Nothing to report at the National Reconstruction Fund
The NRF is a bad idea being badly executed.
Imagine a fund manager with a $15 billion mandate, a 64-strong team and a $28 million (and growing) annual cost base. Now picture asking how the portfolio is performing and being told, politely, that it's early days so they can't say too much. That is the Australian government's National Reconstruction Fund Corporation: three years in, $1.6 billion committed across 30 investments, and not one published number telling taxpayers whether any of it has worked.
The NRF's website has an investment page. It is a lovely thing: logos, dollar figures, stock photos of industry in action and guff about sovereign capability that reads as though drafted by an arts graduate who has never worked in, let alone run, a business.
I put some questions about fund performance to the NRF and several weeks later heard back from Brett from its stakeholder engagement team. He explained the NRF "takes a medium to long term outlook when making investment decisions", and he supplied benchmarks, but not achieved returns.
The NRF is shooting for returns equal to the five-year Australian government bond yield plus two to three per cent; its Net Zero and Forestry Growth Funds target the five-year bond rate minus one per cent; and its Economic Resilience Program has no benchmark at all, on account of its 'loans' being interest free.
A hurdle rate set a full percentage point below the Commonwealth's own cost of funding is not so much a benchmark as a licence to lose money. The Economic Resilience Program dispenses with the pretence altogether: no benchmark means nothing to fail against. A fund manager's dream.
