EXPLANATORY STATEMENT
Issued by the authority of the Minister for Industry and Innovation,
and the Minister for Finance
National Reconstruction Fund Corporation Act 2023
National Reconstruction Fund Corporation (Priority Areas) Declaration 2026
Purpose and Operation
The National Reconstruction Fund Corporation Act 2023 (the Act) establishes the National Reconstruction Fund Corporation (the Corporation).
Section 63 of the Act sets out the investment functions of the Corporation, and provides that the Corporation may:
- provide financial accommodation for purposes relating to; and
- acquire equity interests in entities any of the activities of which are in
a priority area of the Australian economy.
Investments must also satisfy other applicable requirements that arise under the Act.
The National Reconstruction Fund Corporation (Priority Areas) Declaration 2026 (the 2026 Declaration) identifies priority areas of the Australian economy for the purposes of the Act.
The Act requires the priority areas of the Australian economy to be declared in a legislative instrument. This allows for timely changes to the Corporation’s investment focus in the event priority areas change, for example because of significant technological or other unforeseen developments that require immediate or prompt changes to the Corporation’s investment focus.
The 2026 Declaration repeals and replaces the National Reconstruction Fund Corporation (Priority Areas) Declaration 2023. The 2026 Declaration prescribes industrial manufacturing and critical supply chains as a priority area of the Australian economy. The industrial manufacturing and critical supply chains priority area relates to the objectives of both the Net Zero Fund and the Economic Resilience Program. The priority area reflects opportunities to support Australia’s critical supply chains affected by market disruption and sectors which have the greatest opportunity for decarbonisation, as defined by the government’s Industry Sector Plan (and not already captured in the renewables and low emission technology priority area).
The 2026 Declaration also updates the definition of manufacturing to explicitly include the assembly, installation and storage of products. Further, the 2026 Declaration updates each of the priority areas to provide clarity on their scope and intention.
Further details about the 2026 Declaration are in Attachment A.
Authority
Section 6 of the Act provides authority for the legislative instrument.
Consultation
The following Government stakeholders were consulted in relation to the National Reconstruction Fund Corporation (Priority Areas) Declaration 2023 instrument:
Austrade; Australian Space Agency; the Department of Agriculture, Fisheries and Forestry; the Department of Climate Change, Energy, the Environment and Water; the Department of Defence; the Department of Education; the Department of Employment and Workplace Relations; the Department of Foreign Affairs and Trade; the Department of Health and Aged Care; the Department of Home Affairs; the Department of Infrastructure, Transport, Regional Development, Communications and the Arts; the Department of the Prime Minister and Cabinet; the Department of the Treasury and the National Indigenous Australians Agency.
Consultation was conducted with a broad range of industry stakeholders and experts including businesses, peak industry bodies, research institutions and unions, as well as relevant State and Territory Government agencies.
Public consultation was also conducted; a consultation paper was released and the public invited to provide feedback on how the Corporation could support each priority area.
In relation to the 2026 Declaration, consultation has occurred with the Department of Agriculture, Fisheries and Forestry; the Department of Climate Change, Energy, the Environment and Water; the Department of the Prime Minister and Cabinet; the Department of the Treasury; the National Indigenous Australians Agency; the National Reconstruction Fund Corporation; the Net Zero Economy Authority and the Office for Women.
Statement of Compatibility with Human Rights
A Statement of Compatibility with Human Rights is set out in Attachment B.
Attachment A
Details of the National Reconstruction Fund Corporation (Priority Areas) Declaration 2026
PART 1 – PRELIMINARY
Section 1 – Name
This section specifies the name of the instrument as the National Reconstruction Fund Corporation (Priority Areas) Declaration 2026.
Section 2 – Commencement
This section provides that the 2026 Declaration will commence on the day after it is registered on the Federal Register of Legislation.
Section 3 – Authority
This section sets out the provision of the Act under which the 2026 Declaration is made.
Section 4 – Schedules
Section 4 provides that this instrument amends or repeals specified legislative instruments as set out in the applicable items in the Schedule. Any other items in the Schedule operate according to their terms.
Section 5 – Definitions
This section provides definitions of terms used in the 2026 Declaration. Although the definitions are largely self-explanatory, the following should be noted:
- The definition of manufacturing supports a broad understanding of the entire manufacturing process, focussing not just on production, but also on the pre‑production development and inputs and post-production services that form part of the manufacturing ‘smile curve’. This approach has been taken because modern manufacturing is supported by a dynamic ecosystem capturing value at every stage of the product cycle. The 2026 Declaration expands this definition by including ‘installing products’, ‘storing products’, and ‘assembling products’. This broad interpretation is particularly important to achieve the intention of the sub-funds.
In making investments, the Corporation will need to interpret this broad definition of manufacturing while considering requirements in the Act and the investment mandate issued by the Ministers.
- The definition of products includes not only manufactured products for the end user, but the manufactured inputs for use in final products. It includes both tangible and intangible products like software.
Section 6 – Priority areas of the Australian economy
This section identifies the priority areas of the Australian economy the Corporation can invest in. The priority areas of the Australian economy are to be interpreted broadly and beneficially, and activities may overlap between priority areas. However, this does not mean, for example, a priority area mentioned twice will have increased priority over other priority areas only mentioned once.
Subsection 6(1) – Value-add in resources
The value-add in resources priority area of the Australian economy is concerned with gaining more value from Australia’s mining industry by manufacturing products in connection with mining and processing minerals, processing these minerals into higher value goods, or building or maintaining facilities for these activities. For example, it covers the manufacture of exploration or drilling technologies; mining safety solutions; or products to assist with transportation of minerals. It also covers, as an example, the refining and processing of spodumene to lithium hydroxide and then onto cathode active materials for use in battery manufacture, as well as the manufacture of technologies and other products used in this processing.
Building and maintaining facilities also includes ancillary activities such as design, engineering, acquisition of equipment, and purchase or lease of land on which the facility is or is proposed to be located. This scope of the term ‘building or maintaining facilities’ applies to every use of the phrase throughout the 2026 Declaration.
Subsection 6(2) – Value-add in agriculture, forestry, and fisheries
The value-add in agriculture, forestry and fisheries priority area of the Australian economy is concerned with gaining more value from Australia’s primary production industries by manufacturing products in connection with primary industries and processing their produce, processing the outputs of those industries into higher value goods, or building or maintaining facilities for these activities. For example, it covers the manufacture of fertilisers and farming equipment; technologies to manage crop, tree, and animal health; and improved storage solutions to extend product life. It also covers the manufacture of food, beverage, timber, and fibre products because this manufacturing involves the processing of produce of primary industries. It does not include developing new farms or plantations.
Subsection 6(3) – Transport
The transport priority area of the Australian economy is concerned with manufacturing aircraft, road vehicles, rail vehicles and ships, products in connection with aircraft, road vehicles, rail vehicles and ships, or building or maintaining facilities to enable the manufacture of these products. For instance, it could include the manufacture of electric vehicles, or components or charging equipment connected with their use. It does not include common use infrastructure such as roads or railways, but may include products for use with or in such infrastructure such as road surfacing solutions, or components for rails.
Subsection 6(4) – Medical science
The medical science priority area of the Australian economy is concerned with manufacturing a broad range of products for therapeutic use such as medical devices, medicines, personal protective equipment, and vaccines, or building or maintaining facilities to enable the manufacture of these products. It does not include products for veterinary purposes and is not intended to include products with possible secondary health applications, for instance, cosmetics or health food.
Subsection 6(5) – Renewables and low emission technologies
The renewables and low emission technologies priority area of the Australian economy is concerned with manufacturing products in connection with: renewable energy generation, transmission, distribution, or storage; reducing greenhouse gas emissions; and energy efficiency. It is also concerned with recycling, waste reduction, waste and resource recovery, and building or maintaining facilities for these activities, including manufacturing. This includes opportunities such as manufacturing components of wind turbines, production of batteries and clean energy technologies, hydrogen electrolysers, thermal energy storage solutions, innovative packaging solutions for waste reduction, and the recycle and upcycle of, for example, rooftop solar photovoltaic (PV) panels.
It does not cover the installation of standalone renewable energy infrastructure for the generation of power for general use, such as solar or wind farms. However, installing renewable energy infrastructure for the purpose of supporting a business to decarbonise is within scope in accordance with the intent of the Net Zero Fund. In this context, installation refers to the process of mounting, securing, fixing, electrically connecting or integrating infrastructure so it is fixed in place, and capable of generating electricity for the purpose of decarbonisation.
Subsection 6(6) – Defence capability
The defence capability priority area of the Australian economy is concerned with manufacturing products in connection with defence or building or maintaining facilities to enable the manufacture of these products. It captures the parts of the economy involved in delivering the fundamental inputs to defence capability, such as those involved in the development, manufacturing, and sustainment of relevant products.
Subsection 6(7) – Enabling capabilities
The enabling capabilities priority area of the Australian economy is concerned with the manufacture of technologies and other products that support the advancement of Australia’s industrial capability, or building or maintaining facilities to enable the manufacture of these products. This includes advanced manufacturing technologies or materials technologies; artificial intelligence technologies; advanced information or communication technologies; quantum technologies; autonomous systems; robotics technologies; positioning, timing and sensing technologies; biotechnologies; space objects or products in connection with space objects; and other advanced technologies.
Advanced manufacturing or materials technologies refers to technologies such as additive manufacturing, advanced composite materials, high specification machining processes, and semiconductors and advanced integrated circuit manufacture.
The category of “other advanced technologies” is intended to capture emerging technologies, recognising that Australian industry is developing and adopting technology at a rapid rate, and that funding of manufacturing of such new and innovative advanced technologies aligns with the overall policy objective of the Government in establishing the Corporation to diversify and transform Australian industry.
Subsection 6(8) – Industrial manufacturing and critical supply chains
The industrial manufacturing and critical supply chains priority area of the Australian economy is concerned with strengthening Australia’s resilience, economic security and national preparedness by supporting manufacturing and logistics businesses access critical goods and inputs that are essential to Australia’s national interest. It focuses on industries that underpin Australia’s critical supply chains, and industrial subsectors with the greatest opportunity and need for decarbonisation.
This priority area recognises that recent global shocks—including geopolitical conflict, trade restrictions, natural disasters and industrial closures—have highlighted Australia’s vulnerability to concentrated and complex supply chains for essential products. Disruption to these supply chains can have immediate consequences for national security, critical services, food production, transport, energy, health and economic stability. Investment through this priority area is therefore directed toward building, retaining and/or scaling domestic capability where it is in Australia’s national interest to do so. It also supports Australia’s transition to Net Zero by identifying opportunities for decarbonisation where not already covered by the Renewables and Low Emission Technologies Priority Area.
This includes the manufacturing and processing of alumina and aluminium; cement and concrete; chemicals and plastics; food and beverages; iron and steel; glass; pulp, paper and paperboard; and fertilisers and agricultural protection chemicals. It also includes logistics (such as distribution); metals refining and smelting; waste and resource recovery; fuel production, fuel additives, fuel derivatives and fuel storage (including alternative fuels such as low carbon liquid fuels); and building or maintaining facilities for these products or activities. NRF investments in this priority area are intended to support the entire supply chain for the products listed including inputs to the products.
For the purposes of investments made under the Net Zero Fund in this priority area, the Government’s Net Zero Industry Sector Plan (published in 2025) outlines general decarbonisation pathways which can include optimisation of technologies and processes; electrification; and alternative fuels and inputs. Decarbonisation technology pathways will vary by sub-sector and facility.
Schedule 1 – Repeals
Schedule 1 provides that the 2026 Declaration repeals and replaces the National Reconstruction Fund Corporation (Priority Areas) Declaration 2023. The power to repeal a previous declaration is implied in the power of the responsible Ministers under section 6 of the Act, to declare areas of the Australian economy as priority areas for the purposes of the Act.
Attachment B
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
National Reconstruction Fund Corporation (Priority Areas) Declaration 2026.
This instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Legislative Instrument
The National Reconstruction Fund Corporation Act 2023 (the Act) establishes the National Reconstruction Fund Corporation (the Corporation).
Section 63 of the Act sets out the investment functions of the Corporation, and provides that the Corporation may:
- provide financial accommodation for purposes relating to; and
- acquire equity interests in entities any of the activities of which are in
a priority area of the Australian economy.
Investments must also satisfy other applicable requirements that arise under the Act.
The National Reconstruction Fund Corporation (Priority Areas) Declaration 2026 (the 2026 Declaration) identifies priority areas of the Australian economy for the purposes of the Act.
The 2026 Declaration provides legislative authority to declare the subsectors contained in the industrial manufacturing and critical supply chains priority area as priorities of the Australian economy.
Human rights implications
This instrument does not engage any of the applicable rights or freedoms.
Conclusion
This instrument is compatible with human rights as it does not raise any human rights issues.
Senator the Hon Tim Ayres, Minister for Industry and Innovation, and
Senator the Hon Katy Gallagher, Minister for Finance