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Fresh fight looms on $14bn budget promise

Written by on May 15, 2024

Labor’s multi-billion dollar Future Made in Australia package has been thrown into doubt less than a day after Treasurer Jim Chalmers handed down his budget, with the Coalition signalling it would oppose a central measure.

The government will spend $23bn over the next 10 years to bolster domestic manufacturing and accelerate the path to net zero.

But it’s the $13.7bn in production tax incentives for green hydrogen and processed critical minerals Labor will have the hardest time to make it happen.

It will need to pass legislation to bring its plan to fruition, but the Coalition is so far unimpressed.

Shadow treasurer Angus Taylor said the production tax credits would only deliver “billions for billionaires”, and the Coalition would instead look to support the manufacturing and resources sector through different pathways.

“Frankly, this is not a good use of taxpayers money. This is not how you get manufacturing and resources sectors really firing,” he told ABC Radio.

“Their pathway is government subsidies. Our pathway is fundamentals. 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 is an extraordinary claim to make.”

The Business Council of Australia has warned bipartisanship is necessary for the Future Made in Australia agenda to be effective.

“It will increase our competitiveness,” chief executive Bran Black told ABC Radio.

“We need to see this as the start of some momentum towards genuine change that drives improved fundamentals for investment.”

Mr Taylor said the question should not be whether there would be bipartisanship, but whether it was good policy – which he did not believe Labor had presented.

In his post-budget media blitz on Wednesday morning, Dr Chalmers sought to offer assurances to taxpayer that the $13.7bn in tax credits wouldn’t be wasted.

“(Those credits) will reward businesses who produce the energy of the future to help the world get to global net zero and to create good, secure, well-paid jobs in our local communities,” he told ABC News.

“So by using the tax system by paying on scale and success, we’re making sure that money is not wasted.”

Dr Chalmers said the global transition to net zero was a “golden opportunity” for Australia.

In addition to the tax incentives, the government will spend a further $1.3bn for another round of the hydrogen headstart program to boost “early-mover renewable hydrogen projects”.

Opposition Leader Peter Dutton said there were other ways to support these projects rather than using taxpayers money.

“People like Clive Palmer and Twiggy Forrest are great business people and they know how to milk a weak government and that’s what they’re doing at the moment,” Mr Dutton said.

“I think we’d be better off providing for arrangements and an environment which is conducive to business investment.

“Those projects should be able to stand alone and we support them – but not with taxpayers’ money.”

Independent Wentworth MP Allegra Spender said she is open to the Future Made in Australia plan if “it is done right”.

“I’m open to the Future Made in Australia, I’m looking really carefully at the details,” she told Sky News.

“But the challenge for me will be that the implementation is done right, making sure that there’s a real arms length between the decisions the minister is making.

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“And making sure there are real guardrails around it. This is the work I’ll be doing and interrogating it as it comes forward.”

The budget also earmarked $1.7bn for a new Future Made in Australia innovation fund, for priority sectors such as green metals, low-carbon liquid fuels, and batteries.

The government had also already announced its intention to loan Silicon Valley company PsiQuantum $466m to develop a quantum computer.