The federal government supports Australia’s auto industry as a $15 billion fund takes effect

Potentially big news for the Australian auto industry is that a proposed $15 billion federal government fund to support manufacturing passed the Senate this week and went into effect.

The purpose of the National Reconstruction Fund (NRF) is to support Australia’s manufacturing base to make it less dependent on global forces and to create local businesses in need of capital.

Plans include investing up to $3 billion in taxpayers’ money (through loans, equity and guarantees) in low-emission technologies, $1 billion in extracting value from natural resources, and $1 billion to support “advanced manufacturing.” .

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The fund aims to regenerate itself through a positive return and is run by a supposedly independent board.

According to Prime Minister Anthony Albanese, this may be big news for Australia’s automotive industry, which is seen as a key factor in Australia’s quest to become a player in lucrative green technologies.

“The point here is to provide some support, to facilitate investments that may be struggling to attract capital, especially given what other nations are doing,” he said today.

“But we’re already falling behind. And there’s a reason other nations support their auto industries. Because it’s not just about cars, it’s about the multiplier effect. And we can do that here.

“We make caravans. We build buses. We manufacture the world’s fastest EV charging station, Tritium, in South East Queensland. We can do all that. What we haven’t been good at is commercializing these opportunities. That’s what this is about.

Federal Minister for Industry and Science Ed Husic stated: “We have all these resources and yet we are not extracting the greatest value from the battery value chain”.

“If we get the battery value chain right in this country, up to 60,000 jobs could be created,” he claimed.

Much of this reflects the views of Tesla and Technology Council of Australia chairwoman Robyn Denholm, who told the National Press Club last year: “Australia should aim to take over refining, battery cell manufacturing and vehicle manufacturing.” .

As mentioned here, Harvard Business School’s Economic Complexity Index (EDI) found that Australia has slipped from 60th in the world in 2000 to 91st in 2020. Countries improve their ECI by increasing the number and complexity of the products they export.

In its contribution to the NRF discussion paper, the Electric Vehicle Council said Australia, with its deposits of lithium, nickel and other key minerals needed for electric vehicles and clean energy, is well positioned to benefit from growing demand for critical minerals.

“However, to fully capitalize on the economic opportunities presented by the energy transition, it is important that the country expands its focus on downstream opportunities in the refining, processing and manufacturing of battery components and vehicles, which are currently dominated by other players. ‘ it added.

The lobby group adds that the NRF’s goal must be to create a local environment that attracts investment “across the entire EV value chain,” from mineral extraction and processing to battery manufacturing to EV manufacturing and assembly .

What do you think? Is it good that the Australian government wants to expand local manufacturing and development, including the automotive sector?