Originally published by Greg Brown of The Australian.
21.04.2026
The $15bn National Reconstruction Fund can be unleashed to invest in Australia’s petrol and diesel capacity after the Albanese government amended its investment mandate, as Jim Chalmers prepares to unveil fuel security measures in next month’s budget.
The Iran war has prompted the government to add an eighth priority area for investment from the NRF, with fuel manufacturing for the first time eligible for support from the off-budget fund aimed at increasing Australia’s industrial base.
Fuel security was added to the mandate of the NRF ahead of launching the $1bn Economic Resilience Program, which went live this week to help companies suffering with the impacts of the Middle East war.
Government sources said the new investment rules would apply to the broader NRF, although the $5bn Net Zero Fund can only invest in low carbon fuels. The NRF website on Tuesday described the fund has having only seven priority areas, with a source saying this would be updated.
Industry Minister Tim Ayres said the NRF would examine proposals to expand Australia’s fuel-making capacity, which Labor sources suggest could be done through investments in expanding existing refineries or storage capacity. While the NRF was previously unable to invest in fuel production, Senator Ayres said the government had “sharpened” its focus and there was nothing stopping the fund investing in increasing Australia’s production of diesel.
The Left faction heavyweight and key ally of Anthony Albanese said diesel would continue to be “crucial” to Australian industry and logistics despite the government’s long-term objective to electrify the nation.
“When there’s proposals for those kind of investments, the funds will be examining them,” Senator Ayres told The Australian.
“There’s no prohibition on getting engaged in fuel security measures. In fact, we’ve sharpened the focus of the fund on precisely those kind of measures: making sure that where there’s opportunities to strengthen our supply chains, the fund can step in.
“We’ll see more investment in electric vehicles, we’ll see more investment in battery operated logistics. But right now, diesel is crucial.”
When asked if the NRF could be used to expand the diesel production capacity at Australia’s two existing refineries, Senator Ayres said: “I’ll leave those commercial discussions to the NRF.”
A spokesman for the NRF would not comment on “which companies we are engaged in discussions with”, although sources played down any imminent deal with refinery owners Viva Energy or Ampol.
The Prime Minister raised the need to address fuel security in his speech to the National Press Club in Canberra earlier this month, leaving the door open to using taxpayer funds to increase Australia’s fuel storage and refining capacity.
Climate Change and Energy Minister Chris Bowen over the past fortnight has said the government will consider increasing the required fuel holdings under the national reserve stockpile, while the Treasurer has flagged fuel security as a focus of the budget.
The Australian reported on Tuesday that the $1bn Economic Resilience Program had been reproposed from a zero-interest finance package announced during the election campaign to assist exporters in finding new markets in the wake of Donald Trump’s “Liberation Day” tariffs.
The NRF is also shifting from its initial purpose of generating gains across its portfolio with a target rate of return between 2–3 per cent above the five-year government bond rate.
The zero-interest loans for the $1bn Economic Resilience Program and the $5bn Net Zero Fund have a benchmark rate of return below the five-year bond rate.
The NRF and the broader Future Made in Australia agenda has previously come under criticism for its focus on the green energy transition rather than supply chain resilience and national security.
Rejecting this criticism, Senator Ayres said the rollout of renewables would be key to increasing Australia’s industrial capacity and economic resilience. “Our future energy advantage is in low-cost electricity, which is Australian wind and Australian solar backed up by storage and gas,” he said.
“That is the future competitive advantage for heavy industry, right though to advanced manufacturing.
“Markets are changing, industrial processes and technology are changing. Australia can’t hit reverse and go back to a more expensive, uncompetitive industrial capability.”
He said companies such as Rio Tinto were “not virtue-signalling hippies” and wanted to invest in renewable generation because it was the “lowest cost option for them”.
“In resilience terms, an Iranian dictatorship can’t stop the wind blowing in Australia,” Senator Ayres said.
“A Vladimir Putin can’t, through some maritime blockade, stop Australian sun powering Australian solar facilities, providing cheap electricity to Australian industry.
“This is clearly, in cost terms and resilience terms, Australia’s advantage and we should press it home.”