Jenny Ware (Hughes, Liberal Party) Share this | Hansard source

I rise to speak on the National Reconstruction Fund Corporation Bill of 2022. The National Reconstruction Fund Corporation Bill purports to deliver on the ALP's $15 billion signature manufacturing policy. It establishes a fund that will be administered by a corporation with an independent board that would deliver funds against an investment mandate set by the government. However, the design and execution of this bill are both fraught with issues.

The first thing is the bill ignores key economic issues which drive our manufacturing industries. The government must first address issues such as rising energy prices, labour market shortages and disrupted supply chains if our manufacturers are to succeed. Without policies that create strong economic conditions, any government spending is in vain. The coalition is opposing this bill because this represents the Labor government telling our manufacturers what they think they need rather than addressing what they actually want.

The second main problem with this bill is it will create even more lost time for manufacturers. In this broken model, it will take a significant time for money to start flowing through to the manufacturing industry. The Clean Energy Finance Corporation, upon which the NRF was modelled, was established in 2012, and the first investment was only made some ten months later. Our manufacturers, with the current economic conditions, cannot afford to wait that long. The government has announced that the NRF should be up and running by next financial year but hasn't yet committed to a launch date.

The third issue with this bill is the poor funding model upon which the National Reconstruction Fund has been built. In this instance, the model shifts from competitive grant programs with robust processes to government acquiring equity and providing loans. Unintended consequences of the way that this has been modelled include government equity and loan schemes being 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—totally 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 crowding out private investment are also concerning with this legislation. This begs the question: if there are such great investment opportunities for the government to acquire equity, 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 manufacturers are family owned businesses.

A fourth problem with this legislation is that there is inappropriate ministerial discretion to allow the minister to appoint the chair and board members who will oversee the corporation and its funds. This flies in the face of specific recommendations given by the minister's own a department on such appointments.

There's a fifth issue with the NRF, and that is that this 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, for example, complementary medicine and, to a lesser extent, the recycling industry. The government's new priorities are far too vague and strip industry policy of the focus needed to drive investment into specific sectors. This is demonstrative of Labor choosing to spray money indiscriminately instead of continuing investment certainty for our manufacturers and our industries.

Finally—and this is the sixth problem with this bill—it is fiscally irresponsible. It's delivers funding well in excess of the coalition's former Modern Manufacturing strategy. An initial $5 billion appropriation is provided upon passage of this 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, which stated:

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

such as this 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.

Overall, again, the budget in October last year was a missed opportunity for the Labor government to support industry and businesses 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 to thousands of job losses. All of this will have a devastating impact on industry. The industrial relations bill will cause mayhem for industry and businesses when combined with the ideological scrapping of the Australian Building and Construction Commission and the funding cut Labor handed to the Australian Small Business and Family Enterprise Ombudsman. Labor's union paymasters will be left to run rampant without the proven oversight and dispute resolution required.

While manufacturers across our country struggle with rising power prices, Labor's focus is making it more difficult for industry to employ and keep workers and to grow their businesses. But, rather than embracing it as an opportunity, the budget took active steps to spitefully wipe out key features of the coalition's industry policy.

The coalition had provided $2.5 billion to create the modern manufacturing strategy. This sought to bolster our sovereign manufacturing capability and empowered over 200 projects across Australia. Despite promising over and over again that their NRF would reinvigorate manufacturing in Australia, we saw next to nothing in the budget to roll out this program. Let's make that clear: Labor has chosen to redirect the modern manufacturing initiative without ever having rolled out their own National Reconstruction Fund.

One of the key pillars of the coalition's manufacturing strategy was our strategic decision to bolster Australia's capabilities in the space sector. The coalition supported funding to locally design, develop, manufacture and deploy specialised space products, equipment systems and services for export to international markets, and to support national and international space missions. This Labor government chose 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 upon which this shift in focus was made. The government must address the critical issues affecting our manufacturers, not simply tinker with a proven model.

The Labor government is rushing this bill through, just like it rushed through its radical industrial relations agenda, sidestepping parliamentary scrutiny and avoiding appropriate consultation with industry, and the Australian taxpayer will end up wearing the bill for this recklessness. That is because the NRF delivers on what the Labor Party and the unions want, and not what our struggling Australian manufacturers need. Labor is rushing this bill through, because this bill is what put Labor in power—a chosen board to oversee $15 billion of taxpayer funds on Labor chosen priorities.

The bill hasn't passed but unions are already salivating at the prospect of the NRF and have listed their demands as thus: a third of the board positions handpicked by the Council of Trade Unions—positions which will determine who gets access to the funding; and enterprise agreements with unions—a precondition to make an application for any money under the fund; applicants must not have engaged in conduct that treated workers unfairly—a very vague way of saying that, if you're not with them, you're against them. Finally, the unions have demanded that applicants must commit to direct employment and, if contractors or indirect workforces are used, they must be employed on the same conditions as the direct workforce. This essentially enshrines compulsory unionism to a successful applicant. Again, Labor rewards its union mates.

Let us turn then to what some of the stakeholders have said about this. The ACTU said:

The bill puts forward a model of independent directors that are appointed by the minister. The ACTU does not support this model. The board of the National Reconstruction Fund should have equal representation from trade unions, industry and other expertise.

The Australian Industry Group said:

Cuts to the Modern Manufacturing Initiative and Entrepreneurs Programme in 2022 deprive the NRF of two main pipelines for preparing innovative SMEs to be investment-ready.

The Australian Chamber of Commerce and Industry said:

There is no clear definition of what a 'priority area of the Australian economy' is. The Bill leaves it open to the minister to declare that each or any area of the Australian economy can be identified as a priority area.

The Australian Banking Association said:

It is noted that banks already invest in many of the priority areas proposed to be targeted by the Fund, such as renewables, transport and defence. Investments in these priority areas 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.

In addition, the AWU's submission said:

In responding to the consultation paper, the AWU supports the ACTU's submission and recommendations for the purpose, governance and structure of the NRF.

Again, unions being thanked by Labor. The Australian Forest Products Association said: 'Our timber processing facilities are limited in the investment they can justify due to a shortage in fibre supply. This shortage is being exacerbated by state government ongoing moves to shut down native forestry, while the plantation forestry estate is shrinking, with land being moved to other more lucrative areas and uses. This in turn impacts on the potential returns for investment in Australian manufacturing of timber products.' The Association of Mining and Exploration Companies said:

The fastest way to attract investment to the sector, is to approve and open more mines in a timely manner. The longer the approvals process, the greater the perceived risk.

Therefore, the ALP is again shooting the program in the foot, as mines can take up to a decade to approve. For all of the reasons I have outlined, I oppose this bill. It is not supported by industry groups. It is not supported by business. It is supported by unions. It will do nothing to improve our manufacturing industry.

(Quorum formed)

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