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Affordable power and tax cuts beat ‘picking winners’

October 19, 2017

Affordable power and tax cuts beat ‘picking winners’

The Australian, 16 October 2017

Bill Shorten’s claim in Adelaide on Saturday that the slogan he wants to hear in future is “Made in Australia’’ would be credible if the opposition turned its attention to the main problems impeding business and job creation. Labor should agree to pass the full gamut of the Turnbull government’s proposed company tax cuts — offset by reductions in recurrent government spending. On Wednesday, the House of Representatives is due to vote for the remainder of the government’s package, to cut the corporate rate from 30 to 25 per cent for all companies over the decade. In dismissing the plan as a “handout’’, the Opposition Leader is putting Australian manufacturers at a significant disadvantage to rivals offshore. Any leader serious about assisting manufacturing would also free up the workplace relations system to encourage wage rises based on productivity growth.

Mr Shorten is promising that his proposed $1 billion Australian Manufacturing Future Fund would “make sure that you get access to the low-cost finance which gets you ahead of the pack … Labor won’t let the big banks hold Australia’s advanced manufacturing back.’’ The fund would be modelled on the Clean Energy Finance Corporation, established by Julia Gillard under her agreement with the Greens to legislate an emissions trading scheme in 2011. As we said of the CEFC, taxpayers have often paid a high price for governments picking losers, which has too often been the case when they set out to pick winners. There is no reason why technically innovative proposals for automotive parts and food manufacturing, with good commercial potential, should not find investment backing. So should viable proposals for clean energy generation and storage.

Both sides of politics, unfortunately, have built up unrealistic expectations that governments have the means to subsidise renewables at no cost to consumers. Today’s Newspoll reveals that a thumping majority of Australians — 63 per cent to 23 per cent — believe governments should continue taxpayer-funded subsidies for investment in renewable energy. At the same time, 58 per cent are unwilling to pay anything more in electricity costs to help implement a clean energy target to foster more renewable energy sources.

Sharper battlelines over energy policy will be drawn when cabinet considers the government’s energy policy today, before a debate in the Coalition partyroom. While the government believes it is on track to reduce Australia’s carbon emissions under the Paris agreement by 26 to 28 per cent by 2030, the new policy is expected to emphasise reliability of supply over green energy subsidies. The ensuing fight with Labor and the Greens will be a defining issue until the next election. In addition to assisting households, affordable, reliable energy is essential to the future of Australian businesses. Without it, Mr Shorten’s “Made in Australia’’ mantra would amount to no more than hot air.