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Thursday, 29 May 1997
Page: 4014


Senator CONROY(3.49 p.m.) —by leave—That is typical of the government's approach: claim a rort, go over the top and throw the baby out with the bathwater. That is the track record of this government. We saw the Premiers Conference last year. The Treasurer (Mr Costello) stood up on national television and said, `The state governments are rorting the tax system. It is an outrage. We've fixed it. We've cut it off.' And what happened? He went crawling back because Jeff Kennett and the other premiers rolled him. The Prime Minister (Mr Howard) did a deal and rolled the Treasurer on it—humiliation for the Treasurer. The R&D claims of rorts—never substantiated.


Senator Ferguson —I thought you wanted to talk about the report.


Senator CONROY —We will be getting there, Senator Ferguson. Then we had the Wright family and the rorts the millionaires were pulling on the means tests. We all know about the fictitious Wright family. Now we come to infrastructure bonds and the rorts that were being pulled in infrastructure bonds.

When asked to produce evidence, what was the response from Treasury? You were there, Senator Ferguson. You had Treasury officials who said, `Well, we have looked at a few of the projects and a couple of them might have been tax aggressive, but what we are actually worried about is the capacity to change the guidelines that are approved after the approval has been given.' When asked whether Redbank or Oakey contained any of the tax aggressive positions that they were suggesting, the answer was, `We haven't looked at them.' So we are throwing out good projects; projects that are about jobs in regional Australia, which is crying out for them. They are being thrown out, not on the basis—


Senator Ferguson —They'll still get them.


Senator CONROY —Is that a promise? You cannot promise that. They are being thrown out. Construction would have started today if it was not for the Treasurer. The Treasurer has single-handedly stopped construction on Redbank—single-handedly. Work would have started this week if it was not for the Treasurer. Construction jobs, engineering jobs, were this week stopped by the Treasurer.

What has been the impact on Australia's reputation? Senator Ferguson has referred to Siemens—a huge international company—and National Power—a huge international company—and they cannot believe it. They have signed contracts. They are shaking their heads in disbelief. This is like operating in some of the banana republics. That is what this is like operating in. You sign contracts, you comply with the government guidelines and the government says, `Come and use these infrastructure development bonds.' And what happens? After they have put in their application forms, signed the projects, it is ripped out from under them. They are shaking their heads in disbelief at this government. They thought they could encounter this sort of activity only in banana republics.

For the benefit of senators who were not involved in the committee and have not read the report, Redbank is providing 200 construction jobs, 1,000 engineering jobs and $10 million a year into the Hunter Valley's regional economy—vital. This is the same government that was playing blackjack down at the casino while steel workers are going under in Newcastle and the Hunter. Do they care? No. They were down at the casino with their mate Jeff, playing blackjack. That is how much they care about the Hunter Valley.


Senator Sherry —Simon was there, though.


Senator CONROY —Our shadow minister for regional development was there, as Senator Sherry said. Then we heard the suggestion from Senator Ferguson that they could use the new scheme. What a joke. The new scheme is a quarter of the size of the old scheme. It is a joke to suggest to specifically keep it to roads and rail. It does not matter that EPAC did a study and said that infrastructure projects for roads were the worst use of infrastructure bonds. That is what they said—minimum economic benefits. What about City Link, Senator Carr?


The DEPUTY PRESIDENT —Senator Conroy, you shall address your remarks through the chair.


Senator CONROY —Sorry, Madam Deputy President.


Senator Carr —The fleecing of motorists.


Senator CONROY —The fleecing of motorists; that is right. That is what happened with City Link; it was the fleecing of motorists. The kindest words that could have been said for the new system that Senator Ferguson champions were vague. It was described as a beauty contest because it is going to delay projects for another six months. It has to go through some committees. It is all subjective. There are no objective guidelines. It is all about picking winners. Some government committee is going to make the decision without objective guidelines.

In particular, I would like to talk about the conduct of the DAA—the Development Allowance Authority. Their evidence to the committee was at best unclear and completely unsatisfactory. When asked what the written criteria were that they used to determine which projects they were working on, they admitted they had none. Even after the flood of applications, which clearly increased their workload—and, interestingly, almost half of those applications came from one financing company, and we will come back to that—they admitted that to this day they have no written criteria.

Why did clients using the DAA not know what the criteria were? DAA's answer was, `We don't understand why they misunderstood what the criteria were.' They actually set out criteria including the likelihood of the project proceeding, the expected draw down date of the infrastructure borrowings, the expected date of commencement of construction and whether the financing was consistent with the symmetry originally contemplated by the government in introducing the concession. That is very important.

Redbank and Oakey met all these criteria, but their applications sat waiting for months while projects that were not even close to completion got approved. Some of them had not even lodged a development application with their local council. Some were for tenders and they got approved. Some still do not have an EIS approval from the government about whether the project will begin, like the rail link in Brisbane. They do not even have Queensland government approval for the project to go ahead, and they got approval.

So what has been going on down at the DAA? Why did one company, one financial adviser, succeed in getting projects like that through the DAA when legitimate projects that would have started construction this week, would have drawn down their bonds before the end of the financial year, did not have approval? These are the questions that DAA were not able to answer. The only suggestion that they were able to make was that they gave out their certificates on the basis of need by their clients who were applying.

It is miraculous—in fact, unfounded—that no-one other than one company seemed to have understood that. Only one company went to them in the required time and said, `We need these projects.' AIDC contacted DAA between eight and 10 times from November through to February to say, `Where's our certificate?' but they did not seem to understand that all they had to do was say, `We need it. We'd like it shortly. It's urgent.' That is all they had to do. They went through the process of answering letters, putting documentation in and making eight to 10 phone calls to the DAA to say, `What's happened with our applications? Where are they?' The furphy of the lot from DAA, before I am cut off, was they said, `We still need information in March.' (Time expired)