Plus ça change, plus c’est la même chose.
Australia’s Treasurer, Jim Chalmers, “will more purposefully direct investment flows to priority areas such as clean energy, through market design and co-investment”. Also known as industrial policy, Chalmers looks set to revive a relic of 1970s economic thinking:
“We will employ this co-investment model in more areas of the economy, with programs already under way in the industry, housing and electricity sectors.
Australia can do more and do better than just batten down the hatches in 2023 or hope for the best. We can build something better, more meaningful and more inclusive – 30 years of prosperity stronger, broader and more sustainable than the last.
We can maximise our advantages by focusing on things we can and do control – setting ourselves up to emerge from a difficult year as a more resilient, more cohesive and more purposeful country.”
Front and centre of Chalmers' new Australia is the National Reconstruction Fund (NRF), which “will provide finance for projects that diversify and transform Australia’s industry and economy”.
The good news is that the NRF will be somewhat insulated from the politics of the day – so it won’t all be wasted on dud projects or captured by concentrated corporate and labour interests – and at $15 billion it’s only about 0.5% of the Australian government’s total expected expenditures (2022-23 to 2025-26).
The bad news is that it’s still industrial policy, which at its heart assumes that omniscient, benevolent bureaucrats know better than the profit and loss, capitalist system. If Chalmers has a problem with the outcomes of that system, then he would get better results by putting a price on whatever he considers undesirable – based on his essay, probably be some form of carbon tax – and then let the market “direct capital where it can have the greatest impact”.