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Thursday, 19 June 2014
Page: 6670

Mr WATTS (Gellibrand) (10:16): Infrastructure investment is what allows Australians to attend world-class schools, be treated in world-class hospitals and get to their places of business on world-class roads and railways. It is crucial for our nation's productivity and our cities' liveability. It is only by investing in infrastructure that Australia can grow in a fair and prosperous way. But funds for infrastructure investment are limited, and each infrastructure investment comes with an opportunity cost. So we must ensure that decisions made about what to fund and what projects to allocate federal funding to are given the careful consideration they deserve. We must ensure that political interest does not trump the public interest in the allocation of funds.

The previous Labor government believed strongly in investment in infrastructure in the public interest. Under Labor, infrastructure investment was lifted to record levels. In this period, Australia's infrastructure spending as a proportion of GDP rose from 20th in the OECD to first. But Labor was aware that, even with this increase in funding, not all proposed projects could be funded. It knew that, in making decisions about which project to fund, it was essential to have an independent body recommending which projects received these limited funds. That is why it linked funds that allocated money for projects to independent agency recommendations. The two funds in the bills under consideration—the Building Australia Fund and the Education Investment Fund—were both linked to such assessment bodies. These assessment bodies ensured that relevant projects met the appropriate criteria before they were allocated funding. This sorted the wheat from the chaff, meaning that only projects with a robust business case were able to get through and win Commonwealth funding. It cut the pork and focused investment on productivity-driving infrastructure.

Unfortunately, the Abbott government's actions in seeking independent analysis of their funding of infrastructure projects has so far not met their pre-election rhetoric. The bills under consideration consolidate funds from the Building Australia Fund and the Education Investment Fund into a new fund, the Asset Recycling Fund. This fund, however, has no requirement for projects to be assessed before funding is allocated. There is a general requirement in the bills that projects that are funded through the Asset Recycling Fund are 'productivity enhancing'. But no independent agency is specified in the bill to determine whether this crucial criterion has been met. Indeed, when asked who would make this assessment, the Treasurer responded, 'We will, through the Treasury, and we will form an opinion on it.' So the critical arbiter of whether the Treasurer's proposed project is 'productivity enhancing' will in fact be the Treasurer—a Treasurer with National Party MPs and Liberal Party marginal seat holders whispering in his ear and next to no external accountability on ultimate decision making.

This is why Labor is seeking to move an amendment that requires all projects funded out of the Asset Recycling Fund to be subject to assessment by Infrastructure Australia. The independent assessment will make sure that all projects receiving Commonwealth funding will really address Australia's infrastructure needs. Labor will also seek an amendment that will require the tabling of a disallowable instrument for each privatisation and funding transaction. This will allow privatisations to receive parliamentary scrutiny and will hold the federal government accountable for the actions taken by state governments as a result of this bill. Without these amendments, there is a real risk that key state assets, such as our hospitals and our roads, could be privatised to bankroll partisan, poorly thought out pork-barrelling projects.

A key example of such a project is Melbourne's East West Link, stages 1 and 2. East West Link is a project that has undergone virtually no independent assessment. There are no public figures for how much the road will cost to build and no figures for how high the tolls will need to be for the private companies involved in this project to recoup their investment. No detailed evaluation of the project or cost-benefit analysis has been fully published. The Acting Infrastructure Coordinator of Infrastructure Australia, John Fitzgerald, told a Senate committee that, even three weeks ago, a full business case had not been seen by Infrastructure Australia. Mr Mike Mrdak, Secretary of the Department of Infrastructure and Regional Development, tried to claim that the business case for Infrastructure Australia had been seen and was 'reasonably complete'. But, when questioned about what details had been provided to Infrastructure Australia about East West link stage 1, Mr Mrdak admitted:

I think Victoria are now reviewing in the light of what they are doing in terms of some of the planning issues and also the procurement issues which are now underway.

It is hard to believe that an infrastructure business case without a concrete planning proposal and procurement details is 'reasonably complete'. Even an unpublished assessment by the Victorian government that was leaked to the Melbourne media suggested the project will be a dud, returning, under a conventional assessment of the project's costs and benefits, just 80 cents for every dollar spent. This lack of preparation may explain why the East West Link tunnel has been so vociferously opposed by community groups in Victoria, why more than $5 million has been spent by the Linking Melbourne Authority to guard the project against protesters, and why even now the project is tied up in Supreme Court litigation.

Stage 2 of the project, largely in my electorate in Melbourne's west, is even less progressed than stage 1. At this stage it is not even a line on a map. No land has been allocated for it, there have been no land reservations, no environmental assessments have been done, no drilling or testing of the land has been undertaken, and no community consultation about the project has occurred. We do not know where the proposed tunnel is going to go, where the entries and exits to the tunnel will be, or even where it will cross the Maribyrnong River—by the Premier's own admission. We do not know how much traffic it will displace or divert, how many residential properties will be acquired to build the road, or what areas of Melbourne west will be most significantly affected by the construction. For the benefit of the House, I would note that this is a project that is intended to run not only through industrial areas in my electorate, but also through a number of well-established and densely populated residential suburbs.

The Acting Infrastructure Coordinator of Infrastructure Australia, John Fitzgerald, recently admitted that, although some discussions had taken place, 'there is significantly more information that we require for it to be a full business case'. He described the material currently under consideration for stage 2 as being in the 'conceptual' stages. Yet this did not prevent the Abbott government from pledging $1.5 billion to fund stage 2 of the East West Link—$1.5 billion for a back-of-the-envelope proposal, $1.5 billion for a project that is not even listed on Infrastructure Australia's priorities list from December 2013, $1.5 billion for a project with plans so utterly lacking in detail that, according to Victorian Premier Dennis Napthine, it may 'possibly' include viaducts, it may 'possibly' include bridges and a tunnel, and it may 'possibly' include surface freeways. They have no idea.

These are plans for a road that will potentially pass through the residential suburbs of Footscray and West Footscray in my electorate. Families in these areas deserve to know the impact this project would have on their homes and on their community, but the funding for this project has been guaranteed by the Abbott government without even a modicum of community consultation. Moreover, Premier Dennis Napthine has suggested that he would like to start work in late 2015, meaning that the Napthine government 'is going to get its skates on'. With such an accelerated timeframe, it is unlikely the project will get the full community consultation it requires.

The first billion dollars of funding will be allocated towards the project in the next six weeks. By 30 June, $1 billion of Australian taxpayers' money will be placed in a fund for a road that will not even be ready to receive environmental approval until 2015-16. Yet it is the government's intention that stages 1 and 2 of the East West Link will receive federal funding from the Asset Recycling Fund. Indeed, the Prime Minister was 'very pleased' to announce the funding at a press conference held at the end of May. He stated, 'We are very, very confident that this is a worthwhile investment by the Commonwealth at this time.' But I would ask how on earth he would know that. Indeed, it is one of the key projects being funded by the Asset Recycling Fund, as the Abbott government has now committed $3 billion to the project. Of course, when the Abbott government talks about a $3 billion commitment, this money does not magically appear from unused budget funds. This is $3 billion ripped from previous infrastructure projects around the country, including, most disappointingly for the commuters in my electorate, the $3 billion committed by the previous Labor government to the Melbourne Metro rail project.

The Prime Minister likes to tout himself as 'the infrastructure Prime Minister', but the reality is that he is the 'infrastructure Frankenstein', stitching his policy and funding together by stealing funds from a series of previous Labor projects. It is just another of the Abbott government's fibs to claim that anything contained in the bills under consideration is new money to be spent on infrastructure. What these bills do demonstrate, though, is that the Abbott government only believes in one sort of transport—roads. That is why all funding for urban rail investment was cancelled in this year's budget. This is despite the fact that, early in its term, the Abbott government launched a Productivity Commission inquiry into infrastructure investment. This inquiry was needed due to the failing return on investment for private roads and tunnels. Indeed, economic geography professor Brent Flyberg has found that up to 50 per cent of traffic forecasts misjudge traffic flows by more than 20 per cent. Inflated estimates lead to significant losses when actual traffic falls below predicted traffic by a significant margin. This was certainly the case with the Brisbane Airport Link, where forecasts predicted 135,000 vehicles a day would use the toll road. Once built, however, the road was used by only 45,000 vehicles a day. When projects are only receiving one-third of their expected returns, it is understandable that investors begin to get cold feet.

It is not rocket science to conclude, then, that the best asset for road investment is the requirement for a detailed business case before the project receives Commonwealth funding. Yet this is the one step in the process that the Abbott government seems determined to erase. To add insult to injury, this is a bill that contains an investment system primarily tilted towards private investment. Under the Asset Recycling Initiative, states and territories will be eligible to receive a federally funded 15 per cent incentive payment when appropriate public assets are sold and funds reinvested into new 'productivity-enhancing capital assets'. In real terms, this means that, if a state government sells a road and uses the funds to buy another one, they will receive 15 per cent of the road's funding from the federal government. However, one unavoidable result of this structure is that there will be a significant increase in the privatisation of Australia's publicly owned infrastructure. Further, the bill could very well decrease the amount of federal government project infrastructure funding that projects will receive, as it only guarantees that 15 per cent of the cost of these projects will come from federal funding. In the past the federal government has often provided up to 50 per cent of funding for our infrastructure projects. This shortfall in funding for infrastructure will have to be made up for by the states in funding substandard, or shoddily planned, infrastructure alternatives—and where the Commonwealth government refuses to provide any funding for these projects at all, this situation will become dire.

Nowhere is this clearer than with Premier Napthine's new and less-than-improved version of the Melbourne Metro rail project. Once the Abbott government indicated they were not willing to fund any part of the impeccably credentialled Melbourne metropolitan rail project, the Napthine government felt they had to come up with a more affordable alternative that they could fund themselves. The alternative proposed by Premier Napthine is a city tunnel that does not go into the city, does not service the majority of Melbourne's commuters, and calls the station next to the casino by the name of 'Fisherman's Bend'. It is a compromise project that was cobbled together when the Abbott government shut its doors in Dennis Napthine's face during the last election campaign, and it is not what the commuters of Melbourne, particularly the commuters of Melbourne's west, need or want.

The previous Labor government had an outstanding record of investment in urban rail projects. The last Labor government committed more to urban rail infrastructure investment than all previous governments in Australia running back to Federation combined. More than $13 billion was committed to urban rail projects—substantial nation building investment. But the bills under consideration are a depressing shift in government policy from rail to roads, a shift from detailed design and construction to big projects with little detail, a shift from independent support, oversight, scrutiny and accountability to partisan whim. It is another policy from a government with a lack of ideas and a rigid adherence to roads, roads, roads—an ideological obsession with roads, roads, roads. It is a government that cannot translate a three-word policy into a comprehensive infrastructure plan for Australia.

Under this Abbott government we will see metropolitan rail systems across the country become more crowded, more creaky and more inefficient. We will see the residents of Melbourne's west saddled with a project they did not ask for, that their opinions were not sought on, before the creators gleefully announce $1 billion worth of funding. We will see projects chosen by whoever has the Treasurer's ear rather than the independent infrastructure experts of Australia. The commuters of Australia did not vote for this and they do not want it.