Free-market advocates rightly frame interventionist industrial policy as the classic case of governments “picking winners”. If done well, however, it can leverage an economy’s natural comparative advantages and drive lasting prosperity. Done poorly, which is often the case, it can bleed private capital from productive to non-productive industries, prop up uncompetitive industries and further entrench rent-seeking at taxpayers’ expense.
The Albanese government has yet to show it can distinguish between the two. The glaring example is the taxpayer-funded bailout of ageing, loss-making and energy-intensive manufacturers such as Glencore’s Mount Isa copper smelter as well as the growing pressures to support Rio Tinto’s Tomago aluminium smelter. Some companies invoke the importance of preserving regional jobs and sovereign capability or facilitating the transition to a low-carbon economy.
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