Wednesday, 8 March 2023
National Reconstruction Fund Corporation Bill 2022; Second Reading
Patrick Gorman (Perth, Australian Labor Party, Assistant Minister to the Prime Minister) Share this | Link to this | Hansard source
This debate on the National Reconstruction Fund Corporation Bill 2022 happens as we enter the third decade of the 'no-alition'. In the 2000s we saw them adopt this policy of saying no to everything, when Tony Abbott became Leader of the Opposition. In the 2010s, we saw the 'no-alition' move on to the car industry, saying no to the car industry. Now, and I must say that I am surprised, we have the 'no-alition' saying no to, of all things, investing in the manufacturing industry of Australia.
It is no surprise that my view is that those opposite do not bring any policy ideas into this chamber. They have now had nine months, and the only policy idea that has been brought in is a reheated policy idea from Tony Abbott, a reheated policy idea of saying no to everything that this government has an electoral mandate to deliver. So we have an opposition leader with a one-word policy manifesto: no. I give former Prime Minister Morrison credit that when he looked at this 'no' policy he at least turned it into a three-word slogan. He went from 'no' to 'not my job'. At least he had a three-word slogan there. I've listened to the speeches that have been delivered in this place telling us why they will not vote for this legislation, and I still don't understand. I've seen people putting arguments and rent-seeking as to why we should invest in things in their electorate and why we should do all sorts of other policy initiatives, but there's been no clear reason as to why they do not support this piece of legislation in front of us.
Maybe, if we had $1 for every time those opposite said no, we would start to make a dent in the trillion dollars of Liberal-National debt that was left for this government to clean up. In the context of this policy, I think it's important to note that we developed the National Reconstruction Fund having seen the errors of those opposite: always opposing, always cutting, never seeking to build the nation up, with no manufacturing plan. It's no wonder this lack of vision—not sharing the vision that the government brings about trying to invest in the future of our manufacturing—is the tone of those opposite. When we look at the history of how they acted when they were in government—and I refer, in particular, to the Leader of the Opposition—there were cuts. Cut? Yes, they cut $50 billion from hospitals. Taxes? Yes, he tried to introduce a $7 GP tax. Privatisation? Yes, they launched the Medicare privatisation task force. None of those things were about backing medical manufacturing. This bill is about backing medical manufacturing.
We saw the now Leader of the Opposition cheer as we waved goodbye to the Australian car industry. Again, to this day, that's something that's hard to believe—that that was something the opposition, when they were in government, encouraged. They dared the Australian car industry to leave and then cheered when it happened, saying it was good. We saw the terrible economic judgement of the Leader of the Opposition and his colleagues when they were in cabinet. Not only did they leave us without a car manufacturing industry; they left us with $1 trillion of Liberal debt, agreed to, every single step of the way, by the now Leader of the Opposition. He's proudly the leader of the 'no-alition'. He's proudly voting no to this legislation. I'm probably less generous than the minister for manufacturing and industry, who at least noted that sometimes the opposition backs manufacturing when there's a TV camera around. I'm not even sure if that's true anymore.
Let's talk about what this legislation seeks to do. We seek to invest in the long-term interests of the nation. The National Reconstruction Fund will provide the finance to drive investments in seven priority areas. First, it will add value in resources, expanding Australia's mining science and technology, and increase domestic processing in Australia. That's incredibly important to my electorate, the headquarters of some of the largest mining operations in Australia. I speak all the time to people from the CEO of the Chamber of Minerals and Energy, Rebecca Tomkinson, through to the CEOs of those major mining companies. We know there is so much more we can do if we back the science that is already being developed in Perth, already being developed in Western Australia, already being developed across Australia, to make sure that we secure the future of our resources industry and all that it can become. I note that's also on the agenda for the Minister for Resources, as she travels with the Prime Minister and the trade minister to India today.
Second, it will value-add in the agriculture, forestry and fishery sectors. We know that we can do so much more to add to the raw materials which we, in this nation, extract from the beautiful land we call Australia. If we think about this in terms of what it means, again, for Western Australia, we have some incredibly lucrative export industries, including the crayfish industry. We've got the Fremantle Fishing Boat Harbour. We can do so much more, particularly in fisheries, to make them sustainable, high tech and high value for the future.
Third, we want to invest more in the technology of transport, making sure that we're backing transport manufacturing. I was incredibly proud, late last year, to represent the wonderful minister for infrastructure and transport at an event where we announced our commitment to investing in electric buses for Perth. That's good for my electorate. It's clean transport. It's more transport so people can get to where they work and wherever else they want to go without having to rely on a car. Importantly, I commend the work of Rita Saffioti, the state minister, and the state government, who are working in close partnership to make sure that we make those buses and the charging infrastructure, where we can, in Western Australia, building on the great success of the Metronet's Bellevue manufacturing centre, which I have also visited with the minister.
Fourth, investing in medical science, making sure that we back our world-leading researchers so we not only have those essential supplies that we need but also those breakthroughs that we need for tomorrow, to improve the quality of life for Australians and people the world over. I know that this will be welcomed by the Harry Perkins Research Institute, just about seven metres outside of my electorate in the electorate of Curtin, home to some of Australia's great researchers and it will be welcomed by the universities, not just of Western Australia, but Australia over.
Fifth, making sure that we invest in the future of renewables and low-emissions technologies. I know for towns like Collie in Western Australia, where we are undergoing that complex but important transition to clean energy sources, that if we invest in these technologies then we provide a future for those towns. I think about what we're doing at Midland TAFE in Western Australia, where we're investing in making sure that we train people up for those new jobs in wind turbine installation, manufacturing and maintenance. I was pleased as well to stand with the Prime Minister and the minister for training when we announced the new energy apprenticeships at North Metropolitan TAFE in East Perth, again backing the future of manufacturing, backing the jobs that come with the exciting transition to renewables and low-emissions technology.
Sixth, invest more in defence capability, making sure that we can maximise Australian suppliers, backing our sovereign manufacturing, backing those who serve in our defence forces, backing the Australians who work in manufacturing to make sure that we can do everything necessary to defend this country and build up our armed forces.
Seventh, invest in making sure that we enable the capabilities in data science, engineering and software development. This is a great opportunity if I think about how exciting these opportunities are when it comes to advanced manufacturing, science and technology. I was at Cassia Primary School with a range of people, including Asta Morton from the Chamber of Minerals and Energy, seeing the wonderful work that the Chamber of Minerals and Energy does in investing in technology training for kids in primary school, teaching them how to code. It was really, really exciting to see children in year 2, 3, 4 and 5 actually seeing how this technology applies with these little Bee-Bots and wom-bots. I'm not going to do them justice in terms of the little devices that the kids can code; they go off and do a thing. They've built a program that's uniquely developed for children learning in the Pilbara. I note that it was part of the Port Hedland cabinet meeting that happened a few weeks ago. It was a very exciting moment.
I'm conscious that we need to get this legislation voted on today because it is important, so I conclude by noting that this morning parliamentarians from across the political spectrum gathered just down the road at Old Parliament House to unveil the statues of Enid Lyons and Dorothy Tangney, something that is welcomed by parliamentarians the nation over, but it is particularly exciting for those of us on the Labor side of politics from Western Australia to see that statue of Doherty Tangney. It was a proud moment. I'll finish by noting her words about the importance of manufacturing and industry in her first speech to the Senate. She said:
Particularly, I pay tribute to the women in industry who, for the first time, have been called upon to take their places in fields hitherto the prerogatives of men, especially those engaged in the engineering industry who have turned night into day, and have pursued a way of life completely foreign to anything they had known before. I have seen them at work in munitions factories. I have seen them going on shifts at midnight with the same heroism as has marked the wonderful exploits of our men on the battlefields. I hope that when the day of peace comes what has been so willingly surrendered by our workers in industry will not be forgotten, and that the maximum of what they have voluntarily given up in the war effort will be the minimum upon which our new industrial standards will be based.
She saw that great opportunity for the manufacturing industry of Australia to grow out of the challenges that Australia faced in World War II. She saw that it was a great enabler of gender equality in this country. I think it was wonderful to see the parliament, the nation, the Commonwealth acknowledge her contribution and that of Dame Enid Lyons just down the road this morning.
Paul Fletcher (Bradfield, Liberal Party, Shadow Minister for Government Services and the Digital Economy) Share this | Link to this | Hansard source
I'm pleased to speak on the National Reconstruction Fund Corporation Bill 2022. I want to make three points in the time available to me. Firstly, experience teaches us that Labor's bold promises are very unlikely to be matched by delivery. Secondly, spending $15 billion of borrowed money is bad economic policy. Thirdly, so much remains uncertain about how this is going to operate that it's not appropriate that the parliament vote in support of it.
We've had plenty of bold promises about what the National Reconstruction Fund Corporation is going to achieve. It's going to apparently 'support, diversify and transform Australia's industry and economy, helping to create secure, well-paid jobs, securing future prosperity and driving sustainable economic growth.' For anyone who's been around for more than five minutes, this sounds very similar to the bold promises that Labor made under the National Broadband Network under the Rudd-Gillard-Rudd government from 2007 to 2013. They promised that they were going to roll out a national broadband network which would deliver fibre to the premises to 12.2 million premises. It would attracted significant private sector investment and it would all be done in eight years. This was what then Prime Minister Rudd said when it was all announced in 2009. Well, what actually happened?
First, there was no private sector investment, despite it being promised. Secondly, rather than getting to 12.2 million premises, they had connected barely more than 50,000 premises to the NBN by the time they left government. Thirdly, of course, it got nowhere near getting done in eight years. It was a rolled-gold implementation disaster. Of course, the list of Labor's implementation disasters goes on and on. Some of their greatest hits include naval ships and submarines. How many were delivered in the six years of the Rudd-Gillard-Rudd government? There were none. The mining tax failed to deliver just about any revenue at all. Of Labor's GP superclinics, 28 were promised at the 2010 election. By 2013, just one was operational. I could easily use up 15 minutes going through a long list of Labor's implementation failures, but for anybody who has been around this place for more than five minutes, we know there's a yawning gulf between Labor's bold promises and what they actually deliver. We should apply appropriate scepticism, therefore, to the bold promises being made now, including the claim by the minister that the National Reconstruction Fund Corporation will be up and running by July this year. Even the Clean Energy Finance Corporation, the model on which the government says this fund is based, took three years to design, to legislate and to start making investments.
The second proposition I want to put in the time I have today is that spending $15 billion of borrowed money on the National Reconstruction Fund is bad economic policy. Of course, it's not being done on a standalone basis; it's one of three such investment vehicles being established by the Albanese government in rapid succession: the National Reconstruction Fund, Rewiring the Nation and the Housing Australia Future Fund. In total, this government is borrowing $45 billion to put into these various funds. Whether they generate a positive return, lose 100 cents in the dollar or come in somewhere in between, it will be the Australian taxpayer who is on the hook to repay this money and the accumulated interest on it.
Currently, the 10-year bond rate is around four per cent, so if the Commonwealth borrows $45 billion then, every year, the Commonwealth needs to spend $1.8 billion in interest. This goes to making the budget position, the underlying cash balance, worse by that much every year. This is doubtless why the International Monetary Fund has been clear in its commentary that a proliferation of such vehicles should be avoided.
Now, this $45 billion will not show up as an expense in the budget, because the theory is that it's a capital investment, but the simple fact is that, while this consequence of public sector accounting treatment means that the spending is less visible, it costs real money, and that money needs to be paid by taxpayers. There is no free lunch. Those who champion these kinds of funds like to argue that because the Commonwealth can borrow at low rates then it can invest in a range of projects which earn a higher return and generate a profit. Of course, the logical end-point of this argument is that the government ought to borrow without limit and invest in every project it can find. But the economic reality is that there is no certainty that the projects in which the National Reconstruction Fund invests will be profitable. If the projects that the fund invests in meet normal private sector standards of risk, then of course the project proponents could simply secure their funding from the private sector. If this has not happened—if the project is one that the private sector refuses to finance—that should be a flashing red light as to the amount of risk that this taxpayers' money is exposed to.
We have to recognise that a government organisation is inevitably subject to political pressures that private sector financiers and investors are not. If there is a factory proposed in a marginal seat or championed by somebody who's been a major donor to the Labor Party, there is a real danger of a decision being made to fund the factory even when the business case does not stack up. The Australian Banking Association has described the core problem with the model the government is using here as follows: 'The ABA has concerns that the investment mandate and the proposed priority areas for investment will need to be carefully articulated so as not to have the effect of crowding out the private sector market from areas in which it has an appetite to invest or the risk profile can be appropriately managed.' As this quote highlights, the government is hopelessly confused between two competing and opposing principles. The first principle is that this fund is supposed to operate on a commercial basis and generate a return, which raises the obvious question of why you would set up a government entity which simply crowds out the many private sector parties which are in the business of providing equity and debt finance. The second competing principle is that this fund is supposed to put money into projects that the private sector would not put money into. That's a hopeless confusion between these two competing and opposing principles.
It is certainly true that there is an important role for funding by government when it comes to supporting and stimulating start-up businesses, developments of new technologies and so on. But the logical and coherent way to provide such funding is through the use of grants as opposed to pretending that it's an investment on commercial terms with a reasonable prospect of a positive return. Grant funding is exactly what the coalition did when last in government, with our $2.5 billion Modern Manufacturing Strategy, which aimed to bolster our sovereign manufacturing capability and which supported over 200 projects across Australia. We've seen a rich array of completely nonsensical purported economic arguments being put by various ministers in favour of the National Reconstruction Fund, such as the claim—from the Treasurer, no less—that it's designed to 'help combat the inflation challenge'. That is an absolutely ludicrous argument. In fact, it's the direct opposite of the economic reality. By borrowing $45 billion to set up this fund and the other two funds, the government will put more pressure on debt markets and it will drive up interest rates and, in turn, inflation.
We know that the Prime Minister has form with these kinds of funds. He argued for one in the 2016 election, when he was infrastructure minister—his $10 billion concrete fund, which was going to be a financing facility. This was, in the words of the Labor policy document: 'for Infrastructure Australia to provide, if needed, a combination of guarantees, loans or equity investments to get new projects underway. Once the project is under way and financeable, Infrastructure Australia could sell its equity or debt interest to long-term investors like super funds.' The idea appeared to be that you could borrow money from a concrete bank towards the cost of an infrastructure project, and then that project would generate returns to allow repayment of the loan. The huge problem was that just about every one of the projects that Labor indicated as likely to receive funding were projects that do not generate a revenue stream. Most of them are multibillion-dollar heavy rail or light rail projects, such as Melbourne Metro, or Cross River Rail in Brisbane and the Gawler Line in Adelaide. Public transport projects like this do not even cover their operating costs, let alone generate a return on capital. Of course, that's not to say that large rail projects aren't very worthwhile, and I was certainly involved in championing them when I held infrastructure portfolio responsibilities. But to pretend that the concrete bank advocated by the then shadow minister for infrastructure and now Prime Minister was in fact going to generate a return was nonsensical; it was deeply ill-conceived. And I'm sorry to say that the idea the Prime Minister is now proposing, and which this parliament presently has before it to vote upon, is equally ill conceived for both microeconomic and macroeconomic policy reasons. And I'll make this additional point about pumping this additional stimulus into the economy: we have fiscal policy going in precisely the opposite direction to the monetary policy settings pursued by the reserve Bank of Australia.
I turn, thirdly, to the fact that so much remains unclear about how this fund is going to operate that the parliament could not responsibly support the bill that is before us this morning. While the government's commentary has focused on manufacturing and technology priorities, and on 'rebuilding Australia's industrial base', the bill itself does not mention any specific sectors; does not limit eligible priority areas; has no reference to reconstruction, other than in its title; and no reference to rebuilding. One powerful piece of evidence for how unclear and unspecified the list is of areas into which this fund might put money is the attempt in recent weeks by the minister to argue that if the National Reconstruction Fund does not go ahead it will put at risk the AUKUS security pact between Australia, the United States and United Kingdom. That is an argument which is, arguably, even more ludicrous than the argument I cited earlier from the Treasurer about the way that this fund is going to help fight inflation. It would be a very hard choice to determine which of these two arguments were the more ludicrous, but both of them, by any standard, are objectively and entirely ludicrous.
The reality is that this fund is being set up in a way which will allow the minister to splash money around in any direction that pleases him. We've heard a lot from this government about their unswerving commitment and dedication to the principle of arms-length funding and yet, under this bill, the minister has an extraordinary amount of discretion on everything—the appointment of the chief executive and the board through to the priorities of the fund are at the minister's discretion. In effect, this parliament is being asked to sign a $15 billion blank cheque for whatever the minister decides he wants to spend the money on. As the Australian Chamber of Commerce and Industry has observed:
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.
Equally troubling is that it would be very difficult for the parliament or the Australian public to know how good or bad a job the National Reconstruction Fund Corporation is doing in its stewardship of this $15 billion of borrowed taxpayers money, with a reporting requirement only at the end of the asset's life cycle.
However, what is, regrettably, all too clear is that for some bizarre reason the government has abandoned the commitment made by the previous coalition government to support the Australian space sector. A key pillar of the Morrison government's manufacturing strategy was our strategic decision to bolster Australia's capabilities in the space sector. We supported funding locally to 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. But Labor has not included space industry manufacturing as a priority area. The space industry, as well as the broader Australian public, are yet to understand the basis for this shift in focus.
What is also, regrettably, all too clear is the extent to which this body will have extensive union involvement in its decision-making. Perhaps that's unsurprising, given that the minister is a former union official. Just on a random check, is the current Labor minister at the table a former union official? Yes, he is! What a surprise! It is very likely that this fund will pursue a traditional union agenda of assisting certain favoured industry sectors for a essentially political reasons—one of which, of course, is their wish to compel more Australians to join unions. As Professor Gary Banks, former chairman of the Productivity Commission has warned:
… industry assistance that targets import replacement and job creation in certain sectors is generally 'bad for Australia's productivity and prosperity, …
And the Australian Industry Group has rightly highlighted the very real risk that the National Reconstruction Fund will, 'operate as a means for unions to attract members'.
I conclude with the observation that this is a bad idea and badly executed. Labor has a long track record of financial disaster with these kinds of schemes, and the current Prime Minister seems to have a particular enthusiasm for them. I confidently predict this fund will not live up to the breathless claims being made. A lot of taxpayers' money will be wasted. It's a bad bill. I have no hesitation in voting against it.
Sam Rae (Hawke, Australian Labor Party) Share this | Link to this | Hansard source
My electorate of Hawke is home to some of Victoria's fastest-growing suburbs—indeed, some of Australia's fastest-growing suburbs. Thousands of new families, of all colours, creeds and backgrounds, enjoying the fine Australian ambition of building a new home, of raising kids and of providing the best possible life for them. The Albanese government shares their ambitions. We want to empower that ambition by creating opportunity, by easing the pressure of cost of living and by fostering an economy where no-one is left behind.
The National Reconstruction Fund represents the biggest ever peacetime investment in Australian manufacturing capacity. It is a critical and necessary investment in the future of our nation, ensuring the strength of our sovereign capabilities and outlining an aspiration for the economy that we want to be. Its outputs will be consequential and wideranging. But, importantly, for the people of my electorate, the National Reconstruction Fund is about being a country that makes things again. It's about providing a new pipeline opportunity for them and for their children. It will mean that the students at Sunbury Downs College studying science, maths or technology, who hope to go to one of our world-class universities, know that this government will back them if they choose a career in research and development; that this government wants to see them succeed, see their work commercialised and see that their talent stays here in our country. It will mean that the TAFE student studying for free, thanks to Labor governments, know the skills they are learning will fill jobs now and well into the future. That training in advanced manufacturing and the industries that support it is a worthy endeavour. It will mean new, good, well-paid, honest jobs in my electorate and in so many others across the outer suburbs and regions of our country.
It recognises the workers who proudly fill manufacturing jobs. Let's remember that it recognises them 10 years since those opposite dared the car manufacturing industry to leave this country and to leave my state of Victoria. It says to manufacturing workers that we value them and we value their work, that their skills and labour are a critical part of our economy and that they will never be forgotten or left behind by this Albanese Labor government.
In his recent address to the National Press Club the Prime Minister outlined Labor's plan for Australia for this year. He put forward a clear agenda that seeks to shape our nation's future, not be scared of it. After a wasted decade of inaction, drift and reactionary politics under the Liberals, Labor, under the leadership of this Prime Minister, is balancing the urgent action needed to address global challenges and fix the mess left behind by those opposite with long-term reform and investment that will deliver the lasting progress that Australia needs. The National Reconstruction Fund is an investment in this progress and, indeed, it is an investment.
Based off the model of the Clean Energy Finance Corporation, the National Reconstruction Fund will be required to generate a positive portfolio rate of return. This means the government's $15 billion investment will be returned with profit to reinvest in the fund itself, ensuring that it becomes self-sustaining. It will generate growth across our economy, it will boost productivity and it will create decent, well-paid Australian jobs.
The National Reconstruction Fund will provide finance to drive investments in seven priority areas of the Australian economy. These leverage our natural and competitive strengths, support the development of strategically important industries and shore up our supply chains. The seven priority areas are: firstly, transport, where we need to develop capabilities in transport manufacturing and supply chains for our car, train and shipbuilding industries; secondly, resources, to expand Australia's mining science technology and ensure a greater share of the raw materials we extract here are processed here, value-added here and not shipped off and imported back at higher prices; and, thirdly, agriculture, forestry and fishery sectors, to unlock potential and value-add to raw materials in sectors like food processing, textiles, clothing, and footwear manufacturing.
A fourth priority area is medical science, to leverage Australia's world-leading research to manufacture essential supplies like medical devices, PPE, medicines and vaccines. A fifth area is renewables and low-emission technologies, to capitalise on the opportunity presented by building the components for cleaner, renewable energy right here in our country. A sixth priority is defence capability, to close the capability gap left by those opposite, with Australian defence suppliers employing Australian workers to keep Australians safe.
The seventh priority area is a range of other enabling capabilities to support and develop key enabling capabilities across engineering, data sciences and software development, from artificial intelligence to robotics and quantum. These priority areas cut across the broader sections of our economy. They are deliberate and are about building a diversified and resilient economy well into the future.
Those opposite have decried the National Reconstruction Fund as interventionism. Many in their ranks think that the government have no place in this space and that we should not be, as they claim, picking winners. This is a tired, narrow-minded and diminished view of what governments can do. We need modern solutions that meet the challenges we face today and considered, strategic investment in research and manufacturing across these priority areas. It's critical to rising to those challenges and putting us in the best possible position for the future.
The pandemic and Russia's illegal war in Ukraine have shown the vulnerability our country faces in being the last stop in the international supply chain. We know that supply-side shocks are a significant driver of the economic environment and the economic challenges that we face today. Indeed, the inflation that is currently putting extreme pressure on households across our country is largely driven by supply-side pressures. Indeed, the Reserve Bank of Australia noted in its most recent Statement on monetary policy that supply-side factors likely account for between half and three-quarters of the inflationary pressure currently facing our economy.
With a strong manufacturing base, we can stand on our own two feet as a nation. We can protect ourselves from these challenges emanating from across the seas, but we can also commercialise Australian smarts, create new industry and build well-paid, decent Australian jobs. The National Reconstruction Fund is a very wise investment in a smart economy for the future.
That is why it is so shocking to me and to my colleagues that those opposite are not supporting this bill. They were a failed Liberal government that has become a 'say no to everything' opposition. They say no to power bill relief. They say no to sensible and targeted cost-of-living relief. And now, in voting against this bill, they are saying no to Australian jobs, no to Australian industry and no to Australian research. Here in this place they show their true colours. Underneath the Sharks hats, behind the 'daggy dad' get-ups—nonsensical facades they think will appeal to working Australians—and through their confected culture wars designed to divide our communities, we see them for who they are. Australians know that, deep down, this Liberal opposition has not changed since Joe Hockey stood in this place and dared Ford to leave our shores. The people in my electorate, in my community, know the coalition are against good conditions. They're against well-paid union jobs, and they're still fundamentally antiworker. Once again, they have made a choice to turn their backs on Australian jobs.
The Albanese government backs in workers. We back in Aussie smarts, and we're backing in Australian jobs. The National Reconstruction Fund is a smart investment in the potential of our nation. It is about renewing, revitalising and rebuilding Australia's manufacturing industry for Australians, for small-business owners, for the regions and for Australian jobs. It's not a handout and it's not about picking winners. It's about creating opportunity from Australian smarts for the people in my community and so many others like it.
Gavin Pearce (Braddon, Liberal Party, Shadow Assistant Minister for Health, Aged Care and Indigenous Health Services) Share this | Link to this | Hansard source
I rise today to speak to the National Reconstruction Fund Corporation Bill 2022, a bill that the opposition will, indeed, oppose. It's a bill that fails to support the manufacturing and industry sectors on the ground across the north-west, the west coast and King Island in the great state of Tasmania. In the electorate of Braddon, you'll find the most practical, pragmatic, hardworking people in small business anywhere in the country. Our region is the engine room of Tasmania, and that engine is driven by our fantastic small business sector—by mum-and-dad businesses working hard. We punch well above our weight when it comes to the contribution to the state and the nation's wealth.
There's one thing that practical enterprising people hate more than anything else, and that is bureaucracy. Big government inserting themselves into their lives, their livelihoods, their businesses and the way they go about their work every day is their biggest frustration, when there's no reason for this intervention in the first place.
On this side, we firmly believe in and steadfastly stand on the side of the individual. We celebrate initiative and personal responsibility. We know that our nation was built on the back of our enterprising mums and dads, our small businesses and our small to medium sized enterprises. We know that our SMEs are strangled by senseless oversight and bureaucracy. They never reach their full potential because of this bureaucratic burden. Bureaucracy is slow and unresponsive, and modern businesses can't afford to be slow and unresponsive if they are to compete in a competitive global environment.
Standing in this place, I feel ashamed telling our manufacturers and our industry that the Albanese government has introduced yet another piece of legislation that will make their life more difficult and make their life harder, not easier. This National Reconstruction Fund is described by the Albanese government as a funding opportunity. All I can see is that this fund is a source of endless frustration for practical small businesses. There have been more phone calls to my office, asking me: 'What on earth is this government doing now? What were they thinking?'
It was only a few months ago that I was standing in this very place, speaking against the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022. This was a bill that took away the gains that we've made in the workplace over many decades, a bill that took us back to the old dark days of industry-led government intervention and back to the time of the previous Labor governments, who sold their soul to their union masters, a bill that unfairly targeted our small mum-and-dad businesses and a bill that took control away from small business and put it back in the hands of Labor's union masters.
And here I am again! Here I am again on a different day, at a different time and speaking on a different bill, but, yes, it's the same old story. If it looks like a duck and it quacks like a duck, you know what they say. Providing what industry requires at any time is our responsibility as government. In typical style, this bill's underlying assumption is that the Albanese government knows what's best for small business. This is something that they are demonstrating time and time again in this place. It beggars belief that you would implement $15 billion worth of financing in that mechanism to drive investment without genuinely consulting industry on the ground.
Let's take our world-class forestry sector, for example. The NRF does not alter in one way the landscape or improve the opportunities for this sector. This includes our native regrowth industry, of which Tasmania leads the nation. Our leading forestry industry bodies such as AFPA, the Australian Forest Products Association, and AFCA, the Australian Forest Contractors Association, work hard on behalf of world's-best-practice industry, and they support and underpin their forestry-sponsored industry workers and businesses in the wood fibre industry. I was pleased that AFPA and AFCA made a submission to the NRF consultation process and outlined the real story on the ground.
The issues that they've raised are just common sense to me and common sense to people on this side, but it's a shame that that common sense hasn't found its way to the land of the bureaucrat and to this big-government approach to small business. If their submission had landed in the world of the real people, they might have had a fighting chance. Their submission basically noted: 'Our timber processing facilities are limited in the investment that they can justify due to a shortage of wood fibre supply. This shortage is being exacerbated by some state governments and their move to shut down native forestry. In turn, this impacts on potential returns for the investment of the Australian manufacturing side of sustainable timber products.' AFPA and AFCA want the Albanese government to at least try to understand, at least try to listen. Our forestry industry is crucial when it comes to our renewable future. It's crucial to our renewable jobs, our resilience and affordable housing strategies, but it is being held back by a government and that government's inaction and militant attacks on this enterprise. But what's this government's solution to this? They're planning to add another layer of complexity and bureaucracy on top of all of that.
Unlike Labor, I believe in a world with more boots and less suits. This gets back to what I said earlier. The last things that we need for our environmentally responsible, sustainable, safe and professional forestry industry are more bureaucrats, more rules, more bureaucracy, more government and more union involvement. This won't get the logs out. That won't help our young contractors pay those payments every month. It won't put families who work in the industry at the forefront of their own destiny. In an industry which in Tasmania often is run by small businesses and families, these are generational businesses that are handed from father to son, from mother to daughter. So again I ask: what is the National Reconstruction Fund going to do for them? I think it will be zip, nada, nil. I think the government didn't consult, didn't listen or didn't act on the advice that industry peak bodies, like AFPA and like AFCA, raised in this question.
The question remains, after all of that: who are they listening to? I must admit I read with interest the extensive list of stakeholders that the government did consult in drafting this piece of legislation. This included Austrade, and I accept that this is an appropriate stakeholder. The next 15 on the list are all federal departments: the Department of Agriculture, Fisheries and Forestry; the Department of Climate Change, Energy, the Environment and Water; the Department of Finance—the list goes on and on. I ask: where's the consultation with industry on the ground—the manufacturers, the welders, the log truck drivers, the dozer drivers, the mums and dads who are going about their business every day? Where's their consultation? If one is to develop a funding opportunity that aims to boost investment in manufacturing, to create jobs, to grow local capacity and to rebuild Australia's industrial base, then I reckon a great place to start would be to start listening to the people on the ground, the ones that really matter. It beggars belief to me! But, true to form, this government has hand-picked a small cohort of their mates, asking them to contribute to the design of this bill. It will come as no surprise to anybody who got an invite to the table—the Australian Council of Trade Unions; the former Labor cabinet minister Anna Bligh, who leads the Australian Banking Association; Industry Super Australia. The list goes on and on. It was a big get-together.
We all know that unions largely underwrote the Albanese government's election victory. They spent $37 million in donations on campaign materials and election advertising, of which $16 million was paid directly to the Labor Party. We also know that there's no such thing as a free donation—or a free lunch, for that matter—and it seems the national reconstruction corporation is a payday for that union movement. One-third of the corporation's board positions will be hand-picked by the Council of Trade Unions. In effect, that means that the trade union movement will choose who gets the funding and who doesn't. Alarmingly, an enterprise agreement with the unions is a pre-condition to even making an application. You wonder why we're upset on this side. You wonder why we're against this. They are demanding that applicants commit to direct employment, and, if contractors or indirect workforces are used, then they must be employed on the same conditions as the direct workforce. This essentially enshrines compulsory unionism into any and every workplace that wishes to apply for these funds.
I'm standing up for my local manufacturing sector. I'm standing up for those mums and dads that go about their business every day. I'm standing up for those forestry workers that go to work, trying to get those logs out into that sector every day. I'm standing up for industry on the ground. I'm standing up for the battler. It's an exciting time for industry, as we're seeing many emerging opportunities, but the sector is also facing significant and ongoing intermediate challenges.
I'm out and about every day, onsite, talking to business owners. They're telling me they have three major challenges. Firstly, the cost of energy. Secondly, workforce shortages: they're finding it difficult to get employees. And, thirdly, the disrupted supply chains, which really impede on their cost of doing business. These are the three things that we want government to support them with right now, but the Albanese government have turned their backs on them and are focusing on scrapping the former government's funding programs and putting bureaucratic, union-led programs in their place.
Industry should know that I'm always on their side. They know that I'll fight for them in this place and remind government of the importance of our local manufacturing sector and industrial sector. I'll remind the government that industry must be free and agile and as unencumbered to bureaucracy as possible in order for those small businesses to maintain profitable. And—here's a news flash—I'll remind all those on the other side that governments and bureaucrats don't create jobs. It's our enterprising mum-and-dad and small and medium sized business sectors that create jobs, and that's why the opposition will be opposing the National Reconstruction Fund Corporation Bill 2022.
Sharon Claydon (Newcastle, Australian Labor Party) Share this | Link to this | Hansard source
It is with great delight that I rise in this chamber today to speak in support of the National Reconstruction Fund Corporation Bill 2022. This bill presents such an enormous range of very exciting opportunities for my electorate of Newcastle—and not just my electorate. All of us on this side understand the profound impact that this can have in terms of helping shape our nation's future.
This bill gives effect to the Albanese Labor government's commitment to establish a National Reconstruction Fund Corporation. The government is providing the corporation with $15 billion to enable it to invest in priority areas in the Australian economy. It is gobsmacking to those of us on this side of the House that we would have an opposition voting against such important investment in critical infrastructure and projects for this nation—doomsayers, naysayers. It's not good enough. One of those priority areas for Australia, of course, is investing in renewables and low-emissions technologies, and we have $3 billion already earmarked for this sector.
As the world urgently focuses on the need to decarbonise, the transition to renewables and low-emissions technologies will play a critical role in delivering Australia's emissions reduction target of 43 per cent from 2005 levels by 2030 and net zero emissions by 2050. This is a commitment we have signed up to, that we have pledged to the international arena. This bill plus the investment mandate guiding investments combined are going to make sure that the $15 billion fund absolutely will be driving Australia's already natural inclination towards innovation.
While the National Reconstruction Fund will be administered at arm's length from government by an independent board, as it should be, the investment mandate will guide the board on making investments in key sectors which leverage Australia's natural and competitive strengths and reflect the government's priorities. A commitment to lower emissions is one such priority, and the National Reconstruction Fund will help accelerate regions like Newcastle and the Hunter in becoming a renewable energy hub, indeed a superpower. It could support investment in renewables and low-emissions technology so we can pursue big commercial opportunities that lay ahead, including, in my part of the world, manufacturing of components for wind turbines. We know the critical role of offshore wind in the future of energy, so being able to manufacture those important component parts of turbines here in Australia and in towns like Newcastle is a very, very bright part of our future. Things like the production of batteries, new solar technologies, modernising steel and aluminium production, hydrogen electrolysers and innovative packaging solutions for waste reduction are all critical areas that my constituents and Australian citizens everywhere care deeply about.
The Albanese Labor government is committed to supporting carbon-intensive regions like Newcastle and the Hunter to take full advantage of the enormous economic and job opportunities that come with renewable energy. With our skilled workforce, abundant resources, industrial expertise, and critical rail and port infrastructure, Newcastle is poised to take full advantage of these new energy industries. Newcastle and our region have powered Australia for generations, and the Albanese Labor government is ensuring that we will continue to do so for many generations to come. The Port of Newcastle, as many know, is the largest coal export hub in the world. But we are looking to the future and we know that these new energy industries are going to play a vital role in that future. We know that industries like green hydrogen will be critical to the diversification of the economic base of our region. They are a critical part of the diversification plans for the Port of Newcastle and are integral to the shaping of our region's future. We've had 10 years of people putting their heads in the sand, pretending this wasn't going to be, that they didn't need to plan. They pretended everything was going to stay the same. They lied to people in Newcastle and the Hunter. They were going to leave us hanging out to dry as the global economy transformed, leaving regions like mine that are carbon intense with nothing to plan for in the future. Well, that changes with the election of this government. The Albanese Labor government has already committed $100 million to ensure the green hydrogen readiness of the Port of Newcastle. Just last month we opened consultation on a proposed offshore wind zone for the Hunter region, an exciting opportunity for Newcastle to ensure large-scale, reliable and clean electricity for decades to come. In fact, community information sessions are happening in Newcastle today, and I encourage Novocastrians everywhere to attend, to hear, to listen to the experts and to have their voices heard. Supporting Newcastle to become a clean-energy superpower will create thousands of new jobs while critically diversifying our local economy. It is unimaginable that we have members opposite opposing such investments.
The CSIRO predicts that the hydrogen industry alone would account for 7,600 jobs and $11 billion in additional GDP by 2050. Heavy industries moving to carbon-neutral processes like green-hydrogen-manufactured steel could also create 92,000 new jobs over the next decade. These are not insignificant investments. Australia could create as many as 400,000 new jobs by targeting industry support towards zero and low-emissions manufacturing, including renewable energy and battery storage production. Labor's Powering Australia plan will see five out of six new energy jobs in regions like mine. Again, I say to members opposite: how dare you seek to stop and prevent such important, critical investments into regions like Newcastle and the Hunter? How dare you? You pretended nothing was going to happen and were prepared to leave hundreds of thousands of families hanging out to dry. You've been part of the problem and now you seek to prevent being part of the solution. You seek to stop the solutions that we put before the Australian people and now the Australian parliament. It is unacceptable, and I implore all thinking individuals on opposition benches to give very careful consideration to your votes. You say you are a party that issues free votes; let's see how many exercise that freedom when it comes to the crunch.
The National Reconstruction Fund is the first step in Labor's plan to rebuild Australia's industrial base. We want Australia to be a country that makes things again—it is that simple. In November last year the honourable Minister for Industry and Science, Ed Husic, addressed the National Press Club and said:
We import the bulk of what we need across sectors.
And yet, the signs are there that we can take a different path.
He also said:
We have the smallest manufacturing industry relative to domestic purchases of any OECD country.
Our consumption of manufacturing output is nearly double our domestic manufacturing output.
And we have slipped in economic complexity from a modest 55 in 1995 to 91st in the world in 2020.
The Albanese Labor government was elected on a mandate to drive the transformation of Australian industry and revive our ability to make world-class products here in Australia again. We saw, through the pandemic, how those global supply chains were under huge pressure, and products that we expected to be able to access were very hard, if not impossible, to obtain.
We need to revitalise manufacturing after years of neglect under the coalition government. Those opposite had nine years—and nine industry ministers in those nine years—but left Australia's manufacturing industry in tatters. And they have again shown that they are not on the side of Australian manufacturers. Our focus is on rebuilding Australian manufacturing industry for Australians. With Newcastle's strong background in manufacturing, the National Reconstruction Fund brings enormous potential for our region. Newcastle is ready to take up that challenge. Our region, taking in Lake Macquarie and the Hunter Valley, is ready and is the lead employer of manufacturing in regional New South Wales. Manufacturing is Newcastle's largest output-generating sector, supporting an estimated annual output of $5.76 billion. It generates an estimated $3.13 billion in regional exports, and Newcastle's manufacturing sector spends an estimated $3.492 billion on regional imports—more than any other sector.
Despite this, right now Australia ranks dead last among the OECD countries in manufacturing self-sufficiency. This is untenable! The National Reconstruction Fund provides a crucial financing vehicle specifically to drive investments in projects that will build prosperity, broaden our industrial base and boost regional economic development. The NRF has been welcomed by the Hunter Jobs Alliance, a regionally based alliance comprising nine unions and four community environment groups. Those are not two camps which necessarily sit together too often but, together, they understand fully the benefits that come to regions like ours from the National Reconstruction Fund. In response to the National Reconstruction Fund consultation paper, Hunter Workers said: 'We strongly support the NRF as essential to address investment gaps that are constraining manufacturing opportunities, including in the Hunter and other regions. This is a critical national investment that must be well designed as a durable program for the long term. We commend the Australian government on the initiative and on the rapid development of the NRF program to date.' That's what Hunter Workers had to say. Australian know-how, our scientists and our innovators are among the best in the world. Photovoltaic technology and solar cells were invented here, but 87 per cent of those cells today are made in one country—and it's not Australia. In the next three years, that number will be 94 per cent. If we invent it here, we should make it here: that is Labor's proposition to the Australian people.
Manufacturing matters because it creates full-time meaningful work and secure jobs. The $15 billion in capital provided through the NRF will support projects that create secure, well-paid jobs; drive regional development; and invest in our national sovereignty and our sovereign capability, broadening and diversifying Australia's economy. These are all good things. How anyone would vote against them is unfathomable. Through the National Reconstruction Fund, Labor will partner with business to unlock further potential private investment of more than $30 billion. And the NRFC will invest strategically in high-value-adding projects and priority areas with a strong regional presence—this means in areas like resources, agriculture, defence and renewables. It's anticipated that this will drive scale and growth, creating high-value jobs in the regions. Investments, including those targeting emerging opportunities, will help regional areas to diversify their economies and to create workforce opportunities. This investment will play to the strengths of Newcastle and the Hunter region, supporting new and emerging industries; transitioning existing industries to net zero emissions; and making it easier to commercialise innovation and technology. We are great at all these things; however, people need support now. After 10 years of neglect we need to invest—we need to remedy that. Our future in Newcastle is looking bright indeed under this government.
Kate Chaney (Curtin, Independent) Share this | Link to this | Hansard source
I rise to provide qualified support for the National Reconstruction Fund Corporation Bill 2022. A version of this bill is an essential step forward if we want to reduce supply chain risk, shape our future economy and achieve our potential to become a renewable energy superpower. There is so much opportunity in Australia, and in some areas, where markets fail or enabling investment is required, government support is justified to kickstart new industries. For example, in my electorate there's huge potential under the $1.5 billion committed to medical manufacturing under the medical science priority area. In Curtin, we have six medical research institutes, four hospitals, a university and a number of med-tech startups.
But Australia's wealth hides a serious failure of national strategy. The wealth generated from our abundance of resources should have led to an investment in the industries and skills that Australia doesn't currently have. Due to our geography, we'll always be a country that digs stuff up and ships it overseas, but we have so much potential, including for value-adding to our commodities. As an alternative to exporting green energy directly, we can move further down the supply chain, using our abundant sun and wind and embedding green energy in our commodities and adding to our economic complexity.
Australia's main exports are in low-complexity categories such as mining and agriculture. According to the Atlas of Economic Complexity, in 2020 Australia ranked 91st of 133 countries, just above Namibia and just below Kenya. Economic complexity is important because it not only allows countries to produce unique, sophisticated and high-value products with diverse export destinations but also guards against major economic shifts that could dramatically affect a country's reliance on a small number of industries, as we do. We need to add to our economic complexity as we can foresee significant changes in demand for our second and third largest exports, coal and gas. There are huge opportunities to add value to our largest export, iron ore, by processing it using green energy, but this will require some government support to ensure we don't miss the boat. Many of these industries will only become competitive with some foresighted government support, especially as we see other countries, like the US, positioning themselves to lead in the opportunities presented by decarbonisation. So the priority area for focus on renewable and low-emissions technologies in the fund is essential, as well as value-add in resources.
I would like to be a hundred per cent supportive of this bill, but, like many of my crossbench colleagues, I'm concerned about the potential of this government or future governments to abuse the intention of this legislation and this fund. Government support is only needed if market forces do not provide adequate incentives for investment. This mainly occurs in emerging or immature industries. There is a risk that the fund could be used to grow economic activity that's contrary to the sustainable long-term robustness of our economy. For example, value-adding to resources will need to leverage our natural advantage in renewable energy, not embed or grow the use of fossil fuel energy sources.
While I understand that fossil fuel investment is not the intention of the bill, it's important that we guard against the fund being used to satisfy powerful interests, such as the fossil fuel companies, with strong connections to political parties. Before I can support this bill, I would like to see an explicit carve-out for fossil fuel industries to ensure that this or future governments cannot use the fund to support fossil fuel based industries that have a declining role in our future economy.
There are some broad challenges with the legislation which I expect will surface in the report to be tabled on Friday from the Senate Economics Legislation Committee. I understand the rationale for securing the full $15 billion to provide certainty for private sector co-investors, but the discretionary nature of the $10 billion component to be provided in due course raises some concerns. There is very little transparency or guidance on how the fund will be used. There are seven broad priority areas based on analysis from 2020. It's not clear whether there is actually market failure in all of these areas, whether government intervention is justifiable. We don't want to see government investment that takes the place of private investment. I would like to see more recent or ongoing analysis—say, by the Productivity Commission—into whether these areas are and continue to be fields that require government intervention to promote future healthy industries.
I have a similar concern about the transparency of the investment mandate. With such a large amount of money, there should be an opportunity for parliament to scrutinise the investment mandate. This could be done, for example, through a disallowable instrument. Taxpayers have the right to know how this money will be invested.
Another concern relates to timing. Having just seen the 10th consecutive interest rate rise, I believe it's clear that the economy remains overheated. It will take some time to get the fund up and running and it's expected that inflation will peak in the next 12 months. It would be preferable for the first investments from the fund to occur after inflation is more under control. The timing may work naturally, but the government could consider linking the two to avoid fiscal policy working counter to monetary policy.
The government has stated that the board will be independent, but the ministers' power to appoint the board means the ministers potentially have significant power in relation to a significant discretionary sum of money. I will support the member for Mackellar's amendment, which aims to improve the transparency and accountability of the board. I hope that the board will have the skills and experience to make appropriate trade-offs between the seven priority areas and take a long-term view of the industries in which Australia is most likely to have a long-term competitive advantage.
Our economy depends on diversification into growing sectors and our world depends on meeting our emission reduction targets. I think there is potential to achieve both of these aims through this bill, and I encourage the government to consider the concerns I've raised, along with the outcome of the Senate inquiry, to ensure that the fund doesn't replace private investment, extend dying industries or industries where we have no competitive advantage, or exacerbate inflation.
Steve Georganas (Adelaide, Australian Labor Party) Share this | Link to this | Hansard source
I, too, rise in support of the National Reconstruction Fund Corporation Bill 2022, which will be driving transformation of Australian industry. Now, we know that driving that transformation of Australian industry is vital to reviving our ability as a nation to make and manufacture world-class products once again, and in South Australia, my home state, we understand this very well. We were a good manufacturing state. We had car plants where we could manufacture a motor vehicle from design—in other words, designing it on a piece of paper—right through to the showroom selling that actual vehicle. We were one of only 13 places in the world, 13 countries, that had those skills.
What we saw from the then government, those on the opposite side today, who had nine ministers in this area in nine years, was that it left Australia's manufacturing in tatters. And what a line-up it was! There was Macfarlane, Pyne, Sinodinos, Cash, Andrews, Porter, Taylor and, of course, Mr Morrison as well. They stood right here in this place and goaded General Motors-Holden out of Australia. Who could forget that speech by Joe Hockey, the then Treasurer, goading General Motors-Holden out of Australia! They just had absolutely no regard for those workers who were working in these manufacturing jobs in South Australia, where the loss of Holden cost us 30,000 manufacturing jobs. There were approximately 1,500 workers at GMH and another 30-odd thousand people working in smaller companies that manufactured products for General Motors-Holden.
The National Reconstruction Fund's investment decisions will be those of an independent body. For too long, while those opposite were in government, decisions were made in the interests of coalition held seats and of their mates, not in the interests of Australia. You will not see a single colour coded spreadsheet when this is up and running in Australia. And the irony is that the coalition is talking about inappropriate ministerial direction in regard to this thing; it is just bizarre to me. You would think that they would be supporting manufacturing. You would think that they would be supporting jobs—jobs in their areas, in regional areas, in rural areas, in outer suburbs, in cities—because that's what this bill is designed to do.
We know that for too long, when those opposite were in government, decisions were made not in the interests of Australia but in the interests of the coalition and their mates. Our focus is on renewing, revitalising and rebuilding Australia's manufacturing industry for all Australians: for small-business owners, for the regions, for jobs, for innovative technologies, for the people of Australia and their future. The opposition have a choice: to either vote for and support this bill and help create jobs and make this nation a manufacturing nation once again, or to not support jobs. That's the choice they have when this comes up for a vote later on today.
During the pandemic, we experienced firsthand the potential dangers of being a country that doesn't make things locally. All of us would have witnessed it in our electorates, when there were shortages of things on supermarkets shelves and products that we needed to manufacture. The demand on supply chains was huge. As I said, who could forget the empty supermarket shelves, the months waiting for deliveries and the shortage of construction materials, which is still felt today?
We have an abundance of natural resources, but we need to expand how we value-add to these products. For decades, we've mined our resources and shipped them overseas to other countries to process them and add value to them. We then import them back at many times the price we originally sold them for. This sends any potential manufacturing industry profits and thousands of jobs overseas. That's what we've done over the last 10 years. This is what we've seen. We need to keep businesses here. We need to value-add to products.
Australian know-how and our scientists and innovators are amongst the best in the world. As I said before, we were one of the only nations that could actually design a car and from that point go right through the process to actually producing it, adding to it and then selling it in the showroom. We were one of only 13 nations. So we have a proven track record. Another example is that we invented photovoltaic technology. Solar cells were invented here. But today, as we heard the member for Newcastle say, 87 per cent of the world's cells are made in one country. And in the next three years that number is expected to rise to 94 per cent. We need to change that, make more of those here and see more of that product being exported. We need to keep our people working in local industries, and we want Australians living overseas to come back home with their special technology. Of course, many young people leave Australia seeking support and funding for their ideas.
Those opposite like to talk about manufacturing, but the reality is that the manufacturing sector has been neglected for years under the former coalition government. Those opposite had, as I said, nine ministers. That is why this National Reconstruction Fund will be a total game changer, and that's why those opposite must support it. It sets aside $15 billion as a key platform to support, diversify and transform Australia's industry and create sustainable, well-paying jobs.
As a South Australian, in the history of South Australia we had two major motor vehicle producers. We had Mitsubishi, formerly Chrysler, and General Motors-Holden's. They produced vehicles and provided well-paid and secure jobs for thousands and thousands of people in South Australia. One of them was my father, who worked at General Motors-Holden's.
We're focusing this fund to drive investment in a number of priority areas. As I said, these areas include value-adding in: resources; the agriculture, forestry and fisheries sector; transport capabilities in transport manufacturing and supply chains, including for cars, trains and shipbuilding; and medical science, to take advantage of our world-leading research—we know we have world-leading research—to ensure we always have essential supplies such as medical devices, personal protective equipment, medicines and vaccines. The pandemic certainly taught us the importance of this.
Then I come to the priority area of renewables and low-emission technologies. This is an area that has been underinvested in in this country. Why is that? Because there was no certainty. We had a government—those sitting opposite now—that for nine years had so many different policies on climate change, on renewables and on low-emission technologies. No-one in their right mind would invest when there's no certainty. That's what we want to give investors. We want to give them certainty so we can become world leaders in renewable technologies, such as making components for wind turbines, batteries, solar panels and innovative packaging solutions to reduce waste—just to name a few things. There are many more.
The NRFC will also support our National Battery Strategy. It will send a very strong message to investors about our Australia's industry and battery supply chain capabilities. We know we're one of the world's places where lithium is mined and we want to value-add to that. That's what's required in batteries for electric vehicles. These are some of the areas that've got great potential for Australia. The other one is defence capability, so we can employ Australian workers, whether they be in technology, infrastructure or skills in another area that is very important to South Australia.
As I said, with those opposite for too long we were a government that made no decisions in this area. It was an area that was neglected and an area that shouldn't have been neglected. This government, this Albanese Labor government, is going to turn that around with this particular bill that will help manufacturing; will help innovative technologies; will invest in real jobs, secure jobs and jobs that pay well.
Tony Pasin (Barker, Liberal Party, Shadow Assistant Minister for Infrastructure and Transport) Share this | Link to this | Hansard source
The National Reconstruction Fund is ill considered and I fear will be poorly implemented. I'm here, very strongly, to provide my commentary and my view. I do that as the member for Barker. The House might not be aware, but in terms of manufacturing Barker is the electorate division in Australia that has more people employed in full-time employment in food manufacturing than any other electorate in this place. I'm not much of a pin-up boy, but when it comes to the grocery council of Australia I'm it—sometimes perhaps because I consume far too much of their product! The reality is food manufacturing is going gangbusters in Barker, or at least it has been. There are significant headwinds pressing up against the ability of Barker's manufacturers to take the opportunities that world-leading free trade agreements—established by the former coalition government—with some of the most populated and aspiring countries around the world. They are headwinds that are pushing back the opportunity not only for those manufacturers but for people working in those sectors. Importantly, from my perspective, and I know it's important to other people in this place, it's pushing back opportunities for primary producers who provide the raw product that goes into manufacturing facilities and comes out as some of the world's most valued food and fibre.
What are those headwinds? These are headwinds that this bill and this effort should be targeted towards, but in fact without addressing those headwinds this is a complete waste of time. Those headwinds that I speak of are labour shortages for the sector and energy costs. Not a month ago I came to this House with a really stark and particular example of what energy costs are doing to manufacturers in my electorate. Nippy's are fruit packers and fruit juice and otherwise drink producers in my electorate. It's a third generation family business. It's family owned. All of their product is Australian grown. They came to me alarmed that their energy bill was going to from at gargantuan $900,000 to $1.8 million. This is a relatively large business. It was going to increase by 92½ per cent. Imagine opening that email. Well, that's what Ben Knispel did in that business. Then imagine him having to take that email to his parents, Jeff and Tina, who have worked so hard in their lives to establish that business, and having to say, 'Mum and Dad, I've got some bad news for you.' 'What's that, son?' 'Well, the electricity bill is going up.' 'By how much?' 'By almost double.'
That's bad enough news for the Knispel family and for Nippy's, and for everyone who works in that business, like the citrus producers that provide the product that go into what I think—well, I know—is Australia's best fruit juice. But I'll tell you who it's really bad news for: the mum-and-dad consumers who are wheeling their trolleys down the aisle of Woolworths or Coles and who really want to buy that 100 per cent Aussie-grown fruit juice. Instead, as the price of that product necessarily increases because the cost of producing it in Australia increases, they look to cheap substitutes. Of course they would; they have to. I don't blame them for that, I get it. In this place we talk about the cost-of-living crisis, or the crunch. Well, the crunch occurs, item by item, as you walk down grocery aisles. When it comes to fresh fruit juice, the alternatives are cheap and nasty concentrates which have been rehydrated from foreign concentrates. But that's where we're pushing Australian manufacturers. We're pushing them to the wall because they're competing with jurisdictions that have cheaper costs for energy and cheaper costs for labour.
While I'm on the question of labour: the second thing that this government should be looking to address in this space is labour force shortages. A number of years ago I'd visit the odd employer who would say to me, 'Tony, we're having some difficulty accessing short-term labour.' It was often in fruit picking and the more difficult kind of work. I'm here to tell you, Mr Deputy Speaker Freelander—in fact, I don't need to tell you—that everyone in this House is having the same conversations I'm having, I am sure, with employers who speak variously politely and less politely—in my case, scream at me—about the need for more people in the labour market.
We're seeing two things occurring in my electorate, and I confirmed it with employers who were visiting Parliament House yesterday. There's a capital strike going on—that is, manufacturers are not investing in capital. That's not because they don't have capital, which I want to address in a minute in terms of the bill. They've got access to capital—there's no issue about that. But the reason there's a strike on is because they've got no confidence that, when they expend the capital and they expand their plant and equipment, they'll have the staff they need to undertake that manufacturing activity. That's why there's a capital strike.
To the extent that any of them are expending capital in my electorate at the moment, they're all doing so to substitute automation for labour. They're not doing that because it's cheaper, which is the rhetoric that you sometimes hear—not necessarily from those opposite, but in the civic square from other participants. They're doing it because they need to de-risk their businesses. They need to de-risk their businesses from the prospect of not having a workforce to be able to do this work. So, increasingly, when I visit manufacturing businesses in my electorate, nobody drives a forklift anymore. These are all automated vehicles. It looks a little bit like something off the set of Dr Who. But businesses are spending gargantuan sums of money to do that for no reason other than they've tried and tried to fill those roles. Instead, what they do is spend, as I said, gargantuan sums of money to automate those processes.
For those opposite, the priorities are all wrong here. This is a bill that effectively tries to incentivise, with capital, manufacturing development in our country. I'm pretty close to those manufacturers, and I can tell you that there's no shortage of capital for them. What there is is nervousness. That nervousness is born of the cost of energy and the uncertainty around our labour markets. Solve those problems first, before you try to pat yourself on the back in this place because you're standing up for Australian jobs and Australian manufacturers. With respect—and as someone who has a bit to say during question time, much to the frustration, I think, of the Speaker—if that were true, I wouldn't be able to easily barb the relevant minister about his paper. You'd think that the federal Minister for Industry and Science would be the first person to buy Aussie paper. But, because I'm able to barb him, it's a classic example of what's going on in this country.
You see, I and other members of this place have people come to us from time to time concerned about the prospect of various industries. There are two industries I'm desperately concerned about in the Australian business ecosystem—those that are involved with cement and aluminium. The Portland Aluminium smelter is in the member for Wannon's electorate, but it's effectively a pitching wedge from mine. There are many people who live in my electorate but work at that smelter. The risk we face with the agenda that's being pursued aggressively by those opposite is that those businesses—and there are literally a handful of smelters lefts in in this country—become unviable. What would then happen? Nobody in this place presumably anticipates that, as a result of that, Australians would consume or use less aluminium. That's not going to happen.
What's going to happen is that our ore will be put on boats; it will be shipped overseas; it will be processed into aluminium; and then it will come back to Australia, again on a boat, either as a finished product or as a refined product for manufacturing. That's a bad outcome for Australian manufacturing. It's a bad outcome for Aussie jobs. I'd suggest to you it's a really bad outcome for the environment. That's because, assuming, if I could for a moment—which I don't think we should—the environmental standards in the country that our manufacturing effort exports itself to are exactly the same as Australia's, which I think is unlikely, you've got the footprint of taking massive amounts of ore overseas, only to bring back the refined product. As I said, that presupposes that the environmental standards in other jurisdictions are equal to Australia's, which I think we can accept is unlikely to be the case. The more likely reality is that we would create a massive footprint shifting material OS and bringing it back, only to manufacture it in a jurisdiction that has less stringent regulations around environmental protocols, pollution, energy, carbon, carbon abatement et cetera. But that's what this aggressive agenda is doing.
On the one hand, you've got the minister for carbon reduction fighting for these outcomes, and on the other hand you've got the minister for industry saying, 'We're all about Aussie jobs.' I'm really struggling to draw the connection between the two. But it's not just me; it's Australian manufacturers, who feel like they're on an extinction pathway. Trust me. I speak to them all the time, and they say, 'Tony, it's getting harder and harder.' You see, I don't want that to be the future of Australian manufacturing. Those opposite are fond of saying, 'The car industry is not here anymore; Australian manufacturing is dead; we don't make things anymore.' Rubbish! Like I said, there are more people employed in food and fibre manufacturing in my electorate than in any other division and it is the No. 1 cohort of employers. We manufacture all sorts of products that the world is desperate for: proteins, milk products, wood, wine.
What we need is a government that understands what the headwinds are and doesn't come up with a shiny new thing that they can market in a retail political space saying, 'Look at us. We want to be the government that makes things again.' Please! Provide the settings that business needs to get ahead. Back manufacturers in.
The first thing you could do is say, 'We're going to take an agnostic approach to energy generation in this country.' What we've got to do is find the cheapest form of energy generation now, in the medium term and in the long term. Before those opposite say, 'That's renewables'—it may well be in the long term, but right now without baseload renewables, it's not. And solve the issue around labour shortages, please, but not by a lottery that allows those Pacific Islanders who win the lottery to leave their homes. Solve those two problems before you rush in here with this shiny product and ask me to vote for it.
Julian Hill (Bruce, Australian Labor Party) Share this | Link to this | Hansard source
We were just treated to another in the series of bizarre contributions from those opposite. Using a reasonable voice can't cover up the abject nonsense which is being spouted by those opposite. They're talking down Australian manufacturing saying, 'It is terrible. It's stuffed. There are no workers. Energy prices are out of control.' We even heard, from the previous speaker, that manufacturing in Australia is now 'on an extinction pathway.'
It's like they forget they were the government for the last nine years. It hasn't all changed overnight. The people opposite were the government of the country, through the last decade of dysfunction, dithering, delay and decay. They're responsible for the situation we're in. I'll just remind the speakers still to come: maybe try taking some responsibility and have a look at your own record as you talk about the situation the country's in.
We had eight industry ministers—actually, we had nine. We only had eight that the Australian people knew about and the ninth, of course, was Scott Morrison, who was the secret industry minister when he was also Prime Minister. So that's nine industry ministers in nine years. Apparently, it's Labor's fault that they made such a mess. There's a joke in my community: 'How do you know there's an election on? The Liberals turn up at a mosque.' It's a little bit like what we're hearing here. How do you know the election's over? The Liberals start to care and talk about Australian manufacturing. It is pathetic.
If COVID taught our country anything, it's about disruption to supply chains. If Russia's illegal war in Ukraine taught us anything, it's about the need to manufacture the consumables of war and conflict. If history and common sense teach our nation anything, then it is the critical importance of urgently boosting our sovereign manufacturing capability. The government says, as we're mocked, 'We need to make more things here.' We can make more things here. We should make more things here and we must make more things here.
As the Prime Minister has been saying, before the election and since, we need 'a future made in Australia.' That's what our suite of policies, together, are about. And the National Reconstruction Fund, the $15 billion fund, which is the subject of the National Reconstruction Fund Corporation Bill, is a critical part of that. We have a mandate. We announced it, we released it before the election, and it was carefully designed with industry to respond to actual issues out there in the economy. And yet, those opposite say they're going to vote against it. I encourage them to reconsider their position. To the Greens political party: don't join with the Liberals. Back Australian manufacturing; it's now urgent.
It's got two big goals: to transform industry—bringing new technology and critical sectors—and to create more secure, well-paid jobs, which are so important in my community in south-east Melbourne, covering part of the great south-east metropolitan manufacturing precinct stretching through Dandenong and Hallam. It's the largest single employment sector in that region. It really frustrates me when we hear the common media narrative talking down Australian manufacturing. That said, there are a few home truths. We'll never make everything here. We're a country of 25 million people in a globally connected interdependent world of complex supply chains; we can't make everything here. Of course we have to work with the rest of the world but we need to do much better. If you look at the stats, we are now around the lowest for manufacturing self-sufficiency of any developed country in the world. It is the record we have inherited from the former government that they do not want to own, don't want to talk about. They want to use a reasonable voice so people forget that they were the government responsible for this. That is what we hear. It is all doom and gloom. We heard the former Speaker say, 'My businesses yell at me, 'We are on a path to extinction.' Well, I tell you what you can do if energy prices are such a big deal. You could have voted for the government's energy price relief plan. We recalled parliament in December to cap gas prices to give immediate relief to manufacturers, and what did those opposite do? They voted against it. And what did they do before the election? They changed the law to cover up—I would say 'lie', but we are in the parliament, so I can't say 'lie'—the power price rises that were coming down the pipeline which consumers and businesses are now suffering from. But instead of working with the government to clean up the mess, they voted against it. They voted against power price relief, just as they say they are going to vote against support for manufacturing.
We are also too low in economic complexity, which is a nerdy measure that economists use to look at how complex our economy is. Can we make a wide diversity of goods, particularly high-value complex goods? Japan is at the top of that list. A few years ago we slipped to 87th out of the 133 countries measured and it went down over the decade this mob were in office compared to the previous decade. It is now urgent that this bill passes after a decade of neglect and drift. Those opposite chased the car industry out of Australia. Right here in the parliament, from the government benches, Joe Hockey and Tony Abbott were daring them to leave and guess what?—they left.
Those opposite played politics with grants. The former prime minister made himself the chief decider in the modern manufacturing grants. He was going to make all the decisions. At least that was honest. It was not the series of coloured spreadsheets and dodgy stuff that the Auditor-General found in all the other grants programs. At least he owned it—well done. We have an inquiry into that, and some public hearings on Friday. We will see what went on. As I said, there were eight industry ministers. We will name the rogues' gallery: McFarlane, Pyne, Hunt, Sinodinos, Cash, Andrews—she's still here—Porter, Taylor and Morrison—he is sort of sometimes here. But despite their wasted decade, the $1 trillion in Liberal debt, all the mess, they have learnt to nothing. They are still here in their reasonable voice talking down Australian manufacturing instead of working with the government in the national interest. In voting for the bill to urgently revitalise manufacturing, they say 'no, no, no'. I think we are not allowed to call them the no-alition in here at the moment. It is one of those grey areas. We will stay away from that but we do it outside, though.
Mike Freelander (Macarthur, Australian Labor Party) Share this | Link to this | Hansard source
I think that is right.
Julian Hill (Bruce, Australian Labor Party) Share this | Link to this | Hansard source
Yes, okay, I've got that. I am going to quote myself. Mayor Quimby from The Simpsons used to quote himself, so I will be that guy for a moment. In my first speech to this parliament, I talked about the future of Australian manufacturing and said: 'If we are going to succeed, the story of manufacturing has to be like, will be like, the story of agriculture over 100 years. We will see greater investment in technology, more mechanisation.' We want to climb the value chain, value-add to our natural resources, the raw products. It will mean higher skilled jobs, higher wage jobs but fewer jobs overall, more productivity. That is the future we want to chase—high wage, secure, good, well-paid, skilled jobs.
We can't compete with the low-wage countries. That is not where we want to go. We want to climb that value chain across the globe. That is future success and that is exactly what this bill is about. It will provide finance, including loans, guarantees and equity to drive investments in seven priority areas in Australian manufacturing. It will be loans, guarantees and equity, not grants, modelled on the very successful Clean Energy Finance Corporation, an initiative of the former Rudd-Gillard government. Oh, it was Tony Abbott's mob actually, wasn't it, who tried to get rid of the Clean Energy Finance Corporation? Thank goodness they could not get through the Senate because it is still there today and it has made record investments into clean energy, stimulated new investments in new technology and has gone some way—one of the few things that was working under that mob—to lowering our emissions.
The seven priority areas include: value adding to resources; value adding in the agriculture, forestry and fisheries sectors; unlocking potential and value-adding to raw materials like food processing, textiles, clothing, food manufacturing; developing capabilities in transport manufacturing and supply chains—cars, trains, shipbuilding are all important in so many other states and territories; medical science—leveraging our world-leading research. You know about this, Deputy Speaker Freelander, from your life as a renowned medical specialist, teacher and researcher. It is about providing essential supplies such as medical devices, PPE, medicines and vaccines. We can say 'PPE' post the pandemic, and people know what it is because we learned as a country that we need to make that stuff here and not rely on other countries when a crisis happens. We're too vulnerable to supply shocks. We're too vulnerable, frankly, to military blockades should the worst happen, because we don't make enough basic stuff here. It's urgent.
On renewables and low-emission technologies, we almost got an admission from the former speaker in his reasonable voice. He almost admitted that renewable energy might be the cheapest form of new power. We will take that as a baby step forward from the nuclear brigade over there. We might get two steps backwards today as they go on their nuclear tour of world disaster sites with Uncle Ted over there and his home-made videos.
Defence capability is so important—a lesson from Ukraine. You've got to make the consumables of war. You've got to be able, at the very least, to maintain, repair and sustain the platforms and capabilities that you do have—you can't make all the big, new, shiny stuff here—and all the enabling capabilities such as engineering, data science, software development, artificial intelligence, robotics and quantum.
So get with the program. I say to the opposition: have a serious look at the challenges we face and back this. Maybe they object to the fact that it's not a slush fund. Whenever they hear 'fund', their little eyes light up from their time in government. 'Oh, how can we rort this? How can we distribute this to all the Liberal marginal seats? We did a good job with the congestion fund, didn't we?' Apparently, congestion only happens in Liberal electorates. That's why you put 83 per cent of the congestion fund into Liberal-held electorates. Maybe that's the issue: they're worried that Labor will fairly distribute this. Well, they're not going to be decisions made by politicians. They will be made by an independent board. You could learn from that.
In closing, I say to the opposition and the Greens: get with the program. Back Australian manufacturing. I say in particular to the Greens political party: don't vote with the Liberals all the time. Don't team up with the Liberals. Back Australian manufacturing and support this bill.
Andrew Willcox (Dawson, Liberal National Party) Share this | Link to this | Hansard source
I rise today to speak on the National Reconstruction Fund Corporation Bill 2022. Just like with the Albanese Government's radical industrial relations agenda, Prime Minister Albanese is going to rush this bill through, sidestepping parliamentary scrutiny and avoiding appropriate consultation with industry.
The coalition's Modern Manufacturing Strategy was delivering for our manufacturers. In Dawson, manufacturing champions such as CQ Field Mining Services were successful in a grant through round 2 of the Modern Manufacturing Fund to transform the met services for our future growth. Mackay business conveyor specialist Diacon Australia was another local organisation successful in round 1 of the Modern Manufacturing Fund. Businesses like CQ Field Mining Services and Diacon applied for funding through the Modern Manufacturing Fund. This fund was administered professionally through a structure of competitive grants with robust processes.
By scrapping the Modern Manufacturing Fund and replacing it with the National Reconstruction Fund, this government will make it more difficult for smaller manufacturers to access. The process outlined appears to be far more complicated and laborious. We are also being told by this no-plan government that this fund should be up and running by next financial year, but they haven't committed to a launch date yet. Industry leaders have told us this type of funding model takes years to get right and the government has chosen to redirect the modern manufacturing initiative funds without even having rolled out their own National Reconstruction Fund. This has left out manufacturing industries in the lurch without certainty.
I don't get it. This is like bulldozing your house down before you build a new one. You will have nowhere to live. The government clearly has no understanding that these delays will damage and likely cancel the businesses that they have in the pipeline.
What this means is years of work from the coalition have been lost. It begs the question: who is the National Reconstruction Fund delivering for? Is it delivering for our struggling Australian manufacturers? Or is it delivering for the Labor Party and their union mates? I find it hard to believe it's for our Australian manufacturers when this bill will put in place a Labor hand-picked board to oversee $15 billion of taxpayer funds. The unions have already demanded a third of the positions on this board. This bill gives the minister inappropriate discretions, all while the Albanese Labor government promises the Australian people and transparency. Another ridiculous union demand is that the applicants must commit to direct employment and, if the contractors or indirect workforce is used, they must be employed on at the same condition as a direct workforce. This, essentially, enshrines compulsory unionism to be a successful applicant—very tricky indeed!
While manufacturers across the country struggle with rising power prices, Labor's focus is making it more difficult for industries to employ and keep workers and, in turn, grow their businesses, because the Albanese government's budget took active steps to spitefully wipe out key features of the coalition's industry policy. The first step for increasing manufacturing in Australia is to have affordable and reliable energy. Unfortunately, under Labor's watch, electricity and gas prices are going through the roof, and the renewable pipedream is creating uncertainty due to lack of reliability.
Another important requirement for manufacturing businesses is the cost of finance. Under the Albanese Labor government, we've seen interest rates go sky high. And, speaking of sky high, the Albanese Labor government has scrapped the space industry as a priority. This is a reckless decision. Investment into the space industry can and will yield many benefits. Space and manufacturing go hand in hand, and by backing this space Australia can deliver an entirely new space supply chain. It is important that we have total control of the development and building of our satellites to be assured there is no risk of foreign eyes receiving our intel. The satellites that we build and own can enhance our military and defence capability. With the current geopolitical tensions, it has never been more important to have our eyes on the seas. While I talk about eyes on the seas, locally built satellites can provide monitoring for illegal fishing, coastal surveillance and early detection on foreign boats coming to our shores. Space technology for propulsion can be used for missiles and high-tech weapons to further protect our country. But everyone knows Labor is weak on border protection and soft on defence.
The coalition supported funding to companies like Gilmour Space to locally develop, manufacture and deploy satellites into low-space orbit. Gilmour Space is a pioneer new space company and a leading, venture-backed manufacturer of launch vehicles and satellite platforms in Australia. While Gilmour Space's manufacturing hub is based on the Gold Coast, its launching centre is in my home town of Bowen, smack bang in the middle of my electorate of Dawson. Bowen is uniquely located 20 degrees south of the equator. This is the ideal place to launch a rocket and put satellites into space. These innovative guys tend to launch the Eris rocket into space later this year. If successful, it will be Australia's first homegrown orbital space craft. Under the coalition modern manufacturing fund, Gilmour Space was awarded $52 million to develop sovereign space capabilities in Australia. The satellites Gilmour Space intend to deploy will enhance and enable earth observation, fire detection and enhanced navigation. They will be there for agricultural opportunities. There is also the potential for manned flights and for deeper space missions in the future.
On the back of this comes a tourism component. The Gilmore Space launch is a growing tourist attraction. Bowen could be Australia's next Cape Canaveral, with tens of thousands of people flocking to watch the launch. But let's not stop there. We could have a visitors interpretive centre and a simulator for those who've always dreamed of reaching the stars or walking on the moon.
The space sector will create thousands of jobs, from engineers working on the development of these rockets to tour guides handing out tickets at the launch viewing platform. The possibilities are out of this world. But, alas, the coalition's progressive and forward thinking has been completely wiped out by the Albanese government's scrapping of the space industry as a policy priority. This is short-sighted, and takes major manufacturing opportunities away from all Australians, not just the people in my electorate.
I'm also very concerned about the decision to scrap food and beverage manufacturing as a standalone priority for Australian industry. The coalition laid out an ambitious plan to double the value of the industry by 2030. The Prime Minister said at the last election he would leave no-one behind. What a joke! He is leaving whole industries behind. Changing these priorities leaves investment decisions in limbo. Decisions like these from the Albanese government, when paired with other cuts and pillaging from our regions, make it clear to me that Labor just don't care where their food comes from, and Labor certainly don't care if the country ends up with food shortages. Maybe when this government starts to feel hungry, it might realise that this is bad governing. But I fear it might be a case of too little, too late.
Since coming to government, the Albanese government has been on a go-slow, wasting time for our manufacturers with countless reviews, cuts to coalition programs and finger-pointing. It needs to start acting like a government. The Albanese Labor government is not in opposition any more; it is in control. It needs to take control and work for all Australians. As surging costs continue to cripple our manufacturers, the challenges presented by rising energy bills, workforce shortages and disrupted supply chains smash small businesses. The Albanese government remains focused on a union backed agenda. Instead of pleasing its union buddies, the Albanese government must address rising energy prices, increased gas costs, increased finance costs and labour shortages. This is the only way manufacturing can succeed in this country.
It is vital that government supports Australian manufacturing, and with this bill the Albanese government is, clearly and sadly, leaving our manufacturing industry behind. Ten months in, the manufacturing industry can certainly say with confidence that life isn't easy under Mr Albanese.
Tony Zappia (Makin, Australian Labor Party) Share this | Link to this | Hansard source
This legislation, the National Reconstruction Fund Corporation Bill 2022, is about nation building, economic security, national security and job security. But, most importantly, it's about reducing Australia's reliance on other countries. COVID exposed the vulnerabilities and extreme risks that arise when nations become too dependent on global markets and just-in-time imports. For Australia, as an island nation, the risks of reliance on overseas imports, overseas markets and overseas services, including overseas call centres, are even greater than they are for most other countries.
Cutting Australia off from the rest of the world right now would cripple Australia. As an example, 90 per cent of our petroleum fuel comes from overseas. Only a few months ago, the AdBlue crisis almost brought Australia's trucking industry to a standstill. That would have also crippled the nation. It was only because of the $29 million government investment in the Incitec Pivot plant in Queensland that we were able to get through—again highlighting that the very problem we faced could have been resolved, were we manufacturing much more here in Australia. We have the capability to do so and we have the industry able to do it.
So many of Australia's essential goods and services which are currently sourced from overseas could easily be manufactured, or at least provided in part, within Australia. Certainly, if a crisis did then arise we would at least be able to get through it. The ability to make things in Australia will bring peace of mind to Australians, create economic growth, encourage innovation and increase export opportunities. As, quite rightly, highlighted by other speakers, this legislation will support investments in seven key areas of Australian industry through loans, equities and guarantees. Those seven key areas are: renewables and low-emissions technology; medical science; transport; agriculture—where, again, we could add so much value; forestry and fishing; resources; and defence capabilities. In particular, we already have a very strong defence manufacturing sector here in Australia. It has proven that it can compete with the rest of the world, and so we should do everything we can to support growing that sector. It is much better to have our products made here in Australia than to be reliant on other countries for them.
Australia not only has the natural resources which we can add value to by turning into finished products but, through the CSIRO; our universities; our existing defence industries, which I mentioned just a moment ago; our medical sciences sector; and so many other research institutions, Australia has significant world-leading research and development capabilities. Yet too many Australian ideas and human expertise are lost to overseas countries. Across the world, the leading economies all have strong manufacturing sectors. In China, manufacturing accounts for 39 per cent of their GDP; in Ireland it's around 35 per cent; Japan and Germany sit at around 20 per cent; and in Russia it's now 14 per cent. In the USA and the UK, where it has fallen to 12 and 10 per cent respectively, both governments have committed to rebuild their manufacturing base. Both countries see the importance of having a strong manufacturing centre and have made it a national priority for their countries.
In Australia, sadly, manufacturing has plummeted to a paltry 5½ per cent of GDP, after having reached a high of around 30 per cent half a century ago. From 30 per cent we're down to just over five per cent. This highlights not only the foolishness of how we allowed manufacturing to slide in this country but also that we were able to manufacture so well in times gone past. In fact, in the post-World War II years, state and federal governments on both sides of politics drove a manufacturing agenda by investing in manufacturing, investing in skills training and boosting the manufacturing workforce through immigration. They focused on a manufacturing nation, and did so by making those appropriate investments.
In South Australia, where I come from, the Liberal Playford government of the day grew the state by investing in manufacturing, particularly in Adelaide's northern suburbs. The satellite city of Elizabeth was established as a centre of manufacturing, including being home to the iconic General Motors Holden plant, which we talk about so often in this place. South Australia's economy grew on the back of manufacturing. Sadly, in 2013, the now opposition drove GMH out of South Australia, out of Australia, and then spent a decade dithering over submarines. No decision was ever finalised in their time in government, after nine years. Both of those actions did widespread harm to South Australia's manufacturing sector, where industries could no longer survive as a result of the lost contracts, and therefore the skilled workforce was also gradually lost to South Australia.
With advanced technology in use today, the argument that Australia cannot compete with overseas cheap labour is simply no longer credible. As I pointed out, countries like Germany, Japan, Ireland and other European countries are all proof of that, because they have strong manufacturing sectors. In my own electorate, only a few weeks ago, Tindo Solar, which was established in 2011—so it's been there for over a decade now and is Australia's only solar panel manufacturer—opened its new plant in Mawson Lakes. It's growing and it's competing in one of the most competitive areas of manufacturing, and it's doing it in Mawson Lakes in Australia with Australian conditions.
The reality is that manufacturing adds to the country in so many ways, and I want to highlight this particular point: there's another very important reason why rebuilding Australian manufacturing is so important. Not everyone has the opportunity or the desire to go to university, but those people still need a secure job. Manufacturing industries offer employment opportunities to everyone, including new arrivals with little education and limited language skills or those people who, for whatever reason, never ended up with a university degree. They are people who, over the course of their employment, not only find security but learn new skills, make friends and build their own self-confidence.
In summing up, I've listened to the debate of members opposite, and they're clearly all talking from the same talking points because you see the same irrelevant arguments being put up. It truly is bewildering that they are not supporting this legislation. The reality is that in recent times coalition governments have not backed manufacturing in this country at all, and, in not doing so, it is actually a betrayal of what the Australian people want and expect governments to do. I suspect the truth of the matter is that they don't want the Australian economy to grow over the next few years because that would be a tick for the Albanese Labor government. They want the Albanese Labor government to fail and therefore they are trying to block legislation which they know is in the national interest and which will be a feather in the cap of whichever government was to promote a rebuilding of Australian manufacturing.
Regrettably, what they are really doing is putting their political interests ahead of the national interest, and they should hang their head in shame for doing that. Those members opposite who come into the House and argue against this legislation should think carefully about what they are actually doing. Ultimately, what they are doing is betraying the will of the Australian people, who I know want us to rebuild a manufacturing base in Australia. This legislation begins that task, and I commend it to the House.
Rebekha Sharkie (Mayo, Centre Alliance) Share this | Link to this | Hansard source
I rise to speak in support of the National Reconstruction Fund Corporation Bill 2022. This bill seeks increased inflows of finance into the Australian economy by financing businesses, state and territory governments and other entities through concessional loans, equity guarantees and a wide range of other financial instruments. The expenditure is significant and restricted to government priority areas—a total of $15 billion, in fact, to be expended by July 2029. Government investment in areas prioritised by the government of the day is not new, nor is it necessarily bad; however, any government expenditure should have a very robust framework that provides the community with confidence that the money will be invested wisely. It is, after all, an investment that belongs to all Australians.
As a political centrist, I believe it is appropriate and important for targeting government investment, particularly where there is a market failure that warrants intervention and where the objectives of government require market stimulus to achieve a stated aim. This approach is not controversial. It forms the basis for the activities of most governments in contemporary Western democracies. It is in this context that I will raise concerns I have with the bill but also outline my qualified support.
The National Reconstruction Fund Corporation to be established under the bill will be the entity responsible for the fund—all good so far. The corporation will direct the flow of finance to priority areas identified by the government. Here is my first concern: the bill does not identify what these priority areas are, nor does it allow, through a disallowable instrument, a mechanism for the parliament to question or challenge these priority areas. This leaves us to support a bill that will in essence give the government a $15 billion chequebook for directing Australian taxpayers' money to projects at its will.
Ministers have announced that the fund will provide up to $3 billion for renewable energy and low-emissions technologies, $1.5 billion for medical manufacturing, $1 billion for value-adding in resources, $1 billion for critical technologies, $1 billion for advanced manufacturing and $500 million for value-adding in agriculture, forestry, fisheries, food and fibre. These may well be appropriate investments; however, this grab bag of headline investments is merely a media announcement. There is no detail and no broader policy strategy; nor is there any investment analysis. The second reading speech of the Minister for Industry and Science did identify seven priority areas. However, this is simply an indication; it's not legislation. The bill in its current form gives the government unlimited discretion to set and reset priority areas and the investment mandate. We often refer to policy as 'not passing the pub test'. Well, I'm confident that if I went into any pub in my electorate and asked the locals in the front bar if they thought it would be a good idea to give the government $15 billion to spend without identifying what they were going to spend it on, without even identifying a priority area, their answer would be a resounding no—and that would be a polite response!
The Parliamentary Budget Office noted that conventional budget reporting makes it complicated to evaluate the fiscal risk and impacts of equity investments as proposed in this bill. Again, if I went back to my locals in the front bar and said, 'In addition to giving them the $15 billion, it's going to be difficult to assess the physical impact, the potential risk or even whether projects will require private investment,' I think the polite response I referred to would quickly change to something quite animated.
It doesn't stop there, Mr Deputy Speaker. These are some other concerns I have. The Australian Council of Trade Unions has called on the minister to appoint union officials to the fund's board. The Australian Industry Group's Chief Executive, Innes Willox, has publicly relayed his concerns, referring to the request as 'union overreach' and saying:
Any compulsion for funding to go to unionised workplaces or those who agree to roll over on union demands is discriminatory and would see businesses who would otherwise consider involvement instead simply walk away.
The Australian Manufacturing Workers Union is a little more bolshie, in wanting a secure jobs code that would include an 'enterprise agreement with unions as a precondition of tender'. In its submission to the Senate Economics Legislation Committee it stated:
In the case of start-ups, we may consider that an MOU to enter into an agreement as part of the tender process, but the agreement must be finalised prior to award of tender.
I fear the discussion in the front bar would now be resembling a full-fledged melee—and I'll come back to that.
Australians are experiencing high inflation, a high cost of living, difficulty in purchasing a house, and, for some, difficulty in finding a place to live. Employers can't find staff, and this is particularly problematic in our regions. In response to COVID-19 we overstimulated the economy and created debt not experienced outside of wartime eras. Australian government securities are around 45 per cent of GDP, and that is not expected to fall until after 2026 at least. In dollar terms, gross debt is forecast to increase to more than a trillion dollars in 2023-24, reaching a peak over the forward estimates of $1.193 trillion. These are truly staggering numbers. We've never gotten to a trillion before.
Some will argue that debt is okay, offering advice that our interest on securities remains low, so why worry? This won't always be the case. Indeed, interest rates on Australian government debt have already started to rise. That was last year in 2022, and we've seen that continue this year. Interest payments will increase over time as new debt is issued at higher rates and existing debt that was issued at historically low rates matures and needs to be refinanced. The Institute of Public Affairs cites that a worst-case scenario, where interest rates are at six per cent instead of four per cent, based on Treasury forecasts in the budget, would result in an interest rate bill of $64.1 billion from 2023 to 2031. That would make interest payments the third-largest expenditure item, behind health and income support for seniors, and would represent about 7.5 per cent of the Commonwealth budget. That is an extraordinary amount of money that needs to be found, that needs to be paid year on year and that takes money away from other needed spending.
In their report, Selling Australia's Future, the Institute of Public Affairs argues that, by increasing debt today, the government is effectively borrowing from the wealth of future generations to pay for current expenditure, concluding that all Australians should be concerned with the high level of government debt. It is them, their children and their grandchildren who will be paying for it. High levels of debt also place the country in a vulnerable position, with little capacity to absorb or respond to future shocks. Perhaps there will be another pandemic in a few years. Who knows? We just don't know, but we're not addressing that at the moment, and I think we would be in quite a precarious position if we needed to go through the spending that we've done in the last three years again in the near future. Given our high levels of debt and the associated risk, we must ask ourselves: 'Can we afford this debt?'
I mentioned earlier that government expenditure and investment in the right circumstances is appropriate and necessary. We know that government investment can grow our productive capacity. However, we also know that the government—and it doesn't matter who's in government—doesn't necessarily have a good track record of picking the right investment. It is this issue that concerns me perhaps the most. There is no doubt that investment in the areas that the minister referred to in his second reading speech, such as renewables, low-emissions technologies and medical manufacturing, among others, is important. But, as mentioned, they are not identified as priority areas in the bill. There are still too many unanswered questions, and these answers are so important for the aforementioned pub debate and for my support.
Australians need assurances that this bill won't simply give unbridled power to the government to pick investment sectors, individual businesses and projects without public scrutiny. We need the government to publicly dismiss the demands of the unions, who are pushing to exploit the funds for their own vested purposes. We need clarity on the fiscal risks and how government will approach financial analysis and due diligence for each and every investment. It's also incumbent on the government to ensure any investment provides economic and productive returns that are measurable and meaningful. Finally, the government must consider the inflationary impacts of increasing the flow of money into the economy and proceed in a manner that doesn't add to the existing inflation pressures that are now hurting so many Australians.
Mr Deputy Speaker Goodenough, you may ask, after me giving that speech, why I'm supporting this bill. I'm supporting this bill because we used to be a nation that made things, and we're no longer a nation that makes things. I'm the daughter of a factory worker. The member for Makin, who spoke before me, spoke about Holden and how he made cars in South Australia. Holden was one of a number of car manufacturers in South Australia. My dad worked at Mitsubishi. It provided a good, solid wage. It paid the bills and kept us in a house.
We don't have the manufacturing that we had, and it has gone in one generation. When I was in my final years of school, we were visiting Mitsubishi. We visited the Kelvinator factory. We used to make fridges in South Australia too, and we used to make glasses. We used to make so much, and we have allowed our manufacturing capacity and capabilities as a nation to significantly diminish in just one generation. That's why I'm supporting this bill—because we need to be making things again. If COVID has taught us anything, it is that manufacturing, national sovereignty and security are intrinsically linked.
This bill provides a significant opportunity to improve Australia's economic complexity, broaden our manufacturing capability and take advantage of our abundant natural resources, without continuing to treat Australia like a sandpit, which is what we've effectively been doing for the last 30 years. However, without the insurances sought, I do remain concerned that such a large investment may yet become another squandered opportunity.
Kate Thwaites (Jagajaga, Australian Labor Party) Share this | Link to this | Hansard source
The National Reconstruction Fund Corporation Bill 2022 is a big step forward, both for manufacturing and for jobs in our country. The opportunities that are presented by the National Reconstruction Fund have the potential to shape the future of Australian industry. While some in this country—and that does include those opposite—gave up on Australia having a future in manufacturing and our industrial capability, this government has not.
We know that Australia can be a country that makes things once again. We can have a bright future as a country that makes world-class products right here. We can secure our own future by supporting, diversifying and transforming industry and creating secure, well-paid, good, sustainable jobs not only for those people who are working now but also for those who will enter the workforce in the future. This is such an exciting opportunity, and this government knows that the future ahead of our country is one where we make things here in Australia.
We've seen in the past that funds similar to this can have a big impact. We've seen the value that comes from having a body like the Clean Energy Finance Corporation for the climate and energy sectors. This $15 billion National Reconstruction Fund Corporation will do the same work for manufacturing in our country. It is the biggest government investment in manufacturing in living memory. It is so important that this government gets behind and backs Australian manufacturing and Australian industry.
Importantly, it will have an independent board to assess projects at arm's length from government; to provide equity, loans and guarantees; to back in Australian businesses and our knowledge base and our people; and to see returns on investment in the longer term to allow for reinvestment—and so on and so on. What we are starting here is something that will provide a legacy for Australians to come and a legacy for Australian manufacturing and industry to come. Throughout this period, it will be creating secure, well-paid jobs.
Our country learnt a lot of lessons through the recent pandemic, and some of those lessons are very pertinent to what is trying to be achieved through this fund and this bill. We did learn that our supply chains have vulnerabilities. We cannot entirely rely on things being able to be manufactured, things that we need in our country for the safety of people in this country, and know that we will always have access to those things. We learnt that we need to become stronger and more self-sufficient in many areas and that we do, in fact, have the domestic capability in our country to not only support ourselves but also sell that capability to the world. That's the future that's in front of us—that ability to not only support people and industry and manufacturing here but also be a place where people around the world come to Australia looking for those products, looking for that knowledge and looking for that manufacturing base.
The National Reconstruction Fund will help us achieve all of this. The fund will provide capital to capture new high-value market opportunities, and it means that, when capital markets tighten, it will provide those longer term co-investment funds for industries and investors that are so important. It will drive Australia's sustainable economic growth, and with that it will drive jobs—good jobs. It will enable Australian companies to plan ahead—to know that they can make these investments that mean that they will be here for the long-term, and to consider the long-term projects that help with innovation and adapting new technologies. It is a really exciting future ahead of us.
Our government wants to turn back the years of neglect we saw under the coalition government. We know that they left Australia's manufacturing industry in tatters. We felt the effects of that during the pandemic. Those opposite baited the Australian car industry to leave our shores, and, guess what? They took up the invitation. They're gone. I hear from manufacturers in my electorate about the flow-on impacts of that decision, not just for those who were directly involved in manufacturing those cars but for all the small enterprises who were supplying parts. There is the lack of knowledge now that we have in our country from that entire industry going, because those opposite told them they were welcome to shut up and leave and failed to support Australian manufacturing.
When those opposite did made decisions, it was not in the interests of Australians. It was them backing in selected supporters who they chose to throw their weight behind. Under their watch, we have seen far too many good ideas that were grown right here in Australia, and that should have been Australian products and Australian ideas, leave. That's because they couldn't get the support they should have got from the Australian government at the time.
Things are going to be different under this government. By letting the opportunities go, the previous government, the Liberal-National government, let go more jobs. They let go the industries we should have in this country—the jobs, the knowledge, the skills. They let go Australians with bright ideas who just needed support, government investment and surety to make a go of it.
This government wants Australian manufacturing to come home. We want the people who want to work in Australian manufacturing, who want to bring their knowledge and skills to Australian manufacturing and industry, to come home. We want them and we want budding innovators here to know that Australia not only welcomes them and their ideas but is going to support them. We're going to back them in. We will empower the National Reconstruction Fund to invest in Australians and in their experience and knowledge. Through the fund, our government wants to make the most of Australia's strengths. We want to back-in industries that we know are important, both now and in the future.
Importantly, that does include renewables and low-emissions technologies. This is a massive area of potential growth for our country. We can, indeed, be a clean-energy superpower, and that comes with government backing this industry. Up to $3 billion of the National Reconstruction Fund will be set aside for targeted investment and for opportunities like wind turbine components, the production of batteries and solar panels, new livestock feed to reduce methane emissions, modernising steel and aluminium, finding solutions to reduce packaging waste and developing ways to make food that is low in impact and high in nutrition. These are products that are ideal for exporting. There is a lot of potential for our country in this space.
Australia is already a world leader in medical research, but, again, there is more than we could be doing. Another of the funds targets will be leveraging this expertise to provide essential medical supplies like medical devices, personal protective equipment, medicines and vaccines. We will value-adding in the agriculture, forestry and fisheries sectors, unlocking our country's potential in food processing, textiles, clothing and footwear manufacturing. We will be backing in transport manufacturing, developing capabilities and supply chains for cars, trains and shipbuilding.
My electorate of Jagajaga is not concentrated with manufacturing, but we do have some strong local manufacturers based there. I know from talking to them over the years that they are looking for government to back Australian industry and Australian manufacturing. In Heidelberg West, we have a precinct of 600 businesses, including manufacturing, warehousing and commercial businesses, as well as growing technology production and related services. The backing the government is giving in this fund will support my business community in Heidelberg West to do what they are already doing well, but they need government support to go even further. There a companies like Leeson Solar, who are absolutely passionate about the growing uptake of solar for homes and businesses, and who are breaking the mould when it comes to the solar industry and the directions it can take in this country. I'm excited about what this fund might mean for them. And outside of that immediate precinct in Heidelberg West, across the electorate, I'm excited about what this fund might mean for companies like Lovitt Technologies in Greensborough, who are already doing great work in precision engineering and in the aerospace industry. These are the companies that governments should be backing in and that governments should be supporting. I'm so proud that this Labor government is doing exactly that.
The National Reconstruction Fund will supercharge the opportunities for Australian manufacturing. It will be supporting Australian businesses and Australian workers. There's so much potential here in Australia. It is up to us to harness that potential. It's up to us to grow our ability to make world-class products right here, to bring out the best of Australian expertise and ideas and to allow for investment that delivers good, long-term, secure jobs for Australians now and into the future. This government will not be goading industries to leave. We will be backing in Australian manufacturing and Australian industry and we know that this means a brighter future for all Australians.
Rowan Ramsey (Grey, Liberal Party) Share this | Link to this | Hansard source
Before I begin on the content of the bill, I might advise the member for Jagajaga to have a look at when Ford Australia and Mitsubishi Australia decided to pack up and leave the car manufacturing industry in this country, because it certainly wasn't under a coalition watch. Then to come to the bill itself, the National Reconstruction Fund Corporation Bill 2022. I must say I take umbrage even with the name of it. I think it was Shakespeare who wrote that a rose is a rose by any other name. That's not the case actually. If you put a connotation on a name it carries something else. The Macquarie dictionary defines 'reconstruction' as 'to rebuild'. Oxford says it's building something that's been damaged or destroyed. That doesn't change the intent of the bill, but you can see what the Labor Party is doing here. They're indicating that the economy was broken when they came to government, when, in fact, it was not. Sure, the economy needs maintenance and upgrading—all things do—but it wasn't broken. It hasn't been smashed, as the title of this bill would suggest.
As of May last year, at the time of the election, Australia was the 13th largest economy in the world, despite only being 55th in the population stakes. I don't think that indicates a broken economy. The World Population Review says in fact that Australia is No. 1 in the world when it comes to standard of living. That also doesn't indicate to me that the economy is broken. We have some issues with our health system. We could have a better health system, there's no doubt about that. But despite the number of challenges, we are No. 6 in the world and that would not indicate to me either that the economy is broken. I could go on and on and on in this area. I maintain that the very premise, the connotation that this bill is sending, is offensive. The member for Jagajaga said as much in her comments that the economy was smashed when they came to government—the dereliction of the coalition government. I refute all of those allegations.
Now let's come to the $15 billion fund. It's a lot of money. It seems not so long ago that we used to speak in millions of dollars but now we speak in billions of dollars. Of course, one has a thousand times more impact than the other. I'm not sure that the population is completely across it. It does have a bit of a ring of The Hollowmen doesn't it? '$5 billion perhaps?' 'No, not $5 billion.' '$10 billion?' 'No, $15 billion. We will have $15 billion.' 'What are we going to spend it on?' 'Well, it doesn't really matter, because we don't know.' I could go on further with that as well. But the point here is that this $15 billion didn't grow on a tree. It hasn't even been taxed out of your super yet. The government is going to borrow. I thank the member for Mayo for pointing out how much the interest on that might be in a rising inflationary economy. We know that interest rates are going up all the time—only yesterday in fact. She thought that the idea of the government borrowing $15 billion to spend on its pet projects may not go down in the front bar of many pubs in Mayo. I don't think they'd go down in the front bar of many pubs in Grey either, I have to say.
Normally, when governments invest off budget, it's for net tangible assets. The most prominent one I can think of off the top of my head is the NBN, and it cost a lot of money: $43 billion. In 2015 it had a return of $160 million a year. It's now up to $5.1 billion and it's rising, so it looks like it is at least getting to the point where it's a performing asset. But who knows with the National Reconstruction Fund? That is going to be operating in the area of cheap loans—and, by definition, a cheap loan is money you loan to an organisation or a people who can't raise the money in the straight financial market, so the likelihood of it performing as well as a loan is lower.
The next thing, of course, is equity. It's the same analogy. In private enterprise, people can take money out of their pockets and invest in the scheme themselves. If they're not prepared to invest in an industry, proposal or project, it really calls into question whether the taxpayer should be willing to invest in that project as the default investment. Of course, what happens when you've got equity in a project and it falls over is that it becomes a completely new issue altogether. The government may end up owning equity in something that doesn't even exist anymore. So that gives me a lot of concern about the directions around how this money might be invested.
Given the abandonment of the program that existed under the Modern Manufacturing Fund, which was a competitive grant, it is unclear how these investments will be decided. The minister said he will appoint an independent board, but remember these are ministerial appointments, so the minister will actually get to select who goes on the board, and presumably they might be thinking about the same way as the minister or the government does. I think it's very concerning that we don't really know; the government has given us broad guidelines on where they would like to see that board invest, but we don't have a clear indication of what that might be. I think there are some big questions lying underneath this legislation.
I think we wax lyrical in this place and others about Australia's sovereign capacity. It's been referred to by most of the speakers on this bill. The things that Australia needs to have its own capacity in have been highlighted over the last three years through the COVID crisis and some of the tensions in the Pacific Ocean, it must be said.
To come to the point of what these essentials are: one of the ones that's been thrown around quite liberally is critical minerals. That raises the question of what critical minerals are. They can be things such as lithium and graphite but also be more mainstream minerals like zinc. Zinc is going to become one of the high-demand minerals in the foreseeable future. And of course there is copper. We have capacity in those areas in Australia. In fact, some of these things are smelted in my own electorate, in Port Pirie. The Nyrstar smelter is there. But at this stage there are not any clear alternative technologies to a blast furnace being fed by coke, which of course has the accompanying emissions.
In other areas, the government, in one of its first moves as a new government, legislated a 43 per cent reduction target for emissions by 2030. That means these industries that run things like blast furnaces are going to have to meet these 4½ per cent reduction targets per year but have no alternative technologies. These are the very industries that we need to expand in Australia today. If we are going to produce more critical minerals, we're going to have to put in more production platforms. At the moment, because there are no alternative technologies, it means that emissions will rise from those industries. How is that is going to be dealt with, at a time when they are being told to bring down emissions? To bring it back to the point of this bill: we are told this fund will be interested in investing in critical minerals, so I challenge the government to tell us how they're going to do that. Are they going to overturn the 43 per cent, or bypass the 43 per cent, or find some way around it, or are they not going to invest in these industries?
There is another issue, in the same light, that causes me deep concern. The previous government had put some money on the table to get a urea plant off the ground in Western Australia—in your home state, Mr Deputy Speaker—where we could take Australian gas and turn it into urea. It's proposed on the Burrup Peninsula. We extract Australian gas and send it to overseas markets where, at least theoretically, it gets turned into urea and then sent back to Australia. So we've chewed up a heap of energy freighting the raw product out of Australia and a heap of energy bringing the raw product back in. But I can tell you, if we put a urea plant in place in Western Australia, it will increase Australia's emissions. Whether or not that will get funding from this new board, who knows? And I would like to know before we vote on the bill, but I know we're not going to. The government is not going to give us that information. But, if we're not going to invest in things like urea plants and critical minerals, it then brings up the question of where this $15 billion is going to go.
I just want to make that point again: if we build a urea plant in Australia, it will reduce world emissions, but it will increase Australian emissions. It's one of these great problems I have with the international accounting mechanisms for greenhouse emissions. I've often said in this place that it's designed by Europeans for Europeans, and we are the victims of that in many, many cases.
Another issue that would come into this space is gas itself. At the moment, we are dealing with a crisis in Australia, with high gas prices and high electricity prices. Absolutely every day we are getting examples from the opposition benches in question time about people dealing with their electricity bills. The government has put in place a cap on gas in Australia, and, of course, this is leading to a reconsideration of investment in the extraction of gas. It stands to reason that, if you're going to limit people's profits, you'll limit their interest in investing in those very industries that we need. What we need in Australia is more gas.
In this space, the minister for energy has said that he is not interested in licensing a new gas mine unless it's carbon neutral. That's going to be fairly difficult to achieve, I might say. But we need more gas in Australia, not less gas. And, once again, will this fund have enough independence from government, to invest in the gas industry, to bring more production online? I suspect it won't have that kind of independence, and we will not see that kind of investment coming out of this government. If you're talking about manufacturing—and they are talking about manufacturing—the very premise that we can compete in manufacturing in Australia is built upon having cheap energy. And we should have cheap energy in Australia; we are blessed with energy.
So I am concerned in so many areas with this bill: the quantum of it, the $15 billion; the fact that it is off-budget borrowing; the fact that we're in an environment where interest rates are rising, and the service costs on that debt will continue to rise; and the fact that we have a board which will be appointed by the minister, and we're told that it will be independent, but we have all these other decisions that have come out of government that would almost seem to preclude the investment by this new board of this new fund in the very industries that we need to drive Australia forward. On so many fronts, I do not think this National Reconstruction—and I have told you why I don't like that word—Fund is sitting on sound foundations or is good for Australia, and that is why we on this side of the chamber are opposing it.
Allegra Spender (Wentworth, Independent) Share this | Link to 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.
Pat Conaghan (Cowper, National Party, Shadow Assistant Minister for Social Services) Share this | Link to this | Hansard source
I rise to speak in opposition to the National Reconstruction Fund Corporation Bill 2022. In doing so, I say that Australia is a country that is blessed with so much. Aside from making things—and apart from a series of fantastic tourism ads—we also have significant natural resources, a motivated workforce and, most importantly, that good old Aussie ingenuity and pride in our products that we stamp as 'Australian made'.
In my electorate of Cowper, we have a number of manufacturing businesses that employ a significant number of people. In the small town of Smithtown, just outside Kempsey, is the Nestle factory. Some say 'Nestles' and some say 'Nestlay', but I'm told reliably that it is pronounced 'Nestlay'. It has been operating since 1921 and has just recently unveiled a new hot 'choccy' production line. Previously, only part of that hot chocolate product could be made at the factory, but a recent investment has meant that the complete product can be manufactured locally. The innovative new recycled cup that is produced on site will also help to reduce up to 95 tonnes of waste from entering landfill each year.
Or we can look at Planet Lighting in Bellingen, which manufactures and supplies some of the country's most advanced medical and surgical lights, as well as LED and custom lighting solutions. It's just another small but brilliant manufacturing company in regional and rural Australia. And of course everybody knows Akubra! Akubra are in Kempsey, and I'll give a shout out to Steve Kier, who is the fourth generation manufacturing there. Akubra employs dozens and dozens of people in the Kempsey and Macleay Valley areas. It is known all around the world and highly respected.
I do, however, appreciate that it would be disingenuous not to recognise that in recent decades the number of products proudly adorned with the 'Made in Australia' stamp, such as the products I have described, have been declining. A number of economic factors have fed into this. But it should be noted that this does not sit with one single government or one government term, but has been occurring gradually under several successive governments.
For all its disadvantages, the one thing that COVID-19 brought to the fore of the national consciousness was the need to protect and enhance our sovereignty when it comes to supply chains and manufacturing. Rather than being an issue almost solely discussed in this place and in corporate boardrooms, it was a topic discussed over the dinner table at home with families right across the country, not just in our traditional manufacturing towns. The sight of bare shelves and restricted pantries was more than a metaphor—it was a reality and a wake-up call for the nation.
I'll circle back to the number of economic factors that have influenced Australian manufacturing in recent decades. I don't pretend to be an economist by any stretch of the imagination, but before this place I was a small-business owner and, believe it or not, I am the one who does the weekly shop on a Sunday. I understand that higher input costs ultimately mean higher price points are required for the customer. That means reduced competitiveness both locally and internationally. For all its complexities, the success of manufacturing in this country does boil down to just that. As members of parliament, we need to ask: does this bill, combined with the current policies, assist manufacturers with input costs? I think it would be naive at best and at worst wilfully negligent to reply 'yes' when this bill arrogantly ignores one of the most prominent current input costs—that is, the cost of energy.
This is not an issue that we can sidestep with ideology. It's one cost that has already skyrocketed and has future increases of over 50 per cent on the horizon. That's not a figure I'm throwing out; this is a figure that this government acknowledged in the October forecast. This is a cost that will continue to go up without meaningful policies in play, and this bill provides the perfect opportunity to address this for our local manufacturers, yet it is stunningly omitted. Why?
I'm sure that for every member travelling around their electorate—it's particularly true in mine—electricity costs are on the top of the list of topics of conversation each day not just with manufacturers and business but also everyday constituents. I was at Expressway Spares, which borders my electorate and Dr David Gillespie's electorate of Lyne. They employ over 300 people, and in the past six months their electricity bill has doubled. That is obviously causing them great concern about being able to cover their costs. I hate to mention payroll tax because it's a tax on employing too many people, but the increase in cost is just not sustainable. I think everyone understands that if it costs more to keep the lights on at home, it's also costing businesses more to supply products, and means higher prices on the shelves. It's economics 101. Any reasonable person would acknowledge this, so I question why the government is sticking their head in the sand. Some people may agree with the proposed financial supports contained in this bill, but if not combined with a reduction to the cost of energy, any funding provided at one end will ultimately be used to combat the other end, rendering them effectively impotent and being an exercise in grandstanding and headline-grabbing rather than meaningful change. I fear this practice is becoming all too common with this government.
The second key economic factor affecting growth of Australian business that is completely ignored in this bill is the current labour market shortages. I mentioned before that electricity costs were on the top of the list of issues. Well, labour shortages would have to be number two, particularly when speaking to small businesses. It can't only be coalition MPs hearing this, so I ask again: why is the government sticking their head in the sand? If we're not willing to address these basic principles, throwing obligatory cash at would-be manufacturers is an exercise in futility.
Let's put those two issues aside, pretend that these basic principles can be ignored, take a step back and look at the funding streams and mechanics that are on offer in this bill. I think it's necessary to point out that there was an existing coalition policy in place providing funding to Australian manufacturers that was already in play and working, and that was the Modern Manufacturing Initiative. The initiative had already started to bolster our sovereign manufacturing capability, and over 200 projects had been successfully funded. This government swiftly changed that and dismantled the important initiative that already had momentum before the National Reconstruction Fund was even at a point that it could be used to replace it.
What this has meant, in very real terms, is that there has been a significant time loss in providing support. It would be one thing if that delay had been in place to sort out the aforementioned energy costs and the labour market implications, but it simply wasn't. Additionally, the method by which the funds are to be awarded is comparatively volatile when seen next to the Modern Manufacturing Initiative's model. Removing the competitive grants process is a mistake, in my view, and I should add that private economists also share the same view. The model in its current form proposes that government should acquire equity and provide loans, behaving more like a financial institution by imposing return on investment thresholds and repayment plans.
As a business owner of 18 years before coming into this place, the last thing I would ever want is to be in business with government. Whether it's federal, state or local government, keep your nose out of my business. That fact has significant implications when it comes to businesses' agility and the pursuit of innovation—two of the key driving factors in long-term success. Couple this with the psychological importance of retaining ownership of your own business, particularly when you're looking at the plethora of family owned and run manufacturers in this country, and the National Reconstruction Fund is looking more like a hurdle than a leg-up.
The ambiguities contained within this bill are also of concern, and the lack of definition and detail, again, seems endemic in Labor policies. Why are the national manufacturing priorities not defined within this bill? It leaves the door open for a continual change in the eligibility criteria based on political whims of the minister, particularly when they are able to personally appoint the chair and board members charged with overseeing the corporation and its funds.
The dismantling of the Modern Manufacturing Initiative and introduction of the proposed National Reconstruction Fund can be seen as blatantly partisan decision-making and ultimately reveals, once again, a government unwilling or unable to provide reasonable detail and definitions in their policies. The Australian manufacturing industry deserve certainty, and they deserve a clear path to grow, not ambiguity and not an unwillingness to address basic economic principles. In short, they deserve better than this.
Before I finish, I'd like to make an observation. If the National Reconstruction Fund Corporation Bill is so important, where are all the government speakers? I have watched people speak for the better part of today—and I note the member for Jagajaga is sitting on her own—
Yes, next to the member for Riverina—but where are the speakers from the government if this is so important? The only inference I can draw from the lack of speakers is that this is just another ill-considered and ill-conceived bill that the government is trying to ram through this place. I think it's demonstrative of the way this government is adopting policy and adopting the bills. To be perfectly honest, I think it's disgraceful.
Colin Boyce (Flynn, Liberal National Party) Share this | Link to this | Hansard source
As I begin my contribution, I would just like to concur with some comments that the member for Grey made that relate to the simple word 'reconstruction'. That has connotations that the Australian economy has fallen apart, that it is not existent and that we have to totally rebuild it. That is absolutely not correct and he pointed that out in his contribution. This bill has some specific issues.
The National Reconstruction Fund Bill 2022 delivers on the ALP's $15 billion election commitment and signature manufacturing policy. The fund will be administered by a corporation with an independent board who will deliver funds against an investment mandate set by the government. The design and execution are fraught with issues. First of all, the bill ignores key economic issues. The government must address rising energy prices, labour market shortages and disrupted supply chains if our manufacturers are to succeed. Without policies to create strong economic decisions, any government spending is in vain.
The coalition is opposing this bill because this arrogant government is telling our manufacturers what they think they need, rather than addressing what they want or what they need. The simple fact of the matter is that, without addressing these key economic challenges which are holding back industry, government spending is useless. Under the economic mismanagement of the government, any proposed financial support will be whittled away by increased input costs. It seems that every time Labor are in government, they have terrible luck. Every time they come to government, there is a sudden and dramatic economic crisis. This is one of the consistent themes when canvassing industry stakeholders, including those who welcomed the NRF model.
Second, the bill will create even more lost time for manufacturers. In this broken model, it will take significant time for money to start flowing. The Clean Energy Finance Corporation, on which the NRF is modelled, was established in 2012, and the first investment was only made some 10 months later. Our manufacturers cannot afford to wait this long. The government announced that the NRF would be up and running by the next financial year but have not committed to a launch date. Industry feedback suggests that this type of funding model takes years to get right and those years will be lost to manufacturers.
Third, the NRF has a poor funding model. The model shifts from competitive grant programs with robust process to government requiring equity and providing loans. Unintended consequences include government equity and loan schemes that are 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, 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 creating private investment are also concerning but beg the question: If there is such a great investment opportunity that the government will acquire equity in, 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 many of our manufacturers are family-owned businesses. The bill will also stifle innovation, as beneficiaries of the fund will be unlikely to invest in innovation without a guaranteed return. The funding model does not entertain failure, which is inherent in innovation.
Fourth, there is an inappropriate ministerial discretion in this bill which allows the minister to appoint the chair and the board members who will oversee the corporation and its funds. The government has already demonstrated in its early appointments that it cannot be trusted to make sensible, non-bipartisan decisions. The Minister for Industry and Science has already shown that from his form on issues of ministerial appointments. The minister has rejected the recommendations of his own department on appointments. Worse than that, he has appointed a self-declared socialist and union member to the board of a robotics policy committee. The same appointment has previously labelled the previous government as 'self-serving, entitled halfwits' and even referred to the Leader of the Opposition as 'Voldemort'. Minister Husic cannot be trusted to appoint truly independent members to the board of this $15 billion fund.
Fifth, the 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, complementary medicine and, to a lesser extent, recycling. The government's new priorities are too vague and strip industry policy of the focus needed to drive investment to specific sectors. This is typical of Labor—choosing to spray money indiscriminately instead of continuing investment certainty for our manufacturing industries.
Finally, the bill is fiscally irresponsible, delivering funding well in excess of the coalition's Modern Manufacturing Strategy. An initial $5 billion appropriation is provided upon passage of the 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, who stated:
Implementation of below-the-line activity through newly created investment vehicles—
such as the 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.
Let's not forget that Labor are carelessly rushing through a total of $45 billion of off-budget spending, and this must be stopped.
I will talk about the negatives of this whole thing. The budget was a missed opportunity for the government to support industry and business 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 for thousands of job losses. Mark my words: this will have a devastating impact on our industries. Their industrial relations bill will cause mayhem for industry and business when combined with the ideological scrapping of the Australian Building and Construction Commission and the funding cut they handed the Australian Small Business and Family Enterprise Ombudsman. Their union paymasters will be allowed to run rampant without proven oversight and dispute resolution. While manufacturers across the country struggle with rising power prices, Labor's focus is on making it more difficult for industry to employ and keep workers and to grow their businesses.
The budget took active steps to spitefully wipe out key features of the coalition's industry policy. The coalition provided $2.5 billion to create the Modern Manufacturing strategy. This support sought to bolster our sovereign manufacturing capability and empower over 200 projects in Australia. Despite Labor promising over and over again that their National Reconstruction Fund would re-invigorate manufacturing in Australia, we saw next to nothing in the budget to roll out this program. Let me be clear: Labor have chosen to spitefully redirect the Modern Manufacturing Initiative funds without having even rolled out their own National Reconstruction Fund. Additionally, we saw the minister conduct politically motivated reviews into already committed funds issued under the Modern Manufacturing Initiative, funds which had already undergone independent assessments by subject matter experts and the department.
The government have displayed a callous lack of understanding as to how these delays may have damaged these projects. But one of the key pillars of this new manufacturing strategy was our strategic decision to bolster Australia's capabilities in the space sector. We supported funding to locally design, develop, manufacture and deploy specialised space products, equipment, systems and services for export to international markets and support national and international space missions. The government chose, effectively, 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 on which this shift in focus was made.
The government must address these critical issues affecting our manufacturers, not tinker with a proven model. With power prices forecast to likely spike by 56 per cent over the next two years, many businesses across the country may be pushed to the brink. It is time this government delivers inflationary support for the industry and put forward a plan to deal with spiralling power prices.
Angie Bell (Moncrieff, Liberal National Party, Shadow Minister for Early Childhood Education) Share this | Link to this | Hansard source
I'm pleased to speak on the topic of manufacturing and Labor's National Reconstruction Fund Corporation Bill 2022. I know a little bit about manufacturing because it runs in my blood. Both my grandparents, my father and both my brothers all worked at General Motors Holden in the northern suburbs of Adelaide, Elizabeth, where I was put up, so, of course, I'm very passionate about the topic of manufacturing, as are those on this side of the chamber. The coalition understand the value of manufacturing in our great country, particularly when it comes to our sovereignty. We are passionate about manufacturing. We understand the importance of manufacturing. And I think Australians also understand that. They understand how important it is that we rely more on our own nation's capability than on that of others.
I want to contrast what the coalition believes in and delivers with what the Labor Party promises and fails to implement. The coalition believe in incentivising business and manufacturers, as we've proven time and time again with lower taxes and much stronger economic credentials. We took corporate tax from 30 to 27.5 and then to 25 per cent in our last term. Lower taxes: that's what the coalition stand for, not like this Albanese government, who have already had tax hikes for hardworking Australians.
During COVID, it was the coalition who held the nation together with JobKeeper, the cash flow boost and many other financial programs and incentives that positioned Australia to bounce back better than any other advanced country around the world, including our $1.3 billion Modern Manufacturing Strategy, which assisted hundreds of manufacturers around the country, including on the Gold Coast and in my electorate of Moncrieff and many others, to grow and thrive so that they could employ more Australians. Of course, we've seen our record low unemployment rate when we left office, which the Labor Party inherited.
Manufacturing on the Gold Coast particularly is a very large employer. The segment is actually the third largest employer. It grew to $8.3 billion and currently employs 22,880 people. Tourism is a staple; it's a primary industry for the Gold Coast, and it's going gangbusters again. It will, no doubt, break all records, but it was approaching $6 billion when COVID hit and it suffered a $2 billion body blow, but manufacturing during COVID grew 22 per cent over the last five years and continues at an annual growth rate of 24 per cent on the Gold Coast—in textiles, chemical products, metal products, boatbuilding, glass, food, space and many other segments. The coalition's focus, when we were in government, was to modernise manufacturing. Our focus was on sovereign capability; on jobs; on medical products; on defence; on food and beverages; and on resources technology and critical minerals processing—in my own electorate there is a $200-million business, Mineral Technologies, in Carrara. I took the Prime Minister there when we were in government. It's a successful mineral technology processing plant. And we also had our focus on recycling, clean energy and, of course, space. I've mentioned Gilmour Space Technologies many times. Adam Gilmour is a constituent of mine, although his business, Gilmour Space Technologies, is in the member for Fadden's electorate. Adam Gilmour is doing great things for space and was a recipient of a modern manufacturing grant.
When Labor came to office at the last election they inherited a country in a strong economic position, as they always do after the coalition has been in office. As I said, there was an historic low unemployment rate—the lowest since 1974—with the national debt at 34 per cent of GDP. Let's just compare: in the United States, national debt is at 130 per cent of GDP and is expected to hit 133 per cent by the end of the year. In the UK it was at 99.5 per cent of GDP at the end of last year. But what do those opposite do when they inherit a strong economy, when they're faced with out-of-control inflation, a cost-of-living crisis and interest rates that continue to go up—in fact, 10 increases in 10 meetings of the RBA, versus zero increases in 100 meetings under a coalition government? That's a long question, but a shorter question is: what do they do when they're in charge of the treasury benches? They add fuel to the inflationary fire. They issue government bonds and they borrow more money. They increased the debt that COVID forced the country into, and pushed up inflation in the process. That's what we're seeing. In short, they ruin the Australian economy—and history will repeat itself. Then the Reserve Bank has to increase interest rates, as we've seen again, to curb the inflation beast, and every Australian with a variable-interest-rate mortgage has to pay for Labor's bad decisions.
There are 800,000 of, let's say, families—certainly, mortgage holders—who will come off this historically-low interest rate and will have their repayments more than doubled, crippling household budgets. Families are having to make very difficult decisions. We're not seeing any empathy from the Albanese Labor government for families across Australia who are having to make those really tough decisions to change the menu every night or to change the school that their kids are enrolled in because they simply can't afford it.
The minister on the government bench here is sniggering at my remarks—
Andrew Giles (Scullin, Australian Labor Party, Minister for Immigration, Citizenship and Multicultural Affairs) Share this | Link to this | Hansard source
No, I'm not—that is absolutely outrageous!
Angie Bell (Moncrieff, Liberal National Party, Shadow Minister for Early Childhood Education) Share this | Link to this | Hansard source
This is about empathy—
Andrew Giles (Scullin, Australian Labor Party, Minister for Immigration, Citizenship and Multicultural Affairs) Share this | Link to this | Hansard source
You should withdraw that!
Angie Bell (Moncrieff, Liberal National Party, Shadow Minister for Early Childhood Education) Share this | Link to this | Hansard source
This is about empathy for Australian families and the extra bills that they're having to pay. They're really struggling, and 800,000 mortgage holders will have to pay more than double. When inflation is out of control it affects every Australian at the supermarket, in local cafes and in restaurants—you name it. We all pay more.
This government is making it worse. They use the line that they're providing cost-of-living relief without adding to inflation, but that's simply not the case. In December alone we saw early childhood education out-of-pocket costs for parents increase by 4.5 per cent. If that's not an inflationary cost caused by Labor's incoming policies, then what is? What further evidence do we need? Under us, those costs decreased by 4.5 per cent in the election quarter to June 2022, which is evidence that we know how to make decisions that improve the economy and the lives of Australians through economic measures. It seems that every time Labor is in government they have terrible luck: every time they come to government there's a sudden and dramatic economic crisis. Why? It's because they make bad decisions which exacerbate the economic circumstances of the time.
The coalition opposes Labor's NRF because it's another bad decision by Labor. It's bad for taxpayers, for business, for manufacturers and for the economy. It has a poor funding model—surprise, surprise! The government's funding model has unintended consequences and is likely to fail. That's why we don't support this bill. It's not because we don't support manufacturing. The minister likes to bandy across the chamber in question time and say that we on this side of the House don't support manufacturing. That's utter and absolute rubbish. And because it's another bad economic decision from the Albanese government, we will see the ramifications through the economy. The shift the government is making to the funding model, from primarily competitive and non-competitive grants to government acquiring equity and providing loans, is likely to have unintended consequences that those opposite are simply not able to grasp, as terrible economic managers with barely an economic degree between them.
The National Reconstruction Fund Corporation Bill is the ALP's $15 billion election commitment in manufacturing policy. That is what we know. The fund will be administered by a corporation with an independent board who'll deliver funds against an investment mandate set by the government. The design and execution are fraught with issues, and I would like to outline just a few of them.
Firstly, the government is telling our manufacturers what they think and what they need, rather than addressing what they actually need. What they need is the government to show leadership on high energy prices, disrupted supply chains and acute labour shortages across the economy. Without addressing these key economic challenges which are holding industry back, government spending is ineffective. It won't address the real problems, and many of my colleagues outlined those concerns.
Secondly, the bill is fiscally irresponsible, delivering funding well in excess of the coalition's Modern Manufacturing Strategy. An initial $5 billion appropriation is provided upon passage of the bill, but 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 International Monetary Fund, who stated:
Implementation of below-the-line activity through newly created investment vehicles—
such as the NRF—
should be phased appropriately, and, more broadly, a proliferation of such vehicles should be avoided.
'It should be avoided'—but those on the other side are not listening. They are not listening to manufacturers and they are not listening to the IMF.
They're running head-long off to off-budget or below-the-line funding that the IMF distinctly warned against. In addition, 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.
That's small family business. That's what the coalition would do, and always does, when in government: support small and family business, which is the backbone of our economy and certainly the backbone of the Gold Coast economy in the electorate I represent. Labor are carelessly rushing through a total of $45 billion of off-budget spending, and it must be stopped.
Thirdly, the bill will create even more lost time for manufacturers. In this broken model, it will take significant time for money to start flowing; whereas, that money was already in place under the modern manufacturing fund. The Clean Energy Finance Corporation, on which the NRF is modelled, was established in 2012 and the first investment was made only some 10 months later. Our manufacturers cannot afford to wait that long, particularly with energy prices going through the roof as they are right now. The government announced that the NRF should be up and running by next financial year but haven't committed to a launch date. Industry feedback suggests that this type of funding model takes years to get right—and those years will be lost for our 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 great big white elephant. There are risks to crowding out private investment, and they are very concerning. If there are such great investment opportunities the government will acquire in equity, why hasn't the private sector already taken advantage of these lucrative opportunities, when we all know the private sector works at speed light compared to the wheels of government? We must also not overlook the importance of retaining ownership, especially given that many of our manufacturers are family-owned businesses.
The bill will stifle innovation at a time when our country needs innovation, as fund beneficiaries will be unlikely to invest in innovation without a guaranteed return. This funding model does not entertain a failure, an inherent ingredient to innovation. Also, there's an inappropriate ministerial discretion on this bill which allows the minister to appoint the chair and board members who will oversee the corporation and its funds. The government has already demonstrated in its early appointments that it cannot be trusted to make sensible, non-partisan decisions. Also, the bill undermines investment certainty in national priorities, with government changing Australia's national manufacturing priorities on a political whim. They are just some of the major concerns that we have with this bill.
Instead of supporting industry and jobs, 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. Let's watch the unemployment rate go up. Instead of dealing with power prices forecast to spike by 56 per cent over the next two years—many businesses across the country may be pushed to the brink—this government is focused on bad, economy-wrecking policy. It's time for the government to deliver inflation support for industry and put forward a plan to deal with spiralling power prices. While manufacturers across the country struggle with rising power prices, Labor's focus is on making it more difficult for industry to employ and keep workers, to grow their business and to keep their costs low. Labor's policies are simply not working.
Bert Van Manen (Forde, Liberal Party) Share this | Link to this | Hansard source
It's always a pleasure to rise in this place and speak about business in this country and the wonderful job they do for us as a nation. We all know that we have the capabilities and expertise in this country to manufacture a wide range of high-quality products. It was the previous coalition government that understood this best and understood how we could harness the potential of our manufacturing base, particularly in advanced manufacturing, to drive our economy and ensure sovereign capability. That's why the coalition, when we were in government, implemented the $2.5 billion Modern Manufacturing Strategy, which was designed to position Australia as a globally recognised, high-quality and sustainable manufacturing nation. This support sought to bolster our sovereign manufacturing capability and empowered over 200 projects across Australia. It was all about government backing enterprise led growth, strategically investing in harnessing our world-class science and research to secure our manufacturing future.
Sadly, the proposed National Reconstruction Fund is the Modern Manufacturing Strategy's polar opposite. This policy proposed by the government sets the tone for the overarching policy direction of this Labor government, an agenda guided by sheer arrogance. It sets out to tell business what Labor thinks they need, instead of addressing what they want. The coalition government's manufacturing funding model centred on a competitive grants program with extremely robust processes, awarding funding to businesses that were investment ready. Labor's preference, however, is for a poorly designed funding model built on the government having to provide equity and loan schemes, which has raised far too many unanswered questions. As I've said many times in this place since the election outcome, Mr Deputy Speaker: have a look at what the government does, not what it says, because nine times out of 10 they are two very different things.
In increasing Australia's manufacturing output, the role of government should be not to dictate but to ensure that business are able to operate in an environment where they are best placed to compete on a global scale. Government equity and loan schemes are less accessible than grants, and manufacturers may struggle to meet return-on-investment thresholds or put together the detailed business cases in-house. Furthermore, an unanswered question is what will happen to failed or failing loans or business ventures. That is a key part of the business development process. As unwelcome as it is at times, it is the way the market cleans out the system. How will eligibility be met on these loans when certain industries have margins that are too small or the approval is seen as too risky? What about private equity? The Australian Bankers Association have stated that banks are already involved in providing loans in the priority areas identified in the consultation paper, meaning that the government will be discouraging further private investment instead of addressing current issues, such as input costs, noted by industry stakeholders. That is certainly the feedback I get from my manufacturers, Mr Deputy Speaker, as I go around my electorate of Forde. Compounding their poor policy direction is the failure of this Labor government to deal with the economic issues facing businesses more generally, let alone manufacturing. Without policies that create strong economic conditions, any government spending is in vain. We see before us that this government fails to deal with these issues. Rising energy prices, labour market shortages and disrupted supply chains are issues that must be addressed if we want to see our manufacturers succeed. Power prices have been forecast to spike by over 56 per cent over the next two years, with many businesses across the country already feeling the pinch—sadly, some may be pushed to the brink. Inflation remains far too high, with every increase in interest rates not only impacting consumer spending but also curtailing business confidence.
This government loves to congratulate itself on its extensive budget repair that it has undertaken from its midyear budget last year. However, when pressed, the government struggles to be specific, not only noting that it has sought some vague plan—which is not unusual for Labor governments—while spending continues, as with this proposal, off the balance sheet and hidden away from the budget. While manufacturers across the country struggle with rising power prices, inflation and rising interest rates, the government is failing to enact any productive policy that will address these issues. It likes to say it has a plan, but in reality it has no plan to address these economic conditions that are impacting our economy, hurting everyday Australians and impacting our local businesses.
What I find very interesting about this proposed National Reconstruction Fund is that on one hand the government is talking about wanting to build and grow manufacturing in this country while another piece of legislation that is before this House will do exactly the opposite—that is, the proposal by this government in the TLAB 1 bill to change how franking credits can be paid in the event of capital rising. I am sure that's just the thin end of the wedge of what the government wants to do with franking credits, but let's leave it where it is as this point in time—we all remember the 2019 election, when Labor wanted to change the way franking credits worked, very substantially. Let's just focus on the impact on manufacturing businesses—particularly large listed manufacturing businesses—of this franking credit proposal. One of the best ways and one of the cheapest ways for business to obtain or retain capital to grow and develop is by re-investing the profits of that business. The beauty of our franking credit system is that those companies will pay tax on their profits and then they will make a decision at board level of how much of that profit they wish to distribute to shareholders via a franked dividend and how much they wish to retain for capital to grow and develop their business. If you do that, the consequence is that you build up a pool of franking credits in the franking credit account on your balance sheet. If they say, 'We're going to raise some more capital in addition to that to grow our business,' and then at some undetermined future point say, 'We want to pay out some more franked dividends,'—whatever that amount may be, because the company makes that decision in its best interests and the best interests of its shareholders—the company may well be prevented from paying out that dividend in a franked form. That is complete and other nonsense.
This is the hypocrisy of this government: on one hand you're talking about building and developing our manufacturing base and giving growing businesses the ability to grow, yet at the very same time you have another piece of economic policy over here which mitigates against exactly that. Where's the economic sense in that? There is none. The government should have a good hard look at itself and, if it's genuine about something like the National Reconstruction Fund, then maybe it should have a look at some of the other policies it has in place to see if they're actually mitigating against what it says it wants business to do. Why it's the case that the government can't work that out for itself is beyond comprehension.
In contrast to that is the coalition's record from when we were in government. As I mentioned earlier, as part of our economic recovery from the pandemic, and earlier, the coalition had the Modern Manufacturing Strategy. This was a $2.5 billion policy to provide pathways for manufacturers to expand across six key priority areas: medical products; resource technology and critical minerals processing; food and beverages; defence; recycling and clean energy; and, importantly, space. The Modern Manufacturing Strategy's aim was to secure our sovereign manufacturing capability and to unlock a new generation of high-wage, high-skill and high-tech jobs. By listing our local space industry as a national manufacturing priority, the coalition understood and appreciated the extensive opportunities that could be taken advantage of by developing that.
But I can also add that prior to the Modern Manufacturing Strategy we had the Modern Manufacturing Fund. A number of businesses in my electorate, and across Logan and the northern Gold Coast, were successful in obtaining funding through the Modern Manufacturing Fund. Anybody in this place who wants to say that manufacturing in this country is dead or dying should maybe come and have a tour through some of the industrial estates around this country. I never cease to be amazed by the quality of small-, medium- and large-manufacturing businesses across my electorate—or even a little outside my electorate, in the Treasurer's electorate of Rankin. These are businesses that are using innovative ideas, or re-using the technology they have already developed for a particular product segment in the marketplace. They're taking the lessons from those and developing new products for a new market, whether in defence or in other areas
I just want to touch on a few of those businesses in the remaining time I have. Take a company like Merino Country Australia at Shailer Park. They received $400,000 through our Modern Manufacturing Fund to adopt new technologies for sewing machines and garment production in order to support the international expansion of their wool and clothing business. Or there is ATP Science, which is at the forefront of the fitness industry and which experienced tremendous growth. To support that demand, ATP received $1 million in funding to expand production of their unique high-protein products.
Under our Sovereign Industrial Capability Priority Grants, Holmwood Highgate at Loganholme received $1 million to enhance the manufacture of bulk liquid transport equipment, not just for the commercial sector, which they have done a fantastic job in for nearly 70 years, but for where they have branched off into defence industry. That isn't just for the support of our Australian Defence Force; they're exporting that technology to the world. Frontline Manufacturing at Meadowbrook received $710,000 to purchase equipment that would allow them to manufacture metal plate for armoured fighting vehicles in their big factory at Redbank, in conjunction with Rheinmetall.
These competitive grant processes have provided businesses with the freedom to follow the most appropriate road to prosperity and growth, and these successful local grant recipients developed a vision for their future and, in turn, reaped the benefits. This successful process of delivery is in direct contrast to the government's plan for a loan-and-equity scheme rolled out against an investment mandate which crudely dictates how a business must implement its strategies for growth. Government doesn't know what business is good at or capable of doing, and government should stay out of businesses' lives.
But what we are seeing now are proposals by this government not only to have an equity stake in your business but they want an equity stake in your house and they want an equity stake in your super. What else does this government want an equity stake in in your life? We should oppose this bill, because it's bad policy and it's bad for the country.
Luke Howarth (Petrie, Liberal Party, Shadow Minister for Defence Industry) Share this | Link to this | Hansard source
I rise to speak on the National Reconstruction Fund Corporation Bill 2022. I want it to be known that I support manufacturing's long and prosperous history in Australia, which has promoted innovation and secured jobs for Australians. When I look around my own home, back at Clontarf, only a few of the items were made in Australia. On my roof I've got solar panels from Tindo Solar, the only manufacturer of solar panels in Australia. Pretty much nothing else is made here. I've got a barbecue in my backyard from Heatlie Barbecues, made in Australia and designed and manufactured here. I've got a Polyworld water tank, manufactured in Clontarf, where I live in Queensland, and RM William boots—you'll know about them. They're made from kangaroo leather produced by Packer Leather in my electorate. From BlueScope Steel, I've got a COLORBOND roof and a steel frame—all Australian steel products.
But it is fair to say that we could do a lot more, and I'd love to see a lot more manufacturing come back into Australia. I must say that the Labor Party have been responsible for the loss of a lot of manufacturing, through higher demands through unions that have sent businesses overseas. Look at what they've done since coming to government: they're governing for the unions again, governing for their political donors, by scrapping the ABCC and making industrial relations changes that weren't flagged prior to the election. With the Labor Party, it's all about looking after their political donors, and they take no responsibility for jobs that are being sent offshore through their actions whilst in government.
The reality is that there's a really good manufacturing policy right now that the Australian government has in law, rather than bringing in this crazy bill. You'd think that, when they came to office, the current government might actually govern—be it through a minister or the Prime Minister—and say, 'Hang on, we already have a Modern Manufacturing Strategy with six National Manufacturing Priorities.' But, instead, they said: 'No, let's throw that out. Let's just do something completely new, off books and off the budget.' There's no budget surplus for the next four years, and none for 10 years, yet they go on about debt, $250 billion of which they racked up during the Rudd-Gillard-Rudd years. This government can't tell the truth. That's the reality.
But let's talk about what the coalition government did for manufacturing in our time in office. The former coalition government delivered the Modern Manufacturing Strategy. It identified the six National Manufacturing Priorities, including around food and beverage; medical products; resources technology in critical minerals processing; recycling and clean energy; defence; and the space industry. I'll say more about the space industry, because it seems that the minister for industry has completely abandoned space. They want to leave that to overseas countries. Take note: that's what they want to do—this government is completely abandoning space.
We invested $1.5 billion in the Modern Manufacturing Strategy, strengthening and building a competitive economy. That $1.5 billion generated over $113 billion in value in products manufactured—that was in 2021—and more than $50 billion in exports from the $1.5 billion in the Modern Manufacturing Strategy, which the coalition government put in place. So you'd think that this government would do something, rather than delaying this for a couple of years. It's 10 months in, and they haven't even got anything in place. They've ignored the previous Modern Manufacturing Strategy for the last 10 months, and by the time this National Reconstruction Fund gets established it will be—what?—two years down the track, and manufacturers will be left wanting.
Sharon Claydon (Newcastle, Australian Labor Party) Share this | Link to this | Hansard source
The debate is interrupted in accordance with standing order 43, and the debate may be resumed at a later hour. Your speech was interrupted, so you will be given leave to continue speaking when the debate resumes.