Future Made in Australia: $23bn for ‘biggest transformation since Industrial Revolution’
The Australian government’s $23bn package over the next 10 years to spur domestic manufacturing and speed up the path to net zero is shaping up as the most politically contentious element of the budget.
The government has placed a range of budget measures under the banner “A Future Made in Australia” in a strategy that Labor hopes will boost its standing in key seats in Queensland and Western Australia.
But the opposition has rubbished its central measure – $13.7bn in production tax incentives for green hydrogen and processed critical minerals – as a “handout to billionaires” it cannot support.
The treasurer, Jim Chalmers, said in his budget speech on Tuesday night that the global economy was facing its biggest transformation since the Industrial Revolution.
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“Australian energy can power it, Australian resources can build it, Australia’s regions can drive it, Australian researchers can shape it and Australian workers can thrive in it,” Chalmers told parliament.
“Our $22.7bn Future Made in Australia package will help make us an indispensable part of the global economy.”
In a riposte to critics who have warned against “picking winners” for public funding, Chalmers said the economic transformation was “a golden opportunity for Australia” but “our approach to growth and investment needs to change as well”.
He promised that the government would act with “rigour” and “discipline” in deciding which projects needed public assistance.
“If we hang back, the chance for a new generation of jobs and prosperity will pass us by – and we’ll be poorer and more vulnerable as a consequence,” Chalmers said.
A vast array of projects, including some already announced or under development, have been included in the sweeping package.
It includes an estimated $19.7bn over 10 years under the “renewable energy superpower” banner.
This includes tax incentives for the production of hydrogen and critical minerals from 2027-28. There will be a further $1.3bn for another round of the hydrogen headstart program to boost “early-mover renewable hydrogen projects”.
The budget papers earmark $1.7bn for a new Future Made in Australia innovation fund run by the Australian Renewable Energy Agency, for priority sectors such as green metals, batteries and low-carbon liquid fuels.
The announcement of support for quantum computing in Brisbane comes with a federal price tag of $466m, but this is a mixture of equity and loans.
The government has promised to legislate some of the principles it will follow to decide on support for proposals, although it has yet to publish its proposed Future Made in Australia Act.
The bill is expected to be introduced into parliament during the winter sittings, with the public to be consulted before that.
The shadow treasurer, Angus Taylor, told ABC TV the Coalition supports the manufacturing and minerals processing sectors, but not through subsidies.
Taylor said the opposition had “many questions” about the Future Made in Australia package but it “cannot support billions in handouts to billionaires” in the form of production tax credits.
The government is promising to follow a national interest test, according to whether the industry falls within the categories of “net zero transformation” or “economic resilience and national security”.
“Net zero transformation” will cover industries such as renewable hydrogen, green metals and low-carbon liquid fuels.
The Treasury says industries “may warrant public investment under this stream” if Australia has the chance to develop a “sustained comparative advantage in a net zero global economy”. Public investment would only occur if “needed for the sector to make a significant contribution to emissions reduction at an efficient cost”.
Meanwhile, the second category – “economic resilience and security” – will assist industries such as the processing and refining of critical minerals and the manufacturing of clean energy technologies.
The Treasury suggests that such industries could gain federal support “if some level of domestic capability is necessary or efficient to deliver adequate economic resilience and security, and the private sector would not invest in this capability in the absence of public investment”.
The government will also change the rules “to enable Export Finance Australia to finance domestic projects in the national interest where they are consistent with the Future Made in Australia Framework”.
The release of the budget package, with a heavy emphasis on renewable energy, follows criticism of the government’s gas strategy last week.