National Reconstruction Fund, page-45

Things hotting up with the NRF - with first CEO being announced today - Macquarie Bank heavyweight with an appetite for risk and innovation.

This will be a huge opportunity for EMV - and perfect timing!

How the new $15b fund boss will revive manufacturing

Andrew TillettForeign affairs, defence correspondent
Feb 1, 2024 – 5.00am
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The inaugural chief of the $15 billion National Reconstruction Fund says he is willing to take investment risks with taxpayers’ money but is confident the overall portfolio will deliver a return to government over the medium term.

Former Macquarie Group executive Ivan Power will be announced on Thursday as the chief executive of the NRF, a key plank of the Albanese government’s agenda to revive manufacturing.

Former Macquarie Group executive Ivan Power is new chief of the National Reconstruction Fund. Alex Ellinghausen
Mr Power is a veteran of more than 25 years in global investment and markets, including 20 years at Macquarie, where he was head of group development and analysis.

The fund – often likened as Australia’s answer to the US’s sweeping Inflation Reduction Act – has seven priority areas for investment: renewables and low emission technologies; medical science; transport; value-adding in agriculture, forestry and fisheries; value-adding in resources; defence capabilities and enabling technologies. It is banned from investing in fossil fuel industries.

The fund is set up to make investments on a commercial basis and, where possible, deliver a financial return to government. Its operations and investment decisions will also come under scrutiny from non-government politicians through Senate estimates.

But Mr Power maintained such requirements would not result in a cautious approach to investment, adding returns would be assessed over the medium term.

“I am so conscious we are investing the money of Australian taxpayers. We’ve got to balance that against the really bold ambition that’s in the act and in the mandate that is diversifying and transforming Australian industry,” Mr Power said.
Tolerate some losses

“The return is across the portfolio. We expect that is going to be a big, broad and diverse portfolio, which is a lot of how you manage risk.

“But we are not going to achieve the instructions in the mandate if we don’t take risk. If we’re not prepared to take risk, which many private investors do every single day, then we’re not going to achieve our mandate.

“We have to be prudent in how we are assessing, pricing and managing [risk] but really consciously we do have to take it.”

Industry Minister Ed Husic said the government was prepared to tolerate some losses.

“As is the nature of investment decisions, particularly when it comes to early-stage innovation, a lot will work out really well and some may not work out, and that’s important to signal,” he said.

“There will be some highs and lows along the way, but we’ve got clearly a really sharp vision for what we want to achieve and having high-calibre stewardship is vital in the form of Ivan and the board.”

Mr Power said he would look to work with superannuation funds and other local and foreign investors, saying the fund’s mandate was clear on co-investment, and he understood the “power of private investment”.

“Ultimately, if it is that we want to be exploiting some of these great opportunities we have, and making sure we are able to build the key pieces of infrastructure we are going to need to exploit those, private capital has been instrumental by any measure,” he said.

Mr Power said another task was to spread the word in Australia and globally about Australia’s “world-class” industrial capability despite its high-cost reputation, saying the challenge was to harness Australia’s competitive advantages.

“If you look at some of the really great manufacturers in the world, they are countries similar to us, whether it is Switzerland or Germany or many other places like that. [Costs] don’t need to be an impediment.

“In quite a lot of those areas we’ve already got world-class industries and companies in many cases, whether it is resources, whether it is medical, whether it is transport, and a lot of it is about working with those companies as customers and finding out small and medium enterprises can work with them as they take their businesses to global scale.”