Industry policy can help rebuild trust in government

Political trust is a difficult thing to pin down, but at its core, there is a belief that in uncertain times political institutions will provide certainty. It's no accident that when we face external crisis or conflict, the population expects that the government will provide support, security and solutions.

Over generations, voters have learned that the government is powerless to deal with the challenges we are now confronting. Whether it's letting big companies off the hook for their tax bills, failing to implement an emissions trading scheme or continuing to roll out robodebt amidst a class action lawsuit, Australians have been let down by their government again and again.

In the face of a climate emergency, the Morrison government is questioning scientific consensus and sending thoughts and prayers to those affected by an unstable climate, and encouraging them to watch cricket.

Similarly, there is little doubt that the economy is in bad shape. GDP growth is slowing, wage growth is stagnant, and capital investment is low.

Yet the government keeps telling us that good times are just around the corner, consistently forecasting growth that never comes.

The reasons why the response is optimistic but ineffectual is simple: those in power have taken their hands off the wheel of government. They have accepted that the best kind of government is one that doesn't intervene.

It is hard to build trust in a political system that tells you that you're on your own.

To rebuild trust and solve the various problems confronting the nation, the government must act decisively. The good news is that there is a way to address the climate and economic crises and rebuild trust in our political system: industry policy.

Since the 1980s this area of policy has had a bad name. It was seen as a protectionist approach to the economy that picked winners and propped up unsustainable companies.

However, modern industrial strategy is a process of working with willing business partners to deliver mutually beneficial outcomes.

Internationally celebrated economist Mariana Mazzucato describes the best approach to industry and innovation policy as a "mission-oriented" strategy that builds connections between public and private partners around shared national goals.

Rather than picking winners, this approach encourages a collaborative approach to economic development that sets targets for industry growth and works to share the associated benefits. Successful industry policy shows that public institutions matter and make an impact on people's lives. When people can see the government intervening for their benefit, trust is rebuilt.

For example, in the late 1970s and 1980s the United States government actively brought on the computer age through a targeted industrial strategy.

The government established the Small Business Innovation Research program to support small businesses in the growing digital sector. Beneficiaries of this program include digital giants like Compaq, Intel and Hewlett Packard, all of which grew as a direct result of government support.

Similarly, the government instituted a series of public procurement that supported emerging high tech companies modernise governmental operations and invested in research and development funding for universities and government labs working on computer technologies. It was these government labs that produced ARPANet, the predecessor to the internet.

If Australia were to apply the same approach to renewable energy generation and storage, there is a potential to reduce our contribution to climate change and grow our economy - but what would this approach look like in practice?

It would start with an ambitious but achievable renewable energy target. Australia is currently getting 21 per cent of its energy from renewable sources, compared with Germany, which produced 54.5 per cent of its energy from renewables in March. As a consequence, Germany employs approximately 284,000 workers in the renewable energy sector, while Australia only has 17,740 renewable energy jobs.

The next step would be to identify companies that would benefit from government assistance, through seed funding via the Clean Energy Finance Corporation, access to information about the domestic and global market, and connections to local suppliers.

Companies like the Vestas wind turbine factory in Geelong in Victoria or the recently announced lithium processing facility that will be built by Neometals near Kalgoolie in Western Australia would be prime examples.

These companies would act as the hub of an investment strategy that would extend through businesses in the supply chain, distributors and energy retailers.

Each business in this complex economic ecosystem would need specific information and assistance that would be tailored by a national authority, like the already existing Australian Renewable Energy Agency. This body would not only be responsible for the provision of support to companies in this area, but also with enforcement of national priorities in the sector.

Waste management, employment and local content procurement requirements would be set and enforced to ensure that the growth of the sector distributed the benefits back into the community.

Another important area for investment would be in research & development. This funding should be spread through public, private and university sectors to maximize innovation and employment. This step has already been advocated by Opposition innovation spokeswoman Clare O'Neill in a speech hosted by Per Capita last week.

Finally, government procurement and planning laws could be rewritten to require public buildings and institutions utilise this growing sector. Targets for solar panels on the roofs of public buildings, subsidies for public servants to install lithium batteries at home, or requiring all government fleet vehicles be electric and built in Australia.

Not only would this approach substantially reduce our country's carbon footprint, but it would provide secure jobs for Australian workers, show that the government has vision and purpose, and most importantly, it would give people hope in uncertain times.

Now is the time for the government to adopt a mission-oriented industry policy and give Australians a future that they can believe in.