The majority of submitters to the inquiry acknowledged the importance of
Infrastructure Australia (IA) and supported the bill's aim to make it more
effective and to strengthen its role in improving infrastructure planning and
prioritisation on a national basis.
Many submitters also supported the governance changes proposed in the bill.
However, there were specific concerns raised in relation to IA's proposed
functions and the minister's powers. Additional concerns were raised by IA
itself regarding the lack of consultation during the drafting of the
legislation, re-establishment of IA under the CAC Act, and the tax concession
arrangements for infrastructure projects.
This chapter will address the primary concerns of submitters, namely IA's
proposed functions and the minister's powers which some submitters argued would
diminish IA's independence and transparency.
Item 8 of Schedule 1 of the bill would repeal sections 4 and 5 of the
Act and insert proposed sections 4 and 5. Proposed section 4 establishes IA as
a body corporate (statutory body) under the Commonwealth Authorities and
Companies Act 1997 (CAC Act). CAC Act bodies are independent governing
entities which are both legally and financially separate from the Commonwealth.
The CAC Act regulates certain aspects of the financial affairs of Commonwealth
authorities and in particular, details rules regarding reporting and
Under the current arrangements, ministerial direction powers exist
between the minister and the advisory council which are separate to the
ministerial direction powers between the minister and the Infrastructure
Coordinator. In effect, therefore, the current Act provides for a statutory position
(Infrastructure Coordinator) and a separate statutory body (advisory council),
each with separate reporting lines to the minister.
As part of re-establishing IA as a CAC Act body, the bill would abolish
the position of Infrastructure Coordinator who is appointed by the minister and
establish a position of CEO appointed by a board.
The bill would also abolish the twelve-member advisory council and establish a
twelve-member board under proposed section 6D.
The proposed structure of the board comprises:
- nine members, including the chair, to be determined by the
Commonwealth. Of the nine, at least five would have experience in the private
sector, and one in local government; and
- three members nominated by the states and territories.
The bill would impose directors' duties upon the board members, making
them formally accountable for their decisions.
The board would appoint a CEO who would be responsible to report to the board
rather than the minister, and the CEO would undertake the day-to-day administration
of IA which is currently the responsibility of the Department of Infrastructure
and Regional Development (department).
The department noted that, unlike current arrangements whereby the advisory
council has no formal responsibilities for IA's objectives or performance,
under the bill, the board and the CEO would have clearly articulated roles and
The bill would also simplify current reporting practices whereby both IA
and the Infrastructure Coordinator report separately to the minister. According
to the department, this can be duplicative and time consuming, potentially
inhibiting the independence of the advice while not maximising the advisory
capacity of IA.
The department noted that such changes would help preserve IA's independence,
while improving reporting arrangements and the delivery of IA's functions.
The department's Deputy Secretary, Ms Lyn O'Connell explained that the bill
seeks to rationalise some of the current reporting lines and create greater
transparency and accountability with the CEO reporting to the board.
She argued that, compared to current arrangements where there is a discrepancy
between the reporting arrangements of the coordinator and the council, the bill
would provide a direct, clear reporting line between the minister, the board
through the chair and then to the CEO.
Infrastructure Partnerships Australia (IPA) also supported the proposed
governance changes. It argued that in comparison to current arrangements
whereby the Infrastructure Coordinator is appointed and directed by the
minister, the establishment of a board and CEO would introduce a normal
reporting relationship between the board and agency's public service staff.
Similarly, the Australian Automobile Association (AAA) held the view that the
appointment of a CEO who reports to the board would provide for greater
independence while improving reporting arrangements and the delivery of IA's
The proposal to re-establish IA as a body corporate under the CAC Act
was recognised in evidence as an important step towards strengthening IA's
critical role in providing independent, expert and transparent advice to
The Moving People 2030 Taskforce stated that the 'reform process being
undertaken by the Commonwealth Government holds significant potential to make
IA an even more effective and valuable body'.
IPA argued that the proposed structure serves to provide additional
accountabilities and transparency because the execution of the prioritisation
and policy functions of the agency would be better insulated from the
priorities of executive government. According to IPA, the changes would create
an appropriate governance relationship between the board and staff while
reducing opportunities for inconsistent priorities between government and IA's
work program and prioritisation of projects.
According to Mr Brendan Lyon, CEO of IPA, the current governance arrangements
have contributed to the aggravation of state and territory governments
regarding the process of prioritisation and lack of transparency.
Beyond these proposed changes, IPA argued that the balance of the bill's
provisions largely serve to give effect to the government's stated policy
objectives including that of the refreshed audit and reforms to the agency's
Infrastructure Priority List.
Infrastructure Australia functions
Proposed section 5 sets out the general functions of IA. The provision
retains IA's existing functions, including conducting audits of nationally
significant infrastructure (currently defined as proposals in transport,
energy, water and communications); development of the Infrastructure Priority
Lists; identifying impediments to investment; promoting investment in
infrastructure; undertaking or commissioning research and other functions as conferred
on IA by the Act.
While there are no significant changes to IA's current functions under
the bill, the department noted that the bill does define more clearly those
functions to ensure that IA would deliver high quality, evidence-based advice.
Furthermore, the bill provides a broad remit to consider policy in the areas of
nationally significant infrastructure which is distinct from the current Act
while setting out specific reporting obligations.
Evaluating infrastructure proposals
Proposed section 5A provides for IA to evaluate proposals for investment
in nationally significant infrastructure and other infrastructure determined by
the minister. The proposed section would allow the minister to make two types
of determinations, both of which are legislative instruments and subject
therefore to disallowance. First, the bill provides that the minister may
determine other infrastructure which is to be evaluated by IA and second, under
proposed subsection 5A(2), the minister may determine a class of proposals
which IA may not evaluate.
A number of submitters raised concerns about the determination provision
in proposed subsection 5A(2) which would give the minister the power to limit
the class of project proposals that IA will evaluate.
Consult Australia argued that what constitutes a 'class of proposals', on what
basis this decision would be made, and whether and how such a decision would be
published is not clear.
Mr Michael Apps, representative of the Moving People 2030 Taskforce and
Executive Director of the Bus Industry Confederation, noted that while the
classes of infrastructure that will be excluded from evaluation are not stated,
it was 'clear' that urban transport will be one of the excluded classes.
The Tourism and Transport Forum (TTF) was concerned that the provision may
allow the minister to prevent IA from assessing proposals relating to public
Other submitters argued that the exercise of power in such a manner would
undermine the ability of IA to fulfil many of its general functions as set out
in the bill.
During the hearing, a number of witnesses highlighted the consequences
of the exclusion of urban and specifically public transport from IA's
consideration and the need for a holistic approach to addressing Australia's
transport challenges. Mr Bryan Nye, representative of the Moving People 2030
Taskforce and CEO of the Australasian Railway Association argued that while the
government has made a commitment to improve productivity, its own research has
indicated that by 2020, congestion in capital cities will constrain the
Australian economy by $20 billion.
Noting that 84 per cent of the Australian community live in cities, the
National Infrastructure Coordinator, Mr Deegan emphasised the importance of
urban transport issues as well as the need for an independent body that
assesses all projects given the pressure on both rural and urban Australia.
Unless we take a network approach to the operations of
transport in our cities—dealing with roads, public transport and all of the
other elements in a holistic fashion—the productivity benefits that might be
derived will be lost.
Mr Liam Foley, Policy Officer of the Urban Development Institute of
Australia (UDIA) also argued that rather than limiting the classes of
infrastructure, the focus of IA should rest with evaluating all relevant
infrastructure classes to ensure improvement in the nation's productivity as
well as the maximum return for the community and economy from the government's
In response to such concerns, the department stated that it did not
agree with concerns that the bill would limit the type of project to be
evaluated by the IA and particularly IA's ability to assess public transport
projects. The AAA also noted that it is neither the intent nor the practical
impact of the bill to exclude proposals for investment in public transport.
Furthermore, the department noted that the Act currently provides for IA to
evaluate proposals for investment in nationally significant infrastructure only
by ministerial request. In contrast, the bill would enable this function to be
performed without a ministerial request, except in relation to proposals in a
class determined by the minister under proposed paragraphs 5A(1)(a) and (2).
The department explained that under the bill, the minister would be
provided with the power to exclude a class of proposals from IA's function to
facilitate the government's policy that IA assess all projects across economic
and social infrastructure (excluding Defence projects) that seek Commonwealth
funding of over $100 million.
Where projects do not meet the definition of 'nationally significant
infrastructure' including projects involving social infrastructure, they could
be brought within the evaluation function by a determination of the minister
under proposed paragraph 5A(1)(b). Projects not seeking Commonwealth funding of
over $100 million could be excluded by a determination under proposed
In relation to proposed paragraph 5A(1)(b) and proposed subsection
5A(2), Ms O'Connell further clarified that 'health and education proposals are [within
scope] if looking at evaluations, but out [of scope] if looking at policy'. She
noted that the legislative drafters' advice was that the best way to implement
that intention was to provide ministerial power of direction but to make sure
that the ministerial power of direction was a legislative instrument so that it
is a disallowable instrument and transparent.
Development of infrastructure plans
Proposed section 5B sets out the requirements that IA would be required
to meet when developing infrastructure plans. New subsection 5B(2) requires IA
to develop infrastructure plans that cover a period of 15 years from the time
that the plan is prepared. Such plans must be prepared every five years or at
other such intervals as determined by the minister.
Submitters welcomed the inclusion of 15-year infrastructure plans
specifying priorities for all spheres of government and subject to review every
The Australian Conservation Foundation (ACF) noted that a 15-year planning
horizon will allow for more rigor and certainty regarding recommendations while
supporting lower infrastructure construction and maintenance costs.
Similarly, the TTF highlighted that the development of 15-year plans will help
to ensure that there is an overarching framework, particularly for federal
investment in infrastructure.
The National Infrastructure Coordinator, Mr Deegan noted that the strength of
the legislation rested with the provision for long-term 15-year plans which
would provide for 'long-term national infrastructure planning and moving away
from the politicisation of the current process'.
Submitters also broadly supported proposed subsection 5B(1) which
details the specific requirements that IA must comply with when developing
infrastructure plans. Of this provision, Consult Australia stated that:
It is often through a suite of projects, or a
regionally-based approach that the greatest benefits will be realised from an
investment. This expansion in the functions of IA should help support business
confidence and plan for the delivery of infrastructure with greater certainty.
Providing advice on infrastructure matters
Proposed section 5C sets out the infrastructure matters on which IA
would provide advice. The department noted that IA's current primary functions
as set out in the Act are retained in the bill.
Under the proposed section 5C, IA will advise the minister, Commonwealth,
state, territory and local governments, infrastructure investors and owners on
- Australia’s current and future needs and priorities relating to
nationally significant infrastructure;
- policy, pricing and regulatory issues that may impact on the utilisation
- impediments to the efficient utilisation of national infrastructure
- options and reforms, including regulatory reforms, to make the
utilisation of national infrastructure networks more efficient;
- the needs of users of infrastructure; and
- mechanisms for financing investment in infrastructure.
The department advised the committee that proposed section 5C would
provide IA with a wide-ranging remit across infrastructure.
IPA also commented that oversight of social infrastructure investments would
mark a material change in the mandate of IA which 'increases the relevance of
IA, because it gives the agency a role in advising on every Commonwealth
economic and social infrastructure project'.
The bill proposes to remove functions provided under paragraph 5(2)(g)
of the Act 'to provide advice on infrastructure policy issues arising from
climate change'. It also proposes to remove the function of reviewing
Commonwealth infrastructure funding programs to ensure that they align with
Infrastructure Priority Lists as provided for in paragraph 5(2)(h) of the Act.
The proposed removal of these provisions raised concerns with some submitters.
The UDIA advocated that IA should provide advice on climate change, as
it 'is a legal and policy reality' and is likely to have a 'significant impact'
on both Australia's existing infrastructure assets and future infrastructure
The National Infrastructure Coordinator, Mr Deegan stated that there were a
number of specific instances relating to bridge heights, port development and
opportunities in Australia's cities to deal with climate change threats where
appropriate early expenditure to deal with possible climate change impacts will
save money. He emphasised that the up-front consideration of climate change
impacts is an important component in assessing projects and one of the factors
that should be considered in prioritisation of projects and the associated
However, the department confirmed that the bill includes all of the
current 'additional functions' of IA except those contained in paragraphs
5(2)(g) and 5(2)(h) of the Act. In relation to these two provisions, the
department highlighted that under section 5(4) of the Act, these two functions
can only be undertaken by IA on request of the minister.
The department emphasised that the bill would provide the necessary flexibility
for these functions to be undertaken by IA through two new provisions, namely
proposed subsection 5C(b) and proposed paragraph 5D(1)(c).
Proposed subsection 5C(b) would direct IA to provide advice on policy,
pricing and regulatory issues that may impact on the utilisation of
infrastructure and which could include any issues arising from climate change.
Furthermore, according to the department, the bill would provide IA with the
necessary flexibility to address matters pertaining to climate change and
Commonwealth infrastructure funding with the inclusion of proposed paragraph
5D(1)(c) which provides for IA to undertake any functions that the minister
directs it to perform.
The department emphasised that this proposed provision is similar to that
contained in paragraph 5(2)(j) of the Act concerning additional
functions which states that IA has any functions that the minister, by writing,
directs IA to perform. Moreover, the bill's section 5C would enable IA to
provide advice on Australia's future needs and priorities relating to
nationally significant infrastructure, policy issues impacting on the
utilisation of infrastructure, impediments to the efficient utilisation of
national infrastructure networks and options and reforms to improve the
efficiency of utilisation of such networks.
Mr Brendan Lyon, CEO of IPA argued that the removal of climate change
from the legislation would not have any material impact on whether there is
up-front consideration of climate change. Mr Lyon, whose views were supported
by the department, argued that:
The place to do that is through the project inception tools
that are used. An area where Infrastructure Australia certainly should have
done deeper work over the last couple of years is around how you engender
proper consideration of sustainable development objectives into the front end
inception of infrastructure.
Functions only performed when directed by the minister
Section 5D details the functions that IA would only be able to perform
when directed to do so by the minister in writing. Under subsection 5D(1),
these functions include:
- to review and provide advice on proposals to facilitate the
harmonisation of policies, and laws, relating to development of, and investment
- to publish the following material:
- evaluations conducted under section 5A;
- evidence relied on in preparing, and reasons for any opinion or
conclusion contained in, the audits, lists, evaluations, plans and advice
mentioned in in paragraphs 5(a) to (e);
- any other functions that the Minister directs Infrastructure Australia
Concerns were raised in evidence that the section 5D would give the
minister excessive direction powers and limit IA's independence as an advisory
body to government.
Under proposed paragraph 5D(1)(b), for example, IA evaluations would be
published only with the minister's consent.
Mr Nye, representative of the Moving People 2030 Taskforce, informed the
committee that proposed section 5D would prevent IA from publishing project
evaluations, material used in those evaluations, plans, audits or advice other
than at the direction of the minister.
The UDIA argued that by preventing IA from publishing evaluations conducted
under section 5A, paragraph 5D(1)(b) would reduce the independence of IA as
well as the transparency and scrutiny with which it performs its functions.
Similarly, the National Infrastructure Coordinator argued that by providing
that IA is not permitted to publish evaluations and other documentation without
the written direction of the minister, proposed paragraph 5D(1)(b) would
undermine the credibility of IA and its value to the nation.
It was highlighted that while a determination under proposed paragraph 5D(1)(a)
would be a legislative instrument to come before Parliament, directions given
under proposed paragraph 5D(1)(b) are not legislative instruments and could not
therefore be reviewed by Parliament.
The Business Council of Australia argued that the publication of such
evaluations wherever possible is critical to public confidence in the decisions
made by government and that a substantial component of public disclosure is the
publication of such reports.
However, the department clarified that the intention behind proposed
paragraph 5D(1)(b) was to provide a requirement for IA to publish evaluations
and other documentation while also ensuring that it would be able to safeguard
commercial information. Whereas there is no current provision for IA to publish
material under the Act, the bill proposes to provide greater transparency by
providing such a provision while also balancing the need to publish with that
of safeguarding commercial information. Ms O'Connell noted that such a balance
would meet the need of the state governments which were particularly concerned
about the appropriate treatment of commercially sensitive material when they
put forward information to IA.
Furthermore, contrary to the concerns raised by some submitters, the
department also highlighted that section 5D would reduce the list of functions
that IA can only perform at the request of the minister. At the same time, it
expands the function of evaluating 'nationally significant infrastructure'
without a ministerial request except in relation to proposals in a class
determined by the minister.
Ministerial power to direct IA about the performance of its functions
Section 6 of the Act empowers the minister to give written directions to
IA about the performance of its functions. The bill's item 9 of Schedule 1 would
substitute subsections 6(3) and 6(4) of the Act and set out the general nature
of the directions that may be given (proposed subsection 6(3)), while proposed
subsection 6(4) makes it clear the that the minister could not give directions
about the content of any audit, list, evaluation, plan or advice to be provided
by IA. The proposed provisions expand upon the existing subsections which limit
the directions that the minister can make to those that are of a general nature
Mr Foley from the UDIA raised concern that proposed subsection 6(3)
would require IA to perform its functions in accordance with requirements
specified in the direction. The UDIA argued that the proposed subsection 6(3)
would allow the minister to provide direction on a project’s scope, what
matters will be considered by the project, and the manner in which the project
will be conducted.
Similarly, the National Infrastructure Coordinator raised concerns with
subsections 6(3) and 6(4) of the bill on the grounds that the width of the
ministerial directions may curtail and inhibit the opportunity for the
community to have a public debate on matters of national importance.
However, the department emphasised to the committee that proposed
subsection 6(4) would clearly limit the powers available under proposed section
The department advised that under proposed paragraph 6(3)(c), the bill would
retain the minister's power under the Act to direct IA to perform a function in
accordance with any requirement that are specified in the direction, including
requirements relating to:
- the scope of any audit, list, evaluation, plan or advice to be provided
by Infrastructure Australia; and
- any matters that Infrastructure Australia must or must not consider in
performing the function; and
- the manner in which Infrastructure Australia is to perform the function.
Proposed section 6(4) states that 'the Minister must not give directions
about the content of any audit, list evaluation, plan or advice to be provided
by Infrastructure Australia'. The department noted that this provision ensures
that IA would at all times maintain an unfettered capacity in relation to its advice
on investment, planning, priorities, projects and other matters to government.
Similarly, the AAA noted that this section would ensure the independence of IA
in relation to its advice on investment, planning and priorities.
Consequential changes for tax concessions
The Selection of Bills Committee noted some concern that the bill
changes arrangements for tax concessions in respect of infrastructure projects.
However, the department noted in its submission that the proposed
consequential changes provided for in the bill are not intended to have any
impact on the assessment of tax concessions for infrastructure projects
currently provided for under the Income Tax Assessment Act 1997.
The committee considered the concerns of submitters and witnesses
regarding the governance structure reforms, the functions of IA as well as the
minister's powers as proposed by the bill. The committee notes that, contrary
to the views of many submitters, the bill would widen the infrastructure remit
of IA while imposing for the first time, reporting and publishing obligations.
The committee is satisfied that, rather than diminishing IA's ability to
provide expert and independence advice to government, the bill would codify the
extent of ministerial powers and reduces the list of functions that IA can
perform only upon ministerial request. The committee is also satisfied that the
bill would strengthen IA's role as an independent and transparent advisory body
through the clarification of functions and a governance structure that is
legally and financially separate from the Commonwealth.
The committee recommends the bill be passed in its current form.
Senator the Hon Bill Heffernan
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