Sep 24, 2014

Consideration in Detail – Infrastructure Australia Amendment (Cost Benefit Analysis and Other Measures) Bill 2014

Mr ALBANESE (Grayndler) (10:06): by leave—I move opposition amendments (2), (3), (6) and (7) together:

(2) Schedule 1, item 2, page 3 (lines 11 to 13), omit “for investment in, or enhancements to, nationally significant infrastructure that involve Commonwealth funding”, substitute “that involve capital expenditure”.

(3) Schedule 1, page 3 (after line 13), after item 2, insert:

2A At the end of section 5A


(5) The summary of a proposal evaluated during a quarter must also include:

(a) either:

(i) if the proposal involves capital expenditure of $100 million or more—a cost benefit analysis of the proposal prepared under section 5AA; or

(ii) for any other proposal—a cost benefit analysis of the proposal if one has been prepared under that section; and

(b) a summary of Infrastructure Australia’s evaluation of the proposal.

(6) Schedule 1, item 7, page 4 (after line 21), after subsection 39E(1), insert:

(1A) The amount referred to in subparagraph 5A(5)(a)(i) is to be indexed at the same time, and by the same amount, as the amount referred to in subsection 5A(2).

(7) Schedule 1, item 7, page 4 (line 22), omit “is”, substitute “and subparagraph 5A(5)(a)(i) are”.

These amendments relate to Infrastructure Australia’s evaluation of proposals. Amendment (2) relates to requiring a cost-benefit analysis of projects over $100 million. The government’s wording gets the process back to front, and Labor’s amendments will address that. Our amendments are consistent with the legislation adopted by the former Labor government relating to the Building Australia Fund and what Labor have moved for in recent months. It gives the $100 million commitment actual meaning.

The effect of this specific amendment is twofold. Firstly, it gets the sequencing right around project proposals by correctly defining the trigger for a cost-benefit appraisal by Infrastructure Australia. It does not make sense to trigger in-depth evaluations of projects seeking funding by selecting those that have already been funded, rather than linking the trigger to involvement of Commonwealth funding of $100 million or over. A meaningful trigger for the proposal should be capital expenditure on the project being $100 million or over. This makes sense, gets the sequencing right, progresses funding appraisal, implements the actual coalition promise and ranks projects by their actual size.

The recent debate, for example, about the East West Link has included the concern that the Commonwealth has provided funding already of $1½ billion for a project that has not commenced. This flies in the face of the commitment to proper cost-benefit analyses and also the very clear and explicit commitment from the coalition that they would make milestone payments. One billion dollars of this $1½ billion applies to stage 2 of the East West Link. This is like an episode of Utopia! The government have funded $500 million for stage 1, which might commence sometime in the coming years, but $1 billion for stage 2, which, funnily enough, comes well after stage 1—a billion dollars. It is indeed as if the scriptwriters from Utopiahave taken over the minister’s office! Labor support the reverse, consistent with the legislation we put in place for the Building Australia Fund. Labor believe that potential public transport projects should also be assessed for cost benefit. Under the current government, setting a Commonwealth funding trigger for a cost-benefit analysis means that the relative merit of public transport will not be compared against a competing road project.

Labor’s amendment also aligns with the coalition’s actual election commitment, where the $100 million cost-benefit threshold would apply to all infrastructure projects worth more than $100 million. That was the commitment that was made. Secondly, it ensures that all infrastructure proposals nominated by the minister will also be evaluated by Infrastructure Australia, which is a reasonable proposition. The bill as proposed would have the minister nominate pet projects that would avoid a requirement for IA cost-benefit evaluation even if they were over $100 million in value. This amendment applies the same uniform process across all projects of a value of $100 million or over, regardless of what the political views are around a particular project.

Amendment (3) is about transparency. As we have moved previously and as many stakeholders, regulators and academics have called for, details of project evaluations will be made public on a regular basis. This amendment adds greater rigor to disclosure by requiring that the details of cost-benefit analyses are published on the IA website. Also included are wider elements of any IA evaluation. Items (6) and (7) are consequential amendments that are uniform with the indexation method proposed in the bill. I commend the amendments to the House.