According to Tim Ayres, assistant minister for manufacturing, attaining the goals of national industrial strategy is essential to the government’s ability to meet its commitments to decrease energy costs and emissions reduction.
The National Reconstruction Fund (NRF) enabling legislation is presently being reviewed by the Parliament, and while industry policy and climate policy have always been connected, this week saw an increase in issues of contention between the government and the Greens.
In this episode of the Commercial Disco, Senator Ayres claims that market intervention through the NRF’s mechanisms is fundamentally essential to secure the economy’s long-term viability and reach emissions targets.
Australia has had an unbroken decline in economic complexity over the past 30 years, placing 91st globally on the Harvard Atlas of Economic Complexity Index, sandwiched between Kenya and Namibia.
According to Senator Ayres, “market failure” does not adequately capture the “perversity of what has occurred in the Australian economy in the previous 20 to 30 years.”
According to Senator Ayres, “industrial capability was offshored [as part of that process], which has been immensely harmful to our economy, welfare, and future capacity. The outsourcing of the automobile industry under the last government [cost] 40,000 jobs.
“Thus, it is necessary for the government to intervene. But, the NRF uses a unique approach that includes co-investments, loans, and guarantees. That calls for a different relationship between the public and private sectors and the investment community. That’s novel. An updated approach to industry policy has been adopted in the Australian context.
Coincidentally, Senator Ayres spoke at a meeting on sustainable mining between Sweden and Australia on Wednesday at the Swedish embassy in Canberra. Yet it is worth mentioning that Sweden has consistently rated in the top ten of the Harvard Atlas of Economic Complexity Index for the past 30 years. (It has placed as high as fifth; it is currently eighth.)
The World Bank estimates that Sweden’s investment in R&D as GDP percentage is 3.53 per cent, nearly twice as much as Australia’s investment in R&D. This can’t be a coincidence (1.83 per cent). Since 2008, when it was 2.4%, Australian R&D expenditure has been going downward, while Swedish R&D investment has been trending dramatically since 2014.
Senator Ayres maintains that to re-industrialize, urgent market involvement is necessary. To ensure that Australia takes advantage of decarbonization prospects, the industry priorities have been focused on in this manner.
Sen. Ayres stated that “reaching our industry policy objectives is crucial to meeting our objectives in terms of emissions reductions, making energy more affordable, and making the industry more efficient and more competitive.”
“We will consider the Greens’ and the other crossbenchers’ reasonable suggestions as we go with this. Yet, this is the idea behind the reindustrialization of the Australian economy.
The $20 billion Rewiring the Nation Fund and the development of an efficient renewables and low-emissions technology industry are essential to accomplishing our goals in terms of energy and mission.
