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Toronto: The clean energy revolution fuelled by Joe Biden’s historic climate change bill had changed the economic landscape and required Australia to be more competitive or risk falling behind, Business Council chief executive Jennifer Westacott has warned.
Speaking in Toronto at an economic forum of industry and political leaders, Westacott also urged closer collaboration with Canada on the AUKUS submarine deal; pushed for a rethink of Australia’s “too slow” skills and education system; and called for new trade and investment ties with “emerging Asian powerhouses” in the Indo-Pacific.
Business Summit 2023,Jennifer Westacott, Chief Executive, Business Council of AustraliaCredit: Natalie Boog.
“The Inflation Reduction Act in the US is acting as a massive magnet for investment,” she said of the Biden administration’s climate change bill, which provides billions of dollars to support new infrastructure investments in clean energy projects.
“Countries like ours can’t duplicate that big expenditure, but at the same time, we cannot sit by and let other countries eat our lunch.”
The comments from one of the country’s top business leaders comments come almost one year after the Biden administration signed the Inflation Reduction Act into law, fuelling a green revolution that French president Emmanuel Macron recently warned risked “fragmenting the West” by massively subsidising American companies to the detriment of industries in some other countries.
A truck passes a wind farm near Del Rio, Texas, Wednesday, Feb. 15, 2023. Credit: AP
The Act is the most ambitious climate bill in US history, and aims to slash the price of wind turbines, electric vehicles and other types of renewable energy by driving investment through incentives such as tax breaks, grants and loans.
Companies across various sectors are also rewarded for building equipment or sourcing components or critical minerals from the US or countries that have a free trade agreement with America.
However, the policy has caused friction with Europe, where some nations fear they will miss out on investment. The Biden administration, meanwhile, says its message has been consistent.
“We will unapologetically pursue our industrial strategy at home,” National Security Adviser Jake Sullivan said during a speech in April, “but we are unambiguously committed to not leaving our friends behind.”
Westacott described the Inflation Reduction Act as an economic “game-changer” and likened it to a clean energy version of former president Franklin Roosevelt’s New Deal, which sought to bolster the economy after the depression through federal spending, job creation and regulatory reform.
And while countries like Australia and Canada would struggle to attract the same kind of capital, they could nonetheless collaborate on other things, such as more regulatory certainty for businesses, better policy settings and “a realistic approach to developing technologies such as hydrogen, nuclear, and carbon capture and storage,” she argued.
“It’s how we respond to the Inflation Reduction Act that really matters,” she said. “We are going to have to double down on sensible industry policy to drive our comparative advantages and absolutely double down on getting the economic fundamentals right like we have never done before.”
Westacott was speaking at the Australia-Canada Economic Leadership Forum, which brought together about 150 business and political leaders from both countries, including Canadian Prime Minister Justin Trudeau, former Australian foreign affairs minister Julie Bishop, who is now the group’s co-chair, and Australian Attorney General Mark Dreyfus, who used the event to talk up the importance of the Indigenous Voice to parliament.
Canada’s Prime Minister Justin Trudeau speaks at the Australia-Canada Economic Leadership Forum in Toronto on Tuesday.Credit: Bloomberg
The forum seeks to identify areas where the two countries can work more closely on trade, investment, foreign policy and global security, but this was the first time it had been held since February 2020 in Melbourne, days before the world was upended by the global pandemic.
Noting how much had changed since, Trudeau talked up the importance of the partnership between the two countries and pointed to the Critical Minerals Alliance, established at COP15 in Montreal late last year, as evidence of this.
The pact between Canada, Australia, the US, Germany, France, Japan and the UK, commits to mining and developing critical minerals sustainably and in a way that also respects Indigenous rights.
“In the global race to build a net-zero economy, the world is rushing for access to the critical minerals that Australia and Canada have,” Trudeau said.
“But we need to act fast to meet the demand for major projects – everything from critical mineral mining projects, to wind farms that produce hydrogen.”
Westacott said transitioning to clean energy provided huge opportunities but also enormous risk and costs. She also noted that developing nations need reliable and affordable sources of energy, and “telling these countries to decarbonise before they’ve industrialised could become a major tension.”
“Are we going to simply withdraw our existing commodities – gas and coal – and leave rapidly developing countries stranded? They will have no alternative but to seek new markets.”
With 3.5 billion people expected to make up the Asian middle class by the end of the decade, Westacott also called for new multilateral agreements with Indo-Pacific nations.
“Economies in the Indo-Pacific region are expected to grow almost double that of Australia, Canada and the US over the next five years,” she said.
“As these super economies grow, so do the market opportunities for our countries, but on the flip side, they will also be our economic competitors.”
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