Rebekha Sharkie (Mayo, Centre Alliance) Share this | Hansard source

I rise to speak in support of the National Reconstruction Fund Corporation Bill 2022. This bill seeks increased inflows of finance into the Australian economy by financing businesses, state and territory governments and other entities through concessional loans, equity guarantees and a wide range of other financial instruments. The expenditure is significant and restricted to government priority areas—a total of $15 billion, in fact, to be expended by July 2029. Government investment in areas prioritised by the government of the day is not new, nor is it necessarily bad; however, any government expenditure should have a very robust framework that provides the community with confidence that the money will be invested wisely. It is, after all, an investment that belongs to all Australians.

As a political centrist, I believe it is appropriate and important for targeting government investment, particularly where there is a market failure that warrants intervention and where the objectives of government require market stimulus to achieve a stated aim. This approach is not controversial. It forms the basis for the activities of most governments in contemporary Western democracies. It is in this context that I will raise concerns I have with the bill but also outline my qualified support.

The National Reconstruction Fund Corporation to be established under the bill will be the entity responsible for the fund—all good so far. The corporation will direct the flow of finance to priority areas identified by the government. Here is my first concern: the bill does not identify what these priority areas are, nor does it allow, through a disallowable instrument, a mechanism for the parliament to question or challenge these priority areas. This leaves us to support a bill that will in essence give the government a $15 billion chequebook for directing Australian taxpayers' money to projects at its will.

Ministers have announced that the fund will provide up to $3 billion for renewable energy and low-emissions technologies, $1.5 billion for medical manufacturing, $1 billion for value-adding in resources, $1 billion for critical technologies, $1 billion for advanced manufacturing and $500 million for value-adding in agriculture, forestry, fisheries, food and fibre. These may well be appropriate investments; however, this grab bag of headline investments is merely a media announcement. There is no detail and no broader policy strategy; nor is there any investment analysis. The second reading speech of the Minister for Industry and Science did identify seven priority areas. However, this is simply an indication; it's not legislation. The bill in its current form gives the government unlimited discretion to set and reset priority areas and the investment mandate. We often refer to policy as 'not passing the pub test'. Well, I'm confident that if I went into any pub in my electorate and asked the locals in the front bar if they thought it would be a good idea to give the government $15 billion to spend without identifying what they were going to spend it on, without even identifying a priority area, their answer would be a resounding no—and that would be a polite response!

The Parliamentary Budget Office noted that conventional budget reporting makes it complicated to evaluate the fiscal risk and impacts of equity investments as proposed in this bill. Again, if I went back to my locals in the front bar and said, 'In addition to giving them the $15 billion, it's going to be difficult to assess the physical impact, the potential risk or even whether projects will require private investment,' I think the polite response I referred to would quickly change to something quite animated.

It doesn't stop there, Mr Deputy Speaker. These are some other concerns I have. The Australian Council of Trade Unions has called on the minister to appoint union officials to the fund's board. The Australian Industry Group's Chief Executive, Innes Willox, has publicly relayed his concerns, referring to the request as 'union overreach' and saying:

Any compulsion for funding to go to unionised workplaces or those who agree to roll over on union demands is discriminatory and would see businesses who would otherwise consider involvement instead simply walk away.

The Australian Manufacturing Workers Union is a little more bolshie, in wanting a secure jobs code that would include an 'enterprise agreement with unions as a precondition of tender'. In its submission to the Senate Economics Legislation Committee it stated:

In the case of start-ups, we may consider that an MOU to enter into an agreement as part of the tender process, but the agreement must be finalised prior to award of tender.

I fear the discussion in the front bar would now be resembling a full-fledged melee—and I'll come back to that.

Australians are experiencing high inflation, a high cost of living, difficulty in purchasing a house, and, for some, difficulty in finding a place to live. Employers can't find staff, and this is particularly problematic in our regions. In response to COVID-19 we overstimulated the economy and created debt not experienced outside of wartime eras. Australian government securities are around 45 per cent of GDP, and that is not expected to fall until after 2026 at least. In dollar terms, gross debt is forecast to increase to more than a trillion dollars in 2023-24, reaching a peak over the forward estimates of $1.193 trillion. These are truly staggering numbers. We've never gotten to a trillion before.

Some will argue that debt is okay, offering advice that our interest on securities remains low, so why worry? This won't always be the case. Indeed, interest rates on Australian government debt have already started to rise. That was last year in 2022, and we've seen that continue this year. Interest payments will increase over time as new debt is issued at higher rates and existing debt that was issued at historically low rates matures and needs to be refinanced. The Institute of Public Affairs cites that a worst-case scenario, where interest rates are at six per cent instead of four per cent, based on Treasury forecasts in the budget, would result in an interest rate bill of $64.1 billion from 2023 to 2031. That would make interest payments the third-largest expenditure item, behind health and income support for seniors, and would represent about 7.5 per cent of the Commonwealth budget. That is an extraordinary amount of money that needs to be found, that needs to be paid year on year and that takes money away from other needed spending.

In their report, Selling Australia's Future, the Institute of Public Affairs argues that, by increasing debt today, the government is effectively borrowing from the wealth of future generations to pay for current expenditure, concluding that all Australians should be concerned with the high level of government debt. It is them, their children and their grandchildren who will be paying for it. High levels of debt also place the country in a vulnerable position, with little capacity to absorb or respond to future shocks. Perhaps there will be another pandemic in a few years. Who knows? We just don't know, but we're not addressing that at the moment, and I think we would be in quite a precarious position if we needed to go through the spending that we've done in the last three years again in the near future. Given our high levels of debt and the associated risk, we must ask ourselves: 'Can we afford this debt?'

I mentioned earlier that government expenditure and investment in the right circumstances is appropriate and necessary. We know that government investment can grow our productive capacity. However, we also know that the government—and it doesn't matter who's in government—doesn't necessarily have a good track record of picking the right investment. It is this issue that concerns me perhaps the most. There is no doubt that investment in the areas that the minister referred to in his second reading speech, such as renewables, low-emissions technologies and medical manufacturing, among others, is important. But, as mentioned, they are not identified as priority areas in the bill. There are still too many unanswered questions, and these answers are so important for the aforementioned pub debate and for my support.

Australians need assurances that this bill won't simply give unbridled power to the government to pick investment sectors, individual businesses and projects without public scrutiny. We need the government to publicly dismiss the demands of the unions, who are pushing to exploit the funds for their own vested purposes. We need clarity on the fiscal risks and how government will approach financial analysis and due diligence for each and every investment. It's also incumbent on the government to ensure any investment provides economic and productive returns that are measurable and meaningful. Finally, the government must consider the inflationary impacts of increasing the flow of money into the economy and proceed in a manner that doesn't add to the existing inflation pressures that are now hurting so many Australians.

Mr Deputy Speaker Goodenough, you may ask, after me giving that speech, why I'm supporting this bill. I'm supporting this bill because we used to be a nation that made things, and we're no longer a nation that makes things. I'm the daughter of a factory worker. The member for Makin, who spoke before me, spoke about Holden and how he made cars in South Australia. Holden was one of a number of car manufacturers in South Australia. My dad worked at Mitsubishi. It provided a good, solid wage. It paid the bills and kept us in a house.

We don't have the manufacturing that we had, and it has gone in one generation. When I was in my final years of school, we were visiting Mitsubishi. We visited the Kelvinator factory. We used to make fridges in South Australia too, and we used to make glasses. We used to make so much, and we have allowed our manufacturing capacity and capabilities as a nation to significantly diminish in just one generation. That's why I'm supporting this bill—because we need to be making things again. If COVID has taught us anything, it is that manufacturing, national sovereignty and security are intrinsically linked.

This bill provides a significant opportunity to improve Australia's economic complexity, broaden our manufacturing capability and take advantage of our abundant natural resources, without continuing to treat Australia like a sandpit, which is what we've effectively been doing for the last 30 years. However, without the insurances sought, I do remain concerned that such a large investment may yet become another squandered opportunity.

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