$15 billion National Reconstruction Fund

The flagship industry policy provides a $15 billion manufacturing fund to deliver both sovereign capabilities as well as an investment return for taxpayers.

It is expected that the returns generated by the National Reconstruction Fund (NRF) will mean it can continue to invest into manufacturing projects well beyond the initial six-year, $15 billion allocation. 

However, there are concerns that larger programs of other national governments, like America’s $418 billion industrial policy, provided a risk that capital would be sucked to the United States if the NRF were not put in place.

The NRF Corporation bill passed the Australian Parliament with some changes that go to the size, term, composition and governance of the National Reconstruction Fund board which will control the money. The $15 billion NRF will be administered by an independent board with members appointed by the Industry minister and Finance minister.

Based on yet to be finalised investment mandates and private sector co-investment plans, the NRF will back Australian manufacturing projects with loans, equity investment or guarantees. The projects would need to have the potential to diversify and transform Australia’s industry and economy and be part of the government’s 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
• enabling capabilities 

The NRF Corporation would be required to develop policies on environmental, labour, social and governance matters to create secure jobs and a skilled workforce, and help to meet Australia’s greenhouse gas emission targets, and how its investments impact First Nations people.

The NRF Corporation board will approve investments, and its members’ terms will be for four years. The first review of the Act has also been brought forward to 2026.

The NRF Corporation bill explicitly prevents the fund from “directly” financing the extraction of coal and natural gas or pipeline infrastructure for natural gas and the direct financing of native forest logging.

The US policy, delivered through its behemoth Inflation Reduction Act stands out for its scale and similar support for areas like critical minerals, technology and clean energy.

The NRF’s first $5 billion will be available from the commencement of the fund, with the remaining funding to be made available at the Ministers’ determination by July 2029. Investments that will be made to make a return for the fund, so it could compete with the “powerful” US plan.

By:  Joseph Brookes

From:  https://www.innovationaus.com/a-future-made-in-australia-begin-albaneses