Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Hansard source

I move opposition amendments (9) and (12) on sheet 7486 together:

(9) Clause 19, page 18 (lines 7 to 16), omit the clause, substitute:

19 Recommendations about grants payments

(1) The Finance Minister must not make a direction under subsection 18(1) in relation to a grant for an infrastructure project unless the Infrastructure Minister has recommended that a direction be made.

(2) The Infrastructure Minister must not make a recommendation under subsection (1) in relation to a grant for an infrastructure project if:

  (a) capital expenditure on the project is $100 million or more; and

  (b) Infrastructure Australia has not done both of the following:

     (i) given the Minister an evaluation of the project (see subsection (3));

     (ii) advised that there are likely to be productivity gains from the project.

(3) Infrastructure Australia's evaluation of an infrastructure project mentioned in subsection (2) must:

  (a) contain a cost benefit analysis of the project, including an estimate of the productivity gains from the project; and

  (b) set out any other matter that Infrastructure Australia considers relevant to the project.

(4) The Infrastructure Minister must not make a recommendation under subsection (1) in relation to a grant for an infrastructure project if:

  (a) the grant is for expenditure incurred under the National Partnership Agreement on Asset Recycling; and

  (b) the grant does not relate to a transaction that the Treasurer has approved by legislative instrument.

(5) An approval under paragraph (4)(b) must specify the State-owned assets, or the parts of State-owned assets, to the sale of which the transaction relates.

(12) Clause 25, page 21 (lines 4 to 7), omit the clause, substitute:

25 Recommendations about payments

(1) The Finance Minister must not make a direction under subsection 24(1) for the purposes of making infrastructure payments for an infrastructure project unless the Infrastructure Minister has recommended that a direction be made.

(2) The Infrastructure Minister must not make a recommendation under subsection (1) in relation to infrastructure payments for an infrastructure project if:

  (a) capital expenditure on the project is $100 million or more; and

  (b) Infrastructure Australia has not done both of the following:

     (i) given the Minister an evaluation of the project (see subsection (3)); and

     (ii) advised that there are likely to be productivity gains from the project.

(3) Infrastructure Australia's evaluation of an infrastructure project mentioned in subsection (2) must:

  (a) contain a cost benefit analysis of the project, including an estimate of the productivity gains from the project; and

  (b) set out any other matter that Infrastructure Australia considers relevant to the project.

(4) The Infrastructure Minister must not make a recommendation under subsection (1) in relation to infrastructure payments for an infrastructure project if:

  (a) the payments are for expenditure incurred under the National Partnership Agreement on Asset Recycling; and

  (b) the payments do not relate to a transaction that the Treasurer has approved by legislative instrument.

(5) An approval under paragraph (4)(b) must specify the State-owned assets, or the parts of State-owned assets, to the sale of which the transaction relates.

Amendment (9) and amendment (12) are critical amendments that place proper processes around approvals given to projects by the infrastructure minister. These are preconditions to grants or payments from the Asset Recycling Fund, including under the Asset Recycling Initiative. That initiative proposes a Commonwealth contribution to a state or territory totalling 15 per cent of the reinvested proceeds from a privatisation. The bill provides no criteria for deciding how scarce Commonwealth funds will be prioritised to competing projects. Labor's amendment proposes to fix that. As the Parliamentary Library has noted in its Bills Digest, the strong selection criteria that Labor applied under the Building Australia Fund has not been replicated in this bill. As this bill proposes to empty out the BAF, these amendments will retain independent and transparent approval processes around project selection by requiring Infrastructure Australia to green-light projects of over $100 million in value. Good governance follows the money.

These amendments are also consistent with the Treasurer's intent to recycle privatisation proceeds into productivity-enhancing infrastructure. They are consistent with Labor's amendments to the Infrastructure Australia Amendment Bill and those we have moved for the Land Transport Infrastructure Amendment Bill. These amendments are also consistent with the broad call for independence and transparency of project advice from important stakeholders, such as the Business Council of Australia, Infrastructure Partnerships Australia, the Urban Development Institute, the Bus Industry Confederation, and the Tourism and Transport Forum. These amendments align with the Productivity Commission's recent finding in its interim report on funding of public infrastructure.

This is one of the Productivity Commission's findings I agree with. It says:

The overriding message of this draft report is the need for a comprehensive overhaul of processes in the assessment and development of public infrastructure projects.

In the case of either a grant, item (3), or a payment, item (6), to a state, territory or other entity in respect of a project greater than $100 million in value, the infrastructure minister must first have received an evaluation of the project from Infrastructure Australia and advice from it that the project is likely to produce productivity gains. IA's evaluation must include a cost-benefit analysis of that project.

Additionally, for a project involving the privatisation of a state or territory owned asset and recycling of the proceeds into another asset, the infrastructure minister cannot recommend a project unless the Treasurer has approved the privatisation transaction as eligible for a Commonwealth contribution from the asset recycling fund. The mechanism for this approval will be via a disallowable instrument for each transaction. This proposed change reflects Labor's view that there are good and bad privatisations. Labor believes that the Commonwealth should not reward states, for instance, for selling assets in a fire sale or without adequate regulatory protections.