‘Indispensable’: Treasurer’s bold move

Guardrails for Labor’s landmark industry policy will be announced by Treasurer Jim Chalmers on Wednesday — a day after the investment vehicle provided fresh equity to a Silicon Valley-based tech start-up.

In April, the Albanese government launched its Future Made in Australia plan, joining the roster of countries that had erected subsidies and trade barriers, spurred by economic upheaval following the global pandemic and China’s growing assertiveness.

But in the midst of continued criticism from economists, industry experts and even the government’s own hand picked Productivity Commission chief that the policy risks making Australian enterprise more inefficient, Dr Chalmers will on Wednesday announce the framework underpinning Labor’s flagship industry policy.

‘Indispensable’: Treasurer’s bold move

“Where markets are nascent or don’t yet exist, there can be a case for targeted, temporary support to crowd in private investment – especially in industries that meet strict criteria,” Dr Chalmers will say in an address to foreign affairs think tank The Lowy Institute.

The Treasurer will claim that Australia can be the “primary beneficiary of a changing and churning global economy” if it pushes ahead with the industry policy overhaul.

“Only if we make ourselves indispensable to the net zero transformation, only if we align our economic and security interests more tightly, and only if we invest and engage, not just protect or retreat,” he will say.

The Treasurer will outline five ‘tests’ to determine where taxpayer funds are poured, with the project’s competitiveness, productivity, and contribution to decarbonisation, economic resilience and national security taken into consideration.

How a specific proposal can “build the capabilities” of people and the regions, bolsters the private sector and delivers “value for money” will also be accounted for.

The legislation, to be introduced later this year, will also create two ‘streams’, through which funding will be funnelled.

First, a ‘national interest’ stream will be established, focussed on bolstering sovereign capability and safeguarding Australia against supply shocks.

“This will have a focus on only the most critical risks – to avoid a costly mindset of trying to eliminate all risks,” Dr Chalmers will say.

Second, a ‘net zero transformation’ stream will also be included, assisting Australia’s energy transition where there is a “reasonable prospect” the project will remain internationally competitive.

The Treasurer will also outline changes to accelerate foreign investment approval processes to help encourage the flow of international capital into Australia’s decarbonisation efforts and other Labor priorities.

Designed to protect sensitive industries, critical infrastructure, supply chains and rare earths, a more robust vetting protest will apply to foreign investment proposals.

Treasury officials will also provided with greater resources to conduct on-site visits, ensuring with compliance with government requirements.

“Our reforms will make Australia a more attractive place to invest, boost economic prosperity and productivity, while strengthening our ability to protect the national interest in an increasingly complex economic and geostrategic environment,” Dr Chalmers will say.

On Tuesday, the Albanese government unveiled it would jointly provide almost $1bn in funding to Silicon Valley-based quantum computing start-up PsiQuantum alongside the Queensland state government through its Future Made In Australia plan.

“This is our moonshot for Queensland. This is our Project Apollo,” Queensland Treasurer Cameron Dick said.

However, key questions regarding the project remained unanswered following a press conference in Brisbane to announce the commitment.

When pressed whether the 400 jobs created — equating to in excess of $23m of funding per position — would be filled by Australians as opposed to workers flown in from the US, PsiQuantum founder and chief executive Jeremy O’Brien was uncertain.

“I don’t know if that’s been determined,” Professor O’Brien said.

Asked how the taxpayer funding was split between equity and loans, the government on Tuesday remained tight-lipped, citing commercial confidentiality.

The timeline for the funding package, and the milestones required to deliver additional funds were also not detailed.

With PsiQuantum incorporated in the United States, and based in Silicon Valley, Mr Albanese and Mr Husic were also questioned why a foreign company should be provided with Australian taxpayer funds.

“That accent, that’s as Australian as you can get,” Industry and Science Minister Ed Husic said, gesturing to Professor O’Brien.

Two of PsiQuantum’s four founders are originally from Australia.

Alongside Australia, the United Kingdom, Singapore and the United States have also committed funding to PsiQuantum, raising questions about which country should be first in line to benefit from any technology advancements it achieves.