IRA-style spend to support industry

Detail of Australia’s long-awaited response to the US Inflation Reduction Act will soon be made public, with domestic advanced manufacturing and a clean energy incentive scale-up on the cards.

Prime Minister Anthony Albanese today announced the Future Made in Australia Act: the nation’s response to the IRA and other international investment incentive programs.

While light on detail – including a price tag – the program will encompass the already existing SunShot solar manufacturing program, the Hydrogen Headstart initiative and the nation’s Critical Minerals Facility under a shared banner.

More investment incentive programs will be revealed in the upcoming federal budget.

The nation will also establish a Net Zero Economy Authority, which Mr Albanese said would support communities through the upcoming period of economic change and coordinate the incentive response.

The government will ramp up its focus on domestic procurement.

Addressing an audience in Brisbane, Mr Albanese said the Act would serve as a response to the IRA – US President Joe Biden’s $500 billion incentive to stimulate green energy investment in the US – but would not compete with it.

“Obviously, Australia cannot go dollar-for-dollar with the US's Inflation Reduction Act,” he said.

“But this is not an auction, it’s a competition. And Australia 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.”

Mr Albanese said the policy shift, which follows in the footsteps of initiatives in the European Union, Japan, South Korea and Canada, was a move away from the globalisation era consistent with the actions of others.

“The heavy lifting of economic transition and industrial transformation is not being done by individuals, companies or communities on their own,” he said.
 
“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 it’s about urgency.
 
“Securing jobs, attracting investment and building prosperity has never been a polite and gentle process where every nation gets a turn. It’s always a contest, it’s always a race.”

The IRA in the US has created a conundrum for some in Australia, with major companies including Woodside Energy and Fortescue attracted to prioritise spend in the US as a result of the financial incentives on offer.

The US has pitched the IRA as an incentive with the potential to benefit Australia, by supporting its critical minerals sector as part of a global supply chain.

Opposition leader Peter Dutton accused the prime minister of pedalling false hope on manufacturing growth in response to today’s announcement.

Industry responds

While pitched in Queensland, Western Australia would likely be at the heart of the government’s drive to grow manufacturing and clean energy projects in the nation.

The Kwinana Industries Council – which counts Alcoa, BHP, BP, Covalent Lithium, Woodside, Wesfarmers and IGO among its full members – was quick to pitch its case following reports of today’s announcement.

Director David Harrison issued a statement urging the federal government to pay close attention to the strategic importance of the Kwinana industrial area and the projects planned for it.

“The Western Trade Coast is the perfect place for additional government support, based on its long-standing global reputation as a leading heavy industry,” Mr Harrison said.

“The scale of investment that is currently under way in new industries such as lithium processing, hydrogen, biofuels and defence makes Kwinana the perfect place to invest.”

BP looms as a potential beneficiary of Hydrogen Headstart at Kwinana, with its proposed project at the site of its former oil refinery shortlisted by the federal government for funding late last year.

Environmental groups The Climate Council and Clean Energy Council were supportive of the plan and said they would work closely with government on the finer details.

“The Act could be a game-changer that facilitates immediate investment to match the global clean energy shift, supercharge new industries, and cement Australia’s advantage in clean energy,” Climate Council chief executive Amanda McKenzie said.

“Diversifying into sectors like clean manufacturing and critical minerals is essential.”

Employers organisation Australian Industry Group was less glowing, but complimentary of the government’s commitment to better focus its policy direction.

“Too often, government policies distort activity, create unintended consequences and are slow to adapt as circumstances change and flaws are exposed,” Ai Group chief executive Innes Willox said.

“Yet we are today invited to make a leap of faith that more government guidance and support is the answer to our ills.

“Industry will naturally view the promise of more government intervention with suspicion, if not alarm.”

Ms Willox said delivering on the promises made by the government would be key to success of the Future Made In Australia pathway.

The Australian Council of Trade Unions unsurprisingly said its focus in working with government on the policy would be in ensuring the safety and security of future, well-paid jobs.

“This is a nation-building project; The Future Made in Australia Act will help Australia compete at the head of the pack in the global race toward our clean energy future and make sure the benefits flow to workers their families and communities,” ACTU president Michele O’Neil said

“The jobs and industries of the future need to be built now, and the union movement is ready to play our part in winning for workers, better jobs, a stronger economy and a safer climate.”