Allegra Spender (Wentworth, Independent) Share this | Hansard source

The National Reconstruction Fund exists to implement the government's industry policy, and I acknowledge the goals on this are trying to set Australia up for the future and build the industries which will deliver long-term prosperity to Australians. This is a laudable goal and one that I share. We are going through a unique transformation in the global economy, the transformation from fossil fuels to clean energy, as well as the ongoing digital transformation of our economy. There is a role for government as we go through these transformations, but we must acknowledge the historical challenges of industry policy and ensure that lessons are learned from past mistakes. I can see in this bill and in discussions with the minister a more modern approach to industry policy.

I will be supporting the fund but I want on the record the risks and concerns which I and others share in the spirit of constructive engagement. I have raised my concerns with the minister and would like to acknowledge his willingness to engage with me and me and to make time to discuss these concerns, and that he has discussed these in good faith. That said, not all of my concerns have been resolved and I will be moving three amendments, which I hope will be supported, to try and improve the bill.

My first concern is there is nothing to stop investments being made in industries or in activities where there is no public benefit. These interventions can be perfectly appropriate in circumstances where an externality exists, like carbon emissions or airborne pollution or where there is a failure of market to provide capital to certain industries. I accept that. That is when the government should step in and change the regulatory framework, provide subsidies or make investments. That is the rationale for the Australian Renewable Energy Agency and the Clean Energy Finance Corporation, both of which have done great things for Australia and which I wholeheartedly support. But the great work is not in their ability to get money out of the door or in their ability to earn a profit on their investments; it is their ability to remedy a market failure.

This fund does not exist to remedy market failure; it exists to funnel money to particular sectors, even if they already have adequate access to private capital markets. I can't support that. That is not prudent use of Australia taxpayer money and it would diminish Australia's already stagnant productivity growth, particularly if this or future governments choose to redirect the fund's investments into areas where there is no public benefit but where there may be clear private political benefit. My amendment will seek to put guardrails around future investments to ensure that investments are made to address market failures and ensure they address public benefit, not private benefit.

My second concern is that the investment mandate is not disallowable. The mandate is essentially the rules of how the fund operates, how it invests, and the risks and the outcomes it seeks to achieve. As we seek to legislate the fund today, we don't know what the rules will be. We do know that, as the bill currently stands, the minister will be able to establish a mandate and that it will be available publicly, but parliament has no role in agreeing to the mandate or the ability to rescind the mandate should it prove to be problematic. This is a concern, and I believe it is one that we should fix.

My view is that parliament should have a greater role in overseeing and scrutinising public expenditure and it is appropriate for the mandate to be disallowable, especially since we have not even seen at the draft mandate and are effectively giving the minister this power without knowing how he or future ministers will use it. I take the point that the investment mandate for other off-budget funds is similar to this one and not disallowable either. But rather than allowing this fund to adopt an inferior practice, I think it is an opportunity for parliament to insist on improved practice and then work to raise standards across the board, and that is what my amendment will seek to do.

My third concern is with the review process, which I believe could be improved. There is a requirement in the bill for reviews of the fund every five years and that this process must be independent and include public consultation. I welcome this requirement but I would like this bill to go further. Parliament should require that the first review be completed before any investments beyond the initial $5 billion are undertaken. This is a simple matter of good governance. The government has said that the fund will receive $5 billion when it is established, and an additional $10 billion before the end of the decade. Before we commit to additional resourcing I think it's reasonable to have an arm's-length review that provides confidence in the fund's effectiveness and that where any deficiencies are identified they be acknowledged and resolved. This should occur before providing what is a very significant amount of money to an off-budget entity.

Finally, I would like to note a general concern with the government's use of off-budget vehicles. This year, the government will establish the $10 billion Housing Australia Future Fund, the $50 billion National Reconstruction Fund and the $20 billion Rewiring the Nation Fund. Each is expected to unlock private co-investment, and could well account for between $100 billion to $150 billion of total off-budget investment. There are circumstances where off-budget spending is appropriate, and I certainly acknowledge the need for the Housing fund, the National Reconstruction Fund and the Rewiring the Nation Fund. But we must acknowledge that the reporting, scrutiny and accountability mechanisms are weaker and less direct than on budget spending. There is a clear opportunity to improve the integrity of how public funds are used. I have decided not to pursue the those improvements in this bill as they would only apply to one off-budget vehicle, when we need a comprehensive response applied across the board. But I intend to pursue changes that would improve integrity and confidence in the use of off-budget vehicles.

Integrity is the theme of the three amendments I am moving today, in what I hope will be seen by the government as a good faith attempt to improve this legislation constructively—legislation which will, hopefully, contribute towards the greening of our economy and to the building of significant new export industries for Australia and new high-wage occupations for Australians. This is the kind of long-term vision and legislation which I and the community are seeking from our government, and which I will support. Thank you.

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