The future, according to a speech on Thursday by Prime Minister Albanese, will be made in Australia.

Speaking to the Queensland Media Club, Albanese announced that later this year the government will introduce legislation called the Future Made in Australia Act to give effect to the government’s plan and “vision” for Australia’s prosperity in the future global economy.

Citing opportunities created largely by the transition to cleaner energy sources and the global race decarbonise, the PM set out, albeit in a speech light on policy details, where Australia can benefit from those opportunities and the role that government must play to see it happen.

And in an interview on the ABC on Wednesday, he said “we can make more things here” but that to do that “we need to identify where Australia has a competitive advantage”.

Which he said required “a private sector-led surge that occurs. But where government investment is required as a catalyst to facilitate that private sector investment, then we should be prepared to engage in providing loans or providing support to make sure that those industries can get off the ground”.

The pressure is on, but details light

Although none of Albanese’s latest announcements offer much detail about what a future made in Australia might actually look like, there are clues littered throughout his speech and recent media appearances.

When speaking to the ABC, he said that “we have an incredible opportunity, but we must seize it”. That was quickly followed by a warning – if we don’t, we will keep seeing resources exported overseas with value added there and then imported back at much higher value.

A clear policy signal? Perhaps not. But it does lead one to think about what industrial processes Australia might be able to recapture or expand upon to take advantage of the “incredible opportunity”.

That there is an opportunity, there is no doubt. Tim Buckley, director of think tank Climate Energy Finance and a former managing director of Citigroup, he tells me there is $US4 trillion-$6 trillion ($6.1 trillion-$9.1 trillion) annually of global investment capital looking to find a home in the world’s clean energy and decarbonisation revolution.

But he says, in the face of the US Inflation Reduction Act and the direct stimulation and support that is providing for clean energy investment and the reinvigoration of manufacturing capacity there, “Australia can’t rely on the traditional notion of free markets in international trade and competition”.

That, coupled with policy supporting local industries being adopted by Australia’s other key trading partners, including India, China, Korea, Canada and the European Union, creates circumstances that mean we must adopt policy that, as Buckley puts it “puts Australia into the global race already underway”. 

What might a future made in Australia look like?

Earlier this year I wrote a piece for TND about how Australia might find a place in the global clean energy policy race and take advantage of some of the opportunities it might present.

In it I referenced comments by Treasurer Jim Chalmers about Australia’s response to the US legislation where he said that Australia would “not copy” the IRA but rather make use of our “natural advantages”.

Key among those natural advantages is our access to an abundance of clean energy sources and the wide-open space required to harness them. 

One issue for Australia, though, is that solar and wind energy doesn’t come in a form that is readily picked up and exported. But it can be, in effect, by a concept known as “embodied decarbonisation”.

Embodied decarbonisation refers to carbon that would normally be emitted by the energy used to create a product being reduced or removed by processing or manufacturing that product with clean energy before it is moved on to the next stage in its life cycle. 

The jobs and the opportunities that leverage our “competitive” or “comparative” natural advantages, lie in our ability to expand on our current processing capability and, as Buckley puts it, “extend” into more energy intensive industrial processes. That would mean that materials such as aluminium and iron ore can be refined further here using clean energy, thereby giving Australia, our workers and the economy a sweeter (and larger) slice of the pie while contributing to reduced global emissions.

The IRA has used a broad brush of direct financial incentives to encourage capital investment into the US and create good jobs, which the White House said in February has supported $360 billion of private investment in clean energy project investment since President Joe Biden took office.

Australia, however, is likely to adopt a narrower and more targeted approach to encourage investment that ensures we can maximise the benefit of our unique advantages, by building on capability that we already have.

Will Australia make more things again?

It seems that the answer to this question is, it depends. 

Although policy details are lacking and no legislation has been released, some, like Liberal senator James Paterson are not convinced.

On Sky News shortly after Albanese announced his grand legislative vision, Paterson said “we all want a future made in Australia, but I’ve got absolutely no confidence at all that this government or the policies it has will deliver that”.

To compete globally, Paterson said we should be “backing business and industry with the policy settings they need to succeed”. Too right.

Also speaking on Sky News in response to the FMA announcement, Motley Fool chief investment officer Scott Phillips said that it was a “bad idea unless the money is being cleverly invested”. Which might be interpreted as a solid each-way bet. 

Phillips also declared that “free trade is good for everybody”, which seems to overlook the fact that in this market segment, with many of our allies and trade partners adopting policy to support their domestic industries, the trade is far from free.

Ultimately it seems that the global money will follow the most favourable policy, so doing nothing and letting the market run free is not an option.

But if Australia does get the policy settings right, we should expect to see a government that invests and partners with private industry to maximise the jobs opportunity we have by expanding our domestic material processing capability and reinvigorating energy-intensive advanced manufacturing supply chains by working with strategic trading partners.

Australian-made policy, for Australian-made products.

Scott Riches is an employment lawyer and former union official. He is also director principal of Capacita