National Reconstruction Fund Corporation

Mr HAWKE (Mitchell—Manager of Opposition Business) (19:50): Today in question time we had the Minister for Defence Industry trying to make a valiant defence of Labor's flagship National Reconstruction Fund. Members might wonder why the government felt this was necessary. I want to address the fact that last month the Auditor-General handed down its report Design and establishment of the National Reconstruction Fund Corporation. This report found that the NRFC Board was yet to finalise a financial or investment strategy. This is despite more than $400 million having been invested by the NRF to date. That's $400 million invested without a financial or investment strategy, which is required. I quote from the report:

NRFC's investment targets are not supported by formal plans to deploy investments in a timely manner to generate returns and fund operating expenses.

In plain language, the Labor Party has been splashing taxpayers' money around without a care in the world. How surprising! This is an astonishing government failure and governance failure, as the Auditor-General found, because it's directly at odds with what the government has said the rationale for the NRF is. Minister Ayres has said:

… the NRFC is required to deliver a positive return to the Government over time …

And no less than the Prime Minister, when visiting China early last month, said of the NRF:

… we expect it will produce a return to the Government through increased revenues …

Well, then, how does that correlate with the Auditor-General finding that the 'NRFC's investment targets are not supported by formal plans to deploy investments in a timely manner to generate returns to fund operating expenses'? In other words, the fund has no plan—not to fund its own expenses and certainly not to deliver a return to government. But the Prime Minister and the industry minister are promising the taxpayer that there will be a return from this money. That's very difficult to imagine without a plan for a return and where the funds aren't being deployed to produce a return. It will barely even cover its expenses.

What action has the government undertaken to address this serious mismanagement? Last week Capital Brief reported that Minister Ayres and Minister Gallagher issued a joint statement to the NRFC to accelerate its investment. In layman's terms, that means 'hurry up'. Get on with it, because there isn't a return coming. Labor wants the NRFC to double down on its investment pipeline in the full knowledge of the fact that there isn't a finalised investment or financial strategy—a small problem. It will be without such plans until after its September board meeting. But the government is saying to the fund, 'Hurry up and spend the money,' without the plan and without the investment strategy. Is this a recipe for disaster, Deputy Speaker Scrymgour, I ask you? It sounds like a recipe for disaster. 'Hurry up and spend, hurry up and invest, but don't hurry up and set up your investment plans to actually fund the money that the taxpayer has given you.' It's little wonder that the federal budget is heaving with debt and debt has increased under the Labor Party if this is the approach.

But this is not the only serious governance blind spot that we found at the NRFC. In the same report, the Auditor-General found that the ninth member of the NRFC Board, Mr Glenn Thompson, was appointed without due diligence checks having been conducted by the ministers' respective departments. I ask the House: who is Glenn Thompson? Mr Glenn Thompson is a former long-time assistant national secretary to the Australian Manufacturing Workers' Union, someone that you probably would want to do due diligence checks on, just like any other member of the board. This is the very same union, of course, regrettably, of which Minister Ayres is a former national secretary. So a person who has been appointed to the NRFC Board without, according to the Auditor-General, due diligence checks having been conducted is also a member of the union of which the minister is the former national secretary. That is a coincidence that we would certainly want to know more about. Despite this advice being present on the appointment briefs, the minister still signed off. So clearly there are questions for the government and the minister to answer over the appointment of a member to the NRFC board that the Auditor-General found was appointed without due diligence checks having been conducted by respective departments.

This is not the careful and strategic deployment of taxpayer funds that ought to constitute industry policy in the 21st century. Instead, this appears to me like more of the same discredited protectionist policies of the past but with less scrutiny and less planning than ever before. If the Prime Minister and the industry minister are serious about a return to government, surely they are going to need an investment plan, not just spending the money? This isn't our claim; this is from the Auditor-General. So we ask the government to seriously look at what they are doing in this fund.