Jane Prentice (Ryan, Liberal Party) Share this | Link to this | Hansard source

It is important to develop a realistic long-term infrastructure plan exemplified by Infrastructure Australia's proposed 15-year infrastructure plan and to also increase private sector investment in infrastructure by looking at options for funding and financial mechanisms and by harmonising and standardising procurement guidelines. Efficient infrastructure provides services that improve both productivity and quality of life. However, poorly chosen infrastructure projects can reduce productivity and financially burden the community for decades with infrastructure that is inappropriate and expensive to maintain.

In Australia, there is a fundamental need for a comprehensive overhaul of the poor processes currently used in the development and assessment of infrastructure investments. All other desirable or aspirational objectives—projected pipelines, increased private financing, cost savings and even user charging and price uniform—ultimately depend, for their efficacy, on having a much strengthened and widely applied set of credible and welfare enhancing reforms.

The Productivity Commission also appeared before the committee hearing, having just released their report on public infrastructure. That report, inter alia, discussed user charging, concluding that it should be used to the fullest extent that can be economically justified. They proposed that well designed and efficient user charges are likely to be superior to taxpayer funding of infrastructure in many situations. Efficient user charges are an effective means to real willingness to pay for new infrastructure and improve the use and augmentation of existing infrastructure. User charges are already the norm for most types of economic infrastructure such as electricity, telecommunications, gas, water and many transport sectors. Concerns about market power can lead to such charges being determined or monitored by a regulator. The extent to which user charges are able to recover the full cost of supply differs across sectors and regions. As infrastructure can provide benefits over generations, user charges too can span generations if they are properly reflective of the effective life of the assets concerned.

The Productivity Commission report also discussed asset recycling, an important initiative of the coalition government's infrastructure plan. The Productivity Commission acknowledges that governments have successfully privatised airports, major ports and electricity infrastructure services. They recommend that states proceed with the sale of any remaining assets of these types, subject obviously to good sale processes including a sound regulatory framework. The priority for the sale of government-owned assets is not to secure the highest price per se but to ensure that economic efficiency is achieved, the risk to consumers and other public interests are managed, the market structure is amenable to privatisation and the sale is conducted efficiently, ethically and transparently.

When the Productivity Commission appeared before the committee, they wanted to address a number of questions and comments that had arisen after the release of their report. The report was not an inquiry into specific infrastructure projects but was rather approached by stepping back from the entire topic and saying, 'What things are going to most significantly make a difference to improving infrastructure and how, in this case, does infrastructure proceed in Australia?'

Both the committee inquiry and Productivity Commission looked quite closely at the role of Infrastructure Australia. The concept of having an overarching entity which looks at infrastructure across the economy is conceptually very appealing, as is looking at how Infrastructure Australia can play a larger part in securing the Commonwealth and state governments' interests in infrastructure projects from the very beginning, especially when dealing with public-private partnerships. The committee also heard from Engineers Australia who identified the lack of engineering input when it came to forward infrastructure planning, and that this lack of engineering expertise resulted in far greater costs down the track:

… the stripping out of the engineering and technical structures in many public service agencies. What this leads to is an inability to adequately monitor technical design, what is being delivered, and adequately oversight outsourcing arrangements.

Engineers Australia has suggested that agencies that have these technical responsibilities need to be able to understand what it is they are expected to do and what resources they require. These resources can in fact be obtained from the private sector, with suitable firewalls between those arrangements and subsequent procurements. Another point they stress is the time and investment it takes to educate and train engineers to full competence. The intermittency related to engineering is of serious concern to the industry.

The committee is looking into many different factors from a wide range of stakeholders involved in Commonwealth infrastructure planning and procurement to ensure that, as we move forward, we are getting better value for the taxpayer dollar—not just at the build stage of an infrastructure project, but throughout its lifetime as well. The inquiry is also emphasising the importance of long-term infrastructure planning and the designation of infrastructure corridors, especially for rail, to ensure that the land is available once a project becomes economically viable.

Efficient provision of infrastructure, including public infrastructure, is the hallmark of a well-functioning economy. I welcome the government's commitment to building infrastructure for the 21st century and to approaching infrastructure planning and procurement sensibly and efficiently, ensuring that Australia's infrastructure can support a growing population and future requirements. I commend the bill to the House.

David Gillespie (Lyne, National Party) Share this | Link to this | Hansard source

The purpose of the Infrastructure Australia Amendment (Cost Benefit Analysis and Other Measures) Bill is to amend the Infrastructure Australia Act 2008 so that it is a function of Infrastructure Australia to conduct a cost-benefit analysis of all projects of an infrastructure nature which are nationally significant and which involve Commonwealth funding of at least $100 million. Infrastructure Australia was brought in with a lot of fanfare in 2005 by the now opposition but it took until 2008 for them to enact it. That is another problem: the structural set-up of that organisation was flawed from the start. This bill also introduces sound governance principles so that the Infrastructure Australia committee is separate from the department and the politicians, so we get a truly independent analysis and cost-benefit analysis of the projects that need to be undertaken in Australia.

We all know infrastructure in Australia needs an upgrade. It is a pity that Infrastructure Australia and the previous government did not look at one of the biggest infrastructure projects that the nation is undertaking, and that is the National Broadband Network. Instead of being developed on the back of a coaster, then put onto a whiteboard and rolled out as policy by press release, it should have had a rigorous analysis. It has only been since the coalition took on the responsibility of government that Minister Malcolm Turnbull has undertaken a root-and-branch review of it and done a true cost-benefit analysis, working out the best way to deliver it with the best value for Australian taxpayers and consumers of communication technology. It is a multi-modality mix of delivering fast broadband. With the expansion of wireless capability—which should expand even with the new spectrum that is available for telecommunications—wireless will be much more widely used. That is why we are using a multi-modality mix of fibre to the premises, fibre to the node, fixed wireless and satellite.

It is a pity this analysis was not done. The NBN and its costs do not even appear on our budget figures because it was set up off-budget. As opposed to this reckless waste of money—which is now getting back on track—look at what we have achieved with the infrastructure. We are rolling out improvements to our road infrastructure. As the Prime Minister has said many times: we are building the roads of the 21st century whether you are living in Adelaide, Perth, Sydney, Melbourne, Brisbane, or in the regions.

In our region, in the electorate of Lyne, we have $1.2 billion roughly being spent on the Pacific Highway. It is vital infrastructure that was the No. 1 priority of the New South Wales government. The NRMA had it as its No. 1 infrastructure project. The New South Wales Business Chamber saw it as the No. 1 infrastructure project that needed to be rolled out, and this coalition government is actually delivering on that. $1.2 billion is being spent on the Pacific Highway from the Oxley Highway intersection up to Telegraph Point and then on to Kempsey, and over the next four or five years we will see enormous civil engineering tasks being undertaken—bridges over the Hastings River and improvements on the Pacific Highway south of that—bringing the Hastings and the Manning closer to Brisbane. So all the goods and produce that come out of the Manning and the Hastings and the hinterland will have a rapid route to the north like they have to the south, down towards Newcastle. So it is improving that interconnectedness. If only this rigour and cost-benefit analysis had been taken by the previous government they would have seen past their bias against New South Wales coalition governments and rolled this vital bit of infrastructure out a lot sooner.

As well, I am very pleased to see that we have got other infrastructure rolling out in the Lyne electorate—improvements to the Bucketts highway which connects the Gloucester Valley to the Hastings and the Manning via a rickety old route. There is $8.7 million being rolled out in this first year to Gloucester Shire Council, which is managing the project, and the Greater Taree City Council. That road which has heaps of traffic is going to be improved significantly.

A 15-year planning register is also very important, and Infrastructure Australia will develop a 15-year plan independent of the government to inform the government with some rock-solid, cold, hard light-of-day analysis of infrastructure priorities. This bill will establish an out-of-department, out-of-government, freestanding Infrastructure Australia with its own governance and its own responsibilities to make fearless and frank advice. It will allow us to develop and deliver much more infrastructure than the previous government and in a much more cost-effective manner. I commend this bill to the House.

Warren Truss (Wide Bay, National Party, Leader of the Nationals) Share this | Link to this | Hansard source

May I thank members from both sides for their contribution to this debate and welcome the support that has come for these amendments, which come in part from commitments that I made to the opposition spokesman that we would bring this bill into the House to tidy up some elements of the original bill which did not accurately reflect the wishes of either side or, for that matter, common sense. The government is committed to building a stronger Australia and our May budget laid out an infrastructure plan that will deliver vital transport infrastructure across Australia. It will also create thousands of jobs and increase the economic prosperity of this nation.

The building of the infrastructure of the 21st century needs to go hand in hand with reforms that will ensure we select and build the right infrastructure at the right time. The coalition government committed to and has reformed the peak industry advisory body, Infrastructure Australia. No longer is the head of IA under the direct guidance and direction of the infrastructure minister, as was the case under the previous government. No longer will IA be required to retrofit its advice to align with the election promises of any government, as was previously the case. The previous government was right to set up Infrastructure Australia; it was just wrong in the way it used it. As an independent, transparent organisation, with the CEO responsible to the board, Infrastructure Australia is now set to be fundamental to long-term infrastructure planning in this country, effectively coordinated across jurisdictions and underpinned by robust, evidence-based advice.

I am a firm believer in not putting into legislation what does not need to be there. The government is about red-tape reduction and not about red-tape creation. In fact, regulatory best practice would dictate that primary legislation not be a repository for superfluity. The government committed to have Infrastructure Australia assess projects receiving over $100 million in Commonwealth funding. That, in my view, does not need to be in legislation. The government committed to that threshold, and that is exactly what is happening without it actually being in the legislation.

However, during the debate on the Land Transport Infrastructure Amendment Bill, there were claims that the government was reneging on the election commitment to a $100 million threshold, because it was not specifically stated in the bill. So the government is now prepared to act in good faith to put the words in the legislation. We gave an undertaking during debate on the Land Transport Infrastructure Amendment Bill to introduce legislation to put the $100 million threshold in legislation, and that is exactly what we are doing here. We take our commitments seriously.

The bill amends the act to include in the functions provision the requirement that Infrastructure Australia undertake evaluations of proposals that involve Commonwealth funding of at least $100 million. This figure is to be established as a benchmark, based on 2014 dollars, and indexed every five years to ensure that this figure maintains relativity into future years. This provision is an expansion of the power given to Infrastructure Australia to evaluate projects. This means that the existing power to evaluate proposals for nationally significant infrastructure and other infrastructure determined by the minister has now been expanded to allow the evaluation of proposals for investment or enhancements to nationally significant infrastructure that are seeking Commonwealth funding of at least $100 million.

Contrary to what the member for Grayndler mentioned in his speech, there is no limitation in the new provision. That is what the words that introduce the provision, 'without limiting the function', mean. Let me make it also clear that this power to evaluate relates to proposals for investment or enhancements to nationally significant infrastructure. The reference to the word 'proposals' in 'proposals for investment in, or enhancements to, nationally significant infrastructure' makes it obvious that the consideration by IA is taking place when there is a proposal before them—that is, from a proponent seeking funding.

It is the duty of any government to make sure that Commonwealth funding is spent properly and we achieve value for money. We want to make sure that any project proposal seeking Australian taxpayer money is robust. As the opposition spokesman knows, there will also be other due diligence processes undertaken by my department before any funding decisions are made. I make this point to clearly state that this information that has been around and put forward by some speakers during the debate is wrong.

The government recognises the importance of improving Australia's processes for selecting, prioritising, financing and delivering major infrastructure projects. A robust methodology is necessary to properly inform consistent and relevant cost-benefit analyses for infrastructure projects. To this end, the government commissioned the Productivity Commission to undertake its inquiry into public infrastructure. The inquiry investigated a range of longer-term options to improve project selection and prioritisation. The government is closely considering the Productivity Commission's findings, with a view to releasing a formal response later this year, but is already undertaking reforms to improve the robustness of its project assessment and delivery mechanisms.

In line with the Productivity Commission's findings, the government recognises the importance of robust, consistent use of cost-benefit analyses in assessing projects to ensure that our limited public resources are targeted towards the productivity-enhancing public infrastructure projects which best meet Australia's needs. To this end, earlier this month the government released for public comment a proposed project appraisal framework developed, in consultation with Infrastructure Australia and state and territory governments, by the Bureau of Infrastructure, Transport and Regional Economics. The paper is the outcome of Australian state and territory governments agreeing to consult to develop a more sophisticated and consistent framework to assess and evaluate major infrastructure projects. I look forward to the outcome of that public consultation.

There has been some mention about the government's approach to public transport. Public transport needs are relevant in the delivery of Australia's infrastructure. For instance, the Asset Recycling Initiative will provide an opportunity for state governments to fund priority infrastructure which may include urban rail projects and so address public rail transport needs. Indeed, since the election of the federal coalition government, almost every state has committed to major public transport projects, and we welcome their commitment to fulfilling their responsibilities in that particular area.

The amendments in this bill build on the reforms already being implemented regarding Infrastructure Australia. This will ensure that this organisation is well placed to provide key advice to government and so inform decisions on the delivery of the infrastructure and transport that is so critical to the future needs of this nation. I commend the bill to the House.

Question agreed to.

Bill read a second time.