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representatives vote 2023-05-24#4
Edited by
mackay staff
on
2023-08-11 09:49:13
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Title
Bills — Infrastructure Australia Amendment (Independent Review) Bill 2023; Consideration in Detail- Infrastructure Australia Amendment (Independent Review) Bill 2023 - Consideration in Detail - Cost-benefit test
Description
<p class="speaker">Allegra Spender</p><p>SPENDER () (): by leave—I move amendments (3), (4), (6) and (8) to (10) on sheet revised on 24 May 2023:</p><p class="italic">(3) Schedule 1, item 4, page 5 (after line 8), after subsection 5B(8), insert:</p><p class="italic">(8A) Without limiting subsection (7), the proposals covered by that subsection include proposals that involve capital expenditure of at least $100 million.</p><p class="italic">(4) Schedule 1, item 4, page 5 (after line 14), at the end of section 5B, add:</p><p class="italic">(10) The summary of a proposal evaluated during a quarter must also include:</p><p class="italic">(a) either:</p><p class="italic">(i) if the proposal involves capital expenditure of $100 million or more—a cost benefit analysis of the proposal prepared under section 5CA; or</p><p class="italic">(ii) for any other proposal—a cost benefit analysis of the proposal if one has been prepared under section 5CA; and</p><p class="italic">(b) a summary of Infrastructure Australia's evaluation of the proposal.</p><p class="italic">(6) Schedule 1, item 4, page 6 (after line 13), after section 5C, insert:</p><p class="italic">5CA Cost benefit analysis</p><p class="italic">(1) Infrastructure Australia must not include a proposal in an Infrastructure Priority List referred to in paragraph 5(b) unless a cost benefit analysis of the proposal has been prepared in accordance with a method approved under subsection (2).</p><p class="italic">(2) Infrastructure Australia must approve a method for preparing cost benefit analyses of proposals. The method must enable proposals to be compared.</p><p class="italic">(3) Infrastructure Australia must cause a method approved under subsection (2) to be reviewed:</p><p class="italic">(a) no later than 12 months after the commencement of this section; and</p><p class="italic">(b) every 24 months after that first review.</p><p class="italic">(4) Without limiting subsection (3), a review under that subsection must consider whether cost benefit analyses are adequately taking account of social, environmental and economic costs and benefits.</p><p class="italic">(5) The report of the review must be made available on Infrastructure Australia's website within 14 days of the report being approved by the Board.</p><p class="italic">(8) Schedule 1, page 8 (after line 18), after item 7, insert:</p><p class="italic">7A Before section 40</p><p class="italic">Insert:</p><p class="italic">39E Indexation of amounts</p><p class="italic">(1) The amount referred to in subsection 5B(8A) is to be indexed in accordance with the method determined by the Minister by legislative instrument. The method must provide for the amount to be indexed:</p><p class="italic">(a) for the first time on a day in 2028; and</p><p class="italic">(b) at least once every 5 years.</p><p class="italic">(2) The amount referred to in subparagraph 5B(10)(a)(i) is to be indexed at the same time, and by the same amount, as the amount referred to in subsection 5B(8A).</p><p class="italic">(3) Subsection 5B(8A) and subparagraph 5B(10)(a)(i) are taken, on and from a day of indexation, to refer to the amount as indexed on that day.</p><p class="italic">(9) Schedule 1, page 8 (before line 19), before item 8, insert:</p><p class="italic"> <i>National Land Transport Act 2014</i></p><p class="italic">7B Subsection 16(1)</p><p class="italic">Before "Commonwealth funding", insert "Subject to subsection (1A),".</p><p class="italic">7C After subsection 16(1)</p><p class="italic">Insert:</p><p class="italic">(1A) If an Investment Project involves capital expenditure of $100 million or more, Commonwealth funding may only be provided if the project has been evaluated by Infrastructure Australia under section 5B of the <i>Infrastructure Australia Act 2008</i>.</p><p class="italic">7D After section 92</p><p class="italic">Insert:</p><p class="italic">92A Indexation</p><p class="italic">(1) The amount referred to in subsection 16(1A) of this Act is to be indexed at the same time, and by the same amount, as the amount referred to in subsection 5B(8A) of the <i>In</i><i>frastructure Australia Act 2008</i>.</p><p class="italic">(2) Subsection 16(1A) is taken, on and from a day of indexation, to refer to the amount as indexed on that day.</p><p class="italic">(10) Schedule 1, page 11 (after line 12), after item 21, insert:</p><p class="italic">21A Subsection 5CA(5)</p><p class="italic">Omit "Board", substitute "Commissioners".</p><p>These amendments replicate an amendment moved by the Prime Minister as the shadow minister for infrastructure in 2014. My thinking and my goals are the same as the Prime Minister's thinking and goals were at that time. The goal is to ensure that the government only invests in infrastructure projects that create benefits that are greater than the costs. To achieve this these amendments require that Infrastructure Australia cannot include projects on the infrastructure priority list unless they have undertaken a cost-benefit analysis and that analysis has returned a positive benefit. To ensure these analyses are undertaken in a reliable and consistent way without the selection of favourable variables the amendments require Infrastructure Australia to publish a standard methodology which must be used by proponents. The amendments then create the requirement that the Commonwealth not provide public funding to major projects which are not on the priority list.</p><p>In line with the Prime Minister's amendment back in 2014, a major project is defined as one worth more than $100 million. You would think this would be an uncontroversial amendment as it's one that simply requires that public money be used prudently and one that was previously proposed by the Prime Minister himself, but the fact that almost a decade later it has not been legislated and that there is opposition by the Prime Minister and his government, as I understand it, suggests it is controversial. It is only controversial because it takes away the power of government to make investment decisions which are positive politically but negative economically. I am not confident that the past actions of Commonwealth governments warrant them having unilateral power to determine what should be funded, what should be a priority and whether the public has the right to see whether the project stacks up. I commend these amendments to the House.</p> <p class="speaker">Catherine King</p><p>We won't be supporting these amendments. The Independent Review of Infrastructure Australia recommended that IA's role in project evaluation relate to proposals with Commonwealth investment of $250 million or where projects are recognised as nationally significant. The monetary threshold also aligns with the Albanese government's focus on investing in projects that are truly nationally significant, not smaller projects in marginal electorates. It's for this reason that we're unable to support the proposal of the $100 million threshold.</p><p>In relation to the undertaking around cost-benefit analysis, in accordance with the independent review, Infrastructure Australia will have the function of evaluating or endorsing evaluations undertaken by states and territories. The bill does not need to explicitly say 'cost-benefit analysis' because it is inherent that an assessment of a project would include an assessment of the benefits and the costs of the project.</p> <p class="speaker">Allegra Spender</p><p>I thank the minister for her response. I would like to ask the minister two questions for clarification. The first is on the $250 million threshold. Is the minister saying that the government would support these amendments if the $250 million threshold were changed from the $100 million threshold? And the second piece is this. I note from the minister's comments that she notes that Infrastructure Australia will have the opportunity to create cost-benefit analyses. Now, I support that, but my question is: 'Shouldn't they be obliged to?' because, again, this is public money; it's absolutely critical that we have effective cost-benefit analysis of public money.</p><p>I'd like to quote the Prime Minister's speech from 2014 when he raised this amendment and he said:</p><p class="italic">Labor will seek to amend this bill to make it clear that infrastructure project selection starts with a measurement of cost benefit prior to any decision to fund. This is consistent with Labor's approach to the Building Australia Fund, where projects are required to be prior assessed by Infrastructure Australia. Labor will achieve this by making the $100 million about the capital value of the project rather than how much funding has been earmarked to it. This amendment will also ensure that projects nominated by the minister for evaluation are also assessed by Infrastructure Australia. Labor will also move to amend the Land Transport Infrastructure Act to make Infrastructure Australia assessment a pre-requisite for funding projects over $100 million in value. Finally, we will move amendments to require a standard method for cost-benefit analysis and to strengthen transparency.</p><p class="italic">The government, if it is fair dinkum, should support these amendments.</p><p>These are the words of the Prime Minister. This is my question back to the minister: is the government fair dinkum? And, if the government is fair dinkum about the need for strengthening transparency, then why don't they support this? I also want to quote the Prime Minister's own comments to me when I raised some of the questions relating to this bill in the House a couple of weeks ago, and the Prime Minister said:</p><p class="italic">The legislation that is before parliament, moved by the infrastructure minister, will make sure that there's transparency and will make sure that there's proper analysis. That's because there's a finite level of resources, and that is why we should make sure that productivity drives that agenda going forward. That is what my government is committed to, and that's what we will get on with the business of doing.</p><p>I ask the minister, respectfully: would the $250 million make a difference? As to the fact that Infrastructure will do this: I want a commitment within the legislation; why is that not possible? If the government has changed its mind or the Prime Minister has changed his mind in terms of what is needed, why have they changed their mind on what is important for transparency and accountability and making sure we get value for public money?</p> <p class="speaker">Catherine King</p><p>I will just say a couple of things. Again, I think the member is being a bit broad in her interpretation of what the Prime Minister previously said, as that amendment is not exactly the same, and I think is being cute about that, to be honest.</p><p>The second thing is that Infrastructure Australia will not be undertaking cost-benefit analysis, but they will undertake an analysis of the cost-benefit analyses that have been done by states and territories and project proponents. They will not actually initiate a cost-benefit analysis themselves, because currently they are bogged down with assessing multiple project analyses that have been done and what we want them to be able to do is to have a consistent analysis, a consistent framework for the country—because there isn't one; it's very variable across projects and across states and territories. We also want to free them up to be able to lift the level of the way in which cost-benefit analysis is done in this country—and that is their role; that is what we're trying to get them to do—rather than undertaking cost-benefit analysis on every single project themselves. So they will be evaluating whether the work on a project that has been done actually meets the quality of a cost-benefit analysis and then whether it is worthy of or available for Commonwealth investment. That is their role. You are changing the role and changing the bill in what you're actually asking to be done, so we won't be supporting that.</p> <p class="speaker">Allegra Spender</p><p>NDER () (): I'd like to just make a note to the House that the minister just described it as 'cute' that I had put this amendment forward. We took the Prime Minister's own amendment to the drafters and said: 'Can you please replicate that in the Infrastructure Australia bill, given that, obviously, the act has changed over time since he made that piece.' That is exactly how it was done, and I'm happy to share the emails and the correspondence on that to prove that this is what I'm intending to do: exactly what the Prime Minister asked to do in the first place.</p><p>In terms of the point that you raised about cost-benefit analysis and having consistency: I support having consistency in cost-benefit analysis, but what I'm asking for is that it is published, that it is available and that we do not fund things in this country, nor make any public commitments to funding, without effective cost-benefit analysis beforehand.</p> <p class="speaker">Kate Chaney</p><p>In the private sector no project worth $100 million would get through without a clear cost-benefit analysis showing that it makes sense. The same standards should be expected of taxpayers' money and how it is spent. Whether that cost-benefit analysis is done directly by Infrastructure Australia or by the states using a similar methodology is of less concern than the fact that there should be analysis that shows that it stacks up before money is allocated. I understand that with government projects often it is not just about economic benefit; you need to take into account environmental and social factors as well. There are methodologies to incorporate these, and economic benefits, into cost-benefit analysis, and this is actually addressed in the amendment.</p><p>Australians don't want to see their money wasted. The amendments put by the member for Wentworth today are focused on ensuring that Australians can have some confidence that the money that is being spent on these huge projects is being spent well and on the right priorities. There will never be enough money to go around, and requiring open, transparent cost-benefit analysis with a common methodology will mean we are actually allocating money to the best projects, the ones that make the most sense for the country. I call on the government to hold itself to the standard that it was requesting the opposition to hold itself to in the previous parliament. Come through with the transparency that will actually rebuild trust in the ability of government to deliver projects.</p> <p class='motion-notice motion-notice-truncated'>Long debate text truncated.</p>-
- The majority voted in favour of *disagreeing* with [amendments](https://www.openaustralia.org.au/debate/?id=2023-05-24.21.1) introduced by Wentworth MP [Allegra Spender](https://theyvoteforyou.org.au/people/representatives/wentworth/allegra_spender) (Independent), which means they failed.
- ### What do the amendments do?
- Ms Spender [explained that](https://www.openaustralia.org.au/debate/?id=2023-05-24.21.1):
- > *These amendments replicate an amendment moved by the Prime Minister as the shadow minister for infrastructure in 2014. My thinking and my goals are the same as the Prime Minister's thinking and goals were at that time. The goal is to ensure that the government only invests in infrastructure projects that create benefits that are greater than the costs. To achieve this these amendments require that Infrastructure Australia cannot include projects on the infrastructure priority list unless they have undertaken a cost-benefit analysis and that analysis has returned a positive benefit. To ensure these analyses are undertaken in a reliable and consistent way without the selection of favourable variables the amendments require Infrastructure Australia to publish a standard methodology which must be used by proponents. The amendments then create the requirement that the Commonwealth not provide public funding to major projects which are not on the priority list.*
- >
- > *In line with the Prime Minister's amendment back in 2014, a major project is defined as one worth more than $100 million.*
- ### Amendment text
- See [OpenAustralia.org.au](https://www.openaustralia.org.au/debate/?id=2023-05-24.21.1) for the text of the amendments.
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