Kristy Reading, Host: New legislation, spruiked to help create jobs and boost manufacturing across regional Australia, will head to the Senate this week after passing through the Lower House. If the Labor Government's National Reconstruction Fund passes the final hurdle in Parliament, it will put $15 billion into projects to diversify industry and economy in seven priority areas, including renewables, transport, agriculture and defence, while ultimately boosting manufacturing.

But not everyone is happy with the move, including the Nationals, who say the fund is effectively turning its back on investment in coal, gas and native forestry. Many of the industries regional New South Wales relies on to grow and prosper. Senator Tim Ayres is the Assistant Minister for Manufacturing and is here to tell us what he thinks the National Reconstruction Fund could do for regional areas like ours. Good morning.

Tim Ayres, Assistant Minister for Trade and Assistant Minister for Manufacturing: G’day, Kristy. It's always good to be on [ABC] Radio New England. I grew up in your listening area in Glenn Innes. I feel a bit sentimental about coming on the radio up there. It's good to talk to you and your listeners.

Kristy Reading: Well, thank you for your time this morning. Tell us, why do you think this fund is so important?

Assistant Minister: Well, this is the biggest peacetime investment in Australian history in manufacturing capability from any government and I think it's important to set out what is the nature of the problem that we are trying to solve here. Manufacturing has retreated in Australia to being less than 7 per cent of our Gross Domestic Product. We have slipped down the indexes of economic complexity over the course of the last decade, more than 20 places to where Australia is 91st in the world. We are stone cold last in the OECD when it comes to manufacturing self-sufficiency.

So, this fund is designed as a co-investment vehicle, so it's not a grants vehicle where money is allocated out with no real accountability to firms. It is a co-investment and loans facility that will mean that there will be a return to the fund, and this fund will have a perpetual capability to continue to reinvest in the manufacturing capability of the future. And the jobs that are generated, the factories that are built, the new industrial capability that is delivered, none of that really goes into our central business districts or inner cities because by their very nature, factories and blue-collar work will be in our outer suburbs, our regional cities and in our country towns. This is a very big commitment from the new government that we were elected to deliver, to rebuild manufacturing and it will be to the enormous benefit of regional Australia.

Kristy Reading: Can you give us some examples of projects that this fund would or could invest in?

Assistant Minister: Well, manufacturing capability in the sectors that you spoke about, and more. So, I know that the National Party have indicated completely incorrectly that this fund will not be engaged in the sectors that you just talked about. Now, it was never envisaged to be engaged in primary production of any kind. It's about manufacturing, so up the value chain.

So, in mining, this fund will be engaged in making sure that Australian mining is moving up the value chain from just the extraction of minerals to more mining technology, but also taking products like, for example, lithium. Australia has significant reserves of lithium. We export it currently around the world, to make sure that we're processing lithium ore, moving up the value chain to do things like making lithium-ion batteries for the booming electric vehicle market.

Now, those jobs are the good jobs. Moving up the value chain into export oriented, high end manufacturing jobs is where the good job opportunities are. We currently, if we continue with the example of lithium, extract a tiny amount of value of the ultimate end product that lithium is directed towards, less than a percent. It's our ambition to use this fund to invest in lithium production right through to battery production, that delivers good jobs on the West Coast and the East Coast and in our interior in Queensland and New South Wales in particular, where those lithium reserves are.

Kristy Reading: What do you make of claims that Labor is turning its back on big industries that exist, like forestry, coal and gas?

Assistant Minister: Well, this is hyper-partisanship. This bill should be being voted for by the whole Parliament. This is a sort of hyper-partisan campaign looking for a reason. These guys in the National Party, Barnaby Joyce, Mr Coulton and David Littleproud decided they were voting against this legislation before they saw it. They are searching for a reason to oppose it. And what that means, of course, is that we have to seek the support of the crossbench in order to get the legislation through the Parliament, because the National Party is not at the table. To walk away from it, to turn their backs on blue collar workers in country towns and then complain about it, is utter hypocrisy and they should be working in the national interest.

Does anybody think that we can get through the next two or three or four decades in our region that is full of challenges and opportunities, if Australia's industrial capability and manufacturing continues to decline? It is just absolutely destructive hyper-partisanship for them to embark upon the course that they have embarked on, and it turns their back on the people in country towns who will benefit from this. There are blue-collar workers who need jobs, there are young school leavers who need apprenticeships. So, it's in the interest of country towns and regional cities, but it's also in the national interest. We need to rebuild our national capability in industry and manufacturing.

Kristy Reading: Senator Tim Ayres we will have to leave it there this morning but appreciate your time on this.

Assistant Minister: Thanks, Kristy.

Kristy Reading: Thank you. That is Senator Tim Ayres, Assistant Minister for Manufacturing.