The Business Council of Australia (BCA) welcomes the opportunity to provide a submission to the Senate Inquiry into the Future Made in Australia Bill 2024. A well-designed Future Made in Australia (FMIA) agenda can help drive investment, increase productivity and improve living standards for all Australians. However, it must be noted that the chances of success of FMIA would be enhanced by improving Australia’s underlying investment fundamentals.

The FMIA agenda reflects the intent of the Government to craft an Australian response to the US Inflation Reduction Act (IRA), as called for by the BCA. Australia should respond if other nations are taking significant actions to further enhance their attractiveness as an investment location. Ideally, this is achieved by learning the lessons from other programs and getting the investment fundamentals right. As with any policy, there is a need for clearly identifying the problem being solved and the policy objectives. There also should be firm guardrails to ensure the policy is a success, that there is judicious use of taxpayer dollars, and that there is a sustainable and enduring policy agenda that allows business to plan confidently.

Australia should not sit still while other countries are increasing their incentives, nor while they are growing their competitiveness at a foundational level. To best grow our economy we must, as a point of national urgency, become a more competitive place to do business. The net zero transformation and fragmentation of the global economy mean that the resilience and competitiveness of Australian business – more than ever – is dependent on its ability to be flexible and adaptable to changing circumstances. This requires a focus on getting the fundamentals right to make Australia an attractive investment destination through reform of our tax system, easing the burden of regulation, a streamlined project approvals process, a high-quality skills and education system, a well-managed migration program, a streamlined foreign investment screening regime, and improvements to the workplace relations system.

FMIA needs to be just one component of a reinvigorated and contemporary industry policy where we ensure a future still made in Australia by optimising across the entire ecosystem, not just focussing primarily on the early stage. Any activity currently in Australia that is lost to a more competitive environment overseas risks being lost forever, with the resulting loss in innovation, investment, productivity, jobs, and revenue. This means we must:

• drive industries where we have a comparative advantage;
• focus on the areas, capabilities and industries where Australia has existing capability and the potential to scale up to global markets; and
• support key enabling capabilities across the ecosystem that cut across industries and that are needed to tap into the world's supply chains.

Sector Assessments are a welcome element of FMIA for identifying how sectors align with the National Interest Framework and opportunities to address barriers to private investment. This is critical to ensure FMIA is a success. The independence and confidence in Sector Assessments could be enhanced by having the Productivity Commission conduct this analysis, which should ultimately take the form of a comprehensive policy development or assessment process that follows best practice public policy principles.

The eligibility criteria and design of FMIA policies must not be so restrictive as to limit support for projects that otherwise meet the policy objectives, or that may otherwise result in investment going overseas. Many of these projects will deliver benefits across local communities and supply chains. At the same time, the Community Benefit Principles must not be so narrowly or rigidly defined as to undermine the success of FMIA, including by making it very difficult for participants to comply. These principles, while positive in the broad sense, risk increasing costs, duplicating other policies already in place, and offsetting competitive gains achieved through FMIA. There is evidence emerging in other countries that providing subsidies has materially increased project costs and introduced additional delays, particularly when labour and product markets are tight. These implications should be considered in the Australian context.

Read our full submission here.