Additional Comments - The Greens

1.1The National Reconstruction Fund Corporation Bill 2022 would invest in rebuilding Australian industry and manufacturing, a public policy outcome that the Australian Greens welcome.

1.2The Australian Greens strongly support public investment in rebuilding manufacturing in Australia. At the last federal election, the Greens proposed a $15 billion Made in Australia Bank.[1] This bank would support and finance manufacturing, innovation, industrial decarbonisation and re-localisation of supply chains.

1.3Broadly, the stated aims of the National Reconstruction Fund Corporation are supported by the Greens, in particular a reinvigorated role for state-led investment in designated priority areas of the economy.

1.4As noted by the Tech Council:

Given the long-term and strategic nature of these investments, governments are often the best-placed actors in an economy to address this gap by being patient funders of strategic investments and crowding-in further private investment.[2]

1.5While the broad aims of the NRF are consistent with Greens policy, we maintained serious concerns regarding the potential for fossil fuel finance under the original bill as proposed.

Concerns regarding coal and gas

1.6The legislation as originally proposed was wide open to abuse by governments that want to use the $15 billion for more coal and gas. That’s a risk that the Australian Greens simply could not take. We need legislative restrictions to stop public money being used to prop up coal and gas.

1.7Coal and gas are the main causes of the climate crisis. To have any chance of getting the climate crisis under control and meeting even the net zero climate targets that the government claims to support, there can be no new coal and gas projects. This is the view of the conservative International Energy Agency,[3] the United Nations Secretary-General[4] and the world’s scientists.[5]

1.8Concerningly, there was nothing in the proposed legislation itself to prevent investment in coal and gas, or in projects that would lock in and extend the use of coal and gas. Anything the Government of the day chooses to support could be declared priority areas for investment in the future.

1.9Under the original proposed legislation, the Minister would issue the Investment Mandate as a non-disallowable legislative instrument, and declare the priority areas of the Australian economy in the form of a disallowable legislative instrument.

1.10Likewise, the scope of matters that a Government can specify in the Investment Mandate, which is not disallowable, affords very considerable discretion. While a degree of discretion and flexibility is desirable for the efficient operation of the NRF, the broad lack of guardrails against investment in coal and gas were extremely concerning.

1.11The only limiting factor in this bill as originally drafted were the rules preventing a Government from dictating that the NRF undertake a specific investment.

1.12The Minister provided a good deal of detail on the proposed priority areas and we thank him for his collegiate approach - but the detail provided is effectively a moot point when there were so few limitations on what industries the Government of the day can choose to direct the NRF toward.

1.13Questions in Senate Estimates asked by the Australian Greens revealed that under the originally proposed bill the Government could use the $15 billion National Reconstruction Fund as a slush fund for coal and gas.

1.14The Department of Industry, Science and Resources confirmed that under the originally proposed legislation, the Government of the day could invest in coal and gas by simply changing the priority investment areas, subject to the revised priority areas not being disallowed by the Senate.[6]

1.15The draft priority areas of the economy for investment circulated by the Government set out the following areas: renewables and low emissions technologies; medical science; transport; value-add in the agriculture, forestry and fisheries sectors; value-add in resources; defence capability; enabling capabilities.

1.16The Department of Industry, Science and Resources confirmed that it would be a decision of government as to whether Carbon Capture, Use and Storage (CCUS) technology - a notorious method of expanding gas extraction, enhancing oil recovery and delaying emissions reduction - would be considered a ‘low emissions technology’ and therefore fall under the priority areas.[7]

1.17However, whether the priority areas flagged by the current Government are fit-for-purpose or not is beside the point. As noted, the Government of the day is able to change priority areas, subject only to the lower bar of a disagreed-to disallowance motion.

1.18There was real risk with this legislation that this Government, or subsequent Governments, would have almost unlimited discretion to declare ‘priority areas’ for a gas fired recovery or a coal mine renaissance.

1.19This is a view shared by Labor’s own members, who made a submission to the Department’s consultation.

1.20In a submission to the Department of Industry, Science and Resources’ consultation on the National Reconstruction Fund, the Labor Environment Action Network Australia (LEAN Australia), stated:

LEAN strongly recommends that the NRF not invest in any technology which will support further fossil fuel development including discredited carbon capture and storage processes or ‘clean gas or coal’ technologies. All NRF investment should support the delivery of policy to deliver net zero by 2050, an end to extinctions and delivery of Kunming-Montreal Global Biodiversity Framework obligations. All proposals should be tested for alignment with the Government's existing commitments and policy priorities.[8]

1.21Other submitters also highlighted the fact that coal and gas should not play a part in the future of modern manufacturing in Australia.

1.22Ms Heidi Lee, CEO of Beyond Zero Emissions gave evidence as to the role that coal and gas should play in manufacturing:

When we looked at shoring up and giving confidence to the manufacturing sector and the businesses in it—nobody is looking for any fossil fuel input streams for that. What we hear are people looking at the time frame for when they can turn off existing coal and gas use in their facilities, and this is because, for the facilities that we are looking at, everyone is dependent not just on Australian financiers but also on global finance, so the medium- to large-end of-town businesses. All of that investment money is looking for ways to decarbonise, so we're seeing that in so many commercial, financial and other businesses. There's a whole lot of pressure on these businesses from all sides—from shareholders as well, for those that are public—and all the pressure is on transitioning to renewables. The question is: how fast? There is a need to make sure that energy is reliable today, but there is no increasing demand that we see for future-proofed manufacturing to have any fossil fuels.[9]

1.23The Australian Greens had serious concerns that the bill as it was originally proposed is wide open to being used as a vessel for fossil fuel finance. It is our view that the National Reconstruction Fund must not be allowed to invest in coal and gas and supporting infrastructure and these amendments were secured in the House of Representatives on 9 March 2023.

Amendment to ban investment in coal and gas projects or logging of native forests

1.24The Australian Greens successfully amended the National Reconstruction Fund Corporation Bill (2022) during consideration-in-detail in the House of Representatives.

1.25The Greens amendment creates a class of ‘prohibited investments’ within the legislation that explicitly bans the National Reconstruction Fund Corporation from financing the extraction of coal and gas, the construction of gas pipelines and the logging of native forests.

1.26The Greens have also secured a government amendment so that Investments made by the Board will also have to align with the legislated climate targets and any future updated commitment by Australia under the Paris Agreement. The government has undertaken to move this amendment in the Senate.

1.27The amendments the Greens have secured will ensure that the National Reconstruction Fund will be focused on creating high-quality jobs across a diverse economy, particularly in regional Australia.

1.28The Coalition tried to use public money to fund coal and gas through the Clean Energy Finance Corporation and they were unable to do so because of the guardrails that the Greens and Labor put in place. Now we have the same assurance that the National Reconstruction Fund will not be used to fund the climate crisis.

1.29Every cent spent on coal and gas would wreck the climate and divert much needed funding from manufacturing initiatives, especially in regional Australia. The Greens have made sure that this fund will only be invested in building the future of Australian manufacturing, not propping up coal and gas corporations.

1.30The Greens will now support the passage of the bill through the House of Representatives with the government agreeing to support the Greens amendments on coal and gas and native forest logging. The Greens will also support the bill in the Senate subject to consideration of government and other amendments.

1.31The committee recommends that the bill be passed as amended subject to consideration of government and other amendments in the Senate.

Senator Penny Allman-Payne

Substitute Member

Greens Senator for Queensland

Footnotes

[1]Australian Greens, ‘Greens $15 billion plan for a “Made in Australia” Bank to power clean energy future’, Media Release, 6 May 2022, https://greensmps.org.au/articles/greens-15-billion-plan-made-australia-bank-power-clean-energy-future (accessed 10 March 2023).

[2]TCA, Submission 11, p. 2.

[3]International Energy Agency, ‘Net Zero by 2050: A Roadmap for the Global Energy Sector, May 2021, pp.18-19, https://www.iea.org/reports/net-zero-by-2050 (accessed 10 March 2023).

[4]United Nations, ‘Secretary-General’s briefing to the General Assembly on Priorities for 2023’, 6 February 2023, https://www.un.org/sg/en/content/sg/statement/2023-02-06/secretary-generals-briefing-the-general-assembly-priorities-for-2023-scroll-down-for-bilingual-delivered-all-english-and-all-french-versions (accessed 10 March 2023).

[5]The Australia Institute, ‘An Open Letter: No New Coal Mines’, 27 November 2015, https://australiainstitute.org.au/wp-content/uploads/2020/12/New-Scientist-Press-ad-PRESS-REISSUE_0.pdf (accessed 10 March 2023)

[6]Ms Luchetti, DISR, Committee Hansard, 16 February 2023, p. 94.

[7]Ms Luchetti, DISR, Committee Hansard, 16 February 2023, p. 94.

[8]Labor Environment Action Network (LEAN). Submission to the National Reconstruction Fund consultation 2023, 2 February 2023, https://consult.industry.gov.au/national-reconstruction-fund/submission/view/63 (accessed 10 March 2023).

[9]Ms Lee, BZE, Proof Committee Hansard, 22 February 2023, p. 29.