The Albanese government introduced legislation this week for the $15 billion National Reconstruction Fund (NFR), its replacement to the coalition’s Modern Manufacturing Strategy.
Industry and science minister Ed Husic said the NFR was a “nation-building fund” and one of the largest peacetime investments in manufacturing in Australia’s living history.
The NRF is modelled on the Clean Energy Finance Corporation, governed by an independent board making independent investment decisions through loans, guarantees, and equity, including with institutional investors, private equity, and venture capital.
Its goal is to better connect industry to science and ensure Australian innovations and discoveries are commercialised and scaled onshore.
At the National Press Club (NPC) on Wednesday (29 November) Husic said the fund would be administered on the basis that it would achieve a return to cover borrowing costs and have an expected positive underlying cash impact.
“The National Reconstruction Fund will be the connective tissue between human capital and Australia’s technological potential,” Husic said.
The NRF will invest across seven priority areas:
- renewables and low emission technologies;
- medical science;
- transport;
- value-add in agriculture, forestry and fisheries;
- value-add in resources;
- defence capability; and
- enabling capabilities.
Husic and finance minister Katy Gallagher will establish an NRF Reference Group to guide the fund’s development and its investment mandate. There will also be public consultation to further define the scope of the seven priority areas and how the fund will make investment decisions.
“We are taking a collaborative approach and consulting across industry, the finance sector, unions and the community on the implementation of the NRF. This consultation is a crucial first step to guide these significant investments,” Husic said.
More information, including a consultation paper, is available on the Department of Industry, Science and Resources consultation hub.
Gallagher said the fund would support innovation and industry after “years of uncertainty and lack of a plan”.
“The pandemic made it clear that Australia must be a country that supports local businesses and industries to make more things here,” Gallagher said.
Prime minister Anthony Albanese said, “The National Reconstruction Fund will play a key part in ensuring Australia is a country that makes things.
“It will help create secure local jobs, boost sovereign capability and diversify our nation’s industry and economy.
“The National Reconstruction Fund will help Australia capture the opportunities of today and tomorrow, building on our natural and competitive strengths to create a future made in Australia.”
The Australian Food & Grocery Council CEO Tanya Barden welcomed the announcement, saying the right policy support could see food and grocery manufacturing reach its potential to double in value by 2030.
Australia’s food and grocery manufacturing industry is currently worth almost $134 billion and the AFGC has outlined a plan in its Sustaining Australia: Food and Grocery Manufacturing 2030 report to grow that value to $250 billion by 2030 with targeted investment and innovation.
“The vision driving the NRF is the same as the vision for the local food and grocery manufacturing industry – to support investment and innovation to create high-tech, high-value businesses that make high quality goods for Australia and the world.
“This fund recognises the critical importance of domestic industry and sovereign manufacturing capacity to Australia,” Barden said.
Back at the NPC, Husic said the government wanted Australia to be “a country that makes things again” and that it wasn’t “rose-tinted nostalgia” for Australian manufacturing in the past, but “reclaiming the idea of a country that make things, there is the potential to reshape what we as a people can achieve, together. To reinvigorate faith in Australian ideas and know-how.
“To remind ourselves that we have all the ingredients we need right here – the people, the capability, the natural resources – to compete with the best in the world to produce new technologies and research”.
“Manufacturing is more than smokestacks, or rows of workers pumping out parts. Today, if you want to compete you need sharp manufacturing capability,” he said, adding there are companies all over Australia “pioneering new ideas” and “defying doubt”.
“[The NFR] is one mechanism through which we will realise our ambition to better connect science and industry, to ensure Australian-made discoveries can be commercialised and scaled in our nation.
“I don’t want scientists, researchers and innovators thinking their nation turned their back on them, and that the only way to realise their dreams is to head offshore.
“We want more Australian companies to think globally and build locally.
“We have missed opportunities in the past. We are determined we do not do that again,” he said.
Barden said, “Food and grocery manufacturing can play a key role in our economic growth as a high-tech, high-value-add sector that capitalises on our quality produce and technical abilities.
“With 40 per cent of the people working in the industry in regional areas, the industry is not just a driver of the national economy but also the lifeblood of so many regional and rural centres.
“We look forward to working with the government to help create the strong manufacturing capabilities that will secure the nation’s future,” Barden said.
Robotics, innovation, and STEM
Husic also announced the government was developing a National Robotics Strategy.
“You might not know this, but Australia is a global leader in field robotics - robots that operate in large, unstructured outdoor domains, like aerial, land, and underwater robots.
“In 2021, robotics companies were estimated to be worth $18 billion in annual revenue to the Australian economy, up from $12 billion in 2018.
“Robotics technologies will be part of our industrial future. And this is why I have also committed to delivering a National Robotics Strategy.
“It’s not about replacing workers. It cannot be about replacing workers. We are not racing against robots we are racing with them – to industries and jobs of the future. Manufacturers are already entwining automation with human skill, to develop secure, well-paying jobs.”
Husic also raised the issue of R&D and innovation. While Australia is ranked fifth in the 2022 WIPO Global Innovation Index for research capability, we have the smallest manufacturing industry relative to domestic purchases of any OECD country. In 2020, we were ranked 91st in the world in economic complexity, and in this year’s WIPO index we were the 25th most innovative country overall.
“Manufacturers are already some of our biggest investors in research and development. Currently the manufacturing sector makes up almost 30 per cent of total R&D expenditure through the government’s Research and Development Tax Incentive,” he said.
To better support and grow the science ecosystem, Husic said Chief scientist Dr Cathy Foley would lead a consultative process to revitalise Australia’s science priorities.
This week Husic also announced an independent review into Diversity in STEM programs and announced the Buy Australia procurement reform program, which aims to “level the playing field for SMEs, regional and Indigenous-owned businesses”.
He outlined the policy Startup Year, which would enable students to stay on for a further year at university to participate in start-up incubators and accelerators, with the opportunity to translate their ideas into new, vibrant businesses. With a modified HECS scheme, up to 2000 new firms could be created and new jobs fostered, he said.
“This will help produce the next wave of companies translating science into the jobs and technologies of our future. New firms. New jobs. New growth.
“Investing in human capital is the first step. It must also be partnered with investment in our industry capital.”
