INDUSTRY AID’S $16B BILL - PC; TARIFF WARNING
Industry assistance costing $16 billion, says PC review
Federal government trade and industry budgetary assistance in Australia rose by almost four per cent to more than $16 billion in 2023-24, according to the Productivity Commission (PC). The PC’s Trade and Assistance Review found that the industries that benefited most from this assistance (relative to their share of the economy) were farmers, filmmakers and manufacturers. Filmmakers also benefited from an expanded tax credit, drawing in around three times more assistance than their share of the economy. The PC – the government’s statutory productivity agency – also estimated the government provided more than $127 million in concessional finance. On trade, the PC found that more than 300 “nuisance tariffs” imposed more than $1.3 billion in compliance costs, while collecting just $2 billion in revenue.
PBS not on table for tariff negotiations, says Chalmers
Treasurer Jim Chalmers says Australia’s Pharmaceutical Benefits Scheme (PBS) will not be used as a bargaining chip in any tariff negotiations with the United States. Dr Chalmers was responding to reports that President Trump had proposed tariffs of up to 200 per cent on pharmaceutical imports into the US, in a bid to encourage onshoring of more pharmaceutical companies in the US. The Treasurer said Australia would not weaken the PBS in the interests of American pharmaceutical multinationals. In 2024, Australia exported $A1.9 billion worth of pharmaceutical products (excluding medicaments) to the US. According to the 2025-26 Federal Budget, Australia will spend $21.5 billion on pharmaceutical benefits in the current financial year. Dr Chalmers also played down the potential effect of a reported 50 per cent tariff proposed on copper imported into the US, noting that less than one per cent of Australia’s copper was exported to the US.
RBA cautious on US tariff outcomes
Meanwhile, the Reserve Bank of Australia has warned that international trade policy developments would have an adverse effect on the global economy, posing a threat to domestic spending by households and firms. In its July Monetary Policy Statement, the central bank said the final scope of US tariffs and policy responses by other countries remained unknown. In this context, the RBA Monetary Policy Board voted to keep the cash rate unchanged at 3.85 per cent, citing tight labour market conditions and low productivity. The RBA said it would await further information to confirm that inflation was tracking towards 2.5 per cent on a “sustainable basis”.
PM talks up Chinese tourism, plays down Taiwan threat
Prime Minister Anthony Albanese has opened his visit to China by spruiking Australia as a destination for Chinese tourists. Mr Albanese said pre-Covid Chinese tourism in Australia peaked at 1.4 million people in 2019, partly recovering to just 860,000 people who spent more than $9 billion in 2024. Speaking in Shanghai, the PM also sidestepped the issue of the defence of Taiwan, saying that Australia “supported the status quo”, while not supporting any unilateral action. He said Australia had a stable, orderly, coherent position when it came to international relationships, reinforced by bipartisan support in the nation. China is easily Australia’s largest trading partner, with $196 billion in exports to China in 2024, and $115.6 billion in imports.
US moves to dump subsidies for renewable energy sources
President Donald Trump has moved to end all US government subsidies to renewable energy projects such as wind and solar generation. In an Executive Order, the US President said the proliferation of wind and solar projects displaced affordable, reliable and domestic energy sources, and compromised the electric grid. He said reliance on “so-called ‘green’ subsidies” threatened national security by making the US dependent on supply chains controlled by foreign adversaries. President Trump also ordered the repeal of tax credits for wind, solar and other green energy sources.