Mr CADMAN(10.47 a.m.) —I think that there are many in Australia who seek to hike back to the days of Snowy Mountain schemes and great infrastructure projects and the vision they say those projects played in Australia. In part, that is true, but in this day and age the Australian people have a huge debt to pay off which they did not participate in. I believe that job availability and opportunities for youth, the functionality of families and the capacity of families to exist, care for the aged, health costs and things like that are the main centres of focus for Australians. There is not really the same imperative in their outlook for large projects of the type of the Snowy Mountain project.

Many elements of the remarks of the member for Hotham (Mr Crean) would lead us to think that the solution to many of Australia's problems are grand projects and grand infrastructure activity. In particular, I took him to say in his presentation that only with massive government intervention into Newcastle could some of those problems be solved. In my view, the member for Perth (Mr Stephen Smith) made a very interesting speech because he seemed to distance himself from those remarks in a very basic and thoughtful manner. He was more realistic about the opportunities for Australia to take on large projects and really directed his attention to how we could achieve those projects using alternative methods rather than total government involvement and total government directed investment.

The debate in Australia is really: how do we as a nation achieve things without having to take money from taxpayers, put it into government coffers and then redirect it at government whim into projects that the government endorses? What we are really doing as a nation is drawing on the creativity, inventiveness and drive of the total Australian population rather than saying, as the Labor Party has traditionally said, that all of the brains, all of the brilliance, all of the drive and all of the direction for the future of Australia lies vested in Canberra amongst a few politicians. That is absolutely not true.

One has to go back only 14 or 15 months to see how untrue that is and to realise that all of the activity of the Australian Labor Party and the government of Paul Keating directed to new work opportunities, to Working Nation, to infrastructure bonds and all of those sorts of things could not produce anything but disastrous results. In fact, if all of those schemes had been successful, there would still not have been enough capacity in Australia for us to take on large infrastructure projects and successfully carry them through. In fact, the member for Hotham and the Australian Labor Party are battling to identify successful projects that are related and that have been brought about by their activity and by the introduction of the infrastructure borrowing bonds process.

On 5 December 1995 I put it to the House—and I think I was the only one on my side or amongst all members of the House to say—that I believed that the decision to introduce infrastructure borrowing bonds was a bad decision by the government and was a decision which would lead to misdirection of resources. It did not favour any input from the marketplace or the needs of the country but really sought to provide a favoured treatment—a tax funded treatment—for projects that were dreamt up to gain a tax advantage.

That has proved to be the case. It has been proved over the last three years that the proposal of the government of the day—the Labor Party—for infrastructure borrowings was a failure, simply because it left things so open that people were able to capitalise on the tax concessions in such a way that the infrastructure projects that were so dear to the heart of the Labor Party did not go ahead. Instead, the tax advantages flowed to people making investments and manipulating the funds. That is a shame, because their goal and their purpose were laudable enough, even though I believe misdirected. But it is a double penalty when your misdirected intentions fail, and the failure of the project has been rectified by the new government where the tax rorts have been cancelled out and a new process put in place.

At the same time, however, I would like to point out to the House that the real benefits of the change of government can be seen in the figures coming through on the way in which new capital expenditure, new investment, is taking place in Australia today. One only has to look at the March quarter results of new capital expenditure to see that there has been a 40 per cent increase in the estimates of capital expenditure for this year.

I acknowledge that this is not people investing in every instance in big projects such as ports and gas pipelines, but it is people investing in income generating activity such as new plant and equipment, improvements to their offices, their factories and their farms. This is driving ahead the opportunity for Australians to take advantage of a better way of life.

It is not government funded. Total business investment rose strongly in March, the quarter that we have just finished, to its highest level since the survey commenced in June 1987. So for the first time for a decade new capital investment is starting to rise to a level where it will generate growth, activity and opportunities for Australians in jobs and in expanded export opportunity, increased efficiency and productivity.

That is something that was not able to be achieved by huge concessions made to infrastructure borrowings and infrastructure funding. So one has to look at the total input to this nation to be able to ascertain precisely how well government policy is working.

Equipment spending has also reached its highest level since the survey began. Equipment spending is a pretty important aspect, because capital expenditure can include things like aircraft and other things which are imported, but the equipment spending is really the basis of new and future production. It does give an indication of confidence in the future for those making the investment. It does give an indication of the prospects for job improvement and for new opportunities for Australia. We now have had the third quarter of growth in capital expenditure and we have reached an historic high. That must continue.

But at the same time as removing the rorts that were implicit and perfectly predictable in the previous government's infrastructure borrowing scheme this government has now introduced changes by introducing the infrastructure borrowing tax rebate—a much cleaner and easier way of giving a concession, if one needs to give concessions to large projects.

Certainly, the demands on the financier and the investor are more rigid than was previous ly the case. But I guess the thing that I applaud more than anything else is the accountability that has been built into the process by the current government.

It is all very well for the Australian Labor Party to say that there is a whole bunch of `what ifs?'—`What if we had done this?' or `Maybe if we had done something else we could have achieved more.' They had a chance for 13 years. It is the first time in 10 years that we have seen a big increase in capital expenditure, and now we have seen a sensible infrastructure borrowing scheme that can generate $2 billion worth of investment. The start-up is $37 million, and in 1999 it will be $75 million—which will produce $2 billion worth of capital investment, because it will encourage the mix of private sector funds with the tax concession given by the Australian taxpayer.

The fact of the matter is that, at the end of the day, if there were no concession of this type the Australian taxpayer would be $75 million better off. But I do believe that the $75 million is about all that Australians are prepared to pay in this day and age for infrastructure. Most of them are more concerned about their family circumstances and the prospects for their kids than they are about infrastructure. They do believe—and I endorse that thought—that the circumstances ought to be such that private enterprise is encouraged to do these things and not to have the hand of government on all advances Australia wants to make.

When we took the rorts out of the system, there was a cry from the Labor Party. I participated in that debate and pointed out to them that they were wrong again. It did not seem to make any difference to the member for Hotham, who keeps raving about Newcastle and whether ministers should go up there or not. It is purely a political process; he is not applying his mind to the future needs of the nation. I think that the member for Perth and other members in this chamber are providing a very welcome intellectual input to this process, and I want to compliment them on that.

I hope they subsume those ahead of them, because I think that the attempt at that sort of political point scoring by the member for Hotham just does not really cut the mustard, because it does not really register with the people of Newcastle. They understand the circumstances and they know that he is engaged in political point scoring, because it was his policies that brought about the circumstances we have today in Newcastle. What he is proposing, I think, in some nebulous way, is some rescue package which was tried time and time again by the Australian Labor Party when they were in office and failed.

When we first brought changes to this process and the House debated the Infrastructure Certificate Cancellation Tax Bill, I pointed out to the House that, if we were going to give concessions, they needed to be directed. By the proposals announced in the budget, they are well directed.

The Treasurer (Mr Costello) gave good notice of this. There can be no claim by the Australian Labor Party that there should be greater support for private provision of infrastructure; nor should there be any claim that infrastructure borrowings, applications pending or anything like that have been harshly dealt with because they have all been taken care of within the budget process. For a simple outlay of $75 million, the eligible categories for new public infrastructure are road and rail projects and their related facilities, the projects that had applications for infrastructure borrowings pending at the time of the 14 February announcement and extensions of projects that had previously been certified for infrastructure borrowings use. It is a perfectly reasonable transitional arrangement.

The other condition that applies, and it is an important one, is that only genuine private sector proponents who provide new public infrastructure will be able to access the tax rebate. Private sector proponents will be able to access the rebate only if they pass the tests contained in section 51AD and division 16D of the Income Tax Assessment Act. It is a proper, rigorous approach: are the funds really going to be used for the purposes for which the investors say they will be used? Therefore, we have the accountability process built back into the system. It is reasonable, it is directed and it is focused. It meets the needs for infrastructure activity, particularly within the categories of rail and road, because if there is any impediment in the cost structure of Australia today to our capacity to compete it is the infrastructure costs related to transportation.

We suffer huge penalties for the distances that our goods have to be moved, and then, having moved them around within Australia, there is the cost of transhipping them overseas if they are being exported. So the directed approach being taken by the government is logical in light of the stage we are at, in light of our development and needs and the neglect that has occurred over the years.

People have said in this House, `If only you could build a railway line from Adelaide to Darwin many of our problems would be solved.' The line is halfway there, but the problems are not half solved, so I think a rigorous economic test needs to be applied to this process, and that is what the government has said it will do.

As to stage 2 of this proposal, only projects which have fully satisfied the requirements of stage 1—that is, rail and road, in transition and genuine private investment met—and have satisfied additional assessments as to the viability of the project from a commercial feasibility viewpoint will be assessed. Therefore, there will not be a rebate for those projects which are pie-in-the-sky sorts of ideas that may attract a tax concession but which will not produce results. We are not going to have jojoba sorts of activities or the psychedelic ostrich farm type investments that are so speculative in rail and road. They will not be part of this government's regime. They will have to pass the viability test, and I think that is a reasonable thing for the government to require.

As to the extent to which the project should not proceed without the rebate, another test that will be applied is whether there is a need for a rebate. Could the commercial investors go ahead without taxpayer support is one of the questions that they will have to answer. The extent to which the tax benefits arising from the rebate flow to the infrastructure proponent is also significant because we will not be allowing investors to reap the benefit; the tax concessions must be directed into the nuts and bolts, the bricks and mortar, of the project so that the project itself gains the benefit. In practical terms it means that, if under normal circumstances you can build 10 kilometres of freeway without the rebate, you ought to be able to build 12 or 15 kilometres of freeway with the rebate. So the advantage of the tax rebate will be directed.

I welcome this change because it is starting to get things back on the road. But I do draw the attention of the House to the fact that this important measure—now well directed, now under control—is linked to private sector capital investment. It is only when the two go together that we will get a real multiplication factor in the capacity of Australia because some concession for infrastructure—for roads and rail and maybe other things eventually—may be needed from government. I really believe that the true emphasis is on giving people who have goals and visions of their own a capacity to do what they want. That can only come from a healthy economy where people are content and forward looking, not from a regressive, overtaxed, restricted economy with a huge debt around its neck. That is the direction this government is taking the nation—not to debt but to success and profit.