Wendy Askew (Tasmania, Liberal Party) Share this | Hansard source

I too rise today to contribute to the debate on the National Reconstruction Fund Corporation Bill 2023. The Albanese government is heralding the National Reconstruction Fund Corporation as the first step in Labor's plan to rebuild Australia's industrial base, and we've heard that again here today. This is a great ambition. I'm all for increasing manufacturing and building prosperity across the country, especially if it helps rural and regional communities, like my home state of Tasmania, but this bill has been rushed and it is not the right solution.

The National Reconstruction Fund is supposed to be up and running by next financial year, but the government has not even committed to a launch date yet. Clearly, it hasn't been thought through and doesn't have a lot of substance behind it. The National Reconstruction Fund will be administered by a corporation with a chief executive officer and an independent board that will oversee the corporation and its fund.

The Minister for Industry and Science, Ed Husic MP, has discretion to appoint the chair and board members. Can we trust Minister Husic to appoint truly independent members to the board of this $15 billion fund? This is the same minister who was caught out sending his official mail using paper made in the UK. Why not use paper made in Australia, Mr Husic? That may have been because Mr Albanese promised that forestry would be a priority under the National Reconstruction Fund before the election last year. But, less than a year on, he's broken this promise by agreeing to the Greens' demand to cut out the native forest industry in return for their support of the fund.

The corporation will be tasked with delivering funding for projects that are designed as national priorities by the government. Instead of vague and indiscriminate ideals, we need to drive investment into specific sectors and provide certainty for Australian manufacturers and industry. This proposed model makes accessing funding harder because it shifts from the existing competitive grant programs, which already have robust selection processes, to the government acquiring equity and providing loans for projects.

Some manufacturers could struggle to meet the return on investment thresholds, as part of these loans, while they are busy building capacity. Others will be ruled out of eligibility because their margins are too small or too risky—because of supply chain shortages. It will take years for the money to start flowing and to get the model for this fund right. So what happens to manufacturers in the meantime?

On top of these access issues, I want to highlight how the prescriptive nature of funding requirements and the need for a guaranteed return means those who receive the go-ahead will be unable to invest in innovation. We've all heard the stories of innovation that involve years of research and development and many failures before the right combination was found and developed. Australian John O'Sullivan and his CSIRO colleagues were investigating echoes of black holes when they came up with a way to send signals to a destination without interruption. We know this innovation as wi-fi, but it actually began as black-hole research. The National Reconstruction Fund model will not encourage innovations like wi-fi as it does not allow failure. How can we have innovations without trial and error? This idea—its design and its planned execution—is problematic.

We on this side of the chamber acknowledge the importance of having strong supports for Australian manufacturing. We achieved this through our Modern Manufacturing Strategy. This government's proposal is at a much greater cost and has a far greater risk for the taxpayers of Australia without any guarantee of the rewards that our policies have proved and delivered. What we do know, according to the Prime Minister's media release, is that the government plans to allocate funds from the National Reconstruction Fund to improvements in Powering Australia, medical manufacturing, value-adding in resources, critical technologies, and advanced manufacturing in agriculture, forestry, fisheries, food and fibre. That was how it was announced, noting, of course, that the government have now done that desperate dodgy deal with the Greens which will prohibit coal and gas from receiving finance from the fund.

So what we can see is the Albanese government proposing a corporation that can invest billions of dollars in projects in specific priority areas that already have designated funding arrangements. Consider, for instance, the Clean Energy Finance Corporation, the Medical Research Future Fund or the Modern Manufacturing Strategy that the coalition set up. These initiatives offered focused funding for specific industry areas, so the Labor government, therefore, is really just offering us a rebrand.

At a time when our country is battling rising energy prices, labour market shortages and disrupted supply chains, this government wants to add more manufacturing to a mix via a fund that is not needed and was not in the budget. This bill ignores the economic issues that we're already facing and that must be addressed first. Kickstarting a series of significant manufacturing projects requires strong economic conditions, and that is something we just do not have right now. This bill does not follow good fiscal considerations. The initial $5 billion appropriation is provided once the bill passes, but the timing of the remaining $10 billion is not subject to further parliamentary approval.

Indeed, similar financial structures to what we see proposed for the National Reconstruction Fund were criticised by the IMF, the International Monetary Fund, in February of this year. In its 2022 article IV consultation, the IMF stated:

Implementation of below-the-line activity through newly created investment … should be phased appropriately, and, more broadly, a proliferation of such vehicles should be avoided. Cost-of-living support in light of high energy prices should be targeted, aimed at protecting vulnerable households and small viable firms.

This is a clear indication of where our focus should be right now.

Manufacturers across Australia are struggling with rising power prices. The government's priority should be delivering inflationary support for industry rather than redirecting funds to manufacturing projects that had already been approved and costed under the Modern Manufacturing Initiatives. Projects came to a standstill and people lost jobs because of this government's redirection of funds to an initiative that does not have a launch date and industry feedback suggests could take some years to get right. Those will be lost years for manufacturers across Australia.