The treasurer, Jim Chalmers, will call for incentives for producers of environmentally sustainable critical minerals in a major international speech.
Chalmers will speak to the G20 economic ministers in São Paulo overnight, warning that Australia’s growth in the last quarter was “quite weak” and the soft landing to reduce inflation without a recession is “assumed but not assured”.
With growing concern about the Australian nickel industry due to growing international competition from Indonesian producers, Chalmers argues that “critical minerals industries and supply chains are not reliable enough or sustainable enough”.
“Right now, we don’t have the right market structures to reward global producers that improve their environmental and social footprint,” he says, in an advance copy of the speech.
“We should look to reward sellers that invest in improving the quality and sustainability of critical minerals.”
“This should include consideration of a differentiated international trading market for resources produced to higher [environmental, social and governance] standards.”
The comments appear to leave open international cooperation to impose tariffs on less environmentally sustainable minerals exports, along the lines of the European Union’s carbon tariffs.
In August the climate change and energy minister, Chris Bowen, said his department would begin consulting on whether Australia should adopt a so-called cross-border adjustment mechanism (CBAM) to avoid disadvantaging domestic companies. Steel and cement would be the first two products to be considered.
In his speech to the G20, Chalmers says that “inflation remains our major concern but for most of us the balance of risks in the economy has shifted, is shifting, or will shift before long from inflation to growth”.
Chalmers says that the Australian government expects “growth in next week’s December national accounts to be quite weak”.
This is “the inevitable consequence of global uncertainty, higher interest rates and cost of living pressures”, he says.
“Inflation has moderated substantially in Australia since its peaks in 2022 and the monthly inflation gauge that came out today is further evidence that inflation is moderating in welcome ways – but we’d like it to moderate further and faster.”
On Wednesday the Australian Bureau of Statistics revealed the consumer price index was 3.4% in January, fuelling hopes of interest rate cuts from the current cash rate of 4.35%.
Surveying conditions around the world, Chalmers notes that “global inflation has peaked, issues in the banking system have been well-contained and growth in some major economies like the United States has defied expectations”.
“But since we last met we’ve seen technical recessions confirmed in Japan and the United Kingdom, two good friends and two big and important economies.
“Around a quarter of the G20 has recorded a recession or just narrowly avoided one.
“This is before the lagged effect of the synchronised tightening of monetary policy is fully-felt.”
In a separate G20 speech about inequality, Chalmers argues that the global financial crisis, pandemic and spike in inflation “all risk turbocharging the inequalities and vulnerabilities which threaten our communities and our economies and diminish our politics”.
Chalmers notes “five big shifts” around the world: from hydrocarbons to renewables; from information technology to artificial intelligence; from younger populations to older; the changing composition of our industrial bases; and from globalisation to fragmentation.
Chalmers argues governments must do “everything we can to ensure our people are the beneficiaries of this change rather than victims of change” including by allowing people to “earn more and keep more of what they earn”.
“Our agenda needs to be middle-out and bottom-up, not top-down.”
On Tuesday evening the Australian parliament passed Labor’s $359bn tax cut package, delivering bigger savings to low and middle-income earners earning less than $146,486.
