The Coalition has well and truly embraced ‘picking winners’

Peter Roberts

Ahh the good old days – the days when the Coalition was dead against ‘picking winners’. Remember them?

It is hard to believe that only a decade ago, any mention by Labor of an activist industry policy that identified industry sectors that Australia should focus on was met with a chorus of ‘picking winners’ from coalition politicians.

Back then if Labor suggested backing, say the location of a silicon chip factory with a subsidy that too was ‘picking winners’. ‘Leave it to the marketplace’ they would say, ‘only do things that we are good at here and import the rest’ and so on, and so on.

The LNP chorus was echoed by dry economists in the media and especially by the Productivity Commission which has long been the guardian of the sort of economics that has brought us to today.

Henderson in Perth, the site of the planned dry dock

Today that dry philosophy has brought us the OECD’s least complex and most fragile economy, narrowly based on digging up minerals and sending them offshore unprocessed.

But today, picking winning industry sectors and picking winners among individual companies has become the norm – and it is the Liberal National government that has achieved this – not Labor.

So we have national industry priorities, industry growth centres, defence innovation grants and capability building grants.

A search on turns up 739 federal government grants and programs.

And this being the lead up to an election we have daily announcements from the government of the latest grant recipient under this or that grant scheme.

On Wednesday there were four companies backed by $243 million in Modern Manufacturing Initiative Collaboration Stream grants:

  • Australian Vanadium which is developing a battery metals and electrolyte value stream based on a mine at Gabanintha south of Meekatharra gets $49 million (this was on top of an earlier grant provided under Canberra’s (Resources Technology and Critical Minerals Processing National Manufacturing Priority Roadmap)
  • $30 million will help fund Arafura Resources’  rare earth separation plant that could have the potential to supply neodymium and praseodymium (NdPr)
  • $45 million will go to an Alpha HPA and Orica project to produce materials for lithium-ion batteries and LED lights
  •  Another $119.6 million is going to Pure Battery Technologies and Poseidon Nickel for a nickel, manganese, cobalt battery material refinery hub in Western Australia.

That’s a lot of winners picked in one day.

Of course, the mother of all picking winners is $4.3 billion announced the day before to build a dry dock at Henderson south of Perth

And who can forget $55 million for steelmaking in Port Kembla, and $113 million of federal support for plant protein factories and another $20 million for satellite manufacturing in South Australia? All in the past few days?

Don’t get me wrong – I am not arguing against any of these projects.

But to repeat the old dry arguments – did the government grants induce any additional investment in these projects, or would they have gone ahead anyway?

Is deciding the recipients of massive grants essentially inside the office of a minister or even a Prime Minister the best way to allocate public funds? Surely an independent, knowledgeable body such as the six industry growth centres is better.

What is to stop these massive grant schemes from being rorted as so many others have been? And why not loans that are paid back which is the far superior model used to finance and support green energy projects?

Meanwhile one can ask – what use is a Productivity Commission when its philosophy has been so thoroughly trashed by the very political parties that once held them sacred?

This story was originally published by @AuManufacturing. You can subscribe to the @AuManufacturing newsletter here.

Do you know more? Contact James Riley via Email.

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