Federal opposition Senators are concerned that investments through the National Reconstruction Fund will be captured by rent-seekers, with several Senators voicing concern.
The Coalition arguments follow the release of the Productivity Commission’s most recent five-yearly productivity inquiry, which expressed similar concerns that “there is a danger that calls for ‘sovereign capability’ can encourage rent-seeking”.
Debate on the legislation for the National Reconstruction Fund (NRF) began in earnest on Friday, with the government aiming for the bill to pass through the Senate either late on Monday evening or Tuesday.
Liberal Queensland Senator Paul Scarr on Friday highlighted the PC report and argued that it has “repeatedly warned Australia about going down this path”.
“That’s because it does not work. It distorts the economy. It promotes rent-seeking and the misallocation of resources. There will be a conga line of rent-seekers coming after the $15 billion from the government with respect to their projects,” he said.
He highlighted that between 1997 and 2012, Australian governments spent $30 billion supporting the automotive industry which eventually contracted between 2013 and 2017 as Ford, Toyota, and Holden shutdown their manufacturing facilities.
“Thirty billion dollars was spent. And now we have a new policy coming from those opposite, industry policy 2.0, proposing exactly the same thing,” Senator Scarr argued.
Senator Scarr questioned why the government should “risk taxpayers’ money” on supporting enterprises that can’t obtain “attract equity investment or debt support without going to the government”.
Liberal Queensland Senator Gerard Rennick backed Senator Scarr’s claims that the $15 billion NRF would be channelled to “the rent-seeking parasites”. Senator Rennick also noted that he “never agreed with a lot of the slush funds [that the former Coalition government] set up either”.
“The fact of the matter is that small businesses, like window manufacturers up in Cairns, won’t know how to go through all the applications and the paperwork and jump all the hurdles to get the hand-out,” Senator Rennick said.
“This is the thing: guys who work in manufacturing, the guys who are on the tools, can’t stand the paperwork. What you will have is the professional class of rent-seeking elites, who know how to work the system — a lot of them will be ex-staffers and lobbyists, who do nothing but grease the wheels, sucking money out of the system.”
Labor Queensland Senator Nita Green rebutted the rent-seeking accusations levelled by Senator Scarr. She accused Senator Scarr of using an “appalling slur against good men and women who simply seek to have a good, secure local job — and many of them are in regional Queensland”.
“I apologise to Queensland manufacturing workers who are watching this debate for the words that were used in describing their contribution to our state. I certainly do not agree with the Liberal senator who called manufacturing workers rent-seekers,” she said.
The Coalition announced it would oppose the NRF in early February. Deputy Leader of the Opposition and Shadow Industry minister Sussan Ley said it “fails to address the issues our manufacturers need the government to show leadership on: high energy prices, disrupted supply chains and acute labour shortages”.
Last month, Ms Ley also criticised Industry and Science minister Ed Husic for politicising the AUKUS partnership. Mr Husic argued the fund would support national security by supporting the development of “enabling capabilities” for Defence like quantum, AI, and robotics.
Treasurer Jim Chalmers has flagged he wishes to “renovate” Australia’s economics institutions, which include the Productivity Commission. The commission has previously been criticised for persisting with laissez-faire economics while other countries are implementing “serious and purposeful government policy” on industrial strategy.
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