National Reconstruction Fund – The story so far

In the October 2022 Federal Budget, the Australian Government announced the establishment of the National Reconstruction Fund (NRF) – allocating $15 billion to partner with the private sector to support investment capable of growing the economy and increasing employment.

In the 2023 Federal Budget, $61.4 million over four years (commencing 2023-24) was committed to establish the National Reconstruction Fund Corporation (NRFC). This builds on and is partially offset through the redirection of funding from the previous budget.

This allocation to establish the NRFC included:

$53.2 million in 2023-24 for establishment and operational costs
$8.2 million over four years from 2023-24 (and $1.2 million each year ongoing) for the Department of Industry, Science and Resources to support the establishment and provide oversight of the NRFC.

In August 2023, the Minister for Industry and Science announced the NRF’s independent board, to be chaired by Martijn Wilder AM. The board first met in September 2023, and registered its investment mandate on 29 November 2023. In February 2024, the NRFC Board announced Martin Power as the inaugural CEO.

Further, Dr Mary Manning was announced as Chief Investment Officer in June 2024, commencing the role in July 2024. At the same time, the NRFC flagged that we could expect their first investment announcements within a few months. Having taken longer than first anticipated, we look forward to seeing funds distributed.

Which sectors will benefit from the NRF?

The distribution of NRF funds will take place following a decision by the board to provide a loan, guarantee or equity to Australian-based investments in the priority sectors previously identified by the Department of Industry, Sciences and Resources. These are:

Renewables and low emissions technologies
Medical science
Transport
Value-add in agriculture, forestry and fisheries sectors
Value-add in the resources sector
Defence capability
Enabling capabilities.

Within these priority areas, the government previously identified $8 billion of the total $15 billion in NRF funds for the following:

Renewables and low emissions technologies: Up to $3 billion
Medical manufacturing: $1.5 billion
Value-adding in resources: $1 billion
Critical technologies: $1 billion
Advanced manufacturing: $1 billion
Value-adding in agriculture, forestry, fisheries, food or fibre: $500 million.

Investment Mandate

While the NRF investment mandate has been registered, the board is still developing policies and procedures to align with the mandate.

In performing its functions, the board must consider the value of:

Growing industrial capability
Helping industry pursue value-adding opportunities
Improving economic diversity
Crowding-in private finance
Decarbonisation
Creating secure jobs and a skilled, adaptable workforce
Boosting supply chain resilience
Commercialising Australian innovation.

The NRF can only invest in bodies that are solely or mainly Australian-based.

The board must also consider the importance of improving economic participation by historically under-represented groups including First Nations people, women, people with a disability and people of culturally and linguistically diverse backgrounds.

Investments will not be made in projects which directly finance:

Coal or natural gas extraction
Constructing pipeline infrastructure for extracting natural gas
Native forest logging.

BDO Comment

The delivery of NRF funds via loans, guarantees and equity is a marked difference to the previous government’s strategy, which involved delivering generous grant funding to successful applicants who were able to show they had met increased employment and other project objectives.

$15 billion in funding was allocated to the NRF – a much-needed increase in spending on industry. Of this amount, $5 billion was provided to the NRFC on commencement of the National Reconstruction Fund Corporation Act 2023, with an additional $10 billion to be provided by instalments before 2 July 2029.

We look forward to seeing NRF funds provided to Australian companies, so they can get on with advancing and growing our sovereign manufacturing and industrial capability.

We’re keeping a close eye on NRF developments and will provide updates to this page as they occur.