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Wednesday, 27 May 2009
Page: 4442

Mr SWAN (Treasurer) (9:28 AM) —I move:

That this bill be now read a second time.

Today I am introducing a bill to provide a standing appropriation to pay any possible future claims made under the Australian government’s guarantee of state and territory borrowing.

The guarantee will support jobs and protect infrastructure programs from the ravages of the global recession.

It recognises that now is certainly not the time for governments to pull back on infrastructure investment. Pulling back on infrastructure investment now would mean even slower growth and higher unemployment.

The government has decided that the quickest and most effective way to implement the guarantee was to use the Commonwealth’s executive power to establish a contractually based scheme. This follows the practice used for putting the wholesale funding guarantee into place.

Although the guarantee is a contractually based scheme, an appropriation is needed in the very unlikely event the government needs to make a payment of a claim under the guarantee.

In order for the scheme to be effective in allowing the states and territories access to the credit markets, ratings agencies and investors need to be confident claims will be paid quickly if a state or territory were to default on an obligation.

That is why the government is acting now to put in place this standing appropriation.

The bill has two substantive measures.

A standing appropriation is established by the bill to enable claims to be paid in a timely manner, in the unlikely event that claims are made under the guarantee, and to allow borrowings made under the bill to be repaid.

A borrowing power is also provided to enable timely payment of claims should there be insufficient funds in the Consolidated Revenue Fund when the claims are to be paid.

Quick passage of this bill will ensure that the guarantee will be fully effective once the contractual arrangements are in place.

The Rudd government has taken decisive action to stimulate the domestic economy, mostly through direct government investments.

But we know that for this stimulus to be effective, it is essential that states continue to maintain their own investment programs to support the economy, and protect jobs.

There has never been a more important time for governments to support jobs today by building the infrastructure we need for tomorrow.

That is why we are nation building for recovery.

And it is why I am introducing this legislation today.

I commend the bill to the House.

Debate (on motion by Mr Haase) adjourned.