Mr RAMSEY (Grey—Opposition Whip) (12:11): 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.