Economic adviser warns Made in Australia a ‘fool’s errand’

The Nightly
The Nightly
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Australian Prime Minister Anthony Albanese addresses the Queensland Media Club at the Brisbane Convention and Exhibition Centre in Brisbane.
Australian Prime Minister Anthony Albanese addresses the Queensland Media Club at the Brisbane Convention and Exhibition Centre in Brisbane. Credit: DARREN ENGLAND/AAPIMAGE

Labor’s plans to rev up clean energy and manufacturing in Australia with taxpayer-funded subsidies dished out under the Future Made in Australia Act has drawn criticism from yet another former Federal Government economic adviser.

The Productivity Commission’s inaugural chair Professor Gary Banks has reportedly lambasted Prime Minister Anthony Albanese’s proposal — Australia’s response to the US Inflation Reduction Act — as a “fools errand”.

According to The Australian, Mr Banks joined the chorus of PC critics on Wednesday, saying: “Seeking to obtain benefits to society through subsidies for particular firms or industries, including in the form of tax concessions, has proven a fool’s errand, particularly where the competitive fundamentals are lacking.”

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The scheme was unveiled last week but has already drawn strong feedback in the canvassing period in the lead-up to the Federal Budget next month, when more detail on the scheme is set to be revealed.

The Productivity Commission — a high-powered office independent of government — has cautioned Labor’s Future Made in Australia proposal is likely to carry an immense price tag and risks creating industries that are reliant on long-term taxpayer support.

The Budget would contain “new programs, new funding and new opportunities working with business”, Mr Albanese has said, prompting comment from current Productivity Commission chair, Danielle Wood, that the Act risked creating a class of businesses that were reliant on handouts.

On Friday, former commission chair Peter Harris reportedly told the Australian Financial Review that governments had a history of failure from interventions.

The mining sector has been crying out for tax credits and subsidies as they grapple to secure the capital from the private sector needed to build refining and processing operations.

WA Premier Roger Cook hit out at criticism of the proposed Act last week, saying ‘only a loser would suggest’ that a government shouldn’t directly involve itself in taking advantage of the energy transition.

“It is absolutely important that the Commonwealth does what it can to support Australia moving into these low emissions and energy transition-related industries, particularly in relation to manufacturing.”

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