La­bor’s $1bn plan for man­u­fac­tur­ing jobs

The Weekend Australian - - THE NATION - DAVID CROWE

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.

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