Paul Fletcher (Bradfield, Liberal Party, Shadow Minister for Government Services and the Digital Economy) Share this | Hansard source

I'm pleased to rise to speak on the Future Made in Australia Bill and to follow the member for Reid, who has shared with us a remarkable collection of nonsequiturs and logical inconsistencies as she grasps around for some kind of argument in favour of what is, in fact, a naive piece of interventionist policy which is premised on the fundamentally false assumption that ministers and bureaucrats can do a better job of predicting what the market might be interested in paying for than private sector participants.

I want to touch on the companies that she mentioned at the end of her speech. We all celebrate RODE, which is a remarkable Australian company that's built a global position in microphones and audio engineering. You could mention a range of other successful Australian companies that are manufacturing, exporting and building global scale and global market share. You could mention Cochlear, with the position they've built up in hearing implants over 30 or 40 years of sustained hard work based on research done in Australia, originally at the University of Melbourne, now based at the Hearing Hub at Macquarie University. You could mention CSL, which has similarly established a global position in particular market segments to do with plasma and other important elements of the medical value chain based on distinctive expertise and using that expertise to build a global market position.

Or you could mention earlier stage companies. One that I would mention is Baraja, which, for a period of time, was based at CSIRO in West Lindfield in my electorate. The two PhD qualified men who founded it took the idea of dense wave division multiplexing, which is well known in telecommunications, and said, 'We think we could use this to come up with an innovative way of doing LiDAR.' LiDAR is the key component that is used in automated vehicles to sense the area through which the vehicle is driving. Their insight was that, if you split the light wave into all of the different colour components, you can get much richer data coming back to the sensor. That idea of splitting is fundamental to the way that dense wave division multiplexing works. Indeed, there's been a whole research tradition of this in Australia, with companies like Redfern Photonics, going back 30 or 40 years.

So let's be clear: nobody is contesting the proposition that it is a very good and desirable thing to have companies that take distinctive intellectual property developed in laboratories or universities in Australia and use that to build a global market position and employ thousands of people. Take CSL. They employ many thousands of people around the world. I think they operate in around 40 countries around the world. Nobody is contesting that that is a very good and desirable thing. What is being contested by this side of the House is the proposition that the best way to get to that outcome and generate more such companies and more prosperity, employ more people and build competitive positions in these intensely competitive sectors is to involve ministers and bureaucrats in developing things like Future Made in Australia plans, who are suddenly going to find new insights, new ways and new market opportunities that those dunderheads in the private sector had missed.

This is not a new idea. There is a long list of disastrous attempts to do this kind of thing in countries around the world. We laugh now at the idea of five-year plans setting out targets for the number of tractors to be built. That was a feature of the economy of the Soviet Union in the 1950s and 1960s. We laugh now because that seems like such a foolish idea. Of course, most of the countries of Eastern Europe have now moved away from that model. We can look at China, which moved away from that model and recognised that a market based approach was likely to be much more successful. But, if you look at what this government is essentially trying to do here, their big idea, their big breakthrough, is that somehow, by having ministers and bureaucrats here in Canberra come up with these ripper plans, they're going to attract more private-sector capital and a thousand flowers will bloom across sector after sector after sector where those hopeless dunderheads in private industry have failed to date to capture the opportunities. That shows a touching faith and, on any objective view, a naive faith in the capacity of bureaucrats and of governments.

The proposition that I want to put to the House this evening is that these are bad bills and bad policies that the opposition is opposing for three fundamental reasons. Firstly, whenever you have bureaucrats, officials and ministers making choices about where to put significant chunks of public money, there's a very good chance that money will get squandered and the outcomes for taxpayers will be dismal.

The second point I wanted to make is that we have, with the PsiQuantum episode that we've learnt quite a bit about over the last few months—none of it encouraging—a very good case study of exactly what can go wrong and how to take almost $1 billion of public money and, if I can put it politely, splash it up against the wall. My confident prediction to you is that the taxpayer is not likely to get anything like 100 cents on the dollar back on that almost $1 billion. There's every chance that almost all of it will disappear, with very little to be received in exchange.

The third point I wanted to make, as many of my coalition colleagues have made very articulately and powerfully, is that there's a much better way to stimulate the economic and industrial activity and the growth that we all want to see—that is, by focusing on getting the basics right with cheaper energy prices and less complex, burdensome, expensive, difficult and non-globally-competitive industrial relations arrangements, as well as getting inflation under control so that businesses face lower operating costs.

Let's turn first to the proposition that, when you involve ministers and bureaucrats in setting out plans, you involve a lot of misallocated resources, a lot of wheel spinning and a lot of lengthy reports and plans being written by people who—I don't want to be rude—frankly have very little idea of what they're talking about. It is very evident in what is proposed here that there is real confusion about the roles of different bureaucratic entities. We're seeing an expansion of the role of ARENA, from research and development to, suddenly, manufacturing and deployment, where apparently their expertise has been hidden under a rock for 10 or more years.

Of course, it's equally troubling that, in the way this has all been set up, the bill gives the Minister for Climate Change and Energy the capacity to allocate additional funding to CEFC at the stroke of a pen and that the government under this bill would be able to roll out almost $4 billion in an election year. So there's very little reason to be confident that this kind of top-down industrial policy is going to produce the targeted results. There's every reason to be confident that it will waste a lot of taxpayers' money.

The Treasurer is going to decide whether a particular sector of the Australian economy deserves investment. How likely is it that the Treasurer will have success in allocating capital? Capital allocation is one of the fundamental disciplines in business, and successful businesses get very good at it. They have real discipline in the way they do it, whether it is conglomerate-type businesses like Wesfarmers or, of course—one of the beloved examples for corporate finance theorists around the world—Berkshire Hathaway. Those capital allocation disciplines are critical to generating a return. The Treasurer is a fine fellow, but I'm sorry to say he has zero experience in this. So I say to Australian taxpayers: you can have zero confidence in the people who are going to be allocating the money that's being proposed to be spent here.

Let me turn specifically, then, to a case study that is before us right now of what happens when a minister gets excited about a particular investment proposal. In this case, it is PsiQuantum, an American company—not an Australian company—based in Silicon Valley, in California. PsiQuantum came to Australia, knocking on the door, in 2022. They had a ripper proposal that the Australian government and one or more state governments should put hundreds of millions of dollars into building what they claimed was going to be the world's first fault tolerant, error corrected quantum computer, and Australia was going to get the very first chance to have one of those in specifically Queensland. The semiconductors contained in that computer won't be built in Australia because they are being built in Dresden in Germany and in New York state under agreements already signed by PsiQuantum with a company called GlobalFoundries. It's not as if the Australian government and the Queensland government are going to have any exclusivity here, actually, because just a few weeks ago the government of the US state of Illinois announced that they too are doing a deal with PsiQuantum to build a fault tolerant, error corrected computer. This one will go to Chicago. There are US$500 million available to subsidise that. So this agreement that the Australian government and the Queensland government have supposedly done with PsiQuantum doesn't secure any exclusivity.

Then there are all the process problems. How were PsiQuantum chosen? Why were they the ones who happened to knock on the door of the minister? The minister has personally met with them on several occasions. He visited their premises in Silicon Valley. Why did they get this huge chunk of funding and a whole bunch of other quantum companies actually based in Australia and founded by Australians, companies like Silicon Quantum Computing, Diraq, Quantum Drilling or Q-CTRL, didn't get any of this? Indeed, why is it that the best they got was several months later when the government conducted an expression-of-interest process which on any analysis was a reverse-engineered sham, the rules of which said that participants were not allowed to speak to Australian government officials? Don't forget that PsiQuantum had been given the opportunity for months to speak with Australian government officials up to and including the minister.

This is what happens when ministers give to themselves or are granted the power to splash around hundreds of millions of dollars of taxpayers' money. It gets spent in ways that do not reflect a disciplined or fair process. The consequence will be, I confidently predict, that this money which is being committed to PsiQuantum will not produce the kinds of returns that the minister has been suggesting. Here is another prediction. According to the minister, this computer is going to start operating in 2026. I confidently predict that that will not happen. No industry expert believes that that's going to be achieved by that date.

My third proposition is that there is a much better way. If you want to encourage Australian companies to be innovative, to be successful and to export, create the business conditions which make it more attractive for private sector businesses and investments to allocate capital and to put capital at risk. Get inflation down by controlling government spending. Rather than changing the industrial relations rules so that the crooks and thugs at the CFMEU can knock on the door and—in fact, without even knocking on the door—march into workplaces all around Australia, reverse those disastrous changes. Make it easier to do business and impose fewer burdensome, costly and entirely globally uncompetitive industrial relations rules. Those are the basics. Then, of course, we need to get the cost of energy down. The cost of energy was promised to go down. It is going up and up. In business after business, that is creating huge problems for our global competitiveness. This fantasy notion that ministers and bureaucrats can pick winners that the private sector has missed is a recipe to waste a lot of taxpayer money. We on this side of the House are root and branch opposed to what is a very bad idea.

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