Green subsidies no ‘free for all’
Proposed green manufacturing subsidies will not be a “free for all”, Treasurer Jim Chalmers has said, as the government faces criticism over the policy from its own hand-picked Productivity Commission boss.
On Friday, Danielle Wood, an ex-Grattan Institute chief who now serves as the government’s chief productivity adviser, joined economists and business groups to warn that Labor’s Future Made in Australia Act risked creating a class of businesses reliant on subsidies and could make the economy more inefficient.
The funding is set to be unveiled in the upcoming federal budget on May 14.
However, Dr Chalmers said businesses receiving subsidies and support would be subject to “rigorous and robust tests” to ensure that taxpayer funds were not squandered.
“What we’re talking about here isn’t some kind of free for all of public funds,” Dr Chalmers told the ABC’s Insiders program on Sunday.
“What we’re trying to do here is incentivise private investment, not replace it.”
The private sector would be overwhelmingly responsible for the “heavy lifting” to bolster domestic manufacturing, he said, however, government and public investment still had an important role to play.
“That will still only be a sliver of the hundreds of billions of dollars we need to land this energy transformation,” he said.
Downplaying Ms Woods’ criticisms, Dr Chalmers said it would be “pretty strange” if the government had not already considered these factors in finalising the policy.
“Danielle made some important points, but obvious points, about making sure we get value for money,” he said.
“We’ve got strict frameworks, we’ve got exit strategies and off-ramps and we are taking into consideration the impact of these plans on the economy more broadly.”
Alongside investments and subsidies, tax breaks for businesses would be considered, he said.