Former US President Ronald Reagan made famous the following line: “The nine most terrifying words in the English language are: “I’m from the Government and I'm here to help”. But as they say ‘they’re all doing it nowadays’ and the Albanese Government is playing follow the leader.

As the AFR’s Phil Coorey pointed out: “Prime Minister Anthony Albanese will warn today there is no choice but to try to mimic the clean energy and supply chain subsidies being offered by other nations, including America’s Inflation Reduction Act (IRA), to safeguard national security and sovereignty. This is all about interference in the economy.

Coorey explained that he made the point “that neither Australia nor other like-minded nations implementing IRA-style schemes – such as the US, Canada, Korea, Japan and the European Union – were walking away from global markets or the rules-based order.”

The strategy is being portrayed as mission critical interference and encouragement by his Government to prepare us for the future, which can’t be overdependent on foreign suppliers for important products the economy requires.

So, the PM has launched an industry protection program to make sure we are less dependent on the free market and overseas manufacturers for critically important supplies, which became a worrying issue during the pandemic, when supply chains broke down. Interestingly, Opposition leader Peter Dutton largely agrees with the policy, though he doubts whether we could rival China when it comes to delivering solar panels at competitive prices.

The Government has unveiled its Future Made in Australia Act that will introduce new government-assisted programs to make more ‘stuff’ here, and will lump in some programs already in existence, such as the $15 billion National Reconstruction Fund and the critical minerals strategy. The latter program ensures that minerals we need for technologically advanced products are kept and owned in Australia.

This is new protectionism is the new ‘competitive environment’ of a global economy, which is terrified of being over-reliant on China for important products, such as solar panels.

This is where the new Solar Sunshot program will come in, but Coorey says it has been criticised “for being unrealistic because the vast bulk of the world’s solar panels are made in China, meaning Australia could not hope to compete on cost without the imposition of tariffs on imports.” The PM says they’re largely made by machines, which should reduce the impact of higher labour costs here. And it comes as US Treasury Secretary Janet Yellen recently went to China to talk about Beijing’s “unfair trade practices”.

Yellen, who’s an economist and former US central bank boss and would have grown up espousing the value of free trade (especially as her country was the most competitive in the world), now, when it comes to critically important supplies, has certainly changed her tune.

This is what she said after her China trip: “We don’t want to be overly dependent, and they want to dominate the market. We’re not going to let that happen. People like me grew up with the view: If people send you cheap goods, you should send a thank-you note. That’s what standard economics basically says. I would never ever again say, ‘Send a thank-you note.’”

Under this Future Made in Australia Act, the following will be given high priority:

1. The National Reconstruction Fund.
2. The government’s skills agenda.
3. Initiatives to encourage the domestic manufacture of batteries.
4. The hydrogen headstart program.
5. The Net Zero Economy Authority.
6. A greater role for super funds to invest in these critically important areas; and
7. $1 billion in subsidies, grants, and other forms of support for the domestic production.

Interestingly, the Centre for Policy Development, the right-wing think tank, largely supports the policy. “The indisputable fact is that the industries of 2050 and beyond will need to look very different to the industries of today, and we can’t rely on capital markets to chart the best course over the long-term,” said Toby Phillips, the CPD economy program director to the AFR.

This will be a big push program for the Government ahead of the 2025 election campaign, which clearly has started!