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

I'm in the House to talk about something a bit unusual, something I never thought I would be talking about in the House, which is one of my favourite biscuits: Tim Tam. But I do want to explain why that is relevant and, I think, extremely relevant to the business of the House. The government has established a host of specialist investment vehicles to direct public funds into priority areas, like renewable energy, housing, agriculture and exports. The $15 billion National Reconstruction Fund was established in 2023 to diversify and transform Australian industry. But the question I ask, particularly in the economic times that we have right now, is whether these funds are actually doing what they were sold to do—filling funding gaps, crowding in private capital, addressing market failure and building sovereign capability that would not otherwise be built by the private sector. And, when I look at recent decisions, I struggle to see it.

Take Arnott's. The National Reconstruction Fund contributed $45 million to a $1.75 billion refinancing. There was no obvious funding gap. Government provided less than three per cent, and the rest came from private markets on commercial terms. The deal was oversubscribed, suggesting public funds actually crowded out private capital rather than attracting it. Market failure? It's hard to identify. Arnott's has operated successfully since 1865. Supporting Australia? Arnott's has not been Australian owned since 1997 and has been owned by US private equity firm KKR since 2019. So what are taxpayers actually getting? It seems that, since the 2019 KKR leveraged acquisition, Australians are actually paying 60 per cent more for homegrown Tim Tams. 'Timflation' is outpacing the consumer price index threefold. The NRF says that investment will expand production, but the funds merely refinance existing debt tied to past investment. But the terms of the deal have not been released, so scrutiny is limited.

This is part of a broader pattern that does concern me: questionable investments across specialist investment vehicles, unknown contingent liabilities under the Capacity Investment Scheme and increasing industrial bailouts such as Whyalla and Tomago. There is a role for government in industry policy, but it has to be extremely disciplined, targeted at genuine market failures like climate change, where the market is not already operating effectively, and opportunities for technology spillovers that build national capacity. I am concerned, and not just about the price of Tim Tams. I'm concerned that discipline is slipping. I have competitive businesses and sectors coming to my doors and asking for money. Someone this week said to me: 'Allegra, other sectors are getting money. We employ people too. Why aren't we getting any?' That is of extreme concern to me. When businesses believe that their competitive advantage is not innovation or productivity but their ability to secure government cheques, capital shifts away from doing what it does best, which is allocate efficiently to opportunities.

Government capital, where it is trying to solve market failure, should be directed to those areas in which the private market otherwise wouldn't invest or wouldn't invest at the scale of the opportunity. And this is where we want private capital and public capital really to work in concert, but only where it's actually going to make a real difference. We do not want the private sector moving away from investment in R&D, electrification, digitisation and capacity building into how it can more effectively lobby in Canberra. That weakens productivity and distorts the economy.

The Productivity Commission has already outlined clear guardrails for modern industry policy. We should be following them. With deficits forecast for a decade and households under pressure from inflation and interest rates, every dollar needs to be tested. Does it expand productive capacity? Does it unlock innovation, or does it entrench unproductive investment? This is a cost-of-living relief government has to be focused on. The cost-of-living relief will only come from improving productivity and, really, effectively, supply-side changes. Undisciplined spending today only makes Australians worse off tomorrow. And, again, who pays for it? With government predicting deficits for the next 10 years, the generation who will pay for it are the generation who are coming—that generation where they have fewer workers compared to the working-age population, where they are already more indebted when they finish university and education, and where housing is more out of reach. We should not be burdening them with investments that do not benefit the public.