The treasurer is breaking from Labor’s previously claimed belief in the Hawke-Keating market-based economic model that helped deliver 30 years of prosperity.
Jim Chalmers is ripping up the economic textbook. The Labor treasurer is embracing a bigger role for government to direct capital and allocate resources in Tuesday’s federal budget.Chalmers is, once and for all, publicly breaking from Labor’s previously claimed belief in the great Bob Hawke-Paul Keating, market-based economic model that helped deliver 30 years of national prosperity.
Instead, he says, it recognises that the world has changed and the past “is not necessarily the right economic orthodoxy for the big turning points”. Albanese, Chalmers and Industry Minister Ed Husic will sit around the cabinet table choosing what green energy, manufacturing and technology projects are worthy of government backing – under the guise of the energy transition, supply chain resilience, national security and sovereignty.The current head of the Productivity Commission, Danielle Wood, and four previous heads of the commission
Nonetheless, the Albanese government’s actions demonstrate Labor’s lack of regard for orthodox economics and mainstream economists.In past decades, strong treasurers and an economically rational Treasury would have blocked the Future Made in Australia agenda, price caps on gas, and re-regulation of the labour market that takes the rigidities of the workplace system back to the pre-Keating era.
Leigh is Assistant Minister for Competition, Charities and Treasury. He is below Chalmers and Assistant Treasurer Stephen Jones in the Treasury pecking order.He worked as a media and political adviser to treasurer Swan for five years until 2013, working closely with the Treasury led by the respected Ken Henry.
The government would “build a better capitalism” more aligned with Australian values and building more resilience against economic and geopolitical shocks, he wrote. Instead of green industrial policy that entrenches government picking winners, a carbon price allows businesses in the market try to fund the lowest cost way to reduce emissions.
The Snowy Hydro 2.0 pumped hydro project initiated by the Turnbull Coalition government has already jumped in cost from an initial $2 billion to $12 billion.Australia will need to build the equivalent of 50 Snowy Hydro schemes Chalmers worked for Swan and still wears the scars of the mining tax and carbon tax fights, which ultimately contributed to the infighting and downfall of the Rudd-Gillard government.
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