Australia can be a 21st Century industrial success. Climate change provides the imperative; our vast renewable energy and mineral resources provide the opportunity.
Billions of dollars and clear and consistent policy are needed, and continual interventions (by the current or a future government) will be toxic to investor confidence.
Done well, and with bipartisan commitment, the Future Made in Australia Bill could provide the policy framework to realise the opportunities in a cooperative, strategic partnership between government and industry, while avoiding valid concerns about traditional industry policy.
Unfortunately, the draft Bill is not up to this task.
Realising the government’s vision of a sustainable manufacturing renaissance based on renewable energy, hydrogen, and critical minerals requires three elements:
- A disciplined approach to identifying and supporting those industries that will build on Australia’s comparative advantages in a low-emissions world. Dilution of effort will be fatal.
- Differentiating where overcoming supply chain challenges genuinely requires local manufacturing, and where other means are more economic.
- A high level of cooperation between government and industry and a strong governance structure.
The government already has numerous policy and funding tools and mechanisms that could form the building blocks of new industry policy, many of which it inherited from previous governments. They include the Safeguard Mechanism, the National Reconstruction Fund, ARENA, the Clean Energy Finance Corporation, the Northern Australia Infrastructure Facility, Hydrogen Headstart, Export Finance Australia, and numerous measures announced in the May 2024 budget.
The government needs to clarify how these measures work together, how they fit with the Future Made in Australia framework, and where and how the Future Made in Australia National Interest Framework applies.
The National Interest Framework is intended as a guide to assessing where and how the government intends to apply industry policy, including public funding to unlock private investment. Formalising the National Interest Framework and creating a process for sector assessments is welcome transparency.
But, without specifying the role these assessments will play and how they will factor into decision-making, there is a risk of falling into three classic industry policy traps: overreaching for competitive advantage, picking losers, and short-term policy thinking.
The Bill needs be more explicit about how the National Interest Framework will inform and guide future policy and funding decisions so these traps can be avoided.