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Monday, 30 May 1994
Page: 858

Senator CHILDS (4.56 p.m.) —We are dealing with a matter of public importance introduced by the opposition which alleges there is a lack of commitment to regional Australia by the government. Senator Ian Macdonald and Senator Panizza, in introducing the discussion for the opposition, have used the usual short-termism that is particularly characteristic of them. They are referring, of course, to election issues—in other words, they are trying to solicit votes. For example, we have just heard Senator Panizza refer critically to foreign aid. He pit that against assistance to rural people. The Minister for Trade (Senator McMullan) must wince when he hears this sort of short-term approach because it is recognition that the opposition does not know how often our aid program leads finally to work and to markets for Australian products.

  I want to refute the opposition's allegations. The coalition parties have deliberately misconstrued the scope of the government's national regional development policy. While there is $151 million over four years under the regional development portfolio for specific initiatives, a range of measures in the white paper assist Australia's regions to grow. Key measures are designed to increase financing options for business. The McKinsey report showed quite clearly that a healthy business climate is a key factor in a vibrant regional economy. Private investment plays an important role in that business climate.

  Access to finance has been recognised by the government as being a special problem for regional businesses and communities. The white paper has responded in three very significant ways: firstly, the scope and concessionary provisions for infrastructure bonds have been broadened. Secondly, pooled development funds have been made more flexible and attractive through further tax concessions. Thirdly, small and medium sized enterprises will now be able to go directly to the Commonwealth Development Bank. The bank will now be able to assist with equity lending. Lending processes will be freed up, and the amount of funds available for lending will be increased.

  The need for finance for regional infrastructure is especially important and is a focus of the Kelty task force on regional development. The revisions to infrastructure bonds provide a great opportunity for regional Australia. It is the complete opposite to what the opposition is saying. Regions will be able to access private sector funds for strategic infrastructure projects. This will enable them to build on their economic strengths and determine their own needs and priorities.

  The changes to infrastructure bonds will result in a greater availability of funds for public sector projects in regional areas. Infrastructure bonds will be attractive to private sector companies, particularly superannuation funds, where it is anticipated that $600 billion is available for investment by the year 2010.

  The substantial taxation rebate allowance for infrastructure bonds will undoubtedly attract superannuation funds. Currently superannuation funds pay taxation at the rate of 15c in the dollar. The taxation treatment of infrastructure bonds provides for a tax rebate of 33c in the dollar. In other words, for every dollar invested the superannuation fund would be eligible for a tax refund of 18c.

  The concessionary treatment of infrastructure bonds has been extended from 10 to 15 years. The government will also allow infrastructure assets to be sold within 25 years of inception, provided they are sold to a commercial entity. In addition, the removal of local government borrowing restrictions effectively allows regions to invest in infrastructure bonds from their own resources, from regional consortia or other arrangements—the direct opposite from what the opposition would have us believe.

  This initiative will also complement the $70 million over four years that the government will contribute to local infrastructure programs in its own right. The government has substantially expanded the types of hard infrastructure that can be included within this scheme. These include land transport, seaports, electricity generation and transmission, aviation facilities, water and sewerage projects and other types of water infrastructure.

  The irrigation systems at Goulburn and Sunraysia highlighted in the white paper are examples of the kinds of projects the government will be supporting. Despite criticism from the opposition, the Sunraysia project is typical of the sorts of projects that have potential under these three particular policies to which I am referring. This expansion will be of particular benefit to regional Australia where there is a need for small-scale strategic infrastructure investment.

  In any discussion on financing for regional development we must recognise that local government is a key player, and this government has always supported local government. Local government has extensive borrowing capacities which are largely underutilised. Local government borrowings leveraged with infrastructure bonds will become a potent financial vehicle for regional Australia.

  The changes to the way pooled development funds will operate will act as a further catalyst to regional growth. Small to medium-sized enterprises, especially those located in non-metropolitan regions, have traditionally been starved of equity capital. By decreasing the tax payable on profits by pooled development funds, and by allowing these funds to invest more than five per cent of their capital in start-up exercises, the government has increased the attractiveness of equity investment in small and medium-sized enterprises, the very small and medium-sized enterprises that the opposition gives lip service to, but of course we get carping criticism when this government does something very tangible for small and medium-sized enterprises.

  For example, the Minister for Housing and Regional Development, Brian Howe, two weeks ago met with the Hamilton regional board which has established a special venture finance committee to look at ways of overcoming the problems it faces. As a result of the white paper initiative, this board told Mr Howe that it is looking to establish its own regional pooled development fund to assist businesses in the region to grow and export. This is unambiguously good news for Hamilton.

  The federal government is keen to demonstrate that regions, whether metropolitan—and I do not have time to point out the advantages to metropolitan regions of the government's initiatives—or rural, can make an important contribution—

Senator McGauran —What does that have to do with regional Australia?

Senator CHILDS —The emphasis is on regional areas, but of course the matters that I am referring to assist the undeveloped regions in big cities, and I say that as an aside—

Senator McGauran —Could I take a point of order, Mr Acting Deputy President? It is on relevance. Senator Childs is now drifting into what he claims are regional areas within the main capital cities. I believe this debate deals with regional Australia which deals with matters outside capital cities. I ask you, Mr Acting Deputy President, to bring him to the point of relevance.

  The ACTING DEPUTY PRESIDENT (Senator Colston)—Senator Childs is developing an argument, and he is quite in order.

Senator CHILDS —I will not reply to the interjection, but I would like to say that Senator Ian MacDonald had the audacity to mention health and education. These are state responsibilities, and in my state of New South Wales the state government has slashed and pilloried. There are waiting lists at hospitals and wards are being shut down. That is what this coalition would do if it were in power. In education and health areas the state of New South Wales is a perfect example of what would happen if those opposite ever had a go at the people of New South Wales with the double whammy of federal and state power. Fortunately the people of New South Wales, my state, have had that experience and will not allow the federal coalition to get its fangs into the health and education policies of the federal government.

The ACTING DEPUTY PRESIDENT —Earlier I indicated that I would check, after Senator Spindler made a contribution, whether a document which Senator Bolkus wanted incorporated in Hansard could be so incorporated by leave. I must admit that I neglected to ask that after Senator Spindler made his contribution, so I now ask whether leave is granted for the incorporation of that document.

Senator Ian Macdonald —No.

The ACTING DEPUTY PRESIDENT —Leave is not granted.