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Tuesday, 25 November 2008
Page: 11275

Dr KELLY (Parliamentary Secretary for Defence Support) (6:09 PM) —It is very interesting to follow the member for North Sydney and his comments in relation to the lack of planning. There was 12 years of that and a lot of catch-up has to be done. It is with great excitement and pride that we on this side of the House welcome the introduction of the aptly titled Nation-building Funds Bill 2008 and the associated bills—in particular, the COAG Reform Fund Bill 2008, which establishes a mechanism for the transfer of moneys to the states and territories. The measures that will be brought into effect by this primary bill will drive this country forward. Not only will they finally address the capacity constraints that have held back our economy for too long but, in the context of the current financial crisis, they will have the added timely benefit of helping to offset the impacts of the crisis. These measures will in fact build on the interim $10.4 billion Economic Security Strategy that passed through the House during the last sittings and the stimulus to local government spending emerging from the Australian Council of Local Government conference on 18 November to see us through these difficult times. They will also position us to take advantage of the inevitable economic rebound.

The government’s strategy and nation-building agenda is a shot in the arm for the Australian economy in the face of the most substantial economic challenges we have faced since the Great Depression. It is a salutary illustration of the increased interdependence of the international economy. For example, who could have imagined that a decision made by the Irish government regarding savings guarantees would have had such a knock-on effect around the world?

The International Monetary Fund now expects growth of less than one per cent in six of the world’s largest developed economies next year. This will be the slowest growth in developed economies for over a quarter of a century. The Australian government has acted quickly and decisively to ensure that the Australian economy continues to grow through these difficult economic times, and investment in infrastructure projects will be part of this strategy.

The essential feature of the Nation-building Funds Bill 2008 is the establishment of three key funds: the Building Australia Fund, providing the basis for unclogging the arteries of our national infrastructure and tackling our critical transport, communications, energy and water issues; the Education Investment Fund, to address the skills needs of our economy by investing in higher education infrastructure, vocational education and training infrastructure and the creation or development of research infrastructure; and the Health and Hospitals Fund, to remedy the urgent needs of our health system through funding for the creation or development of health infrastructure. The bill provides that by 30 June 2009 there shall be not less than $5 billion in the health fund, $7.5 billion in the Building Australia Fund and $2.5 billion in the education fund as the first instalments. All these funds will be supervised by advisory boards and Infrastructure Australia, ensuring good governance and putting an end to the pork barrelling and politicised approach to spending of the Howard government.

The need for such action is not a sudden revelation. It has been evident for some time that the economy was being held back by infrastructure constraints, particularly in export growth. Over the last six years of the Howard government, export volume growth averaged only three per cent. During the prior 20 years of the eighties and nineties export volume growth averaged around seven per cent. The reason for this decline was infrastructure deficiencies. This was pointed out in the Fisher task force report, Australia’s export infrastructure, in 2005, and in OECD and International Monetary Fund reports in 2006. What was the Howard government’s response? They did nothing. This has been highlighted by the latest Access Economics Budget Monitor, which stated that under the Howard government:

As more and more unexpected revenue poured into federal coffers in recent years, budget decisions increasingly smacked of less strategic spending.

The report records the ‘poor economic management’ of the Howard government which:

… wasted much of the once-in-a-generation opportunity thrown up by the China boom.

Thankfully, we now have a team at the wheel that is prepared to shape events rather than be shaped by them and that will not fiddle while Rome burns. The Prime Minister, the Deputy Prime Minister, the Treasurer, the Minister for Finance and Deregulation, the Minister for Superannuation and Corporate Law and the Minister for Innovation, Industry, Science and Research have implemented an array of complementary measures to add to our infrastructure efforts. It should be noted that this team has been working tirelessly alongside dedicated public servants to protect the Australian economy. It is very much a question of the men and women meeting the hour, and the Australian people will have cause to be grateful that we have such steady and visionary hands on the levers at present.

And it is not just now that these abilities and this prudence have been demonstrated. How many times over a number of years has our Labor leadership drawn attention to the fact that we should have been taking advantage of the good times to make the necessary infrastructure and skills reforms that the country was crying out for? We highlighted the need to remove the capacity constraints on this economy and seize the opportunities and potential of new technology and industries so that we would not fall victim to the so-called Dutch disease relating to over-reliance on resource wealth at the expense of a diversified economy. What was the response of the Howard government? ‘She’ll be right. The government can continue to lie back, fat, dumb and happy. The good times will last forever. What the hell is Labor talking about?’ The Howard leadership ridiculed Kevin Rudd for having the temerity to suggest that Western Australia should take the opportunity of the mining boom to diversify and position itself as a provider of international financial services. How typical of their short-termism, their lack of vision and their irresponsible approach to economic management!

In so many respects, the Howard government was reminiscent of the administration of US President Calvin Coolidge, who was in office immediately prior to the Great Depression of 1929. The philosophies of Howard and Coolidge were very similar. They had mindless optimism that the market would always look after itself and that the good times would last forever; they ignored infrastructure constraints, thinking this could always be left to the private sector; they expected that prosperity would naturally trickle down to all sectors of society; they provided tax advantages to the wealthy at the expense of investment in infrastructure; they favoured the big end of town over the promotion of competition; and they disregarded the disadvantaged in the community. Coolidge at least had the excuse of not having much in the way of historical precedent to draw on but the Howard government had no such excuse. I have no doubt that in time John Howard will come to be regarded as the Calvin Coolidge of our time. The Howard government will forever be known as having slept on its watch, and so many of that team are still here and still asleep.

Fortunately for the United States, the administration of President Franklin Delano Roosevelt, taking office at the height of the Great Depression, managed to right the ship, manage the crisis and at the same time achieve massive infrastructure development that serves the United States to this day. Fortunately for Australia, we have the Rudd team, which is similarly addressing the complacency and neglect of the Howard years, steering this country through these troubled times and preparing us for the future. The proof of this is in the presentation of this bill.

And what are the critical areas of infrastructure that the Howard government neglected for so long? One glaring example was the need for a National Broadband Network, or NBN, which has been well understood by Labor as the greatest single piece of infrastructure required in our economy and society today. The impact of an NBN will be on a par with the great nation-building projects in our history, such as the Snowy Hydro scheme, which I am proud to have in my electorate, and the Adelaide to Darwin telegraph. The Adelaide to Darwin telegraph, completed in 1872 by a visionary South Australian government, was the spark that ignited the Australian economy. It provided this country with an ability to have close to real-time overseas communications and participate effectively in international trade. The NBN is set to have a similar impact. In a nation such as ours with a huge geography and low relative population we cannot expect private industry to deliver solutions in the same way as has been possible in Singapore or the Netherlands. Like the Snowy and the telegraph, therefore, such critical infrastructure requires a visionary and determined government to provide the impetus and support. It is interesting to note that the Snowy scheme was the product of the Chifley Labor government and that at the time it was not only not appreciated or understood by the Liberal Party but vigorously opposed by its leader, Robert Menzies. It seems that the opposition have learned nothing from history and remain as intellectually bankrupt as they have always been.

It was a great pleasure for me to have conducted a number of forums in my electorate on the broadband issue during the course of 2007. Through these forums and my conversations with thousands of constituents I got the message loud and clear as to all the various applications reliable broadband could have for rural and regional Australia. It is critical for the future of our towns, schools, medical support and small and medium enterprises. Broadband can help defeat the tyranny of distance and ensure that our kids get an education the equal of that of any city child.

I came across a businessman in Batlow who handles large media files and at present has to load these up in the evening and hope they transfer overnight without the line dropping out. There were farmers around Dalgety who wanted reliable broadband for online sales and to follow the futures market. Greater bandwidth to our schools would enable the operation of virtual classrooms so that the language courses that cannot be given now could be conducted across a number of classrooms in the region using the one teacher from a central location. Our aged care and remote medical facilities could be better supported by telemedicine, with patients being able to be monitored and advised by the best doctors without having to travel over our snow and ice covered roads.

And then there are the key transport bottlenecks and opportunities. In my electorate there are many of these that are holding us back. An example is the Princes Highway, which has been neglected as a key coastal economic artery and which has been a serious safety concern. At the town of Bega it is necessary for B-doubles to perform time-consuming and costly uncoupling and coupling operations on the edges of town, while larger and larger rigs perform an increasingly dangerous dogleg through town. Fortunately, this government is addressing the problem after 30 years of inaction. Then there is the Gocup Road, which is likely to double in heavy traffic with the massive expansion of the Visy pulp mill. There are untapped opportunities for the Moruya airport taking direct flights from New Zealand with some upgrading work to the runway and terminal and huge potential for the port of Eden with some basic breakwater measures.

One thing that will hold back any rural and regional town is health services. Over the last 12 years of the Howard government, country Australians suffered from a gradual erosion of services—this on the watch of those who profess to have rural and regional interests at heart. It was no wonder that their neglect led to the rise of Pauline Hanson and the gradual disintegration of National Party representation in this place. There are many fine, decent men and women in the National Party who sincerely want the best for our rural and regional communities—people like the member for Riverina, the member for Gippsland and Senator Barnaby Joyce—but they have been seriously betrayed over these last 12 years by the Liberal Party and I believe that they would be fulfilling the true meaning of their charter if they were to leave the opposition benches and join us on this side.

Our towns in Eden-Monaro of Tumut, Bombala and Moruya and the Bega Valley are crying out for better health support and they must have it. Health concerns were right up there with Work Choices as a concern of constituents during the campaign last year and we have listened to those concerns. Over the Howard years, the proportion of Commonwealth government support for the health system dropped to 40 per cent, ripping the equivalent of $1 billion out of health services every year. That is utterly scandalous. Now, through the Health and Hospitals Fund, help is on the way.

In the public education system I have seen the shameless reliance on demountables that are too hot in summer and too cold in our severe winters of snow and ice. It is a scandal that so many of our schools need extra help to create the basic conditions to support the introduction of information and computer technology. It is time the opposition realised that investing in all of our children’s education is important not only to ensure they have happy and prosperous lives but for the benefit of the economy generally. Human capital economists like the University of Chicago’s James Heckman have been saying for many years that public spending on education and skills leads to high rates of return on investment. This is borne out by OECD analysis which estimates that one year of average additional educational attainment for a population adds between three and six per cent to long-term GDP growth.

Between 1995 and 2004, public funding of tertiary education increased by an average of 49 per cent across the OECD but declined by four per cent in Australia. This makes Australia the only OECD country where the total level of public funding of tertiary education decreased during that time. Between 1995 and 2004, total funding per tertiary student increased by an average of nine per cent across the OECD but increased here by only one per cent. We have been falling behind and are now below the OECD average for the proportion of graduates in science and agriculture, and way below them in engineering, manufacturing and construction—7.2 per cent compared with 12.2 per cent. In Korea, one of our main regional competitors, the figure is 27.1 per cent. In the last 10 years, research output has grown rapidly in countries like Singapore, Korea, Taiwan and mainland China, which is now the second biggest investor in research and development in the world. We have not kept pace with this sort of effort and it would have been to our great cost had it not been for the effort this government now intends to bring to bear.

Because of this government’s budgetary measures we had a sound surplus to assist with managing the current crisis and support these infrastructure measures. Had the Howard government been re-elected this surplus would not have been there as they would have had to meet the irresponsible, unfunded promises made during the campaign, carrying on their great tradition of fiscal profligacy and pork barrelling, particularly through Regional Partnerships, while continuing to neglect our key infrastructure investment. That was one of the great challenges I had in my electorate—cleaning up that Regional Partnerships mess, over 50 per cent of the promises of which were unfunded.

As the Treasurer has said, we now have a government that is working in synchronisation with the actions and assessments of the regulators, the Treasury and the Reserve Bank of Australia, using both fiscal and monetary policy measures to ensure the economy weathers this storm, including investment in infrastructure that will produce significant returns in the long term. What we know is that these extraordinary times call for extraordinary measures and decisive action. I meet with many leaders of business and industry as part of my responsibilities in the Defence portfolio and they have applauded the government’s efforts while conversely expressing deep disquiet at the irresponsibility of the opposition. They have appreciated the strong, timely, considered and decisive action we have taken to protect the Australian economy and invest in infrastructure. In the short time that the Rudd Labor government has been on the Treasury benches we have already started preparing industry for climate change measures and worked to fix significant infrastructure and skills constraints on the economy. These challenges were made much harder to tackle because of the coalition’s nearly 12 years of inaction under John Howard.

While on the coalition, I would ask those opposite to reflect on the attacks against the Treasury and in particular the Treasury secretary—attacks that have been completely unwarranted and unprecedented. In the last sitting week we heard outrageous accusations by the coalition, accusing the Treasury of manipulating economic forecasts. This attack shows that the opposition is either incompetent or just out to embarrass hardworking public servants for their own political gain. Either way, this is a grievous departure from responsible behaviour at a time when we need to be doing all we can on both sides of this House to promote and instil confidence in our regulators and advisers.

This bill is a package of which we on this side have good cause to be intensely proud. It is heartland work for us to ensure that this is a land of prosperity in which all have the opportunity to share, a land prepared for the challenges confronting us. We also intend to do all we can to equip our children to flourish and to make this country one of compassion where no section of Australian society is left behind. Unlike the Howard government, which neglected to act on our capacity constraints, neglected the disadvantaged and demonised many fellow Australians for political gain, this is a government that governs for the future and governs for all Australians. I commend this bill to the House.