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Analysts say the U.S. Inflation Reduction Act could provide up to $1.56 trillion in production credits for green products such as solar technology, and the European Union, South Korea and Japan have also announced similarly ambitious plans.
“This is Australia’s response to the new global competition for quality skilled jobs in regional and regional areas,” said Assistant Trade Minister for Australia’s Future Manufacturing Tim Ayres.
Greens leader Adam Bandt will wait for the inquiry’s report until he finalises his position on the fund, but said to win his support the government could not fund projects that use fossil fuels.
“With Labor now backing coal and gas projects beyond 2050, this could become another coal and gas secret fund with no protections stopping them from plowing more public money into fossil fuels,” Bandt said.
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“The Greens will continue to consider this bill, but we want to ensure everyone benefits from Mining Boom 2.0, not just the big companies profiteering, and that Labor will stop new coal and gas mines being built.”
Ayers said some of the projects supported by the program may require natural gas, which is used as both a fuel and a feedstock in manufacturing as they move to cleaner technologies that are not yet in commercial production.
“This is the right amount of gas, just the right amount, to support manufacturers’ transition to electrified production processes,” he said.
But many economists have expressed concerns about the plan and its potential to waste taxpayer money.
Independent economist Saul Eslake said the government risked wasting taxpayers’ money because the projects could fail due to inherent challenges facing local manufacturers.
“The problem with Australia is that we don’t have a large domestic market and we’re not geographically close to any large domestic market,” he said.
“[The plan]is rife with what I’ve long called manufacturing fetishism, which is the belief that manufacturing is inherently more noble than other types of economic activity,” Eslake said.
He warned that using public investment to attract private capital could drain resources from more profitable sectors such as mining, agriculture and services.
However, Eslake stressed that he supports government spending to drive the transition of the energy grid from fossil fuels to renewable energy.
Grattan Institute energy director Tony Wood said it was vital to have safeguards in place to force responsible ministers to act on advice from their departments and experts.
“When the government picks winners, you don’t want the losers to pick the government — and I mean when the vested interests become powerful.”
Mr Wood said the Australian Manufacturing Future fund had bright opportunities but the government should support green mineral processing rather than producing batteries or solar panels.
Wood said Australia’s vast size and ample supply of wind and solar power could power the processing of energy-hungry commodities such as iron ore, bauxite, copper, nickel, lithium, cobalt and other key minerals through a green transition.
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