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Thursday, 29 May 1997
Page: 4012

Senator FERGUSON(3.41 p.m.) —I seek leave to make a short statement in a somewhat unusual manner. A committee report was tabled this morning for the Economics Legislation Committee. It was inadvertently tabled prior to its appearing on the red sheet because it was thought that there was no comment to be made. With the agreement of the Manager of Opposition Business, I seek leave at this stage to make a short statement on that report.

Leave granted.

Senator FERGUSON —The report that was tabled this morning was on the provisions of the Taxation Laws Amendment (Infrastructure Borrowings) Bill 1997. I only intend to make a couple of brief comments because it will be debated in the chamber later. Some important things need to be said today at the tabling of this report on this bill because a number of people who gave evidence to this inquiry undoubtedly would want to know what was in the report because it will affect possible decisions that they make.

I refer in particular to some comments that were made in the minority report signed by Senator Sherry. I want to refer to the points Senator Sherry made. He made three main points in the minority report. They were, firstly, that no abuse of the infrastructure borrowings arrangement had been demonstrated. Secondly, he proposed that transitional arrangements be provided which allow for all projects which have been certified by the DAA to retain that certification and that further opportunity for certification be provided for certain projects including the basis of regional development and regional employment. Thirdly, he said that the proposed bill may be retrospective.

I want to make a couple of comments on each of those points because it is important that they be refuted. Senator Sherry is certainly in a minority in claiming that the infrastructure borrowings arrangements were not subject to abuse. He only needs to ask his colleague Senator Carr, the current Manager of Opposition Business, who himself commented in the Senate on 28 June 1996 on the use of infrastructure borrowings. Indeed, he described some schemes as sordid arrange ments that were being used `to feather the nests of friends of the government and the private sector'. So Senator Sherry probably needs to consult with Senator Carr, because he says that there is no abuse in place, yet Senator Carr says that there were some sordid arrangements in place.

Senator Carr —In Victoria.

Senator FERGUSON —It does not matter where it is, Senator Carr. This covers the whole lot of the infrastructure borrowings. Just confer with Senator Sherry so that you make sure you get a united front.

Senator Sherry —He was actually sitting next to me when he said it.

Senator FERGUSON —Well, he can confer with you right there. In an article on 19 February 1997, shortly after the announcement by the Treasurer (Mr Costello) abolishing the infrastructure borrowing scheme, David Walker in the Age wrote that the features of the IB scheme `have proved irresistible to financial engineers large and small, who have tweaked into it something different from the government's original intent' and `some experts were saying the rorts had gone too far'. So if Senator Sherry in his minority report believes that there is no abuse of infrastructure borrowing arrangements, I think it is very clearly demonstrated.

In relation to the transitional arrangements, which is the second point that he makes, Senator Sherry has not grasped why the government acted in the way it did. The Treasurer (Mr Costello) indicated in his 14 February 1997 announcement that if all applications for infrastructure borrowing certificates were to proceed, based on the details of their current applications, the cost to the government would be in the order of $4 billion. This was not disputed: the cost to the government would be in the order of $4 billion. Senator Sherry's amendments have the potential to allow a large number of these projects to proceed, at an excessive cost to the budget.

On the issue of retrospectivity, the Treasurer's announcement on 14 February made it clear that no more infrastructure borrowing certificates would be issued after that date, except where a letter of undertaking had been given, and we heard that in evidence. Applicants who have pursued the issue of certificates since 14 February 1997 have done so in the knowledge of the Treasurer's statement and on the basis of advice from the DAA that certificates would later become void on the passage of the government's legislation. Let me make it quite clear that those people who were issued certificates after 14 February were advised by the DAA that they would become void on the passage of the government's proposed legislation. So I find it very difficult for Senator Sherry to argue retrospectivity when in fact these people were advised and notified that this would be the case.

We heard evidence in particular that placed much emphasis on the proposed projects at Redbank and the Oakey power station.

Senator Conroy —Good projects.

Senator FERGUSON —I agree with you, Senator Conroy. There was emphasis on the roles that National Power and Siemens have played in both of these projects. But I think that the minority report which was put down by the opposition really ought to take note of two particular sentences in the report where the government confirms the commitment in the 1997-98 budget, with details provided of an infrastructure borrowings rebate. Then it says:

The evidence provided to the Committee from these projects appears to indicate they would sit well with the criteria outlined by the Government to apply to the new IB rebate programme.

It is important to note that, although the new program relates to road and rail infrastructure, in fact all of those people who have applied through the other broader criteria will be eligible, which means that both Oakey and Redbank will be eligible under this scheme. I think that, with the assurances that have been given—

Senator Conroy —What assurances?

Senator FERGUSON —The assurances have been given that they sit well with the criteria that have been outlined by the government.

Senator Sherry —How can you give that assurance?

Senator FERGUSON —If we take the route that Senator Sherry takes, it could cost the government $4 billion; that is what it could cost. It would appear that those opposite are more concerned with talking than listening, when they will get a chance to say something in a minute.

Senator Carr —I hope you stay and listen.

Senator FERGUSON —I will stay and listen, Senator Carr. I will be very interested to hear what Senator Conroy has to say on this, because I understand he is speaking.

It is important to realise that, in closing these loopholes identified by Senator Carr on 28 June 1996 when he said there were some sordid arrangements feathering the nests of friends in the private sector, and when other people have commented that the rorts have gone too far, it is the government's intention to make sure that those rorts do not continue. For that reason, the recommendation that the government has made in tabling this report is that the legislation proceed and that the new program that will be put in place in the spring sittings will then cover those people, who will be eligible to apply under the new scheme once that legislation is put in place.