The Grattan Institute, a prominent Australian think tank, has issued a stark warning to the Albanese government regarding its approach to industrial policy, cautioning against falling into a "classic industry policy trap" that risks propping up uncompetitive firms and stifling productivity. In an article published in The Australian Financial Review on July 2, 2025, Alison Reeve, Energy and Climate Change Program Director at Grattan, argued that the government's current reactive measures, often in response to financial difficulties at regional industrial facilities like those in Port Pirie or Whyalla, lack the strategic foresight needed for a robust net-zero transition.

Reeve highlighted that while interventionist industry policy is back in vogue globally, driven by inflation, trade tensions, and the urgent need for climate action, Australia's government is "flying blind." She asserts that the government possesses limited information about the operational competitiveness and structural integrity of firms seeking bailouts. This informational deficit leads to "policy on the run," exemplified by the $1 billion green iron fund announced without clear access criteria, green conditions, or allocation mechanisms following GFG's Whyalla plant administration.

To avert this trap, Reeve urged Treasurer Jim Chalmers to activate provisions within the "Future Made in Australia Act," passed last year. This legislation empowers Chalmers to request "sector assessments" from Treasury. These independent reports are designed to provide a comprehensive evidence base, evaluating Australia's competitive potential in a sector, its contribution to an orderly net-zero transformation via renewable energy, and its capacity to enhance economic resilience and security. Crucially, these assessments must also determine if government support would genuinely leverage private sector action and deliver value for money.

Once completed, these sector assessments must be tabled in Parliament, offering transparency and accountability. While not binding, they would equip the government with the "solid knowledge and a form guide" to make informed decisions, moving beyond the decades of subsidies seen in industries like aluminium smelting or car manufacturing. With such data, Chalmers and Industry Minister Tim Ayres could announce "well-structured, strategic industry assistance," attracting international investment and giving promising firms a genuine chance to seize opportunities in the global energy transition. This proactive, evidence-based approach would enable the government to strategically "pick winners" rather than being "picked by losers."