Second Reading – National Reconstruction Fund Corporation Bill 2022

Thursday, 16 February 2023

Mr PITT: I rise to speak on the National Reconstruction Fund Corporation Bill 2022. If you’re feeling kind, you could potentially call this a smokescreen. If you’re feeling less kind, you’d call it a political stunt. But the reality is that this proposal is a political showbag. Deputy Speaker Goodenough, I’m sure you’ll recall when you go to the show and you buy a showbag; it’s up in bright lights and it’s got a lovely pamphlet and it all looks wonderful, and you lay out your hard-earned money and it costs a fortune. But then you get it home, open it up, get to the bottom and find it’s full of you-know-what. That is this proposal, and I will outline over the next few minutes exactly why that is the case.

The political showbag has hit the media. David Marin-Guzman, from the Fin, I believe, wrote: ‘ACTU wants unions first in $15b fund’. The first problem: a $15 billion fund is actually not true. In fact, the legislation specifically says that on commencement there will be $5 billion. I know there’s some confidence in those on the other side, but in 2029 the contribution will have been up to a total of $10 billion. We just had the previous speaker outline the commitment, and I got to $8 billion. There’s no 15 in eight and there’s no 15 in 10, unless my math has changed since I went to school—and I know it was a while ago. So this is the first problem with the political showbag. What’s being sold is not what’s in it. It is not a $15 billion fund. It will be $5 billion of the hard earned money of the taxpayer that the government has to borrow.

Secondly, it’s about the ACTU. According to this story, it is calling on Minister Husic to install union officials on the fund’s board, because otherwise it might be biased towards the finance sector and private business—that is, to those people who make decisions that actually make a return, who make good financial decisions. What else do they want? Let’s have a look: ‘You must guarantee secure jobs with decent working conditions.’ In this country we have laws. They already exist. You can’t just wander around and hire people outside agreements and outside Australian law. It is unlawful. That is why it’s in place. They also believe that enterprise agreements with unions must be a precondition of any tender. There may be those listening who think this is unlikely and it might not happen, so let’s look at what else they want. They also want there to be no independent directors. They oppose independent directors. They are a bad idea. We see from Senator Michaelia Cash in the other place the quote: ‘Union demands on Labor know no bounds after they made $16.7 million in donations.’

You can ignore that, if you like, but if you go to the actual statements on this bill, you will find that the federal Labor government consulted with a range of government stakeholders followed by the following non-government stakeholders: the Australian Banking Association, the Australian Council of Superannuation Investors, the Australian Council of Trade Unions, the Australian Investment Council, Industry Super Australia and the Law Council of Australia. We’ve heard honourable members come to this place and outline what it is the fund will be investing in, but there’s none of them in the consultative process, absolutely none.

The fund also includes the capacity to lend money, to provide equity to invest in state and territory governments. Is federal Labor serious? Do state governments need more money from the Commonwealth through a loan fund? Do they not get enough through GST or through the existing national agreements or for hospitals? Actually, on hospitals, they don’t get enough. In the last budget, according to the AMA, federal Labor cut $2.4 billion from the forwards for hospital funding, so we know where this is coming from. We know exactly where it’s coming from.

The fund will also be used to meet international agreements. This is a magic fund. It is not just a political showbag; it’s magic. It will cover everything from critical minerals to defence, energy and, right across the road, international agreements. But it is not $15 billion, because their own legislation says that that’s not the case. It says exactly how much money is going in.

This appears to be a wonderful intervention from those opposite, but it is actually a cut in what has been provided for support. If we come back to just one segment, critical minerals, which I’ve had a bit to do with over recent years, we find that the previous coalition government established a $2 billion loan facility. It’s already there for critical minerals. It was established through former prime minister Scott Morrison, former minister Mr Tehan and me. Guess what! It is managed by Export Finance Australia, which already exists. It has already made investments and loans. It has already provided money for critical minerals.

The challenge in this space is that critical minerals is not an economic decision. It is a national security decision. The reason for that is that there is a provider in the world who basically has a monopoly across everything to do with critical minerals. If you even look like you are not going to be providing to that monopoly provider, they will knock out your business, so you have to be able to provide different methods to ensure success. You cannot simply rely on the basics of the economy when it comes to critical minerals. It is incredibly important to get this right. The idea that you would put forward the political showbag as a solution for something that is absolutely necessary for not only this country but other countries around the world—it’s the reason there are signed agreements with places like Japan, the United States, South Korea and India. The critical mineral supply chain is critical to this country and many others.

There was $2 billion in loans, and we had announcements that were delivered for $239 million provided EcoGraf Limited and Renascor Resources. We also had some $50 million over three years to establish the Virtual National Critical Minerals Research and Development Centre, along with $200 million, if I recall correctly, for grants. And guess what? They got cut in the last budget—not entirely, but they were reduced by those opposite because clearly they didn’t think they were important. So the political show bag cannot be the solution for all things, and it is certainly not $15 billion. That can be checked because it is in the legislation—$5 billion at commencement up to $10 billion by 2029. So they’re confident that they’re still going to be there in 2029. It is quite extraordinary, absolutely extraordinary!

I will return to the appointment of board members. We’ve heard a lot from those opposite and others around transparency in selection, so I thought I should go and read and see exactly what skills you might need to become a member of the board. There’s a pretty good list. It says:

(b) professional credibility and significant standing;

in at least one of the following fields:

(c) banking and finance—


(d) venture capital, private equity or investment by way of lending or provision of credit—

Sounds okay—

(e) economics;

(f) government funding programs or bodies;

(g) accounting;

(h) law;

(i) a priority area of the Australian economy;

(j) industrial relations—

Would you believe—

(k) industry growth—

And, finally—

(l) any other field that the Ministers consider appropriate.

So it is anybody. It doesn’t really matter as long as the minister thinks that that’ll be okay. They can be appointed. In terms of all of those opposite who bang on about transparency and bang on about decisions, this has very clearly been set up to select whoever they want, because that is exactly what the legislation says.

So it will be borrowed money and it will be pushed by the ACTU, according to reports in the media and according to the fact that that was who was consulted. But let’s come back and look at the fundamental problem: if you want manufacturers in this country—and we all do—then they have to be internationally competitive. It’s pretty straightforward how you get there. You must have affordable electricity, affordable gas, affordable energy. You must have an available workforce. You must have people who are actually manufacturing something that the world wants. So you need a market. And, quite simply, you just need to get out of the way of business. Businesses are quite capable of making their own investments and their own decisions if they don’t continually have government interventions—and there have been no worse interventions in recent times than the interventions of those opposite in the gas market and the electricity market, in particular. We have seen that exactly what we warned would happen is happening, and that is that there will not be sufficient investment to bring on more gas. If anyone wants to see what the results are when there is no investment in the resources sector, go to Victoria. It is very straightforward. There has been a moratorium on onshore gas exploration in Victoria for some 10 years. And guess what? They’ve run out of gas. And guess what? When there’s no gas in the markets, and you shortfall the supply, the price goes up and you become uncompetitive. All of those poor manufacturers in Victoria that rely on gas for their energy and for their sourcing for other products are now absolutely getting it in the neck because of decisions of state governments not to develop their own resources.

I don’t see anything in this political show bag that will fix that. I just don’t. The intervention that those opposite are putting forward—the idea that you can shift gas from Gladstone to Melbourne and be competitive on price—is just wrong. It’s not factual. You cannot do it, because you’ve got to transport it. You’ve got to build infrastructure. You have to have pipelines and all the things that go with them. It is not that simple.

We’ve also seen very recently in the press—and I genuinely hope this is not true—that those opposite are considering changing the ADGSM to allow for quarterly decisions, including the ability to block all exports of the gas industry. Mr Deputy Speaker, can you imagine if you had purchased a new car two years ago, and you had borrowed however much money you might have needed—$50,000 or $100,000 or $25,000 or even $10,000 if that’s what you could afford—and the government came to you and said: ‘It doesn’t matter how much equity you have; it doesn’t matter what your loan conditions are; it doesn’t matter what your contract is; we’ve decided that potentially we want you to change that car and get a different car, or not use your car at all, but you will still have those bills.’ That is what’s being proposed, and I hope it’s incorrect, because investment in this country is critical to its success. Investment in the resources sector means jobs, particularly in the regions. Investment in the gas sector means you’ll have lower energy prices and more availability. The idea that you’ll go back to investors and countries who have committed tens of billions of dollars to this nation and tell them, ‘That’s just too bad; we’re going to take your product whether you like it or not,’ is the wrong decision. It sends the wrong message and it is bad for our national reputation.

Over the last few years, COVID has been terrible for all of us, for all Australians. But I’ll tell you what one of the highlights was: the Australian resources sector maintained their operations, maintained their contracts and met those contracts. They enhanced the reputation of this country because of the decisions that they made and the work that they did, and, as a result, they are breaking all records. I’ve seen the most recent forecasts. It could be as much as $460 billion worth of economic activity added to this country from the resources and gas sectors. That is off the back of the fact that they supplied when it was incredibly tough. They supplied when the rest of the world was stopped. They made sure that the countries with which we have agreements—Japan, South Korea and others—had their energy supply and could keep their lights on and keep their people safe, because they had a deal with this country and companies in this country. The idea that those opposite would destroy that reputation is an absolutely false economy. They should absolutely not do it. Do not do it. There will be billions of dollars worth of investment decisions made over the future which simply won’t be positive. They will not take a final decision to invest in Australia knowing that the playing field will change constantly under this federal Labor government. It does not make any sense. It is dangerous for the nation, its reputation and the 1.2 million people who are employed, directly and indirectly, through the resources and energy sector.

I come back to the political showbag. What we see once again from Labor is all politics. It is all noise. What they put forward is not factual. There is not $15 billion in this fund. There is a maximum of $10 billion by 2029. There is $5 billion to start with. So the idea that those opposite purport to hold—that they can cover all of those fields through this simple proposition—is wrong. There are any number of existing policies and programs which have been enormously successful; which are out there, established and budgeted for; and for which processes are in place. You do not need to set up another whole political showbag simply to put the ACTU on the board. We know that that is the proposal the ACTU want, given that they are among the few that were actually consulted. We can put two and two together—well, some of us can. For those opposite, it adds up to 15, but it hasn’t got quite the right numbers.

Once again I come back to where I started. Those opposite will potentially be providing money to state and territory governments who already have any number of other sources. They will be putting forward all sorts of proposals for which there is already existing availability. So we will not be supporting this bill. It is the wrong decision for Australia, and it is a political showbag. (Time expired)

#thegov_button_6624c17459c55 { color: rgba(255,255,255,1); }#thegov_button_6624c17459c55:hover { color: rgba(255,255,255,1); }#thegov_button_6624c17459c55 { border-color: transparent; background-color: rgba(0,82,148,1); }#thegov_button_6624c17459c55:hover { border-color: transparent; background-color: rgba(255,194,14,1); }