Monique Ryan (Kooyong, Independent) Share this | Hansard source

This is a critical time for our country. The decisions we make now will determine the economic future of generations to come. We're facing a crucial decade in which we must deal with the impact of climate change, cut climate pollution in line with the Paris Agreement, build the technology and manufacturing capacity to become a global leader in clean exports and create generations of prosperity for Australians. It's a time in which we must re-evaluate our industrial base, manufacturing capability and our economic sovereignty.

This Future Made in Australia legislation aims to establish policy frameworks to ensure that Australia has the sovereign capability necessary for our security interests and that we can develop the technologies necessary to decarbonise and to further industrialise our economy. The bill reflects a global trend towards increasing government interventionalism. In releasing a trillion dollars of clean energy funding, the US Inflation Reduction Act drew capital in from all around the world and made it harder to fund similar ventures in Australia. In the EU, Japan, China, South Korea and Canada, the heavy lifting of economic transition and industrial transformation is being facilitated and enabled by governments. The FMIA Act therefore reflects a significant shift in our national economic approach. It has caused some economists some alarm—with good reason.

There is an opportunity cost in subsidising manufacturing and industry. All industry assistance comes at a cost to those who are not supported. Let's face it, Australian governments' track records of picking winners are often poor. The Productivity Commission has raised concerns that attempts by government to reshape or diversify Australia's narrow trade and industrial structure, based as it is on primary commodity exports, could fail—that our government may sponsor businesses that will never be internationally competitive and will create long-term dependency on public support, at a significant net cost to the wider economy. These are valid concerns. The past decade has seen low productivity growth and business investment as well as narrowing of our economic foundations. Australia's ranking in the Harvard Atlas of Economic Complexity, which measures the diversity and knowledge intensity of a country's export mix, has now fallen to 93rd in the world, sandwiched uncomfortably between Pakistan and Uganda.

We're left very vulnerable to commodity price cycles. At the same time, much of our manufacturing has gone, resulting in the supply-chain issues that affect us every day. During the COVID pandemic we struggled to access PPE and toilet paper. Right now, today, our country has significant shortages of many medications. We've even got a shortage of intravenous saline. We have not been effective enough in diversifying supply, in stockpiling, in forging alternative arrangements or in switching technologies to minimise supply-chain disruptions.

Australia has been extraordinarily fortunate, with its endowment of some of the most valuable deposits of fossil fuels and minerals in the world. Australia is the world's largest exporter of coal and gas combined, but we have not reaped the full benefit from our coal or our gas. We weren't smart like Norway, which imposed a 76 per cent resource rent on excess profits from its fossil fuel industries. We were slow and maladaptive, like Britain, and we're paying the price for that now. Our government gets less from the PRRT than it makes from students from their HECS debts—from an incredibly lucrative but finite resource, the value of which is soon to fall globally.

The world is waking up to the fact that if we want to stop global warming we have to stop burning fossil fuels and we have to switch to renewables. The move to net zero emissions of greenhouse gases by 2050 is already, in countries like China, resulting in the biggest and fastest structural economic changes the industrial world has ever experienced. We can choose to join China and the US at the forefront of this new industrial revolution, or we can be left behind and suffer the consequences for decades. Within the next two decades the world will stop buying fossil fuels. Other countries will enforce carbon border adjustment mechanisms. If we're still basing our economy on fossil fuels at the time, it will tank. We have to plan for a future in which our gas is worthless and the massive plants that are still being approved by this government have become stranded assets.

Where we do have a comparative advantage is in the sun and the wind as well as in critical minerals, but we have to stop digging up those resources, dispatching them elsewhere and then paying top dollar for the refined product when it returns home from overseas. We have to focus on energy cost and security. And we have to harness the extraordinary potential of the sunniest continent in the world, which has an average offshore wind speed of eight metres per second. We have to stop exporting our minerals, and we have to transition to the onshore production and refining of ammonia, steel, iron, aluminium and critical minerals.

The potential scale of the energy transition is huge. The critical minerals industry alone has already created 13,463 direct jobs. The 100 projects currently in its development pipeline will create up to 21,365 ongoing jobs and another 42,743 construction industry jobs. That's far more than our gas industry does at this point. In the coming zero carbon world, we should cease exporting iron ore, metallurgical and thermal coal and gas because it will be cheaper to make green iron in Australia, using green hydrogen, produced from our sun, our wind and our water. It could be the cheapest green iron in the world. It could be the same for green aluminium, green fertiliser, green silicone and green aviation fuel.

Rather than exporting coal and gas for refining, we could export surplus renewable energy embedded within that suite of available products. Doing so would cement not only our economy but also our geostrategic position within the Asia-Pacific. But we have to be careful. An abundance of rare materials does not necessarily translate into an advantage as a manufacturer. Before we jump to subsidising complex products using Australian resources, we have to consider all the costs that are potentially involved: tax, logistics, labour, and the important materials required to establish those manufacturing processes. Then we have to consider whether it remains reasonable to assume that higher Australian costs can be outweighed by the cheaper energy and the access to the component materials that we have from here.

We also have to remember that red tape and industrial unrest stifle productivity. The Future Made in Australia initiative will be successful only if it helps manufacturing and industry with regulation. It decreases the complexity of planning and permitting; it improves state and federal collaboration on these projects, reviews uncompetitive tax arrangements and cuts red tape. Australian innovation, research and development are chronically underfunded relative to international benchmarks. There were 182 line items for innovation and research and development in the recent federal budget, and yet businesses are telling us they feel unsupported.

The challenge for us as a medium-sized, commodity-rich but remote democracy is to identify those industries in which we have a demonstrable current or future competitive advantage and determine how best to support them while minimising risks to the taxpayer. We have to determine where supply chain issues generally require local manufacturing and where other means might be more economical. We know that government interventions can distort markets, and the projects that deliver immediate political and employment benefits can often prove costly and ineffective over time. We also know they can be inflationary. And we know they can fall victim to cronyism and corruption. In such a context, it's appropriate that we start as we have, in those areas in which we do have a demonstrable advantage, clean energy and critical minerals. We should also remember those areas in which we have genuine sovereign risk and potential for development both of domestic surety and a significant export market.

In some ways, this act acts as an umbrella to better coordinate the suite of existing initiatives and funds that are aimed at the decarbonisation of our economy. These include the National Skills Agreement, the National Reconstruction Fund, the Net Zero Authority, Rewiring the Nation, ARENA, the Northern Australia Infrastructure Facility, Export Finance Australia and the Clean Energy Finance Corporation. These bodies are already operating under their own investment mandates and guidelines. We have to ask how this scheme is going to engage with those existing initiatives. Australia has a long tradition of excessive red tape and poor regulatory structures, and this bill provides insufficient detail regarding how this initiative is going to interact with those other bodies.

Any government assistance has to be based on independent, transparent, evidence based assessments of the risks associated with every proposal to ensure future value for money. There should be tight criteria specifying the outcomes to be achieved and mandated performance monitoring against those specified outcomes. While the National Interest Framework provides detailed criteria on the types of projects that might qualify for public support, it provides very little detail on the form and quantum of what that public support might look like. It includes minimum detail on the community benefit principles on which that support should be contingent.

The legislation should be more explicit. It should detail what forms of support will be offered, how that support will be provided and the timeframes for spending allocations within each sector. Providing that detail would increase policy certainty and investor confidence. We should expect non-performing projects that don't meet those commitments will be wound up and clarity around how performance will be assessed and oversight provided. And we need an annual breakdown of expenditure under the act and of the outcomes of that expenditure.

I have to say that early indicators cast some doubt on the government's preparedness to adhere to those standards. The government has, unfortunately, already started to pick winners. It's allotted $1 billion to solar panel supply chain manufacturing for production of solar panels in the Hunter Valley. This is an industry in which China is globally supreme and in which prices are falling very quickly. The government has also already committed $2 billion to green hydrogen and $4 billion for the mining and processing of critical minerals. Then it's kicked in $840 million for a rare earth company. If the Future Made in Australia investment goes solely to industries in which we lack a competitive advantage—industries like solar panels, wind farm components, batteries and electrolysers—we will waste money, we will waste the manpower which goes into those industries and we will waste the opportunity to do better elsewhere.

Even more concerning is the $470 million invested by this government in the quantum computing firm PsiQuantum. It seems that the decision to invest in PsiQuantum was made prior to the completion of an EOI process to which the company was not invited and in which it did not participate. There were 21 other companies engaged in that EOI process—an EOI process in which they had no chance of success, even though they had no knowledge of that. The processes around this fund allocation are utterly opaque. We deserve more transparency. We deserve tendering processes which don't involve NDAs. We deserve for ministerial diaries to be open. We deserve to receive FOIs which are not highly redacted. We deserve open calls for tenders, not calls mediated by lobbying firms and negotiations facilitated by former Labor staffers. We deserve processes which don't waste the time, money and effort of other companies and which don't cause a loss of trust both in the processes and in our government. If the Future Made in Australia investment goes solely to companies with special relationships with this government, we have a problem.

The amendment that I move here and further amendments which I will move in the consideration in detail stage of this legislation will address those concerns. I move:

That all words after "reading" be omitted with a view to substituting the following words:

"notes that:

(1) the Future Made in Australia National Interest framework should be configured as the foundational reference for Australia's industry policy;

(2) a robust governance structure for the framework must be ensured;

(3) clear criteria for national funding in the national interest should be established; and

(4) there should be periodic, independent reviews to ensure that industry policy remains effective and relevant".

Australia is fortunate to have another chance to get its policy settings right on this most existential challenge of climate change and energy. We do have an opportunity to establish the industries and jobs of the future in a global market which is estimated to be worth as much as $10 trillion by 2050. But we can't just be a lucky country. We have to be a clever country—adept, agile, transparent and honest. I ask the government to commit to the steps necessary to achieve that to restore faith in this bill.

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