Albanese faces calls to dip into $15bn reconstruction fund

The Albanese government is facing calls to expedite the establishment of the $15bn National Reconstruction Fund to help domestic manufacturers through the worst of the energy crisis.

Anthony Albanese. Picture: NCA NewsWire / Dan Peled

The Albanese government is facing calls to expedite establishment of the $15bn National Reconstruction Fund to help domestic manufacturers through the worst of the energy crisis gripping the eastern seaboard, with Labor saying it wants to accelerate the process as “quickly as possible”.

Manufacturers are grappling with soaring costs as Anthony Albanese and Industry Minister Ed Husic seek to revitalise the ­nation’s sovereign industry with the $15bn off-budget capital ­investment.

Tennant Reed, Ai Group’s head of climate, energy and environment policy, said he expected international gas markets to be tight for “years to come”, re­inforcing the importance of the National Reconstruction Fund in helping manufacturers reduce energy vulnerability

He said the manufacturing sector needed government assistance through readily available loans at “reasonable” interest rates, enabling the transition to more sustainable sources such as biogas or green hydrogen.

“When businesses get through an acute stage, they will turn to investments. Government has a role in making that investment possible,” he told The Australian.

“The NRF is key both to the government’s wider economic development agenda and to helping industry invest its way out of current energy vulnerabilities. A strong and timely fund can be very helpful.”

The Prime Minister announced the NRF in late-March ahead of the federal election, telling Labor’s national conference he wanted to revive Australia’s diminishing manufacturing sector in the post-pandemic recovery.

The $15bn fund – modelled on the Clean Energy Finance Corporation, also known as the “green bank” – will stay off government balance sheet and be distributed through loans, equity, co-investment and guarantees.

In an interview with The Australian, Mr Husic declined to offer a timeline for when he expected the NRF would be established, but said thought had been given to who would sit on the board and the structure of the organisation.

“I’m not putting a specific timeline but I can give the assurance that I am the most impatient person in the government,” he said. “I want to get this thing set up really quickly and the reason I want to is that we haven’t got a moment to lose to rebuilding the industry.

“The sooner we get this done the better and I’ve communicated that to the department and that I want this to be moving quickly.”

Mr Reed said the CEFC and Australian Renewable Energy Agency should do the heavy lifting to begin alleviating the acute pressures hitting businesses’ bottom lines.

Mr Husic flagged his intention to work with the CEFC and ARENA, highlighting $3bn set aside in the NRF as part of the Powering Australia sub fund as an area of potential co-operation.

“We do want to link in with others and work with them where it’s practical to do so,” he said.

Within the existing scope of ARENA and the CEFC, Mr Reed said the former could offer capital grants for businesses installing high temperature heat pumps while the latter could provide loans, guarantees or equity investments. Problems could arise from any efforts to support domestic manufacturers’ transition to more efficient gas appliances, given they currently needed a direct link to renewables.

“Establishing the NRF will need legislation similar to that underpinning CEFC,” Mr Reed said. “(It) needs a bit of work and consultation, it’s a lot of money and there are ways it could go wrong. But there are things they can do in the meantime while that is stood up,” he said.