Labor’s Bitter Industrial Harvest

Australia is now beginning to harvest the poisoned fruit of the Albanese Government's policy agenda. Just look at what has happened over the past few weeks.

Labor sold Net Zero with promises of cheaper power, new industries, and a manufacturing revival. What Australians are seeing instead is billions in subsidies to keep major industrial plants operating, the collapse of grand hydrogen ambitions, steelmaking jobs disappearing, and Australian manufacturers and retailers falling into administration.

TOMAGO: FROM INDUSTRIAL JEWEL TO SUBSIDISED SURVIVAL

Tomago Aluminium was a genuine Australian industrial jewel. It is Australia's largest aluminium smelter, producing roughly 40 percent of the nation's aluminium, directly employing more than 1,000 people and supporting thousands more jobs throughout the Hunter.

But aluminium smelting has one uncompromising requirement: enormous quantities of reliable, competitively priced electricity — 24 hours a day, 365 days a year.

Electricity accounts for more than 40 percent of Tomago's production costs. Historically, one of Tomago's great competitive advantages (necessary for its ongoing survival) was its location near the Hunter Valley coalfields and large coal-fired power stations capable of supplying continuous low-cost electricity.

An aluminium smelter is essentially a giant continuously operating electrochemical furnace. Electricity does not merely run the machinery; it drives the chemical reaction that produces aluminium and provides the heat needed to keep the contents of the smelting pots molten.

When the power stops, electrolysis stops. The heating stops. The molten bath begins cooling. Eventually, the pots freeze.

Tomago has previously said it can deliberately take a potline offline for around an hour, but the longer the interruption continues, the greater the risk of being unable to restart it. A prolonged interruption can cause the molten material to solidify inside the cells.

And a frozen potline cannot simply be switched back on the following morning. It's completely stuffed. Tomago has previously estimated that rebuilding a completely frozen potline could cost more than $100 million and take up to a year.

This is the fundamental problem policymakers must confront when attempting to run an aluminium smelter increasingly from weather-dependent generation: wind and solar output must be backed by enough storage, dispatchable generation, transmission, and other firming capacity to guarantee the continuous supply the smelter requires. The maths doesn't add up.

Now taxpayers are being asked to underwrite the consequences.

The Albanese and Minns governments have announced a joint $2.5 billion taxpayer-funded package to keep Tomago operational. Labor's policies have turned Tomago, a wealth-creating asset, into a parasite, subsidised to the tune of $2 million per worker.   

For taxpayers, that raises an obvious question: if the new electricity system is supposed to deliver cheaper, more competitive energy, why does one of Australia's great industrial enterprises require billions of dollars in government support to remain commercially viable?

A subsidy may keep the plant operating. It does not, by itself, solve the underlying question of whether Australia can once again supply energy-intensive industry with internationally competitive, reliable electricity.

WHYALLA: THE HYDROGEN DREAM MEETS INDUSTRIAL REALITY

Then there is Whyalla. For years, Australians were promised a new era of "green" steel and hydrogen-powered industry. Governments committed enormous sums of public money to that vision.

Now the 60-year-old Whyalla blast furnace has been permanently shut down. Five hundred steelworks employees and another 100 labour-hire workers are losing their jobs.

Whatever happens to Whyalla from here, those losses are real. The contrast between the political rhetoric and the industrial reality could hardly be starker. Governments promised a new generation of green industrial jobs. Instead, Whyalla is facing a period without primary steelmaking while workers and their families pay the immediate price.

AND IT ISN'T JUST THE INDUSTRIAL GIANTS

The pressure is not confined to aluminium and steel. Australian Off Road, a long-established Sunshine Coast caravan manufacturer, entered administration in September amid intense competition from imports and rising domestic costs. Network RV had already collapsed.

Australian manufacturers operate in an international marketplace. Energy, wages, finance, regulation, taxation, and compliance all ultimately find their way into the price of the finished product.

Political slogans cannot repeal arithmetic. If producing something in Australia becomes substantially more expensive than importing it, eventually, customers choose the cheaper product. Margins disappear. Investment stops. Businesses close. Workers lose their jobs and, in many cases, owners lose businesses they spent decades building.

A "Future Made in Australia" cannot be created by a press release. Australia must actually be a competitive place in which to make things.

THE RETAIL WARNING

The warning signs are appearing in retail as well. Cue Clothing, founded in 1968 and operating Cue and Veronika Maine, entered receivership in September. Its receivers said that improved sales were insufficient to overcome the company's overhead costs.

Australian households have endured years of pressure on real disposable incomes and household budgets. When families have less purchasing power after housing, energy, insurance, and other essential expenses, discretionary retailers inevitably feel the squeeze.

NOW THE LABOUR MARKET IS FLASHING RED

For a time, weakness in parts of the private economy has coincided with rapid growth in public-sector employment, and that has masked the damage Albanese has been doing.

But the latest unemployment figures deserve attention. When Labor came to office in May 2022, the ABS recorded 548,100 unemployed Australians and an unemployment rate of 3.9 percent.

The latest ABS figures for August 2026 record 722,900 unemployed Australians and an unemployment rate of 4.6 percent. That is 174,800 more Australians unemployed than in May 2022.

You could almost fill the MCG twice over with the number of extra Australians who have become unemployed since Albanese came to power. It is another warning sign in an economy already struggling with weak productivity and sustained pressure on household living standards.

AND AUSTRALIANS ARE GETTING POORER

This is ultimately the test that matters. Headline GDP can grow because the population grows. But Australians do not experience the economy as an aggregate GDP statistic. What matters to living standards is what happens per person — to productivity, real incomes, and purchasing power.

Australia has endured an extended period of weak GDP per capita and poor productivity growth. Rapid population growth can make the aggregate economy larger while doing little to improve the economic position of the individual Australian.

That is why the debate should no longer be about announcements, targets, or political slogans.

Look at the factories. Look at the smelters. Look at the steelworks. Look at the businesses entering administration. Look at productivity. Look at GDP per person. And look at unemployment.

Governments can subsidise individual plants, announce billion-dollar funds, and promise industries that may exist decades from now. But eventually every economic policy confronts the same test: does Australia remain a competitive country in which businesses can invest, manufacture, employ people, and create wealth without depending upon permanent taxpayer support?

The poisoned fruit does not appear overnight. It ripens slowly. But Australians are beginning to see the bitter harvest.

“The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy.”
― Henry Hazlitt