Jim Chalmers says Australia doesn’t need a version of the US Inflation Reduction Act, but that only underscores how important its fine print will be to Australia’s critical minerals industry.
Jim Chalmers says Australia won’t be introducing an IRA-lite scheme, referring to the massive subsidies available to mining, energy and manufacturing industries under the Biden administration’s Inflation Reduction Act.
Despite enthusiastic political rhetoric and signing of the US-Australia “climate, critical minerals and clean energy transformation compact” as the third pillar of the alliance, key aspects of how IRA subsidies can be used in other countries are still to be finalised. US Treasury guidelines on what constitutes a foreign entity of concern under the IRA, originally due mid-year, are now expected by next month.
“Their real strength is their ability to undermine the economic thesis for an investment in a democratic state where you have to have a certain response to shareholders and return on investment,” he told the International Mining and Resources Conference in Sydney.“They don’t have to do that, so their ability to dump product on the market can destroy the incentives to invest in certain countries.”
“President Reagan famously said that if you want more of something, subsidise it and if you want less of it, tax it,” he said. “What we are seeing with the IRA is the US wanting more content from the US and allied countries with which we have free trade agreements. So we are going to subsidise those.”
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