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Monday, 24 June 1996
Page: 2557

Mr MUTCH —My question is addressed to the Treasurer. Is the Treasurer aware of the considerable uncertainty created by the decision of the previous government to remove the eligibility for urban roads in relation to infrastructure borrowings? Can the Treasurer advise the House whether the government intends to take any action to remove this uncertainty?

Mr COSTELLO —I thank the honourable member for his question. On 15 December 1995 the previous Labor government announced, effective immediately, that it would no longer offer tax benefits in the form of infrastructure borrowings for urban roads. Mr Speaker, you would be aware that the basis of that decision was factional fighting within the Labor Party in relation to City Link and the M2 projects. Even though the City Link would have proceeded, the announcement was to be prospective and to prevent further infrastructure borrowings in relation to urban roads.

Mr Tanner —Hence it is irrelevant to City Link.

Mr COSTELLO —Yes, hence it was irrelevant to City Link. But it proceeded anyway, so I don't know why the socialist left made such a noise about it. This government has its socialist left under better control.

Opposition members interjecting

Mr COSTELLO —I take it back; I withdraw. As far as our government is concerned, we always reserve the right to review infrastructure borrowings and to make sure the program is meeting its objectives. There is no basis on which, whilst infrastructure borrowings are proceeding generally, urban roads could be excluded. There was no basis to the previous government's decision, apart from the political ones, which I described earlier. Against this background, the new government has decided to reinstate urban road projects for eligibility for infrastructure borrowings.

Let me make it entirely clear that the government's position is to allow the borrowings. The decisions as to where roads will proceed or who will use that tax treatment is a matter for the state governments concerned or for those who are actually constructing them. Those matters are a matter for the government's concern and any private sector partners that might use infrastructure borrowings.

This decision will allow developers of urban road projects considering the use of infrastructure borrowings to proceed with certainty. We are restoring policy consistency in relation to this matter.  On the current forward estimates in the budget for the cost of infrastructure borrowings, the decision to reinstate urban road projects is expected to have minimal impact for 1996-97 and for future years.