Labor moves to thwart Joe Hockey’s asset recycling scheme

Anthony Albanese says the Abbott government is trying to “con” Australians about its commitment to infrastructure spending. Photo: Andrew Meares Greens oppose privatisation: Greens deputy leader Adam Bandt. Photo: Wayne Taylor
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The federal government’s plan to spur state government asset sales through an asset recycling fund could be significantly modified by the Senate under a plan put forward by Labor.

The $5 billion fund, announced by Treasurer Joe Hockey in the lead-up to the budget, pays states a 15 per cent bonus if they sell old assets and reinvest the proceeds of the sale in new infrastructure.

But Labor infrastructure spokesman Anthony Albanese on Wednesday unveiled two amendments to the new laws that could limit the availability of that 15 per cent bonus payment.

The first amendment would give the Parliament the power to disallow the 15 per cent bonus payment to states on a project-by-project basis.

The second measure would require a cost-benefit analysis by Infrastructure Australia of a project before payment is approved.

Mr Albanese said the fund was an attempt by the Abbott government to “con” Australians about its commitment to infrastructure spending.

“On a superficial level, it sounds like the government is doing something . . . but there is a real problem here. The budget includes no new money for infrastructure,” he said.

“The few new projects are being funded by cuts to existing road and rail projects. But more than anything else, this bill is about an attempt by the Commonwealth to flick pass responsibility for nation-building to state governments.”

While the government’s plan is expected to pass the House late on Wednesday or early on Thursday, Labor could team up with the Greens to modify the bill when it comes to the Senate – expected next week.

The Greens and the Palmer United Party, who will hold a large share of the balance of power in the Senate after July 1, are opposed to privatisation of assets.

On Wednesday, the Greens called on Labor to vote down the proposal in the Senate. Deputy leader Adam Bandt argued the bill would create a “toll-roads slush fund at the expense of investment in public transport”.

Mr Bandt said the Greens would consider Labor’s amendments, “but Labor must refuse to aid and abet Tony Abbott’s privatised roads agenda and vote with the Greens to block this bill”.

If the Greens vote against the Labor amendments, then Labor, in turn, is likely to pass the government’s bill in unamended form.

Melbourne’s East West link and the Sydney West Connex project have, for example, not been subject to a benefit-cost analysis by Infrastructure Australia, but federal money has already been allocated for these projects.

However, the 15 per cent federal bonus funding for future projects could face being blocked in the Parliament if Labor’s amendments pass.

The NSW government is banking on up to $2 billion to flow from the fund if it is re-elected, in which case it will push ahead with its privatisation of the state’s electricity assets.

Finance minister Mathias Cormann said the government was determined to pass the fund as it had been designed in the Senate.

“As with all the government’s budget measures, we will work respectfully and constructively with all senators to ensure we pass the budget that Australia needs,” he said.

“In the end, Labor will have to make a decision on whether they really want to stand in the way of important additional investments in productivity-enhancing infrastructure designed to build a stronger more prosperous economy.”

Earlier on Wednesday, federal Labor frontbencher Richard Marles told Sky News that the ALP would not stand in the way of assets being recycled, such as the sale of the poles and wires proposed by NSW Premier Mike Baird.

“Privatisations can be good, they can be bad, they need to stand on their own two feet in terms of there being good public policy,” he said.

“So what we’re saying is this; we’re not standing in the way, we’re proposing couple of amendments.”

Infrastructure Partnerships Australia said if the asset recycling plan does not go ahead NSW would miss out on $1.9 billion on the ”poles and wires” privatisation.

Victoria would lose $750 million from the sale of the Port of Melbourne which has bipartisan support at state level.

Chief executive Brendan Lyon said a lack of state funds had slowed the delivery of infrastructure, describing the asset recycling program as ”one of the most sensible pieces of national infrastructure policy in years”.

“This policy has been a circuit breaker, because it puts real money on the table to reward state governments for undertaking potentially unpopular but necessary reforms, like the sale of the Port of Melbourne and the NSW electricity grid,’ he said.

“NSW  alone would miss out on nearly $2 billion in funding from the long-term lease of the poles and wires – money that is desperately needed to renew and repair the state’s ageing infrastructure.

“In Victoria, the state government could potentially miss out on around $750 million in payments from the sale of the Port of Melbourne.

“We have to be honest about the challenging and inflexible position states are in, and that failure to sell assets will see us fail to increase the pace and quality of transport and other infrastructure.”

with Heath Aston

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