James Stevens (Sturt, Liberal Party) Share this | Hansard source

I rise to speak against the second reading of the National Reconstruction Fund Corporation Bill 2022. I feel compelled to briefly clarify something very important regarding the car industry. Ford made the decision to close during the Gillard government in about May of 2013. There were three major manufacturers in the country then—Ford, Toyota and General Motors Holden in my home city of Adelaide. The impact of the Gillard government letting Ford close was that effectively for the economies of scale throughout the supply chain for vehicles it was all over red rover from that point onwards. I remember being in briefings with Holden during the Gillard government's era, and it was very clear that letting Ford close implicitly meant that there wasn't a future for car making in this country. That was the simple reality. Ford left. Then prime minister Gillard said it was because of the high Australian dollar. She said, 'The high Australian dollar has led Ford to make the decision to close.' That was really the domino that saw the other two, very regrettably, also make that decision. Those are the facts of the history. It was in May 2013 that that decision was made by Ford. It's completely delusional to suggest that that wasn't the catalyst for the industry regrettably leaving.

But going to this bill and our commitment on manufacturing versus what this bill actually achieves I would like to first start by saying that, as a South Australian, I think it's appalling that this government has stepped away from the priorities the previous government had around the space industry. Space is the future. There is no question that the greatest opportunity for economic growth and employment creation, particularly in my home state of South Australia, is through the space industry. We were very proud to have the Morrison government make the decision for the Australian Space Agency to be headquartered in Adelaide. We are very proud of a number of our capabilities, particularly the great asset of the Woomera proving range, which gives enormous civilian as well as defence opportunities for proving and testing and so on and so forth. We have a lot of great launch opportunities in South Australia, particularly with Southern Launch over near Port Lincoln on the Eyre Peninsula being already a going concern, and with the Space Agency based in South Australia, with our heritage in aerospace, particularly centred around Woomera, and future launch opportunities.

We on this side of the House are really excited about the opportunities that space provides. We are really proud of the record we have in making the decision to establish the Space Agency, which was announced at the international astronautical conference in South Australia in 2017. It was a decision of the previous coalition government. Then there was the decision of the Morrison government to locate the headquarters there, knowing full well that space is a national opportunity. I don't mean to pretend for a moment that South Australia is expecting all the benefits of it. It is much like defence capability. We want to see all Australians benefit.

There are huge opportunities in this sector nationwide. That is why it is absolutely remarkable that the new government are moving away from the most exciting future industry at the first opportunity they've got. Imagine saying, 'We've got a policy for manufacturing and industry that involves stepping away from the biggest future industry opportunity on the planet'—in fact, beyond the planet. That is exactly what they've done. It's completely nonsensical.

No-one has mentioned it in their speeches. You'd assume that there was a reason for this change and they would come in here and justify it in all the speeches in this second reading debate. The previous speaker, the member for Lyons, even talked about the opportunities in the space industry—on the bill that sees the government remove support from the space industry! What spectacular gymnastics we saw from the member for Lyons in his contribution.

As a South Australian I have to really call out the disgrace of dumping space as an industry that is focused on by this government. Apart from the lost opportunities in the future, it is really debilitating for those who made decisions thinking that there was bipartisanship in the future opportunities that the space sector can offer in this country. A lot of people have made decisions, particularly in my home state of South Australia, to invest in South Australia. The previous government sent a clear signal that we were embracing space—the industry and its opportunities.

We know that space has unbelievable applications for all industries—even for some of the most traditional industries we have relied on, like agriculture. Earth observation technology can have enormous applications in agriculture, one of our greatest traditional industries. Of course agriculture is a huge component of our economy in South Australia. It's so short-sighted to not recognise, apart from the direct jobs and investment in space itself, space has applications for so many industries and the kinds of productivity gains we can achieve from the space sector across all industries. The short-sightedness of that is appalling. It is a really dark day for the space industry in this nation to see this government make that decision.

This bill, very much like the housing bill, is effectively a form of magic pudding accounting. The government could properly put in the budget investments in industry and manufacturing capability. They could make a decision that growing manufacturing and supporting businesses in the manufacturing sector are priorities for them and they could undertake an appropriation in the budget and make decisions that involve prioritising expenditure in that area. They would have to cut expenditure somewhere else to accommodate expenditure in manufacturing or, Labor being Labor, maybe they would increase taxes or run a higher deficit.

They could properly invest in industry capability. Instead, what they're doing is accounting trickery where they say, 'At no cost to the actual budget, we can have all this expenditure in industry growth and manufacturing reconstruction'—whatever the spin is on it. There's no budgetary impact whatsoever. They are not going to make any difficult decisions. They're not going to say, 'This area is so important that we're going to allocate proper legitimate budgetary expenditure to it and through our ERC process and budget processes we will have to accommodate other decisions to allow for that expenditure.'

Instead, we have the mythical proposition that happened with the housing bill as well where now they just do things outside of the budget and spend hundreds of millions, if not billions, of dollars by acquiring funds and getting a higher return on the cost of that capital and that will have no risk and be a certainty and guaranteed into the future. As I said on the previous bill, why aren't we just doing that on every element of how we operate the government if it's that reliable and that simple? You could borrow tens of trillions of dollars and, apparently, under this methodology that you are using, much like under the housing bill, you have no risk whatsoever at earning a higher return through these sorts of activities, or any investing activity, frankly. You could give the Future Fund trillions and trillions of dollars and say, 'Hey, could you go and invest this money, earn more than it cost us to borrow that money so we can use the difference between the earnings and the cost of the capital to fund the entirety of government?' That would be fantastic. We could then have no tax, whatsoever. We could spend whatever we wanted because we could just keep borrowing the extra amount of money and just bank that.

This is the Bernie Madoff government. It is very straightforward, because there is just no question whatsoever that, in perpetuity, we will always earn more money than the cost of that money—always. So you could then just get some kind of formula that says: How much do you want to spend this year? How much is that in the differentiated rate of return between what we absolutely will earn on anything we do ever versus the cost of the money that we used to invest it? Then we will just figure out how much to borrow, we will absolutely earn that return and it will be absolutely perfect. So this is perhaps an exciting day for all Australians because we are on the cusp of something that involves no taxation ever again. I don't know if CNN are running this live and whether the world is about to stop, but we now have a government that effectively says, 'We can spend all sorts of money at absolutely no budgetary cost whatsoever with no reliance on taxpayers.' Obviously that is completely farcical and ridiculous.

Now that we have this happening in a pattern—we have had it on the housing bill and now we have it on this bill before the House—these bills have nothing to do with what all the speeches claim they will spend the money on, because will the money ever eventuate? In particular, what kind of financial risk, when things go bad, are we putting the finances of this nation into? It is very much akin to the Jim Cairns-Rex Connor approach to public finances, and we all know how that ended. In fact, thankfully, it stopped before it could even get going. Even people back then—this might be an oxymoron—the responsible members of the Whitlam government—that's a relative term—could not stomach that kind of recklessness. But now apparently we are incurring tens of billions of dollars of debt, saying that beyond any question there will be a return higher than the cost of that money that we can just spend for free off the budget.

We on this side of the House are standing up to the fraud of that proposition. We always hope that the Future Fund is going to have strong returns. The Future Find is a very important capability for us to meet future liabilities and we commend the excellent work and performance of it over the years. But the chair of the Future Fund himself has said, and it is a very reasonable comment, that he is uncertain about the economic future, and people have to prepare themselves for the fact that the Future Fund cannot be expected to buck the trend of markets and be able to keep returning heroic rates of return through any form of economic cycle.

We have a government proposing these sorts of measures where we are on the cusp of some of the greatest risk in the economic market cycle that we have seen for decades. For all of this to go wrong, all that has to happen is the returns we are meant to get on these billions of dollars of borrowings fall below the cost of those borrowings. The cost of borrowing is going up; that's an indisputable fact. We absolutely know that. So the rate at which the government is borrowing money right now is much higher than when the then Labor opposition conceived these hocus-pocus schemes.

Equally, the return of investment for Future Fund and its outlook is dramatically down. We have no idea how the markets and how these sorts of returns are going to shift into the future but, regrettably, there is a very high risk that they will go the wrong way. So what this parliament is being asked to do on this bill and on another bill that has regrettably been through earlier today is to pretend fictitiously that there is no risk whatsoever, that it is completely guaranteed and completely reliable and that we can apparently play the markets better than anyone else in the global markets and always achieve a regular guaranteed permanent return. There's just no way that that is achievable.

So we've got to decide what sort of fiscal responsibility and, in particular, what sort of balance sheet responsibility we want to have as the Commonwealth of Australia, and how important our AAA credit rating is—in particular, the credibility that we've got in global bond markets. If we are reckless with that and the worst-case scenario occurs, imagine where we will be as a nation if, because of these sorts of policies, we see our reputation in global debt markets deteriorate. That is what has been put on the line here with this kind of recklessness: 'What's a good press release in an election campaign? Where can we achieve free money and say we're spending on all these great, colourful, shiny things and we don't have to find any budget savings and we don't have to do anything difficult or unpopular in order to pay for it?' In exchange for that press release and that press conference in an election campaign, saying we've got billions of dollars that we don't have, to spend on manufacturing and industry, the government is recklessly putting at risk our ability to sustainably finance the Commonwealth of Australia. It's not an insignificant thing.

So I'm very proud of the important, strong, principled position that we've taken on this bill and on a similar bill, and I hope that it might persuade some of the reasonable members of the Albanese government who can channel some of the more reasonable members of the Whitlam government to stand up against this kind of fraudulent accounting trickery and put the interests of this nation first, put the finances of the people of Australia first, and vote down this bill.

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