Anthony Albanese lays down markers for second-term agenda with a Future Made in Australia Act

Anthony Albanese will unveil a scaled-down version of the US Inflation Reduction Act to underwrite new investment in clean energy and build a new sovereign industrial base.

Anthony Albanese in Ballina in northern NSW on Wednesday. Picture: NCA NewsWire / Scott Powick

Anthony Albanese will unveil a scaled-down version of the US ­Inflation Reduction Act to underwrite new investment in clean ­energy and build a new sovereign industrial base, as he maps out Labor’s second-term election agenda based on a greater role for government in the economy.

In a speech to the Queensland Media Club on Thursday, the Prime Minister will announce the creation of a Future Made in ­Australia Act to co-ordinate a whole-of-government package of new and existing projects to drive investment.

But he will deny it is a move to “old protectionism”, claiming it is “new competition” in the global economy that is driving the state to intervene more aggressively.

At the centre of the transition to a net-zero economy will be one of the most significant economic challenges to face the nation outside the pandemic and war, the Prime Minister will warn.

With governments in the US, Japan, Europe, the UK and South Korea intervening aggressively in their economies to drive sovereign industrial capacity, Australia needs to follow suit with “urgency” as economic security plays a greater role in national security.

In the first major speech to lay down clear markers for Labor’s election agenda, Mr ­Albanese will say a bigger role for government in the economic transition is needed. He says new projects will be announced in the May budget but concedes Australia cannot match the scale of the US on subsidies. Instead, he says, the nation must leverage its competitive ­advantages to drive new manufacturing or risk losing the race, while asserting greater sovereignty over the nation’s resources and critical minerals.

Warning that Australia risks being left behind in the race for decarbonised economies, Mr Albanese will say in his Brisbane speech: “We need to be clear-eyed about the economic realities of this decade, recognising that the game has changed – and the role of government needs to evolve. Government needs to be more strategic, more sophisticated and a more constructive contributor.

“We need sharper elbows when it comes to marking out our national interest. And we need to be willing to break with old orthodoxies and pull new levers to advance the national interest.

Mr Albanese says government must think differently about what it “can – and must – do to work alongside the private sector to grow the economy, boost productivity, improve competition and secure our future prosperity”.

“We need this change in thinking and approach, because the global economic circumstances are changing in ways far more profound than the consequences of the pandemic or conflict alone,” he says.

“This decade marks a fundamental shift in the way nations are structuring their economies, a change every bit as significant as the industrial revolution or the information revolution – and more rapid and wide-ranging than both.

“Domestic economic policy settings are being reshaped by a new set of global economic imperatives – and domestic economic priorities are reshaping trade policy. We recognise that for Australians to share fully in the rewards, government needs to be prepared to use its size and strength and strategic capacity to absorb some of the risk.

“Only government has the resources to do that; only government can draw together the threads from across the economy and around our nation.”

Mr Albanese will cite the US Inflation Reduction Act, and similar moves by the UK, Europe, ­Canada, Japan and South Korea, as examples of greater government intervention in economies.

He says while Australia cannot match the US in terms of scale, the Future Made in Australia Act will capitalise on the nation’s competitive advantages in land mass and critical mineral resources.

“We will bring together, in a comprehensive and co-ordinated way, a whole package of new and existing initiatives to boost investment, create jobs and seize the opportunities of a future made in Australia,” he will say. “We want to look at everything that will make a positive difference. Investing in new industries – and ensuring that workers and communities will share in the dividend.”

The Investor Group on Climate Change this week called on the government to articulate an economy-wide plan for net-zero emissions, warning of a flight of capital from Australia in the clean-energy sector without a plan to encourage investment.

“This isn’t something that happens overnight, it’s the work of a generation,” Mr Albanese will say. “But the preparation for what comes next, has to start now.”

Mr Albanese will outline a reform agenda involving new financing facilities and investor incentives to drive new economic growth, greater sovereignty over resources and critical minerals, competition reform and community incentives for renewable energy projects.

“Obviously, Australia cannot go dollar for dollar with the United States’ Inflation Reduction Act,” Mr Albanese will say. “But this is not an auction – it’s a competition. And Australian can absolutely compete for international investment when it comes to our capacity to produce outcomes, the quality of our policies and the power of our incentives.

“Nations are drawing an explicit link between economic security and national security. All these countries are investing in their industrial base, their manufacturing capability and their economic sovereignty. This is not old-fashioned protectionism or isolationism; it is the new competition.

“These nations are not withdrawing from global trade or walking away from world markets or the rules-based order … and let me be clear, nor should Australia. We will continue to champion global markets and free trade, to build bilateral and multilateral co-operation and forge agreements. Equally, we must recognise that the partners we seek are moving to the beat of a new economic reality.”

Mr Albanese will say the “heavy lifting” of economic transition and industrial transformation is not being done by individuals, companies or communities on their own.

“It is being facilitated, enabled and empowered by national governments from every point on the political spectrum,” he says.