JIM CHALMERS:
I’m here with Minister Ed Husic, who I’ll throw to in a moment, and then Mary Delahunty, and then, happy to take your questions.
We’re at about half time of the investor roundtable, which is all about bringing together trillions of dollars of institutional investment to make sure that we are seeking great returns primarily, but also great outcomes for Australians and for their economy more broadly.
The government’s primary focus in the economy is the fight against inflation, but we’ve also managed to do this at the same time as we’ve kept the reform wheels turning and the capital flowing as well.
There are immense opportunities for Australia in the net zero transformation, in building more housing and in hardening and making our economic infrastructure more resilient, in the context of all of the national security and other challenges and all of the global economic uncertainty that we face as a country.
These meetings are all about the best returns for investors and the best outcomes for Australians. It brings together the major banks, the major super funds, the major institutional investors to make sure that as capital is flowing in our economy, it’s flowing in the most efficient and effective way, in the service of our national economic objectives.
There’s a lot of very constructive discussion about some specific issues, including one that I’ll throw to Ed in a moment about but most importantly what we are doing is we’re fighting inflation. We’re making sure that capital flows in our economy in the most advantageous way. We’re not trying to replace private capital, we’re trying to attract it. And there’s a really important role for the government’s investment vehicles, for the Future Fund, for the superannuation industry, for the banks and for the other institutional investors represented at the discussion today. Now we are all in search of the best possible returns. We’re also seeking ways to make sure that our economy is the best version of itself, and that’s why these discussions are so important, so valuable to us as a government. I thank all the participants. I’ll throw you to Ed Husic and then Ed will throw to Mary.
ED HUSIC:
Thanks, Jim. Good to see you, Mary. I just wanted to focus on one element of the Investor Roundtable that Jim has convened.
And grateful that he is doing this, because it does enable us to work with the private sector to make sure we can mobilise capital in areas where there are national priority and there’s no greater priority at the moment, in terms of housing than more supply, we need to be able to build more quality homes quickly. An area where we have the prospect of being able to do that and improve productivity in construction is around pre‑fabricated and modular housing. At the moment, it currently comprises about 5 per cent of residential construction builds, through this mechanism could go up to as much as 15 per cent, providing tens of thousands of more homes for Australians.
But it also naturally presents as a manufacturing opportunity as well. Given its early stage and its small part of the overall construction mix, sometimes regulation, red tape, can hamper the increase of the number of homes that we build through a prefab or modular pathway.
What we have done with building ministers in states and territories is look at what are the regulatory reforms, and also the way in which we can smooth the approval pathways for prefab and modular. We’re also working with the finance sector around the products that can be used for Australians to finance the build of pre‑fab and modular homes.
Today, we’re releasing a pre‑fab handbook, as well as flagging the establishment of a national voluntary certification system to be able to support pre‑fab and modular home builds. The National Construction Code has been geared to traditional forms of construction, whereas in pre‑fab, you’re literally building a home in a factory, putting it together, pulling it apart, taking it out on site, rebuilding it.
The issue that we have is building homes quickly. Pre‑fab and modular can do it in a fraction less of the time of a conventional build with less cost and less waste. Being able to smooth the pathways for these builders in terms of being able to have clear and well understood parts of the National Construction Code brought together, smoothing the way that the builds occur, really important.
And we’ll continue to work on improving the regulatory climate for the builds in terms of pre‑fab and modular. And we’ll also work and we’re convening a meeting with the Australian Banking Association and other industry groups next week to talk around how we better establish financial products that can finance the lines of credit that will be required for the build.
Again, the big focus for us is being able to build quality homes quickly, and particularly in regional areas where it will be a challenge to get builders out and scale up builds where pre‑fab and modular can provide a quicker pathway for that build, vitally important.
We’ve been able to talk about that today with investors who agree they’re willing to work with us on this. And again, I express my gratitude to the Treasurer in allowing investors to focus on this as part of the agenda items for this Investor Roundtable.
MARY DELAHUNTY:
Thank you. I’ll be quick, because I know you want to get to the Treasurer and the minister, and I just wanted to say thank you to them for holding such a critical forum as the Investor Roundtable.
It really does bring together some of the greatest minds and the largest institutional investors in Australia and the institutional investor community is really critical to the energy transition.
What we’ve agreed on today is to continue the work in a really more intentional way as to how we bring in really large waves of institutional investment money towards the energy transition in this nation, not just Australian super fund money, but when you’ve got such a sophisticated superannuation community that exists here, it actually acts as like a blue chip stamp for international capital to come in too and that will accelerate Australia’s energy transition.
We’ve spoken today about the importance of the national energy market and the work to be done there. We’ve spoken about the integrated system plan and how important it is to agree to policy certainty around the energy mix in order to give that certainty to investors and bring in those pools of capital.
There’s more work to be done, and it will be done by a working group of the Investor Roundtable. But really just quickly to underscore the importance of that forum, it is critical in the flow of capital in this nation. Really, really good discussions this morning, and very important work to be done in the future. Thanks.
JOURNALIST:
Treasurer, one of the world’s most well‑known investors, Elon Musk, will be an influential figure in the next Trump administration. He’s today described the government’s social media regulations as a backdoor way to control access to the internet by all Australians. Is that what you’re trying to do?
CHALMERS:
Of course not. Elon Musk’s views on this are well known. Our focus today is on getting capital flowing the most efficiently and effectively we can in our economy in the service of our national economic objectives.
JOURNALIST:
Minister Husic I was curious about that issue you raised about pre‑fabricated houses and the banks. Could you just explain what? What’s the problem? What’s the solution that’s blocking this part of the industry?
HUSIC:
There are a number of things. The biggest thing to emphasise is that banks have been focused on the lion’s share of construction activity where those construction methods and timeframes are well established. This is a new and emerging segment with pre‑fab and modular. With conventional construction, you know the timeframes, you know at which points you can release capital, and the risk profiles are well known.
In some cases, for example, with conventional builders, say, for instance, one hits hard times, and you need someone to complete the job, it’s a lot easier to mobilise to complete that, and also to be able to work out when you release capital. Might be a bit difficult or different with pre‑fab and modular builders. The good thing has been, there’s been a lot of stability with the number of players in that segment of the construction market, but being able to work out, in particular, how you scale up a financial product for a pre‑fab that gets built in a much shorter timeframe compared to the longer timeframe of a conventional build is probably one of a number of challenges we’re seeking to address.
The good thing I can say Jacob in talking with banks in this arena, particularly through the ABA, is they’re of the view that we can overcome a lot of these hurdles and work together on it, and it’ll be really good to unlock credit for this as an emerging segment of the construction and build sector.
JOURNALIST:
Earlier, the CEO of the Future Fund said that we haven’t had a huge exposure to the Australian property market in terms of their investment choices. Given that the Future Fund is looking to maximise returns, given that they haven’t invested in property hugely at the moment, what’s to say that they’re going to invest any more in the housing market after this decision?
CHALMERS:
The opportunities in housing are evolving, just like they’re evolving in the global net zero transformation, just like they’re evolving when it comes to making sure that our infrastructure is hardened up in the context of the challenges we have around economic resilience. I think this point really goes to some of the unhinged commentary of the last day or so.
There will always be people who pretend that the economy is exactly as it was in 2006 or that the opportunities and challenges in our economy aren’t evolving. I’ll throw to Mary in a sec on this point. A real flavour of the discussions I have with investors and with objective observers of our announcement yesterday in relation to the Future Fund is that it’s not especially unusual in the international context for governments to communicate their economic priorities and ask that sovereign wealth funds factor that into their decision making.
As the chair of the Future Fund said to you earlier today, we’re not changing the Future Fund’s independence. We’re not changing its benchmark rate of return, we’re not changing its approach to risk.
We’re asking that they consider in the course of making their prudent investments, that they factor in the government’s views about building more homes, building more cleaner and cheaper energy and making our infrastructure more resilient in the context of global economic uncertainty.
That really goes to the nub of what’s been talked about the last day or so.
As the chair of the Future Fund also pointed out, that’s just one of the changes that we’re announcing. We are providing more certainty to the fund by saying we won’t draw it down until 2032 at the earliest. We are modernising its governance arrangements through the statement of expectations.
This is a well considered, careful evolution of the Future Fund. It recognises and factors in our national economic challenges and opportunities, but it does that in a way where we’ve worked very closely and collaboratively with the Fund.
Katy Gallagher and I went to the board of the Future Fund in August. We briefed them on our thinking. They signed up to the announcement that was made yesterday. As I understand it, the support for this at the board level was unanimous, and that’s because it makes sense.
Let’s hear from Mary.
DELAHUNTY:
Thanks, Treasurer. It might be interesting to note that the institutional investor community is not at all surprised to see this type of a change to the mandate and the offerings of the Future Fund.
It’s a sovereign wealth fund, and if we cast our eyes outside our own border, this is not at all an unusual mandate insertion for it to have. In fact, it’s entirely appropriate when you look at the international community. The institutional investor community really welcomes the Future Fund’s entrance into this sort of marketability to be able to consider national priorities, and importantly, that change to the long dated drawdown proposal. That means it is a provider of long term capital for a long time. It’s a really welcome change.
JOURNALIST:
Mary, do you think that it will increase the supply of housing? This mandate change?
DELAHUNTY:
The institutional investor community would say that the greatest insertion into being able to increase the supply in housing has been the Housing Australia Future Fund. It really does change the game in terms of how we get this nation moving on housing.
There are some other, perhaps, state‑based considerations and challenges, but that has been the best federal intervention, and we welcome the ability for the Future Fund to be able to participate in that because it adds to their returns, and it adds to the housing supply in the nation.
JOURNALIST:
Dr Chalmers, did you receive legal advice on the consistency of this new mandate with the Future Fund Act, and will the government release that advice?
CHALMERS:
Of course, we satisfied ourselves legally as part of the considered, methodical way that we work through the issues. It’s not unusual to get legal advice on issues like this, and it would be very unusual to release it, as Greg Combet said earlier today.
Both sides of this, at the Fund end and at the government end, we satisfied ourselves legally. This is completely consistent with the legislation. We are asking the Future Fund to consider these national economic opportunities as part of taking their individual investment decisions independently. That hasn’t changed. It remains entirely consistent with the legislation.
JOURNALIST:
Minister Husic, in August you talked about how sanctions are an important part to people that are doing the wrong thing and the Israeli government needs to be held to account. The Israeli Prime Minister will need to be held to account for the kind of conduct of the conflict. Obviously, we’ve heard about the ICC issuing arrest warrants overnight. Is this in line with what you wanted to see, and does it mean that if Netanyahu would come to Australia, he would be arrested?
HUSIC:
I think Foreign Minister Wong has expressed the position of the government on this this morning. I don’t really know how much more there is to that or the comments that I’ve previously expressed. I note the Coalition’s made some remarks. The Coalition can’t be for law and order and then say which law or which order it finds convenient to follow.
We respect international law, and obviously these bodies need to be allowed to conduct their work in accordance with law. But I really don’t see how much more I can add beyond the comments that I’ve said.
JOURNALIST:
Is this in line with what you expected to see?
HUSIC:
I said a few moments ago, my views on this have been consistent. I think the way in which parties conduct themselves with respect to international humanitarian law matters. Obviously, Hamas being held to account is critical. The way that the Israeli government conducts itself in respect of its objectives and the way that that has an effect on innocent people has to conform with international law.
The ICC is doing its job and beyond the words of the Foreign Minister I don’t see what more I can add.
JOURNALIST:
Just on the ICC, the Chief Prosecutor has previously said that for America and Israel, they view the court as something that only applies to Yugoslav or African war criminals. Do you view the US statement overnight as a hypocritical one given in other circumstances, it encourages nations to adhere to world order and international organisations.
HUSIC:
The challenge you’re offering me is to respond to every country that has various views on these matters and I don’t think that that is particularly helpful. What matters is our country’s expression of its view which we have described and as I said a few moments ago, international humanitarian law means something to everyone, and the way that it’s enforced is important, and we have bodies internationally that do that job and they should continue to do that job.
But again, I’m afraid, friends, if you keep asking me these questions, I’ll have to give you the same answer given that the Foreign Minister has expressed our national position on this matter.
JOURNALIST:
Isn’t that position that Benjamin Netanyahu should be arrested?
HUSIC:
I’m just going to let the law run its course.
JOURNALIST:
Treasurer, the Coalition has vowed to repeal your changes to the investment mandate. The Greens are calling for you to go further –
CHALMERS:
Welcome to my world.
JOURNALIST:
What’s your reaction to the Coalition and the Greens’ response to your changes?
CHALMERS:
The Coalition response has been predictably unhinged and ill‑informed, deliberately so. I see that they’ve had to wheel out John Howard and Peter Costello. Again, that happens on a fairly regular basis. John Howard on the front of The Australian bagging the Labor Party has been happening since before I was born and so I don’t think that’s an especially big revelation either.
What we heard from the Coalition yesterday was really a pretty frank admission that they don’t want to see more investment in housing, cleaner and cheaper energy, or more resilient infrastructure, and that’s what this is really about.
If you go beyond the kind of argy bargy on editorial pages, what this is really about is recognising we’ve got a housing shortage, recognising we’ve got a huge opportunity with cleaner and cheaper energy, and recognising as the world becomes more uncertain, we’ve got an obligation to harden up our infrastructure in our economy. That’s what this is really about.
The choice at the election, the choice before then and after then, is the Labor Party that wants more investment in housing, energy and infrastructure, and a Coalition that wants less investment in each of those things.
The Greens, again, consistent with past practice, they will always issue neatly worded press releases about things that the Labor Party should do. The difference is we’ve got to run the joint and we’re doing that in the interests of the workers and businesses and communities and investors and consistent with our national economic interest. We’re doing that responsibly, we’re doing that methodically.
Now there will always be predictable partisan hyperventilating from predictably partisan people and we’re just seeing the usual suspects. I’m not especially troubled by them.
JOURNALIST:
The R&D review terms of reference is currently with you, just wondering if you had a timeframe for when you wanted to approve those, if you’d had conversations with Jason Clare yet about those terms of reference and whether you had experts in mind to tap to lead that.
HUSIC:
The answer to any question about when I want to get stuff done is yesterday. So that’s a standard.
CHALMERS:
I’ve seen that in the Cabinet. I’ve seen that for myself.
HUSIC:
Thank you very much. We’re well advanced in terms of the terms of reference. You can rest assured, I’ve obviously spoken with the Minister for Education, also the Treasurer who has an interest in this space.
Understandably, for all the reasons we’ve talked about today, R&D in this country relative to our friends in the OECD is nothing to brag about. It will be particularly important for longer term economic and jobs growth and we do need to do better in this space.
We will release details of the terms of reference and panel that has been finalised in due course but it’s important to emphasise this will be a fundamental examination of the way in which we are underperforming on R&D and what we need to do. It’s not about a finger pointing exercise. It’s about us working together to lift a metric, an indicator of long‑term economic prosperity that will be vital for this nation into the years ahead.
JOURNALIST:
Just to clarify, you mentioned the Treasurer having an interest in the R&D review. Will the Treasury have quite a large involvement in the review, or will it mainly be led by the industry.
HUSIC:
My experience in government is Treasury has a deep interest in a lot of people, so I don’t think that’s going to change one iota, my friend.
JOURNALIST:
Can I just follow up on Cam’s question earlier about Elon Musk. Elon Musk has got an ear of Donald Trump. He’s going to be one of his closest confidants. This is now the second time Elon Musk has criticised Australia’s social media policy. Does this kind of awareness that he has of Australia’s social media policy, the constant criticism of it, does that make it harder to engage with the Trump administration? Are you concerned about that at all?
CHALMERS:
No, I’m not concerned about it. Partly because of the answer I gave to Cam’s question before.
Elon Musk having that view about protecting kids online is entirely unsurprising to us. He’s expressed similar views before. Our job is not to come up with a social media policy to please Elon Musk, our job is to put in place the necessary protection for kids online. That’s our motivation, and we do that in the face of feedback from all quarters. We listen respectfully to the feedback we get on this policy, indeed, on all of our policies, even where we don’t agree with it. But the idea that Elon Musk is not delighted with our steps to try and protect kids online is not an especially big surprise to us, nor does it trouble us greatly.
JOURNALIST:
Just following on from that, though, considering with the social media age ban that the onus is on the platforms to enforce, considering Elon Musk’s comments, is it realistic to think that he and the other big tech bosses will actually comply?
CHALMERS:
It’s realistic to think that companies operating in Australia will comply with Australian law and Australian regulations. That’s the price of admission for operating in markets around the world. There is a role for the platforms and there’s a responsibility that the platforms have.
As you go around Australia and you hear the very understandable, justifiable concern that parents have about their kids online, there’s a recognition, there’s a role for government and legislation, and Minister Rowland and the PM and others are advancing on that front. But there’s also a responsibility for platforms as well. They need to do the right thing by Australian kids.
JOURNALIST:
Healthscope has terminated its agreements, its contracts with BUPA and about a dozen other insurers. Is there scope here for the federal government to step in given 6 million Australians will be left without insurance and without the cover that they’ve already paid for?
CHALMERS:
Obviously, we keep an eagle eye on developments in the health insurance sector. As I understand it, Mark Butler is in the West today doing some public commentary on some of these issues and I don’t have anything to add beyond what Mark might be able to contribute.
JOURNALIST:
Minister Husic, the industry says that the scale and volume is what’s really needed. Does that mean government could play a more active role? We could talk perhaps targets, or including a 2 million homes target, that kind of thing?
HUSIC:
I broadly respond in 2 ways. I think probably we’re in alignment on the first part of your question. The second, I don’t think we’re at the point of announcing targets.
I think you’re absolutely right. One of the big things for pre‑fab and modular builders is having certainty of volumes and increased volumes for them given that they’ve operated in fairly lean ways I think it’s safe to say over many years. They haven’t gotten ahead of themselves. They’ve aligned supply and demand very neatly. But if we do want to build, as I said, more quality homes quicker, we can turn to them and expect a greater emphasis on their contribution to building more homes in line with the aspiration we have outlined to 2030. How that will transpire, or how it will manifest itself, we’re still working through that, but I do believe in the discussions that we’ve had with all the investments we’re making as a government to boost supply, and particularly with a focus on social and affordable housing, that is the low hanging fruit as it were in the space that we do want to be able to focus on.
JOURNALIST:
Peter Costello says that the Future Fund will lose money under your changes. Will you be held responsible for any reduction in the returns of the Future Fund due to the reforms that you’re planning?
CHALMERS:
I make it clear again, as I did yesterday and as the chair of the Future Fund did earlier today, the changes that we’re announcing do not change the benchmark rate of return, they do not change the independence, they do not change the approach to risk. There is no reason why we should expect to see the sorts of outcomes that you’re describing.
We are asking the Future Fund and its board of guardians to consider the government’s national economic priorities when it comes to weighing up different kinds of investments. A primary focus on returns is unchanged but making sure that we are in the search of great returns that are also in the service of some of these economic opportunities, I think for reasons that Mary outlined a moment ago, that shouldn’t be especially unusual.
I want to say this more broadly about Peter Costello and others who’ve weighed into this public debate. I have the same view that Greg Combet does about Peter Costello. I respect Peter Costello, I just don’t agree with him on this occasion, and all of you who come to my press conferences about the Future Fund and other issues know that I go out of my way to celebrate and acknowledge the important role of the Future Fund. I am a believer in the role of the Future Fund and in its potential in our economy. It’s one of our big national economic advantages. As you’ve probably heard me say more than anyone else, Shane, I get free advice all the time to liquidate the thing, I get free advice to do nothing with it. We’re finding a way to make sure that it evolves with the economic challenges and opportunities of this country and that’s really the nub of it.
The Future Fund’s not about the past. The Future Fund’s not about what Peter Costello thought in 2006, I say that respectfully. The Future Fund’s not about the past, it’s about the future, the hint’s in the name of the thing. It’s all about recognising that challenges and economic opportunities evolve. My job is not to take something that Peter Costello designed in 2006 and make sure that nobody ever improves it. My job is to make sure it improves and evolves and that’s what those announcements are about.
JOURNALIST:
Speaking of Elon Musk , is it time the Future Fund sold its Tesla stake?
CHALMERS:
The Future Fund makes its decisions independently consistent with the mandate that we’ve given it. Thanks very much.