Feb 12, 2007

Appropriation Bill (No. 3) 2006-2007, Appropriation Bill (No. 4) 2006-2007

Appropriation Bill (No. 3) 2006-2007

Appropriation Bill (No. 4) 2006-2007

Second Reading

12 February 2007

Mr ALBANESE (Grayndler) (8.25 p.m.)—This is a government that makes policy announcements for its short-term political interest rather than serving the long-term national interest. It is a government that serves its own political interests consistently. Not even the management of Australia’s most precious and essential resource, water, has been an exception. In a spectacular display of policy on the run, the Prime Minister announced his intention to spend $10 billion on water policy and the Murray-Darling Basin in the absence of any detailed costing, time lines or management details. Had John Howard been the chairman of a board and taken a $10 billion decision without prior consultation with board members and key stakeholders he would have been swiftly moved on.

Ten billion dollars is a big figure, but the lack of detail in the way these funds will be distributed and the absence of critical information, such as how the problem of water allocation will be addressed, remain. Simple questions remain immersed in uncertainty. Will there be a compulsory government buyback of water entitlements or not? Will the Prime Minister concern himself with addressing Australia’s water crisis or will he ensure that he avoids a crisis between the Liberal Party and the National Party. In short, the Prime Minister’s expectation is that the plan will simply be accepted, no questions asked. This is no way to provide national leadership and no way to address the nation’s water problems associated with the Murray-Darling Basin.

The basin is too important to Australia’s long-term prosperity to leave out critical information or get details wrong because of inadequate preparation and consultation by the Howard government. It is quite clear that more effort was put into writing the political speech to be delivered by the Prime Minister on 25 January than in getting the details right on costing. We know that the Department of the Treasury was brought in at the last minute on the costing of this proposal. We know also that the Department of Finance and Administration was consulted just days before the Prime Minister’s speech.

Federal Labor has strongly called for national leadership in the management of Australia’s water and the Murray-Darling Basin, but we still believe the questions that remain unanswered require a response from the government. Indeed, it is extraordinary that now on 12 February the government has still refused to brief the opposition on the details of the plan. Take, for example, the nine pages of concerns of the Murray-Darling Basin Commission with the proposal. They identified a $900-million black hole in costings, which has still not been adequately explained. They identified the six forgotten rivers in the southern part of the Murray-Darling Basin. A sensible, well-thought-out plan would not have forgotten the 1,484-kilometre Lachlan River in New South Wales or the Campaspe River that supplies town water to Bendigo.

Why wasn’t the Murray-Darling Basin Commission consulted before the 25 January announcement? Why weren’t the state premiers consulted—or the irrigators, or anyone in rural Australia? It is quite clear that short-term political interests rather than the long-term national interest drove the Prime Minister to act. That is the context of the government’s introduction of the Murray-Darling Basin Amendment Bill into this House on 7 December. It was due for debate last week, but the government deferred that, as they deferred the Senate committee inquiry into the bill.

From that we know that, as of December, the government was considering a Murray-Darling Basin management system that was business as usual. We know that this was very much a last-minute cobbled together plan, which is why the government has refused to or is simply unable to provide answers to questions not just from the opposition but from its own Murray-Darling Basin Commission. I remind the House that the commission is chaired by a former Speaker, Ian Sinclair.

At a time when towns and cities across Australia, such as Toowoomba and Goulburn, are confronting severe water shortages and our major cities all have long-term water restrictions, it is extraordinary that the federal government is saying that it wants no involvement in the issue of urban water supply. This issue affects almost 75 per cent of Australians. After years of relentless drought in south-eastern Australia, regional towns and cities are seriously considering the implications of running out of water. Contingency plans have been put in place for transporting water, at massive cost, to communities such as Goulburn and Ballarat.

Urban Australia’s water use and supply needs urgent attention. It is a disgrace that it has not been addressed despite the fact that the National Water Initiative envisaged a major reform. A range of options are needed to secure water supply, with water recycling prioritised because it is cost effective, uses less energy than alternatives and has minimal waste. The greater use of recycled water for industrial and agricultural uses will free up valuable drinking water and help increase environmental water flows. It is in the long-term national interest to facilitate the use of recycled water.

Federal Labor has developed a platform to ensure Australian towns and cities have a sustainable water supply. We have set a national target of 30 per cent of waste water being recycled by 2015. We will develop consistent, comprehensive national guidelines for water recycling. We will provide the leadership, support and investment necessary to achieve the 30 per cent recycling target. We will encourage innovation and new technological solutions to deliver a sustainable water supply for Australia.

The Howard government is sitting on a $2 billion fund, the Australian water fund, which was established in 2004. This is money that was withheld from the states as a result of national competition payments. Three years on from the 2004 plan, more than half of that $2 billion remains unspent. At a time when we have a national water crisis, we have a government that is prepared to withhold spending on critical water infrastructure until closer to an election because it is the election cycle that motivates the government rather than the need for good policy development.

The member for Moreton raised the issue of water in south-east Queensland. I say to him: get the Howard government to move on the funding of the Western Corridor Recycled Water Scheme. This is a $1.7 billion project. It will be the biggest recycling scheme in the Southern Hemisphere, yet the government has refused to fund that project. The only explanation is that it is waiting to make expenditure announcements closer to the election.

As with water infrastructure, the provision of energy infrastructure is also imperative to the long-term national interest. While multiple energy solutions are required to meet Australia’s future energy needs, the Howard government has failed to invest in key clean-energy markets. Australia is economically poorer as a result. Just 10 years ago, when the Howard government came to office, Australia had 10 per cent of the world’s solar energy industry. Now we have only two per cent. Howard government policies have driven Australian companies and jobs overseas and created a solar energy boom in Germany, China and California.

Despite the rhetoric heard from the Prime Minister, the Treasurer and others on the other side, I would like to remind the House of two key reasons that underlie our current economic prosperity. The first is the economic reforms of the Hawke-Keating government: the floating of the Australian dollar, sound national competition policy and superannuation for all Australians. All represent reforms that have set in train a decade of prosperity and created an opportunity to invest in our nation’s future growth.

The second reason includes external economic circumstances that have provided Australia with a rare opportunity. Australia is experiencing an unprecedented resources boom. It is estimated that in 2006 alone the global resources boom added $55 billion to our national income. The flow-on effects of the resources boom include higher wages, lower unemployment, higher company profits and a tax windfall for the federal government. In fact, the ANZ Bank’s Chief Economist, Saul Eslake, has estimated that over the last four budgets the federal government has received an additional $263 billion in tax revenue above its original estimates because of variations caused by the resources boom.

The current favourable economic circumstances have presented John Howard with a choice: squandering the opportunities presented by the resources boom or investing in Australia’s long-term prosperity. It is quite clear that this government has failed to invest in Australia’s long-term prosperity. This once-in-a-lifetime resources boom has been overseen by a government that has done little to relieve the chronic skills shortage or ease infrastructure bottlenecks. History will not look favourably upon these lost opportunities.

To secure Australia’s long-term prosperity, we must boost productivity and boost our international competitiveness. If Australia is to achieve sustainable prosperity and implement policies for the long-term national interest, we must have a comprehensive plan that strikes all the levers of productivity. Australians know all too well that the only lever of productivity that the Howard government is willing to play political games with is the one that results in slashing the wages and conditions of Australian workers. It believes that the way that Australia should be competitive is by engaging in a wages race to the bottom with our neighbours. Of course that is not the way forward.

Labor leader Kevin Rudd has already highlighted the need for an education revolution and the importance of investing in the skills of our workforce and in nation-building infrastructure. On this side of the House we know that our national infrastructure is the economic and social base of our prosperity. It is our roads, ports, airports, pipes, grids, cables, communication networks, schools, hospitals, aged care and childcare facilities. Infrastructure gets employees to and from work and allows doctors and nurses to deliver health care and teachers to build tomorrow’s skills base. If our infrastructure networks are inadequate or insufficient, our competitors will gain an advantage and our long-term prosperity will be at risk.

Infrastructure, like education and skills development, is an area where the Howard government has failed to face Australia’s future needs. Australia’s basic infrastructure is grossly inadequate. It is perhaps the nation’s most serious weakness, and that has been identified by the Reserve Bank, the Productivity Commission and other economic bodies. Redevelopment of existing infrastructure is proceeding at a snail’s pace, and if we continue with present policies there will be no possibility of building the infrastructure base we need to maintain and increase productivity into the future.

Under the current conditions we will have no realistic prospect of providing for our future needs. We will face gross congestion or gridlocked roads, particularly on the rapidly growing eastern seaboard. We will face greater capacity constraints at Australian ports that will further limit the volume of our exports. Inadequate energy infrastructure will impact on our ability to provide sufficient and sustainable clean energy to both industry and households. An archaic telecommunications infrastructure will leave us behind the rest of the world when it comes to knowledge exchange.

With continuing population growth, poor infrastructure management has now brought us to the tipping point, where, if major increases in the rate of investment in infrastructure are not commenced urgently, our productivity will be severely impeded. The Business Council of Australia estimates that Australia already has a $90 billion shortfall in infrastructure, yet investment in national infrastructure is continuing to fall. Earlier this month Treasury’s own research stated that public infrastructure investment decreased from 2.5 per cent to 1.8 per cent of GDP between June 1987 and June 2006. In 2004 Australia ranked 20th out of 25 OECD countries in terms of investment in public infrastructure as a proportion of GDP.

Labor sees spending in infrastructure as an investment, not just as a cost. The short- and long-term economic benefits of investment in infrastructure are well documented. The Committee for Economic Development of Australia points out that investment in infrastructure generates higher returns on investment than other areas. We all know that accumulating infrastructure assets is essential, yet the Howard government has sold more assets over its term in office than it has built—an indictment of the approach of those opposite. Having massive budget surpluses, to the exclusion of long-term investment, makes no economic sense and is bad policy. The Reserve Bank knows it, business knows it and Australians know it. Infrastructure investment and national leadership is needed now to put available infrastructure capital in touch with our nation’s infrastructure priorities.

Federal Labor has a long-held plan to identify Australia’s infrastructure needs and take action to close the gap. Our plan provides urgently needed national leadership, effective coordination across all levels of government and a strong commitment to sustain investment in public infrastructure. Labor has committed to establishing Infrastructure Australia, a peak Commonwealth agency to audit our infrastructure needs, set priorities and get projects on the move. Infrastructure Australia will be charged with analysing, monitoring and reporting on the delivery and operation of major infrastructure projects. A coordinated and objective approach to long-term planning of and investment in nationally significant infrastructure is essential. There is too much overlap and duplication between different tiers of government, too many regulatory bodies and too much overlapping regulation. As a matter of urgency, Infrastructure Australia will conduct an audit of Australia’s infrastructure to assess the adequacy, quality, capacity and condition of Australia’s infrastructure assets and identify the gaps. Put simply, it will be a list of what we have got and a list of what we need. This list will be used to develop a national infrastructure priority list. After more than a decade in government, the Howard government has no official, up-to-date record or database on the state of the nation’s economic infrastructure assets.


Labor is also committed to using the income stream from the Future Fund for future infrastructure investment. Labor has a long-term, sensible approach to infrastructure financing, recognising that both capital and expertise may be efficiently sourced from the private sector, the public sector or a combination of both. Superannuation investment strategies point to the opportunities for private savings to be invested in low-risk, long-term infrastructure projects.

We must get productivity growth back on track and the national government must once again engage with our cities. That is why one of the first announcements of Labor’s new leader, Kevin Rudd, was that Labor would conduct a ‘major cities’ program. Once again, as with Chifley, as with DURD under the Whitlam government and as with Brian Howe’s Better Cities Program, it will need to be a Labor government that takes up the issue of urban infrastructure. In the context of climate change, building sustainable cities through appropriate infrastructure in our cities and our towns is more essential than ever before.

Productivity is a key. One of the key levers to boosting productivity growth is investment in nation-building infrastructure. We cannot tolerate, nor can we afford, a government driven by short-term political interest. The long-term national interest must come first. Australians need a nation-building government and we need it as urgently as possible. Come the next election, with a Rudd Labor government we will once again see national leadership that is prepared to take on the infrastructure challenge that has been left behind by more than a decade of neglect.