Madeleine King ‘agrees’ on Productivity Commission warnings
Resources Minister Madeleine King has backed in some of the concerns raised by Productivity Commission chair Danielle Wood over the government’s Future Made in Australia plan.
Resources Minister Madeleine King has backed in some of the concerns raised by Productivity Commission chair Danielle Wood over the government’s Future Made in Australia plan, despite ALP president Wayne Swan calling the independent adviser’s comments “completely out of touch”.
Ms Wood’s warning that Labor’s newly announced plan to grow the green manufacturing sector domestically could divert investment from the most productive parts of the economy was on Friday backed by economists, experts and former Productivity Commission chairs.
Mr Swan, a former treasurer and deputy prime minister, however, blasted Ms Wood’s intervention. “(She) is completely out of touch with the international reality,” he told the Today show.
“I mean, all of our major competitors are doing this.
“We have to be in it to win it.”
When challenged by NSW independent Dai Le on whether the “Made in Australia” plan would be the best use of taxpayer dollars, Mr Swan asked the Fowler MP: “Are you completely out of your depth here?”
Despite the retaliation from the Labor stalwart against Ms Wood’s comments, Ms King said she agreed that the Future Made in Australia Act would need to be carefully designed so as not to produce any unwanted side-effects.
“It’s right to point out we need to have very clear objectives around what the Future Made in Australia Act will have, what that government work with private enterprise will be … government needs to be accountable,” she told ABC radio.
“On those things, I agree entirely with the Productivity Commission and what they say.”
But Ms King noted that the Albanese government also could not just “stand by” while other countries got ahead of the game in critical minerals and rare earths.
The previous Productivity Commission chairman, e61 chief executive Michael Brennan, backed Ms Wood’s criticism.
“The comments from the PC chair are a really important intervention on the policy issue itself, and also a big positive statement about her independence and that of the institution,” he said.
Independent economist Saul Eslake said Ms Wood was “brave” to speak her mind and her comments were “entirely apposite and in the tradition of her predecessors” at the commission.
“I get that the transition to a zero carbon economy isn’t going to happen without some kind of government involvement, nor am I disputing the world geo-strategically is a different place from where it was 20 years ago,” he said.
“What I would say is that if the Americans are willing to spend squillions of taxpayer dollars to subsidise areas like solar panels, then why shouldn’t we buy them cheaply off them?”
Mr Eslake said the past 90 years of Australian history was littered with examples of governments attempting to nurture ultimately uncompetitive industries.
“The Australian arguments for protectionism in the 1920s was the ‘infant industry’ argument. The problem with infant industries is that they never grow up,” he said.
The textile and motor industries were examples that built up a constituency that made it hard for politicians to turn off the subsidy tap, Mr Eslake said. “So Danielle Wood’s comments were grounded in our history and experience.”
CEDA senior economist Andrew Barker echoed Ms Wood’s comments and said the primary worry was “misdirecting support and resources into areas where we don’t have a sustainable comparative advantage”.
He said one of the failures that policies like the Future Made in Australia Act encountered in the past was “the failure to stop funding uncompetitive industries”.
“Maybe the funding will go to research and innovation and new technology. If it’s to go head-to-head in the future with China, it’s challenging to see how that stacks up … This entails some risk, and we need winning bets to outweigh losing bets.”
Anthony Albanese was forced to defend his plan, saying he was focused on opportunities rather than risks.
“We’ve certainly considered the opportunity that is there,” he told 2SM Radio. “We can sit back and watch the whole world go past us, or we can take up the opportunities that are there.”
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