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Monday, 22 September 2014
Page: 9929

Mr CONROY (Charlton) (12:12): by leave—I am proud of the Building Better Regional Cities Program. It is one of three signature programs of the last Labor government to promote affordable housing. The program involved awarding funding through a competitive applications process for local infrastructure projects that would support new housing developments. It is important to keep in mind that this program was supporting infrastructure to provide the catalyst for affordable housing rather than to build the houses themselves.

There were three criticisms in the ANAO report that I want to speak to briefly. One was the decision to restrict councils to one successful application. This decision came about after funding of the program was halved to $100 million in order to assist with flood reconstruction. I think it was quite reasonable after this event to restrict successful applications to one per council. The second criticism was around the subsequent socioeconomic prioritisation within the merit assessment. Restricting applications for those councils that had a SEIFA index score of below 1,000 was important to maximise the equity aspects of this program. The prioritisation of applications with socioeconomic disadvantage factors was also a sound decision. With a limited amount of funding, it was important to target the program to areas where resources were most constrained and affordable housing would have the greatest impact. As long as applications are sound, what is wrong with preferring projects from low socioeconomic areas?

The third criticism was around evaluation of value for money. The minister exercised discretion on five applications not originally recommended by the department, and I contend that that was reasonable. The department provided recommendations to the minister in a covering minute. The covering minute for grouping 3, which I am referring to, noted:

You only consider applications from the third group with a requirement to improve the value for money to be delivered during the negotiation of the funding agreement.

Regarding claims that these five applications also did not meet at least one other criterion, it is important to place this in context. Of the 15 applications recommended by the department, 11 had been assessed as not adequately meeting one of the five merit criteria; seven had been assessed as not meeting two of the merit criteria; and three had been assessed as not meeting three of the five criteria. So, besides the value for money aspect, which I will return to briefly, these five projects were similar to nearly three-quarters of recommended projects in not meeting one of the five merit criteria. The minister approved these five applications on the basis that the department was to improve the value for money to be delivered during negotiations of the funding agreement.

Mr Innis from the DSS stated: 'It is fair to say that the minister had the discretion to approve whatever project he felt was worthy, provided he explained his rationale. This bit is certainly true, and he asked for the Department in negotiation to seek to increase the value for money proposition.' The ANAO stated that the value for money for four of the five projects in this category was improved. The ANAO also stated that the department did not update the minister as to the state of negotiations around value-for-money outcomes. So we had a situation where most of the five applications rated highly in other parts of the merit assessment but fell down on value for money. The department told the minister, 'You can consider these five if we go away and improve the value for money.' The minister requested the department to do that and they subsequently improved the value for money for four of the five projects.

Ultimately, this program provided critical infrastructure that I am confident, over the course of time, will provide the catalyst for significant affordable housing. Targets in the short term were never going to be met, because it is dependent on the development consent of councils and various state government actions. In my own area of Lake Macquarie I have the town of Wyee, which is a Depression-era settlement, that is benefiting from this program. This is a town only 90 minutes drive from Sydney, yet it still does not have sewerage connected. I am confident that this program will provide the critical catalyst, with investment from Hunter Water, to provide this sewerage, which is long overdue in an important part of my region. I commend the rest of the report to the parliament and thank the secretariat for their very hard work on this and all other projects.