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Tuesday, 28 February 2012
Page: 2200

Mr FRYDENBERG (Kooyong) (19:21): I rise tonight to speak on Appropriations Bill (No. 3) 2011-2012 and Appropriations Bill (No. 4) 2011-2012. These supply bills deal with the appropriations from the consolidated revenue fund for the annual services of government for a total of $3.1 billion—divided between $2.82 billion under bill No. 3, which ranges across 19 portfolios, and $341.1 million for bill No. 4, which covers 13 portfolios.

Since the election of the Rudd-Gillard government in 2007, we have been accustomed to the graphic waste and economic mismanagement of our political opponents. These bills before us provide a good opportunity to outline our concerns with specific examples of this government's bad economic decisions. Tonight I am going to highlight the fallacy that this government rescued the country from the global financial crisis, the fallacy that this government created jobs through the GFC, the fallacy that this government can deliver a program on time and on budget. The shambolic performance of the $150 million Infrastructure Employment Projects program now finally exposed by the Auditor-General will be exhibit A. But more on that later.

Let me start by saying that one could not imagine a worse fiscal record than that which will follow this Labor government into the annuals of history. Bequeathed a balance sheet with no government debt and more than $60 billion in the bank, they are now the proud owners of $136 billion in government debt—the four largest budget deficits in the history of this country totalling $167 billion—and a record debt ceiling of $250 billion. This is not a government that knows how to live within its means. Borrowing $100 million a day, the interest bill alone would pay for five teaching hospitals a year or a crucial national disability insurance scheme. Conscious that their economic credentials are in tatters, the government are doing all that they can to manufacture a budget surplus, however small, in 2012-13, a surplus which started as the Treasurer's rolled gold guarantee and has now been reduced to forlorn hope. It is a hope that is becoming increasingly challenging given that this government is addicted to spending, with government spending more than $100 billion higher than it was under the last years of the Howard government. It is a hope that is becoming increasing challenging because this government has introduced 19 new taxes, damaging investor and consumer confidence and stunting jobs growth in the economy. Despite the realities, the government persists in fiddling the books, trying to produce a surplus. That is why it has brought forward as much of its expenditure as possible for the years 2011-12, indifferent to the ballooning deficit this year. In May 2011, the government predicted a deficit of $22.6 billion, but seven months later in December, that number had jumped by a whopping $15 billion to $37.1 billion. The thinking is clear: bring as much forward as you can or push as much out, just as long as it does not fall within that golden year 2012-13. The other little trick that the government is playing with the books is to take as much spending as possible off the balance sheet so that it does not appear in the bottom line. Two good examples are the $10 billion Clean Energy Finance Corporation and the $18.2 billion of spending for the National Broadband Network over the years for 2014-15. These should be recorded in the underlying cash balance but the government believes these are investments undertaken to make a return and should receive a different accounting treatment. That is just not right. These are government programs for which taxpayers are being slugged. This spending should appear on the bottom line. This spending should be transparent and this government should be accountable.

Back to the Infrastructure Employment Projects Program: this $150 million program forms part of the government's $650 million Jobs Fund and was put in place in 2009 with the specific purpose of stimulating the economy during the GFC. However, the Australian National Audit Office in its audit report No. 7, 2011-12, issued a damming assessment of the program, highlighting the significant flaws in the way it was established and implemented. There is no point in gilding the lily. This must be one of the most scathing reports on record. Do not take my word for it, it is all there in black and white in the report. Some of the Auditor General's findings were, from paragraph 15:

… shortcomings in designing and implementing an effective means for identifying and assessing candidate construction projects has meant that the IEP stream did not achieve the economic stimulus objectives set for it in the anticipated timeframe.

From paragraph 18:

… funds have not been targeted at those areas identified as having the greatest need for support, with none of the approved and contracted projects being located in a Priority Employment Area.

From paragraph 19:

… the department did not assist its Minister with the early identification and targeting of promising projects that could be expected to deliver timely and effective economic stimulus … Instead, the department only responded to referrals from the Minister or his Office.

From paragraph 20:

… Infrastructure did not analyse each proposal’s overall quality in contributing to the stated program objectives so as to provide advice to the decision‐maker on the merits of candidate projects … This reflected the department’s quite narrow view of its role in the administration of this program, and does not sit comfortably with the requirements of the enhanced grants administration framework.

From paragraph 3.7:

Rather than undertake an initial assessment of the potential merits of projects raised through each inquiry as possible candidates for IEP stream funding, the usual departmental response was to provide inquirers with a Fact Sheet on the IEP stream and to advise that:

Please note that there is no application process for IEP. The Australian Government will be identifying projects …

From paragraph3.9:

… a number of inquirers were informed that they could ‘lobby’ the Infrastructure Minister directly, or seek to have their local council and/or local Member of Parliament ‘lobby’ the Minister on their behalf.

From paragraph 3.13:

All but two of the 19 projects accepted for initiation as a possible IEP stream project had been the subject of a representation to the department, the Infrastructure Minister, Treasurer or then Prime Minister concerning possible Commonwealth funding.

From paragraph 27:

… the IEP stream would operate through a non‐competitive and closed process of deciding which projects would be considered for possible funding.

From paragraph 29:

opportunities were not taken to target funding at promising projects that had unsuccessfully applied to other oversubscribed stimulus programs …

and, also from paragraph 29:

no attempts were made to actively involve the Local Employment Coordinators in the identification of projects located in Priority Employment Areas that may have been suitable for consideration for IEP stream funding. This was the case notwithstanding that:

-   the Local Employment Coordinators were announced as being a core part of the Commonwealth’s infrastructure and stimulus measures, in order to focus Commonwealth resources on the 20 Priority Employment Areas (identified by DEEWR analysis as those areas with the greatest need for direct assistance); and

-   the Jobs Fund guidelines had explicitly provided for Local Employment Coordinators to play a role in identifying candidate projects for IEP stream funding

From paragraph 36:

there were eight approved projects where the department’s initial appraisal concluded that the first gateway criterion29 had not been demonstrably met. In each instance, the final advice to the Minister concluded that this criterion had been met. However, departmental records did not address how factors initially identified as being of concern either by it or the independent viability assessment commissioned in relation to the project had either been addressed, or why these factors were no longer seen as being of concern;

Also from paragraph 36:

value for money considerations were not addressed by Infrastructure in its assessment work so as to support its advice to the Infrastructure Minister that the approval of funding for projects represented an efficient, effective and ethical use of public money.

From paragraph 45:

… the IEP stream has not provided the planned level of stimulus in the timeframe that had been budgeted. In particular, only half of the approved projects were contracted to be completed by the original program end date of 30 June 2011 and, by this date, 38 per cent of program funds remained uncontracted.

From paragraph 47:

… despite the April 200937 announcement of the IEP stream stating that the funding of construction of local infrastructure would create immediate jobs in communities affected by the global economic downturn, it was not until August 2010 that any project proponent reported to Infrastructure that an IEP stream project had created or retained any jobs.

There you have it. The Auditor-General found that the government's program did not meet its stimulus objectives, did not meet its time frame, did not adopt the targeted approach, did not analyse each proposal's overall quality, did not see the department question the choice of preferred projects by the minister's office, did not conduct a competitive or open process, did not assess value for money considerations in its assessment of projects and did not report that any jobs had either been created or retained in the first year.

Any one of these findings would be damning, let alone all of them. It is now time for the minister to accept responsibility for his failures and those of his department. To do otherwise is a dereliction of duty and betrayal of the Australian taxpayer. The Prime Minister, the Treasurer and the Minister for Infrastructure and Transport can no longer hand on heart say that their jobs program saved us from the GFC. But in fact this is what they continue to do. The ALP website explicitly lists the creation of jobs during the GFC as one of the government's crowning achievements. The document Creating jobs and skills in Australia says that during the GFC the government created jobs by building shovel ready infrastructure.

But best of all, in a press release issued on 05 April 2009 by Julia Gillard as Minister for Education and Minister for Employment and Workplace Relations, then Prime Minister Kevin Rudd and Brendan O'Connor as minister for employment, she announced '$150 million dollars for infrastructure and employment projects to be initiated by the Australian government for the construction of local infrastructure that will create immediate jobs in communities affected by the global economic downturn'. We now know that statement was false. A $150 million government program failed on all counts and did not create immediate jobs. Now someone must be held accountable.

As a member of the Joint Committee of Public Accounts and Audit I sit with my colleagues, the member for Fairfax, the Chief Opposition Whip in the Senate and the member for Mayo. We hear from the Auditor-General examples of waste and mismanagement through the government bureaucracy. But this report would have to take the cake, highlighting an egregious display of bureaucratic and ministerial incompetence. In the words of my colleague the shadow minister for infrastructure and transport and Leader of the Nationals, Warren Truss, this program is an 'extraordinary case of pork barrelling', and he is so right.

No wonder, then, that this was the report in the Australian:

The winning projects include a new $5.5m terminal for Gladstone Airport, requested of Mr Albanese by the former Labor member Chris Trevor, who lost his marginal seat in the 2010 election. Queensland Premier Anna Bligh successfully lobbied Mr Albanese for $9m to relocate the Queensland Symphony Orchestra, and the Museum of Contemporary Art in Sydney—

in the electorate of Labor minister Tanya Plibersek—

was given $13m to create a national centre for creative learning.

The significant funds in this program flowing to Labor held seats is more than a coincidence. It is a red flag, and a further investigation is required. The fact that this was an executive grants scheme, where ministers had the authority to pick and choose their preferred projects, stinks to high heaven. I am sure what the Auditor-General has told us in this report is just the start of what should and could be uncovered.

In conclusion, I pay credit to the Auditor-General and his team for their thorough work in this report. I pay tribute to journalists like Natasha Bita and Malanda Rout of the Australian, and Fleur Anderson and Pip Freebairn at the Financial Review, because they have had the courage to report on this scandal. I only now hope that the minister comes into this chamber to take responsibility, however remote a possibility that is.

I also now hope that the lessons of this pitiful episode in government administration are learnt by the bureaucracy and are learnt by this Labor government, so that the taxpayers of Australia will be spared the indecency of what has taken place under this, the Infrastructure Employment Projects program.