Analysis and Commentary

Husic keen to get investment flowing from National Reconstruction Fund

Analysis and Commentary

Now that industry and science minister Ed Husic has introduced legislation to establish the $15 billion National Reconstruction Fund, setting off a period of consultation, the big questions for the government is who will lead the NRF and how will it function. Here Husic talks with Peter Roberts.

Industry and science minister Ed Husic is a man on a mission – a mission to get the government’s signature programme to revive the fortunes of manufacturing industry up and running – the $15 billion National Reconstruction fund.

He told @AuManufacturing: ” I am probably the most impatient person in the government, I would love that to happen as soon as humanly possible.

“But the fund will be managed by an independent board – they will need to make their mind up on the basis of the propositions being put before then what they want to back. But we do need to see those investments start flowing as soon as they possible can.”

With the Department of Industry Science and Resources issuing a discussion paper on the focus for the NRF, the first task is to consult with the manufacturing and finance sectors to flesh out how the fund will work.

We know the NRF will be modelled on the successful Clean Energy Finance Corporation and we know it will invest across seven priority areas:

  • Renewables and low emissions technologies
  • Medical science
  • Transport
  • Value-add in the agriculture, forestry and fisheries sectors
  • Value-add in resources
  • Defence capability
  • And enabling capabilities.

The next, and most critical, decision are identifying and recruiting the board who will guide the organisation, with the first step to be the establishment of a reference group that will develop the fund’s investment mandate.

Husic said: “That investment mandate will be used by the board to get a clear sense of what the government’s priorities are.

“Once that work is done we will then go to the next phase which is to select who will sit on the board.

“Some of the members (of the reference group) may continue on and serve in a board capacity, and others may be brought in.

“We hope to make an announcement in the very near future about the composition of the reference group.”

Membership will be negotiated between Husic and finance minister Senator Katy Gallagher, and then put to Cabinet for discussion and final approval.

As for the critical position of Chair of the board: “We hope they are someone who can lever off their experience and their expertise in investment and industry circles, but that they certainly share a belief in the value of a government body to strengthen industry capability.

“And also that they get too what we are trying to do which is to encourage activity across the country, that it is not just capital cities focused, that we are also looking to see what we can do to encourage regional economic development through the fund as well.

“A chair would need to clearly recognise where the government is headed with the fund, what are the motivations of the fund, but ultimately as a government we will respect the independence of the fund too, to make the right calls.”

Husic said one of the big motivations in setting up the fund is that the public had seen ‘a previous government’ use taxpayer dollars in a way that a lot in the community were not very happy with.

“We want this fund to create confidence in the public mind that we can build industry capability, look after the taxpayer dollar, and leave something of long term economic and social good.”

Husic said the government would be talking to the states which are similarly backing businesses in their jurisdictions – talks have been held with Victoria and Queensland – aiming to have them help generate projects to be considered by the fund.

“We want to make sure that from the moment the NRF is stood up and the doors are open that we can start having those investment propositions being considered by the board.”

Of course the Albanese government is not the first to come to office intending to revitalise manufacturing, and while the NRF is the biggest funding commitment made to manufacturing, it is still relatively modest, and may still have modest results compared to overseas efforts such as in the United Kingdom and the United States.

Husic said: “I am under no illusion about the size of the job and task ahead of us.

“I do appreciate than manufacturing had been under pressure particularly given so much of its work has been offshored to low wage, low cost, countries.

“The type of behaviours that we are trying to encourage is that to have a modern economy we do need sophisticated capabilities.

“If you look at the priority areas of the plan it will require a lot more advanced manufacturing effort.”

However Husic declined to nominate a target for measuring success for the NRF to aim for such as growth in manufacturing’s share of GDP or growth in national investment in the sector.

“Some of the factors you mentioned are already measured, and obviously we see importantly what we can do to drive better employment growth in the sector, better output and better results in terms of export activity as well.

“I imagine that will all be used to measure the success of the fund.”

Further reading:

Picture: Ed Husic

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