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Monday, 7 March 2005
Page: 26

Senator GEORGE CAMPBELL (2:21 PM) —My question is to Senator Nick Minchin, the Minister representing the Treasurer. Can the minister confirm for the Senate that state and local government investment totalled $22.5 billion in 2003-04, an increase of $5 billion, or 36 per cent, since before the GST was introduced, representing 78 per cent of public sector investment? Is the minister also aware that over that same period investment by the Howard federal government fell by seven per cent to just $6.2 billion, or just 22 per cent of public sector investment? Given that the Howard government’s failure to invest in infrastructure has directly contributed to capacity constraints and inflationary pressures, why has the federal government failed to do its fair share of public sector investment?

Senator MINCHIN (Minister for Finance and Administration) —I remind the senator of my answer to a question from Senator Ferris in which I pointed out that capital investment by the federal government has been remarkably steady for 40 years and throughout our period of government while, since we have come to office—

Senator George Campbell —It’s gone down.

Senator MINCHIN —state government capital investment—and these are ABS figures; you can go and check them yourself—has effectively halved, from about three per cent of GDP to 1¾ per cent of GDP. The fact is that the federal government have enormous fiscal responsibilities. We are responsible for defending the nation, and the states do not spend a penny on defence. We have to spend a lot of money on defence. They have very little responsibility in relation to social welfare. We are the ones responsible essentially for the welfare of Australians through the pension and social security. We have enormous responsibilities fiscally placed upon us by the Constitution and by the development of federal government responsibilities.

The one principal area of responsibility which the states have retained is for the nation’s infrastructure. They are responsible for our ports, our energy—our power and gas—and our water. These are the states’ responsibilities. What has been happening under a sequence of Labor governments around the country is that they have been featherbedding the union mates of the Labor Party, the public sector unions who come running to the Labor Party saying, ‘Give us more money for our wages.’ They have been, therefore, sacrificing appropriate levels of investment in the future because they want to please their mates in the union movement while they are in government.

The states dropped the ball, as I said before, on their responsibilities for investment in the nation’s infrastructure. Even worse, they are refusing to get out of the way, particularly in Queensland and New South Wales in the energy sector. They ought to get out of the business of owning and operating their infrastructure. We saw in Queensland the scandal of them not properly reinvesting in the energy infrastructure they own. Instead, they are dividend stripping for their own purposes. They ought to get out of that business entirely and hand it over to the private sector, who will properly invest for the nation’s future.

The government does not resile from the view that the states have dropped the ball when it comes to their responsibility for infrastructure. We have a whole range of other responsibilities in relation to the nation’s expenditure—to wit, social security, health, education and defence. These are not particularly responsibilities which the states have. We are meeting our responsibilities and we call on the states to meet theirs.

Senator GEORGE CAMPBELL —Mr President, I ask a supplementary question. Is the minister aware that the OECD survey of the Australian economy singled out the Howard government for particular criticism for its failure to address Australia’s infrastructure needs, stating:

Areas where reforms are yet to be completed include infrastructure services ... the federal government in particular should make stronger efforts ...

How does the government respond to the OECD’s assessment of the Commonwealth’s particular responsibility for underinvestment in infrastructure?

Senator MINCHIN (Minister for Finance and Administration) —I point out to the senator that the OECD in its report was full of praise for the Australian economy and the enormous reforms which we have made to this economy. It praises the economy as probably one of the best-performing OECD economies. So you do not have any case to put in relation to the OECD. The OECD report is glowing in its praise of Australia. Where it says we need to reform it focuses in particular on things like the disability support pension—where we are blocked by the Labor Party. It focuses in particular on industrial relations reform, which is so needed in this country and which this Labor Party has opposed for the last nine years.