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Tuesday, 25 November 2008
Page: 11421


Mr BILLSON (9:32 PM) —I rise tonight to make a contribution to the debate on the Nation-building Funds Bill 2008, the Nation-building Funds (Consequential Amendments) Bill 2008 and the COAG Reform Fund Bill 2008. In a nutshell, the bills provide the legislative framework for the Building Australia Fund, which has been identified by the government as the account through which payments will be made for transport, communication, national broadband network, energy and water infrastructure projects; the Education Investment Fund, which essentially carries forward the provisioning that was earmarked by the previous government for payments towards higher education and research, vocational education and training, and other educational infrastructure; and also the Health and Hospitals Fund, which will make payments for the creation or development of health infrastructure. That is the main purpose of these bills.

There is also embedded within them a rather unsettling attempt to have a go at the Communications Fund. This was the subject of much debate in the chamber earlier in the term of this government’s life, when that money that was set aside in perpetuity to ensure that those in rural and regional Australia could have their telecommunications infrastructure future-proofed by that $2 billion of money. The interest from that fund could be applied to remediate areas of disadvantage or service unavailability or underperformance.

That task is an ongoing task; as technology keeps changing, it is not something that will be addressed by any single intervention by any government. We do not know quite what the telecommunications infrastructure of the future will look like. I still remember some colleagues talking about mandatory dial-up speeds, which were at a snail’s pace compared to where things are now. That is a real-life example of how things change and adapt in this area of communications and why there is a need to have that insurance there.

So I support the efforts of the opposition in saying: ‘Well, you can have a go at the surpluses that the coalition government created the framework for and you can take funds that have already been set aside through the prudent fiscal management of the coalition and apply them to those targets, but try not to do a smash-and-grab raid on the Communications Fund; that just seems unnecessary and counterproductive and it really overlooks the importance of  and the rationale for the establishment of that fund in the first place.’

We are left with some funds here that are looking a little bit anaemic. The ambition of taking herculean budget surpluses and sliding them over into these funds has been shirt-fronted by some of the economic circumstances we face. Thank God, though, that there is still the gift—the legacy and the inheritance—from the coalition government’s period in office. Had it not been for that wise economic management there would be nothing going into these funds—nothing at all. The only resources going in are the ones that were secured during the coalition’s term of government—and on a budget setting that was set by the previous government. There has not been a surplus delivered by the Rudd government yet—no extra capacity to go into these funds. I would almost bet that we will not see a surplus budget from the Rudd government for quite some time. In fact, I suspect we might see the end of the Rudd government before we start seeing an end to budget deficits. But that is something we can only live in hope about.

Tonight we are talking about how the incoming government plans to apply the proceeds of the good economic management of the previous coalition government. The opportunity that the incoming government has to apply the fruits of the Howard coalition government is not something that just happened overnight. In fact, a couple of things need to be taken into account. The new members in parliament may not remember the Hawke and Keating years. During that period, the Labor Commonwealth government created more debt than the Commonwealth had created since Federation. That is a pretty impressive effort. For a period of some 80 years, which included two world wars, global depressions and a fledging nation finding its way, the debt that was accumulated was matched in 13 years by the Hawke-Keating government. That put us in the circumstance where, when the Howard government was elected, we were not only faced with a $10.5 billion budget deficit, despite the assurances that the budget was in surplus—that still stands in my mind as one of the greatest political deceptions that has been perpetrated on the Australian public—but there was also this lead in the saddlebag of the Commonwealth of $96 billion worth of debt. Conservatively, just servicing that debt—not paying it off but just paying the interest—was an $8 billion proposition.

If you look back to where we started under the previous coalition government, there was all of that work to tackle and remove the budget deficit—difficult decisions, I might say, for a new member and ones that members opposite might be pleased they have not had to go through—and get it back into the black so we as a nation lived within our means. But then there was also the matter of addressing this lead in the fiscal saddlebag—the enormous debt of the Hawke and Keating years that matched the debt from the rest of the time since Federation. So we would not be here today talking about surpluses and contemplating how to apply them—we would be lucky to pay our bills—because the budget would have at least $8 billion less available and that would put us well and truly into a structural deficit that few would see a way out of. Because of what the coalition did, we do not have that challenge today. We have an opportunity to have this conversation: what to do with the proceeds of sound economic management. These bills seek to set up a way in which those funds will be applied.

I provided that introduction for two reasons: one, because the Labor Party mantra is about wasted opportunities during the Howard government years. But is there a more vivid example of how economic management and opportunity have delivered better prospects for the future than the description I just gave about the removal of debt? That is issue No. 1. Issue No.  2, which is the concept that there had not been investment in infrastructure, is complete fiction. In fact, if you look at the funding forecast and the flows of resources that are anticipated and canvassed in the explanatory memorandum, the amount of net funds available from additional opportunities that the Howard government provided over and above the provisioning that was already there—minus the money for the broadband initiative—you are talking about $8 billion that is not committed and is potentially available for new infrastructure projects.

That is interesting because that $8 billion represents about the average spend on infrastructure under the Howard coalition government over the last five years. So, for all the pomp and ceremony, what we have been talking about, with such ripe and over-the-top rhetoric from the government, is an opportunity that looks very much like the one we had anyway under the previous government. What you are seeing, though, are the mantras coming through to try and make it something more than it is. It is easy for people to pick: where something is in a particular circumstance but Labor would like it to be something else, you just check the mantra. The more there is repetition and lines like ‘nation building’, the more you know that that is a goal Labor wants to put into people’s minds, to create that perception when the reality might be quite different. There is no enormous ramping up of infrastructure expenditure. This is a great sales job, a political messaging exercise. That is why it is worth us all being wary about where these resources go. Having described the work that was involved in creating this opportunity, making poor use of that opportunity is almost as unforgivable as not even trying to create it in the first place. That would be a link between the Hawke and Keating governments, which wanted to steal those prospects, and where we are now with the Rudd government. Gifted with this opportunity, how will they use it? That is the big question that people are wondering about.

My friend and colleague the member for North Sydney has described the ins and outs of how we get from consolidated revenue, special accounts and the like to the funds that are actually available. Two things are clear. What is missing is at least one digit from what the Labor Party’s story is and, for the broader public, probably two digits from the expectations that have been ramped up. Everybody wants a piece of money. There are calls for leadership, which, in politics, is synonymous with cash. When people are saying, ‘Give me more leadership,’ it usually means, ‘I’d like some more resources.’ I have seen claims made on this money from so many quarters that it is inconceivable they will all be met, so there will be a lot of disappointed people. I have seen calls for us to refurbish community theatres as a priority. I have seen local governments saying, ‘Give us more money to remedy some of the transfer of responsibilities that have come our way and the demands on our infrastructure.’ I have seen state governments seeing this as a lifeline to overcome their shortcomings. They are shortcomings that contrast vividly with the work that the Howard government did through the growth period—seizing the opportunity, investing wisely, building an enhanced capacity for the future. Some state and territory governments could not pay their bills during this growth period. How on earth will they pay their way when the economy contracts or its growth rate slows? So this is an interesting time. Premiers are positioning. Chief ministers are positioning. I think the money that it was hoped would be there has been spent about four times over. That means what actually is there has been spent about 15 times over. So we need to watch carefully how this money is spent.

That leads me to why the opposition has raised a number of very important challenges for the government. A lot of work is being done to put in place a framework to enable the government to claim a credible, ethical, objective and transparent evaluation of projects, and there are a lot of ornaments of those things. We have the Infrastructure Australia organisation—a great group of very credible people—who are supposed to have a role. But their role is really one of tick and flick: ‘Does it meet the broad objectives? Okay, push it through, and let the minister decide how to spend the money.’ There are other panels doing that work. What you do not have is transparency that sits behind that work that gives the public confidence in how proposals are evaluated, what the selection criteria are, what the business cases are and, more particularly, what the cost-benefit analysis looks like and what are the long-run benefits—and not just the economic benefits but the environmental and social gains and how you compare those against each other. Above all, work was promised in the Infrastructure Australia Bill, which sits alongside these bills, to actually evaluate what other kinds of intervention might be needed to address an infrastructure bottleneck. Where has that work gone?

It is not coincidental that these propositions before us are called bills—not only because all legislative proposals are bills, but because this is all about the bill. This is all about what it is going to cost. It is not a clever analysis of what other options might be available to bring about the outcome we are working for. The COAG Reform Fund Bill—not smart reform making better use of the resources that we have got but a reform program built on spending more money believing that the opportunities nurtured, secured and delivered for the Australian public under the Howard government years will somehow roll on forever. This is all about how to spend money; it is not about how to secure genuine reform, not about how to evaluate what kind of interventions might be most helpful, most effective and represent the most thoughtful use of those hard earned, hard worked for, hard secured resources that I described earlier.

This is supposed to be all about productivity benefits. Yet where is the Productivity Commission in that evaluation? Aren’t they the expert body that sits down and says, ‘What is a proper role for government in addressing these public policy objectives?’ Is it always about handing over cash, or are there other things that can be done?

I turn to the issue of funding the ongoing costs. Some in this place might know I shared responsibility for looking after AusAID for some time. One of our greatest and most highly considered factors in allocating overseas development money was not just handing over the money to build something but looking at how it would be sustained. How would you continue to support its operation? I have seen too many projects that look fantastic when someone was there to unveil the plaque and then there was no maintenance, no attention given to its operation and no resources to see it achieve the purpose for which it was created. This is an issue here. We have described what the cost of running a hospital is. The easy bit is building one. It is what you do to keep it running that is the issue.

And then there is that horrible thing that has come out of New South Wales where in the public-private partnerships you actually pinch a chunk of dough from the project partner and that gets into general revenue and actually pushes up the cost of the project and you pay more for your tolls. We are recommending that that is not a smart way to go because that is just building unnecessary costs into the system and that is not what people are looking for.

So on all of those levels the coalition has put forward some very constructive plans to make sure this delicious opportunity is not blown—that it is actually applied to enhance the opportunities of our nation and that it goes towards what I think our gift should be to the next generation: a green growth economy with more sustainable high standards of living where we as an economy make wise use of the resources that we have and use them conservatively and efficiently; that we nurture dependable and proven prospects for improved prosperity into the future; that we enhance the resilience of our natural systems and their health; and that we enhance our personal wellbeing and our community vitality. Isn’t that what we should be aiming for? Aren’t those the kinds of goals and visions that this rare opportunity to deploy considerable resources should be going towards?

If you take that as the template, what you do not do is just build stuff so a minister and a local member can unveil the plaque and it is just business as usual—just more of the same. That would be a mistake. I fear that is what is going to happen but that would be a mistake. This is a once in a generation opportunity that the coalition government’s sound economic management and strong financial position—a legacy of the coalition—have delivered, and that was about debt, the removal of that debt, the end of deficits and an opportunity to invest these resources. You can use that treasure chest wisely; you can deploy it with a clear wisdom inspired by a clear ambition and a vision. It is not about a handful of high-profile, high-politic plaque-unveiling projects that will not markedly make a difference other than in the politics of the day. This has been a hard-earned opportunity and we should use it wisely. This concept was teased out in a recent summit in Brisbane, the Australian Davos Connection Summit, Infrastructure 21—From Incrementalism to Transformational Change. As the ADC chairman, Michael Roux, put it:

Transformational change is required to take a generation step forward envisioning the Australian society of tomorrow. This leap forward will require creative policy innovation, resilient leadership and concerted cooperation across jurisdictions.

We should build in an expectation that all stakeholders give of their best when accessing this money, that there be no passengers and that, where there are other systemic changes that need to be made to bring about the best outcome for our nation, there be clear expectations of people wanting the money. That might come through changes in governance arrangements and regulatory reform about how assets perform—whether they are efficiently deployed, whether we use smart systems and whether we get demand management principles and pricing transparency in place. These are what we should be working for, and the money should be a catalyst to bring about that kind of transformation where we can make a substantial step forward, like the coalition’s plan to replumb rural Australia. The hardware is just the start of it; there is a lot of other work done about what you can do in management, pricing, delivery, use, costing for externalities, demand management incentives and market functioning. These are just examples.

Even in public transport, in my own state of Victoria there was an expert pointing to some European experiences where you could double the number of trains using our network just by smarter signalling. That is not a really sexy project, but isn’t that the kind of transformational change we should reach for? Extend the rail line in my electorate; electrify it down to Baxter; build a park-and-ride facility there, where the land is affordable and people can actually be encouraged to use public transport. It is adjacent to the hopefully-to-be-built Frankston bypass. We get those modal interchanges that everyone talks about, but nothing happens. We should say, ‘We can be a partner in that, but let’s make the system work properly by bringing about changes in the way it is managed and making operational that vision of getting the very best out of this money.’

I reckon the coalition’s amendments are pretty smart, and if I were in government I would think, ‘Yes, they are probably the right way to go to make sure this is not viewed as a missed opportunity of biblical proportions.’ In my own electorate I can recommend projects, but they all need to be evaluated transparently. The metrics that are used to judge one project over another need to be clear and understood. The public needs to be informed about why one project is favoured over another. The poor tools that are there to evaluate the economic benefit of environmental improvements and social change need to be worked on. This is important work because, as I described at the outset of my contribution, this has been a hard-earned opportunity. Let’s not blow it; let’s make the very best of it, get a real transformational change and bring about gains and opportunities in this country rather just spend it recklessly. (Time expired)