Aaron Violi (Casey, Liberal Party) Share this | Hansard source

I rise to discuss the National Reconstruction Fund Corporation Bill 2022. The reality is: the best way we as lawmakers can support our industries is by creating the right economic conditions for success. Unfortunately for industry, this government is more focused on politics and spin at the cost of good legislation. On our side of the House, we support our manufacturers to bolster Australia's sovereign capabilities and we will support legislation that makes an actual difference. This government argues that this bill establishes the National Reconstruction Fund Corporation to facilitate increased flows of finance into priority areas of the Australian economy by financing businesses, state and territory governments and other entities through concessional loans, equity guarantees and other financial instruments. That does sound very impressive, but unfortunately this bill follows in the tradition of so many of the government's bills; it follows their standard formula.

Mr Deputy Speaker Vasta, I do need to apologise to you in advance. You were in the House when I spoke on the housing bill, so a lot of the things I'm going to talk about right now are things you've already heard, but that's because the Labor Party follow a very consistent formula. I'll go through this formula again, because it's consistent. Step 1 in this formula: start with an impressive-sounding name. 'The National Reconstruction Fund Corporation'—a very impressive name. Tick! We've got that one. Step 2: commit a lot of money but commit it over a long-term horizon. When we say the number it sounds very impressive—like the name. In this case it's $15 billion over 10 years. We had $10 billion over 10 years for housing; we're now at $15 billion over 10 years, so it's a tick for step 2. Step 3 is very important. The Treasurer in particular, the Doctor of Politics, gets this. You need to place the fund in off-budget spending. They need to do that, Mr Deputy Speaker, because they need to continue the facade of responsible economic management. The Treasurer needs to be able to stand at this box in question time and talk about how economically responsible he is, while really he's playing a bit of smoke and mirrors—and I'll talk about that in a bit more detail. Step 4, following this very standard formula of the ALP: ensure that there's a significant lack of detail in the bill so the government are not held to account while they're rushing the bill through but making claims of transparency.

I'll go through these steps in little more detail, first to step 1 and this impressive sounding name, the National Reconstruction Fund Corporation. Did you know, Mr Deputy Speaker, that the word 'reconstruction' does not appear in the explanatory memorandum or the actual bill, apart from in the bill's name? In fact, the bill does not mention any specific sectors, limit eligibility priority areas or refer to reconstruction at all. I'll come back to this point a bit later, because it's an important one.

On to step 2: on the surface, this legislation looks very positive. It allows ministers and backbenchers to talk about how they're backing manufacturing with a huge investment of $15 billion. They claim it will create jobs and industry growth, all the while securing our sovereign capability. As I said, it sounds amazing. But the real problem is that the government can't actually outline how many jobs will be created or how much growth will be created. We haven't heard any numbers attached to this bill from the government. We know that the Prime Minister doesn't like numbers, so it's not that surprising; it fits the formula. The measure of success for a bill really shouldn't be how much money is spent; it should be about the outcomes that have been achieved. I spent 15 years working in business before this role, and we were always focused on the outcomes, not the money spent. That's actually what you should be looking for—efficiency. It's not about how much we spend; it's about what we actually deliver for the Australian people. But, every time we hear the government talk, they talk about how much money they're spending. In a high-inflation environment, we definitely need a focus on efficient spending, because it's crucial to support all Australians in this challenging economic time.

I'll now move to step 3, the Treasurer's favourite part, the off-budget spending. This government has already committed to $45 billion of extra borrowing in off-budget spending, and that's going to have a direct impact on inflation. The Treasurer's pushing the economy one way; he's got the accelerator on inflation. The RBA governor's got the brakes on. The money for all that off-budget spending still needs to be borrowed and repaid, and that impact is going to be felt across the economy. There's no doubt that the RBA governor and the board, when they're sitting around making decisions on interest rates, are very aware of this government's off-budget spending. The funding model proposed, which is going to shift from direct grants and tax incentives to the government acquiring equity and providing loans, is a pivot to interventionism, and it's likely to have unintended consequences. Businesses may not meet the eligibility criteria. They will perhaps have margins that are too small, or they will be too risky in the current uncertain economic landscape. They may not have the capability to create the complex and detailed business plans that they have to write to satisfy government departments rather than private investors. Feedback from stakeholders has raised issues of ownership. This is a big concern, as many of our manufacturers are family owned businesses.

Unfortunately, innovation and the development of manufacturing systems often go through failures before they succeed. Would a complex innovation pathway be tolerated with this funding structure? How many failures are too many? How does this government drive a return on investment to safeguard taxpayers' money, which is required for all off-budget spending, because it has to deliver a return? It raises the question: if these are such great investment opportunities that the government will acquire equity in, why hasn't the private sector already taken advantage of these lucrative opportunities? This is a crucial question because, by designating this fund as off-budget spending, the government are committing to a return on investment on this capital. With rising interest rates resulting in government debt costing even more in repayments, it is vital that taxpayers' money is spent wisely. Fifteen billion dollars in debt, which is what this government will take out for this fund, at the current four per cent rates, will cost taxpayers $600 million a year. I spoke on the Housing Australia Future Fund Bill. That's $400 million on the housing bill. So we're at $1 billion in debt repayments so this government can spin its lines and follow its formula.

I also wonder—because, when these were announced, we were at zero inflation, in a zero-interest-rate environment—what adjustments have been made to the government's modelling 18 months later, with interest rates rising. That's the reality. This is more political smoke and mirrors from this government to hide its irresponsible spending. At least with private investment, if market gains do not stack up, investment is withdrawn, with investors responsible for their own losses and the associated consequences.

As I've said before, this spending risks driving inflation even higher in Australia. It's not just me and the opposition saying that. Just last week, the Australian Financial Review reported that the International Monetary Fund said:

Strong aggregate demand and the tight labour market warrant continued focus on fiscal consolidation in the near term.

The IMF also warned:

Implementation of below-the-line—

off-budget spending—

activity through newly created investment vehicles (National Reconstruction Fund … and Housing Australia Future Fund) should be phased appropriately, and, more broadly, a proliferation of such vehicles should be avoided.

The Treasurer and the Prime Minister like to stand at that dispatch box in question time and quote the IMF, but you'll notice that they don't quote that part of the IMF's advice. I do wonder about the Prime Minister. We know he's not strong with numbers or the economy, so he potentially doesn't know the impacts of off-budget spending. But we'll give the Treasurer the benefit of the doubt and say that he should. It's clear political spin from him to continue his facade of economic management and his essay writing that he needs to focus on, because that's the reality. The Prime Minister and the Treasurer are the ultimate political insiders. They've spent decades in this house as MPs and staffers, and it's all about politics and spin. It's not about delivering real results for Australians.

Finally, we're on to step 4: ensuring significant lack of detail in the bill so the government is not held to account. When I look at this bill, I can't see where the investment priorities are explained or even mentioned. It's interesting that the minister spoke about the priorities in this place but they are not listed or defined in the bill. So why would the government talk about the priorities but not include them in the legislation? It raises the question: what are they hiding? What are they planning to do once the bill passes that they can't include in the legislation? It just doesn't pass the pub test.

While the bill requires that NRFC investments be mainly Australian based, it provides no definition of those priority areas which would be supported. So does this mean that the government can provide funding to state governments to invest in whatever they like? What are the parameters in this bill? The lack of definition in this bill on what exactly will be eligible for investment flies a red flag. It does not codify the priority areas of the Australian economy to be targeted for investment. There's a great saying I like: if everything matters, nothing matters. And this bill is essentially a blank cheque for the government.

Just this week we have seen the government commit 74 per cent of regional black spot towers spending into ALP seats, despite them representing only 33 per cent of regional seats. This shows that we need to ensure the government is held to account and has transparency in all their spending. The Australian people should not listen to their words but look at their actions when it comes to transparency.

One of the most concerning aspects of this bill and the corporation it creates is the inappropriate ministerial discretion in appointing the corporation's board. Section 19(2)(j) of the bill indicates that those eligible to sit on the board would be people with 'substantial experience in industrial relations'. We all know what that means—union officials. I would note that, in question time on Monday, when asked about the board qualifications required by members, the minister listed the qualifications people needed to be appointed. I was listening very carefully. It included banking and finance, venture capital, economics and industry growth. So what he happened to exclude in his answer was that industrial relations—read 'unions'—is also on that list. It was a very convenient omission from the minister. He also omitted to say that appointments can be from any other field that the minister considers appropriate, so that list is actually irrelevant; the minister can appoint anyone he likes. Again, he forgot to mention that in question time—surprise, surprise.

As I said, the government talk a big game on transparency, but their actions continue to curtail transparency. We have seen just this week that the unions are already lobbying for control of the NRFC, and they're planning to use the NRFC as a vehicle to promote union projects and recruit union members. Always look at what they do, not what they say. This is the reality in the economic environment that we have: taxpayer money is too important and hard earned to waste one dollar, especially at this time of high inflation and high interest rates, and especially as a means to become a vehicle for unions and this government to push their own political agenda.

Unfortunately, there are so many problems with this bill, I truly believe it will cause more harm than good, because this bill follows that time honoured four-step formula of standard ALP policy: an impressive-sounding name; we're committing a lot of money over a long time; we're hiding it in off-budget spending; and we're ensuring there is a lack of detail.

On this side of the House we will always support practical and realistic support for industry, for innovation and for small business. We don't make life harder for Australians by driving up inflation and forcing the RBA to increase rates. We don't just throw around money in the hope that it works, and we won't support a bill that does that. We won't play the political games that the government continue to play, with a prime minister that's all about politics and spin and not about real Australians.

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