I'm pleased to be here debating legislation that's about the long-term future of the country. The Future Made in Australia Bill could, if drafted and implemented well, provide a framework for Australia's transition to a new industrial prosperity.

I speak regularly in this House about the need for government to think beyond the electoral cycle and to make long-term policy decisions that will benefit Australia. I've long urged the government to respond to the US Inflation Reduction Act and the plethora of international financial incentives and investments in clean technology. Future Made in Australia has the potential to be that response. But—there is often a 'but'—in order for Future Made in Australia to be successful, we need to know that the right people are making the right decisions for the right reasons. This is essential if we want our communities to trust that the government is incentivising industries that are good for our long-term prosperity. I'll go into what I think those things need to look like, but, first, I want to say some things about why this is important and the role of industry policy generally.

We all know that Australia is lucky to have an abundance of resources, particularly in my home state of WA. Australia has built its wealth and prosperity off the back of the resources industry, from the discovery of coal in the 1790s to the gold rushes of the 1850s to discoveries of bauxite and nickel to the 1980s, when the enormous North-West Shelf project started exporting gas around the world. But the world has changed. The climate has changed, and the global economy has changed.

The US has committed $1 trillion to decarbonisation. China is responding by electrifying everything incredibly rapidly, spending $650 billion a year on cleantech, twice as much as Europe or the US. China is building as much hydro in a month as we build in a decade and is leading the world in installing renewables, responsible for 50 to 60 per cent of global battery installations, 70 per cent of wind turbines and 75 per cent of offshore wind. The race is on. Australia needs to pivot swiftly to capitalise on the resources that we have that can contribute to the new decarbonised global economy.

The Future Made in Australia Bill identifies two streams under which funding can be allocated: the net zero transformation stream and the economic resilience and security stream. With Australia's copious deposits of critical minerals and solar and wind resources, we are primed to be competitive in the net zero global economy. But after 10 years wasted on climate wars and political headwinds, we haven't entered the race.

Should government interfere with industry? In my lifetime, we've seen an opening up of the global economy, built on an understanding that free trade raises living standards across the world and inoculates us against geopolitical conflict. It's been a clear goal and a macro trend. For decades, the prevailing economic orthodoxy has favoured a hands off approach that leaves industry development up to the free market. Here in Australia, we largely dig and ship. We export our natural resources, almost always in their raw state, to countries with more sophisticated economies. Our economic complexity sits at No. 93 globally, between Uganda and Pakistan. But recent events like COVID, supply chain instability caused by the Russian invasion of Ukraine, and the looming challenge of the green transition have changed the game. It turns out that the free market is not very good at dealing with long-term challenges and doesn't necessarily prevent conflict. In this context, countries all over the world are taking a more active role in industry policy, steering future economic development by supporting key industries.

Australia's long-term prosperity now relies not just on exploiting our current comparative advantages but on setting us up to have strong industries in the future. With our narrow industrial base, exports that are heavily exposed to other countries' industrial transitions and a weak R D and innovation system, we can't afford to be left behind, relying on the economic orthodoxy of the last generation. We desperately need a response with scale, speed and ambition. This has the potential to be it.

With industry policy, so much rides on how it's done. My overall impression of Future Made in Australia is that it's more of a vibe than anything you can put your finger on. Is it an approach, a strategy, a fund, a framework, a collection of programs or a retrofitted explanation of past investments? It's hard to see how all the pieces fit together. It looks like decisions will be made by ARENA, the CEFC, the Treasurer and maybe others, with not a lot of clarity about whether they will be made in a coordinated way. There's no funding specifically allocated for investment in line with the Future Made in Australia approach—it's more of a general plan for when other opportunities come up. There is the National Interest Framework, which is both targeted at contributing to a net zero transition and infinitely broad in pursuing economic resilience and security. There is a requirement for conducting sector assessments under the framework, but there's no definition of 'sector' in the bill, so this could also be as narrow or broad as desired. A Future Made in Australia obviously can't constrain investment decisions of future governments, so perhaps it works as more of a statement of intent with some guardrails for investment decisions—except when we have to take it on faith that they applied, like for the investments already announced. Perhaps these things will become clearer with time, and I'm due to have a briefing soon with the Treasurer to gain a better understanding of how all these pieces fit together.

It seems like a good idea generally but its success will depend greatly on whether the government can be trusted to use it well, and trust is a scarce commodity. I asked, 'What would it take for Australians to trust the investment decisions made under this Future Made in Australia theme?' To build this trust, Australians will need to believe that the right people are making the right decisions for the right reasons. I'll go through each of these in turn. The first point is about the right people. As the VCA rightly pointed out in their submission, any policy that involves the spending of taxpayer dollars should be expert-led, with expert advice provided to government as the starting point. We can only trust the decision-making if it's clear that experts are the heart of assessing which sectors and projects should be supported. I think the introduction of the National Interest Framework and requirement for sector assessments is a good first step, but I worry that in a worst-case scenario departments could be directed to produce a predetermined sector assessment at the whim of a minister. It's difficult to balance the need for expert advice with a desire for nimble and responsive decision-making, but in order to build trust in this process I think a transparent consultation with experts and stakeholders is necessary, and I'll be supporting an amendment to this effect. Tabling the sector assessments in parliament is a good first step to transparency, but I support the Productivity Commission's suggestion for the government to also make public the data and reasoning underlying each sector assessment.

Second is about the right decisions. It's hard to define in advance what the right decisions will be, but we know a few things about what they need to look like. Firstly, we cannot be using taxpayer funds to replace private sector funds. This will be a really tricky balance, because the government will want to back winners, but if government backs only the shore things then it's likely to be replacing private capital. We need to acknowledge that government should have a higher risk appetite than private capital. It needs to be crowding in private capital rather than crowding it out. It should be backing things that may not get up without support but that will ultimately be able to stand on their own two feet once established. It's about de-risking private capital, not replacing it. This is possible. Last year the CEFC mobilised four dollars of private capital for every dollar of public capital, and this is the approach we need to take.

While technology is changing so rapidly, especially around decarbonisation, this may involve placing some bets that don't work out but could be big wins if they do. For example, WA's iron ore deposits are largely haematite. The technology to use green energy to process haematite is not as progressed as the technology to use green energy to process magnetite, Australia's other type of iron ore, but if we can crack it, there are big wins. WA has huge deposits of haematite, and the best sun and wind and space for renewable energy projects. If we invest in solving this problem, we have the potential to punch well above our weight on decarbonisation, helping our trade partners with their decarbonisation challenge by sending them green iron instead of iron ore. There is some risk in this, but it's a risk worth taking. It's hard to see from the legislation what approach will be taken by the Treasurer and other relevant bodies to risk appetite. It's something we should be watching out for, ensuring that we're not replacing private capital but giving industries a leg up that makes a difference.

Secondly, we can reduce the chance of bad decisions being made by having robust guardrails and processes. I recognise that there's an inherent trade-off between strong processes and being able to act nimbly, but I have some concerns about how strong the current guardrails are. I'm very supportive of the net zero transformation stream, but I'm more concerned about the second stream: economic resilience and security. My concern is that this could be used to justify almost any investment. For national security reasons, we may want to be able to make batteries or solar panels or pharmaceuticals or anything so we have some domestic capabilities that we consider crucial. But, if we're paying more to manufacture something in Australia that will never be cost competitive, we need to be very explicit about the additional cost of this and why it's a good insurance policy. For this reason, I would like to see stronger guardrails on the economic resilience stream.

I'll be proposing some amendments about guardrails that I think will reduce the likelihood of bad decisions being made. Firstly, given that the world is rapidly changing, I'll be proposing an amendment that says that we need to reassess sectors every five years. Investments that make sense now may not make sense when we know more about which technologies are likely to dominate and what other countries are doing. I'd hope that this assessment is done continually by decision-makers, even if not formally, but having a formal requirement to reassess every five years will at least provide a backstop.

Another fairly fundamental problem is that there's no requirement in the legislation that an assessment be undertaken before Future Made in Australia support is given. The assessment process seems reasonable. Surely, if we're going to the trouble of laying out an assessment process, it would be more appropriate to use it for every project and not entirely at the discretion of the government. So I'll be proposing an amendment that prohibits Future Made in Australia support unless a sector assessment recommends the relevant sector for support. Observers should be able to assess how the government has come to a conclusion about our future comparative advantages and about which industries we're willing to subsidise for security reasons.

Lastly, for the right reasons, Australians need to believe that investment decisions are being made for the right reasons. Future Made in Australia cannot be used to fund politicians' pet projects. With a recent history of some pretty blatant pork-barrelling, Australian governments don't have a great reputation on this front, and trust is low. The government must be consistent in applying the National Interest Framework and communicating to stakeholders why and how decisions are being made.

So, in summary, we definitely need an industry policy to support the green transition and recognise the new global economic landscape. Future Made in Australia is a step in the right direction, even it's a bit messy and a bit vague, and I have concerns about whether this government can maintain trust in the decisions made under it. We have to do our best. We need greater clarity on what's in and out of Future Made in Australia and how all the different frameworks to support our energy transition fit together, including Future Made in Australia, ARENA, the National Reconstruction Fund, the CEFC and other relevant pieces.

Decisions need to be based on advice from experts with transparency about who has made them and why. The public needs to accept some risk so that public money is crowding in private money, not crowding it out. There need to be stronger guardrails around the economic resilience stream. Sectors should be reassessed at least every five years. No support should be given unless an assessment has been undertaken for the relevant sector and recommended it, and this cannot be used for pork-barrelling. If these issues can be addressed in some way, I think there's a chance that this could point us in the right direction towards future prosperity. It may not be perfect, but we cannot afford to delay.