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Thursday, 27 November 2008
Page: 11700

Mr COMBET (Parliamentary Secretary for Defence Procurement) (12:45 PM) —I have long been an advocate of significantly increasing the level of infrastructure investment in this country and am on the record in my previous role as the Secretary of the ACTU in this regard. I made a number of addresses dealing with this question. Anyone with experience in the real economy would be more than familiar with the fact that investing in infrastructure development is critical to jobs growth, expanding GDP, overcoming a number of the capacity constraints that have developed within the economy because of the failure to invest in infrastructure over the last decade and boosting productivity. So it is an essential economic activity. It is a lesson we have learnt from our experience of economic development throughout the 20th century but it is a challenge that was failed by the previous coalition government.

In this context I am very proud to be able to speak on the Nation-building Funds Bill 2008 and the Nation-building Funds (Consequential Amendments) Bill 2008. These two bills continue the theme of national renewal that is at the heart of the Rudd Labor government’s agenda. The process of national renewal has been underway for a year and the government is determined to continue to deliver to improve the economic performance of our country and to lift our standards of living and rebuild society.

The Nation-building Funds Bill 2008 and the Nation-building Funds (Consequential Amendments) Bill 2008 establish the three nation-building funds that are the central instruments of the government’s renewed infrastructure investment. These funds are the Building Australia Fund, the Education Investment Fund and the Health and Hospitals Fund. Those three funds taken collectively will finance improvements in critical infrastructure in transport, communications, higher education, vocational education and training, research and health. It is expected that they will drive up private sector investment in these areas as well. Importantly, the funds also complement the government’s Economic Security Strategy to help strengthen the Australian economy against the impact of the global financial crisis.

The bills establish the Building Australia Fund, as I said. I will deal with that fund first. This will finance capital investments in critical economic infrastructure in transport and communications but most notably, it would be expected, in road, rail, urban transport, port facilities and broadband. The government will constitute the fund by transferring the remaining proceeds of the Telstra 3 sale, the assets of the Communications Fund, which will be closed, and $7.5 billion from the 2007-08 budget surplus, leading to total funds in the Building Australia Fund in the order of $12.6 billion. Infrastructure Australia will give advice to the Minister for Infrastructure, Transport, Regional Development and Local Government regarding potential payments from the fund in relation to the creation or development of transport infrastructure. The Minister for Broadband, Communications and the Digital Economy will receive advice also from Infrastructure Australia regarding the potential for Building Australia funds to help create or develop communications infrastructure.

The Education Investment Fund will be constructed by closing down the Higher Education Endowment Fund and transferring $2.5 billion from the 2007-08 budget surplus, which will endow the fund with $8.7 billion to focus on capital investment in higher education and vocational education and training. In other words, the purpose of this fund in particular is to help provide capital expenditure for renewal and refurbishment in universities, vocational education and training institutions, research facilities and major research institutions. This broader focus is, of course, an important distinction between the Education Investment Fund and the former Howard government’s Higher Education Endowment Fund. While the latter was restricted to supporting capital renewal in universities, which of course is an important objective, the Rudd government’s fund will pursue that objective but will also support other research institutions and vocational education and training facilities.

Unlike the coalition, the Labor government respects and supports an important level of investment in vocational education and training, and that is evidenced in the approach that we are adopting. There are many more students who participate in the vocational education and training systems than the university system, as important as it is. If we are serious about renewing education infrastructure we should not be discriminating against one part of the education system. An advisory board will be established to provide advice to the Minister for Education and the Minister for Innovation, Industry, Science and Research on potential fund investments within their portfolio areas.

The Health and Hospitals Fund is the third component or fund within the nation-building funds, and this will be endowed with $5 billion from the 2007-08 budget surplus. This fund will be focused on capital investment in health infrastructure, including funding for renewal and refurbishment of hospitals, medical technology equipment and major medical research facilities and projects. The bills also establish a Health and Hospitals Fund advisory board to give advice to the Minister for Health and Ageing regarding potential payments from the Health and Hospitals Fund in relation to the creation or development of health infrastructure. In other words, the board will give advice to the Minister for Health and Ageing to ensure that we are appropriately boosting investment in this area.

For each of the funds, evaluation criteria will be developed in consultation with the Treasurer and the Minister for Finance and Deregulation, and this will provide the analytical rigour to ensure the appropriate use of moneys from the funds. The ministers with portfolio responsibilities are required to obtain and have regard to the advice from the advisory boards where the minister recommends a payment from one of the funds. What that means is that, unlike what happened under the previous government, investment under these nation-building funds will be made according to the strict application of appropriate and rigorous criteria. For too long, infrastructure funding was allocated on the basis of the margin of seats or the members that may hold them and the political party of which they are a member, rather than the general infrastructure needs of the economy. This must be a nation-building effort, not something along the lines of the coalition’s application of its discredited Regional Partnerships program. Nor will the Rudd government exclude the Treasury from input into major investment decisions. Unlike the current Leader of the Opposition, who apparently when Minister for the Environment and Water Resources opposed Treasury input into the $10 billion water policy fiasco as it unfolded, we think it is very important to include Treasury and appropriate bureaucratic advice in the formulation of responses and the application of these funds.

While the main purpose of the funds is to help meet our long-term infrastructure challenges, the funds will also help Australia meet some of the impacts of the global financial crisis. To this end, the government has announced that it will fast-track our nation-building agenda. This bill and the consequential amendments bill allow for interim arrangements to begin as soon as is practicable. This investment in critical infrastructure will result in a short-term economic stimulus, while at the same time expanding the economy’s growth potential. To achieve this bringing forward, if you like, of our infrastructure investment, interim advisory bodies will be established for the health and education funds. Of course, Infrastructure Australia has already been constituted, and I met with Sir Rod Eddington, the Chair of Infrastructure Australia last week. Infrastructure Australia is already concentrating on a priority list of potential areas for investment. The government has indicated that Infrastructure Australia is expected to produce that interim report on the national infrastructure priority list in December—so in the very near future.

We all have a number of projects for infrastructure investment that we consider extremely important, particularly in the context of our constituencies or the regions in which we reside and we are representing—and I am no different from anyone else in that regard—but, of course, these proposals will be properly considered by Infrastructure Australia in a national economic context. Not to be left behind by other members who may be speaking on this bill, I would like to mention a couple of elements. The previous speaker mentioned the importance of the coal industry to the Hunter region and the importance of the Newcastle coal export capability. There is currently investment going into additional coal-loading capacity—which I strongly support—through the port of Newcastle, but we also need investment in the rail infrastructure to ensure that there are no bottlenecks in getting the demand for export coal through to the port. I think that clearly sits within nationally appropriate consideration for Infrastructure Australia in investment in infrastructure that is of national economic significance.

The member for Hunter and I have adjoining electorates. My electorate of Charlton adjoins the electorate of the Minister for Defence, the member for Hunter. One of the important road transport investments that is of interest to both of us and to all residing in the Hunter region is the extension of the F3 freeway. That extension, which has been mooted and is currently under examination, would commence within my electorate and traverse a good deal of the eastern side of the Hunter electorate. There is also an important infrastructure need for that area. Within my electorate of Charlton, there is an investment that is on a much smaller scale but that is nonetheless economically significant for the Hunter region, and especially for the lower Hunter, and that is an infrastructure requirement known as the Lake Macquarie transport interchange. It is essentially a railway station at Glendale, a road overpass and the development of a road network that will link an industrial area in Cardiff, where about 10,000 people work, with a large retail centre operated by Stockland on the other side of a railway line which divides the industrial estate and the retail centre and would facilitate the movement of thousands of people into and out of that area every day using public transport rather than the motor vehicles that they are currently having to rely on, causing significant congestion and making it very difficult to get to and from work and the shopping centre. That is a more modest infrastructure investment that is extremely needed in the area and one which I strongly support.

This is an opportunity for the opposition to come forward and support the government very clearly in its objectives to accelerate the level of investment in infrastructure. Earlier, I made the remark that we have seen a decade of what I certainly consider to be neglect by the coalition government. If we are to get these funds established by 1 January 2009 and for the infrastructure funds to play a role in the government’s Economic Security Strategy, we need to get the legislation considered quickly. It is an opportunity for the opposition to get on board and be clear in its commitment to ensuring the economic growth of the country by supporting these initiatives. Labor has already begun the process of lifting infrastructure investment. We have committed to rolling out a fibre-to-the-node broadband network as an essential component of a modern economy—and it is. It is also very important to my electorate and the Hunter region. We have committed to investing in innovative solutions to secure our water supply, including recycling and desalination plants. We have committed to developing a national emissions trading scheme or the Carbon Pollution Reduction Scheme, which will help drive investment into innovative renewable energy solutions, including coal technology, by having a more market based approach to carbon pollution.

Also, I am very proud to say that this government has put housing back on the national political agenda, and that is a critical element of infrastructure. This is essential, given the housing stress so many Australians are under at the moment. An example of the government’s response has been the announcement of the Housing Affordability Fund. This fund will address the cost of developing new infrastructure associated with housing development in new suburbs such as water, sewerage, transport and parklands. Within the context of the global financial crisis and the consequences of that crisis in the residential mortgage sector of the economy, the government has undertaken to purchase up to $4 billion worth of residential mortgage backed securities to ensure that that part of the marketplace picks up again and that credit is available that leads to stimulations in demand in residential housing sales. So the government has already taken a number of initiatives to pick up the infrastructure baton, and these bills represent a significant step further in relation to that commitment.

The bills will establish nation-building funds with $26.3 billion at their disposal. If we are to attack the infrastructure crisis and avoid the costs of congestions, the pressure on an increasingly interdependent industrial economy, the reduced competitiveness that comes with it, the reduced living standards that are the consequence of a failure to invest and the growing environmental problems associated with crumbling infrastructure, we need to get these measures into place. In the past Australia has experienced the benefits of sustained, well-planned infrastructure investment. The commitment of the Curtin and Chifley governments to post-war reconstruction and infrastructure development, as we can see with the benefit of 50 to 60 years hindsight, was an enormously significant factor in the post-war boom that carried the country through to the early 1970s. Similarly, the Whitlam and Hawke-Keating governments made very significant improvements in the infrastructure in the western suburbs of Sydney, for example, and of Melbourne.

The OECD has estimated that the annual investment required in telecommunications, road, rail, electricity and water infrastructure is 2.5 per cent of world GDP. The OECD also found that if you add electricity generation and other energy related infrastructure investment, that figure should rise to 3.5 per cent of world GDP. That is the level of annual investment that is needed to ensure that needs are met and economic growth continues in a consistent and stable manner. A much quoted report from the Australian Council of Infrastructure Development and Econtech found that there was a nearly $25 billion backlog in infrastructure investment within this country in electricity, gas, road, rail and water infrastructure. Econtech calculated that, if that investment were made, it would result in a long-term increase in GDP of nearly one per cent and that exports would rise by roughly two per cent.

This should not just be looked at, either, in solely an economic context. Economic growth and development are very important for social development and the creation of social infrastructure such as schools, childcare centres and the like, and they help address inequities in the distribution of income in our society through the creation of employment and the improvement of living standards. So all of these measures are extremely important.

Linked to this nation-building agenda, too, is looking at infrastructure investment through the prism of climate change that I mentioned earlier. A vital role of Infrastructure Australia will be to provide advice on infrastructure policies arising from climate change. Reducing congestion and improving the efficiency of transport networks will play a very important part in the abatement of greenhouse gases and the improvement of urban amenity. The Building Australia Fund has a key role to play in this context.

As I said in my opening remarks, I have been a long-time advocate for increased infrastructure investment. For that reason I am extremely pleased that these bills are before the House. The three nation-building funds will result in $26.3 billion being made available to fund critical infrastructure in transport, communications, higher education, vocational education and training, research and health. It is important to pause to consider how important that is: $26.3 billion being committed to infrastructure investment in these areas will be very important to our economy and our immediate, medium-term and long-term economic performance. The early infrastructure investment will also be part of the government’s Economic Security Strategy, as I outlined, that will help Australia face the challenge of the global financial crisis. Advancing important infrastructure investment will have an important stimulatory impact on the economy in the short term.

We should never lose sight of the importance of investment of this nature. It is an extremely important initiative for government to take. It is critical, as it always has been in the history of our Federation, that the national government—the Commonwealth—take leadership in this area, work with the states and bring about investment in all areas of infrastructure to bolster our economy, to boost jobs, to lift living standards and to build productivity for the future economic security of this country.