The Senate has demanded changes to the Government’s asset recycling bill – the Coalition’s plan to provide incentive payments to state governments that sell-off public assets and “recycle” the funds into new infrastructure – in a bid to improve project selection and accountability, and deliver taxpayers better value for money. From The Guardian:
The Greens and the PUP will back Labor amendments requiring cost benefit analyses to be published for the projects being funded, and giving the parliament the power to disallow the bonus payment for any project that is not value for money.
Several of the government’s “roads of the 21st century” projects, including Melbourne’s East West link and the Sydney West Connex project, were not subject to cost-benefit analyses before federal money was allocated.
This is a wise move by the opposition Senators. The Productivity Commission’s (PC) new report into the provision of public infrastructure explicitly questioned the Government’s asset recycling agenda, noting that it “could act to encourage privatisation in circumstances that are not fully justified and encourage the selection of new projects that do not have demonstrable net benefits”.
The PC also argued that it is critical that governments “properly conducted cost–benefit studies of large projects, and [ensure] their disclosure to the public”. And it only backed privatisations where governments can ensure that:
- economic efficiency is achieved
- the risks to consumers and other public interests are managed
- the market structure is amenable to the privatisation
- the sale is conducted efficiently, ethically and transparently.
As noted by the PC, “there are many examples of inadequate project selection that have led to costly outcomes for users and taxpayers”. And proceeding with the Government’s assets recycling plan without proper safeguards and processes will ensure a continuation of the same, whereby projects are chosen more for political expediency or based on ideology, rather than on their overall economic and social net benefits.
