Carina Garland (Chisholm, Australian Labor Party) Share this | Link to this | Hansard source

I'm really grateful to be able to speak in continuance here on the National Reconstruction Fund Corporation Bill 2022 and reflect on why it is so important that we establish a National Reconstruction Fund. We get one chance to rebuild after the kind of crisis we have seen with the COVID-19 pandemic and the lessons we learned there around the precarity of supply chains in Australia. We must seize this opportunity. I am really genuinely disappointed that those opposite won't support the National Reconstruction Fund. It isn't too late. They can change their minds. I wish that they would back in Australian manufacturing in the same way that we will on this side of the House. This should be bipartisan. I'm baffled. It is inexplicable why the coalition won't support the community in relation to investing in manufacturing, but then again, as we saw with automanufacturing, this is not an area that the coalition seem to have much interest in supporting.

We saw what happened during the very worst parts of the COVID-19 pandemic—and we are still in a pandemic, of course—when we had no sovereign capability in manufacturing and when supply chains were terribly disrupted through border closures. This was a moment for our country to reflect and learn lessons to make sure that we can do what is needed to be resilient and self-sufficient. We have learned that lesson. We saw what happened. We don't want that to happen again. We are implementing the change we need.

I have had a lot of conversations about this in my electorate. I have some big universities—Monash University and Deakin University—in my electorate. They are doing amazing things in terms of technologies of the future in a range of different sectors, including the pharmaceutical and medical technology, defence and renewable energy spaces. All of those areas will be backed in by the National Reconstruction Fund priority areas.

I have spoken to many businesses in my electorate, including Textron Systems in Notting Hill and Stryker in Mount Waverley, about the National Reconstruction Fund. There really is excitement and relief that there's a commitment from government in this country to revive manufacturing in Australia, to support the companies who are already here so that their businesses can grow and thrive and also to encourage more businesses in an ecosystem and environment such as in my electorate so we can create the high-wage, high-skilled jobs in this country that we really need. We need to do this in order to grow our nation's wealth. We need to do this to make sure that we have good, secure, well-paid jobs in Australia.

This is a good bill that will do great things for our nation. This is a good plan for our country. We can rebuild our country to be a place that is sufficient, resilient and more secure. That's what the National Reconstruction Fund is about. It would be nice if those opposite didn't just say no to everything. What we are seeing in this debate is that this is not a contest of ideas about how manufacturing can be supported in Australia. There is none of that. There is no constructive plan from those opposite, no vision, no imagination, no hope and no support for people in our communities across Australia who want to have a thriving manufacturing industry here.

We are putting forward a plan that is forward-thinking. It is about building a prosperous nation. It is about growing our wealth. Those opposite are just saying no—no to good, secure jobs, no to a strong economy and no to a more secure Australia. I find it quite unbelievable. I'm not sure what kinds of conversations those opposite are having in their communities around what's happening with the National Reconstruction Fund and why they are not interested in stimulating the economy or in growing our nation's wealth and creating jobs of the future, but I personally would find it very difficult to have conversations in my community if I were walking away from something as important as this for our country's future.

Advanced manufacturing has a huge multiplier effect. We know this. This is a fact. Manufacturing acts as an anchor for businesses across supply chains, and that's one of the many reasons that the loss of automanufacturing and the decline of manufacturing under the previous government was so devastating. It wasn't just about Toyota or the other car companies; it was about all of the different parts of the supply chain that were engaged in the manufacture of those automobiles.

Through revitalising manufacturing in this country, particularly high-tech advanced manufacturing, we can once again realise the positive impacts throughout the economy, stimulating and driving the development of business, with—and this is a really extraordinary figure—multiplier effects of 10 to one in some high-tech manufacturing sectors. So each dollar we invest reaps much larger returns.

This is a historic, remarkable moment for our nation to go down this path. I remember the many conversations I had throughout the election campaign, and I'm sure many people in this place had conversations with their communities about disrupted supply chains and the fact that we just could not make things here. I remember the distress in conversations with people when they couldn't get medicines in Australia or when they remembered the kinds of great jobs that used to exist. I see scoffing from those opposite, but we're talking about a shortage of infant paracetamol that took place during the pandemic, and I don't think that is funny. Parents were really distressed, during one of the greatest public health crises of our time, that their children weren't able to get pain relief. Those opposite might find that funny; I don't.

I remember when I spoke to people in the electorate about the great kinds of jobs that used to exist in manufacturing. They could support families on those jobs. They had reliable hours and good wages. People in my community remember that Australia. They want that kind of security of work and the kind of high-quality wages that they can support a family on again. People in this country want us to be better at local supply. They were horrified at the state of things during the earlier parts of the pandemic.

Australians know that the National Reconstruction Fund is a way to boost our economy, not just to recover but to rebuild and to be a stronger nation than we were before. We, the Albanese Labor government, were elected on a mandate to drive this transformation of Australian industry and revive our ability to make world-class products in Australia. Manufacturing matters because it creates full-time, meaningful work and secure jobs. We're focusing on high-quality jobs because that means more well-paid and secure jobs.

The $15 billion of the National Reconstruction Fund is a key to support, diversify and transform Australia's industry and to create sustainable, well-paying jobs—those jobs of the future. The NRF, the National Reconstruction Fund, will provide finance to drive investments in seven priority areas of the Australian economy. These leverage Australia's natural and competitive strengths, support the development of strategically important industries and shore up supply chains. Those seven priority areas are value-add in resources; value-add in the agriculture, forestry and fishery sectors; transport; medical science; renewables and low-emission technologies; defence capability; and other enabling capabilities. I know that a lot of the businesses in my electorate, particularly around the Monash Technology Precinct, are really looking forward to seeing what can be possible with the support of a federal government that backs these industries in. There are so many businesses and researchers at the universities already doing incredible work. This is just about enabling them to do more of that to expand the footprint they have in our community; to create those good, secure jobs; and to join with leaders in pharmaceuticals like Moderna and Pfizer in my electorate to create that hub, that ecosystem, where we're generating new ideas, new technologies and wealth for our communities and for our country.

I'm really pleased that we're getting this work done. It was a priority of ours going into the election campaign and, of course, into government. We're not wasting any time before getting it done. Our communities expect this kind of reform of us, especially as we rebuild after the devastating period of the pandemic. I really urge those opposite to reconsider, because I genuinely think this is going to be good for all of our communities—your electorates as well as mine.

Henry Pike (Bowman, Liberal National Party) Share this | Link to this | Hansard source

r PIKE () (): Another week, another big market intervention from this government! As if the government's radical IR laws, sneaky new carbon tax and investment-killing gas price caps weren't enough of a drag on employment, business confidence and investment, this time Labor proposes a poorly conceived and hugely expensive $15 billion cash splash in the manufacturing sector. It is a sector that the government claim to champion, yet they also seem to have no regard for the real factors that are holding back Australia's manufacturing potential: uncompetitive and ever-escalating energy prices.

If the government are genuine about supporting Australian industry, they need only look at our record in government to see some great examples of targeted, practical policies that will actually do the job. Look no further than the coalition's $2.5 billion Modern Manufacturing Strategy, Mr Deputy Speaker. This was a clear and effective strategy which sought to strengthen our sovereign manufacturing capability, and it delivered, under the previous government, with more than 200 individual projects right across the country.

Compared to the coalition's approach, not only is what the current Labor government proposes in the provisions of this bill excessively expensive, coming in at six times the cost, but, even more critically, its design and proposed execution are rife with problems. Before I point out many of those problems in my contribution this evening, I want to make one point about the government's default approach. Labor's time-honoured approach, once they identify something they want to do something about, is usually a heavy-handed, emotionally charged—as we saw this evening—direct intervention done on a whim, and to hell with the consequences.

We saw this many times during the Rudd-Gillard-Rudd years. One example was an overnight decision to intervene in the live cattle market by banning exports. It was an emotional response to a TV show which resulted in unimaginable cost to the industry and to the families and communities who depend upon it for their existence. We've seen it in the government's rushed response to escalating energy prices, where they've taken the policy approach of price controls—a policy straight out of the playbook of 1980s Argentina. It killed investment there and it is killing investment here. I fear we're straying into similar territory today, where an arrogant government will tell our manufacturers what they need rather than addressing the broader economic challenges that confront them and what they actually want. We all want a strong manufacturing sector in this country but it is in the how that the differences emerge. In the context of this bill, the coalition do have serious concerns and we cannot support this bill in its current form.

The Albanese government's National Reconstruction Fund Corporation Bill 2023 is an ideologically driven interventionist approach that does a cruel disservice to their stated aim. It is their inexperience in government—or perhaps it's their deplorable track record of public policy design—that does the real damage. If the primary aim of the NRFC is to effectively reinvigorate Australian manufacturing capability then there are fundamental flaws in the design of the NRFC and the way it operates that will doom it to failure. Once created by the measures in this bill, Labor's NRFC is set to suck vast sums of money from almost everywhere and spray them in any direction the government sees fit. There are no criteria to identify genuine need or evidence of strategic alignment when it comes to this bill; neither are any priority areas or investment policy parameters identified in the bill. Such important considerations are conspicuously left out as beyond the scope of the bill. Instead, the parameters that will determine the investment decisions of the NRFC will be at the absolute discretion of the government or, more specifically, left to the minister's judgement to define.

The coalition also has significant concerns about the fiscal irresponsibility of this government. The bill fails a critical test of financial stewardship by securing without further recourse to this parliament an eye-watering $15 billion in funding. This is many times the cost of the coalition's equivalent Modern Manufacturing Strategy. This deliberate design provides an initial $5 billion appropriation with assent to this bill, while a further $10 billion is made available to the government at any time, without additional parliamentary approval. Fifteen billion dollars is a huge amount of money, and this parliament will simply hand it over to an untested scheme with the passage of this bill.

This feature means that important questions of priority areas, investment parameters, senior appointments and the $10 billion in additional future funding will effectively bypass the authority and scrutiny of this parliament. History shows that such a cavalier approach to public policy rarely ends well, especially when it comes with a $15 billion price tag. Such flagrant overreach risks rampant waste, poor investment outcomes, a proliferation of pet projects—try to say that three times fast, Deputy Speaker!—and potential pork-barrelling on a horrendous scale. And it all happens thanks to a flawed design which places such risks well beyond the limited capacity of the NRFC to control.

Beyond its flawed design, the NRFC also risks failure because it ignores the major economic problems which transcend the investments it makes. To put it another way: without addressing skyrocketing energy prices, labour market shortages and disrupted supply chains, any large-scale government spending to stimulate manufacturing will almost certainly be in vain. The minister can call that 'a significant step in rebuilding Australia's industrial capacity' if he likes, but I call it false hope. It is false hope, grounded in poor policy from a bad government.

Of course, it is also important to point out that this parliament will have limited oversight of how this vast sum will be spent and the value to taxpayers of that investment. This bill effectively deals this parliament out of the equation when it comes to ensuring sound manufacturing policy that actually assists the industry.

The Albanese government did have the opportunity, in the October budget, to correct its policy settings to meet the challenge of underlying economic problems. It is deeply troubling to a great many Australians that critical underlying problems, such as the current cost-of-living crisis, are problems that this hapless Labor government has little willingness, and even less ability, to solve.

However, the failings of this bill do not end there. We have serious concerns for the underlying funding model itself. This is because Labor's approach shifts from competitive grant programs with robust tested processes, under the coalition, to the Australian government directly intervening to acquire equity and offer loans with dubious security provisions, under this funding plan.

The potential for adverse unintended consequences with this approach is, of course, very high. Adverse consequences could include risks associated with investment distortion—including the crowding-out of private investment and venture capital to small enterprises and start-ups. If that isn't the case, then the viability of investments that fail to attract private investment should be questioned, which, in turn, begs the further question: why should the Australian government risk being the lender of last resort?

One more negative consequence of Labor's direct investment strategy is the almost certain erosion of business confidence and investment certainty. Heavy-handed government that shifts national priorities on a whim—or with priorities that are too vague, thanks to poor policy design or ideological dogma—only serves to undermine confidence. And where confidence goes, investment capital and innovation soon follow.

Beyond the potential for $15 billion of taxpayers' money to be washed down the drain, there is also the equally precious commodity of lost time. It may take years to correct all the mistakes and deliver appropriate support through reliable mechanisms to where it is so desperately needed. This is only more lost time for Australian manufacturers, and it's time that many don't have.

It's important to consider some of the comments that many of the stakeholders have made in relation to this bill. The Australian Banking Association's submission to the department's consultation noted that:

… banks already invest in many of the priority areas identified by the consultation paper, such as renewables, transport and defence. Investments in priority areas, as proposed, would be better suited towards the beginning of their lifecycle, such as during the research and development or commercialisation phases of a project or business, where it is more difficult for banks to manage the risk profile.

Orica's submission noted that:

We understand the NRF will provide finance in the form of loans, guarantees and equity and will not provide grants. In our experience, and one which is likely shared by other large companies, is that banks generally provide more competitive lending rates for debt financing than that offered by government.

This bill is not addressing what specific industries want or need. Providing excessive and unsustainable public funding without addressing the underlying economic limitations on growth is pointless, self-defeating and it's irresponsible. The government has stooped to a new low today—or yesterday, in fact—relegating Australia's allies in our key defence pact, AUKUS, into a bargaining chip into the debate around this rushed bill.

I want to make a point about the debate surrounding the bill that's been very troubling. AUKUS, of course, is our tremendous new partnership with the United States and the United Kingdom and it should be above politics. But unfortunately, in the last couple of days we've seen that the Labor government is not content to allow this to remain above the political fray. This government has stooped to a new low by relegating Australia's allies and our key defence pact into a bargaining chip to try to sell this bill. It's an act of desperation, unfortunately, from Labor, and it makes clear that the NRF isn't about national security; it is all about politics. When Ed Husic introduced the national reconstruction fund bill he didn't mention the words 'AUKUS' or 'national security' once. He didn't mention it a single time. Yet yesterday, in the press, they're trying to make out that this bill is somehow central to our global alliances. It's complete madness. This is a desperate, desperate politics from a desperate government.

If the NRF is all about national security then why did Labor cut the space industry out of its priorities for this bill? And if Labor are so concerned about defence manufacturing, why have they held up millions of dollars in funding for critical defence manufacturing projects funded through the Modern Manufacturing Strategy? This desperate intervention from Labor politicises the landmark AUKUS partnership, undermining Australia's cornerstone national security agreement. It is particularly concerning to see the Albanese government linking the NRF to such a critical security pact when they will rely on the support of the Greens to pass this bill through the Senate.

Labor putting the NRF into the same conversation as AUKUS is simply dumb policy. It is dumb politics too, and good luck explaining to the Greens that they should back the bill for the sake of AUKUS. If this is such a key national security imperative, as Labor say, then they need to immediately rule out mandating union board members and mandating union agreements for the condition of entry into the fund, because we know several unions joined many anti-AUKUS protests over recent months. The Albanese government has failed to rule out radical union demands as they rush through their National Reconstruction Fund. We saw yesterday that the unions are already waiting with their list of demands about how this whole system will work. They're rushing the bill through because the Albanese government want a blank cheque, and this bill will put in place Labor-picked boards to oversee $15 billion of taxpayer funds on Labor-picked priorities.

The bill hasn't passed yet, but the media are already reporting that unions are ready with their list of demands. Yesterday we saw in the media that they want a third of board positions hand-picked by the Council of Trade Unions, determined to get access to the funding, of course, and—another kicker—they want enterprise agreements with unions as a precondition to make an application to this stream of funding. This essentially enshrines compulsory unionism to be a successful applicant and this is, of course, a massive throwback to pre-1980s Labor policy.

I'll conclude with this point: the Labor Party first committed to a $15 billion National Reconstruction Fund while in opposition, with an announcement on 15 November 2021 that hailed the NRF as the first step in Labor's plan to rebuild Australia's industrial base. Labor's 2021 announcement then went on to say that the NRF would unlock potential private investment of more than $30 billion. Well, how exciting. We should have thought of that, given their onward slide to the left on the political spectrum, with one of the most interventionist approaches seen from any Australian government in decades. But here's the thing: the bill establishing the NRF does not include any requirement for co-contributions of financial recipients or any private investment in NRF funded projects. It's too expensive, it's too opaque, it's too risky, and it asks way too much of the Australian taxpayer.

Debate interrupted.