Future Made in Australia Act: A regression to the past

An Albanese government struggling for a growth agenda ahead of the 2025 election unfortunately thinks that it’s found one in Labor’s long-dead protectionist and interventionist instincts, which the party’s reform pioneers began sweeping away 50 years ago.

It is of course worse in a fully employed economy, as highlighted by Wednesday night’s above-forecast US inflation reading.As globally recognised Australian economist Warwick McKibbin told our reporters, returning to the protectionist policies of the 20th century, a global oil price rising above $US90 a barrel and mid-year personal income tax cuts amount to a dangerous mix that could force the Reserve Bank to increase, rather than cut, its cash rate.

The central lesson from the old protectionism is that the subsidies granted to inefficient industries that can’t stand on their own feet impose costs on the economy’s efficient industries, including its resource-based export sectors that will need to compete more sharply in a low-carbon world. As with the old protectionism, however, the worst reason for this new protectionism policy is because everyone else is doing it. As Professor McKibbin says, it is crazy to seek to compete in the same sectors that the US, China and Europe are stimulating.

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