Canberra’s heavy ‘helping’ hand to whip up clean-energy fervour

Treasurer Jim Chalmers at the Economic & Social Outlook Conference in Melbourne on Thursday. Picture: Aaron Francis

At midterm, the elements of Albonomics are falling into place.

Anthony Albanese’s governing mission is to build economic self-sufficiency at home, “resilience” as he puts it, while trying to set the nation up for opportunities as a “renewable energy superpower”.

In the Prime Minister’s schema, the market alone can’t be trusted to deliver the transition to clean energy and secure the net-zero emissions target by 2050, Labor’s top-shelf priority in its pitch to voters for a second term.

So, spend big, and multiply, with Canberra’s guiding hand.

Albanese’s government is laying the foundations for a green new deal, with a honey pot of subsidies for investors who meet more rigid tests and a group of chosen industries that are seemingly born ready for this almighty industry policy heave-ho.

Business is on board, for two reasons, other than the national interest: one, there will be an immense amount of public money up for grabs, and two, Joe Biden has forced the rest of the rich world to respond. The US Democrat’s game-changing and limitless green-dream Inflation Reduction Act could eventually be worth $US1 trillion.

In terms we can all understand, that’s the Australian dollar equivalent of all the goods and services we produce in eight months.

We can’t get under the IRA, we can’t go over it, but we have to do something about it.

Albanese fuses a global emissions reduction obligation with abundant natural advantages staring us in the face, but no economy-wide pricing of carbon pollution to direct investment to its best uses.

We’re in the world of “second-best” policy and yet we must stay the course.

Coming off a big personal and psychological loss on the voice, with a community cranky with the nation’s establishment powers, Albanese faces a fatigued electorate; it can only absorb so many big bets, where the outcome is not assured but the journey will involve “value destruction” as well as “value creation”, as economist Pradeep Philip described it.

The key message out of Thursday’s The Australian-Melbourne Institute outlook conference is that a public battered by rising living costs, falling real wages and housing stress must deal with even more disruption in what Jim Chalmers has branded the “defining decade”, these “turbulent ’20s”.

We need more economic dynamism, as it is called, which involves risk-taking and failing, to fashion a high-performance economy to be able to nail the energy transformation and fund the kind of welfare state that is our entitled destiny with a rapidly ageing society.

But to get rich, and hit the nirvana of full employment and low inflation, we’re going to have to get out of the comfort zone, not simply rely on governments to do the heavy lifting, as Westpac’s chief economist Lucy Ellis declared.

Labor’s new growth model is not yet settled, but the moving parts are steadily locking in, as the Treasurer acknowledges.

We’ll need to be smart, as well as lucky, and adaptable to change and, as Michele Bullock put it the other day, “shock after shock after shock”.

Albanese is playing to the conditions, hoping the times will suit him and his government long enough to at least snag a second term.