The Grattan Institute isn't normally to be found advocating for industry policy and support of manufacturing. Its latest report, on industry policy in the context of the drive to net zero, is both critical of existing industry policy -- crafted by both sides in worship of the great god of manufacturing -- and supportive of government assistance to help create a manufacturing sector that will prosper without carbon emissions.
One of the biggest criticisms of industry policy traditionally is that governments should avoid picking winners. "More important than not ‘picking winners’ is ensuring that the government is not propping up ‘losers’," the report suggests. And in the context of existing industry policy and net zero, we're propping up plenty of losers -- wasting taxpayer money supporting high-emission projects. Some examples:
- the Olive Downs coal mine in Queensland, which is underwritten to the tune of $175 million by the Northern Australia Infrastructure Facility, amounting to a subsidy of $8.18 per tonne of CO2
- subsidies for gas exploration and production
- the propping up of the Mount Isa copper smelter, the owners of which threaten to close it every time a Queensland election comes around
- the Victorian government's propping up of the Portland smelter at a cost of $200,000 per job.
The only way to stop such abuses -- and this is a story that's becoming common -- is to prevent politicians from having a role in funding allocation and to make sure decisions are made to a clear mandate, targets and milestones by a body at arm's length from government.