Future Made in Australia Bill 2024, Future Made in Australia (Omnibus Amendments No. 1) Bill 2024

Mr HAWKE (Mitchell) (11:33): I rise to oppose the Future Made in Australia Bill 2024. We have just heard from the member for Calare, who spent 10 minutes outlining why the bill is quite a bad bill and why this kind of government spending doesn't meet the scrutiny test for effective spending by government, and yet, like all agrarian socialists, his complaint about this bill is simply that he hasn't allocated the government spending, that he hasn't decided which sector it will go to. But if it goes to his preferred sector, by amendment, then somehow the spending will become good.

I approach this bill from a different perspective, and that is that, in the inflationary crisis that we are in, this additional government spending is going to cause more trouble for the economy in terms of inflation—the hidden tax that we all wear—but also the tax that comes from more government spending through our debt and the other financing that the government uses.

While the title sounds good, we've gone back to the Rudd era of Orwellian title names: a future made in Australia? Nobody could oppose a future made in Australia. But, of course, this money will not lead to a future made in Australia; it's simply more misallocated government spending. This time, uniquely through this bill, it is at the discretion of the executive, as if a government minister has the capacity to allocate capital in a way that will be most efficient inside our economy and produce the best results for a future made in Australia. The bureaucrats who advise him and are inexpert at understanding the demand and supply of the economy and aren't integrally involved in that process day to day will somehow provide some magical form of advice to the executive where a government minister will allocate borrowed money in a way that will produce efficient results.

I think we all know where this is going. This money will be spent, but it will not be spent efficiently. It will not be spent in a way that produces a future made in Australia. It will simply be spent at the cost of more inflation, higher more taxes and higher government debt. That's why I oppose this bill fundamentally.

Milton Friedman spoke about this when he spoke about this misallocation of government capital and the increase in government spending. At a time when the Reserve Bank is warning about the government about its spending profile, simply putting a bill in to spend more money at the discretion of the minister is not going to do it in terms of reducing the critical challenge of our time: inflation and the hidden tax that Australia represents on every good and service in our economy.

When we look through what's already occurring, we see that the Productivity Commission has told us through this bill that the $1 billion commitment to solar panels in Australia under the Future Made in Australia program should be retrospectively subjected to a tougher national interest test framework. I think that's a polite way of saying you can produce solar panels in so many countries in the world now at about five to 10 times cheaper than Australia can possibly make them, so why would we mandate the production of solar panels? Only a government could be so stupid as to say, 'Let's produce solar panels when we can get them 10 times cheaper somewhere else.' Only a government could misallocate that capital so badly that the Productivity Commission politely says, 'We should retrospectively subject this $1 billion solar panel program to a National Interest Framework test.' It's very polite language, but what it says is, 'This is a barking disaster.' What the Productivity Commission is saying is, 'We're wasting a ton of money.' What the Productivity Commission is saying is, 'You are burning government capital and adding to the inflation burden in Australia for no benefit.' However many solar panels we produce, that same billion dollars could buy five to 10 times the amount of solar panels. It's a misallocation of government capital, and it will not produce an efficient solar panel industry in Australia.

What could this money be better used for—even tax credits or tax production credits, which I don't hesitate to say are not a bad idea in many sectors. What could this capital do if it were instead allocated efficiently? These are the questions the Productivity Commission has raised about the manufacture of solar panels. What kind of projects will we see? The government has said a PsiQuantum computer and quantum computing. It might be a virtue. It might be something our economy needs, but why does the government need to allocate $1 billion of public money to a new technology that is potentially going to be one of the most revolutionary and profitable in the world's history if it gets going? There's no answer to these questions.

The Productivity Commission has been absolutely damning about this kind of government spending and the use of government and government bureaucracy to try to allocate this money in an efficient way. And is this the time? We have demands on our school system and our health system? There are plenty of calls on government spending as it is, and the Treasurer is under right now from Labor education ministers and health ministers around the states. Yet here we are allocating $1 billion inefficiently that will not produce a future made in Australia.

The critical problems for manufacturing anywhere in the country are the input costs that they face: their energy costs, the cost of production, their labour costs. The government says, 'High wages, high wages.' We do have the highest wages in the world, but we don't compete on those wage costs internationally. We can't compete. It's factored in that we have the highest wages in the world, but it doesn't mean we can compete internationally with our manufacturing sector. So what can we compete on? We now have energy prices moving to the highest in the world. Well, manufacturing can't compete on energy input costs, so what can manufacturing compete on in Australia if none of these things? These are the questions that the government is not answering. Are we going to look at our taxes on employment or our company tax structures? No. There is silence on these critical questions that could actually make a manufacturing company more competitive and able to manufacture at a profit in Australia. That's why we're losing so much manufacturing.

Even the modern challenges of advanced manufacturing are not being addressed. Advanced manufacturers in Australia will tell you that they can innovate and produce advanced manufacturing products within Australia. Even under the weight of wages, energy costs, other input costs, taxes and regulation, they can still come up with a competitive advantage, which is then stolen internationally, replicated and sold back to Australia. This cripples the innovation and the upfront investment from those corporations. If the government were spending this $1 billion in a way that protected our advanced manufacturing sector from this stealing and replicating that has been going on for many years, that would be a better allocation of the capital. But instead we're going to have this 1950s model where a government minister advised by bureaucrats decides where to spend $1 billion, and this is going to produce efficient manufacturing.

I hate to say that this is not going to work. It's going to be a complete waste of government capital. It's apparent in the very design of this bill. We know that Treasury wasn't consulted prior to the investment in solar manufacturing. Again, I go back to it because $1 billion has been allocated to solar panels, which can be produced five or 10 times cheaper in other countries. Why would we do this? Why would we allocate money to solar? Everybody, including the Productivity Commission and Treasury, is saying this solar program is misallocated capital at the wrong time. We have nothing against solar panels at all, but there is a global production glut of solar panels at the moment. But of course the Australian government says now is the time to spend government capital instead of allowing that capital to be used by the private sector or in the form of other pro-manufacturing-industry policies that might actually make it easier to manufacture in Australia.

There are many good reasons why we oppose this bill. The ARENA changes in particular are quite egregious. Again, the crossbench has been so polite in not calling them out. The ARENA changes really do highlight this, and it's clear in the explanatory memorandum and the second reading speech from the minister. They are changing the operation of ARENA. Why is the CEFC even now needed if industries are commercially viable? Once they get to a certain point of government investment, why are these changes needed if they are viable and why do they need government funding? The minister will have the power at the stroke of a pen to boost funding without any scrutiny and without being subjected to any real test. These ARENA changes, when you go through them—and there is obviously some difficulty in understanding how every element will operate—mean no parliamentary oversight and no scrutiny. The crossbench has been talking about transparency, but under delegated legislation the government can roll out up to $3.98 billion by our estimates, with an election approaching. But even if there wasn't an election approaching, government spending of $3.98 billion done in this way isn't a good idea for any government and will be subject to a lot of waste and a lot of deadweight in its service delivery, in its bureaucracy and administration costs, and in its outcome, especially when you look at some of the ways this capital is being allocated.

Given how many challenges manufacturing in Australia is facing, state and federal governments should be tackling the input cost issue. All input costs are rising. At the same time as we have rising input costs, government is doing nothing for manufacturing in relation to its energy costs, which continue to be one of the biggest factors in manufacturing. It's true that, with the exception of perhaps Queensland, for maybe a decade or more, we've had no new investment in gas, which is one of the prime necessities for manufacturing in Australia. Even in a big state like New South Wales, we've had 15 years of no new gas projects. There are gas bans in big states like Victoria. They're not banning fracking or unconventional gas; they're banning conventional gas in a state like Victoria. Therefore our energy costs have continued to rise, and this bill doesn't do anything to address those issues.

The biggest booster of green hydrogen is scaling back their ambitions for green hydrogen. Green hydrogen is completely unproven when we have conventional gas available now and lots of gas under us in every part of Australia that we could be using now to provide cheap energy for manufacturing, which would actually sustain an Australian manufacturing sector, but we're not allowed to use the conventional gas. We have to then use government subsidies and money to subsidise green hydrogen, which is still unproven and has not yet been tested. So, again, we are seeing that their own investments don't meet the standards already to actually provide for a future made in Australia.

They can say, 'We want a future made in Australia,' all they like. Everybody wants a future made in Australia. We love manufacturing. It'd be great to have more Australian manufacturing. But it isn't just saying it. You've got to understand the practical issues that manufacturing actually faces, and government is there to do that. Spending more simply won't produce that. Spending more in a misallocated way actually risks all those efficient manufacturers that are trying to compete with inflated government spending that is allocated by a government minister with people in Treasury in Canberra telling them that this is the best way to spend the government's money. We've been here before. It doesn't work. It won't work this time. It won't produce an efficient manufacturing sector either, and I think many of those opposite know that.

So why don't we curtail this bill and come back with some real proposals to actually decrease the input costs for manufacturing in Australia and make it viable and sustainable? That would actually help the manufacturing sector, and that's what they're calling out for. We can do something about their energy costs. We can do something about their regulatory and tax environments, actually sustain the economy and make sure that it would actually go better. That's why I oppose this bill and the coalition is opposing this bill. This clearly does appear to be a ministerial slush fund before an election. It has all the hallmarks of it. It doesn't really matter how it is spent. With a government minister allocating it, the capital is very likely, if not almost 100 per cent certain, to be misallocated in our economy and not spent in a way that will produce a future made in Australia.