Future Made in Australia bill passes Senate to provide tax credits to green hydrogen and minerals, and boost regions

Tax breaks for mining and manufacturing companies will lead to large regions of Australia being reindustrialised with billions of dollars of spending, a federal minister says.

Production tax credits for hydrogen production and critical minerals processing all but passed parliament after the government struck a deal with the Greens on the incentives.

The laws passed the Senate in a late-night sitting on Monday and will now be sent back to the lower house to be rubber stamped.

Hydrogen producers will get a tax incentive of $2 per kilogram of renewable hydrogen produced between 2027/28 and 2039/40, while critical minerals producers will get 10 per cent of processing and refining costs.

Assistant Trade Minister Tim Ayres said the measures would spur production in Australia across a range of industries.

“It’s a smart measure. It’s going to drag through tens of billions of dollars of private investment and reindustrialise our regions and suburbs,” he told ABC Radio on Tuesday.

“It is a core part of diversifying the Australian economy, moving Australian production up the value chain, particularly in the mining sector.”

The tax incentives form part of the federal government’s $22.7 billion Future Made in Australia manufacturing policy, which aims to fund clean energy projects and create jobs for the decarbonisation transition

The Greens added their support after securing an amendment to prevent incentives being offered for uranium mining.

The Business Council of Australia welcomed the laws passing the Senate, saying it would make Australia more competitive in manufacturing.

“Investments like these are important because they help deliver certainty for industry looking to invest here and enable Australia to seize the opportunities driven by the energy transition,” the council said in a statement.

“The final design and administration of the production tax credits … must not be so restrictive or onerous as to undermine their success.”

ACTU president Michele O’Neil said the scheme would help deliver thousands of new jobs.

“Supporting renewables investment has a proven track record in the United States, where Inflation Reduction Act tax credits have channelled more than $370 billion of new investment into clean energy and industrial projects, creating around 330,000 new jobs so far,” she said.

“Australia’s rural and regional communities deserve this economic boost too.”

Australian Workers’ Union national secretary Paul Farrow said the measures would unlock Australia’s potential.

“Australia’s approach to critical minerals and new energy has been constrained by a ‘dig and ship’ mentality, and this bill tips that on its head,” he said.

“This bill finally provides what industry has been crying out for: investment certainty to move beyond raw exports and build up our domestic processing and manufacturing capabilities.”

Source: AAP