Labor pushed to create $100b ‘Australian inflation reduction act’ Tom McIlroySep 11, 2023 – 5.00am
Supporters of the plan say a $100 billion package would set Australia up for a generation. Carla Gottgensnone
Joe Biden’s Inflation Reduction Act risks cutting the lunch of Australia’s renewables industry, and $100 billion in new government spending is needed to keep the country competitive, according to environmentalists, investors and unions.
Pitching a new 10-year Australian renewables industry package to federal Labor, groups including the Smart Energy Council, Climate Energy Finance, the ACTU and the Australian Conservation Foundation will use a conference in Canberra this week to call for new spending to re-industrialise the economy and spur job creation.
After the federal budget included a commitment to respond to the IRA, delegates to the Australian Renewables Industry Summit say $100 billion in “cornerstone funding” should be locked in over a decade through ambitious new budget commitments.
They propose a big spending plan that would support green iron and steel, green alumina and aluminium, and processing and refinement of critical minerals.
It would also spend on advanced manufacturing for solar and wind componentry, electrolysers, batteries and grid control technology, as well as consumer appliances. Broader elements would include transmission infrastructure, zero carbon transport, expanded domestic recycling and new education.
A midterm target of at least $300 billion a year of clean export revenue by 2035 is included, with about 700,000 direct jobs, mainly in rural and regional Australia.
The IRA and Chips and Science Act offer more than $US400 billion ($624 billion) in tax credits, loans and subsidies.
‘Deluded’
Climate Energy Finance director Tim Buckley told The Australian Financial Review an integrated approach to investment was needed, to benefit local communities, Indigenous Australians and future workers.
“To leave it to the free market is just, in my view, to be deluded,” he said.
“The IRA has stimulated a massive, massive manufacturing boom. The amount of money going into manufacturing in America in the last 12 months is four times the highest level of any previous year in American history.”
He said the strict rules of funding attached to programs meant a rethink was needed in Australia.
“If our lithium goes to China and then Korea, it’s not eligible for the IRA, but if it goes from Australia to Korea to America, it is eligible. So we can cut the Chinese out when it goes to America, and we should be doing the value adding in Australia.”
Sims urges caution Former competition tsar Rod Sims, now chairman of the Superpower Institute, formed to advocate for decarbonisation, used a speech last month to argue policies such as the IRA were not a direct threat to Australia, but showed government here should move quickly.
He argued Australia should applaud the bill’s moves to expand electrification of the US economy – steps that would add significant scale to some decarbonisation actions, which would be likely to bring down costs for other countries.
“The problem with the US IRA is its protectionist tendencies. The bill encourages production in America,” he said.
“The key point is that Australia must not follow the US with this, and we should certainly not give the US preferential access to our minerals. We want to achieve world prices for our products, and not to subsidise American production.
“Under the IRA, Australian ore and processed minerals will be treated as US sources of supply for, say, US battery production. This is to be strongly welcomed, provided we get paid world prices for our products.”
Mr Sims called for more workforce training, and for regulatory approvals for mines and processing to be made more efficient. It was vital for Australia to look at efficiency in the tax and expenditure systems, he said, to boost comparative advantage.
“If we do not fully embrace reducing world emissions by 6 to 9 per cent we will be letting down the world’s climate and our future prosperity,” he said.
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