Henry Pike (Bowman, Liberal National Party) Share this | Hansard source

r PIKE () (): Another week, another big market intervention from this government! As if the government's radical IR laws, sneaky new carbon tax and investment-killing gas price caps weren't enough of a drag on employment, business confidence and investment, this time Labor proposes a poorly conceived and hugely expensive $15 billion cash splash in the manufacturing sector. It is a sector that the government claim to champion, yet they also seem to have no regard for the real factors that are holding back Australia's manufacturing potential: uncompetitive and ever-escalating energy prices.

If the government are genuine about supporting Australian industry, they need only look at our record in government to see some great examples of targeted, practical policies that will actually do the job. Look no further than the coalition's $2.5 billion Modern Manufacturing Strategy, Mr Deputy Speaker. This was a clear and effective strategy which sought to strengthen our sovereign manufacturing capability, and it delivered, under the previous government, with more than 200 individual projects right across the country.

Compared to the coalition's approach, not only is what the current Labor government proposes in the provisions of this bill excessively expensive, coming in at six times the cost, but, even more critically, its design and proposed execution are rife with problems. Before I point out many of those problems in my contribution this evening, I want to make one point about the government's default approach. Labor's time-honoured approach, once they identify something they want to do something about, is usually a heavy-handed, emotionally charged—as we saw this evening—direct intervention done on a whim, and to hell with the consequences.

We saw this many times during the Rudd-Gillard-Rudd years. One example was an overnight decision to intervene in the live cattle market by banning exports. It was an emotional response to a TV show which resulted in unimaginable cost to the industry and to the families and communities who depend upon it for their existence. We've seen it in the government's rushed response to escalating energy prices, where they've taken the policy approach of price controls—a policy straight out of the playbook of 1980s Argentina. It killed investment there and it is killing investment here. I fear we're straying into similar territory today, where an arrogant government will tell our manufacturers what they need rather than addressing the broader economic challenges that confront them and what they actually want. We all want a strong manufacturing sector in this country but it is in the how that the differences emerge. In the context of this bill, the coalition do have serious concerns and we cannot support this bill in its current form.

The Albanese government's National Reconstruction Fund Corporation Bill 2023 is an ideologically driven interventionist approach that does a cruel disservice to their stated aim. It is their inexperience in government—or perhaps it's their deplorable track record of public policy design—that does the real damage. If the primary aim of the NRFC is to effectively reinvigorate Australian manufacturing capability then there are fundamental flaws in the design of the NRFC and the way it operates that will doom it to failure. Once created by the measures in this bill, Labor's NRFC is set to suck vast sums of money from almost everywhere and spray them in any direction the government sees fit. There are no criteria to identify genuine need or evidence of strategic alignment when it comes to this bill; neither are any priority areas or investment policy parameters identified in the bill. Such important considerations are conspicuously left out as beyond the scope of the bill. Instead, the parameters that will determine the investment decisions of the NRFC will be at the absolute discretion of the government or, more specifically, left to the minister's judgement to define.

The coalition also has significant concerns about the fiscal irresponsibility of this government. The bill fails a critical test of financial stewardship by securing without further recourse to this parliament an eye-watering $15 billion in funding. This is many times the cost of the coalition's equivalent Modern Manufacturing Strategy. This deliberate design provides an initial $5 billion appropriation with assent to this bill, while a further $10 billion is made available to the government at any time, without additional parliamentary approval. Fifteen billion dollars is a huge amount of money, and this parliament will simply hand it over to an untested scheme with the passage of this bill.

This feature means that important questions of priority areas, investment parameters, senior appointments and the $10 billion in additional future funding will effectively bypass the authority and scrutiny of this parliament. History shows that such a cavalier approach to public policy rarely ends well, especially when it comes with a $15 billion price tag. Such flagrant overreach risks rampant waste, poor investment outcomes, a proliferation of pet projects—try to say that three times fast, Deputy Speaker!—and potential pork-barrelling on a horrendous scale. And it all happens thanks to a flawed design which places such risks well beyond the limited capacity of the NRFC to control.

Beyond its flawed design, the NRFC also risks failure because it ignores the major economic problems which transcend the investments it makes. To put it another way: without addressing skyrocketing energy prices, labour market shortages and disrupted supply chains, any large-scale government spending to stimulate manufacturing will almost certainly be in vain. The minister can call that 'a significant step in rebuilding Australia's industrial capacity' if he likes, but I call it false hope. It is false hope, grounded in poor policy from a bad government.

Of course, it is also important to point out that this parliament will have limited oversight of how this vast sum will be spent and the value to taxpayers of that investment. This bill effectively deals this parliament out of the equation when it comes to ensuring sound manufacturing policy that actually assists the industry.

The Albanese government did have the opportunity, in the October budget, to correct its policy settings to meet the challenge of underlying economic problems. It is deeply troubling to a great many Australians that critical underlying problems, such as the current cost-of-living crisis, are problems that this hapless Labor government has little willingness, and even less ability, to solve.

However, the failings of this bill do not end there. We have serious concerns for the underlying funding model itself. This is because Labor's approach shifts from competitive grant programs with robust tested processes, under the coalition, to the Australian government directly intervening to acquire equity and offer loans with dubious security provisions, under this funding plan.

The potential for adverse unintended consequences with this approach is, of course, very high. Adverse consequences could include risks associated with investment distortion—including the crowding-out of private investment and venture capital to small enterprises and start-ups. If that isn't the case, then the viability of investments that fail to attract private investment should be questioned, which, in turn, begs the further question: why should the Australian government risk being the lender of last resort?

One more negative consequence of Labor's direct investment strategy is the almost certain erosion of business confidence and investment certainty. Heavy-handed government that shifts national priorities on a whim—or with priorities that are too vague, thanks to poor policy design or ideological dogma—only serves to undermine confidence. And where confidence goes, investment capital and innovation soon follow.

Beyond the potential for $15 billion of taxpayers' money to be washed down the drain, there is also the equally precious commodity of lost time. It may take years to correct all the mistakes and deliver appropriate support through reliable mechanisms to where it is so desperately needed. This is only more lost time for Australian manufacturers, and it's time that many don't have.

It's important to consider some of the comments that many of the stakeholders have made in relation to this bill. The Australian Banking Association's submission to the department's consultation noted that:

… banks already invest in many of the priority areas identified by the consultation paper, such as renewables, transport and defence. Investments in priority areas, as proposed, would be better suited towards the beginning of their lifecycle, such as during the research and development or commercialisation phases of a project or business, where it is more difficult for banks to manage the risk profile.

Orica's submission noted that:

We understand the NRF will provide finance in the form of loans, guarantees and equity and will not provide grants. In our experience, and one which is likely shared by other large companies, is that banks generally provide more competitive lending rates for debt financing than that offered by government.

This bill is not addressing what specific industries want or need. Providing excessive and unsustainable public funding without addressing the underlying economic limitations on growth is pointless, self-defeating and it's irresponsible. The government has stooped to a new low today—or yesterday, in fact—relegating Australia's allies in our key defence pact, AUKUS, into a bargaining chip into the debate around this rushed bill.

I want to make a point about the debate surrounding the bill that's been very troubling. AUKUS, of course, is our tremendous new partnership with the United States and the United Kingdom and it should be above politics. But unfortunately, in the last couple of days we've seen that the Labor government is not content to allow this to remain above the political fray. This government has stooped to a new low by relegating Australia's allies and our key defence pact into a bargaining chip to try to sell this bill. It's an act of desperation, unfortunately, from Labor, and it makes clear that the NRF isn't about national security; it is all about politics. When Ed Husic introduced the national reconstruction fund bill he didn't mention the words 'AUKUS' or 'national security' once. He didn't mention it a single time. Yet yesterday, in the press, they're trying to make out that this bill is somehow central to our global alliances. It's complete madness. This is a desperate, desperate politics from a desperate government.

If the NRF is all about national security then why did Labor cut the space industry out of its priorities for this bill? And if Labor are so concerned about defence manufacturing, why have they held up millions of dollars in funding for critical defence manufacturing projects funded through the Modern Manufacturing Strategy? This desperate intervention from Labor politicises the landmark AUKUS partnership, undermining Australia's cornerstone national security agreement. It is particularly concerning to see the Albanese government linking the NRF to such a critical security pact when they will rely on the support of the Greens to pass this bill through the Senate.

Labor putting the NRF into the same conversation as AUKUS is simply dumb policy. It is dumb politics too, and good luck explaining to the Greens that they should back the bill for the sake of AUKUS. If this is such a key national security imperative, as Labor say, then they need to immediately rule out mandating union board members and mandating union agreements for the condition of entry into the fund, because we know several unions joined many anti-AUKUS protests over recent months. The Albanese government has failed to rule out radical union demands as they rush through their National Reconstruction Fund. We saw yesterday that the unions are already waiting with their list of demands about how this whole system will work. They're rushing the bill through because the Albanese government want a blank cheque, and this bill will put in place Labor-picked boards to oversee $15 billion of taxpayer funds on Labor-picked priorities.

The bill hasn't passed yet, but the media are already reporting that unions are ready with their list of demands. Yesterday we saw in the media that they want a third of board positions hand-picked by the Council of Trade Unions, determined to get access to the funding, of course, and—another kicker—they want enterprise agreements with unions as a precondition to make an application to this stream of funding. This essentially enshrines compulsory unionism to be a successful applicant and this is, of course, a massive throwback to pre-1980s Labor policy.

I'll conclude with this point: the Labor Party first committed to a $15 billion National Reconstruction Fund while in opposition, with an announcement on 15 November 2021 that hailed the NRF as the first step in Labor's plan to rebuild Australia's industrial base. Labor's 2021 announcement then went on to say that the NRF would unlock potential private investment of more than $30 billion. Well, how exciting. We should have thought of that, given their onward slide to the left on the political spectrum, with one of the most interventionist approaches seen from any Australian government in decades. But here's the thing: the bill establishing the NRF does not include any requirement for co-contributions of financial recipients or any private investment in NRF funded projects. It's too expensive, it's too opaque, it's too risky, and it asks way too much of the Australian taxpayer.

Debate interrupted.

See this speech in context