Developing new economic edges to sustain our competitiveness

The reality is that Australia's national power is in relative decline. Countries to our north are growing faster than us, and from a larger demographic base. They are quickly bridging the gaps in wealth and income that long defined our respective economic conditions.

To be clear, our neighbours' growth is a welcome development. Flourishing economies across the region have lifted millions out of poverty, empowering many to enjoy secure and thriving livelihoods. Australia will continue to support this transition as a valued and high-impact development partner. Indeed, we will increase our contributions in this regard.

At the same time, our slipping economic standing correspondingly weakens our ability to shape the world around us. Influence, after all, costs resources. And our resources are diminishing in relative terms.

In this context, Australia must develop new economic edges to sustain our competitiveness. Before long looms the expiry date of our old comparative advantages. Demand for coal and gas is in slow but terminal decline. To maintain our favourable position, we must build up new strengths—through investment, innovation, and other incentives.

In that vein, the strategy sets out a number of policies aimed at growing new industries and exports that will ballast our economic standing:

Position Australia as a renewable energy export superpower. With our vast solar and wind resources, Australia has all the ingredients to become one of the most energy-rich nations in the coming economic order. Our renewable potential is great enough to power the region's economy, and our own many times over. To seize the opportunity, we will work to harness these abundant resources, at scale, and convert them into green hydrogen and clean electricity (exported via subsea cables). We will leverage all available incentives, including significant public investment, to accelerate the growth of these industries into dominant export sectors. Further, we will lead regional diplomatic efforts to develop the standards and policy architecture needed to unlock large-scale renewable energy trading.

Become a leader in green production methods. Green steel and aluminium stand out as examples of emerging industrial processes that Australia is well-positioned to dominate. Australia will therefore direct increased funding under the Modern Manufacturing Initiative to support the expansion and clean electrification of aluminium and steelmaking in Australia. We will further ensure that guarantee of origin schemes cover Australian-made green metals for the purposes of emissions trading and navigating carbon border adjustment mechanisms.

Seize new resource-sector opportunities. Given the eventual tapering of demand for our coal and natural gas, we will endeavour to help the industry seize and scale similarly high-value opportunities in critical minerals mining and processing. Beyond financing under the existing Critical Minerals Facility, we will explore CSIRO-recommended incentives such as production and R&D hubs, which yield co-location advantages; local content quotas, tying R&D investment to local manufacturing, and other measures that boost demand for Australian-mined products; and long-term off-take agreements that help mid-tier Australian miners access external capital for new projects.

Level up in clean energy supply chains. Our abundance of lithium, rare earth elements, and high-grade silica—the primary input to polysilicon—endow us with the upstream basis of a vertically integrated battery and solar PV manufacturing industry. Alongside the latter as targets for industrial development, Australia will invest in and cultivate an indigenous High-Voltage Direct Current cable manufacturing capability. Australian-made subsea cables would help supply the prospective connection projects, advocated earlier, that export clean electricity to our near-neighbours. Our cables would also find strong export markets in the many regional states, like Vietnam and South Korea, planning to scale offshore wind.

Strengthen Australia's research base. Innovation must undergird our competitiveness in the coming decades. Australia will aim to boost its R&D capabilities through increased university funding and the creation of new ARC Centres of Excellence; stricter public investment conditions that prevent the commercialisation of Australian IP offshore; and return-on-equity arrangements that incentivise more strategic and aggressive public investment in promising innovations.