SENATOR TIM AYRES, MINISTER FOR INDUSTRY AND INNOVATION AND MINISTER FOR SCIENCE: I’m delighted to be able to announce this morning that the National Reconstruction Fund has fast-tracked the delivery of $6.15 billion to get finance moving to strengthen critical supply chains. 

There are three components to this. The first is the $1 billion Economic Resilience Program. That will be delivered through Australian banks to their existing customers, loans of up to $5 million for firms with a turnover of less than $100 million. This is the Australian Government acting to ensure that firms in supply chains that are facing escalating costs and short-term cash flow pressures have access to short-term zero-interest loans to make sure that they sustain their businesses through this short-term shock. 

The second component, of course, is the $5 billion that is available for Australian manufacturing firms who are investing in energy resilience and capital that improves their energy performance. The $5 billion is available at a concessional interest rate or concessional rate of return. That means that the National Reconstruction Fund will be working with Australian manufacturing firms and proponents to deliver new capital investment in Australian industry that will support the reindustrialisation of our outer suburbs and our regions, deliver on good blue-collar jobs in the Australian economy but make Australia stronger and more economically resilient. 

This shock, which clearly is the largest energy shock in our history, reinforces the broad criteria that sit behind the Future Made in Australia legislation and framework. And that is all about making sure, not only that we secure Australia’s future competitive advantages, particularly in energy terms, as we shape our future economy that’s in the interest of Australia and Australians, but it’s also about securing our economic resilience and future national security. 

The Government’s moved as this energy shock has emerged to provide capital, for example, to Export Finance Australia, changed the rules to make sure that Australia is in the front of the queue for sourcing fuel and fertiliser and other essential goods. These measures today make sure that Australian manufacturing and Australian industrial firms are at the front of the queue when it comes to investment in energy resilience and energy security and future production capacity, and that Australian businesses in the supply chain who are facing short-term shocks are able to access small amounts of capital – up to $5 million – to make sure that they trade their way through this challenging set of circumstances. 

Happy to take questions. 

JOURNALIST: Just on the $1 billion, my understanding is the NRF is essentially looking after the interest costs of the $5 million interest below $5 million. How is this in any way relevant to the goal of the NRF, which is supposed to produce a return on its investments and is supposed to be targeted at manufacturing? This seems to be far broader, and does it make a return on paying for the interest elements of these loans? 

AYRES: It is broader. It is acting in the supply chain to make sure that firms that operate in manufacturing supply chains and supermarket supply chains, for example, are able to trade their way through this set of circumstances. Some of these businesses have been operating very well for a long time, but they operate on tight margins. So the short-term cash flow challenges that they face are potentially acute, and we want to make sure that the Australian Government is backing truckies, backing logistics firms to make sure that they can continue to operate and we keep the economy moving. 

We have acted decisively here to repurpose that billion-dollar existing Economic Resilience Program commitment to deliver for today. 

JOURNALIST: But how does it – like, the NRF has to make a return, though, right? 

AYRES: Well, they have a requirement to deliver investment returns across their portfolio. Different elements of the portfolio have a different risk appetite and a different required return rate. That’s appropriate. So the $5 million, again, concessional finance there. Bond rate minus 1 per cent. I want to see, and the Albanese Government wants to see, the National Reconstruction Fund stepping in to secure investment in new energy and new capital for existing industrial businesses and new industrial businesses. We want to see Australian manufacturing in the front of the queue. That’s what a Future Made in Australia is about. 

JOURNALIST: Minister, can I ask about the Liberty Bell Bay facility? 

AYRES: Yeah. 

JOURNALIST: Is the Government considering financial support for the workers and suppliers of that facility while the administration is occurring? And also, is there a role for Government to play in assisting the facility in the long term after [indistinct]? 

AYRES: Well, can I first say that I understand how acute these issues are for that industrial community in Tasmania. This is a couple of hundred workers there who have been working hard every day. That facility is a mission-capable manganese facility processing Australian manganese ore into manganese for the steel industry here and around the world. And what happened since they were taken over by GFG has meant that that firm has really struggled through no fault of their own to complete a new facility. We have been working very closely with the Tasmanian Government, watching very closely, engaged with the administrators since the administration, and we’ll keep working with that community and the administrators. And when we’ve got more to say about that process, we’ll make those comments at the appropriate time. 

JOURNALIST: In the long term, though, is there a role for Government to play do you think in supporting the facility at [indistinct]? 

AYRES: Well, we’ve seen the National Reconstruction Fund and its engagement in the Australian economy, you’ve seen the Australian Government work with state Governments previously to secure foundational industrial capability. The Albanese Government in Queensland, for example, two critical investments: one with the Boyne aluminium smelter to intervene there to secure that facility through until 2040 with a billion-dollar commitment from the Albanese Government, $1 billion from the Crisafulli Government, $7.5 billion from Rio Tinto investing into new generation capacity in Queensland. That is an economic slam dunk for Queensland and for Australia. It means lower electricity costs. It means a platform of investment through to 2040 for that vital Central Queensland industrial economy –

JOURNALIST: You’re suggesting a similar arrangement could sort of take place – 

AYRES: Well, right now this firm is in administration. It’s the responsibility of the administrators and the creditors to make decisions about what is in the best interests of that firm and for the creditors themselves. They’ve got legal obligations to work that through. I’m just saying we have acted in a consistent way around the country to secure foundational industrial capability. 

The Mount Isa intervention, for example, has secured future Australian fertiliser production at Phosphate Hill. That was slated for closure on 31 March of this year. Because of our intervention and the announcement that the Australian Government made in relation to gas reservation, that facility has been purchased and is continuing to operate. 

We, as a Government, are determined to act for a Future Made in Australia that means more manufacturing, and that has meant working with business owners to secure foundational manufacturing capability. 

JOURNALIST: Minister, can I ask you about the drop in support for One Nation since February. It’s dropped a few points. Is it your assessment that One Nation has reached a high watermark and scrutiny means that will only continue to fall? What is your analysis as to why One Nation support is falling from its high earlier this year? 

AYRES: My assessment? I don’t want to bore you by not commenting on poll movements. My assessment is that the job of the Albanese Government is to keep focused on the interests of Australia and Australians, in my case, focused on the interests of blue-collar and industrial regions and our technology future shaping a better future for Australians and Australian jobs. And, in particular, that means investment and action in big regional economies. That’s what we have to do, and I think that’s what Australians expect us to do. 

JOURNALIST: On the fuel shock, then, our stockpile has held up okay through the crisis so far. Do you think Australians expect our stockpile to be stronger, bigger, and how pressing is that pressure on the Government to act sooner than this crisis being over? 

AYRES: Can I take that in two parts. The fuel stockpile, the Minimum Stockholding Obligations, have held up and in some cases improved because of the action that the Government has taken. We implemented the Minimum Stockholding Obligations. We have worked hard to free Export Finance Australia up to provide that capital support, underwriting fuel and fertiliser purchases in regional ports. That is having an effect. But we’re not complacent about that. 

This is a big energy shock for the global economy, and Australia's geographic position means that we are at the end of these big supply chains. So Australians will expect an active Government in the short term, supporting our fuel security and fertiliser security and supply chain security challenges, but also they have a Government that is focused on the long term – investments like bringing forward this $5 billion National Reconstruction Fund component from the middle of the year till today means firms can act today to reinforce their energy resilience and their energy security. 

JOURNALIST: Is there an expectation to move – that Australians have that the Government will move on this as soon as the budget? 

AYRES: Well, I've learnt even as a relatively new Cabinet Minister not to front run what’s in the budget. But the Budget is shaped, of course, by the circumstances that we’re in. I think the Treasurer has been very clear about that. There are substantial measures available now, bringing forward this very substantial measure in the National Reconstruction Fund and making sure it's fit for purpose. Delivering energy security for Australia is in the interests of Australians, particularly in our industrial suburbs and our outer regions, making sure that Australia’s energy advantage is our future competitive advantage. 

JOURNALIST: We heard a couple of times last week from Madeleine King about her personal view on gas taxes and the various options being looked at. Your portfolio obviously covers gas end users. What’s your view on gas taxes? 

AYRES: Well, as I indicated before, the announcement that the Australian Government made in relation to gas reservation just prior to Christmas was very important for Australian industry. Access to Australian gas for Australian industry provides a platform for future investment in Australian industrial capability is a core part of our future competitive advantage. It’s not an either/or proposition in energy terms. I want to see additional electricity investment. That’s why that Boyne aluminium smelter investment from the Australian Government and the Crisafulli Government, underpinning $7.5 billion worth of new electricity, all renewable projects, wind and solar, both backed by gas and backed by storage, driving down electricity costs for households and business. That’s why our Data Centre Expectations are there to make sure that data centre investments come with additional electricity generation. And for our gas-dependent heavy manufacturing, having Australian gas available for Australia and Australians has already driven new investment in Australian manufacturing. 

JOURNALIST: So, you don’t have a view on, you know, should there be a tax on exports or this 25 per cent super profits tax or anything else? 

AYRES: The best thing to do is for us to work on those issues carefully with the industry and make announcements when the time is right. 

JOURNALIST: Can I – sorry – Viva, the Geelong refinery or refineries more generally, do they qualify for loans under the Economic Resilience Program? And if they do, I know they are only short-term loans with $100 million tops, would they be negotiating directly with the NRF if they did? 

AYRES: So, I think for the refinery there’s a $100 million turnover cap and a $5 million cap on the size of the loan. So, on both those counts I think for the kind of investments in refinery capability it’s unlikely that the refineries would qualify for the [bank stream of the] Economic Resilience Program component of the National Reconstruction Fund. They would be dealing with the Fund directly. 

We have set this up for these smaller loans so that businesses are working through their existing customer relationship with the banks so that we can deliver this as quickly as possible. That’s, we think, the smart way of delivering the Economic Resilience Program. I’m really grateful, I have to say, for the fast work of the four major banks and the two regional banks – Bank of Queensland and Bendigo Bank – for working to deliver this. We are open to working with additional banks to make sure that their customers have access to this facility as well. 

The $5 billion National Reconstruction Fund component in the Net Zero Fund will be available broadly for energy and resilience measures. And, as you know, we’ve already delivered for both of the Australian refineries an update of the support arrangements that are necessary for them. 

JOURNALIST: But could I ask another question? On data centres, you’re talking – data centres are expected through those expectations to conditionality. So the data centre industry is talking about they already provide 70 per cent renewables consumption. Is it the case – like, I’m trying to work out whether new data centre builds and new data centre operations have to have 100 per cent plus of their data centre needs? 

AYRES: So, we can only impose these expectations on new investments. And it is an expectation from the Australian Government that, of course, is being delivered in a variety of ways. We’ve seen already some of the hyper-scalers signing up to these requirements themselves and, in fact, welcoming some investment certainty here about what the rules are in Australia. And where the rubber hits the road, of course, on Data Centre Expectations, is in the approval processes that are largely run by the States. 

Chris Bowen, as the Energy Minister, is engaged with the States on those issues, but the response from the States has been overwhelmingly positive on this question. None of the States want to see a race to the bottom on data centre standards. So for new data centres we require additionality in terms of generation capacity – 

JOURNALIST: Sorry, but to be clear, what they need plus more for the community? 

AYRES: Yeah, that’s exactly right, yes. 

JOURNALIST: Just in terms of the loans themselves, how many are you expecting to be doled out by the Fund as well? And given all the economic [indistinct] that has been going on at the moment, what would happen if those [indistinct] companies [indistinct] down the track not be able to pay those back because the fuel price goes up even more, for instance? 

AYRES: Well, the $1 billion facility is there to be used as much as it is required when, in a way it would be good if the facility is there and provides confidence to industry. The extent to which it’s used will really depend upon the circumstances that firms find themselves in. It is there for the purpose that I outlined – firms that are facing short-term cost hikes that are unable to immediately pass those costs on to their customers and face a short-term cash flow challenge. So, it’s a short-term loan, zero-interest loan, there to support them through for that purpose. And we anticipate that banks will make assessments about customers’ capacity to repay loans and, you know, make sure that their existing customers are put in the best position possible. 

JOURNALIST: Can I just follow up on that? 

AYRES: Yeah. 

JOURNALIST: I just want to make sure I understand this correctly. So the $1 billion is through the NRF, but the $10 billion part of the Fund, not the $5 billion Net Zero Fund. And that has a return of inflation plus a couple of percentage points. This amount that you’re – the NRF is going to be paying interest on these loans effectively. Is there any return component to that $1 billion? Or is that now 100 per cent loss for the Fund that will need to be offset by other investments? 

AYRES: So just one correction – [the general portfolio] is the bond rate plus a couple of per cent. This [ERP] is a zero interest loan facility. Obviously if it’s returning zero per cent… [indistinct] across the entire portfolio of the National Reconstruction Fund, the fund has targets that it is required to meet. It will meet those targets. And there are differential return rates across the Fund where the Australian Government wants to see the Fund take a more aggressive position. So the $5 billion that is in that energy resilience Net Zero Fund has a lower concessional rate of finance as well. We want to see the Fund investing in first movers driving investment and economic activity and lifting our industrial capability. And of course, that means that across the Fund more broadly they’re going to have to meet those required returns. 

I’ll take one more question. 

JOURNALIST: Minister, just on the Tomago smelter deal, just to hear if you had update on how negotiations are progressing there? And was it a mistake to say that you’re going to save the smelter and have New South Wales’s assurance that they were going to at least help shoulder some of the costs? 

AYRES: No. It’s very important that we set out publicly what the pathway is to securing the future of that vital industrial facility. The Tomago facility produces 12 per cent of New South Wales’s electricity. Securing a deal here that delivers support for that facility, but additional investment in electricity generational transmission in the National Electricity Market is very good for that industrial region. Really important to secure those five and a half thousand jobs in the Hunter Valley. It’s very important for Australia’s end-to-end aluminium capability. It’s a vital national strategic asset – 

JOURNALIST: [Indistinct] New South Wales though? 

AYRES: Well, these – this is a very complex deal to work through. It involves some commercial interests and the interests of the Governments here delivering downward pressure on electricity prices and more investment in generation and transmission. That’s in the interests of every industrial facility in the Hunter Valley and beyond and the commercial interests of the owners of the Tomago aluminium facility. So we’re working those issues through very carefully. They are complex discussions. And I just know, you know, that in the Queensland context, the investments in that Boyne aluminium smelter deliver downward pressure on electricity costs, a more competitive Queensland, more industrial investment and 25-year power purchasing agreements that mean that there is industrial activity in Central Queensland for as far as the eye can see.

JOURNALIST: Minister, just quickly, do you think banks need to be more open with providing financial assistance to companies involved in oil, coal, gas given the fuel crisis we find ourselves in? 

AYRES: Well, we’re providing support and a clear message – 

JOURNALIST: What about banks though –

AYRES: – to the banking sector as well, that Australians and Australian firms in the supply chain need support now. That’s what that $1 billion in the new Economic Resilience Program is designed to do. Thanks very much.