Labor’s Made in Australia agenda at risk as Coalition signals it will oppose tax credits
The centrepiece of Labor’s Future Made in Australia agenda - $13.7bn in tax credits for green hydrogen and critical minerals - faces a parliamentary impasse.
The centrepiece of Labor’s Future Made in Australia agenda - the $13.7bn in production tax credits for green hydrogen and critical minerals - faces a parliamentary impasse, with the Coalition signalling its opposition and the Greens refusing to extend their support.
Greens Leader Adam Bandt on Wednesday said the minor party would look at the legislation when it was introduced to parliament, but said there would be no free pass for Labor. He branded the government “climate frauds”.
Mr Bandt said the green hydrogen and critical minerals production tax credits – both of which will require legislation – could not be judged in isolation, but needed to be viewed as part of a broader package alongside Labor’s commitment to fossil fuels.
The comments come after Labor last week committed to keep gas as a key part of the energy mix beyond 2050 when Australia is due to meet its net zero climate target – an ambition which the Greens warned could put the government’s legislative agenda at risk.
“Labor’s Future Made in Australia is a future for more coal and gas,” Mr Bandt said. “Labor may put up in lights their plan to back green hydrogen – but what they are really doing in reality is backing gas and coal.”
“Labor has to make a choice,” he said. “We will have a look at measures Labor puts to parliament. But we will look at it as a package. If Labor wants, on Monday, to pass legislation to expand the green economy but, on Tuesday, open up new coal and gas mines to run past 2050, then we’re not going to have a bar of it.”
“They’ve got their foot on the accelerator and the brake at the same time. We can’t grow the green economy and jobs in the green economy if Labor is also expanding coal and gas to run past 2050. It’s time for these climate frauds in Labor to pick a lane.”
Less than 24 hours after handing down his third budget, Jim Chalmers’ flagship Made in Australia agenda was thrown into doubt with Opposition treasury spokesman Angus Taylor signalling the Coalition will oppose $13.7bn in tax credits for green hydrogen and critical minerals.
Speaking on ABC radio, Mr Taylor said that the Opposition believed in the manufacturing and resources sector but rejected Labor’s Future Made in Australia agenda. He said the Coalition saw a “different pathway” from government subsidies.
“Our pathway is fundamentals,” he said. “This is the most competitive sector, one of the strongest sectors in Australia. To say the only way it’s going to survive is government subsidies – you know that is an extraordinary claim to make.”
Mr Taylor said the $13.7bn in production tax credits would only deliver “billions for billionaires.”
“We think (this) is bad policy. A bad idea. It will be inflationary. It is not the right time to do it. It is not the right approach to take,” he said.
Dr Chalmers confirmed on Tuesday that the government would need to pass legislation to implement its proposed production tax credits for both green hydrogen and critical minerals.
Business Council of Australia chief executive Bran Black earlier told ABC radio that bipartisan support was needed for the Made in Australia agenda to be effective.
‘It will increase our competitiveness,” Mr Black said. “We need to see this as the start of some momentum towards genuine change that drives improved fundamentals for investment.”
Mr Black said Australia needed to support industries in which it had a comparative advantage, including in green hydrogen and critical minerals. But he said it was important not to prop-up industries in which Australia had no comparative advantage.
“It’s that, kind of, goldilocks investment of getting it just right so that you are supporting something to get off the ground a little bit faster. But you really need to get the fundamentals right,” he said.
“We think it’s important to have bipartisan support with respect to industry policy more broadly,” Mr Black said.
But Mr Taylor said the question of bipartisan support was not the right one.
“That doesn’t make it right,” he said. “So the question is whether this policy is right. And, having worked in those sectors for many, many years before politics, the thing I learned more than anything is you’ve got to get the fundamentals right. You’ve got to make sure you’ve got more energy supply coming in to give you those low energy prices. You’ve got to make sure you get approvals done in a timely way.”
Made in Australia agenda to cost $22.7bn over the decade
Taxpayers will plough $22.7bn over 10 years into the Future Made in Australia agenda to help unlock greater private investment across at least five priority areas, with Dr Chalmers saying Australia must capitalise on the global shift to net zero while becoming a more resilient economy.
The Future Made in Australia agenda – costing $3.8bn over the forwards – will require at least two tranches of legislation alongside the introduction of a “national interest framework” to help guide investment into priority areas that contribute to the net zero transformation.
Conditions will be put in place to ensure investors who benefit from new incentives give back to their local communities, with the Treasurer saying the package would make Australia an “indispensable part of the global economy.”
A new investment “front door” will be created to accelerate major projects and streamline environmental, planing, cultural heritage and foreign investment approvals – a measure aimed at attracting more global capital into Australia.
Private sector investment will initially be targeted across five priority industries including renewable hydrogen, critical minerals processing, green metals, low carbon liquid fuels and clean energy manufacturing – including battery and solar panel supply chains.
The ambitious budget package, which Dr Chalmers said was part of an effort to “forge a new economy,” includes $19.7bn over 10 years from 2024–25 to accelerate investment across the five priority areas. Of this, $13.7bn over the decade will go towards production tax credits for both green hydrogen and critical minerals.
The hydrogen incentive will cost $6.7bn over the medium term and will make the nation’s pipeline of hydrogen projects commercial sooner. The critical minerals incentive will cost $7bn over the medium term, with Dr Chalmers confirming that both would require legislation.
Resources Minister Madeleine King said the critical minerals scheme – estimated to cost a total of $17.6bn over the life of the program out to 2040-41 – represented the most “significant investment” in the sector ever made by a federal government.
Labor is also allocating $566.1m over the decade to map Australia’s geological groundwater systems and resource endowments, a cost that will grow to $3.4bn over the program’s 35-year life.
Dr Chalmers said the Future Made in Australia agenda was aimed at bringing new jobs online and tapping the potential of the regions as the world underwent the “biggest transformation since the industrial revolution.”
He said it would attract investment in key industries, transform Australia into a renewable energy superpower, strengthen defence capabilities and economic security, support small businesses and reform tertiary education.
Other key measures in the package include $1.7bn to create a Future Made in Australia Innovation Fund to support the commercialisation and demonstration net zero projects. The Australian Renewable Energy Agency will also receive $1.5bn over seven years from 2027–28 to supercharge “core investments in renewable energy.”
An additional $1.3bn will be provided over 10 years from 2024–25 for an additional round of the Hydrogen Headstart program while $1.4bn will go towards strengthening battery and solar panel supply chains.
The budget said that $466.4m would be provided in the form of equity and loans to US-based company PsiQuantum to support the construction of quantum computing capabilities in Brisbane as part of a joint investment with the Queensland government.
“We know the global energy transformation represents a golden opportunity for Australia,” Dr Chalmers said.
“The world is changing, the pace of that change is accelerating, and our approach to growth and investment needs to change.”
“If we hang back, the chance for a new generation of jobs and prosperity will pass us by.”
The Treasurer said the new “national interest framework” would seek to impose rigour on government decision making. Under the new framework, priority industries will be identified under two streams.
First, the “net zero transformation” stream for industries that can help Australia reach its net zero target and in which the nation has an enduring comparative advantage. And, second, the “economic security and resilience” stream for industries critical to building Australia’s resilience and which are vulnerable to supply disruptions
Given the pace of technological change, the government will regularly review the list of priority industries it is targeting to ensure taxpayer-funded support remains fit for purpose.
As part of the shake-up to the investment framework, $134.2m will be spent on fast-tracking approvals for major renewable energy projects. The government is also putting $15.7m towards the delivery of a more transparent approach to foreign investment and committing $17.3m to mobilise more finance into “sustainable” activities.
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