Government sets post-voice focus on costs and energy

With the voice referendum over, cost of living, security and the energy transition have worked their way to the centre of the Albanese government’s attention. This is exactly where they should be. Anthony Albanese will use the Economic & Social Outlook Conference in Melbourne on Thursday to pledge his focus will be on the impact of inflation on households and driving Australia’s best interests internationally at a time of great uncertainty. Jim Chalmers will tackle the biggest issue on the government’s reform plate: energy and the net-zero transition.

Thankfully, the Treasurer has pushed away calls for Australia to copy Joe Biden’s Inflation Reduction Act, which uses big public subsidies to attract investment. Instead, Dr Chalmers will lay out a more comprehensive agenda. The blueprint includes a new regulatory regime to help underpin a program to issue billions of dollars in green bonds. Dr Chalmers’ plans, outlined in a discussion paper alongside his speech to the conference, put more flesh on the bones of the economic revolution that he hinted at in a much criticised essay on reforming capitalism published in February. The vision was for a “new, sustainable finance architecture including a new taxonomy to label the climate impact of different investments”. The aim was to “help investors align their choices with climate targets, help businesses that want to support the transition get finance more easily, and ensure regulators can stamp out greenwashing”. The push has been extended beyond greenhouse gas emissions to include impacts on biodiversity as well. Dr Chalmers is taking a whole-of-government approach and making the obvious point that Australia risks missing the federal government’s legislated 2030 emissions-reduction target.

On this, Dr Chalmers finds himself in sharp agreement with Tony Abbott, who warned in London on Wednesday that the infrastructure requirements to meet Labor’s 2030 targets were unrealistic. Steven Koonin, a former undersecretary for science in the Barack Obama administration, warned against trying to copy Germany in its renewable energy push. But Dr Chalmers has laid the groundwork for Australia to double down across the economy.

He says while important building blocks are now in place, we will need to do even more to secure sufficient renewable energy generation, transmission and storage to meet our ambitions. The challenge is to “recast and modernise” our industry policy framework with greater input from the revamped Productivity Commission. Dr Chalmers wants a homegrown advanced manufacturing sector to build renewable energy technologies and deliver the holy grail of downstream processing of our abundant raw materials to produce green iron, steel and alumina. Maybe.

What is more certain is that industry will face a raft of new compliance measures, and the biggest winners will be those companies geared to monitoring how others deal with green tape. Companies that have climbed aboard the net-zero bandwagon must be careful what they wish for.