Senate Economics Legislation Committee, , 6:46:31 to 7:17:11
DISR provides updates on the Green Iron Investment Fund, the closure of the Whyalla blast furnace, and biotech R&D.
Topics: Manufacturing, Grants administration, Employment
Speakers: Senator The Hon Jane Hume, Troy Sloan, Senator The Hon Tim Ayres, Tara Oliver, Senator Fatima Payman, Interjection, Julia Pickworth, Matt Crawshaw, Senator Lisa Darmanin
>> Thank you, Chair. Good afternoon. Um, my line of question is around the Green Iron Investment Fund. Uh, the government has rightly earmarked up to $500 million of the Green Iron Investment Fund for Wya's steel industry. Uh, but a failure to announce deployment of the remainder of the $1 billion fund is hampering investment in WA. Um, of the remaining $500 million, the National Development Stream closed to applications in February. I'm curious to know how many applications came from Western
Thank you for your question, Senator. Tara Oliver, head of heavy industry and local manufacturing division. Can I just clarify that you're asking about the Green Iron Investment Fund National Stream?
>> Uh, yes. Uh I'm I want to know how many applications came from Western Australia.
>> Yes. Great. Well, I can certainly let you know that we received 10 applications. I don't have in front of me a breakdown of that by state and territory.
>> So, 10 in total. Can you take it on notice to provide us how many from WA? Um has any of the $500 million um million dollars been approved or contracted yet?
Uh that process is still ongoing Senator and uh as you have set out in your question it's a significant grant. It's half a billion dollars. There are 10 uh applications and uh so we are still in the process of working through that. Uh I work very closely with my colleagues in the business grants hub who who lead on the grant process for that particular project. So when will
successful projects be announced?
>> We are looking to uh finalize the process and have it announced as soon as is possible. Uh Senator as I said it's a very significant
>> timeline >> because I mean as you can imagine the investment and you know getting the ball rolling in this industry is very important.
>> We absolutely agree. uh we are very keen to see a green iron uh industry established here in Australia given our comparative advantages. So I don't have a specific date that I can give to you today. I'm afraid I'm happy to take it on notice
>> still. Yep. I would love to know when it'll be announced. Um the federal government's environmental approvals went through uh for POSCO's Port Headland Iron Project this week um with first output targeted for 2031. That's the same year the fund requires projects to be producing by. Uh is the government engaging with POSCO and other PILAR proponents about uh support from the
I'm not really in a position to speak to specific uh projects uh given um our ongoing consideration of that. I would say of course I'm very aware of the POSCO project from Western Australia. Uh it's uh led out of POSCO in South um Korea. Uh it's a very ambitious project uh and so we routinely engage with all proponents across Australia who have green iron ambitions but I'm not really able to speak to who all of the precise applicants might be in the process while we're going through that consideration.
>> Is that commercial in confidence or what's the reason?
>> We'll take the question on notice. Senator
>> we'll take it on notice. As I said, it is led by our business grants hub.
>> Are they not present today?
>> Uh, I think perhaps they could be, but I'm very happy to take that on notice for you, Senator.
>> Okay. Because if they're in the room, I'm happy to take that burden off you.
>> I would I would suggest to them that they would take the same position.
>> Um, given that WA supplies nearly 40% of the world's, what share of Australia's green iron investment does the government expect to land in WA?
Senator, I think that's probably perhaps a bit of a hypothetical
that I can't really
I mean I would say that >> um a majority of Australia's iron ore originates from Western Australia particularly our abundant hematite iron or reserves uh and we do see interest in WA. So for example, Arena has just funded element zero uh to develop further their technology which is electrolytic. It's not hydrogen based. It's a different pathway. So Arena has put some funding in behind that project that is based out near Perth. So we are seeing a lot of interest emerging from WA which is proximate to the iron or reserves though it's not the only prospective area for
doesn't miss out but also that yeah money is getting out the door so that
>> absolutely
>> things are underway. Thank you so much. Thank you.
>> Thank you. Um we are going to Senator Hume.
>> Hi. I've got a couple of just quick follow-up questions from some questions that were asked by Senator Little earlier around Vala. First um what was the date that the government was first
>> Senator? Do you mind just waiting for a moment and Mr. Sl just coming up? Thank
Hi. What was the date that the government was first notified that the blast furnace at Ryella would permanently close?
let me see if I can find that. Senator, what I'd say is that we are in regular um conversations with Camea, who are the reg um the administrators, sorry. Um and certainly we were in discussions around uh the process to try and um return the blast furnace to operations. uh and we have regular contact with quarter mentha um around that and certainly they were telling us um some of the um you know this when things were going well when things weren't going well when uh what operations were happening uh um but I don't think I've got the actual date but what I would say it was very very close to when it was announced it a day or you know days. It wasn't months or anything like that. I haven't got the date in front of me. >> Okay. >> Apologies, but we'll take that on notice and see what we can uh find.
>> Okay. So, just to be very clear, um >> you said that you were in constant contact with Portantha
>> on everything. Senator,
>> when was the government first alerted to the issues around the blast furnace? And then in comparison to that date or roundabout date, when was the government first notified that the blast furnace was going to
>> Uh, as I said on the blast furnace closure, it was a day or two, you know, days before
>> the the announcement.
>> Yes. Yes.
>> So, what was the date of the announcement? Can you remind Uh the date
of the announcement I I believe was 14th of um uh September.
>> 14th of September. >> Yep. >> So it was sometime in the first weeks of September.
>> Correct. >> Uh and I'm trying to find I haven't got that my my colleague has uh the date when the blast furnace uh shut down. I'm just trying to I feel it was I No, I don't want to guess, Senator. I I'll take that on notice. We do have that.
>> We can come back to you with because I think what what Mr. Sloan's read pains to try and say is yes. In terms of the decision,
>> yes,
>> that that that could not be retrieved. That's one thing. But the two governments and the administrator and Mr. I I can't give you the kind of date >> dates here. there was a kind of eb and flow of this massive struggle to try and uh bring the blast furnace back into full production which was a kind of giant effort that went over many months but >> but Mr. line will be able to if you can later give you those
>> I'm trying to get in fact you can take it on notice but I'm trying to get together in my own head a timeline of when the issues first arose when the notification was of a temporary closure and then when the notification was of a permanent
>> we'll try and give you something on notice that tells that um that tells that story um you know in an effective kind of way
>> and Senator I think it's important to also recognize that and centh is on record of this and we've talked about it as before the previous owner had a you know an underinvestment in capital for a long time and the blast furnace was old and it was always uh facing uh issues that you know had to be repaired and had to be you know they'd take it offline for a week and do repairs and bring it back on. Um so it was always uh you know planned to be replaced um and it needed to be replaced and there was always a work to keep it functioning at at the appropriate level.
>> Did the government try and make any efforts to to stop the closure?
I uh Senator I think it's very important in this process that we remember the the roles and responsibility and legal obligations of everyone involved. Quentha uh are in control and running the steelworks and they have a range of legal obligations including work health and safety that they need you know they are personally liable for. Uh and as such we were very much uh as the minister said uh talking to them uh we're talking to them regularly about everything but on the on this on the on the blast furnace we're regularly talking to them uh but at the end of the day that decision had to be theirs based on their you know their their responsibilities in running uh you know an industrial facility.
>> Okay. All right. I understand. Can you then please explain for me exactly what the 222.6 6 million that's committed to AA in the budget will be spent on
>> uh so basically uh Senator that's to continue the administration so that will be um uh uh funding wages funding operational costs at the at the at the at the at the site because it is more than just the blast furnace. Uh there's a mine, there's a rolling mill, etc. Um there's a port. Um, so that will continue to run the operations. Uh, it will pay for some, uh, you know, minor capex um, upgrades where they need to be done and and so forth, Senator. So, it's just running continuing to run the business.
>> Is there a possibility of the blast vendors coming back online? all right. Thank you. I might leave those there and the for the sake of time. I do want to ask some questions around the R&D tax incentive but I assume that that is one point out 1.2 >> we go for that. Okay. All right. Fantastic. Uh specifically, um I want to talk about biotechnology uh which obviously is on the list the department of critical technologies in it's also one of the proud areas of the National Reconstruction Fund and ambitious Australia identifies that health and medical is one of its the first actually of its six national strategic pillars. That's all I think >> something that you can agree to minister. Thank you. Um so taking a new medicine through pre-clinical work, clinical trials, regulatory approval can take ages, sometimes sort of a decade or so. Is that something that department is aware of in its thinking around the development of a R&D tax incentive changes?
>> Yes, we're aware of that that issue, Senator.
>> Okay. So the budget initially limited the refundable offset to firms under 10 years old and and Treasury's exposure draft released uh in September extends that to up to 15 years with therapeutic goods. Um so within 4 months the government has conceded that 10 years was too short for therapeutics. Is that
administer the R&D tax incentive. We've much beyond that um is better directed to Treasury. Um what we can talk about is our consultation, you know, involvement in the consultation and what we've done.
>> Okay.
>> At a policy level, it is it is Treasury. Um I would just say,
>> but you must feed into that.
>> Yeah. And the treasur indicated um when the budget was delivered like on that night that we would be engaging um with uh with business and industry around these questions. Um there has been a pretty thoroughgoing process led by Treasury but that includes um uh of course the work that colleagues here um are leading uh that has led to uh decisions like the one that you've just outlined and other >> Yep. you know, and and other decisions that go to the delivery of the R&D tax credits.
>> Okay. So, something that you've looked at or fed into Treasury then um some analysis of what proportion of therapeutic products that need clinical trials um you expect to be able to be commercialized within 15 years.
>> Well, it's been a very collaborative process. So, I wouldn't I mean, but Treasury has been engaged directly itself in in engagement with industry. Uh but I'll let um the team answer to the extent that they can in relation to
>> to that industry. Y
>> Senator, I can confirm that you we've provided facts and figures on recent uh program claims breaking them down by sector and things like that for Treasury >> who led the modeling and analysis on the reforms.
>> Is that um data that you can share with this committee? Can is there something you can table something that you can ask you on notice the analysis provided?
>> We could take on notice um facts and figures on biotech claimments in the program at an aggregate level.
>> I think that would be helpful. What was the basis for the new 15year figure?
>> Senator I think that's probably better directed to treasury.
>> What was your recommendation? So
>> probably also officials limited in what he can say in relation to um a policy decision that the cabinet has made. Um but suffice to say it was it was certainly um something that all of us in government around these issues whether at ministerial level or in the agencies were engaged with um biotech and technology sectors in particular. How
many are companies that are currently registered for the refundable offset have been operating for more than 10 years and how many have been operating for more than 15 years?
>> I'll have to take that on notice. Senator,
>> it is data that you'd have though.
>> We should be able to obtain data in that to some degree. Yes.
>> Okay. So, before the budget, did the department model the impact of the age
So Senator the the the modeling is is done by Treasury as part of supporting the treasurous tax reform package. Uh so have to direct questions to Treasury on the modeling.
>> Okay. So before the budget did you feed into Treasury any data that you had about the age limit of the companies that was were involved?
>> Uh so through the normal sort of courses of developing uh the the budget we didn't provide data. I' I'd need to take on notice a lot you know have a lot of data. We share a lot through Treasury.
>> Okay. And what about um sovereign capability risk assessment? Did you do any like that around these changes?
>> Uh no, I don't I didn't know in the in my division though.
>> Has anything been done since the budget around that?
>> So, uh as the minister indicated, there has been consultation since the budget, you know, with biotech sectors.
>> Yeah. Yes. >> So, that wasn't a question.
>> Well, yes. I think I mean maybe a better way um is for me to kind of respond to that that the as you indicated in the preamble to your questions both biotech and these what I'd call critical technology sectors >> um sit very firmly within um the uh the the the priority industries and research and development priorities for Australia. Um we we listen to everybody very closely but but for those reasons of course there was a very thorough engagement about those questions and there continues to be
>> and um Senator we will have police who can talk further to the critical technology sectors joining us under outcome 1.2 if you had further questions around that.
>> I I will at 1.2. So who is it that decides whether a company's R&D counts as um therapeutic goods R&D? Is it is it um is it the ATO? Is it TGA? What's is
the department >> the bill that the government introduced recently to implement these reforms? It's a continues the practice of the program being largely self assessment and the administrators of the program do riskbased compliance based on that. So it is something principally that a company would self assess their eligibility against.
>> Right. So what's the role of um ISA in this industry innovation estate they were the science Australia is that what they're called?
the the powers uh in terms of decisions around registering companies to claim the R&D tax incentive uh and also for riskbased compliance they sit with uh industry innovation and science Australia >> um and so they effectively are providing that that functional regulatory oversight and advisory oversight of the administration of the scheme.
>> Right. Okay.
>> Yeah. and departmental people work under delegation from double ISA and the day-to-day administration of the scheme.
>> Okay. So, uh in September, >> Yep. Yep. I'll just finish this line. In September, there were 18 organizations, Biotech, including OS Biotech, Science, Technology Australia, Medicines Australia, Medical Technology Association. They all wrote to the treasurer. They copied in you minister and they opposed these changes including the increase to the 15-year age limit. So the sector is clearly united in its opposition to the proposals. I'm wondering in light of this um is minister is the government reconsidering them or taking those issues that industry has into account?
Well, all of those organizations and more we have been deeply engaged with since the budget. Uh we have um made a series of uh announcements and new new legislation and papers are being released that reflect those uh discussions. uh and you know we will continue to engage deeply with them about the um the implementation of that which um you know some of that as you kind of pointed to goes to the the way that um issues like um supporting R&D and a range of these other things are dealt with. Um the fact that a public position is taken in in no way undermines the the fact that we are fully engaged. we're not don't don't sort of have a glass jaw and fall down and cry if um if people take a public position that's they're totally entitled to do that and I'm really pleased with the constructive approach that uh all of the sector has
>> Okay, I have some more questions on the R&D tax incentive chair but I'm happy to
rotate the call. Okay, we're actually going to um suspend now for a short break and we will return in 15 minutes which will be 4:10. Look forward to