Prime Minister Anthony Albanese wants to funnel taxpayer-funded incentives towards advanced manufacturing and clean energy projects, as Australia tries to compete with US President Joe Biden’s massive spending plans.
Mr Albanese will make the case for the ‘Future Made in Australia Act’ in a major speech on Thursday, setting out his agenda for the next year leading up to an election.
He will warn Australia’s economy will suffer without greater government intervention, as other nations draw “an explicit link between economic security and national security”.
Mr Biden’s landmark Inflation Reduction Act includes hundreds of billions of dollars in tax breaks and subsidies over the next decade, aimed at boosting clean energy infrastructure and encouraging high-tech manufacturing.
“Obviously, Australia cannot go dollar for dollar with the United States’ Inflation Reduction Act,” speech notes provided by the prime minister’s office state.
“But this is not an auction – it’s a competition.
“And Australian can absolutely compete for international investment when it comes to our capacity to produce outcomes, the quality of our policies and the power of our incentives.”
The federal government has been urged to do more to entice investment in renewable energy and critical industries, amid warnings the US could hoover up available international capital under its own plans.
The prime minister has frequently referred to his desire to see Australia step up in areas such as battery and solar panel manufacturing, harnessing the materials mined in Australia but currently exported overseas for processing.
Mr Albanese will reference efforts from the US, European Union, Japan, South Korea and Canada to strengthen their own critical industries.
“All these countries are investing in their industrial base, their manufacturing capability and their economic sovereignty,” the prime minister is expected to say.
“This is not old-fashioned protectionism or isolationism – it is the new competition.
“These nations are not withdrawing from global trade or walking away from world markets or the rules-based order, and let me be clear, nor should Australia.”
Not the invisible hand, nor heavy-handed either, PM argues
In a pre-emptive strike against critics who would argue against taxpayer funds being spent, Mr Albanese will make the argument that Australia’s partners are “moving to the beat of a new economic reality.”
“None of this is merely being left to market forces or trusted to the invisible hand,” he is expected to say.
“The heavy lifting of economic transition and industrial transformation is not being done by individuals, companies or communities on their own.
“It is being facilitated, enabled and empowered by national governments from every point on the political spectrum.
“Because this is not about ideology, it’s about opportunity – and urgency.”
The Future Made in Australia Act would focus on boosting investment in areas such as rare earths mining and processing, hydrogen and solar energy production.
“We recognise that for Australians to share fully in the rewards, government needs to be prepared to use its size and strength and strategic capacity to absorb some of the risk,” the speech notes state.
“Only government has the resources to do that, only government can draw together the threads from across the economy and around our nation.”
Casting forward to budget
Ahead of the federal budget on May 14, the prime minister will argue the policy complements other measures, such as revised income tax cuts, to improve productivity across the country.
“The first four years of this decade have tested the resilience of our economy and our society alike,” he is expected to say.
“Alongside the devastation of floods and bushfires, Australia has endured a once-in-a-century global pandemic and the biggest international energy crisis in 50 years.
“Government needs to have this same capacity to respond and adapt, to anticipate change – and shape it – when it comes to building for the future.”