Mr PALLAS (Treasurer) — I grieve for the people of Victoria, who have been treated with complete contempt by a Sydney-centric federal Liberal government. The most recent of these outrages is the federal Liberal Party’s duplicitous and, might I say, dishonest approach to the asset recycling incentive scheme. The perfidy, the treachery and the duplicity is almost bottomless in terms of the grief it has inflicted upon the Victorian people.

Victoria has been dealing in good faith with the commonwealth, and not only has the federal Liberal government been playing politics but it has also been pretty incompetent when it comes to implementing its nefarious agenda. The asset recycling initiative was introduced by the former federal Treasurer, Joe Hockey, in his infamous and, might I say, ill-fated budget of 2014. The initiative recognises that when a state divests an asset it loses an ongoing source of dividend yield — that is, the state loses a revenue stream. In return, the federal government picks up a revenue stream as effectively the state provides it with an ongoing payer of company tax. Let us not fall for the myth that asset recycling money is a gift from the federal government to the people of Victoria. It is compensation, and might I say less than fair compensation, for a revenue stream that the people of Victoria have ultimately provided to the commonwealth. Therefore this initiative was not born out of atypical kindness in Joe Hockey’s heart but rather simply recognises that money is owed to Victoria.

In March 2014 the then Victorian Treasurer, the member for Malvern, was not content simply to receive funds for assets that might prospectively be sold — he was chasing recognition for asset sales going back to the 1990s. In terms of seeking full restitution and payment, those opposite have form. They sought it. They did not get it, but of course the national partnership agreement (NPA) that was signed on 2 May 2014 by the then Premier, Denis Napthine, made it clear that the Victorian coalition was entirely supportive of the principles underpinning asset recycling and indeed the asset recycling incentive payments. It is now more than two years since the signing of that agreement and the federal government is still unwilling to recognise our claim on those funds and unable to keep its word. That, I think, is the telling thing.

In January 2015, only weeks after the Andrews Labor government was elected and I became Treasurer, I wrote to Joe Hockey indicating Victoria’s willingness to participate in the asset recycling initiative. In February 2015 we commenced finalising the schedule under the national partnership agreement. In June 2015 we were informed that the federal government had decided to siphon off $800 million from the asset recycling pool to fund unspecified projects in northern Australia. We accepted assurances that the $5 billion asset recycling scheme would be preserved and its integrity maintained. In fact the federal Treasurer said that he remained fully committed to the asset recycling initiative — fully committed. On 1 September 2015 we got very close to a deal. We had a draft schedule and we were getting ready to sign. But then on 15 September Malcolm Turnbull knifed Tony Abbott. I wrote to Scott Morrison to congratulate him on becoming the federal Treasurer and to reiterate Victoria’s willingness and readiness to finalise the national partnership agreement. I heard nothing back for months.

In November I was informed that the federal Liberal government would not be willing to sign a contingent schedule. That meant it would not accept for Victoria exactly what it had accepted for New South Wales — a contingent schedule. Let us put aside any suspicion that the federal government has acted even-handedly in this matter. It has been transparently biased against the state of Victoria. I thought things might change when Infrastructure Australia identified the same projects the Victorian government had as priorities for the asset recycling scheme. You cannot really get too far apart when the professional advisory body to the federal government identifies the same things the Victorian government sees as being important. But still I heard nothing.

In April 2016, as we were preparing the 2016–17 budget for the state of Victoria, I wrote to the federal Liberal government proposing yet another schedule under the NPA. Again we heard nothing. Almost a year and a half after commencing negotiations we could wait no longer. We had heard nothing from the federal government in respect of its willingness to apply the same rules to asset recycling for the state of Victoria as it had applied to New South Wales and as it had applied to the Australian Capital Territory. We heard nothing, and we could wait no longer. The projects demanded action. The people of Victoria demanded action on the initiatives and on the infrastructure for which they had been waiting so long. Ultimately we chose to proceed to fully fund the Melbourne Metro rail project and the western distributor, despite the fact that we had made several offers to the commonwealth to participate in these processes.

Less than a week later the federal Treasurer offered a schedule, including Melbourne Metro, before handing down a budget that pulled a further $854 million out of the funding pool and calling an election. Just in case we did not know it, but of course we would have suspected it, the lion’s share of that money was to come out of the pockets of Victorians. It was the one big efficiency saving they made. So the people of Victoria and their infrastructure should feel a warm inner glow over the fact that Scott Morrison managed to find an efficiency — how to more efficiently rip off Victorians.

In June we wrote to the federal Treasurer pointing out that Melbourne Metro was fully funded. He might have noticed that our budget came before his, and he might have noticed, with all the publicity, that we had fully funded Melbourne Metro — $10.9 billion was put into Melbourne Metro — but still Scott Morrison said, ‘No, have this money and you must take it for this project’. I am sorry; we had fully funded it. The federal government had months, literally months, to participate in this process, and it failed to.

In June we wrote back and pointed out to the federal Treasurer that he may have missed it but the Melbourne Metro project is fully funded, and, by the way, we are removing 50 of our most dangerous and congested level crossings and the federal Liberal government is more than welcome to make a contribution to that project. Now of course we have heard Scott Morrison and Malcolm Turnbull saying that the scheme is capped. We were told only some months earlier that the federal government was fully committed to the scheme. What was the cap? Was it $5 billion? Was it $5 billion minus $800 million for northern Australia? Or was it $5 billion minus $800 million minus $854 million, largely because the federal government had made an efficiency saving?

Goodness me, if these people have a sense of fairness, a sense of propriety, they should be consumed by their own dishonesty. They should hang their heads in shame.

Now, of course we know that the funding decisions mean that the federal Liberal government never intended to provide Victorians their just deserts. The fund was originally $5 billion; we know that. The federal Liberal Party unilaterally reallocated funding from asset recycling: $800 million out for northern Australia infrastructure, and $854 million out in May 2016 — a great budget saving initiative. Little did we know that that funding initiative was at the cost of opportunity of every Victorian.

We hear members in this place grieving about the lack of funding for roads. Well, when people see this government put $970 million into rural and regional infrastructure as a direct result of asset recycling of the port or, on top of that, an extra $200 million to go into these arrangements, then they should have no doubt that if rural and regional Victoria are not getting their just deserts, it is not because of this government. It is the government that runs its head office and its philosophical foundation straight out of Sydney with no regard whatsoever for Victorians. The total available from the fund now is $3.346 billion, or 67 per cent of the original fund.

So when the federal government say they are committed to asset recycling, it means they are committed to it for everybody except for Victorians. By reducing the total fund, the federal government has effectively capped the incentive by disallowing an adjustment based on the final sale proceeds. We got too much; that is basically our problem. We were too good at doing what we did to extract value for Victorians, and the profiteering that was made out of this was at the expense of Victoria’s opportunities.

What we do know is that the national partnership and each of the schedules agreed between the federal government and New South Wales, the Northern Territory and the ACT allow for a final adjustment based on — get this — actual sale proceeds. So when we went to the federal government, we said, ‘Look, the market assessment is about $6 billion’, and we got $9.7 billion. Every other state and territory gets a right to adjust upwards and to get their 15 per cent applied appropriately in those circumstances, but not Victoria.

This is an outrage in so many ways. It is unbelievable. Victorians are being treated inappropriately, unfairly and quite frankly disingenuously by a government that is more concerned about political pointscoring than running the nation. It is like the nation is being run by the Young Liberals branch of the New South Wales party. They agree on schedules on a contingent basis. When announcing that an agreement had been struck with the ACT, Joe Hockey said this:

… the new infrastructure to be built with the proceeds of asset sales —

get this —

are solely matters for state and territory governments.

They are solely matters for state and territory governments, unless of course — this is the subtext — you are Victoria. Then the federal government wants to tell you, ‘That Melbourne Metro thing that you kept asking us to participate in, we’ve thought about it. It’s taken us two years, but we’ve thought about it and we want to be part of it’. When Tony Abbott did not want to be part of it, Malcolm Turnbull now wants to be part of it. When Infrastructure Australia rates it as their no. 1 project and then reverts back to east–west and then back to Melbourne Metro, it is a wild ride with this government.

If you look at the New South Wales schedule of March 2015, you find that it was contingent on final business cases. They did not even care whether or not New South Wales gave them business cases; in the end they said ‘or alternative supporting documentation’. That is, ‘If you can get a note from your mum, that’ll be good enough for us’. This is the ridiculousness and the duplicity of the federal government, and it is all about hurting the Victorian economy.

What is it that they hate so much about Victoria driving the economy of the nation — being in the driver’s seat as the best performing state in the nation? Why do they hate it? Well, because it was a Labor government that dragged this economy out of the gutter that we found it in after those opposite were in office. Of course, given asset recycling initiatives were to be allocated on a first-come, first-served basis, we initiated an option of a contingent schedule and we were rebuffed by the federal government.

In short, the federal Liberal government is a classic example of the Dunning-Kruger effect — those who feel qualified to talk about financial management. The truth is that the federal government are desperately broke, they have massively — —

Honourable members interjecting.

Mr PALLAS — Oh, I hear from those opposite. All we know is debt and deficit have risen predominantly under them. They need to recognise their shortcomings — —

The DEPUTY SPEAKER — Order! The honourable member’s time has expired.