Chapter 2Views on the Bill
2.1This chapter examines stakeholder views on the provisions of the National Reconstruction Fund Corporation Bill 2022 (the bill). It draws on both submissions received, as well as evidence heard by the Senate Economics Legislation Committee (the committee) during the public hearing held in Canberra on 22 February 2023.
2.2This chapter provides an indicative, although not exhaustive, account of the key issues relating to the bill and concludes with the committee’s views and recommendations.
Support for the bill
Investing in rebuilding manufacturing
2.3All submissions to the inquiry and witnesses at the public hearing were supportive of the bill and the objectives of increasing manufacturing in Australia.
2.4Reflecting this goal of diversifying and transforming Australia’s industry and economy, The Centre for New Industry noted that the bill ‘will contribute toward a mission-oriented approach to economic management’, saying further:
Such an approach is essential to provide structure and purpose in navigating the next phase of Australian economic development. A return to the “dog days” of low capital investment, poor productivity, low wage growth and marginal uptake of emerging technologies will lead to stagnation and relative decline, as other countries capture the benefits available from post-carbon industries.
2.5Mr Peter Grist from the Australian Chamber of Commerce and Industry (ACCI) provided evidence to the public hearing that ACCI saw the Corporation as an opportunity to support and develop business in Australia as well as export opportunities:
Generally we see the NRF as an opportunity to provide funding to support businesses to develop in Australia. Currently there are a lot of opportunities for businesses—Australia is very good at research and development and innovation—but we have a lot of difficulty in then moving that research and development and innovation into production here in Australia. So the opportunities the NRF provides through the loans and guarantees will give an opportunity for those ideas to be scaled up, commercialised and produced here in Australia. That will potentially provide us with a lot of export opportunities as well.
2.6Submissions from the trade unions were particularly supportive of the Corporation’s potential to create secure jobs in manufacturing sectors, particularly in regional areas. For example, Mr Steve Murphy, National Secretary of the Australian Manufacturing Workers’ Union (AMWU), noted that:
These workers are looking for a sense of confidence about the future, that there is a commitment that there will be something should their current job end. It looks like there will be a trajectory where there will be a reduction in fossil fuels as we transition to new energy. The NRF has a critical role to play in ensuring that, particularly around renewable energy, a lot of the investment be prioritised for the manufacturing of these technologies in areas where these skills are readily available and exist, to support those workers through appropriate training to pick up the skills that they need so that they can get a good, secure, well-paid job should their current job end
Supporting energy transition
2.7A number of submitters support the role the Corporation can play in the energy transition.
2.8Mr Ben Moxham of the Australian Council of Trade Unions (ACTU) also argued the important role that the Corporation could play in Australia’s energy transition:
There are workers and communities that have powered this country for so long that have ideas about how to diversify their regions and manage that transition, and they need support. We're calling for an energy transition authority to amplify their voices, and we think the NRF should have a seat at the table to support that process rather than cut across it.
2.9Support for this position was reiterated by other witnesses, who pointed out the long term nature of investing in renewable technologies which often made them less attractive investments for financial institutions and other private equity.
2.10Mr Andrew Richards, Chief Executive Officer of the Energy Users Association of the Australia (EUAA), argued that renewable technologies often require continuous investment, that there is a global race to attract capital, and that the Corporation could have a strategic role in investing to build Australia’s sovereign capability. He went on to add:
…like many businesses, our member companies are dealing with multiple challenges, including supply chain and labour constraints, significant increases in materials costs, rising interest rates and broader impacts of inflation on overall cost and consumer demand. We're seeing that these issues are, and will continue to be, amplified by the staggering levels of government support we're seeing in the USA through the Inflation Reduction Act and in the EU as they respond to the Russia-Ukraine War. These things are acting as powerful magnets for people, material resources, technology and capital. So it's in this context that we'd like to express our support for the National Reconstruction Fund, or NRF.
2.11Evidence provided by the Maritime Union of Australia (MUA) reinforced the point that the Corporation will directly and indirectly support areas of Australia in the renewable energy transition:
For example, very large quantities of electricity cable will need to be manufactured to connect onshore and offshore renewable energy to the grid, and this could be addressed through the NRF.
Industry support
2.12Reinforcing the need for the investment provided by the Corporation, many submissions to the inquiry made representations about the need for investment in particular industries.
2.13Submitters also favoured a regional and precinct based approached to investment.
2.14Taking a strategic perspective, Ms Louise McGrath of the Australian Industry Group (AIG), stated that the Corporation would need to provide investment products which were distinct from the products already provided by commercial banks and other existing investment markets, but there was an opportunity for it to provide an ‘ecosystem approach’ to industries, and ‘unlock the potential for future industries’. She said further:
…if we just think more broadly about where we want the Australian economy to move, in response to global pressures and trends and our own desires, we can actually unlock further industry to support that.
2.15Ms Heidi Lee, Chief Executive Officer, Beyond Zero Emissions, said a precinct based approach to energy demand would assist the manufacturing sector:
There is no way to lose by investing in a precinct based approach to energy demand in our manufacturing sector. The longevity of this sector, being able to maintain and grow a workforce and being able to commercialise more Australian innovation onshore all depend on us being able to take our existing industrial manufacturing areas and transition them quickly to renewable energy. We can do the efficiency stuff today, but we need to be able to look at facilities like the National Reconstruction Fund to be able to coordinate investment into a precinct based approach.
2.16Research Australia advocated for the Corporation to target assistance to Australia’s medical research industry as it:
…provides the opportunity to better leverage Australia’s world leading health and medical research and create a vibrant and successful medical products industry which propels Australia forward to become a net exporter of medical products.
2.17Other stakeholders reiterated the importance of partnering with universities to develop Australia’s industrial and research sectors and how this should one of the main aims of the Corporation.
2.18Mr Luke Sheehy of the Australian Technology Network of Universities (ATN) also pointed out that ATN’s member universities have significant global links and that the priority areas of the Fund, particularly those relating to energy transformation, send an important signal to their international research partners. He said:
Recently I took a trip to Germany, where we have a partnership with a German technology university group, TU9, and our discussions were primarily focused on Australia's capacity to deliver clean energy in the form of hydrogen to Germany, and discussions around transforming their industrial base to take that clean energy. So this fund is an important signal not only domestically but for what we're doing internationally, so we warmly welcome it.
2.19In its submission and in giving evidence at the public hearing, the Australian Aluminium Council noted that Australia is one of the few countries that both mines and processes the raw materials that become aluminium. It said that given the importance of aluminium to a decarbonised economy, there is significant opportunity for Australia to ‘lead the world in development and implementation of these technologies’ which investment in the aluminium industry would assist with. Ms Marghanita Johnson, the Chief Executive Officer of the Australian Aluminium Council said that the Corporation could provide ‘a world of opportunity for our industry’.
2.20The Business Council of Co-operatives and Mutuals (BCCM) welcomed eligibility for co-operatively owned businesses. It argued that many of Australia’s canneries had been co-operatively owned but the lack of access to capital for this kind of ownership structure had led to the corporatisation, and eventual offshoring, of many of these businesses. The Corporation could provide access to capital and the ability to grow these kinds of businesses.
2.21Ms Melina Morrison of the BCCM also emphasised that the Corporation could work to strengthen the ‘missing middle’ of Australian domestically owned businesses, where there has increasingly been a large number of small enterprises and larger corporations dominating the marketplace.
Urgency of bill passing
2.22Several stakeholders highlighted the urgent need for the bill and the capital investment the fund would provide. This was a particular concern for witnesses working in the renewable energy sector as other countries moved towards energy transition. For example, Mr Richards of the Energy Users Association of Australia (EUAA) emphasised that it was critical that the Corporation be implemented quickly due to the move towards a decarbonised electricity sector and the high amounts of investment this sector will require in the next 20 years.
2.23The quick passage of the bill was also supported by Mr Thomas McMahon of the Tech Council of Australia (TCA). He argued that the Australian technology sector, in areas like artificial intelligence, quantum computing and cybersecurity, requires ‘more patient capital than is generally provided by private sector investors alone’ and the Corporation could provide significant investment in this space.
2.24Mr Greg Mullins, Head of Policy at Research Australia, echoed this point, stating there was a need to ‘act now’ so that Australian industry such as medical manufacturing would not be beaten by overseas competitors:
There is a global race for capital…We can't afford to wait. We've seen how quickly some of these things move…You really need to be on the front foot with this, looking at those kinds of industries getting in at that really early stage. If you wait, you are going to be beaten by competitors overseas. You've got to act now.
2.25Ms Lee of Beyond Zero Emissions said it was of critical importance the bill be passed so that funds can be released into the priority areas, specifically renewable and low emission technologies:
It is absolutely critical that we get funds released out of this and into these priority areas straightaway and from our research and our perspective, starting with manufacturing and starting with these precincts.
Objects of the bill
Secure well-paid jobs
2.26The object of the bill is contained within clause three and currently reads:
The object of this Act is to establish the National Reconstruction Fund Corporation to facilitate increased flows of finance into priority areas of the Australian economy.
2.27Several stakeholders to the inquiry commented on the object of the bill and suggested that it could be expanded. For example, the ACTU was firm in its view that the overall goals of the Corporation should be legislated as objects. At the public hearing, Mr Moxham of the ACTU said the objects should be expanded to include ‘secure jobs, a high-skilled, adaptable manufacturing workforce; and regional economic diversification.’
2.28This view was supported by the MUA and the AMWU.
2.29In particular, Mr Moxham of the ACTU argued for enshrining the goal of secure jobs in the objects of the legislation:
We think that if parliament is going to create and sign off on the National Reconstruction Fund Corporation then it should embed it in the objects so it's there and it's a decision of parliament.
2.30Dr Penny Howard of the MUA provided an example of an Act with a more expansive objects clause currently in force:
The New South Wales Electricity Infrastructure Investment Act, right at the front in the objects of the act…has, 'foster local community support', 'support economic development and manufacturing', 'invest in education', 'create employment, including employment for Aboriginal and Torres Strait Islander people', and 'promote local industry, manufacturing and jobs'…It is an absolute waste and a travesty if we spend this much money without actually trying to meet all of these different objectives, which cut across this government's social objectives in many different areas.
2.31However, support to expand the object of the act was not universal. The TCA considered it important for the National Reconstruction Fund to maintain the flexibility to invest in a wide variety of industries which would benefit the national interest and generate a return to government. It was concerned that the ACTU’s proposal to expand the objects of the bill may restrict the Corporation’s ability to act flexibly.
2.32The TCA was supportive of the goal of secure, well-paid jobs for Australian workers but argued that the Board and other employees of the fund should have flexibility to find ‘the best opportunities to invest in’. Mr McMahon observed that the skills of the tech sector are in high demand and the industry has very high labour productivity as well as a large amount of employee ownership of shares in companies. He said that his organisation shared in the aspiration of Australians being employed in well-paid, secure jobs and that if the Corporation is able to invest in promising areas of technology ‘we will see people in very high paid, secure, flexible jobs.’
Priority areas and the Investment Mandate
The Use of Delegated Legislation
2.33The purpose of the Corporation will be to invest in the priority areas of the Australian economy. Clause six of the bill states that the Ministers may declare priority areas through a disallowable legislative instrument.
2.34The priority areas of the Australian economy identified by the Government are:
Renewables and low-emission technologies;
Medical science;
Transport;
Value-add in the agriculture, forestry and fisheries sectors;
Value-add in resources;
Defence capability; and
Enabling capabilities.
2.35Clause 71 of the bill sets out the Investment Mandate of the Corporation. Under this clause the Ministers may provide the board with directions about the performance of the Corporation’s investment functions and/or the exercise of its investment powers through a non-disallowable legislative instrument. Subclause 71(3) provides a non-exhaustive list of matters the Investment Mandate may cover.
2.36The committee received representations from a variety of witnesses about the proposed priority areas and the Investment Mandate of the Corporation, especially where the detail is proposed to be included in delegated legislation.
2.37Some stakeholders suggested further details on priority areas be included in the bill. The ACTU in providing evidence to the hearing said flexibility of priority areas within a framework was ideal:
We actually say that the overall goals of the fund should be legislated. These include secure jobs; a high-skilled, adaptable manufacturing workforce; and regional economic diversification—the bigger goals. In terms of the particular sectors, we didn't actually say anything in the submission about legislating those, but I think it's an open question whether there's value in that. But we also see value in having some flexibility to adapt or change that list, within the framework of trying to meet those bigger goals.
2.38That said, other stakeholders were in favour of the priority areas and Investment Mandate being separately listed in delegated legislation rather than forming part of the bill, for reasons largely relating to the flexibility it would provide to the Corporation when investing.
2.39The TCA stated that the Investment Mandate being in delegated legislation allows the Corporation to adapt to change in the market and in technology. It stated that providing the Board and CEO with flexibility to adopt private sector operating practices would allow the Corporation to work effectively with co-investors and make investment decisions quickly, something which was vital for the tech sector.
2.40Research Australia was also supportive of the priority areas not forming part of the bill, stating:
…enabling the Ministers to identify priority areas and to provide instructions to the NRF, including the Investment Mandate, are important features of the Bill, enabling it to consider the national interest as well as profitability. In such an environment, striking a balance between Ministerial direction and the NRF’s independence in making investment decisions is important, and the Bill achieves this.
The scope of the investment mandate
2.41Ms Narelle Luchetti of the Department of Industry, Science and Resources (DISR) explained the reasoning for making the investment mandate a non-disallowable instrument:
The reason for that is to give that certainty to the board so that, when the board are making investment decisions, they are aware of the guidance direction of the government of the day and those two ministers who have signed off on that investment mandate.
2.42Submitters to the inquiry also queried the scope of the investment mandate and whether the matters referred to in clause 71 provided enough direction to the Board.
2.43In response to these queries, Ms Luchetti of DISR explained that the Department’s approach for the investment mandate was consistent with the approach taken for other government investment vehicles such as the Clean Energy Finance Corporation (CEFC) and the North Australia Infrastructure Facility (NAIF). Ms Luchetti also advised that the Department had undertaken a large amount of consultation and was in the process of providing advice to government. She explained further that the draft investment mandate will be provided to the Board which will then have an opportunity to provide feedback to the government before the draft is finalised.
2.44Ms Luchetti also indicated the Department was in the process of finalising the Investment Mandate and the priority area declaration which will be put to government as part of the process for the 2023 Budget.
Identified priority areas
2.45There was broad support for the priority areas chosen by the Government for investment by the Corporation; with some stakeholders noting how the priority areas aligned with their activities. For example, Ms Heidi Lee of Beyond Zero Emissions was highly supportive of renewables and low emissions technologies being included in the priority areas and noted the need for a large amount of investment in this space.
2.46Ms Johnson from the Australian Aluminium Council indicated that two of the listed priority areas would be of direct relevance to her industry: value-adding for resources and renewable and low-emission technologies.
2.47Mrs Tanya Barden of the Australian Food and Grocery Council (AFGC) listed three priority areas which would be particularly helpful for the food and grocery manufacturing sector: value-add in agriculture and food processing, renewables and low emission technologies and transport.
2.48Mr Peter Chesworth of Universities Australia (UA) stated that the priority areas aligned very well with the existing collaboration between universities and industry and that much of the research work done by Australian universities fits under one of the seven priority areas.
2.49Other stakeholders suggested there were several other areas of the Australian economy which could provide substantial productivity improvements through investment. For example, the ACCI was of the view that the list should be broadened and that there should be opportunities for members of the board to determine the priority areas.
2.50Mr James Brown, Chief Executive Officer of the Space Industry Association of Australia (SIAA) reinforced that the space industry should be its own priority area. He explained that governments play a large role in the space industry globally due to the complex and long-term nature of space projects, as well as the tendency of these programs to have a dual civilian and military component. He contended that the Corporation was well placed to build capacity in the Australia space industry.
2.51While supportive of the seven priority areas identified, Mr Ben Moxham of the ACTU acknowledged the need for flexibility in the priority to list to adapt as technology and circumstances change.
2.52DISR gave evidence that it is continuing to work with industry on the seven priority areas and on developing co-investment plans for each of the areas. These co-investment plans will provide guidance to the Department from an industry-policy perspective but will also feed into the future work of the Corporation.
2.53Ms Luchetti of DISR also stated that the priority area declaration as well as the co-investment plans will give the Board a greater level of detail about the monetary and non-monetary issues of each priority area.
Grants to the States and Territories
2.54Some submitters raised concerns about the Corporation’s ability to make grants to the States and Territories as part of the Investment Mandate. (See chapter one for more discussion of this grants power as raised by the Scrutiny Committee.)
2.55However, Ms Nadia Rosenman from DISR explained that the investment power in the bill contained in clause 71 refers to providing ‘financial accommodation’ to the States and Territories. Financial accommodation is defined in the bill under clause five as expressly excluding grants.
Solely or mainly Australian based
2.56Clause 69 of the bill requires that the Board must take reasonable steps to ensure that the Corporation’s investments are ‘solely or mainly Australian-based.’ No definition of ‘solely or mainly Australian-based’ is provided in the bill. Subclause 70(2) of the bill requires the Board to make written guidelines setting out the circumstances, conditions or other matters which will satisfy it as to whether a particular investment is ‘solely or mainly Australian-based.’
2.57Some submitters were in favour of an objective test within the bill as to whether an investment is Australian based while others suggested certain thresholds be legislated.
2.58The ACCI suggested that the threshold for whether an investment was Australian-based should be included in the bill, ‘set at 75 per cent of revenue derived from Australian-based production at the time of investment.’ This 75 per cent threshold would also be extended to the equity ownerships of the entity seeking funding.
2.59On questioning as to why the ACCI had suggested a threshold of 75 per cent of Australian ownership, Mr Peter Grist stated that the ACCI had wanted to set a high bar of Australian ownership to promote growing and developing Australian businesses.
2.60This opinion was echoed by the BCCM, though this organisation recommended an ownership threshold of 50 per cent. The BCCM also recommended that clause 82 of the bill be amended to require the Corporation to report on the domestic ownership and the ownership structures of its investees.
2.61Taking a different view, the AFGC stated in its submission that limiting financing to companies with a particular Australian ownership share was problematic for the food and beverage sector. Most investment in this sector takes place in multinational firms with ‘global significance and presence in Australia.’ The investment of these larger firms, worth around $3 billion per year, is provided to small and medium sized organisations and adds diversity to their sector.
2.62Ms Rosenman of DISR clarified in the hearing that ‘solely or mainly Australian based’ would ultimately be decided at the satisfaction of the board, and that the model for this measure derived from the CEFC.
Governance
Board composition
2.63Clause 19 of the bill governs the appointment of Board members. Members of the Board are to be appointed by the Ministers. Subclause 19(2) sets out a list of areas of expertise that a potential Board appointee should have ‘substantial expertise or experience’ or ‘professional credibility or significant standing’ in which the Minister can take into account in making appointments.
2.64Submitters endorsed the independence of the board, with many welcoming the fact that the Corporation is based on the successful model of the CEFC.
2.65Several submissions and witnesses to the inquiry made representations about the governance model of the Corporation, the makeup of the Board, and industry or sector representation on advisory committees to the Board.
2.66For example, the ATN expressed the view that relevant clauses of the bill should be amended to include ‘experience in universities, research and development’ to the list of areas of expertise the Minister could consider when making decisions about board appointments.
2.67Submissions from unions were firm in the view that Board membership should include representation from union members. For example, the ACTU stated that the Board of the Corporation should have equal representation from industry, trade unions and other expertise, noting that this tripartite model of governance is ‘widespread, well tested and a strong way to ensure informed and robust decision making’.
2.68All unions submitters provided examples of other organisations with tripartite governance models and their successes, such as the New South Wales Renewable Energy Sector Board, the Queensland Government’s renewable energy training centre, and industry superannuation companies.
2.69The ACTU was unequivocal in its views:
…that's the formula that should be at the heart of the National Reconstruction Fund. It is at the heart of a range of other tripartite structures, and we say it works incredibly well. These are not politicised appointments; this is getting the best people around the table to make decisions necessary for industry transformation, which this country has not done successfully for the last decade.
2.70Mr Murphy of the AMWU made clear the position that the Corporation’s board must have union and industry representation on it:
Workers know more about their industry, they know more about their jobs and they know more about how to improve productivity and safety than a lot of people who sit on the boards right now. We are a vehicle to get that voice on there. The track record of industry super funds stands for itself.
2.71Other submitters were not supportive of this position, advocating that the CEFC’s model for board membership should be implemented. This would provide the Board with the flexibility needed to implement its investment strategy.
2.72Mr McMahon of the TCA expressed that while the membership of the Board was a matter for the Ministers’, two seats of the board reserved for union representation would be a significant share and would perhaps not be appropriate.
2.73The ACCI was also not supportive of the tripartite board membership proposal, saying that while it was appropriate for the Ministers to approve the Corporation’s Board membership, recruitment should be done through an arms-length, standard recruitment processes. Mr David Alexander the Chief of Policy and Advocacy of the ACCI said ‘a formal recruitment process would build confidence that the board is appropriately skilled. There is no reason that there needs to be a provision that allows for formal recruitment processes to be bypassed.’
Committees and other advisory bodies
2.74Several submissions to the inquiry proposed committees and other advisory bodies which could provide the Board with industry-specific advice around potential investments. For example, Dr Peter Chesworth, Deputy Chief Executive of UA, commented that in the past there was a tendency for this kind of government corporation to have advisory bodies primarily drawn from the business sector. Considering the important role that universities played in research and development in Australia, University representation on the board would be very important for the Corporation.
2.75The ACTU drew the committee’s attention to the need for the Corporation to ensure that the companies or other bodies it invests in ‘are creating secure, well-paid jobs, along with other Environmental, Social and Governance (ESG) criteria.’ In this vein, it suggested that the bill be amended to establish a ‘Labour Standard and ESG Committee’ which would develop policy in relation to these matters and report to the board on the same.
2.76The Australian Academy of Science also suggested the creation of a committee, proposing that the board create an appropriate body to provide advice and analysis on innovative projects. It also suggested that clause 48 be amended to recognise and empower this proposed committee specifically.
2.77Mr Chris Anderson of the Australian Academy of Science said:
The NRF board will need to be equipped to distinguish between future technology that is ambitious yet plausible and that which is oversold and impossible. It will need high-quality, independent, reliable scientific advice from people with the expertise to provide it.
2.78The Australian Banking Association suggested a panel of financiers which would consult with the Corporation’s Board and executives on the ‘broader investment landscape, potential opportunities and to gauge the risk appetite for the appropriateness of a project.’
Other matters raised in submissions
2.79Various other submitters to the inquiry made suggestions on improvements or amendments to the bill.
Transparency and reporting
2.80Several stakeholders suggested amendments to improve transparency and reporting of the Corporation’s activities. For example, the ACCI argued that it was important for the Corporation’s assessment processes for deciding investments be transparent:
To ensure the process is transparent, the NRF Corporation should be required to clearly set out the details of the assessment process for all potential projects. assessment criteria (including weightings) should be upfront and transparent, with the documentation of this assessment publicly available on the NRF website. Decisions can then be explained based on these assessment criteria.
2.81Research Australia made other recommendations around reporting requirements of the Corporation contained in the bill:
That clause 82 (Publication of investment reports) be amended to require the reports in question to identify recipients of investment and to specify the priority area the recipient relates to; and
That clause 91 (Periodic reviews of the operation of this Act) of the bill be amended to require the Ministers to report to the Parliament on how the Corporation has supported research, innovation and manufacturing.
2.82The AFGC also commented on clause 91 of the bill and the requirement for a review of Act within five years of commencement. Its view was that due to the size of the financial accommodation made available through the Corporation, the Act should be reviewed within three years of commencement.
Financial returns, investment types and surplus capital
2.83Various stakeholders raised the financial arrangements around the proposed rate of return, investment types and the potential for the Minister to direct the Corporation to return surplus capital.
2.84The AFGC was of the view that the Corporation should break even rather than turn a profit, reflecting the purpose of the fund to support emerging sectors which cannot attract private sector investment.
2.85Additionally, the ABA indicated the need for the Government and the Corporation to take measures to ensure that its role is one of crowding in private investments, not crowding them out, referencing the success of the CEFC model in doing this:
Taking the example of the Clean Energy Finance Corporation, the corporation has very successfully filled a funding gap in the Australian market where traditional sources of debt and equity financing have not been able to address the need… We see a very similar possibility for the National Reconstruction Fund in, again, filling that gap, in identifying key areas of technology and value-add—I think that's how the government describes it—in these key priority areas.
2.86Other submitters were concerned about the Corporation’s ability to provide investment to specific ownership structures.The BCCM recommended that the definition of an ‘equity interest (contained in clause 5 of the bill) be amended to include co-operative capital units so these kinds of operations can receive investment from the Corporation. Mr Anthony Taylor of the BCCM stated that the organisation’s primary concern was clarification, as it was not clear under the current clauses of the bill whether a co-operative capital unit could receive funding from the Corporation.
2.87There were also concerns raised about clause 58 of the bill. This clause allows the Ministers to direct the Corporation to pay surplus funds in the Corporation’s special account in excess of $20 million to the Commonwealth. The ACCI was of the view that this clause should be removed, and all surplus funds of the Corporation be retained by the Corporation for reinvestment and support of other ongoing investments.
2.88DISR explained that the Corporation’s special account forms part of consolidated revenue and can be reinvested into the Corporation. It further confirmed that the Ministers cannot reappropriate those funds to other parts of their portfolios.
Committee View
2.89The committee would like to thank all the stakeholders who took the time to submit to the inquiry and appeared at the public hearing, and appreciates the time taken by submitters to recommend further measures to improve the bill.
2.90The committee welcomes support of submitters for the National Reconstruction Fund Corporation to support, diversify and transform Australia’s industry and economy, leverage Australia’s natural and competitive strengths, support the growth of a vibrant and modern economy, and better position industry to be successful in a net-zero economy and more resilient against supply chain vulnerabilities.
2.91The committee welcomes the enthusiasm in the inquiry for the role the Corporation can play in achieving a net-zero economy though investing in renewable and low emission technologies.
2.92The committee further welcomes support for the goals of encouraging private investment, assisting with commercialisation of innovation, developing sovereign capabilities and driving regional diversification while supporting projects that add value, improve productivity and create secure, high-value jobs.
2.93The committee is reassured by evidence that, on balance, the Corporation will play an important role in crowding in private sector investment, and delivering the long term, patient capital that industry transformation requires.
2.94The committee acknowledges consistent support amongst submitters for modelling the Corporation on the CEFC, comprising an independent expert Board, a non-disallowable Investment Mandate, and detailed investment policies to be developed by the Board.
2.95The committee notes the calls from stakeholders for the objects of the bill to specifically include the creation of secure, well-paid jobs, and considers that there is a need to ensure that the economic and social benefits afforded by the Corporation are shared throughout the community.
2.96The committee therefore encourages Government to ensure that the Corporation must specifically consider the objective of creating secure well-paid job, as part of the key functions of the Board.
2.97The committee notes the calls from some witnesses to expand the priority areas of the fund to other Australian industries. The committee is of the opinion that the current priority areas as set out by the government are appropriate, well-supported, and have been well-consulted throughout the process of developing and reviewing the bill. The committee further notes the complementarity of the space industry with the seven identified priority areas and encourages Government to consider its eligibility for the National Reconstruction Fund.
2.98The committee appreciates the suggestions surrounding the governance of the Corporation and the calls for different board composition and advisory bodies.
2.99The committee believes independence of the Corporation board from Government is critical and supports the independent model prescribed in the bill.
2.100The committee also believes that the knowledge and expertise of workers and unions in priority sectors of the economy can be useful in providing direction in how to reinvigorate Australian industry.
2.101The committee therefore encourages Government to consider how the knowledge and expertise of workers and unions in priority sectors of the economy can be harnessed in meeting the objectives of the Corporation.
2.102The committee was pleased to see such overwhelming support for this bill as well as the support for the priority areas which have been nominated by government. The National Reconstruction Fund Corporation Bill is an important piece of legislation which represents a real opportunity for many Australian industries to grow and compete in an increasingly globalised market.
2.103 The committee recommends that the bill be passed.
Senator Jess Walsh
Chair
Labor Senator for Victoria