Industry groups have welcomed the passage of the National Reconstruction Fund Corporation bill, but say the design and implementation of the landmark co-investment fund will be critical to its success.
The bill passed through the Senate with the support of the Jacqui Lambie Network and Independent Senators David Pocock and Lidia Thorpe on Tuesday evening.
Industry minister Ed Husic and Finance minister Katy Gallagher are responsible for the National Reconstruction Fund (NRF), although its investment decisions will be made by an independent board of six to eight members. The ministers will now need to develop an Investment Mandate to guide the board.
Tech Council of Australia chief executive Kate Pounder welcomed the “historic passing” of the bill, saying the NRF is complementary to private funding for building long-term strategic, emerging technologies and industries, particularly areas of strategic importance like quantum, AI, robotics, and cybersecurity.
“There’s nothing revolutionary about this sort of role for government. Emerging industries and technologies have always been funded by a mix of private and public capital,” Ms Pounder said.
“By co-investing with the private sector, the NRF will help fill funding gaps in the market and support the growth of tech companies in areas where Australia has a genuine competitive advantage.
“The design and implementation of the fund will be key to its success. It’s why we look forward to working with the government and other stakeholders to get this right, now that it has passed into law.”
The Australian Industry and Defence Network (AIDN) also welcomed the passing of the bill. AIDN chief executive Brent Clark said that he hopes “all available funds are earmarked for Australian owned businesses and will not be passed onto the subsidiaries of foreign owned enterprises”.
“The use of Australian taxpayers’ money must be used to enhance the capability and capacity of Australian businesses,” Mr Clark said.
According to the bill, NRF investments must be for firms that are “at all times solely or mainly Australian-based”.
Space Industry Association of Australia (SIAA) chief executive Simon Brown said the group’s members expect the NRF will have a “a catalysing effect on Australian manufacturing and exports”.
The government has not committed to a sub-fund for the space sector but a Senate inquiry into the NRF Corporation bill recommended that space industry projects should be eligible for funding. Participating in the inquiry, the SIAA called for space to be designated the NRF’s eight priority area and have a $500 million sub-fund be established.
“The model of the NRF corporation is well designed to address market failures in critical national industries. By enabling government to be a strategic investor alongside industry, the NRF will help smooth the path for space and defence space businesses to grow to scale and compete internationally,” Mr Brown said.
“How quickly the NRF can be established and making investments will determine its success in growing Australian jobs and the complexity of our economy.
“Space industry will be a critical enabler to achieve the NRFs objectives, it is well established that government investments into space yield greater economic returns than most other sectors.”
Australian Information Industry Association chief executive Simon Bush described the NRF as a “landmark investment in Australian industry and strategic capability”.
He said the $1 billion earmarked for critical technologies is a “welcome first step”, but that more funding was needed.
“The NRF is not the only funding that is required to support critical technology and other models of support should be considered,” Mr Bush said.
The AIIA would like to see AI and quantum dedicated funding provided in the upcoming budget and in our Quantum Strategy submission the AIIA recommended $1 billion in quantum investment over the next 5 years for Australia to maintain international competitiveness, support local research and bring R&D to market via a commercialisation focus.”
An Australian Computer Society spokesperson said “advanced manufacturing and modern supply chains are heavily technology dependent and will need skilled staff to build and maintain them”.
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