Chalmers says ‘big’ investment in subsidy plan won’t push up inflation

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The treasurer defended the government’s green industry subsidies plan, joining other countries protecting itself from China’s race to the bottom.

Speaking on the sidelines of IMF and World Bank meetings in Washington overnight, Dr Chalmers said the investments being considered for the new industrial policy were “big”, but would not add to inflation pressures.

The treasurer’s comments appear to contrast with those he made earlier this week that government investment “will only ever be a tiny sliver of what’s needed” since private investment should do most of the heavy lifting.Dr Chalmers defended the proposed policy at an IMF dinner of top finance ministers and economists, amid concerns of government-backed protection for local solar panel and other manufacturers.

Prime Minister Anthony Albanese announced last week he would introduce the act into parliament following America’s IRA and similar schemes adopted by the European Union, along with Korea, Japan, Canada and other nations to compete in the energy transition, which China largely dominates.China exports most of the world’s solar panels, thanks to its huge state-backed enterprises, economies of scale and cheaper labour.

“The president’s approach is strategic, balanced, and targeted…It is also an approach where we are working with our partners and allies who also are feeling the effects of China’s overcapacity and artificially low-priced exports.”are exploring ways to co-invest in an Australian nickel project to help mitigate the impact of a Chinese-backed glut.

 

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