The Productivity Commission is challenging a foundation of the Albanese Government’s Future Made in Australia agenda, arguing Treasury is inappropriately using an oft-cited economic theory as grounds for interventionist industry policy.
Treasury has identified renewable hydrogen, green metals, and low carbon liquid fuels as priorities for industry development on the basis these sectors “are expected to have an enduring comparative advantage”.
But the latest Productivity Commission (PC) report, released on Wednesday evening, argues that existing tools for identifying comparative advantage rely on historical data, meaning it is difficult to make predictions about future comparative advantage with enough confidence to base effective policy on.
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