Weekend Edition: Diversifying Australia
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Why was the National Reconstruction Fund created and what problem does it aim to solve?
Well, Australia for a long time has been criticized for being a dig-it-up and ship it-out economy, with a booming real estate market as well, of course. But that's not entirely sustainable, and it's recognized that the country does need to diversify, that good ideas shouldn't flow overseas for the want of funding, and that innovation should stay in Australia. So what's being done about it? Well, the National Reconstruction Fund sounds like a good start. The morning call from Ned. With Phil Dobby. The weekend edition. So in October 2022, the Australian government established the National Reconstruction Fund with a budget of $15 billion. The idea was to encourage investment in growth areas, to boost the economy, create jobs, and drive innovation.
And David Gall, a former NAB man, is now their chief executive officer. And by the way, he says he listens to the morning call every day. I'm not quite every day. Damn, I'm not quite sure I believe him on that, but uh but good to know you're still listening, David. And uh congratulations on this job. It sounds interesting. But it's it's this isn't really like a sovereign wealth fund, is it? 'Cause we hear a lot of countries have that, because the focus there obviously is just using government money to get the best return possible. Your your aims are a little bit different to that.
Well, hi Phil, and great to be on the podcast um and uh uh really enjoy listening. And yes, I do try and listen every day, but I if I'm truthful, it's probably not every day. No. But but look, uh are we a sovereign wealth fund? No, we call ourselves really a uh the sovereign investor in manufacturing capability in the country. And and so it is a little bit different to a sovereign uh wealth fund. Fund from that uh from that perspective. But we were put in place and we have been put in place to help the economy uh diversify, to help the economy really grow and improve um the resilience of the economy as well. So So supply chains and building out, helping to build out supply chains. In priority areas right across the economy.
And I think one and what I one of the reasons I took the role, and one of the reasons I'm so excited about the NRF is that the government have particularly identified parts of the economy where I think Australia has some comparative advantage and where we're either playing to some of the natural advantages. That we have by proximity, i.e., in resources value adding, or in agriculture, forestry and fisheries value adding, or building on some of the decades of leading research in an area like medical science, if you look at the research that's coming out of Australian universities, other bodies like the CSIRO, uh, the opportunity uh that's in Australia to really capitalise on that, i.e., um turn that uh research into innovation and translate it into
commercial outcomes through the commercialisation process and scaling process, the opportunity there is massive as well.
And the reason it's called the Reconstruction Fund rather than simply the construction fund, I mean I guess it was just the timing, wasn't it? Twenty twenty two, it's just after COVID and I guess everyone discovered just around the world the frailty of supply chains and the need to diversify. So is that is it really reconstructing post COVID? Is that the idea?
Yeah, look reconstruction's an interesting name and we often get asked that question, what are we reconstructing uh uh uh from? But you look you're absolutely right. It is about um strengthening uh th that sovereign capability. It is about building on those strengths, but it's also about um building out what is manufacturing in this country look like in the future. And it does look different to the past. And there are many uh elements to this sort of broader role that Australia can play in building these, um helping uh entrepreneurs build these uh not just domestic leading but global uh leading um manufacturing uh businesses.
How does the NRF differ from a sovereign‑wealth fund and what is its “sovereign investor” role?
So it's not just about the production of the the widget, if you like, it's right through from the research and development uh
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Chapters
8 chapters
1
Why was the National Reconstruction Fund created and what problem does it aim to solve?
0:01–4:13
2
How does the NRF differ from a sovereign‑wealth fund and what is its “sovereign investor” role?
4:13–8:48
3
What does “crowding‑in” mean for the NRF and how does it avoid crowding‑out commercial investors?
8:48–12:52
4
How does the NRF measure success and what is the 3‑to‑1 private‑capital leverage ratio?
12:52–16:54
5
Which sectors and companies has the NRF invested in – examples like Harrison AI, Arafura Rare Earth and Lime Town?
16:54–20:58
6
What risk‑return profile does the NRF target and how are losses handled in the portfolio?
20:58–25:11
7
How does the NRF support regional and mining businesses such as Russell Mineral Equipment?
25:11–28:19
8
How can innovators apply for NRF funding and what does the hands‑on support process look like?
28:19–30:45