Colin Boyce (Flynn, Liberal National Party) Share this | Hansard source

As I begin my contribution, I would just like to concur with some comments that the member for Grey made that relate to the simple word 'reconstruction'. That has connotations that the Australian economy has fallen apart, that it is not existent and that we have to totally rebuild it. That is absolutely not correct and he pointed that out in his contribution. This bill has some specific issues.

The National Reconstruction Fund Bill 2022 delivers on the ALP's $15 billion election commitment and signature manufacturing policy. The fund will be administered by a corporation with an independent board who will deliver funds against an investment mandate set by the government. The design and execution are fraught with issues. First of all, the bill ignores key economic issues. The government must address rising energy prices, labour market shortages and disrupted supply chains if our manufacturers are to succeed. Without policies to create strong economic decisions, any government spending is in vain.

The coalition is opposing this bill because this arrogant government is telling our manufacturers what they think they need, rather than addressing what they want or what they need. The simple fact of the matter is that, without addressing these key economic challenges which are holding back industry, government spending is useless. Under the economic mismanagement of the government, any proposed financial support will be whittled away by increased input costs. It seems that every time Labor are in government, they have terrible luck. Every time they come to government, there is a sudden and dramatic economic crisis. This is one of the consistent themes when canvassing industry stakeholders, including those who welcomed the NRF model.

Second, the bill will create even more lost time for manufacturers. In this broken model, it will take significant time for money to start flowing. The Clean Energy Finance Corporation, on which the NRF is modelled, was established in 2012, and the first investment was only made some 10 months later. Our manufacturers cannot afford to wait this long. The government announced that the NRF would be up and running by the next financial year but have not committed to a launch date. Industry feedback suggests that this type of funding model takes years to get right and those years will be lost to manufacturers.

Third, the NRF has a poor funding model. The model shifts from competitive grant programs with robust process to government requiring equity and providing loans. Unintended consequences include government equity and loan schemes that are less accessible than grants, and manufacturers may struggle to meet return on investment thresholds or put together detailed business cases in-house. What will happen to failed or failing loans? It is clear that the last experiment down this path, the Victorian Economic Development Corporation, uprooted manufacturers.

Eligibility is another issue. Certain industries might have margins which are too small or it could be too risky with disrupted supply chains. Many will no doubt miss out, and the fund could become equivalent to a white elephant. Risks to creating private investment are also concerning but beg the question: If there is such a great investment opportunity that the government will acquire equity in, why hasn't the private sector already taken advantage of these lucrative opportunities?

We must also not overlook the importance of retaining ownership, especially given that many of our many of our manufacturers are family-owned businesses. The bill will also stifle innovation, as beneficiaries of the fund will be unlikely to invest in innovation without a guaranteed return. The funding model does not entertain failure, which is inherent in innovation.

Fourth, there is an inappropriate ministerial discretion in this bill which allows the minister to appoint the chair and the board members who will oversee the corporation and its funds. The government has already demonstrated in its early appointments that it cannot be trusted to make sensible, non-bipartisan decisions. The Minister for Industry and Science has already shown that from his form on issues of ministerial appointments. The minister has rejected the recommendations of his own department on appointments. Worse than that, he has appointed a self-declared socialist and union member to the board of a robotics policy committee. The same appointment has previously labelled the previous government as 'self-serving, entitled halfwits' and even referred to the Leader of the Opposition as 'Voldemort'. Minister Husic cannot be trusted to appoint truly independent members to the board of this $15 billion fund.

Fifth, the bill undermines investment certainty in national priorities, with the government changing Australia's national manufacturing priorities on a political whim, undermining investment decisions and eroding investment confidence. This is particularly pertinent to the space industry, complementary medicine and, to a lesser extent, recycling. The government's new priorities are too vague and strip industry policy of the focus needed to drive investment to specific sectors. This is typical of Labor—choosing to spray money indiscriminately instead of continuing investment certainty for our manufacturing industries.

Finally, the bill is fiscally irresponsible, delivering funding well in excess of the coalition's Modern Manufacturing Strategy. An initial $5 billion appropriation is provided upon passage of the bill, but the timing of the remaining $10 billion will not be subject to further parliamentary approval. In fact, similar financial structures to the one underpinning this bill have drawn criticism from the IMF, who stated:

Implementation of below-the-line activity through newly created investment vehicles—

such as the NRF—

should be phased appropriately, and, more broadly, a proliferation of such vehicles should be avoided.

And this is the important part. The IMF said:

Cost-of-living support in light of high energy prices should be targeted, aimed at protecting vulnerable households and small viable firms.

Let's not forget that Labor are carelessly rushing through a total of $45 billion of off-budget spending, and this must be stopped.

I will talk about the negatives of this whole thing. The budget was a missed opportunity for the government to support industry and business to tackle spiralling costs, workforce shortages and the supply chain crisis. Instead, the government has chosen to forge ahead with radical industrial relations legislation, facilitating a spike in industrial disputes and paving a path for thousands of job losses. Mark my words: this will have a devastating impact on our industries. Their industrial relations bill will cause mayhem for industry and business when combined with the ideological scrapping of the Australian Building and Construction Commission and the funding cut they handed the Australian Small Business and Family Enterprise Ombudsman. Their union paymasters will be allowed to run rampant without proven oversight and dispute resolution. While manufacturers across the country struggle with rising power prices, Labor's focus is on making it more difficult for industry to employ and keep workers and to grow their businesses.

The budget took active steps to spitefully wipe out key features of the coalition's industry policy. The coalition provided $2.5 billion to create the Modern Manufacturing strategy. This support sought to bolster our sovereign manufacturing capability and empower over 200 projects in Australia. Despite Labor promising over and over again that their National Reconstruction Fund would re-invigorate manufacturing in Australia, we saw next to nothing in the budget to roll out this program. Let me be clear: Labor have chosen to spitefully redirect the Modern Manufacturing Initiative funds without having even rolled out their own National Reconstruction Fund. Additionally, we saw the minister conduct politically motivated reviews into already committed funds issued under the Modern Manufacturing Initiative, funds which had already undergone independent assessments by subject matter experts and the department.

The government have displayed a callous lack of understanding as to how these delays may have damaged these projects. But one of the key pillars of this new manufacturing strategy was our strategic decision to bolster Australia's capabilities in the space sector. We supported funding to locally design, develop, manufacture and deploy specialised space products, equipment, systems and services for export to international markets and support national and international space missions. The government chose, effectively, to wipe out the coalition's efforts to develop our space industry manufacturing by removing it as a priority area. The space industry and the Australian public are yet to understand the basis on which this shift in focus was made.

The government must address these critical issues affecting our manufacturers, not tinker with a proven model. With power prices forecast to likely spike by 56 per cent over the next two years, many businesses across the country may be pushed to the brink. It is time this government delivers inflationary support for the industry and put forward a plan to deal with spiralling power prices.

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