Senator TIERNEY (11:35 PM) —I rise tonight to outline to the Senate the many advantages of private investment in Australia's transport infrastructure. We hear over and over again about the congestion in our cities. Of course, in such a large country, businesses right across the country face the problem of the tyranny of distance and have faced for many decades an inadequate road and general transport system. There is a great need to improve Australia's transport infrastructure.

When I was in the United States 20 years ago, I came across a man who berated me for the very poor state of Australia's roads. He had travelled around the United States on their magnificent expressway system. When he went round Australia in the early 1970s, he just could not believe the state of our roads. But, with a country the size of the United States and with a tax base one-twentieth or five per cent of that of the United States, obviously we have a great deal of difficulty keeping our infrastructure system up to scratch. What has made it particularly difficult is we have insisted for so many years that this sort of infrastructure be totally government funded, that it all be funded out of the public purse. We have to ask ourselves very seriously whether this approach has delivered us the best possible outcomes.

Increasingly, the private sector is getting involved in this sort of investment. So a major policy decision that faces us in this parliament—and, indeed, in all the state parliaments—is: what is the appropriate mix of government, private and combination of government and private in the development of Australia's infrastructure?

Unlike the previous ALP government, which scrapped the essential black spots program, this coalition government is committed to maintaining and improving Australia's transport infrastructure. The key question to ask is: is it really—as the Labor Party and many of the public say—best way to go through public investment only?

About 40 years ago a private American company put forward a proposal to build the Sydney to Newcastle freeway; it proposed to build it at no public expense. The only condition that company put on the proposal was a toll which would be on the freeway for 20 years, and then the company would hand it back to the government. The then Cahill Labor government refused on ideological grounds to allow this proposal to go ahead. It then took governments over 30 years to complete that project.

One of the advantages of private money is that the money is up front straightaway, and the project gets built at a very fast rate. Private developers have to do this to get a proper return on their investment. We were deprived for many years of proper roads between Sydney and Newcastle. Fortunately, after 35 years that situation has been corrected. It needs correcting in many other areas of Australia, and that is why we need to embrace more enthusiastically private money in public infrastructure.

It is starting to become more common, as a number of the projects around Sydney show. The building of the M2 motorway in northern Sydney is an example. The current eastern distributor is another example. A matter that was raised this week in this parliament, in terms of Sydney's transport, was the western orbital road which would complete the link road around Sydney; and decisions have to be made on that as to what is the most appropriate mix of public and private investment.

There are several reasons why private investment is becoming more common. There are ownership conflicts between government as the owner and government as the regulator. It reduces government deficits and it improves international competitiveness. Also, people are starting to question why the government should own assets such as power stations, telecommunications facilities and transport infrastructure. By putting a lot of government resources into these things that are often much better run by the private sector, we tie up valuable and scarce capital and, therefore, deprive other sectors that are very much within the purview of government from the benefits of that money. So moving towards a system where we have more private investment in public infrastructure frees up more money for the health system, for the education system and for the welfare system.

One of the best examples and state-of-the-art practices in terms of the way in which this private infrastructure money is working for Sydney at the moment relates to the eastern distributor. This is the main route that will occur in the next few years between Sydney and the airport. It will alleviate major traffic problems and the very worst bottleneck in Sydney, which is at Taylor Square. It will be a very important conduit during the 2000 Olympic Games. There is an expected opening two-way traffic of 80,000 vehicles per day. But here is the big bonus: the company that is building it and the financiers have, under the contract, agreed to transfer this eastern distributor back to the government for nothing after a period of 48 years. So, despite making no outlays at all for this project, the government will own the road.

Allowing private sector investment in these types of projects also transfers inherent risks, such as project cost overruns, to the private sector, saving the government money. Macquarie Bank has outlined the benefits from private sector participation in the eastern distributor as follows: the liberation of public funds for social infrastructure; the private sector being better equipped to deliver and manage economic infrastructure; the $600 million freed up to be used for other social infrastructure projects, such as hospitals and schools; and the fact that the road will be handed back to the government free of charge at the end of the concession period.

Private sector investment also helps get infrastructure projects under way that much more quickly. The eastern distributor that is now being built is well ahead of schedule. Macquarie Bank has argued that, without private investment in the eastern distributor, it would not have been completed prior to the commencement of the Olympic Games. This scenario would have been an absolute disaster for Australia's hosting of the games and would have led to the sort of traffic complaints that we saw in Atlanta.

So why don't we see even more private investment and less public? The reality is that, out there, the public is not sure of the benefits of private investment over public. Popular criticism is that it is `selling off the family jewels', that it will result in a loss of service and lower safety standards and a loss of job security. However, in reality, there are many more advantages than disadvantages. It can deliver to the community infrastructure way ahead of the time that it would have come into being with public funding. The projects are completed more efficiently on time and on budget and on a more economically viable basis.

The advantages of private investment in public infrastructure far outweigh the disadvantages. The challenge before us in this parliament and certainly in the private sector is to work very hard to sell that message to the public.