Prime Minister Anthony Albanese delivers a speech to the Queensland Media Club.

Prime Minister Anthony Albanese delivers a speech to the Queensland Media Club.Credit:Darren England

The entire concept is fraught with risk. China,the source of most of the world’s solar cells,has the industrial power and the strategic will to wipe out rivals when it wants. But there is no room for these doubts in the new Labor vision.

Albanese is not dipping his toe in the water to test a bold idea. He is leaping into the deep,utterly confident he can see a giant wave on the horizon that can carry the country to a better future. And he thinks he can ride that wave to victory at the ballot box.

This is a pitch to voters about a growth agenda. Albanese promises a bigger economy and a bigger country. And he blames Peter Dutton for having no vision. The Labor policy arrives at a point in the election cycle when the opposition leader is yet to reveal an economic plan.

Last week’s package was merely a $1 billion subsidy for solar panel manufacturers in the NSW Hunter Valley. Now it is much grander – and certainly much more expensive. But the pitch comes first;the invoice comes later. There was no estimate of the full cost in the prime minister’s speech to the Brisbane Media Club on Thursday.

Illustration:Simon Letch.

Illustration:Simon Letch.Credit:

The package has a grand title –A Future Made In Australia – and will be governed by an eponymous law. This is a simple retail brand for a complex industry policy,with a phrase that can be repeated until voters are sick of hearing it. Call it FuMIA,if you will,and add it to the game of buzzword bingo with old favourites like “jobs and growth”. Be careful,though,if you turn it into a drinking game:You’ll be under the table in no time as I expect you’re about to hear it a lot.

The government wants the law passed by May or June and will reveal the cost of the specific measures in the weeks leading up to the May 14 budget. Expect more grants,loans and tax concessions for big investors in new projects.

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This will be about Australia producing more critical minerals,batteries,wind turbines and solar panels. It is not about electric vehicles – the batteries to be made in this country are more likely to be for households and industrial use. If it’s green,it will get government help. One example is the incentive for anyone who can use renewable electricity to produce green hydrogen in the hope of storing and transporting clean energy.

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Big vision. Big money. Big risk. Albanese says he will not go “dollar for dollar” against the United States and the Inflation Reduction Act,yet the tax credits in Joe Biden’s policy show how costs can balloon. The US president estimated the fiscal cost at $US369 billion at the end of 2022,but there is no cap on the tax breaks. Credit Suisse tips a cost of $US800 billion over a decade,while Goldman Sachs says $US1.2 trillion.

Gulp. The White House claims the rewards are huge – such as $US5.6 trillion in benefits for the environment. That does not include the added jobs in new industries.

Just like Biden,Albanese will insist that the benefits outweigh the costs. Albanese set basic principles for the package when it was making its way through federal cabinet. The first was that the government needed to act and invest at scale,with real ambition. The second was that it had to act in areas where Australia already has a competitive advantage. That means resources,for instance,and turning lithium and nickel into batteries rather than shipping the raw material offshore.

The argument is that economic security and national security go hand in hand. Energy Minister Chris Bowen warned last year that Australians bought 60 million solar panels over the past decade butrelied on imports for 99 per cent of the total. Those imports were overwhelmingly from China.

Energy company AGL and billionaire Mike Cannon-Brookes are in the running to set up asolar panel factory in the NSW Hunter Valley. What we do not know is how much taxpayer assistance they want to make it work.

Most of this looks like a distant dream. Green steel,for instance. Can Australia really produce steel without using coking coal? The view from Albanese is that Australia must be able to do so. One reason is that carbon tariffs will be imposed by the European Union and others,forcing the shift from fossil fuels.

Ross Garnaut and Rod Simsmade a similar warning about carbon tariffs in February when they called for big investment in new industries. Albanese is not,however,backing their idea for a carbon levy. That means the Labor policy has to fund the subsidies without finding a new way to raise revenue.

Thecase against this policy is the danger of throwing away taxpayer cash. Only this week,the International Monetary Fund warned that costly subsidies or tax breaks could hurt productivity and welfare if not effectively targeted. “This is frequently the case,for example when subsidies are misdirected toward politically connected sectors,” it said.

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The Labor policy could be a rent-seeker’s bonanza. Those with access to Parliament House will line up for federal aid. Unless there is strict oversight,a damning report from the auditor-general is just a matter of time.

Labor has been here before. As prime minister more than a decade ago,Kevin Rudd said he wanted to lead a country that could “make things”. Some of the Labor subsidies were fairly modest and,in the car industry for example,unwound over nine years of Coalition rule. Albanese responds to that lesson by scaling up the ambition.

Dutton is yet to declare his hand on these big ideas. Where is the Liberal growth agenda? “We want to see more manufacturing in Australia,” said shadow treasurer Angus Taylor on Thursday. “But you don’t solve a cost-of-living crisis by throwing hard-earned taxpayers’ money around.” In other words,he has a complaint,not a plan. It will be easy for the Coalition to oppose the spending,but much harder for it to offer a compelling alternative.

That is why A Future Made In Australia is a vital part of the Albanese bid to win the election. The phrase is so blatantly retail that anyone who is against it almost sounds un-Australian. Albanese now has to convince voters he has a second-term agenda that Dutton cannot match.

There’s a huge wave out there,and Albanese thinks he can catch it. It will be a wild ride. And,if anything goes wrong,quite a dumping.

David Crowe is chief political correspondent.

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