National Reconstruction Fund Corporation Bill 2022
9 Mar | '2023
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— This is about empathy—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 that 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.