Economy

Mr HAWKE (Mitchell—Manager of Opposition Business) (16:40): I rise today to highlight to the government the importance of the right allocation of capital within the economy and the consequences of their lack of understanding of the role of public finance and the public financing of industry and innovation in our economy. I want to note that it's been a privilege to hold the role of shadow minister for industry and innovation in the opposition led by the member for Farrer, Sussan Ley, because we understand the role of capital in the economy. The government has told us for years that we've been promised a future made in Australia, which would be delivered by the government. We were told that, if enough taxpayer cheques were written, we could manufacture our way to prosperity. But we are witnessing what is happening with the inevitable unravelling of the government's 'net zero at any cost' agenda, and we do see the cracks of this idea of public finance rescuing industry and innovation coming to the fore.

Let us have a look at the graveyards of Labor's manufacturing dream. Redflow, the champion of zinc-bromine storage, entered administration in August 2024. It had everything the Labor Party loves: grants from California, millions from Queensland Labor and US defence contracts. It had state support, but it lacked market viability. Energy Renaissance, the pride of New South Wales's lithium manufacturing, collapsed in 2025. These bankruptcies were screaming market signals about these businesses, yet the government's response wasn't to reflect on these market signals or understand them, or attempt to understand them, but to announce a $500 million Battery Breakthrough Initiative. This is an investment in the zombification of the economy using taxpayers money to raise the dead. It will not work.

Nowhere is this arrogance clearer than through the National Reconstruction Fund. We were told the National Reconstruction Fund would build sovereign capability. It sounds like a worthy goal. Instead, it uses $45 million of taxpayer funds to refinance Arnott's biscuits, and let's not be romantic about Arnott's biscuits. It's a company owned by a US private equity giant with hundreds of billions in assets. Why does it need $45 million of taxpayers money? Private lenders were lining up to fund Arnott's. The NRF—the government funded, the taxpayers, NRF—didn't crowd in investment. It crowded out the private sector to refinance a snack-food company. How is that investing in sovereign capability? It isn't.

Worse still is the financial vandalism. In 2023, Labor promised that the National Reconstruction Fund would return the bond rate plus two to three per cent. That is a pretty worthy goal. But last week they announced a $5 billion net zero sub-fund that will explicitly target a return of one per cent below the bond rate. In two years, Labor's turned a $15 billion investment of taxpayers money, public money, into a guaranteed loss-making machine—structural loss. They're borrowing money we don't have to invest in companies that lose money to generate a lower return than the cost of borrowing the money in the first place. Imagine if we gave Warren Buffett $5 billion and said, 'Could you go and make a return for us instead?' The taxpayer could pay down some of our debt and lower taxes. Instead, structural losses—now one per cent below the bond rate.

The minister calls the two-class economy that Labor is creating world-leading finance. I call it reckless gambling. As a lifelong Liberal, it is reckless gambling with taxpayers money. It's borrowed money on borrowed time. We've seen massive heavy industry bailouts—billions for Whyalla steelworks from the public and millions for smelters. The last one was Glencore's smelters in Mount Isa. Sounds worthy, but $600 million for 600 workers is $1 million per job in a bailout. That's one million dollars per job saved. Compare that largesse to the record 41,000 small businesses that have collapsed into insolvency under this government. The local builder and the corner cafe that have gone out of business at record rates don't have lobbyists in Canberra. They don't have bailouts coming from a government. What they get is an ATO debt notice, and what the Minister for Small Business announced this week is a helpline for their debt. It's a failure; there's no rescue for them.

There's a two-class economy being created by this failure to understand finance and what crowding in public sector money does to public-sector finance. The people who are too big to fail get huge government bailouts. The forgotten families and their businesses and everyone from the bottom up get more red tape, more debt notices and more liquidations.

The deeper problem is the signal this sends. When you tell investors that losses don't matter, you break the market's compass. When the government tries to subsidise things that are failing already, in fields that are failing structurally, taxpayers' money is wasted, capital is distorted and the government gets deep into debt—and every one of us has to pay back that debt anyway. I say to the Labor Party: reconsider your National Reconstruction Fund, understand public finance and understand what structural inflation you are causing with this mess.