The FMAA aims to support investment in Australian value-added manufacturing initiatives relating to the renewable energy transition. While it remains to be legislated, the budget suggests the FMAA will entail approximately $23 billion of new public spending over ten years. The majority of this is accounted for by two new tax credits which incentivise private investment into domestic critical minerals processing and renewable hydrogen production. These credits are available from 2027 and, while currently uncapped, are estimated to entail $13.7 billion in public industrial support by 2035-35. Also notable is approximately $4.5 billion in new funding for the Australian Renewable Energy Agency (ARENA) across several new initiatives, providing grants, subsidies, and investment for the manufacturing and development of renewable technologies, including batteries and solar panels.

The FMAA reflects widespread calls from the union movement (particularly the AMWU and ETU), climate campaigners, researchers (including at the Centre for Future Work), and even some business groups for a climate industrial strategy which can rebuild Australia’s manufacturing sector, drive decarbonisation domestically and abroad, and create thousands of secure, high-quality jobs. Australia is well placed to achieve this, possessing key advantages in the development of renewable energy technologies including substantial reserves of minerals required for the construction of renewable energy technologies, abundant access to sun, sea, and wind, and availability of skilled labour and manufacturing capabilities. While the present scale of FMAA initiatives is small, they are promising starts in developing value-added clean technology manufacturing in Australia.

Yet the FMAA cannot be understood outside of a broader global context. Since the Covid-19 pandemic, several major economies have undergone historic policy shifts to develop their own manufacturing sectors, particularly in relation to the renewable energy transition. In the United States, the Biden Administration has overseen a substantial expansion in the industrial subsidies available to US producers of renewable and strategic technologies, including batteries, electric vehicles, and semiconductors through policies including the US$1.2 trillion Inflation Reduction Act (IRA) and accompanying CHIPS and Science Act. This is currently driving a rapid escalation in private investment in renewable energy generation and manufacturing, and reflect an alignment of Biden’s climate, economic, and national security policy ambitions. Similar industry policy initiatives are being pursued in the EU, Canada, Japan, Korea, and Brazil. The FMAA will be Australia’s attempt to both compete with and complement these international efforts.

In wielding the fiscal and regulatory power of the state to reshape the structure of domestic economies, governments turning towards industry policy are breaking with a key principle of the neoliberal ‘Washington Consensus’ that has defined much of global economic policymaking since the end of the Cold War: namely, the assumption that the state is not capable of efficiently allocating resources between economic sectors, and so should not bother trying. Insofar as governments are directing the allocation of resources towards desirable industries, these public industrial policies are breaking with neoliberalism.

At face value, these are positive developments. Nevertheless, as British economist James Meadway has recently argued, we cannot assume that all breaks with neoliberalism are necessarily progressive. It is not guaranteed that increased state involvement in economic development will benefit workers, the climate, or global peace. Accordingly, the broader context of this global industry policy trend must be critically examined to ensure that the Future Made in Australia Act genuinely advances domestic and international decarbonisation efforts, develops Australia’s industrial base, and improves the lives of workers and their communities.

Towards this end, three factors must be considered:

Firstly, a low carbon economy is not necessarily a fairer economy. While private sector investment in renewables can be desirable with regards to decarbonisation, the treatment of workers and communities by these companies can be exploitative. Union busting at US Tesla factories, the exploitation of migrant workers on Australian solar farms, and hazardous labour and environmental conditions in Indonesian nickel mines are all troubling signs of a global renewable transition where corporate profits can trump public interest. The FMAA must ensure that workers and communities are prioritised in renewable industrial investments to ensure both the practical and political success of Australia’s net zero transition. The proposed ‘Community Benefit Principles’ are a promising sign that the FMAA will prioritise workers and communities; these must be prioritised to make sure the Future Made in Australia causes a race to the top on labour standards and social benefit.

Secondly, investment in clean technology manufacturing does not necessarily mean divestment from fossil fuels. Indeed, the announcement of the Australian government’s Future Gas Strategy shortly before the FMAA’s unveiling reflects a contradictory approach to both climate and industrial policy, as fossil fuel production both increases emissions and competes with renewable projects for investment and workforce. This is unfortunately not unique: US oil and gas production and export has reached record highs under the Biden Administration even as public and private investment has poured into renewable initiatives. For the FMAA to be successful in its climate and industrial ambitions, it must be accompanied with a phase-out of fossil fuel production and a genuine broader decarbonisation plan.

Finally, the international revival of industry policy is certainly a response to the economic and geopolitical rise of China – particularly China’s success in clean energy industries – as well as to climate and supply chain concerns. China’s clean energy industries have undergone a staggering expansion in recent years on the back of decades of sustained public industrial support and direction. The following figures are illustrative:

• Chinese investment in new photovoltaic (PV) supply capacity over the last 10 years exceeded $50 billion: 10 times that of Europe.
• As of 2023, China’s global market shares in solar panel and wind turbine manufacturing exceed 80 per cent and 60 per cent, respectively.
• Chinese made EVs already account for 60% of global EV sales, with Chinese EV exports increasing 80% between 2022 and 2023.
• Clean energy was the biggest driver of Chinese GDP growth in 2023.

China’s clean tech successes are good news for the climate (China’s emissions are likely entering structural decline years earlier than anticipated), but bad news for US economic interests. Accordingly, efforts to promote clean tech industry linkages amongst US allies (“friend-shoring”) in addition to the development of domestic clean tech manufacturing capacity (“reshoring”) indicate an aligning of US security policy with climate and industrial policy.

The FMAA reflects this context: Australia is positioning to benefit from increased US demand for processed critical minerals and renewable technology componentry and is seeking to use this demand to rebuild Australia’s industrial base. Diversifying global clean tech supply is certainly a worthwhile goal. But if tensions between the US and China intensify, US climate ambitions may be deprioritised in favour of security interests. While benefitting from US and others’ ambitions to diversify global clean tech supply chains, the FMAA must avoid further locking Australia into US economic and security dependency. Instead, Australia could chart an independent course, promoting the strengthening and diversifying of global clean technology supply chains without advancing the tensions of a new Cold War.

Taken together, the FMAA is a promising step towards developing domestic clean technology manufacturing, aligning Australia’s ambitions of transitioning to renewable energy, cutting carbon emissions, and rebuilding industrial capacity. Progressive campaigners must now ensure it lives up to these ambitions, benefits communities by creating secure jobs with strong labour conditions, is conjoined with a broader policy of real decarbonisation, and promotes global economic and climate cooperation.