Thursday 11 April 2024 – The Albanese government’s Future Made in Australia Act, aimed at bolstering domestic manufacturing and catalysing investment in burgeoning technologies, is a welcome recognition that securing Australia’s long-term competitive advantage in the industries of the future cannot be left to capital markets.
The Centre for Policy Development (CPD) commends the government on its ambition to bring a range of new and existing policies and incentives under the one umbrella, and set a clear direction and market signals to guide the development of the Australian economy.
CPD sustainable economy program director Toby Phillips says, “Markets are good at understanding what industries and investment will be most beneficial today, but they struggle to allocate resources towards areas where we can be competitive in the future.
“This announcement is far from a resurrection of the protectionist industry policies we saw prior to the 1980s and 1990s. Rather, it’s an acknowledgement that complex challenges demand complex responses, and Australia doesn’t want to be at the back of the line when it comes to capitalising on the green transition, building resilient supply chains, or developing the next generation of manufacturing businesses.”
The consolidation of initiatives echoes a key recommendation in CPD’s Setting Direction report released last week, which reviewed modern industry policies around the world. It said strong coordination across all of government is crucial to ensure that a diversity of initiatives across many departments are pulling in the same direction.
CPD cautions that while the announcement is a big step in the right direction, how the Act is implemented will be crucial to its success.
“This should be done in a way that does not simply mimic the approaches of other countries like the US, that have largely used loans and tax breaks as a financial lever to drive industry investment.
“There are many more tools the government can use that will be vital to an effective approach, like building the workforce that will support these industries, investing in common infrastructure, and boosting early-stage innovation.”
Phillips also says Australia should capitalise on its unique advantages such as an abundance of resources necessary for the global green energy transition.
“Our Green Gold report last year found that refined iron, green aluminium and ammonia are all areas where Australia has an edge, but investment lags. These energy-intensive export industries are perhaps Australia’s best unrealised opportunity. We also found that onshore green refining of 12% of Australia’s annual iron ore exports would have the same impact on global emissions as Australia’s target to reduce domestic emissions by 43% by 2030.”
The speech given by Prime Minister Albanese in Queensland today also focussed heavily on the importance of supporting the regions and communities that have driven Australia’s prosperity for decades.
CPD published a report last year, Making our Way: Adaptive capacity and climate transition in Australia’s regional economies, that looked at how governments and communities can plan for economic transitions.
“It’s important we understand the inherent advantages and capabilities within communities and support them through this transition in the most effective way possible.
“In some cases this might mean building a hydrogen hub in a region formerly reliant on gas production, but for many communities it will mean completely shifting away from a reliance on resources and mining and investing in a more knowledge and skills based economy.
“The best way to support communities is to build their overall resilience and adaptability, not just providing a grant for a new factory, but setting up the whole community for success over the long-term,” says Philips.
