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National Reconstruction Fund Corporation Bill 2023, second reading

Throughout Australia’s history, manufacturing has been at the heart of our economic growth and success. The revitalisation of our manufacturing sector is of critical importance not only as a pillar of our domestic economy but also as a crucial element of our national security. Supporting our manufacturing industry is, therefore, key to Australia’s future. However, the future will not look so kindly—history will look very dimly—on Labor’s National Reconstruction Fund Corporation Bill. This bill fails to address the economic conditions now facing Australian manufacturers. It fails to provide for timely funding. It fails to present manufacturers with a rational funding model. And it fails to provide investment certainty. The bill is, in other words, a reckless and slapdash attempt to throw money at the manufacturing industry, with no certainty as to the returns that it will deliver. This is typical Labor legislation. This is typical Labor policy on the run. It is neither rational nor responsible. It is, in fact, an embarrassingly poor attempt at a manufacturing policy. Under this government, Australians, including manufacturers, are dealing with soaring energy prices, labour market shortages and disrupted supply chains. This economy, under this Albanese Labor government, is spiralling out of control. The government’s response to this chaos is to tell manufacturers what they think they need rather than addressing what they want.

A number of weeks ago, I attended the 25th anniversary celebration of the Geelong Manufacturing Council. Geelong has an incredible history of manufacturing. It is one of the centres of excellence of manufacturing in this country. So it was with great pride that I attended that function, which brought together manufacturers from the areas of food, agriculture, diesel, petrol, heavy chemicals and right across the spectrum of all types of manufacturing. I’ll tell you the two things that manufacturers were talking about, while the Deputy Prime Minister, the member for Corio, gave his speech, which said nothing of substance. I’ll tell you what they were saying on the floor of the event. There are two things that this Labor government needs to fix. One is spiralling energy costs and the ridiculous energy cap legislation, which has created more uncertainty—so much uncertainty that the gas import terminal proposed by Viva Energy at Geelong’s refinery is now up in the air. There is so much uncertainty because of the haphazard and unacceptable way that this government has attempted to fix the spiralling costs of energy. The other thing is, of course, the multi-employer bargaining provisions. Manufacturers around this country are appalled by what this government is doing to their business. They are appalled. Any business approaching 20 employees, or with more than 20 employees, under this Labor government, is a sitting duck. Do you know why they’re talking quietly on the floor of these events, speaking to us in confidence? Because, if they stick their head up, they will be destroyed by the unions. They will be targeted as soon as those provisions come into force.

If this Labor government wants to do the manufacturing industry any favour, it should get out of the way. It should allow our manufacturers across the country to thrive in the best possible conditions. I say, on behalf of all manufacturers in Victoria: one of the reasons that we have such a fine history of manufacturing is our low energy prices, delivered primarily by brown coal. That kept our energy prices, our electricity prices, lower than anywhere else in the country. Under this government and under the Daniel Andrews Labor government in Victoria, we are now delivering the highest, or amongst the highest, prices in the country, which is putting manufacturers’ backs to the wall. And of course we will never forget in our city, in our region, in Victoria, what the former Labor governments, the Rudd-Gillard governments, did when they were in government. They imposed a carbon tax on all Australians and all manufacturers, which of course hurt everyone economically, particularly employers. It had a huge impact on jobs.

As part of that terrible climate that Labor created when it was last in government, Ford closed on Labor’s watch. In 2013, under Labor, Ford announced it was ending manufacturing. And this Labor government continues to prosecute the argument that car manufacturing stopped under our government. Well, I can tell you there was no finer manufacturer in our city, in our region, than Ford at both Geelong and Broadmeadows, and they packed up shop—they announced that they were closing manufacturing—under the former Labor government, because the conditions that they were forced to compete in meant that Ford was no longer competitive.

This is terrible, terrible legislation. As I say, this is not what our manufacturers want. They want cheap energy prices. They want industrial relations harmony. They do not want a situation where, within a matter of weeks or months, they will have a knock at the door: ‘Oh, we’ve got a vote. We’re now coming for you. We’ve got Geelong Refinery in our region, so we’re now going to suggest that all manufacturers in Geelong pay the same wages that are paid at a large corporation like Viva Energy.’ There is so much fear. There is so much fear by reason of what this government has done.

I have to say as someone who has proudly stood up for manufacturing that before I was ever elected, growing up in Geelong, and after I was first elected in 2013, the many ways that we drove investment into Geelong manufacturers and into manufacturing across this country meant that those really dark days that we faced in 2013 were reversed. That was because of the enormous amount of investment on a competitive basis that we drove into great regions like Geelong, including our fine Geelong manufacturers. Of course, we’re very proud of our $2.5 billion Modern Manufacturing Strategy, which sought to bolster our sovereign manufacturing capability and empowered over 200 key projects across Australia. Despite Labor promising over and over again that their National Reconstruction Fund would reinvigorate manufacturing in Australia, we saw next to nothing in the budget to roll out this program. And now Labor have chosen to spitefully redirect the Modern Manufacturing Initiative funding without even having rolled out their own National Reconstruction Fund.

So I say to this government, from the grassroots, from the manufacturers and their workers, who work so hard every single day to produce the goods and services for our country: why don’t you start listening? Why don’t you start listening to what they’re saying in their factories on the factory floors, in their shopfronts and in their businesses? They want cheaper power prices. They want industrial relations harmony. They want to be allowed to get on and deliver. Supported by great programs like the Modern Manufacturing Strategy, that’s what these manufacturers were doing.

Let me just reiterate that, firstly, this bill ignores key economic issues. The government have failed to address rising energy prices, labour market shortages and disrupted supply chains, which they need to if our manufacturers are to succeed. This is classic Labor policy: ‘Let’s just throw a bucket of money at this.’ That’s just what they did with the VEDC, the Victorian Economic Development Corporation. The government thought it was part of the market, and it was a disaster—tens and tens of millions of dollars of losses.

The second flaw with this bill is it will create even more lost time for manufacturers. This is a broken model. Under this model, which was modelled on the Clean Energy Finance Corporation—which is a much more specific program—it will take a very significant time for the money to start flowing. Our manufacturers cannot afford to wait that long, particularly when all of the investment that we put into manufacturing has now been reallocated or cut. The NRF has a very poor funding model because it shifts from a competitive grant program with robust processes, where applications are decided on their merits, to government acquiring equity and providing loans, which is likely to lead to unintended consequences. Government equity and loan schemes are less accessible than grants, and manufacturers may struggle to meet the return-on-investment thresholds, or all of the investment required to put together a detailed business case in house. What’s going to happen if a manufacturer is saddled with a failing loan? What is going to happen to the financial viability of those businesses? That is a question that the government cannot answer.

The bill also 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. I have to say, on that note, that just yesterday I had a meeting with a university which is doing an enormous amount of work in space and aerospace. They are doing cutting-edge work, actually working with a private business in launching a satellite. Not only are they giving incredible opportunities to their students but also they are embracing school students. To exclude space and aerospace as a key manufacturing priority is a very, very big mistake which needs to be rectified.

The other point that I want to make is that the bill is fiscally irresponsible. It delivers funding well in excess of the coalition’s Modern Manufacturing Strategy, without any of the checks and balances. 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, which is extraordinary. Can you imagine if we, when we were in government, brought a $10 billion appropriation to the parliament and had not been accountable? In fact, similar financial structures to the one underpinning this bill have drawn criticism from the IMF, which stated:
Implementation of below-the-line activity through newly created investment vehicles—
such as 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.

Of course, Labor hasn’t done any of that. It has just got this ugly bucket of money—a big, fat slush fund that it’s just throwing out there, thinking it can do the job. I can tell you, from the manufacturers on the ground all around this country, this is shocking policy. It is time that this Labor government started to focus on the things that really matter: proper competitive support, lower power prices and changing the revolting, regressive IR laws.

28 March 2023

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