Why is the ETU fighting hard for an Australian Inflation Reduction Act?

Twelve months ago the USA passed the Inflation Reduction Act (IRA), and since then the ETU has been fighting hard for an Australian equivalent. Coming in at an estimated $1.2 trillion, the IRA is the single biggest piece of energy policy in world history. And if we don’t respond, we’ll be left in the dust.

The scale of IRA is truly massive. Covering everything from building renewable generation, transmission, electrification incentives, climate adaptation money, environmental justice grants, climate smart agriculture, electric vehicle and charging station rollouts – there’s simply no way of summarising everything that this spending bill does. But what truly sets IRA apart is that rather than demonising workers and communities – it actually invests in them. This is no mere corporate handout, but a carefully crafted piece of legislation designed to actually raise workers’ pay and create buy-in for regions.

Key to IRA is that the easiest way for companies to claim the maximum tax deduction for a project is if they have a union agreement. So instead of governments attacking unions and undermining collective bargaining, the US is now incentivising bosses to negotiate with workers and their representatives.

And this is the critical piece for Australia. We can’t, and shouldn’t, just cut and paste from America. But we do need ambitious energy policy that puts workers on centre stage. Over the coming decades, Australia’s electrical workforce – ETU members – are absolutely critical. So if we’re going to get this job done, we need government to back good, union jobs and union apprenticeships that deliver for our communities.

What are the results from IRA so far?

  • The IRA’s clean energy and climate provisions have created over an estimated 170,000 clean energy jobs and the law is projected to create more than 1.5 million additional jobs over the next decade.
  • The IRA is very pro-union, and includes strong labour provisions and incentives to ensure these new clean energy jobs will lead to careers that will truly sustain workers and their families. It includes incentives for good union jobs, and opportunities for apprentices, among other benefits for workers.
  • The private sector has announced more than $110 billion in new clean energy manufacturing investments, including more than $70 billion in the electric vehicle (EV) supply chain and more than $10 billion in solar manufacturing.
  • Project developers have also planned investments worth at least $122 billion across more than 800 clean energy generation projects—including wind, solar, battery storage, nuclear, hydroelectricity, biomass, and geothermal projects—totalling over 80 gigawatts (GW), enough to power 13.7 million homes for a year.
  • IRA and other laws are expected to reduce greenhouse gas emissions by approximately 1 billion tons in 2030, protecting the US community from some of the effects of climate change.
  • American families are projected to save $27-38 billion on their electricity bills from 2022-2030 relative to a scenario without the Inflation Reduction Act

What could we achieve with our own version?

The IRA is a fantastic and essential investment, but Australian has the capacity to do even better. No country has greater potential for renewable energy. We have critical minerals, lots of space, sunshine and wind, and a highly skilled workforce to power the transition to net zero. We also currently have a pro-union Labor government in power federally and in most states and territories, who have a history of introducing more ambitious climate policy than any Liberal government. But all too often, renewables have become a dirty word, characterised by shit employment conditions, no investment in skills, and no job security.

Internationally-renowned founder of US Climate and energy podcast Volts David Roberts visited Australia recently at the Union’s invitation to speak about why Australia needs its own version of the IRA, and what we can do better than the US. Speaking to politicians, media and those in the renewable energy space, David’s message was that ‘you have to spend money to make money’, and that Australia must invest in its future and actively shape its place in the growing net-zero economy. We can improve on the US’ legislation by including a combination of regulation and standards with incentives, rather than just incentives, to form a more powerful Act.

We have to understand that this is an industrial revolution that we’re living through. The first industrial revolution was when we transitioned to steam power in the 1800s, now were transitioning again. We need to make sure that, for workers, this transition doesn’t look like the last. Instead, we need Government to seize what is a singular opportunity to bring down the cost of living for working people and lower and middle income families in our country, and deliver on a union jobs agenda.

What if we don’t create our own?

The global race to net zero is underway and markets and supply chains that will grow to dominate the 21st century are right now being formed. IRA marked America’s realization that national security, economic security, and trade policy are closely related and that to defend its interests the US needed to plan and act, not simply sit back and hope the market provides.

For example, while the US, the EU, and Australia pursued austerity in the 2010s, China was getting a head start investing in the clean energy technologies of the future. Now it dominates battery, EV, and solar supply chains.

Now, if Australia doesn’t respond in a big way to the IRA with its own big investment and legislation package, then we will simply get left behind, losing our chance to actively shape our place in the growing net-zero economy. Australia needs to imagine its future in that economy – what it can contribute, the industries and good union jobs and innovations it wants to claim for itself – and pass ambitious policy to pursue that vision. 

What’s next?

The ETU successfully led a motion at the ALP Conference on an ‘Australian Industry Policy’ which includes similar commitments to the IRA.

Australian Industry Policy

A commitment to investing 2-3% of GDP (AUD $54-78B/ USD$35-51B) towards the transformation of Australia’s economy towards renewable energy, clean industry, and good quality union jobs. This is a similar investment percentage of GDP to the US, Europe and Canada.

 The final Statement in Detail also binds the party to:

  • Prioritise use of local workers and locally produced inputs in government funded projects.
  • Support and facilitate the expansion of public ownership in critical industries.
  • Assist households to save on energy with efficient appliances and cheap electricity.
  • Revitalise VET to make highly skilled opportunities more accessible.
  • Deploy new industries strategically to support transitioning energy workers.

The motion was backed by Minister Chris Bowen, who said the US Inflation Reduction Act, passed by congress a year ago, was the most important environmental legislation in a generation.

“The Inflation Reduction Act is the most significant development for climate in our living memory, probably more consequential than the Paris Accord,” Mr Bowen said.

“An investment like the Inflation Reduction Act doesn’t just change the country, it will change the planet,” said ETU National Secretary Michael Wright.

“It invests in workers, the climate, a thriving economy and cheaper, more predictable power prices. In the renewable energy future, electrical workers – ETU members – will play a pivotal role, with essential skills in rewiring, rebuilding and electrifying our nation.

“What these industries and jobs look like is influenced by politics on a state, federal and international level. The ETU is proud to be pushing our members needs to the forefront of the conversation on government investment in renewable energy.  We’re here fighting to uphold and strengthen the rights, wages and conditions of our members from the grassroots to the world stage,” he said.

Hear more about the US Inflation Reduction Act from David Roberts and what Australia could do better here:

Energy Insiders Podcast: What Australia can learn from Uncle IRA

A Rational Fear/The greatest Moral Podcast of our generation

Renewable energy on the table at ALP’s national conference

Can Australia match the US’s net zero acceleration bill?

How I learned to stop worrying and love Biden’s IRA

This article was publised on 29 August 2023.