Labor’s $1bn plan for manufacturing jobs
A Labor government would use up to $1 billion in public debt to set up a fund to create Australian jobs in the manufacturing industry, offering finance to companies that might be rejected by the banks.
Bill Shorten will unveil the policy today in a challenge to Malcolm Turnbull, as Labor con- trasts its industry aid with the Coalition’s promise of company tax cuts.
The new Labor scheme, to be called the Australian Manufacturing Future Fund, marks another stage in the use of public debt to create special investment vehicles that avoid dragging down the budget deficit.
While Labor and the Greens legislated a $10bn Clean Energy Finance Corporation to lend money to projects that could cut greenhouse gas emissions, the Coalition embraced the same concept to set up its $5bn Northern Australia Infrastructure Fund — the potential conduit for taxpayer aid to the Adani coal project in Queensland.
Mr Shorten will outline the new fund as a similar model to the CEFC but with a focus on advanced manufacturing jobs in areas where companies might struggle to get finance. “Labor won’t let the big banks hold Australian advanced manufacturing back. We are backing Australian manufacturing and Australian jobs,” Mr Shorten says in the press release draft.
“The fund will apply commercial rigour when making investments and will offer financing including, but not limited to, equity, concessional loans and loan guarantees.
“Upon establishment, a Labor government would, via the fund’s board, request that priority is given to consideration of transformative investments in the automotive manufacturing and food manufacturing sectors.”
Labor is ruling out the offer of “direct cash grants” to the private sector but is keeping open the idea of buying shares or offering loans to companies under an investment mandate it would release if it wins the next election, due by May 2019.
The new policy says a Labor government would start a consultation process to finalise the investment.
The CEFC, a key part of Julia Gillard’s agreement with Greens leader Christine Milne to legislate an emissions trading scheme in 2011, has invested $4.3bn in its first four years.
Labor ordered the fund to reach an investment return equivalent to the long-term government bond rate, but the Coalition increased the rate to put a stricter test on loans.
Mr Shorten pledged on Monday to restore the lower rate in the CEFC’s mandate on the ground the higher rate was holding back investment in new energy generation and storage.
Mr Shorten has also vowed to take $1bn from the government’s northern Australia fund to create a separate Northern Australia Tourism Infrastructure Fund to help the travel industry in Queensland, the Northern Territory and Western Australia.
The new manufacturing fund requires only $34 million in direct budget outlays over the next four years because it would be an “offbudget” item in the government accounts, with $1bn in debt offset by a similar amount of commercial investments treated as assets.