Targeted investment in industry and skills — The Coalition’s record speaks for itself Bills

I, too, rise to make some remarks on the National Reconstruction Fund Bill 2022. I’ll talk briefly of the overview of the bill and some of the areas that the coalition has concerns about.

I’ll also touch on the issue of rhetoric versus reality because I’m hearing a lot of rhetoric from those opposite about what has occurred over the last 10 years and it is simply not matched by the reality on the ground. So I want to touch on a few of those points and put a few facts onto the public record here around what has actually been occurring.

I’d like to talk specifically about space, which was an area of focus for the coalition’s modern manufacturing fund. In our home state of South Australia we have seen a huge amount of investment and growth, and it’s something that is missing from this bill from the government.

I’d like to talk about opportunity.

There’s been a lot of talk here about Australia becoming resilient and self-reliant, but it will need a change to the way government—via the persuasion of, in particular, the Department of Finance—deals with the Commonwealth Procurement Rules and breaking the negative cycle which has existed for many years around how the Commonwealth views startups and small companies when it comes to contracting, as opposed to defaulting to the safe option of a big company, often offshore.

Lastly, I’m going to touch on the point of energy.

Those opposite have been talking a fair bit about energy and what they see as opportunities. But, again, the rhetoric, the ideology and the narrative which is being put forward is directly contradicting the science out of the IPCC, the economics out of the OECD and the engineering out of the International Energy Agency on the impact of an overreliance on variable renewables moving into an economy, as opposed to having baseload power, and also the role of abatement on fossil fuel projects.

So there’s a fair bit there, and I’ll see what I can get through in the remaining 12 minutes that I have.

I have a few concerns. Colleagues have spoken about the economic issues and the fact that this fund doesn’t address some of those key enablers, and I will come to power shortly. They’ve talked about delays.

Not only have we seen delays built into how this legislation is put forward, but one of the things that were deeply distressing to industry in South Australia was that, for companies that had indications from the coalition that they had been granted funds under the Modern Manufacturing Initiative, those funds were delayed, causing huge interruptions to their capital productivity.

The money they had put aside to co-invest in new capability and a new workforce was then put on hold, which was a significant handbrake on the development of manufacturing in South Australia.

There’s a concern about national priorities.

I will come to the report of the Joint Standing Committee on Foreign Affairs, Defence and Trade, which looked at the lessons of COVID and why it is so important for the Commonwealth to set and invest in national priorities, collaborating with industry so that we can get national resilience in that area.

On the funding side of it, the coalition put some $5 billion into the Modern Manufacturing Initiative. It was against quite specific areas which were targeted as national priorities, including things like space, as well as medical products, food products and defence—a range of sectors that were important for our economy. It was a competitive based program in those important sectors, whereas here we have $15 billion, $10 billion of which is not targeted against anything and will not be subject to further parliamentary scrutiny.

That is an enormous amount of taxpayers’ money to not have a structured, strategic plan for its investment or the oversight of the parliament, as the Australian taxpayers’ representative, to make sure that it is spent wisely.

I come to the topic of rhetoric and reality. One of the things that have been said frequently by those opposite is that Australia’s manufacturing went into a nosedive as a result of the coalition government and particularly the demise of Holden.

I encourage people who are interested in this to go back and have a look at a speech I gave in August 2015 on this exact topic.

It goes to my experience as the member for Wakefield—a seat which no longer exists, unfortunately. That was the electorate in the northern suburbs of Adelaide, as well as regional areas, where General Motors-Holden had their manufacturing plant.

I was a frequent visitor to the manufacturing plant, dealing with Mike Devereux as the head of the organisation at that time, as well as dealing with Ian Macfarlane, as the minister for industry, and the then Prime Minister, Prime Minister Howard, about opportunities for us to invest. There were countless times when I spoke to General Motors about things like co-investment by the federal government to bring research and development on things like electric vehicles and other opportunities here to Australia.

But the consistent message was that General Motors was a global organisation that had made investments in other countries, both in research and in manufacturing, and the ultimate demise of that industry, as Mr Devereux later said in public, was unrelated to decisions by the federal government about funding they would or would not make.

Those opposite can point as often as they like, but it’s like someone saying the earth is flat.

You can say it a thousand times; it doesn’t make it true. When the Australian public listen to this debate, I would encourage them to challenge the rhetoric by looking for the facts. Just because those opposite say a hundred or a thousand times that it was then Treasurer Joe Hockey who caused the demise, that is not matched by the reality that I know, as the then local member in that last period of the Howard government, and of the statements made by Mr Devereux subsequently around why General Motors made that comment.

Importantly, it’s good to look at what actually happened, not just to the 80 per cent of workers who went on to find other jobs in the manufacturing industry but to the parts suppliers. For example: for the Nissan Leaf, an electric car, there was a firm here called Nissan Casting that went from one shift a day struggling to provide parts into General Motors to, after that change of focus, running three shifts, seven days a week to keep up with export demands for parts.

There is Heliostat, a subsidiary of Precision Components, who started manufacturing solar components. Again, that was a significant investment in an export capability into the solar industry. We have seen a whole range of investments in manufacturing through the coalition’s time that have led to a range of important things. In 2022 the National Centre for Vocational Education Research found that the proportion of Australian businesses with apprentices and trainees was at its highest level since 2011. What that is saying is that the government’s investment not only in training but also in creating the environment where the private sector wanted to invest was leading to people coming on board.

Here are just some of the grants in South Australia. In October 2014 the Industry and innovation magazine made the comment that Australia’s manufacturing was in decline. 2014 was at the end of a long period of those opposite being in government. They were talking about companies that were actually moving ahead. One of those, just to highlight, is a company in South Australia called REDARC.

REDARC is an innovative company, and Commonwealth support—the AMGC grants, for example, in February 2021—led to an expansion of the workplace there, adopting things like industry 4.0 technology. The point REDARC make is that advanced technology doesn’t necessarily mean fewer jobs; it means better jobs. A $20 million expansion by REDARC created over 100 jobs there. REDARC are one of Australia’s best-known suppliers into not only the automotive industry but also the defence industry, particularly with lighting and other components into naval programs overseas.

Tindo Solar, again in South Australia, I think are the only company here in Australia that actually makes solar panels. There was a $5.3 million investment, assisted by $1 million from the Australian government, to expand their facility to actually become a significant manufacturer of solar panels for the Australian market, creating jobs and creating sovereign capability. Those are the things that were happening under the coalition government.

In the space sector, the Centre for Defence Industry Capability, for example, is investing in small companies like Inovor. I’ve had a fair bit to do with Inovor. They are a company in South Australia making satellite buses. They are an example of the kind of company where we need to continue the investment not just in grants but in contracts to give them the opportunity to grow. The federal government, under the coalition, invested some $65 million into the nation’s space industry. Not only did we actually create the Space Agency; we invested in the industry because of the opportunity not only to have sovereign capability but also to get into the $12 billion worth of international market.

The Space Agency also received funding around Australia’s launch capability, some $32.5 million, to help the local sector gain what they call flight qualifications.

But what do we see under this plan?

That focus on space has gone. Space industry is vocal in media at the moment, highlighting the concern that the lack of focus and the lack of investment will hurt the sector and its growth, which was stellar—no pun intended—under the coalition, and which is now at risk of stalling.

One of the significant things that is disappointing is that the planned strategic update for the space sector, which was launched by the coalition in an attempt to bring together the streams of both civil investment and defence investment has gone nowhere under this Labor government.

Given the strategic update of 2020, which highlights the threats that Australia is facing, this is a classic example of where sensible procurement policy from the Commonwealth could actually help Australia have sovereign capabilities. So we’re not talking about just making a widget for a satellite that’s going to be made overseas but the kind of investment we see in South Australia, where we now have a space manufacturing park—funded partly by the coalition government, partly by the then Liberal government in South Australia and partly by industry—which is looking to manufacture satellites.

We have the launch capability, funded in part by the coalition government, to have three space ports in Australia capable of launch. What it means is the kind of outcome that governments should be looking for are very specific; in this case, military response options.

How do we work with Australian industry, not to make a widget but to have the capability to build a payload for ISR—intelligence, surveillance and reconnaissance—the satellite bus, the vehicle they put it in, and the launch platform, so that, in a conflict, if the assets we rely on, often from Europe or particularly the US, are either taken out of service by an adversary or deployed to areas of greater priority, we have the ability, within a short time frame, to design an appropriate payload, put it in an appropriate bus, put it into a launch platform and launch it into an orbit that will meet our sovereign needs.

Companies that can achieve that for Australia will be well placed to get products town the global market. That’s the change of thinking we need.

I’m going to run out of time to talk about energy, but the last part on this procurement is that many companies, particularly in the defence and national security space, but even for things like personal protective equipment, need the government to move beyond giving them a grant to actually purchasing things from those companies.

PPE is a classic example we looked at during the COVID-19 report my then committee, the Joint Standing Committee on Foreign Affairs, Defence and Trade, conducted. We found that the focus of both the private sector and governments of both persuasions to go competitively to the international market for things like respirators and surgical masks meant that in 2015 Kimberly-Clark closed down the last remaining spun bond factory here in Australia, which is a critical component.

Through COVID there was massive investment to rebuild the capability to make things like respirators, but what we find is that government departments largely continue to buy through panels or other policies that push them to overseas suppliers.

There has been some change in some states and some change in the Defence department here, but what we need to see is federal governments not just looking at these large industry policies from a grant perspective but then following through with contracts, because it’s the contracts that will actually enable these businesses to become sustainable, and to invest more in workforce and innovation so we can have sovereign capabilities, whether it be in space, in medical products or in other areas.

On another occasion, I will come back to talk about energy, because that is a critical thing for this nation’s future.