Australia’s peak business lobby group wants the $15 billion National Reconstruction Fund to support fewer industries and be dedicated to critical technologies as part of an overhaul of industrial policy.
The Business Council of Australia (BCA) on Monday called for the government’s flagship fund to narrow its focus to co-invest in “about five areas of critical sovereign capability or global supply chains”, specifically flagging semiconductors, space, additive manufacturing, and quantum as targets for the co-investment.
The Albanese government has announced commitments to several sub-funds under the National Reconstruction Fund (NRF), including $1 billion for critical technologies, $1 billion for advanced manufacturing, and $1 billion for value-adding in resources.
But the current largest carve out is $3 billion for renewables and low emissions technologies, while a big allocation also looms for the Defence subfund.
Space is not currently considered a priority area for NRF investment, although a Labor led Senate committee has called for space projects to be funded, given its “complementarity” to the government’s seven industry priority areas.
In its Seize the moment report, released on Monday, the lobby group calls for the NRF’s seven priority areas to be slashed, with its focus to be on developing “a small number of key national capabilities and precincts of significance in priority industries”.
“For example, the NRF should look to co-invest in about five areas of critical sovereign capability or global supply chains in which we must operate, such as semiconductors, space, additive manufacturing and quantum,” the report said.
To ensure the fund builds industries at scale, the BCA also call for a coordinated whole-of-government effort “focused on a limited number of priorities across portfolios at every level” with a suite of complementary programs and supports.
Overall, the Business Council of Australia (BCA) claims that the recommendations across 10 policy areas — including its longstanding demand to cut corporate tax rates — presents a national productivity plan that would make “each Australian $7,000 better off a year after a decade”.
“We need a coordinated, national plan to strengthen our economic resilience and ensure we turn these challenges into the opportunities that will deliver greater prosperity, higher wages and improved living standards,’’ outgoing BCA chief executive Jennifer Westacott said.
“We cannot continue to experience record low levels of business investment as a share of GDP where more money leaves the country than comes in. Investment drives innovation which drives productivity and drives higher wages.
The BCA calls for a “holistic strategy” across existing government initiatives such as the R&D tax incentive, grant funding and government investment to be supported by a new independent industry development council that would report to National Cabinet.
Expert representatives from industry and research community on commercialisation, industry development, innovation, and “long-term issues facing Australia in developing the industries needed for future prosperity”.
The report flagged that the federal government has failed to develop “an enduring industry policy and priorities over the past 20 years, during which there have been more than 10 ministers at Commonwealth level in charge of the portfolio”.
The lobby group also reiterated its call for investment in “10 to 15 precincts in capabilities and industries that are critical to the economy”. Each would be a tripartite initiative that draws in co-investment and research collaboration from universities, government, and industry.
“Defence should be one of those areas to capitalise on AUKUS and other projects. Other focus areas should include sovereign capability and the existing and emerging supply chains in which Australia must have a foothold for our economic security,” the report reads.
“Each national precinct should have a coordinated and specific industry plan that removes regulatory burdens and other hurdles to investment, research and development, innovation, commercialisation, scaling up and export.”
Opportunities to capitalise on local R&D success in “important fields such as quantum computing, hydrogen, semiconductors, vaccines, medicines and medical technologies, advanced manufacturing, and wind and battery technologies”, should also be supported.
The BCA called for a reform to the research and development tax incentive to include a “premium of up to 20 per cent to incentivise collaborations between industry and publicly funded research organisations and universities”.
During an InnovationAus.com hosted panel last week, industry stakeholders urged the government to greatly expand its expected investment through the NRF, particularly in response in the United States’ Inflation Reduction Act (IRA).
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