Australia's Ambitious Agenda to Compete with Global Economies

Last month, Danielle Wood, Chair of the Commission, reiterated the importance of free markets driving investment priorities. The Productivity Commission had previously warned against Labor's plans for a local battery-making industry. While some argue that government intervention in certain sectors can be detrimental, others believe it is necessary to stay competitive in an increasingly globalized economy.

In anticipation of next month's federal budget, the Australian government has announced plans to introduce a new law, the 'Future Made in Australia Act', which will consolidate existing measures and programs aimed at promoting local industries. This includes the $1 billion 'Solar Sunshot' program and the $2 billion 'Hydrogen Headstart' scheme.

The announcement marks a significant shift in the government's approach to economic development, with Prime Minister Albanese emphasizing the need to 'act and invest at scale' to remain competitive. The Inflation Reduction Act in the United States, which has led to a surge in investment in clean technologies such as solar panels and batteries, serves as an example of the kind of ambitious agenda that Australia should adopt.

'Greenfoot sound stop.'

The Prime Minister's message is clear: 'Australia is in this race, no matter what.' If the country fails to jump on board the bandwagon, it risks being left behind. In a bold statement, Albanese argues that government investment and incentives are not forms of protectionism or isolationism, but rather necessary measures to stay competitive in an increasingly globalized economy.

Examples from around the world support this view. The United States' 'Inflation Reduction Act' and 'CHIPS Act', the European Union's 'European Economic Security Strategy', Japan's 'Economic Security Promotion Act', and South Korea's 'National Security Strategy' all involve direct government investments, tax breaks, or other incentives to attract and protect industries deemed strategically vital.

As Australia charts its own path forward, it is clear that the country will need to adopt a similar approach if it hopes to remain competitive on the global stage. With next month's budget set to outline further plans and initiatives, the 'Future Made in Australia Act' marks an important step towards achieving this goal.