to tackle the needs of roads, rail, ports, utilities, high-speed broadband, education, and our health and hospitals system. We are serious about tackling this task head-on. The government has brought forward infrastructure spending because, as a result of the uncertainty that exists in the international economy, a need arises for Australia to be ready to handle these challenges.
The Prime Minister is working with the ministers for infrastructure, communications, health, education and innovation to bring forward interim reports on infrastructure projects by early December 2008. This will allow for work to begin next year, bringing a much-needed boost into the Australian economy. By bringing forward its nation-building agenda, the government can implement projects but still have rigorous evaluation in place. Our investment is targeted at boosting productivity to sustain growth both now and into the future, and is subject to rigorous evaluation and transparency. Our investment is in line with what the Australian people expected from the nation’s government—that is, the leadership being shown by the Prime Minister.
This debate also encompasses the COAG Reform Fund Bill 2008 and I just want to speak very briefly on that because, again, whilst it sounds quite a dry debate, it actually signals one of the most significant reforms to Commonwealth-state funding arrangements that we have seen, certainly in the last decade, and will have significant impact on the way in which Commonwealth-state relations work.
This bill will establish the COAG Reform Fund. When funds are used to finance capital projects with the states and territories, they will be distributed from the nation-building funds. These funds will be distributed through a new Council of Australian Governments Reform Fund. The government is committed to harmonising relationships between all levels of government—this is clearly reflected in last week’s Australian Council of Local Government’s meeting and subsequent announcement of the government’s $300 million Regional and Local Community Infrastructure Fund.
I look forward to working with my local communities, the City of Ballarat, Moorabool Shire, Hepburn Shire and Golden Plains Shire over the coming weeks to identify their priority projects to be funded through the community infrastructure fund. During the last election, the government made a commitment to the Australian people to end the blame game between the Commonwealth and the states and territories. We promised that we would work to revolutionise the way our Federation is structured. We said we would work with the states and territories to build positive financial relationships. During our first year in office, we have already taken steps to improve relationships between the Commonwealth and the states and territories. The COAG Reform Fund established under this bill is another step in this process.
The fund will develop a modern system of financial relations between the federal and state governments. It will complement the nation-building funds that I have already mentioned. The COAG Reform Fund will disburse funding provided in future federal budgets to the states and territories for areas of specific reform. It will channel funds from the Building Australia Fund, Health and Hospitals Fund and the Education Investment Fund, where funds are used to finance projects by the states, and may receive funding through special appropriation in the form of National Partnership payments. As I said, whilst not many people may be aware of it, it will significantly revolutionise the way in which Commonwealth-state finances work in this country.
Through initiatives including the Regional and Local Community Infrastructure Fund, the government’s commitment to bring forward its nation-building agenda and funding distribution streams such as the COAG Reform Fund, we really are working to improve relationships with all levels of government and helping to grow our economy. We are restructuring the relationship between levels of government to ensure that the Australian people get better value for their money and the support they need from federal government. The Australian people deserve better quality services and, certainly, the COAG Reform Fund will deliver some efficiencies between the financial arrangements of the Commonwealth and states. The COAG Reform Fund will also play an important part in building on the capacity of this economy—something that is desperately needed.
Under the leadership of the previous government, this country lacked the investment needed in a number of critical infrastructure projects. Not only did it lack the investment needed in those projects, it lacked the capacity to actually determine which projects were in the best interests of the nation, in the best interests of growing the economy. Those decisions were not taken on a good sound cost-benefit analysis and they were not taken, I think, in the best interests of the nation as a whole.
The Rudd government have made a commitment to the Australian people to deliver on our election promises and also made a commitment to deal with the long-term challenges ahead. I am very proud to be part of a government that delivers on the promises that it made in the election. No longer do we have a government of core and non-core promises. We are trying to rebuild the trust that the Australian people should have in their Australian parliament.
I support these bills because they reflect the government’s commitment to invest in the short-, medium- and long-term challenges that are faced by this nation, whether they be in health, in education or in building our national infrastructure. I commend these bills to the chamber.
It is a pleasure to follow the member for Ballarat as the member represents a very beautiful regional centre. I have had the great pleasure to visit Ballarat on many occasions and have actually participated with the Tan Clan. This was set up by running legend Richard Tan. For those who have not heard of the man—he is a 70-year-old fellow who runs a running group that 70 to 100 people turn up to three times a week. They run around Lake Wendouree and other parts of Ballarat. It is a magnificent part of Ballarat that we get to visit at six o’clock in the morning—all of which has nothing to do with the Nation-building Funds Bill 2008 and related bills.
I must say at the outset that it is a pity that we cannot seal our roads with paper or build bridges with the tower of reports that have been undertaken by the current government. I have only been in this place for a short time and I have heard a lot about nation building. There has been a lot of talk and precious little action at this stage. Now we are finally seeing what the government has to offer and I must say it is somewhat disappointing. There has been a lot of hype and rhetoric, but we are finding out that the Australian people are going to be short-changed because the money is simply not there.
The government announced in the 2008 budget that there would be $41 billion in the funds by July 2009 but there is only $26.3 billion to be allocated at the fund’s inception on 1 January, 2009. If anyone believes there will be another $15 billion in the funds by 1 July, come and see me about a bridge I am happy to sell them in Sydney. I should not joke about selling assets in Sydney; perhaps the New South Wales government will take me seriously!
I would like to take up some of the points made by Infrastructure Partnerships Australia in its submission to the Senate Standing Committee on Economics. IPA commented regarding future budget allocations:
The dwindling revenues to the Federal Budget are of concern, given the stipulation that future allocations (beyond the initial contribution) will be made “as Budget circumstances permit”.
The IPA shares my concern that there may not be a lot more money on the way for any of these funds. The IPA also commented:
We hope that these funds prove to be long-term investment vehicles, not ones which will fall away after the initial endowment from the 2007/2008 Budget surplus.
These are all good points. The funding must continue beyond the electoral cycle and, if we are fair dinkum about nation building, this must be above party politics.
There have been a lot of accusations from those opposite during the debate on this bill. I have heard accusations of rorts of previous programs. The Regional Partnerships initiative has been bandied around a great deal. Obviously the speechwriters have dished up the usual key lines and rhetoric, and parrots in the government have been reciting them word for word. But they should be careful about repeating some of these accusations, like those which have been put forward in this place by the Minister for Infrastructure, Transport, Regional Development and Local Government. The minister does tend to get a little bit carried away on occasion. A couple of weeks ago he spoke on Regional Partnerships and, referring to National Party ministers, he said:
They were consistent in their inaction, in their drift, in their nepotism and in the corrupt way they handled the Regional Partnerships program.
That is what he said. The minister has accused former National Party ministers of being corrupt. I believe that is an outrageous slur that does not reflect the quality of debate in this House. I really think it is a bridge too far, but it is perhaps the only bridge the minister has built in the past 12 months.
At least we did have a regional development program. At least the former government actually invested in projects on the ground in regional areas and not in a tower of reports and reviews. All we have heard from this government in the past 12 months is talk about what it is going to do one day with the money left to it by the former coalition government. The minister cannot have it both ways. He has to make up his mind on this issue. On the one hand, he constantly attacks the Nationals as being a spent force and for delivering nothing for regional areas. That is the substance of his almost daily attacks in this place. But, on the other hand, he accuses the Nationals of pork barrelling and delivering projects to country areas that should never have been approved. He cannot have it both ways. We either delivered or we did not. That is duplicity and hypocrisy on a grand scale, but I have become used to it in my short time in this place. There is a lot of spin and not a hell of a lot of substance in some of the material put before us.
Only Labor could come up with the somewhat ambitiously named Nation-building Funds Bill, which is before the House. There is no problem with hiding your light behind a bushel here. They are very good at coming up with these grand names. Even the Minister for Finance and Deregulation described it in his second reading speech as:
… an infrastructure program of historical proportions.
Nation-building—doesn’t it sound grand? You would think that a minister would actually build something before he started bragging and crowing about achievements of historic proportions.
That has not stopped the Minister for Infrastructure, Transport, Regional Development and Local Government either. In one of my first weeks in this place, the minister attempted to take me to task for writing to him to seek an update on a $140 million project to duplicate the Princes Highway east of Traralgon. The minister sought on that occasion to ridicule me for writing on behalf of the people of Gippsland to seek details on the project. The problem was that it was the government’s own promise. The Rudd government had promised the $140 million, and it was notably absent in the budget papers. As it turned out, there was $500,000 there for planning works. So the people of Gippsland are still waiting for another $139,500,000. I look forward to the day when the minister stops playing games with that funding and delivers on that promise.
Those opposite seem to take offence whenever the opposition asks questions about policy decisions. I believe it is only reasonable for the opposition to ask such questions. While the changing economic circumstances around the world warrant a quick response, it is not in the interests of the nation for the opposition to be mute on this occasion. It is reasonable to offer bipartisan support while at the same time reserving the right to ask serious questions about the various packages developed by the government. The three infrastructure funds dealt with under the bill deserve to be closely scrutinised. These are uncertain economic times and we have entered uncharted waters. It is only reasonable for the opposition to keep the government up to the mark, particularly when half the forecast budget surplus is about to be spent under the economic stimulus package and we find the forecast for the budget surplus has been slashed to about $5 billion. That is a remarkable turnaround in the past 12 months.
Plenty of members have already mentioned this, but it is worth repeating: the previous government worked very hard to retire the $96 billion of debt and create the economic conditions which allowed our nation to prosper. The funds being allocated to these three funds have come about through good economic management by the previous government. I believe in giving credit where credit is due, and these infrastructure funds have been achieved through the work of the previous government. We are yet to see whether the current government can deliver the money it has promised from 1 July next year.
I have already voiced the IPA’s concerns and I echo them again today. The previous government did invest in infrastructure and it did put money away for the rainy days we are now encountering, with multiple budget surpluses delivered by the member for Higgins when Treasurer. Budget surpluses and low unemployment became so normal that I fear some of us took them for granted. All of that is about to change. We are seeing forecast growth in unemployment, and I fear that budget surpluses have been consigned to history. The Minister for Finance and Deregulation might not want to say it, but the way things are travelling the budget may already be in deficit.
I note the bills establish three separate financial assets funds: the Building Australia Fund, the Education Investment Fund and the Health and Hospitals Fund. No-one in this parliament would dispute the need to invest in improved infrastructure in all three areas. It is an ongoing and constant challenge for governments to address. It is inevitable that the infrastructure needs of our respective communities will never be fully met. We will always be looking for ways to improve or upgrade the facilities in our communities. But it is ridiculous for the current government to constantly claim that the previous coalition government did nothing for 12 years. I will not bore the House by running through a long list of projects that were achieved in Gippsland by the previous member, Peter McGauran, but I will make the point that these included many important infrastructure projects—such as the redevelopment of the East Sale RAAF base, the Monash rural medical school and about $30 million in Roads to Recovery projects, to name a few.
There is always going to be more to be done, which brings me to the current government’s plans. I have already mentioned the Princes Highway upgrade. That is a project that has bipartisan support, and I urge the government to get on with the job. When governments invest in projects such as road duplication, it improves road safety. I have been a very strong campaigner on behalf of my constituents to say that, if you fix country roads, you will save country lives. This is not just about duplicating the highway between Traralgon and Sale. I call on the government to work with the state government to look at improving the Princes Highway right throughout the Gippsland electorate. The previous government did undertake road improvements through the Auslink and Roads to Recovery programs and the Victorian government has invested through VicRoads in a number of road-shouldering projects east of Orbost to the New South Wales border. But there is always more work to be done. As previous studies have found, if you invest in improving the road safety environment you will achieve a better outcome than if you use enforcement measures and improved driver behaviour alone. There is huge potential to reduce the road toll in regional areas by investing in a safer road environment.
Infrastructure spending in regional areas links into something that I believe is a central theme for the future of my community—that is, providing the tools to allow businesses to prosper and provide opportunities for young people. We need to be innovative and we need to be prepared to look outside the cities with an active policy of decentralisation. Melbourne is bursting at the seams. It does not seem to have enough water, traffic congestion is chaotic and the public transport system is disastrous. I believe the Bracks and Brumby governments have a lot to answer for. But we should not be rewarding that ineptitude with a bailout from the federal government focused only on metropolitan Melbourne’s needs. Rather than support piping water to Melbourne with infrastructure projects like the reviled north-south pipeline, which is being pushed by Labor at both the state and federal levels and which is going to suck the life out of the Goulburn Valley region, we should support investment in infrastructure to help regional areas to prosper in the future. There are compelling social, economic and environmental arguments to support my view that ending the urban sprawl and supporting regional development are positive policy positions for the future.
At a social level one of the greatest challenges we in Gippsland face is to stop exporting all of our young people. We need to invest in infrastructure in health, education and skills training to provide career opportunities so young people can either remain in our region in the first place or return after they have had their chance to tour the world and gain the experience that they desire. At a purely economic level, if we train our own young people they are more likely to help us overcome the skills shortages. There is a proven link between young people being educated in a country environment and having the opportunity to learn skills and their returning there in the future. We have enormous skills shortages in Gippsland in the areas of health, engineering and a range of other professions.
I do not believe in criticism for the sake of it, and the government has taken some positive steps in its response to the global financial situation. The government’s role, however, does not stop with the $10.4 billion economic stimulus package—which I note for the record will benefit Gippslanders by more than $60 million in the period after 8 December. There is a criticism that, if this turns into a one-off spending spree, we will have no surplus to spend in the future and we may have wasted the opportunity. But, unlike some others, I have confidence that the economic stimulus package can work and I hope that the majority of people use it wisely. We do not want to see a leap in pokies revenue the day after the bonus payments arrive. I have faith that the majority of people will use the funds wisely. I fully support the payments to the very needy pensioners, carers and people with disabilities, but I wonder whether we could have done it better for family tax benefit part A recipients. It might have been wise to have provided families who are going to receive a lump sum of $4,000 or $5,000 with some assistance in financial management and to have ensured that the funding is used in a productive way. That is perhaps a weakness in the policy, but given the short time frames I understand the urgency of the situation.
Beyond those one-off payments, though, there needs to be a commitment to infrastructure investment, and that is where I hope Gippsland will receive a fair share of the resources which are going to be allocated under the Building Australia Fund, the Education Investment Fund and the Health and Hospitals Fund. I acknowledge that Gippsland councils did particularly well out of the $300 million program announced last week after the local government summit. The Wellington, Latrobe and East Gippsland shires all received in excess of $1 million, and I am happy to report that there are many projects ready to roll in Gippsland as a result of that.
That is partly because of the complete absence of regional development initiatives over the past 12 months. There was a vacuum that was left after the disbanding of the Regional Partnerships program, so we are playing catch-up. I would like to see a longer term commitment to this type of program, where local government get a guarantee of funding of that sort of magnitude for two, three or four years into the future. They can then plan with some level of certainty for these smaller scale infrastructure projects which they can get going perhaps better than any other level of government.
Investing in regional infrastructure will obviously help local communities to prosper in the future, and investing in these longer term regional development projects is a way to stimulate economic activity in the longer term, and the construction phase will obviously assist with the unemployment forecast, which we all fear. The infrastructure itself should help improve productivity in the longer term. The previous government, as I said, did invest in regional infrastructure, it did support local communities to help create sustainable jobs and it did deliver results, but there is always going to be more work to be done.
As I cast my eye around Gippsland, there are a range of projects that I would encourage the federal government to consider very seriously in the next 12 months. The Sale indoor regional sports complex has a very good mix of an education outcome and a healthy lifestyle outcome. The Minister for Sport visited Gippsland during the Gippsland by-election process and I think she accepted the merits of the proposal. There is a $5 million shortfall in the funding required by Wellington shire. There is a commitment from the Wellington shire and the state government to participate in this project, which will develop a regional indoor sports centre as well as relocating the outdoor netball courts. I believe it is a project that the minister should look favourably upon in the future.
Similarly, in terms of major infrastructure development, the Building Australia Fund talks about investing in water infrastructure such as the Macalister irrigation district 2030 plan, which I have mentioned before in the House. Again, the Minister for Agriculture, Fisheries and Forestry visited the region during the Gippsland by-election. We did get a lot of visitors during the Gippsland by-election, funnily enough. We had several ministers visit, and they were very keen on the Gippsland region and I appreciate the interest they have shown. I look forward to that interest turning into outcomes in terms of these infrastructure investments.
The dairy industry is a major player in the regional economy of Gippsland. The Macalister irrigation district is faced with ageing irrigation infrastructure. These real nation-building opportunities exist in the form of investments to upgrade the irrigation infrastructure, which would deliver long-term economic and environmental benefits to the Gippsland region. The irrigators that I have spoken to in the MID are very keen to pursue this option with the government in the future. There will be a mix of funding, I would have thought, from local sources and the federal government, with an opportunity to improve water security for the dairy industry and at the same time provide additional environmental flows for local streams. Of course, the benefits would flow through to the Gippsland Lakes, which is another topic that has been the subject of much debate in the Gippsland region.
As I said, there is always going to be a need for further investment in regional infrastructure, and I will be working with my community to ensure that Gippsland receives a fair share of the resources which are going to be allocated from these funds. The Lakes Entrance health precinct is one infrastructure project that also deserves consideration. I have written to the minister responsible in relation to that. It is a much needed expansion and redevelopment of the facilities at the Jemmeson Street site. The Gippsland Lakes Community Health staff and management do an outstanding job providing services from Sale to the New South Wales border. The plans are well advanced. There is about $1.2 million of federal funding sought and I encourage the minister to look upon that project favourably in the future.
It is a similar situation in Yarram, where a plan for a childcare centre had bipartisan support during the 2007 election. It ticks all the right boxes in being very much a community hub. It will allow professional women in Yarram area in particular to participate more in the workforce. At the moment, they have no option to access professional care. It will also help in the future to attract skilled workers to the region, because people expect to be able to put their children into care for some amount of time during the working week. I urge the government to get on board with this project—again, it does have support at state and local levels—and to work in partnership with these other levels of government to deliver that childcare centre as part of its response to the global financial situation.
I have also sought both state and federal government support for some infrastructure development in natural gas reticulation. Providing a cheaper and more efficient energy source to businesses and residents in the Gippsland region is a priority issue for me and for other members at state level. We have the quite bizarre situation where the Gippsland Basin produces an enormous amount of oil and natural gas, and I believe that more of the benefits should be accruing locally. We have had 40-odd years of natural gas and oil development at Bass Strait, and many of our towns, such as Longford, Yarram, Lakes Entrance and Orbost, are yet to benefit directly from natural gas reticulation. We have been able to build a pipeline through Gippsland to Cooma, Canberra and Sydney, but many towns along the route have not had the opportunity to access that natural gas. It is an infrastructure project that I have written to the state and federal governments about, and I encourage the government to consider it as part of its nation-building agenda.
I refer to one specific aspect of the legislation which deals with the Communications Fund established by the previous government. Under this legislation, that fund will be axed. I will be supporting an amendment to preserve that fund in the future. I fear that the Rudd government is stealing money that was set aside for the benefit of rural and regional Australians. These were some of the proceeds from the sale of Telstra, and the fund was set up to permanently assist in the rollout of future technologies to help modernise communications in regional areas for years to come. If the government is genuine about its claims for supporting regional communities, it will abandon its plan to take this money out of the Communications Fund and absorb it into the Building Australia fund. I support the investment in infrastructure, but I fear that Labor’s track record in economic management is about to come back to haunt us. I have serious doubts about the independence of these funds, and it remains to be seen whether the government will actually deliver the fair, open, equitable and non-party political infrastructure fund that it claims to present to us here today.
The government did state in the May budget that an infrastructure priority list would be considered by COAG, which indicated to us that the states and territories would have some say over which projects get the nod. I take up the point made by the Leader of the Nationals in the House: he referred to a spokesman from the minister’s office this week indicating that it would not be a COAG decision; the priorities would be determined by the government itself. It is an economic reality that the wish list will be much longer and will cost a lot more than will be covered by the funds to be allocated to them, so priorities will need to be set. I have little confidence that each region will get a fair hearing. I will be fighting to make sure that regional communities, including Gippsland, receive their fair share, and the opposition will be working to ensure that these funds do not turn into an election slush fund for Labor’s marginal seats.
I close my contribution to this debate with another reference to the Infrastructure Partnerships Australia submission:
Infrastructure investments must be determined and managed through a thorough, consistent and rigorous process to ensure that funds are invested productively. It is important that these nation-building funding initiatives are invested wisely, applying objective analysis and assessment to the project selection process.
Further, from the IPA:
We hope the regulations will provide further detail on what practical mechanisms, processes and checks and balances are required to be applied for each Fund to ensure responsible, consistent and transparent decision-making and funding allocation to the most critical, needed and worthwhile projects across transport, communications, energy, water, education and health sectors.
We all agree that investment in both large- and small-scale infrastructure is critical, and I urge the government to live up to its own rhetoric in the practical application of these funds.
I have listened to this debate since it started earlier this morning, and the contributions have in general been both insightful and pretty solid, but I cannot miss the fact that, over and over, those opposite tend to view the Building Australia Fund merely as a pork barrel. They view it that way because that is how those opposite governed. I remind the member for Gippsland of an aside which he made in his own re-election campaign, which at the time might well have been a joke but which says something about a political culture. It was at a breakfast in the Gippsland campaign where the candidate then said, ‘I love the smell of pork in the morning.’
The importance of that is that, from the point of view of good public administration and good public policy, this government does try to get it right. This government has as its focus getting good public policy outcomes. It is why the member was able to reflect on the decisions of last week in a way that is positive. It is unambiguously the case that, in allocating $250 million of taxpayer money to local government, the indicators that were used were population, growth and the financial assistance grants equations used by state governments—the most transparent process which had been used for giving such funds in the last 13 years. Why? Because when funding was allocated by the previous government it was done overwhelmingly on a political basis. Not exclusively—there were some very good programs funded by the former government under the Regional Partnerships program. But, having said that, there became a political cast that was set on that fund.
The Nation-building Funds Bill 2008 establishes three new nation-building funds, the Building Australia Fund, the Health and Hospitals Fund and the Education Investment Fund. On 14 October 2008 the Prime Minister announced that the government is fast-tracking the implementation of its nation-building funds as part of its Economic Security Strategy. The government is committed to this major new infrastructure investment program allocating funds for transport, communications, energy, water, education and health. This year the government will contribute a total of $12.6 billion to the Building Australia Fund for transport, communications, energy and water infrastructure, including, as the member opposite said, the proceeds from the T3 sale and the balance of the Communications Fund. A total of $8.7 billion will be allocated to the Education Investment Fund for education infrastructure, including the balance of the Higher Education Endowment Fund, and $5 billion will be allocated to the Health and Hospitals Fund for health infrastructure. The government has committed to making future allocations to these funds as budget circumstances permit.
We have said there will be a rigorous evaluation of projects. Spending from the funds on specific projects will be subject to rigorous evaluation by independent advisory bodies. In view of the government’s commitment to strengthening the Australian economy in the face of the global financial crisis, this bill and the Nation-building Funds (Consequential Amendments) Bill 2008 will allow for interim advisory bodies for the Education Investment Fund and the Health and Hospitals Fund to be established as soon as possible. The advisory bodies will assess projects against evaluation criteria which are being developed by portfolio ministers. Interim evaluation criteria are also being developed to allow work to commence as soon as possible.
Time is critical because the global economic crisis, the credit crunch, is getting closer and closer to our shores. In my own patch in Western Australia I note that workers are already being asked to take early Christmas leave and untaken annual leave and that companies are beginning to stop employment of new staff. All of these are dark indicators of a tough year in 2009, and that is why a start as soon as possible on the infrastructure spending is important for the long-term health of communities. It is important for establishing industrial capacity that can be maintained rather than industrial capacity that will be damaged by the short-term impacts of the global credit crunch.
The Building Australia Fund will provide crucial funds for investment in critical economic infrastructure and transport, communications, water and energy. Examples, of course, include roads, rail, urban transport, port facilities, irrigation and broadband. The government has already set aside $12.6 billion as the initial payment into this fund. Spending proposals will be subject to rigorous evaluation by Infrastructure Australia. The national broadband network will be subject to government consideration.
Infrastructure Australia is an independent advisory body, with representatives from all levels of government and the private sector. The government has asked Infrastructure Australia to bring forward its interim priority list to December 2008, three months earlier than originally planned. Members will recall that at the COAG meeting in December 2007 originally the Infrastructure Australia time line was for a national audit to commence in the first quarter of 2008 and be carried out through the course of 2008, with a report to COAG in the fourth quarter of 2008 and decisions to be made in the late first quarter or early second quarter of 2009.
The acceleration is deliberate, the acceleration is significant and the acceleration is taking place in order to best counter in an orderly and substantial way the expected impact of the global economic crisis. We will be allowing funding for some projects to commence in 2008. The fast-tracking of infrastructure projects is part of the government’s Economic Security Strategy. We must boost Australia’s economic capacity through nation building. This has been a central tenet of Labor governments over the 117 years of the Australian Labor Party.
Projects will be assessed by Infrastructure Australia against such factors as their ability to increase Australia’s productivity, contribute to economic growth, build our global competitiveness, develop our cities and regions, and reduce greenhouse gas emissions and carbon pollution. Fixing our roads and rail networks, unclogging our ports, making our major cities work better and connecting Australians to high-speed broadband are too important to be delayed by partisan politics. In 2007 the Bureau of Infrastructure, Transport and Regional Economics released a report estimating that urban congestion alone cost Australian families and businesses approximately $9.4 billion in 2005. Furthermore, the same report indicated that, in the absence of additional investment or significant changes in the cost of travel, the cost of urban traffic congestion would increase to around $20 billion by 2020.
The costs created for the Australian community through inadequate infrastructure investment and through congestion are significant. Bottlenecks have been a common sight in Australia’s mining sector. Many will be familiar with the sight of ships queuing off Newcastle and Dalrymple Bay waiting to be loaded with coal exports. The 2008 report by Access Economics commissioned by the Minerals Council of Australia shows the extent of the problem of insufficient supply capacity in the mining sector. The report indicates that, while Australia’s mineral exports have risen in recent times, the global market share for a number of minerals declined between 2002 and 2007. This is significant because it is an indication that even at the time of the most significant global boost in demand for our mineral exports, from the early 2000s to late 2007, there was an underperformance by Australia’s mining sector.
I am not about to allocate blame to the former federal government. I think the former Minister for Industry, Tourism and Resources, Ian Macfarlane, and his predecessor, Senator Minchin, were outstanding ministers. Many of those bottlenecks arrived because of inappropriate investment decisions by companies and sluggish and inappropriate approvals processes in state government departments. But it does suggest unequivocally that Australia’s performance through the five years of that significant global increase in demand for our minerals exports was an underperformance.
The report suggests strongly that the rise in demand by economies such as China had caught Australia’s infrastructure napping and a number of our governments napping. The report also indicates that, if Australia had maintained its market share over that period, miners would have earned our nation an additional $17 billion to $20 billion. That is not to be sneezed at in terms of national income and, most importantly, not to be sneezed at because every bit of market share that we claim during the good times is market share that our nation can hold during the tough times. Market share in minerals is where the game will be played in the immediate future.
The Building Australia Fund has been commented upon in a significant way in the media. The third-party endorsements of the Building Australia Fund have been almost embarrassing for the government. International organisations and domestic commentators have heaped glowing praise on the Australian government for the insight, the foresight and the courage to establish the Building Australia Fund. The IMF said:
Saving some of the revenue from the commodity price boom in three new funds will take pressure off monetary policy in the near term and enable increased infrastructure investment over the medium term.
What seems like an almost bureaucratic economic assessment is in fact an insightful and glowing commendation of the government’s policy of putting these funds in place. Why? Because it integrates both the need for improved infrastructure with the necessary economic prudence and the necessary focus on monetary and fiscal policy to ensure that the national macroeconomic settings are right and within that there is a policy position which allows the government to pursue the construction of infrastructure.
The OECD had made the observation:
Over the past few years there has also been a sharp rise in spending, the quality of which was not always ensured.
This is spending by the former government, ‘the quality of which was not always ensured’. The recent creation of funds that will channel budget surpluses into financing investment in infrastructure, education and health could play a valuable role in improving the quality of spending, especially since the intention is to select projects on the basis of cost-benefit analysis. On what other basis would you select projects? It is certainly not, as those opposite have suggested, on the basis of electoral politics. No. The decisions here will be made on the basis of national need and economic impact. The OECD also said:
The programmed increase in physical and human capital is needed to overcome bottlenecks. Higher spending has been accompanied by reforms in these priority sectors.
All members of this House will recall the dozens of Reserve Bank warnings to the former government that it needed to focus infrastructure spending on bottleneck areas of the economy and also to increase spending on training.
David Crombie is President of the National Farmers Federation. David Crombie would never have voted Labor in his life. David Crombie is no Labor supporting little socialist. No, David Crombie is a substantial farmer and a man with a great reputation for being forthright and frank. David Crombie, President of the National Farmers Federation, said:
Tonight’s announcement of the $20 billion ‘Building Australia Fund’ is a positive move towards addressing critical transport and communications infrastructure. Too often Australia’s farmers face antiquated and grossly inefficient national and regional infrastructure in these areas, undermining the farm sector’s strong record of productivity growth.
David would know. Tony Shepherd is another significant Australian—significant because of the work he has done to help build Transfield as a great Australian company. Tony Shepherd said:
The $20 billion injection into the Building Australia Fund is a great development for the country. Finally, at a federal level, we have recognition of the government’s obligation in terms of the investment and development of infrastructure.
There is no doubt that in Tony Shepherd’s observations there is a tone of exasperation that the previous 13 years had seen an Australian government that did not focus on significant infrastructure needs and whose focus had been myopic to the point of only focusing on its direct electoral needs.
Peter Verwer, Chief Executive of the Property Council of Australia, said:
The government’s $20 billion investment in critical infrastructure confirms its commitment to nation building. The Rudd government’s first budget has delivered the funds to help tackle Australia’s infrastructure deficits.
In this budget, the Treasurer has created a more compelling vision of how it will deploy the enlarged surpluses which it is projecting over the next four years. This is exactly what the government should be saving its surpluses for.
There is an important point that comes out of that solid endorsement by the ANZ Bank’s Chief Economist. Firstly, it is the critique that the former government took its potential surpluses and delivered it back to the community in terms of tax cuts, which did nothing more than increase our import bill, make the national economy poorer and place pressure on inflation through escalating costs due to ageing and inadequate infrastructure.
But, more importantly, it was an observation made in the second quarter of 2008, at a time when even the ANZ Bank’s chief economist—a significant economist both in Australian terms and in international terms—had no reason to believe that the enlarged surpluses would continue to occur over the next four years. It now appears that, as a consequence of the global financial crisis, it is highly unlikely that we will see anything like those projected surpluses over the next four years. Indeed, the MYEFO figures released just a few weeks ago suggested quite the opposite: that we could well be looking at significant hits to government revenues and, in the course of the coming year, $40 billion.
Greg Gailey, of the Business Council of Australia, another great hotbed of Labor support, said:
The establishment of the Building Australia Fund is an effective way of ensuring that today’s strong revenue growth can be better directed to meet Australia’s long term infrastructure needs.
Ivan Backman, of the Australian Logistics Council, said:
$20 billion for infrastructure announced in tonight’s budget is a substantial commitment to building the road and rail networks and ports required for our national future and will be embraced by our Transport and Logistics industry.
It is important in contemplating those significant endorsements of the government’s Building Australia Fund that we do understand that these endorsements are made by people who understand the business that they are in. They are in the business of building Australia. The Australian government is in the business of building Australia. The Australian government is also in the business of protecting families, the Australian community and our industrial capacity from the worst excesses of the coming international financial gloom that will descend on our economy as a consequence of the global financial crisis. To get working early, to have our funds deployed early on substantial projects that build the infrastructure for our nation, is clearly an appropriate decision to make.
We have a number of other funds. The Education Investment Fund was announced in the 2008-09 budget as one of the three nation-building funds along with the Building Australia Fund and the Health and Hospitals Fund. In that announcement it was said that the government will transform Australia’s higher education and vocational education and training institutions over the next decade with a new $11 billion Education Investment Fund, demonstrating the depth of attention paid by the Australian government to the investment deficit in hard infrastructure, in health infrastructure and in education infrastructure, and that that deficit is at last being addressed in a way that makes sense and in a way that demonstrates the government’s commitment to the ongoing needs of our economy and of our communities.
I am proud to be part of a government that has the strength, the dedication and the determination to put these funds together, but most importantly I am proud to be part of a government which has the capacity to be flexible enough to move quickly enough to meet the global crisis head-on in a way that keeps our nation moving forward and does not step back. I commend the bills to the House.
I rise to speak on these bills and, in particular, to support the amendments put forward by the coalition. The COAG Reform Fund Bill 2008 will establish the COAG Reform Fund for the purpose of disbursing funds to the states and territories. The Nation-building Funds Bill 2008 establishes the three separate financial asset funds: the Building Australia Fund, the Education Investment Fund and the Health and Hospitals Fund. These funds will be similarly structured to the Future Fund—an initiative of the coalition government.
The Building Australia Fund will enable the government to make payments related to the creation or development of transport, communications, and energy and water infrastructure. The Education Investment Fund will enable the government to make payments related to the creation or development of higher education, vocational education and training and research infrastructure. And the Health and Hospitals Fund will allow the government to make payments for the creation and development of health infrastructure. These bills set out the mechanism that is to be followed for the making of financial payments related to infrastructure, education and health development. Special powers will be granted to the Treasurer and the Minister for Finance and Deregulation to credit money from the budget through special accounts to the funds.
The creation of the funds is one thing; how are they funded, where the money came from, is something very different. The government may well be the architect of these bills, but they are certainly not the architect of the measures that were introduced over 12 years to create surpluses that fund these funds.
The Building Australia Fund will be established with an initial capital investment of $12.6 billion—$7½ billion from the 2007-08 surplus and also proceeds from the T3 sale and the balance of the Communications Fund. I note that T3, as the member for North Sydney noted this morning, was opposed by the government, and now they seek to live on its proceeds. The education fund will have an initial balance of $8.7 billion, comprising $2.5 billion from the 2007-08 surplus and the remainder coming from the Higher Education Endowment Fund. Both of these initiatives are funded out of the Howard-Costello budgets and strong economic management. The health fund, similarly, will start with $5 billion coming entirely from the 2007-08 surplus, courtesy of the member for Higgins. The funds will have a total of $26.3 billion at inception on 1 January 2009.
The Treasurer said yesterday in the parliament that he would be contributing these funds to these funds. But, as we know, every dollar going into these funds is a dollar saved by the coalition during our years of strong and responsible economic management. The funds highlight yet again the economic legacy left to the Rudd government. The government says the coalition wasted the surpluses. I have heard that in this debate even from the last few speakers. This is like telling someone who has recently retired that they should not have paid off their mortgage or invested in their superannuation. We paid off the debt. The Howard-Costello government paid off the $96 billion of debt by getting back into surplus. We put surpluses back into the economic dialogue of this country over 10 to 12 years of strong economic management. Surpluses were not the norm; deficits were the norm. We only talk of surpluses now in our economic language because of the work of the Howard and Costello government.
We delivered major tax reform. I note that the previous speaker derided the benefits of tax reform. I assume the government thinks that the taxes should have remained where they were back in 1996 and does not believe we should have invested in tax reform. I am happy for that to be a clear and stark difference between the coalition and the government—a coalition that puts its money where its mouth is on tax reform and puts in the hard yards on tax reform and delivers tax reform, as opposed to a government that criticises its predecessors for having invested in providing that relief to families over many years.
In 1996 the top marginal rate was 47c in the dollar and it kicked in at around $50,000, or 1½ times average male weekly earnings. Today it kicks in at $150,000, or 2.8 times average male weekly earnings, and you only pay 45c in the dollar. In 1996-70 per cent of taxpayers paid more than 40c in the dollar. Today only 20 per cent of taxpayers pay this amount. I note that the government deride the provision of tax cuts to families across Australia but were quite prepared to copy the coalition’s tax cuts in this year’s budget and claim them as their own. The government have no excuse to now run this budget into deficit, with economic growth forecast to remain positive. If it were not for this legacy, there would be no capacity to steer Australia through the financial crisis we currently face and make up for the bungles and backflips of the Rudd-Swan government as they have sought to manage this crisis. If it were not for this legacy, we would not be debating these bills today.
The government have no sweat equity in these funds whatsoever. They are capital carpetbaggers. Future contributions were a matter for them. The 2008-09 budget indicated that there would be $41 billion in funds by 1 July 2009. We now know this will not be happening. The government will be leaning on the legacy of the previous government. Their nation-building agenda, as they like to call it, will be funded by the surpluses built up by the coalition through the wise stewardship of taxpayers’ funds.
The government says we should be judged not on what we say but on what we do. In the last five years we as a government spent $40 billion on road and rail infrastructure. The Howard government established the AusLink program, which provided around $40 billion in road and rail infrastructure, including the upgrade of the interstate and Hunter Valley rail system; the Western Sydney Orbital, which my colleague the member for Macarthur would be well aware of; the Albury bypass and the Tugun bypass; multiple upgrades to the Pacific Highway—before 1996, just nine per cent of the highway between Hexham and the Queensland border had four lanes and, because of funding provided by the Howard-Costello government, more than 39 per cent of that highway is now dual carriageway; the widening of the F3; the North Kiama bypass; and the Hume Highway upgrade. This was all infrastructure which, if you believe the commentary from those opposite, was fictitious. It never existed. There was no investment in infrastructure. All of these projects just appeared out of thin air. The Roads to Recovery program provided a vital source of road funding directly into the works budgets of local councils—$1.23 billion was spent between 2005 and 2009.
Treasury figures show that the total investment in economic infrastructure increased, as my colleague the member for Goldstein noted in his presentation on these bills, from 3.2 per cent of GDP in 1987 to 4.5 per cent of GDP in June 2006. ABS figures indicate that the total value of infrastructure spending in Australia, in constant 2007 dollars, rose from $21 billion in 1996 to $56 billion dollars in 2007—an increase from nearly three per cent of GDP to 5.4 per cent of GDP. This investment was made possible as the product of strong economic management that created the environment for business and government to invest. You would think, with the rhetoric coming from the Prime Minister and others, that it is only the public sector that invests in infrastructure in this country.
The Prime Minister has indicated that he is a strong believer in public-private partnerships. This is because the government can ensure value for money for the taxpayer through a public interest test, while bringing in the expertise and innovation of the private sector. PPPs also free up public resources to focus on core services of government. ABN Amro recently forecast that about $80 billion of investment in public infrastructure over the next decade will be undertaken through public-private partnerships, but I am very concerned that much of that investment may well not now materialise because of the global financial crisis and the level of confidence that this government is placing in our economy.
In March 2008 the government instructed Infrastructure Australia to develop nationally consistent PPP guidelines. These guidelines were released last month and do provide a framework for the development of public-private partnerships on a national basis and will apply to Commonwealth, state and territory governments. Critical to the delivery of essential transport infrastructure using PPPs is the need to ensure that all aspects of the contract, entered into between the government and the private sector partner, are in the public interest.
The abuse of PPPs by state governments, particularly in NSW, I believe, has undermined their utility as a viable tool to deliver necessary infrastructure. This goes to the heart of one of the coalition’s amendments to this bill, and that is the issue of transparency. PPPs have been trashed by state Labor governments. They have completely eroded public confidence in PPPs not because of the performance of the private sector necessarily but because of the way they were gouged by state governments looking to merely shift their legitimate costs. These were legitimate investments they should have been making rather than trying to cost-shift all of this investment to the private sector in behind-closed-doors deals that basically avoided their own obligations. We need to restore public confidence in PPPs, and a set of guidelines is simply not enough. We need to have the public sector treating this delivery vehicle as more than just a way to milk revenue and obfuscate public responsibility.
An example of a public-private partnership where it was questioned whether the final outcome was in the public interest has been the debacle of the Cross City Tunnel in Sydney. This $680 million project was delivered by way of a PPP. A joint select committee of the NSW parliament held an inquiry into the Cross City Tunnel and public-private partnerships in May 2006. A specific issue considered by this inquiry was the public release of contractual documents connected with public-private partnerships for large road projects. The committee recommended that the full contract and any material variations, a contract summary, details of the public interest evaluation conducted prior to the decision to enter into the PPP and the base case financial model be publicly released when a new PPP is to be privately financed.
The Cross City Tunnel contract was clearly not in the public interest, forcing vehicles away from public roads onto the toll road by narrowing public roads and implementing street closures that forced motorists to use the toll road to reach their destination. This information was not available for public scrutiny, and the general public had no knowledge that such a deal had been made between the government and the private toll road operator. For this reason I strongly support the amendments put forward by the coalition to ensure transparency in contractual and all other arrangements associated with these projects. Engaging in PPPs is not a leave pass to walk away from public responsibility. There is a public interest in all of these investments, and those public interests must be protected. A PPP is not a vehicle to use to simply walk away from your responsibilities.
The minister’s second reading speech also states that this legislation forms part of the government’s plan to modernise federal financial relations. If this is true, these funds cannot be used to simply displace capital investment under other budgets, whether through Commonwealth-state agreements in areas such as heath, housing, education, disability services or any other area. Also, they cannot be used to displace funds allocated to programs such as AusLink. These funds are supposed to be over and above; these funds are supposed to provide a net benefit and not simply be a way of shifting costs and expenses out of existing agreements or, more seriously, to make up for the incompetence of state Labor governments that have bungled so many projects and left their states in such an appalling state—particularly New South Wales—so as to require some form of federal bailout. Most significantly, they cannot be used as proxy funds to bail out these states. Decisions must also address ongoing operating costs, as has been moved in our amendments, and ensure state governments make commitments to operationalise this infrastructure. It is not enough to build it; they must make sure that this infrastructure can actually work. The recent OECD report, brought to my attention by the member for North Sydney, suggested very strongly that the productivity gains and the economic gains really come from the infrastructure when it is operating. We cannot go around building white elephants, like the desalination plant in my electorate of Cook. We need decisions that invest in productive infrastructure that can be operated and generate real improvements and productivity gains for our economy. That goes to the other amendments put forward by the coalition.
Local government also must be considered in the context of reforming federal, state and local government relations, particularly federal financial relations. As the shadow minister for local government, I believe this requires special attention in how the funds are administered. Local government has responsibility for the provision of an extensive range of community infrastructure: roads, bridges, ovals, galleries, childcare centres, stormwater infrastructure, waste management—the works! The third tier of government provides many of the essential local level infrastructure needs that service so many of our communities and that our communities rely on. The Australian Local Government Association believes that councils across Australia spend around $22 billion. The value of all payments made to local government by the Commonwealth by way of financial assistance grants is $1.86 billion. This is equivalent to 0.6 per cent of total Commonwealth tax revenues. Increasingly, local government is being asked to do more with less funding, particularly by state governments. This process is known as cost-shifting. While cost-shifting to local government is not a recent phenomenon, it has reached a critical point where many local councils are struggling to remain financially viable.
New South Wales councils, for example, have very limited revenue-raising capability and therefore must rely on the Commonwealth and state governments for much of their revenue stream. According to the Local Government Association of New South Wales, council rates only account for about half of the local government revenue. User charges are the second largest source of revenue and make up about 27 per cent of the revenue pie. The third major source of revenue comprises grants, including Commonwealth financial assistance grants, which make up about 8.6 per cent of the local government revenue. Within this environment of constrained finances, local governments have had to manage an expanding role and new responsibilities. They are increasingly called on to provide human services in the areas of education, welfare, recreation and housing. Councils also have seen an expansion of their roles in the management of the environment and planning.
There are many examples of cost-shifting that have occurred in my home state of New South Wales. These examples date back from 1995, when the Labor government was elected, and continue to this day. The primary areas of responsibility for local government are set out their act. In addition, councils have obligations or responsibilities under many other acts, but since 1995 the Labor government has broadened the areas of responsibility with further legislation that applies to local government. This includes the Protection of the Environment Operations Act, the Companion Animals Act, the State Records Act, the rural fires and environment assessment act and the Occupational Health and Safety Act. Local government is also faced with rising costs in the areas of planning and building regulation, street-lighting charges, natural resource management and parking patrol.
A few examples of cost-shifting onto local government include fire services funding. The New South Wales Fire Brigade is funded 73.7 per cent by the insurance industry, 12.3 per cent by local government and 14 per cent by the state government. The fire brigade levy imposed on local government was increased by 13.3 per cent in 2002-03 and was far in excess of the 3.3 per cent rate-pegging limit and the CPI figure at the time. Furthermore, there was also an eight per cent increase in the rural fire service levy, a levy which some councils were also compelled to pay.
Councils also have a responsibility to provide library services under the Library Act 1939. More recently, underfunding by state government has seen a larger proportion of the cost of library services met by local councils. Councils provide 90 per cent of the core funding for local public libraries, compared with 76 per cent of the costs in 1980. Street lighting is another area where local government is forced to fund rising costs with no commensurate additional capacity to fund the cost increases. Currently, Energy Australia has an application before the Australian Energy Regulator for a 67 per cent increase in street-lighting charges. Who knows what that will be under the government’s ETS? The amendments made to the Disorderly Houses Act in 1995 to legalise brothels is another example. These changes made local government responsible for the regulation and any necessary enforcement action related to brothels. This has become a costly and time-consuming exercise for local councils in terms of investigation and prosecution.
Unsurprisingly, local government made up a large proportion of submissions received by Infrastructure Australia when it recently sought those submissions. More than 200 individual projects were contained within the various local government submissions. Those projects have been costed at approximately $1.9 billion. There are many more that are yet to be costed, which have an estimated value exceeding $3 billion. Local government has used the Infrastructure Australia process to seek financial assistance from the Commonwealth’s fund to provide critical transport, communications and water infrastructure.
There are a whole range of projects that come under that: a whole series of airports, like Bundaberg Airport and the Sunshine Coast, Albury and Parkes airports; the Gold Coast stadium; the Port of Eden breakwater extension; the Jervis Bay marina; affordable housing for quay workers in Sydney; the Wodonga container terminal; the metro railway to Doncaster; the Geraldton deepwater port redevelopment; foreshore improvements at Kangaroo Bay in Tasmania; and hospital relocations in Katherine. A whole range of projects have been put forward by local government because they need this support. I am pleased that there is funding in this package that will be in these funds and that it was provided by the coalition government. When these projects—if they are able to be and are supported by the government—go ahead, every single one of them should know that every single dollar came from coalition surpluses, from the wise stewardship and financial management of the coalition.
As the government pretend to build the nation, they build it based on the legacy left to them by the Howard-Costello government. Particularly as they move forward in supporting local government, I make this simple plea: as we expect more from local government and we seek to fund more for local government, at the same time we should also expect more of local government. We should expect them to lay out programs of reform, to increase their capacity and enable them to provide better services—not to just throw money at local councils but to partner with them to make them better, stronger and more able, so that the services they deliver can be more sustained and more effective.
I rise today to support the Nation-building Funds Bill 2008, the Nation-building Funds (Consequential Amendments) Bill 2008 and the COAG Reform Fund Bill 2008, which are being debated in parliament today. These bills are critical to the long-term economic security of Australia. They underpin the Rudd government’s microeconomic reform agenda—an agenda that is firmly focused on driving improved productivity through investing in nation-building infrastructure in a new era of federal and state relations.
In May this year the Rudd government delivered its first budget: a responsible budget, a budget that is about modernising Australia, a budget that puts Australia’s long-term interests centre stage. For too long we had a government that lacked courage, foresight and initiative—the Howard government. Despite a resources boom, the Howard government failed to invest the proceeds in nation-building infrastructure. Independent commentators, like Access Economics in their budget monitor this week, have backed the Rudd government’s response to the global financial crisis and, again, highlighted the failure of the former Howard government to invest the proceeds of the resources boom in long-term nation-building infrastructure. The Rudd government will not squander the budget surpluses. We are committed to using the surpluses to steer the economy through these difficult global economic times.
The member for Cook when speaking earlier effectively said that he did not support our economic security package and that he did not support us using the surplus to invest in the economic security package. We do not know where the opposition stand on our response to the global financial crisis, because one day they say they support the bank guarantees and our economic security package and the next day they come into parliament and pick holes in it and say they do not support it. We have a long-term plan for this country and a long-term commitment to support infrastructure and productivity growth in this country. It is disappointing that the opposition continue to act irresponsibly when it comes to economic management.
The budget delivered in May this year established three funds: the Building Australia Fund, the Education Investment Fund and the Health and Hospitals Fund. These three funds are important investments in our future and are critical to our long-term future. They were welcomed by a range of commentators in the market. They do contrast very significantly with the actions of the former government. The OECD made this good response:
Over the past few years, there has also been a sharp rise in spending, the quality of which was not always ensured.
They are talking about the Howard government there, of course. They continue:
The recent creation of funds that will channel budget surpluses into financing investment in infrastructure, education and health could play a valuable role in improving the quality of spending, especially since the intention is to select projects on the basis of cost/benefit analysis.
They are saying that the Howard government did not spend money on quality projects. The OECD welcome the Rudd government’s commitment to these three funds and see that we will do proper analysis and invest appropriately in the future of this country.
These nation-building funds will focus on infrastructure—on restoring our national transport network, our roads, rails and ports, and on improving broadband; on education—helping to deliver the government’s education revolution, renewing and refurbishing universities and vocational institutions, and improving research facilities; and on health—financing our nation’s hospital and medical research. In order for the country to move forward with the implementation and operation of these three key funds, the Nation-building Funds Bill 2008, the Nation-building Funds (Consequential Amendments) Bill 2008 and the COAG Reform Fund Bill 2008 must be passed.
The COAG Reform Fund Bill 2008 establishes a vehicle through which these funds may be distributed to the states and territories. In my first speech to this parliament I spoke about the need for reform of federal-state relations through the Council of Australian Governments. These bills are an important part of the Rudd government’s plans to deliver on these aspirations. In a report for the Business Council of Australia, Access Economics estimated that cost-shifting, duplication and other inefficiencies in Commonwealth-state funding arrangements cost some $9 billion per year. Of this, $5 billion is related to spending inefficiencies, including around $1 billion for health related inefficiencies.
When I doorknock and run mobile offices in my electorate people say they are tired of the buck-passing and the blame game on health. They want a federal government that will work in cooperation with state governments to help fix the health system. We need to reform those relations, and these bills are a very important part of the ongoing commitment of this government to work in partnership with the states and territories to tackle difficult areas like health.
The COAG reform fund and nation-building funds form part of this government’s modernisation of federal financial relations. Improving the relationship between the federal government and the states and territories—the way we interact, the way we conduct business and the way funds are allocated—is a major objective of the Rudd government. It is clear that effective and meaningful progress is being made. The Prime Minister stated on 26 March at a COAG meeting in Adelaide:
The COAG Reform Agenda is underpinned by a common commitment to clear goals, genuine partnership and the governance and funding arrangements needed to deliver real reform.
A fresh spirit of goodwill has delivered breakthrough agreements in areas unresolved by COAG for too long.
It will move on from the blame game to make federalism again work to deliver real outcomes in the national interest.
We have a government that understands the importance of getting the relationship between the federal government and the states right. It is through a reform of COAG that we are seeking to boost productivity, increase workforce participation and deliver improved services to the community. I have already spoken about some of the real waste that goes on in health because of a failure of the federal and state governments to work effectively together. We also have key policy areas in education where we are making progress. It is through COAG that, for the first time, all governments have agreed to drive the productivity agenda through substantial reform in education, skills and early childhood development. COAG has adopted national targets for schooling. This includes progressing toward a national curriculum, lifting the year 12 or equivalent attainment rates across the country and providing universal access to quality early childhood education for children in the year before formal schooling.
The COAG Reform Fund and the nation-building funds are a critical tool that will enable serious action to be taken on key policy areas like education, as I have just mentioned, that impact on all Australians. Money in the three nation-building funds—whether it be the Building Australia Fund, the Education Investment Fund or the Health and Hospitals Fund—can be transferred to states though the COAG Reform Fund. As stated in the explanatory memorandum of this bill, financial assistance will be provided to a state or territory for the purposes of supporting the delivery of specified outputs or projects through appropriations from the nation-building funds and facilitating the implementation of nationally significant reforms and rewarding jurisdictions that deliver nationally significant reforms, through national partnership payments. This COAG Reform Fund will replace a complex, bureaucratic arrangement of distributing federal funds to the states and territories.
The COAG Reform Fund Bill requires that the terms and conditions on which financial assistance is granted through the COAG Reform Fund are set out in a written agreement, known as a national partnership agreement. A national partnership agreement is an agreement between the Commonwealth and the state or territory. It will set out performance benchmarks and the amount of the payment for meeting each benchmark. In the case of national partnership reward payments, financial assistance will be subject to the COAG Reform Council’s assessment of whether the performance benchmarks have been achieved.
This approach—these national partnerships—will drive reform. We are not giving the states a blank cheque; we are establishing a more effective and efficient way to work in partnership with the states. We are shifting to a more transparent and outcomes based framework, where there is greater incentive to deliver solid infrastructure projects and make reforms in health and education. By improving federal-state relations and coordinating infrastructure nationally, it is ultimately the people of Australian that will benefit. It is the people of Australia that deserve more efficient and effective services. This arrangement will reduce bureaucracy. It is a strategic approach that will provide leadership in the planning, financing and provision of significant national infrastructure projects.
On this Saturday, again, there will be a meeting of the Council of Australian Governments. I am sure there will be important progress made in the areas of health, education and infrastructure. These bills will enable these agreements to be delivered on.
Importantly, the Rudd government is very much focused on the long term. We are very much committed to ensuring that our investments in infrastructure, health and education are not about short-term political gains but about long-term investments in the nation’s infrastructure and interests. We have established Infrastructure Australia to provide the government with advice and to do proper assessments in relation to funds, particularly the Building Australia Fund.
Members of the public and business community were recently invited to submit their project ideas to Infrastructure Australia, the national body established to advise government, investors and owners of infrastructure, which will inform the government’s allocations from the Building Australia Fund. Projects will be evaluated and potentially placed on the national infrastructure priority list. The first priority list was initially planned to be presented to COAG in March 2009. However, the Prime Minister recently requested an interim report from Infrastructure Australia by December 2008.
Obviously there is no denying that the global financial crisis has affected and will continue to affect the way in which the government acts. The past few months have been unprecedented, but the government has acted quickly and decisively to support the Australian economy. Part of the government’s response to the global financial crisis was the acceleration of the rollout of our nation-building funds. As I have just touched on, a priority list of projects will be known soon, enabling us to consider key infrastructure projects in 2009.
We have also made other measures, including the economic security package. I am very pleased that in the next few weeks $4.8 billion will be delivered as an immediate down payment on long-term pension reform to Australian pensioners. I know that pensioners in my electorate of Leichhardt are looking forward to, and will welcome, those payments. Also $3.9 billion will be put in to support payments for low- and middle-income families and $1.5 billion investment to help first home buyers purchase a home. This is particularly important in my electorate, where the construction industry is a critical part of the local economy. Local developers and real estate agents have welcomed it and I know that young working families out there are taking up the opportunity the government has provided them to get into a home for the first time.
We also have $187 million to create 56,000 new training places in 2008-09. I know that the Building Australia Fund has been very much welcomed, particularly in our rural communities. I have a quote from David Crombie, the president of our National Farmers Federation, commenting on the budget:
Tonight’s announcement of a $20 billion Building Australia Fund is a positive move towards addressing critical transport and communications infrastructure. Too often Australia’s farmers face antiquated and grossly inefficient national and regional infrastructure in these areas, undermining the farm sector’s strong record of productivity growth.
I see the member for Kennedy here and I know he is a strong advocate for rural Australia. We have the head of the National Farmers Federation backing our Building Australia Fund and our investment in long-term national infrastructure. We hear bankers like Saul Eslake say in relation to the budget that in this budget the Treasurer has, ‘created a more compelling vision of how it will deploy the enlarged surpluses which it is projecting over the next four years’. This is exactly what the government should be saving its surpluses for.
He was commenting on what the former Howard government had done with their surpluses, that they failed to invest them appropriately in nation-building infrastructure and they failed to invest them in education that would drive our productivity agenda with the infrastructure investment. Whether it is the farmers, the bankers or the working families of Australia, what they are looking for is a government that acts responsibly economically, responds to the long-term interests of the nation and also responds appropriately to the global financial crisis that we are facing at the moment. And the Rudd government is doing that.
These bills are critical not only to our long-term agenda but also to our response to the current global financial crisis. They underpin the Rudd government’s micro-economic reform agenda, an agenda firmly focused on driving improved productivity through investing in nation-building infrastructure and the new era of federal-state relations.
Infrastructure is a key element of the COAG agenda. The Rudd government’s reform of COAG is instrumental in providing Australians with the infrastructure they deserve. The government’s three nation-building funds; the Building Australia Fund, the Health and Hospitals Fund and the Education Investment Fund, will focus on addressing the shortfalls in our country’s infrastructure, a legacy of the Howard government. Whether it is roads, universities or hospitals, these funds are an investment in our future.
The Nation-building Funds Bill and the COAG Reform Fund Bill 2008 are important pieces of legislation. They will be used to finance national investment priorities. They will improve federal financial relations significantly and replace the complex, inconsistent, bureaucratic system currently in existence. We committed to ending the blame game but we are not giving a blank cheque to the states. The COAG Reform Fund Bill and the Nation-building Funds Bill will be an important tool in turning this commitment to the long-term interest of delivering for Australian families into action. This is a new era and we will deliver better services to all Australians.
The aspirations of the Australian people are incorporated in the nation’s national anthem, and that is true of most countries. Our national anthem says we have ‘golden soil and wealth for toil’. In North Queensland, when people sing that part of the national anthem, a lot of people burst out laughing because if there is one thing in this country that is true it is that the soil is not available to create wealth, no matter how hard you work. It has been taken away from the Australian people and it is said that it will never be utilised. The water of Australia has been taken away. That part of the water that is being used is being taken away as well. I think the last government probably decided on a 50 per cent cutback on the Murray-Darling, which is about 60 per cent of our agricultural production, and the current government appears to be going down exactly the same pathway.
I would like to speak positively, not about what we are closing down but about what we are opening up. I would like to concentrate on that today because I have spoken on the shortcomings many times, but I cannot help but refer to aluminium and coal, as I do invariably, because this nation’s economy is being carried by them. Iron ore has had a spike, yes, but that spike has vanished. But, if you look at the last seven or eight years, I think it is a fair call that the nation’s economy has been carried by coal and aluminium. Those two industries were created in my lifetime—not only in my lifetime but in my political lifetime. I am pretty close to my 35th year as a member of parliament and I was a very, very young man when the state government in Queensland decided to create those industries.
You must remember that in 1957 this country was an importer of coal. Between 1957 and 1966 my own home state of Queensland became the biggest exporter of coal of any state on earth. So how did we move from the whole nation being an importer of coal to having one state alone being the biggest exporting state on earth? Very great men, the Thiess brothers, put all of their personal fortunes into it. I do not think they had much left in the till, even though they had built most of the Snowy, done most of the coalmining in New South Wales and built half of Queensland. They did not have much left in the till because all of their money went into proving that we had giant coal reserves, and giant hard coking coal reserves, in Queensland. Bludging off their work—and I use the term with aforethought, and I can give you the reference books—Utah came in and went north and south of the Thiess holdings. They drilled and they secured deposits as well.
So we had these huge deposits in the late 1950s, but we had no way of developing them. We had no railway line, we had no port and we had no coal loaders. So there was nothing that Thiess or Utah could do. At this stage George Ishimura, effectively from Utah, and, more importantly, Thiess had tied down the markets in Japan. But what was the catalyst, Mr Deputy Speaker Sidebottom? What was the catalyst?
Well, you are going to have to be told. The catalyst was a decision by the state government, because the state government had been saying, ‘We are not going to build a railway line unless the mines are there to service that railway line.’ The potential miners, Thiess and Utah, were saying, ‘We can’t build a mine until you build a railway line.’ As one senior official in the Queensland government who will remain unnamed told me recently, ‘It’s the chicken and the egg, Bob,’ and that is exactly right.
The person who broke the egg and hatched the chicken was a very famous man, Joh Bjelke-Petersen. At Bjelke-Petersen’s funeral, the then Premier, in a very generous act, quite rightly attributed the coalmining industry of Queensland to Bjelke-Petersen. He included the tourism industry, but he should have included the aluminium industry as well because the Queensland government built the biggest power station in the world and, because they had negotiated coal for virtually nothing, they had the cheapest power in the world. But we built that power station without a single customer, we built the railway line without a single customer and we built the port without a single customer. So the Queensland government put out some $3,000 million dollars in their money terms—not in our money terms—to build three items of infrastructure for which there was not a single customer.
In the sharpest of contrasts, after some 25 years of economic rationalism architecture by Mr Keating and continued on by Mr Costello and, to a lesser extent, Mr Howard—those two dominating forces—and also the conventional wisdom in Australia created by journalists, the media, banks and all those other people who determine in which direction the country is going to travel, they decided that we would not do that any more, that we would not build infrastructure, that private enterprise would build infrastructure. Now we can see the results of our handiwork.
I represent the biggest mineral province on earth, producing some $13.4 thousand million worth of product each and every year. It cannot expand and in fact a number of its mines are under very serious threat because it has no land on which to build houses for employees. It has no land. That was one of the four major issues, I might add, at the Eureka Stockade—the government would not provide the miners, the owner-operators, with any land to build their houses upon. They had to somehow have a shack or a shed above the mine shaft. We have two towns that service this giant mining province, the biggest mining province on earth and arguably this nation’s greatest asset. One is carting their water in by train from Mount Isa, and Mount Isa is down to only 100 days of water.
This is not an area bereft of water. Cloncurry, my home town, every year on average has 400,000 megalitres flowing past it. All we want or need is 20,000 megalitres. This giant river has run every single year in white man’s history. I can say that because my family were amongst the first Europeans to get there. I can speak with authority because we have been living there for 110 years. Each and every year the river has run. The people of Australia want this to be done but the governments have decided that they will not even allow you to build a weir in that river.
Mr Deputy Speaker Sidebottom, I am sorry to tell you this, but you are a member of the Labor Party, which rules Queensland and now rules Australia. We have actual legislation on this in Northern Australia. I represent about half of Australia’s entire rainfall runoff. Half of the water of Australia is in the Kennedy electorate. For those looking quizzically at me I will give the figures. There is 134 million megalitres of runoff in the Gulf country and there is 80 million megalitres of runoff in the super wet belt, the rainforest where it rains all the time. That is on the coastal part. If you put those two together it is 214 million megalitres, and Australia only has a rainfall runoff of 304 million megalitres. Are you happy? Then I will continue.
We have a law in Queensland called the wild rivers legislation which says you are not allowed to touch any of the water, you are not allowed to take any of that water; the fish need it. But that surprises me because when I am down on the beach there seems to be an awful lot of water out there for the fish. You may say the water has got to flush every year. You can build all the dams you like, you can build four million dams up there, but our flooding, all of our rainfall, comes in three months. That flooding will never be stopped. It does not matter how many dams you want to build, they will never contain the giant floodwaters of North Queensland. I would very much doubt that it would be possible to ever harness more than about 15 per cent of those floodwaters. We do not have rivers that run like the Murray-Darling, we do not have running rivers; we have floods and we have dry river beds. We only have those two propositions. As the great Ernie Bridge, long-serving minister in the Western Australian government, said, ‘All we are asking of government is that our mighty rivers, on their long and great journeys to the sea, pay a small tribute to those people living along their banks.’
Let me now be very specific. Not only does the area I represent have no land to build houses on, so we cannot get workers—we have to fly them in at absolutely disastrous expense—but we also have no water. It is being carted into one place and the other place is on 100 days, that is all that is left in the dam. We also do not have any electricity. We had a minerals conference last week and Steve de Kruijff, the head of Mount Isa Mines’ copper division, quoted the figures that we have 350 megawatts of generating capacity and we have over 300 megawatts of demand. That is a very near run thing in itself, but because of the new mines coming on stream and the increase in population, we will be in very serious trouble to meet our electricity demands within two years. But of course all of the potential new mines cannot open up because they have no power, unless they want to build diesel power stations. The cost there is about $200 a megawatt versus $35 a megawatt on the grid. They would be enormously non-competitive with their international competitors in the marketplace.
Finally, we have no rail capacity. The railways had informed any potential new miners that there is no rail capacity. Curiously, in Australia we tear up infrastructure; we tear it down. There is a weir in the Cloncurry River and it is broken. It was, by determination of the government, left broken. We pulled up the railway line to Kajabbi, which Dugald River and the mining leases at Mount Roseby desperately need. Joe Gutnick and his Legend phosphate proposal want to move eight million tonnes. If that is processed in Australia, as we hope it will be, that is worth $10,000 million, just that one mine, to the Australian economy. They have been informed by the railways there is no railway capacity. The previous speaker, the member for Leichhardt, God bless him, told us how wonderful the government was and that they were doing all of these things. Unfortunately, Mr Deputy Speaker, you did not allow my interjection to be taken, but I pointed out that the current government are not doing anything. They say they are intending to do it. Mr Deputy Speaker, you had better start moving because one-third of your life has gone and you have done absolutely nothing.
I must emphasise that my remarks apply far more to the last government, who were there for 12 years and left us with this situation, where not a single cent was spent on infrastructure. They were not short of money; they found $660 million to build a railway line from nowhere to nowhere. I do not mean to be disrespectful to the Adelaide people and the Darwin people, but it is nowhere to nowhere through the biggest desert on earth. I said, ‘Why did we do that?’ A number of Liberal members explained to me that I did not understand that it saved demurrage. I said, ‘There are no exports going out of Adelaide or Darwin.’ They said, ‘Yes, but it is imports.’ ‘How stupid of me. I hadn’t realised that we were subsidising imports.’ But nobody laughed; they did not catch the joke at all. Yes, we spent $660 million so that the Liberal Party could buy their way through the South Australian elections. That is where the $660 million went. If you want to come to my electorate, you can see how they spent some $300 million in handouts to try and get rid of me the election before last. I just say thank you. Some of them possibly should be looking at some jail time, but I simply say thank you.
I want to be very specific. Dr Bradfield, one of the greatest men in Australian history, is a man we have chosen to name an electorate after. He built the Sydney underground railway system. He built the Sydney Harbour Bridge and the Story Bridge in Brisbane. He built the University of Queensland. He built a number of the major dams in New South Wales. In fact, there were not a lot of things that were not built by JC Bradfield. He conceived the scheme to take a little tiny bit of the giant floodwaters in the super wet belt where we get drowned every year by the floods that occur. I am not saying we can solve the flood problem, but we will alleviate a tiny bit. We could bring a little bit of that water back on the great inland plain of Queensland.
The greenies fascinate me because they are people who must have studied to achieve the level of ignorance they have achieved. You would have to study to achieve that level: ‘The tiny patina of topsoil in Australia will be threatened by farming.’ The tiny patina of topsoil in my electorate is about a thousand feet deep. They say, ‘You will get salination.’ I doubt it is going to happen in my area, because our watertable is a thousand feet deep. I do not think any watertable can rise a thousand feet. It slopes towards the Gulf of Carpentaria as well. How incredibly stupid. ‘We must preserve the native flora and fauna.’ Six million hectares, an area as big as your home state, Mr Deputy Speaker Sidebottom, have vanished under the prickly acacia tree, which has destroyed all flora and fauna. Do we hear any whinges from the greenies? No. They would not be able to spell Acacia nilotica tree, let alone understand those things. But if you dug a trench and you filled Lake Eyre up with water, which would cost you about $1,200 million, not a lot of money, you would make $4,000 million a year in the salt reduction from one-tenth of that area. What a magnificent asset for this country.
We are in a financial crisis, and in America during the Great Depression they built the Tennessee Valley Authority project. Somebody should study that. If ever there was a great project in the history of the world it was that project. We do similar things in the Snowy. But unfortunately Mr Chifley, Mr Curtin and Mr Theodore were not listened to; in fact, they were voted out of office when they said that in a recession government should borrow money and spend on major public works. This government has taken the money in but there has been no spending on major public works. The biggest mineral province on earth is starved of land, of water, of rail capacity and of electricity. But if you build the Bradfield scheme and you build the ancillary water schemes in North Queensland, just three of them, then you have $14,000 million worth of ethanol production which will solve your CO2 problem because it is coming from sugarcane. There is $14,000 million for the Australian economy. The Alligator and Daley, the Ord and Fitzroy—there is another $7,000 million. We can grow all of Australia’s petrol in northern Australia just by taking a minuscule five per cent of the land and seven per cent of the water.
Thank you, Mr Deputy Speaker. Yes, it does. It passes though the very city that I used to be the mayor of, and I can well recall the first train leaving the northern suburbs of Adelaide to go up to Darwin. It was a very significant day for South Australia.
I rise to speak in support of the Nation-building Funds Bill 2008, the COAG Reform Fund Bill 2008 and the Nation-building Funds (Consequential Amendments) Bill 2008 associated with it. I do so because the bills are important ones which I believe set the scene for some of the major infrastructure expenditure that we will see in this country, infrastructure that I believe the member for Kennedy was alluding to the need for. The bills also set the scene for a much greater level of cooperation between the federal government, the states and the territories. For those reasons they are indeed very significant bills.
When our constitution was established over 100 years ago, I am sure that it was very well intentioned by those who framed it. I am sure that they framed it with their best possible efforts in looking at what lay ahead and therefore how to best structure an arrangement between the federal government and the states. At that time, as we know, the states were six colonies and they operated independently of one another. The reality is that time has moved on. It has moved on around the world and it has moved on here in Australia. Here in Australia the states cannot continue to function in isolation as they did, just as countries around the world cannot continue to function in isolation as they might also have done in years gone by.
We have seen, particularly in the last 100 years or so, the range of international agreements and international frameworks that have been established by countries because they recognised the need to work together. We have to work together because we all face similar challenges. We all have common objectives about where we are trying to get to as peoples of this world. Therefore, we understand that when you face those common objectives you do have to work together. It is recognised that today, more than ever before, we do live in a global village. What happens in one country affects the social outcomes, the environment and the economy of another country.
We are seeing that on a daily basis in respect of the financial turmoil around the world. We are seeing it on a daily basis when we debate issues such as the Kyoto protocol and, here in this country, the Carbon Pollution Reduction Scheme. We know full well that that scheme will be dependent on the goodwill and the same level of commitment by other governments. In a similar way, we know that the management of our economy is also dependent on the goodwill and the good management of other economies. Not surprisingly, only in this last week we have seen the Prime Minister attend two international meetings as part of global governance of this world, which is absolutely necessary.
Here in Australia, it is even more so, in that we are no longer six colonies. We are one country. We are all Australian. The states cannot continue to operate in isolation as they might have done, and they cannot continue to compete with one another and to undermine each other as they have done in the past. What we have seen as a result of that competition is quite often an absolute waste and duplication of resources. When one thing happens in one part of the country—and I use the example of an industry that relocates from one part of the country to another—it creates jobs in the part that it locates to but they are lost to the other part. Ultimately, we are all Australians, and ultimately those consequences have to be borne by the national government, the federal government. So it is important that we work together, because the issues facing this country are common to all Australians.
We saw that only today in the debate on the education bill, which deals with a national curriculum and assessment. Mr Deputy Speaker Sidebottom, you were one of the speakers on that bill. It is another great example of where we need to go to in order to work as one nation, because education, like every other service provided in this country, ought to be consistent wherever you go throughout the country. If that is the case, it will make everybody’s lives so much easier and it will create much better opportunities for people in this country.
That is exactly the process that these bills begin. These bills are about nation building, and they are about states working together with the Commonwealth government. For too long we have seen states working against each other and the Commonwealth playing states off against each other—quite deliberately playing one state off against the other—to disrupt the governments of the day for political purposes. We have seen that for much too long. We certainly saw it in the last decade or more of the previous coalition government, where it was convenient to play one government off against the other and it was convenient to play the Commonwealth off against the states and even the local governments.
In my previous role as Mayor of the City of Salisbury, I can well recall a report being commissioned by the federal government about the issue of cost-shifting that was occurring throughout the country, an issue that was occurring because, again, it was convenient for it to occur. It was convenient for the federal government. It was convenient for the states. It was not convenient for local government, because they did not have any say in the matter and they would pick up the pieces and the additional costs as a result, but it was convenient for the other two levels of government. That is not good government. Good government is about governing with one clear focus in mind, and that is the ultimate wellbeing of the people of this country.
One of the things that have concerned me over the years—and I am pleased to see that in recent years it is starting to be put to one side and there is a level of cooperation, even without the intervention of the federal government, amongst the state governments—is the ridiculous notion of competing with one another for businesses or for sporting entertainment. That created no good for any of the states whatsoever. Ultimately, it was causing taxpayers to subsidise the relocation or the securing of the particular event or business—I am using that as an example for the purpose of the point I am trying to make. We saw that happening quite prolifically about 10 years ago. As I said earlier, ultimately the winners are the people setting up the business or—
The member opposite interjects about the Grand Prix. It is a classic case of what I am talking about, but I should say that it is my understanding that, since we have had the Clipsal 500 in Adelaide, the general community there is pleased that we have got that as an alternative to the Grand Prix. My understanding is that it is drawing greater crowds than the Grand Prix.
I used that as an example of where a lot of time, effort and money goes into subsidising something that is in nobody’s interest at all. Perhaps one state picks up additional tourism value and economic activity at the expense of another—in other words, at the expense of your fellows in South Australia, in this case. I saw that happening way too often across Australia, and it is time that we ended it.
We saw it happening again with the Murray-Darling Basin, and we still see it happening every day now. In the Murray-Darling Basin, the states not agreeing with one another because they were all protecting their own interests in the water supplies that are provided by the basin has caused the crisis that we are now facing with respect to water in this country. It shows how cooperative federalism should have been commenced years and years ago.
I mentioned earlier some of the efforts of the previous federal coalition government. Again, if you look back to the record of the coalition government, you see the states being underfunded, you see education being underfunded, you see the hospitals being underfunded, you see housing being underfunded and you see infrastructure being underfunded. And then the federal government had the audacity to turn to the states and say: ‘It is the states’ fault. They are the ones who are underfunding these areas.’ Not for one minute did they accept the responsibility that they were short-changing the states by underfunding them to the tune of billions of dollars in all of those areas. Again, it was convenient politics.
The electors of Australia could and did see straight through it. After almost 12 years of the coalition government, the electors of Australia voted them out. The areas of education, hospitals, housing and infrastructure were key issues at the last election. They were election issues because people in this country knew that those areas had been underfunded and that a much higher level of funding was needed in those areas to get the services they expect out of government. They were not fooled, and they voted accordingly.
This budget responds to those very needs. It is a budget which allocates some $11 billion into the Education Investment Fund, $10 billion into the Health and Hospital Fund and around $20 billion into the Building Australia Fund. These funds were established in the first Rudd government budget. In saying that, I want to make this point: the coalition constantly tries to claim credit for the strong economy that they left the Rudd government. Because of the strong budget surpluses that we inherited, they try to take credit for the Rudd government being able to allocate these funds. They may well say that, but the first point I make is that the first Rudd budget was a budget of the Rudd government. It was the Rudd government that determined its allocations and its expenditure priorities in May. It was the Rudd budget that committed to set aside funds for these nation-building funds.
If the coalition members really believe that they left Australia in a strong economic state then why were our hospitals and health systems in crisis? Why was our education system, according to world rankings, deteriorating yearly? Why was our housing system in crisis? Why was the Murray-Darling river system in crisis? Why did we not have a broadband system that was anywhere near the standards of other countries? It was interesting that yesterday when we were debating the Aged Care Amendment (2008 Measures No. 2) Bill there were speakers from the coalition who were talking about how the aged-care sector is also in crisis. Again I ask: if the economy was so strong and the previous coalition government was doing such a good job, why did we have all of these crises on our hands? Why was inflation at a 16-year high? Why did we have 10 interest rate rises in a row? Clearly the economy was not as strong under the watch of the coalition as they would have us believe. They certainly did not manage what economic opportunities they had very well at all. It is all right for them to come into parliament and talk about how they left a budget surplus. You can leave a budget surplus, but when you leave all of your infrastructure run down and when you leave all of your services depleted and inadequate, that creates a massive debt for the incoming government, because all of those things need to be responded to sooner or later. The time has come when they do need to be responded to.
Services and infrastructure are key priorities of any government. The fact that the previous coalition government refused to commit real money in those areas is, I believe, a sad indictment on the previous government. If nothing else, not investing in infrastructure and not investing in improved education and health services lowers Australia’s productive capacity. It is like allowing a business to run down. If a business does not invest in research and development or plant and equipment then, while it may well save money in the short term, in the long term it will lead to the demise of that business. That is exactly what was happening to this country until the election of the Rudd Labor government.
The ability of this country to live off the back of our natural resources—an ability which the previous coalition government was entirely reliant on—cannot be guaranteed forever and a day. We need to ensure that our economy remains strong not just because we have natural resources that other countries do not but also because we can compete with other countries in every other sphere. It is my view that the Rudd government is picking up the pieces by allocating funds into these areas. It is doing so in the face of some very tough economic times caused by international factors.
It is interesting commentary coming from the coalition because, when we talk about the tough economic times that we are facing and we look at the Economic Security Strategy of the government and the decisions made by this government in response to the financial turmoil, on the one hand they want to take credit for some of those decisions but on the other hand they criticise them. On the one hand they urge this government to increase spending in different areas; on the hand they talk about the government having to maintain a budget surplus. They want more tax cuts for families but they oppose revenue raising measures. The opposition simply cannot have it both ways when it comes to managing the economy of this country and managing the budget that this government is now managing. They cannot try to take credit for the good components of the budget and then criticise other components of it.
These are bills which, as I said from the outset, get us back on track in investing in nation-building projects and investing in the projects that will ultimately lead to greater productivity in this country. It is long overdue that the Commonwealth and the state governments work as one. I am pleased to see that that process has started. I understand that there will be a Council of Australian Governments meeting in a few days time and I am sure that, as a result of that meeting, we will see other examples of cooperation agreed to between the federal government and the states. I am also very pleased to see that this federal government, as part of that process, has included local government in the responsibility that ought to be shared between all three levels of government when it comes to providing services in this country. It is about cooperation, not just between the states and the federal government; it is about cooperation between local government, the states and the federal government, because they all have a role to play in the provision of the very services that these funds, which have been allocated under the first Rudd budget, will be used for. I commend the bills to the House and compliment the Treasurer and the other ministers that were involved in establishing this framework, which I believe secures the future of our country.
It is interesting that the previous speaker congratulated the Treasurer and the government on what they have done to help bring about the funds made available under these bills—the Nation-building Funds Bill 2008, the Nation-building Funds (Consequential Amendments) Bill 2008 and the COAG Reform Fund Bill 2008. The reality is that this government, elected on 24 November last year, has not actually provided any of the funds with respect to the spending included in these bills. Every single dollar allocated to the funds has been provided from the surpluses of the previous Liberal-National government—
and the Rudd government will not have sufficient fiscal surpluses to contribute any significant extra dollars to these funds in 2009-10. The honourable member for Shortland sought to interject but she did not articulate her interjection particularly well, and as much as I would like to respond to it, as I did not know what she said, I am therefore unable to do so. No discourtesy intended, Madam Deputy Speaker. Despite the financial crisis that grips the nation and the world at present, there is an ongoing need for the provision of services such as infrastructure, education and health. Interestingly enough, when the founding fathers drew up the Constitution more than a century ago, they allocated certain responsibilities to the newly formed national government, with all remaining responsibilities staying with the colonies, which became states following Federation.
Unfortunately, over the years, the states had plenty of responsibilities but not the financial wherewithal to carry out those responsibilities, and it was the former Liberal-National government, through the introduction of the GST—every last cent of which is paid to the states—that returned to the states the ability to meet their constitutional obligations. Despite that, the states seem to be hooked on the concept of constantly running to the federal government of the day, cap in hand, seeking additional funds. Even though the GST was intended to provide the states with the necessary money to improve their education systems, their road systems and health, unfortunately the states have failed their communities, and it is therefore necessary for the Australian government to top up spending to make sure that vital infrastructure needed by the Australian community in 2008 is provided and available.
One of the problems we have as a nation is that we have a huge landmass and a relatively small population. That means that the infrastructure which is taken for granted in places like Europe, where there is a very small area and a high population, simply is not always able to be delivered. However, having said that, I also say that infrastructure is absolutely essential and it is important that the government look closely at what it is able to do, because the Australian people do deserve an ongoing dividend for the sound economic management of the country between 1996 and 2007 by the former Liberal-National government.
The bills before the chamber allocate funds towards the establishment of three asset funds. In fact, there is an allocation of $26.3 billion towards the establishment of the three new asset funds and the allocation of funds to ensure the efficient provision of services which are much needed. While on the surface it does seem to be a sensible development, the funding amount fails to meet the government’s own announcement that the asset funds would include some $41 billion by July 2009. Without the provision of infrastructure that helps deliver the physical environment to ensure that business and the community are able to operate effectively and efficiently, progress and prosperity are stunted. Equally, the provision of quality education and health services effectively supports the human assets that deliver the physical and intellectual labour that is the impetus behind progress, achievement and therefore prosperity. The bills carry with them some confusion as to whether money is available to at least launch the three new funds with the amounts promised in the budget in May. There is also the issue that some suggest the true demand for new infrastructure in Australia will be somewhere around $130 billion, which suggests that these three funds will fall well short of the mark when it actually comes to funding the nation-building infrastructure required. This again raises the question of whether Labor has launched this program in a genuine effort to build Australia’s prosperity or only to generate what it hopes will be media coverage that puts the government in a positive light. This bill effectively creates additional government compartments and therefore more bureaucracy.
The funds are to be known by the somewhat dry terms of the BAF, the EIF and the HHF—or the Building Australia Fund, the Education Investment Fund and the Health and Hospitals Fund. Key areas of responsibility for the BAF will be those items that come under the descriptive umbrella of transport infrastructure, such as ports, improved and new roads and rail, and urban transport; communications infrastructure, specifically broadband; and infrastructure in the areas of energy generation and water provision, at an overall cost of $12.6 billion. The Education Investment fund, established with $8.7 billion, will provide for the administration of funds for new infrastructure at universities and other training institutions, including TAFE colleges. The Health and Hospitals Fund will be launched with $5 billion to drive spending and new investment in hospital infrastructure, refurbishments and medical technology and facilities for major research. The three financial assets funds will be launched from 1 January with a proportion of the launch funds, some $15 million, allocated from the 2007-08 surplus: $7.5 billion from the surplus will go to the Building Australia Fund, $2.5 billion to the Education Investment Fund and $5 billion to the Health and Hospitals Fund.
I just want to briefly correct some assertions made from time to time by members of the government party. I pointed out previously that every single dollar allocated to the funds has been provided from the surpluses of the former Liberal-National government. Also, notwithstanding what the government has claimed, the Liberal-National opposition have never said that we will block any infrastructure legislation. We are on the record as being strong believers in infrastructure and we do have a very, very good record of investing $38 billion in infrastructure through AusLink 1 and AusLink 2 alone. The Liberal-National opposition do call for transparency in the workings and analysis undertaken in relation to all competing projects. The opposition want full disclosure of the results of the cost-benefit analysis for projects recommended and those rejected, including all data, assumptions and models used. It does mean full transparency of private-public partnership contracts.
The Rudd government can start to reassure the public by confirming that all of the activities of Infrastructure Australia and the advisory boards are fully transparent. Also, it ought to be noted that the first major infrastructure proposal of the new government, the computers in schools program, is already failing, with states running away from the project. The lack of a whole-of-life assessment of the cost of this project has meant that additional capital and recurrent costs two to three times the initial cost were not factored into the rollout of the program. Also, very great scrutiny will have to be placed upon the Rudd government infrastructure programs, given the dismal history, over many years, of failure on the part of state Labor governments. Birds of a feather flock together, and the community will be looking very closely at the infrastructure programs of this government.
The funds and the accompanying infrastructure projects they will fund will not represent a timely response to the global financial crisis or address concerns about a slowing Australian economy. Many projects will take years to bring to fruition, and obviously there must be consultation with the Australian people. The government has been referring to these funds as long term, but there needs to be a focus on laying the foundations for the future, the long-term future. This is particularly important in our high-growth areas such as the Sunshine Coast, which I am privileged to represent in the Australian parliament. Most people in the community understand that infrastructure does take time to design, to build and to plan, and all of that hinges on first-class planning.
If the Commonwealth’s plan is delivered in haste and for the wrong reasons, it is likely to result in a number of white elephants, and the community will certainly hold the government to account for this. It is important to recognise that increasingly the Australian government does have a role to play in nation building. It really ought to be a matter for the states, but the states have failed the Australian community and so it is necessary for federal governments, regardless of their political colour, to step in and do the sorts of things that states are neglecting. Undoubtedly Australia needs new infrastructure to help it climb out of the current financial crisis and plan for the future. I am pleased to be able to support these bills, with the caveats that I outlined in my contribution.
On 13 May this year, in the Treasurer’s budget speech, he outlined to the House that the Rudd Labor government would establish three funds: the Building Australia Fund, which would receive an initial allocation of $20 billion; the Health and Hospitals Fund, which would finance health infrastructure with key priorities including expenditure on hospitals, medical technology equipment and medical research facilities and projects, and that would receive an allocation of $10 million. That was about reversing the decline in public funding for the health and hospital system in Australia which happened under the Howard government and which the Australian Institute of Health and Welfare so eloquently and categorically set forth in their report in about October last year. Also a third fund was established, the Education Investment Fund, which would finance capital investment in higher education and vocational education and training. That received an initial allocation of $11 billion, including $6 billion from the Higher Education Endowment Fund.
The Treasurer set out very clearly what the Rudd Labor government was about. It was about nation building for our future—a new age for Australia’s long-term infrastructure needs in terms of roads, rail, ports, high-speed broadband, schools, TAFE colleges and also hospitals and medical facilities. These particular funds will make a big impact in my electorate and would have made a big impact in my electorate if the Howard coalition government had had the foresight to establish similar funds.
The Prime Minister said that we would bring forward the establishment of these funds and interim reports on infrastructure projects by early December 2008. The government has already committed $26 billion for future capital investment in infrastructure, higher and vocational education and health, and that is about reinvigorating the economy. It is about modernising our infrastructure, making sure our schools, both private and public, and our hospitals and medical facilities are of 21st century standard.
I was pleased when the government established Infrastructure Australia, an independent statutory council, and appointed Sir Rod Eddington to look into and supervise our infrastructure reforms and to make recommendations in relation to policy in specific projects. We did have, of course, that 1,200-page report from the ANAO which talked about how the Regional Partnerships program was rorted under the previous coalition government. What we need is an independent body to consider the adequacy, capacity, conditions and merits of applications to improve infrastructure funding sought by councils, by states and by other bodies. I am pleased that we are establishing an infrastructure audit which we have called the national infrastructure audit. We are establishing a priority list to guide investment, both public and private, and, of course, to guide policy decisions which are made by governments at all levels but particularly by the Australian national government.
If the Building Australia Fund had been established some years ago it would have recommended some tremendous changes in terms of infrastructure in South-East Queensland, where my electorate of Blair is located. Every day I see, and the people in my electorate see, the failure of the Howard government with respect to road infrastructure in the local area. We only have to look at the fact that Ipswich Motorway should have been upgraded, should have been widened and should have had service roads upon it. None of that was done by the Howard coalition government—and my predecessor opposed it being done. Ipswich Motorway is a clear demonstration of why the Building Australia Fund is so necessary and so important, as are the Warrego Highway and the Cunningham Highway.
Recently I had cause to meet with Mr Warren Pitt, the Queensland Minister for Main Roads and Local Government, and discuss with him the state of those highways. Mr Pitt outlined to me the failures of the coalition government with respect to money which was allocated for the maintenance and improvement of those roads. We have reversed decisions in relation to funding for the Warrego Highway so that there is sufficient money being allocated by the federal government to improve and maintain roads which are really part of the national highway system, such as the Warrego Highway. When you consider what Infrastructure Australia might have recommended if it had existed or what might have happened if money had been available under the Building Australia Fund—a fund which had been established during that time—you can imagine what a difference it might have made for the 100,000 people in my electorate who use the Ipswich Motorway and other roads every day of their lives.
The Education Investment Fund is also being established. That will finance capital improvements in higher education and vocational education and training. That will make a big difference in my electorate. One of the big projects in my electorate which I am hopeful will be funded under the EIF is a project which the University of Queensland is undertaking. There are two University of Queensland campuses within my electorate—the Ipswich campus, which has a particular focus on health and health research, and the Gatton campus, which has a focus on agriculture, horticulture and veterinary science. The University of Queensland has a vet school located in St Lucia, which seems to be a strange place to have a vet school. But the school needs to maintain American and UK standards for accreditation so that the vets who go through that school are able to practice across the Americas and across the whole of Europe, so it needs a world-class facility in South-East Queensland which is up to standard.
The University of Queensland, in their wisdom, have decided that it is appropriate to locate the new School of Veterinary Science at their Gatton campus and have submitted an application for funding under the old Higher Education Endowment Fund, which of course has been subsumed into the Education Investment Fund. I am pleased that they got through stage 1 and they are now at stage 2. I have had meetings with Trevor Grigg, Deputy Vice-Chancellor International and Development, and recently met with Professor Roger Swift at Gatton to dicuss how the project is going. The grant application that has been submitted is for $47.2 million towards the $95.8 million required to construct new facilities for the School of Veterinary Science at the University of Queensland Gatton campus.
This is the sort of project which I hope will make a big difference, and it should receive funding in this regard. It is about establishing a centre for advanced animal science and other existing animal production and research facilities. This will be done in collaboration with the CSIRO, the Queensland Department of Primary Industries and Fisheries and leading national and international scientists. This will create what the experts tell me will be the pre-eminent animal science and health facility in Australia. It deserves funding; it deserves to get to the final stage and be funded. It will make a difference not just in my electorate, not just in South-East Queensland and not just in Queensland but also across Australia and internationally. It will obviously be dedicated to protecting the health and welfare of animals and to enhancing the productivity of the Australian livestock industry and will of course improve our nation’s biosecurity. So I am really advocating strongly that this particular facility receive funding.
The proposal involves three new buildings and a major renovation of the existing buildings on the site to provide modern infrastructure and resources. As I said, these new facilities are required to ensure the school meets national and international accreditation standards and maintains what historically has been its outstanding international teaching and research reputation. So I commend the project to the fund. I think it deserves funding and I certainly will be advocating strongly as the federal member for Blair that that particular project continue and receive federal funding. I have spoken to Steve Jones, Mayor of the Lockyer Valley Regional Council, about this particular project. I think it deserves funding.
I will finish very shortly, and I want to finish on this particular note. We have in the Lockyer Valley a need for a teaching hospital which unites the two small hospitals of Laidley and Gatton. I was on the local health council for many years and I have visited those facilities. Amalgamating those two facilities would be the sort of project that deserves funding under the Health and Hospitals Fund.
Finally I have to say, in terms of our infrastructure, that the national broadband network is vital for my area. The government investment of up to $4.7 billion will make a big difference, because tragically the Howard government, under their fixed wireless type proposal, did not take into consideration the fact that we actually have hills and valleys in the federal electorate of Blair. I got a map from Geoscience Australia to have a look at. It might surprise those opposite to learn that most of Ipswich did not get the kind of coverage of broadband that is necessary. That is a major provincial city in South-East Queensland. A lot of the Lockyer Valley and a lot of the Fassifern Valley were not covered.
This funding under this investment will make a huge difference in my electorate. I thank the federal government for the commitment they have made to infrastructure in my area such as the Ipswich Motorway and other projects. I urge them to fund the relocation of the school of veterinary sciences to the Gatton campus and to bring broadband to the Lockyer Valley in its entirety, to the Fassifern Valley and to the city of Ipswich. That will make a big difference to the kids of Ipswich, the businesses of Ipswich and the people of Ipswich. I commend these bills—the Nation-building Funds Bill 2008, the Nation-building Funds (Consequential Amendments) Bill 2008 and the COAG Reform Fund Bill 2008to the House.