Feb 15, 2017

Auditor-General’s Reports – Reporr No. 38 of 2016-17

Federation Chamber

Mr ALBANESE (Grayndler) (12:27): I rise to speak to the Auditor-General’s report into the WestConnex project and into the Commonwealth financing of that project. The report resulted from an investigation which I requested last year, both as the shadow transport minister and as a member of the Joint Committee of Public Accounts and Audit. This report that was tabled in the parliament yesterday represents the Auditor-General revealing an extraordinarily cavalier approach to the handling of literally billions of dollars of taxpayers’ funds. The objective of the audit was to determine whether the government had taken appropriate steps:

…to protect the Australian Government’s interests and obtain value for money in respect to the $3.5 billion in funding committed for the WestConnex project.

On both accounts, the Auditor-General has delivered a scathing verdict.

Desperate to appear to be doing something on infrastructure when they came to office, the Commonwealth government cut funds that had been allocated to projects that had been approved through Infrastructure Australia—such as the Cross River Rail project in Brisbane, the Melbourne Metro project in Melbourne, the M80 project and the Outer Ring Road in Melbourne—and cut $500 million which was for public transport projects in Perth and was then allocated to toll roads that simply had not been through appropriate processes. They did not have a business case, they had not been through Infrastructure Australia and they were not ready to receive funding.

The Commonwealth coalition came to office saying that they would require all Commonwealth funded infrastructure projects worth more than $100 million to have undergone a cost-benefit analysis by Infrastructure Australia. The Auditor-General says this in the report:

The WestConnex project had not proceeded fully through the established processes to assess the merits of nationally significant infrastructure investments prior to Australian Government funding being committed.

They went further: they even ignored their own department. The report says:

The May 2014 decision to make the $500 million advance payment led to the project being approved without there being any documented analysis and advice to Ministers that the statutory criteria for giving such approvals had been met.

It also went through the processes of milestone payments. Milestone payments were established when I was the minister to ensure that the objectives for which money was allocated from the Commonwealth were actually being met—that is, you did not just forward an advance payment of money without there actually being construction. This arose because when I became the infrastructure minister it was clear to me that under the Howard government the only key performance indicator that it was ever looked at was, ‘Has the money gone out the door?’—not whether anything had been built—and hence you had a whole range of advance payments being made every June.

What we had here was $500 million forwarded as an advanced payment for WestConnex at the same time as $1.5 billion was forwarded as an advance payment for the East West Link. That was all designed to bring forward expenditure into the 2013-14 financial year in which, of course, the Labor government had handed down the 2013 budget so that the deficit in 2013-14 would appear to be bigger and finances in future years would appear to be better. This was a manipulation based upon politics and nothing more. But it is even worse than that, because in the words of the Auditor-General in the report:

… three milestone payments—

worth $1 billion—

were designed and administered in a way that did not adequately protect the Australian Government’s financial interests. This was because, in order not to delay payments, milestones were agreed to after the respective event had already occurred or amended shortly before the payment was due to be made where New South Wales (NSW) had not met the milestone.

Just think about that. Here you had the federal government and the federal minister working out criteria for payments to be forwarded not in advance saying, ‘If you build this portion of road, we will forward further money to you’, but working out criteria which had already been met. The exact opposite of what milestone payments are due for! It included the fact that the department, to quote the report:

Advice provided prior to the first payment (of $500 million in June 2014) identified that a payment of that magnitude was not yet required.

The report went on further, in terms of incurring unnecessary public debt, to criticise the concessional loan. It makes it very clear in the report:

… Stage 2 could have progressed towards construction as planned without the concessional loan.

It goes on to say:

There are relatively few features built into the loan contracts for the benefit of the Australian Government in its role as subordinated lender.

This has been a farcical situation from the beginning.

A division having been called in the House of Representatives—

Sitting suspended from 12 : 34 to 12 : 43

Mr ALBANESE: The coalition have somehow attempted to argue that the responsibility for this fiasco is not theirs. Of course, it is. The fact is that page 22 of the report outlines:

The Labor Government also attached the following preconditions to that commitment:

development of a full business case and its submission to and assessment by Infrastructure Australia;

that the design include suitable connections to the Sydney CBD and Port Botany; and

that no tolls be imposed on currently untolled existing roads.

When people in Western Sydney who today are driving on the M4 untolled drive on exactly the same section of road later on once the toll is reintroduced for road they have already paid for I think there will be a great deal of frustration that the government of New South Wales and federally under the coalition have reimposed a toll on a road that has already been paid for. Also, when Infrastructure New South Wales recommended to the New South Wales government that this be a priority, they recommended it on the basis that it deal with freight to and from the port. There was an issue with the M5 reaching capacity, and Infrastructure Australia even looked at a truck-only road from the M5 directly to the port.

At the moment, what you have with this project is perhaps the only road project in global history where tunnelling began—at Strathfield where the M4 ends—without knowing where the tunnel would come up. After literally every single dollar of Commonwealth’s $1.5 billion grant funding had been fully forwarded to the New South Wales government, they were still changing its final destination and, indeed, removing the exit point at Broadway and just maintaining the two exit points at St Peters and at Rozelle. Good infrastructure requires the planning to be done first and then the financing and construction. This report reaffirms that and reaffirms that this government continues to get it wrong.

Debate adjourned.