More than $10 billion to boost fuel supplies and emergency stockpiles<\/a><\/p>\nMore than $10 billion will be spent bolstering Australia’s fuel security, as the federal government attempts to shield the nation from the long-term consequences of the Iran war.\u00a0<\/p>\n
The plan will see, for the first time, a government-owned stockpile of diesel and jet fuel built up over the next four years, at a cost of $3.2 billion. That’s on top of an increased mandatory stockpile held by the industry, giving Australia a total reserve of 50 days of fuel.<\/p>\n
Another $7.5 billion in loans and guarantees will help secure more shipments of fuel and fertiliser.<\/p>\n
This package will “ensure energy sovereignty”, said the prime minister, in something of an overstatement.<\/p>\n
Even with a 50-day stockpile, Australia will hardly have energy sovereignty.<\/p>\n
Treasurer Jim Chalmers stated himself this week, the economy is being “absolutely pummelled” by this war.<\/p>\n
Australians are “hostage” to decisions being made in Washington and Tehran, he said.<\/p>\n
The dependence on fuel imports won’t suddenly disappear.<\/p>\n
Still, this is a major funding commitment.<\/p>\n
Much of the $10 billion will presumably sit “off budget” (we’ll find out on budget night), but it’s a big government spend, nonetheless.<\/p>\n
It’s more than the $8.5 billion bulk-billing plan that formed the centrepiece of the Albanese government’s re-election campaign last year. More than the $3 billion in student debt relief the government still talks about. More than the $2 billion aged care reforms.<\/p>\n
Loading…A trend towards intervention<\/p>\n
It’s clear whatever this unpredictable US president says, the Albanese government isn’t expecting a return to normal oil flows any time soon.<\/p>\n
Instead, it’s betting taxpayers will be comfortable forking out $10 billion to improve fuel “resilience”.<\/p>\n
“It’s too little, too late,” said Angus Taylor, suggesting the opposition wanted a bigger package.<\/p>\n
But there’s an important note of difference between the two sides of politics.<\/p>\n
Taylor isn’t comfortable with the government holding its own fuel reserve. “They’re going to compete in the market with the private sector,” he warned.<\/p>\n
The opposition leader announced his own plan last week for a 60-day fuel stockpile, at a cost to taxpayers of a mere $800 million. Fuel companies would instead pick up most of the tab, passing on a small increase in pump prices to motorists.<\/p>\n
It’s an example of the different ideological approaches to what is now a bipartisan aim to boost sovereign capability and self-sufficiency.<\/p>\n
Labor is willing to use the government’s balance sheet to directly intervene. Whether it’s funding a bigger fuel stockpile or propping up what it deems to be critical industries, there’s no hesitation in stepping into the market.<\/p>\n
Billions have already gone into keeping steelworks, aluminium, copper and lead smelters going. Billions more have been invested in clean energy, grid upgrades, and decarbonisation of heavy industries.<\/p>\n
Expect much more of this on budget night, under the banner of “sovereignty”, “resilience”, and a “Future Made in Australia”. It’s in line with a global trend towards greater government intervention.<\/p>\n
Loading…A test for government and opposition<\/p>\n
The Coalition, by contrast, wants to scrap many of these off-budget funds, particularly for clean energy. It argues this spending is only adding to higher debt and inflation. Greater economic resilience, the opposition contends, can be achieved by simply lowering power prices.<\/p>\n
Beyond pledging to scrap climate targets, however, former Liberal leader Sussan Ley struggled to explain how exactly power prices would come down. Taylor is yet to offer any greater clarity.<\/p>\n
If Tuesday’s budget is a big test for the government amidst a global economic shock, Thursday’s budget reply will be an equally big test for Taylor.<\/p>\n
The Coalition is already being pressed on what it would do about changes to property tax breaks in the budget. Labor’s push for greater “sovereignty” and “resilience” may also put Taylor in a jam.<\/p>\n
His instinct is to reject government intervention in the market. But polls show at a time of heightened global uncertainty, voters clearly want Australia making more stuff here. There appears to be a willingness to pay a higher premium to insure against global shocks.<\/p>\n
Even if Trump seals a deal with Iran in the coming days, re-opens the strait and announces a victory parade, the government’s course is set.<\/p>\n
The $10 billion “Fuel Security and Resilience” package is an example of Labor’s “sovereignty” plan in practice. And the bill that comes with it.<\/p>\n
David Speers is national political lead and host of Insiders, which airs on ABC TV at 9am on Sunday or on iview.<\/p>\n
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