The $15bn National Reconstruction Fund is on track

Legislation for the National Reconstruction Fund (NRF) was introduced into Federal Parliament late last year, and we’re consulting with industry and the community to make sure we get the design and implementation of the NRF right –things like its priority areas and investment mandate.

The NRF will help unlock private sector investment to create highquality, sustainable industries and well-paying jobs. It represents one of the biggest investments in Australia’s industrial capability since World War II.

Ensuring this investment flows efficiently and effectively is key to successfully diversifying Australia’s manufacturing sector. Stepping up our sovereign capability will help us avoid a repetition of the supply chain issues we experienced during the COVID pandemic. It will also give Australia another string to its economic bow by diversifying Australia’s economy helping reduce the risk of change and deliver real opportunities for people, not just in our cities, but in the vitally important regions.

It will do that by strategically investing in industries of the future. The ones that play to Australia’s natural and competitive strengths. It will back companies with good growth prospects, that help us address climate change and other major challenges.

These investment decisions will be made by the NRF Board, operating at arm’s length from Government. There won’t be a colour-coded spreadsheeting in sight. The Board will be tasked with achieving a positive rate of return on investment - a model the Clean Energy Finance Corporation successfully uses.

Since it was established by the Gillard Government in 2012, the CEFC has generated a return above the Government Bond rate, so it isn’t a drain on government funds but a net contributor to our public finances.

In that time, the CEFC has helped finance about 200 large-scale clean energy projects that put downward pressure on energy prices. Each dollar the CEFC has invested since 2012 has helped attract an additional $2.30 in private sector finance.

That’s why we’re using the CEFC as a template for the NRF.

The NRF won’t provide grants and it won’t duplicate existing Government initiatives that support early-stage research and development or commercialisation either. Instead, it will help provide loans, guarantees and equity across seven identified priority areas:

• Value-add in the agriculture, forestry and fisheries sectors;

• Value-add in resources;

• Transport;

• Medical science;

• Renewables and low-emission technologies;

• Defence capability; and

• Enabling capabilities like quantum, AI and robotics. With global capital markets tightening, it’s important our most innovative manufacturers can continue to secure financial backing to help them create new jobs and economic opportunities.

The NRF will complement other investors in the market ensuring Australian manufactures can benefit from advanced technologies and retool, refocus and re-emerge as world leaders in their sector. These are the companies that will help us expand Australia’s industrial base. We’re under no illusions about the challenges of reversing the consistent decline in investment we’ve seen over the past decade. Australia ranks last among OECD countries in manufacturing self-sufficiency.

In the 1980s, the Australian Government faced a similar predicament when large parts of our manufacturing was being shifted offshore. In response, the Hawke-Keating Government implemented industry restructuring plans and helped the manufacturing industry to modernise, innovate and find new markets. Forty years on, we need to nurture a new generation of diverse and innovative companies to broaden and transform Australia’s industrial base and create more sustainable economic growth over the longer term.

There’s also an imperative to help our manufacturing sector adapt to a low-carbon future and contribute to efforts to meet our long-term emissions reduction targets.

As part of comprehensive plan to build onshore industrial expertise, we’re also continuing to invest in the Cooperative Research Centres (CRC) Program, also started during the Hawke-Keating years. Since 1991, the program has committed $5.5bn of grant funding to support the establishment of 236 CRCs and 189 of the shorter-term CRC Projects (CRC-Ps).

With matching industry and research funding of $16.8bn, the program has enabled 35,400 commercialisation agreements and more than 140 spinoff companies. We’re committed to helping our advanced manufacturing industries in the marketplace too.

The Commonwealth spent more than $80bn on goods and services in 2021-22. Linking that procurement spending to industry development goals and economic growth outcomes will drive even more private sector investment. To make sure that the NRF delivers on its promise, I urge you to keep providing feedback to the consultation that is now open.

You can do so at: https://consult.industry.gov.au/national-reconstruction-fund

The workplace relations changes which passed through the Federal Parliament at the end of last year constitute the most significant suite of amendments to Australia’s Workplace Relations laws in more than a decade. The new laws have implications for all employers.

The key legislative amendments relate to major changes to our system of collective bargaining over employee entitlements, new obligations and risks around employee rights to pursue flexible working arrangements, and restriction around the use of fixed term contracts and pay secrecy clauses. There will also be new protections for employees from sexual harassment and certain forms of discrimination that will create new risks for employers and an expanded ability for employees to access the small claims jurisdiction to seek recovery of amounts up to $100,000, instead of the current $20,000 ceiling. Substantial financial penalties may be applied for non-compliance with many of the new requirements. A broader theme that employers will need to grapple with is the expanded role that the Fair Work Commission will be able to play in various workplace relations issues and disputes, as well as the significant role that unions will be empowered to play in relation to representing their members in such matters.

The most controversial IR change has been the shake-up of the rules relating to collective bargaining, including the significant expansion of union rights to require employers to engage in ‘multi-employer bargaining’ or to co-ordinate industrial action across workforces in support of it. There will also be scope for unions to obtain orders from the Fair Work Commission extending the coverage of such agreements to employers that had not been a party to negotiating it, even if the employer opposes it.

The new laws will also make it much easier for unions to force employers to renegotiate expired enterprise agreements. A particularly significant change that has received limited media attention is the creation of a pathway for unions, or employers, to seek that the Fair Work Commission ‘arbitrate’ what are described as ‘intractable’ bargaining disputes. This will see the Commission intervening to directly set conditions in a way that really hasn’t been a part of our system for decades. It will no doubt change the strategies that unions, and some employers, pursue at the bargaining table.

There are also changes to the process for making a workplace agreement that employers will need to grapple with, as well as changes to the tests that the Commission will apply when considering whether to approve an agreement. This will include changes to the way the Better Off Overall Test, commonly referred to as the ‘BOOT’, is applied by the Commission when comparing a proposed agreement to an award.

The Commission will also obtain new powers to amend a proposed agreement to address any concern over whether it passes the BOOT. In short, the Commission will be able to change or ‘re-write’ terms of an agreement that is lodged with it even if the employer doesn’t agree to the alteration. This will be a concerning risk that employers will need to weigh when engaging in bargaining.

Among other changes, the National Employment Standards have been amended to provide significantly strengthened provisions affording certain cohorts of workers a right to request ‘flexible work arrangements’. Under the new provisions, employers will need to follow prescriptive rules dictating how they respond to requests and will only be able to refuse them on reasonable business grounds. Crucially, if employers don’t agree to such requests, they will face the prospect of the matter being pursued by the employee or their representative through the Fair Work Commission, which will be empowered to ‘arbitrate’ any disagreement. They will also be exposed to significant financial penalties for non-compliance if their refusal wasn’t properly justified.

As mentioned, the other big theme underpinning the legislative changes is the expanded role and powers of the Fair Work Commission and unions.

The Commission will be empowered to intervene in a whole range of workplace relations issues in a more substantial way than is presently the case. This ranges from dealing with disputes over bargaining, through to dealing with complaints over sexual harassment and to powers to resolve disputes concerning employee requests for access to flexible working arrangements.

Unions will similarly be given a raft of new or expanded rights in relation to bargaining and representation of employees. The changes will encourage employers to engage in bargaining, rather than relying upon awards. Coverage by an individual enterprise agreement will provide the surest protection against being unwittingly drawn into the multi-employer agreement that doesn’t suit their enterprise.

Employers should consider whether they have appropriate strategies in place to deal with the new bargaining environment. This should include a proactive assessment of their potential exposure to multiemployer bargaining and what options they have to avoid being a part of it if they don’t want to be.

Ai Group is helping members navigate the new laws and will be consulting closely with the government as it develops its next round of workplace relations changes expected later in the year. aigroup.com.au