The Australia Institute made a submission to the Rural and Regional Affairs and Transport Legislation Committee regarding the Regional Investment Corporation Bill 2017.
The Australia Institute acknowledges the merit of government financing, including on a concessional basis, to address areas of public good, promote sustainable economic development, to address market gaps, and to help with managing risk.
However, our submission raises a number of concerns with this Bill. Its rationale is somewhat unclear. The Explanatory Memorandum says the new Corporation will “streamline administration” of these programs, however it is unclear how these efficiencies are to be achieved relative to the status quo. It also says that the Corporation will provide “independent advice”, however there are many ways to receive independent advice, including from the Department, and it is unclear why the Parliament should favour the approach proposed in the Bill. In addition, very substantial aspects of the Corporation’s lending activities will be at Ministerial discretion. This creates serious risks of politically directed spending without rigorous oversight or analysis. We are unsure that three Board members will be sufficient to effectively govern this agency. It is concerning that the Bill does not mention Infrastructure Australia, the existing government body for expert advice on infrastructure planning and prioritisation.
The Australia Institute has recently conducted a range of research into the Northern Australia Infrastructure Facility (NAIF), a similar agency established last year. We are currently conducting research into water infrastructure and public financing.