China investors in the cold as Chalmers makes security a test for budget largesse

Australia’s national security and the country’s ability to survive another collapse in global supply chains will determine which businesses get a share of the federal government’s multi-billion dollar Future Made in Australia budget spend.

The policy has come under fire from economists including Productivity Commission chair Danielle Wood, who warned that so-called temporary subsidies to support an industry often become permanent taxpayer handouts.Chalmers, in a speech to the Lowy Institute, will argue the policy was aimed at providing temporary support under “strict criteria” in markets which either don’t yet exist or are not close to being fully formed.

Chalmers will argue the world faces its most challenging strategic environment since World War II as countries deal with decarbonisation, national security challenges and a dramatically altered economic outlook. “But it would be preposterously self-defeating to leave our policies unchanged in the face of all this industry policy taking shape and taking hold around us.”Chalmers will also use the speech to reveal changes to foreign investment rules that will toughen regulations around parts of the economy considered “sensitive” while easing restrictions in other sectors.

But restrictions in less sensitive areas will be eased. Repeat investors will have paperwork requirements reduced, timelines for decisions will be shortened while foreign investors will be able to buy established build-to-rent projects. According to Deloitte Access Economics, Chalmers will deliver a second successive budget surplus but for the coming year the nation’s finances will go back into the red.recorded in 2022-23 with a $13.4 billion surplus this financial year, before forecasting a deficit of $7.9 billion.

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