Australia to Implement Inflation Reduction Act Modeled After Biden’s
Direct federal government investment and incentives will be directed towards climate change initiatives.
The Australian Labor government is following the lead of other democracies by intervening directly in their economies to establish “sovereign” green energy supply chains and local manufacturing.
Prime Minister Anthony Albanese is preparing to introduce the Future Made in Australia Act, which will offer taxpayer-backed incentives to support advanced manufacturing and clean energy industries in the country.
During a speech at the Queensland Media Club in Brisbane on April 11, he will emphasize the need for government to adapt to the changing economic landscape by being more strategic and actively contributing to the national interest.
He will highlight examples from the United States, European Union, Japan, and South Korea, where government investments, tax breaks, and incentives have been utilized to target critical industries.
Under the previous Morrison government, efforts to develop Australia’s local advanced manufacturing of high-tech products were initiated.
PM Emphasizes Practical Approach
This shift away from traditional ideologies of limited government intervention in the economy indicates a shift towards seizing opportunities and addressing urgent needs, according to Prime Minister Albanese.
He recognizes the significant shift in global economies over the past decade, particularly driven by the push for climate change action.
In alignment with the Biden administration, the Albanese government will support the development of the renewable energy sector, particularly focusing on areas such as hydrogen, green metals, solar power, and other emerging renewable sources.
This initiative aims to provide Australian businesses, communities, and individuals with opportunities to benefit from the changing economic landscape.
While the announcement precedes the federal budget by a month, Shadow Treasurer Angus Taylor has expressed concerns that the program may not effectively address living costs.
China and Renewable Energy
The forthcoming announcement is expected to address two primary objectives: reducing dependence on Chinese supply chains in manufacturing and further advancing the domestic renewable energy sector.
Chinese companies currently dominate the renewable sector’s supply chains, controlling over 70% of critical mineral production worldwide, essential for wind turbine, battery, and solar panel manufacturing.
Critics in the U.S. have raised concerns about funneling taxpayer funds into renewable energy initiatives, emphasizing the importance of allowing the private market to drive industry viability.
Jonathan Lesser, president of Continental Economics, highlighted the significant federal investment tax credit offered by Biden’s Inflation Reduction Act, arguing that such subsidies distort the market and increase costs.
The announcement reflects the Albanese government’s commitment to tackling climate change through strategic investments and incentives to drive growth in key industries.
