THERE’S something very hollow about Joe Hockey’s attempt to provide leadership to the G20 finance ministers on the need to encourage more private investment in infrastructure.
The Treasurer’s aim is laudable – it makes sense for the G20 to discuss ways of making it easier to unlock billions of dollars in superannuation funds to bankroll the construction of roads, railways, ports and other infrastructure.
But there’s a glaring flaw in Hockey’s argument: while he champions private-sector infrastructure investment, his own government is making decisions right now that will alienate investors by ending the transparency in our infrastructure market.
Infrastructure Minister Warren Truss is amending the laws that govern Infrastructure Australia to gut the existing transparent process for assessing the nation’s needs.
The new regime will replace the current evidence-based decision-making process with one based on party politics.
Truss’s changes will repel private-sector investors – the opposite of what Hockey says he wants.
When Labor created Infrastructure Australia in 2008, it was designed as an arms-length government adviser that would work with the states to assess and rank the nation’s competing infrastructure proposals on the basis of which had the most potential to lift national productivity.
IA was to provide the evidence base for government decision-making – just the facts, with no political seasoning.
Governments would, of course, make the investment decisions, but IA’s information was to be published so everyone – governments, citizens and investors, could assess the facts.
For investors, this would provide greater certainty about the national infrastructure agenda and the place within it for their potential investments.
However, Truss’s amendments to IA’s operations process, which passed through the House of Representatives late last year and are now before the Senate, would end this transparency by empowering the government to order IA not to publish the findings of its own research.
They would also allow Truss to order IA not to investigate the investment-worthiness of certain classes of infrastructure projects, such as public transport.
This appears to be an attempt by the Coalition government to prevent IA from providing it with advice that does not suit its political objectives.
So while Hockey lectures the G20 ministers about the need to harness private investment for national infrastructure, his colleague Truss is removing the transparency provisions in Australian legislation that provide comfort for investors here.
The government’s actions simply do not align with Hockey’s rhetoric.
Perhaps this is why groups including the Business Council of Australia and the Urban Development Institute, as well as IA chief Michael Deegan, have made submissions to the Senate inquiry, rejecting Truss’s legislative assault on transparency and evidence-based decision-making.
Put yourself in the position of an investor. Investors need to assess risk. They want more information, not less.
There’s another difficulty with Hockey’s attempt to present himself as a credible global authority on infrastructure needs – his own actions.
Right now, the Treasurer is ripping billions of dollars out of the existing federal budget for Australian infrastructure projects.
Hockey and Tony Abbott have made it clear they will not honour existing budget allocations for congestion-busting urban passenger rail projects such as the Melbourne Metro and Brisbane’s Cross River Rail Project.
These very projects were identified by Infrastructure Australia as providing significant productivity benefits and as being appropriate vehicles for private-sector investment.
What’s more, their public-private-partnership funding models would have benefited from the 2013 budget measures to encourage superannuation funds to invest in infrastructure.
The Infrastructure Tax Incentive, which came into effect last year, is designed to support new private-sector investment of up to $25 billion.
The measures include raising the value of carry-forward losses by the 10-year government bond rate and removing other impediments to private-sector investment in infrastructure.
Even as Hockey highlights the centrality of infrastructure investment in maintaining global economic growth, he is withdrawing public investment and seems to be unaware of Truss’s crippling IA amendments.
The Treasurer should be championing Labor’s 2013 reforms to attract private investment, as well as the fact that Australia is now ranked first in the OECD for infrastructure investment, compared with 20 out of 25 OECD countries in 2007.
The confusion over the government’s policy intent is another symptom of the fact that the Coalition wasted its time in opposition with a campaign of negativity when it should have been developing a cogent national policy program.
Abbott and Hockey had a plan to win government – but no plan to actually govern.
That’s why Hockey and Truss can’t stay on the same policy page.
Truss should now dump the Infrastructure Australia Amendment Act (2013) in the national interest.
If we truly want to attract private investment in our infrastructure, the last thing we need is a return to the pork-barrelling heritage of Truss and his Nationals colleagues.
As for Hockey, he should remember a universal truth: actions speak louder than words.
Anthony Albanese is opposition spokesman on infrastructure, transport and tourism.
* Published in today’s edition of The Australian