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A major manufacturing initiative won’t replace private investment with taxpayer funds, the treasurer says.

On Thursday the prime minister unveiled the Future Made in Australia Act, aimed at promoting local manufacturing and safeguarding the nation’s control over resources and critical minerals.

It soon drew criticism from business groups and even Labor-appointed Productivity Commission chair Danielle Wood, who said it would create a class of businesses reliant on government subsidies.

But Treasurer Jim Chalmers has hit back at such assertions.

“What we’re talking about here isn’t some kind of free-for-all of public funds,” he told ABC’s Insiders on Sunday.

“What we’re trying to do here is incentivise private investment, not replace it.

Much of the heavy lifting will done by the private sector, Dr Chalmers said, but there was still an important role for governments and public investment.

“That will still only be a sliver of the hundreds of billions of dollars we need to land this energy transformation,” he said.

The Future Made in Australia Act has been likened to the US$624 billion Inflation Reduction Act in the US.

The government is expected to make a significant investment when it unveils its budget in mid-May, as both Dr Chalmers and Prime Minister Anthony Albanese believe it will help transform Australia into a renewables superpower as the world transitions towards net-zero emissions.

It is unclear exactly how the government will execute this bold plan but the treasurer has not ruled out using the tax system, or some combination of economic levers to incentivise investment.

“The world is changing and that pace of change is accelerating and we want a slice of the action for our workers and our businesses and our investors,” Dr Chalmers said.

“The opportunity for us lies at the intersection of our industries, our energy, our resource base, our skills and human capital and our investment strategy.”

Kat Wong
(Australian Associated Press)