Phillip Thompson (Herbert, Liberal National Party, Shadow Assistant Minister for Defence) Share this | Link to this | Hansard source

The coalition will be opposing this bill. Labor's Future Made in Australia policy is about building bureaucracies not businesses. The only thing Labor is making in Australia is more inflation. With inflation rising in Australia and around the world it is time to restore the budget to a more sustainable footing. Australia's economy has gone from leading the world under the coalition to trailing the world under Labor. We are at the back of the pack on interest rates, on inflation, on productivity and on growth.

The coalition will not support this bill, which subsidises businesses for the costs of Labor's bad policies on workplace relations, on environmental approvals, on the safeguard mechanism and on company tax. The best cost-of-doing-business relief Australians could hope for is a change in government.

With regard to production tax credits, this policy does not deliver widespread tax relief. Indeed, it will not provide a cent of tax relief to businesses for years and it costs billions of dollars into the 2040s. Labor's own impact analysis shows that just to apply for these tax credits will cost $100,000 in the first year and hundreds of thousands of dollars in annual costs over the duration of their operation. Just to receive these tax credits, a business has to jump through significant red tape with government, with the Clean Energy Regulator, with the department of industry and with ARENA, and that's before you even get to the tax office.

In addition, businesses seeking to access these credits will be hostage to the same community benefits principles that are embedded in Labor's entire Future Made in Australia plan. What are these? We don't know. The Treasurer will make them up via regulation, but we have heard warnings loud and clear about what these mean. We've seen it in state Labor governments: it's a back door for the CFMEU. Under this policy, if there is no union agreement, there is no tax credit. This is not good policy. This legislation doubles down on the first Future Made in Australia Act by putting the Treasurer and his department in the position to decide whether a sector of the Australian economy deserves investment.

The Treasurer, who has never run a business and has described his private sector career as 'six long, long months', will now be setting the conditions for businesses to operate and will be seeking funding under this plan. Departments will consider the investment against a very narrow set of criteria and have provided evidence to Senate estimates that key investments for Australia's energy future and sovereign capability—be they carbon capture and storage, gas, blue hydrogen, uranium or nuclear—will not be eligible and have not been considered as part of the Future Made in Australia policy. This is not the way to build a healthy and productive economy. The Business Council of Australia has warned that these procurement rules are at risk of enabling this behaviour, while they risk subsidising businesses Australia would never have comparative advantage in. The BCA has also been clear that this is not the best path ahead. The best path is to get back to basics and get the fundamentals right.

Labor's second-term economic plan is unravelling. This is Labor's second-term economic agenda and it is going about as well as it's first-term economic plan. The Productivity Commission says a $1 billion commitment to make more solar panels in Australia under Anthony Albanese's Future Made in Australia program should be retrospectively subjected to a tougher national interest framework test. Allowing sectors to bypass the National Interest Framework process would undermine its role in disciplining spending, yet Labor are already breaking their own rules when it suits them. Key elements of Labor's Future Made in Australia agenda, including the PsiQuantum contract, bypass the National Interest Framework and sector assessments. There are serious questions to answer about the decision to make this investment, with it becoming increasingly clear that Minister Husic decided to invest in this business independently of any departmental appraisal, analysis or recommendation.

The coalition is not the only one raising concerns with Labor's economic plan. Danielle Wood, productivity commissioner and the government's key economic advisor appointed by the Treasurer, Jim Chalmers, has said:

If we are supporting industries that don't have long-term competitive advantage, that can be an ongoing cost. It diverts resources, that's workers and capital, away from other parts of the economy where they might generate high value uses.

We risk creating a class of businesses that is reliant on government subsidies, and that can be very effective in coming back for more.

…   …   …

Your infants grow up, they turn into very hungry teenagers and it's kind of hard to turn off the tap.

When asked whether Future Made in Australia contained tax reform, Ms Wood explicitly said that it is not tax reform. On alternative policies, including lowering of the corporate tax rate, Ms Wood offered that it would make us more internationally competitive.

Danielle Wood is not alone, with former Productivity Commission chairman Mr Gary Banks describing FMIA as a 'fool's errand' that risks repeating mistakes of the past by propping up political favourites. Indeed, he said:

Seeking to obtain benefits to society through subsidies for particular firms or industries, including in the form of tax concessions, has proven a fool's errand, particularly where the competitive fundamentals are lacking.

Mr Banks likened the scheme to Hotel California, saying many will enter program but few will ever leave. In response to this, the Prime Minister called Mr Banks a flat-earther. Another eminent economist, Professor Richard Holden, defended Mr Banks, saying that the Prime Minister's insult was wrong and uncalled for. Steven Hamilton, an independent economist, has said:

There are many problems with industry policy, and this is a big one. It's why I tend to favour more neutral investment incentives like a lower corporate tax rate or accelerated depreciation. I thought we'd learned these lessons, but apparently not. The bad old days are back.

Australians want and deserve something better. The coalition, in government, will do three things. We will steer our nation out of our current domestic crisis. We will not simply talk about the challenges of our time; we will meet them head-on with action to carve out a more secure future. Most importantly, we will make the decisions that set up our nation for success for generations to come. The coalition is working to ensure Australia can play to its strengths.

We are looking to build a nation which is a mining, manufacturing and agricultural powerhouse and a leader in technology—and of innovation. We are seeking to help build a nation where the tax contributions from surging industries help us to build the infrastructure of the future and sustain our safety net, our health system and our aged-care system.

We want Australia to be a place where homeownership is possible for every Australian. We want Australia to be a place where the ability to buy a house is not something within the reach of a few who can rely on the bank of mum and dad, but something assured for the hardworking many. This requires strong economic management. That's why a Dutton led coalition will get Australia back on track by delivering a back-to-basics economic agenda. That is how we will restore our standard of living and ensure future prosperity.

We will get our economy back to basics by fighting high prices and interest rates first. We will then wind back regulatory roadblocks, boost productivity and deliver lower, simpler and fairer taxes. We will also stand up for consumers, small businesses and farmers by delivering stronger penalties for anticompetitive behaviour in the supermarket and hardware sectors. We will support Australians to build businesses, not bureaucracies. We will ensure that Australians have more affordable and reliable energy by rejecting the government's reckless renewables-only approach.

We will restore the dream of homeownership and unlock up to 500,000 homes by investing in shovel-ready infrastructure that will enable homes to be delivered faster. We will reduce migration and place a two-year ban on foreign investors buying existing homes. We will tackle union corruption that is continuing to drive up building costs, and we will take action to make our communities safer, including online. A Dutton led coalition will get Australia back on track.

Madeleine King (Brand, Australian Labor Party, Minister for Northern Australia) Share this | Link to this | Hansard source

I'm really proud today to speak on the Future Made in Australia (Production Tax Credits and Other Measures) Bill 2024, as introduced by the Treasurer. It's remarkable to see how engaged the shadow Treasurer is with this very important piece of legislation, as he clearly wasn't able to make it tonight. It's only 10 past seven in the main chamber here in the Commonwealth of Australia, yet the shadow Treasurer is not here to deliver the shadow Treasurer's comments on this important bill. I thank the member for Herbert for his contribution. He's drawn a few long bows in that contribution. Towards the end he did mention the CFMEU but in the start he mentioned the CFMEU and how somehow this is related to them, which of course it is not, far from it. The member for Herbert, like most of those opposite, is deeply confused around production tax credits. Just as the shadow Treasurer was not engaged tonight on this really important topic for the resources sector of Australia, he was perhaps less engaged on this topic on budget night. Within a few hours of the Treasurer announcing this policy, the Liberal member for Hume breathlessly announced there'll be no support for a production tax credit system that the resources sector of this country has asked for, has helped the government develop and indeed is calling for.

The previous speaker went through a list of quotes, so I might do to same thing at this moment in time. As I said, the government worked extensively with industry since coming to government on establishing how we would best help an industry, the critical minerals and rare earths industry, that is subject to enormous international pressures, not of their making, not of our government's making; indeed, not even—funnily enough—of the previous government's making. These are international pressures that exist within a time in our globe that has to withstand great power competition.

In that light, what has been said as we develop the production tax incentive? Well, the Association of Mining and Exploration Companies said:

After months of detailed consultation with industry, companies and key stakeholders, it is clear that this vital assistance has been well designed and will be effective.

I refer the member for Herbert to that quote. The AMEC goes on to say:

It provides confidence to the growing critical minerals sector and demonstrates to the market and investors, that Australia is open for business and serious about developing a value-added industry right here in Australia.

So is the government, and clearly the opposition is not. AMEC may have been thinking about the opposition when they went on to say:

Talking a good game isn't good enough. We need real action, and the Production Tax Incentive is exactly what industry has been seeking.

I will table these comments after I read them into Hansard for the benefit of the members, if they want to call their leader and member for Hume and ask them respectfully to reconsider their rash decision of budget night.

The Chamber of Minerals and Energy of Western Australia, a well-known friend of the LNP, said:

This measure recognises the Federal Government's commitment to supporting industry to level the playing field in what is an intensely competitive global market. Passage of the legislation would set an important investment signal for further value adding activities and provide certainty to industry.

Australian Strategic Materials has a site that I visited recently with the member for Parkes, a Nationals member who did a fabulous valedictory speech recently. They are developing a remarkable project at Dubbo on the east coast, a rare earths mine-to-refinery project, one of the few on the east coast. You'd think that would get a bit of support from the Liberals National Party; of course, it does not. However, Rowena Smith, the CEO of Australian Strategic Minerals said:

Australian Strategic Materials Limited (ASM or the Company) welcomes the proposed production tax credit for critical minerals as an essential policy development to reduce costs and improve project returns, supporting the development of a robust and sustainable critical minerals industry.

Ardea has a project in Kalgoorlie, 'The federal government's support for the Australian resources sector through initiatives such as the production tax incentive will assist Ardea in being even more cost competitive with our global peers and is very much appreciated.' Thanks to Ardea for providing that feedback as well, and the member for O'Connor might be interested in their views. Wesfarmers as reported in The Australian newspaper this morning—it might have been the morning before, pardon me—has also supported the production tax credit and are quoted as saying:

Australia is well-positioned to support global decarbonisation goals and be a high quality and reliable manufacturer for the global electric vehicle supply chain.

The federal government's targeted initiative benefits those companies that are prepared to take a long-term view, investing capital to develop new production operations and creating many jobs, often for years before finally moving into production and seeing returns.

That's Wesfarmers, a great Western Australian company doing great things.

In Queensland, of course, there are a number of critical minerals projects. There's Alpha HPA, which produces high-purity alumina in Gladstone, in a strong National area; we've visited; you know I've visited. Alpha HPA has said this in a statement that they put on the record, and it's on their website but I'm going to table it anyway:

Alpha HPA commends the legislation designed to bolster Australia's standing as a global leader in critical mineral processing and manufacturing. This initiative aligns with Alpha HPA's mission to sustainably produce high-purity aluminium materials that support the world's transition to decarbonisation.

Mr Kairaitis, the managing director of Alpha HPA, has said:

We consider the Critical Minerals Production Tax Incentive as a positive catalyst for Australian manufacturing, offering tangible support for companies like Alpha HPA that are adding downstream value to Australia's abundant critical mineral resources.

So perhaps the shadow Treasurer and the Leader of the Opposition might want to talk to colleagues in Queensland about Alpha HPA's use of the production tax credit.

There's Australia Vanadium Limited, a really important company creating vanadium and vanadium flow batteries, a really spectacular new technology. Their CEO, Graham Arvidson, has said:

It is highly encouraging to see the Australian Government recognising and supporting the important role critical mineral developers play in the economic growth of the country and the benefits these mineral projects and their downstream industries bring to the regions in which they operate. AVL has been encouraged by the level of consultation that the Government has undertaken with industry to reach this stage.

I think Mr Arvidson makes a really important point: how important these projects are in the regions in which they exist—in the regions right around this country. I table these documents, to the Clerk.

There's no end of members in this place letting us all know how important mining is for the regions; yet, when the mining industry comes to us and wants help to develop a means of supporting and developing an emerging industry, like the rare earths industry, regional members on the other side of the parliament are simply totally absent. They do not engage in this debate in any meaningful sense—and we just saw the contribution from the member for Herbert. There's no contribution from the shadow Treasurer. I know he's not in a regional area, but he sure speaks for many people in this place that are. They are turning their backs on regional communities that have these really exciting but really challenging projects that are subject to those global headwinds that we see before us and that have been around now for a few years. We want to see this industry get through it.

This bill today, for production tax credits for critical minerals, is a cornerstone of the Future Made in Australia plan. We know how important this industry and the resources industry as a whole has been to the nation's prosperity for many decades. It has powered us through a global pandemic. It has seen us through economic downturns. Of course, there are other countries that have vast resources and geologies, though none quite the same as us. We're not alone in relation to these critical minerals, yet we are in the best place to take advantage of our people, our skills, our existing resources industry, our traditional resources industry, and, of course, our unique and very special geology.

As we all know, taxes and revenues from the resources industry pay for our roads, our hospitals, our schools and our Defence Force. They create hundreds of thousands of highly-paid and skilled jobs and have for generations. This can't go on forever, if we don't support these new and emerging industries. We cannot turn our backs on the issues that are facing the critical minerals and rare earths industries. We can't just put our feet up and think that the job is done and we can all move on and somehow suppose that the critical minerals industry will get there on its own.

Indeed, since we have had a resources industry, government has played a part in developing it. If we look to the start of the iron ore industry, we had Sir Charles Court, a great Western Australian premier. We had Sir David Brand, after whom my seat is named, who went to Japan to get the deals, to get the investment, and came to this place to speak to Robert Menzies to make him change the ban on the export of iron ore, and then that happened and they drew investment from Japan to start the iron ore industry. Then there was Bob Hawke having Rio Tinto bring Chinese investors over to invest in the iron ore industry further down the track and the great Mount Channar development in Western Australia. John Howard played a really important part in getting the LNG industry in Western Australia going. There is always government work.

There are state agreements too. We are working with the states on common-use infrastructure facilities and feasibility studies about what will work best and what will be the best way we can combine federal capital with state government and territory government capital to make common-use infrastructure for the critical minerals industry that will be of vital importance for the decarbonisation of not only our country but others, whether that be through the creation of batteries for electric vehicles or for grid-level storage like the vanadium flow batteries that are being built right now in Western Australia. There would be no solar panels or wind turbines without critical minerals and rare earths. There would be no mobile devices, stainless steel, mineral cosmetics and many other things that critical minerals and rare earths go into. It's very important.

Another part of this vast story of what critical minerals and rare earths can be in this country is that, in addition to decarbonisation, they are vital to our national security. They are vital to the national security of partners like the United States, the United Kingdom, Japan and the Republic of Korea. Critical minerals and refined rare earths are essential inputs into most modern military equipment, including combat aircraft, submarines and drones. There are no Virginia class submarines, F35 fighter jets, missile guidance systems or night-vision goggles without critical minerals and rare earths. An F35 needs more than 400 kilograms of rare earth elements and a Virginia class submarine needs more than four tonnes.

We have done untold amounts of work since coming to government, including on many international relationships and memorandums of understanding as well as actual agreements that do things and finance agreements with projects such as the Arafura rare earths mine and refinery project in Alice Springs, which will be a game changer for that great city in the heart of our nation. But what do those opposite want to do? They are turning their backs on the resources sector. They are anti Western Australia, anti Queensland and anti Alice Springs. The member for Hume and others have said this is 'welfare for billionaires'. They should speak to the hundreds of workers who work in, and want to continue to work in, this industry, that want to build a new industry for the national benefit, national interest and, indeed, national security, as I have said.

Joe Hockey once said this place in the worst budget ever delivered that Australia is a nation of lifters, not leaners. Well, the Liberal and National parties are not anymore. When it comes to critical minerals and rare earths and Australia's role in securing global supply chains of the minerals needed to secure our energy future and our national security, the opposition are firmly of the belief that Australia should just lean back and let everyone else do the work. Under the opposition, our resources sector would be the leaners, not the lifters. Under the opposition, Australia would not step up and grasp this golden opportunity to take on the responsibility that history and geology is placing on our shoulders. No, they think they can sit back and let everyone else do the job. They always say they want to get out of the way. Sometimes you have to do some work and you have to put your back into it to help industry. With an industry that has seen enormous challenges because of the global market dominance of one player, those opposite just want to go home, put their feet up and hope for the best. That's not good enough. That's not good enough for the Australian people. It sure as heck isn't enough for the Albanese Labor government. We are leaning into this. We will create a future made in Australia, and we will create a critical minerals and rare earths industry right here in Australia. I seek leave to table the documents.

Leave granted.

Colin Boyce (Flynn, Liberal National Party) Share this | Link to this | Hansard source

I rise tonight to make a contribution on the Future Made in Australia (Production Tax Credits and Other Measures) Bill 2024. As we've heard from the minister in her contribution, this is entirely relevant to my seat of Flynn in Central Queensland and particularly the greater Gladstone area, given the fact that Stanwell Corporation, a Queensland GOC, has put forward a proposal to build a hydrogen plant in Gladstone and produce associated products. I will get into that further in a little bit, but first of all I will give an overview of exactly what this bill is.

This bill seeks to implement the government's Future Made in Australia production tax credits for green hydrogen and critical minerals. The bill puts significant compliance obligations on businesses eligible for either a hydrogen or a critical minerals tax credit, including compliance with the community benefit principles and the National Interest Framework, which are defined through the Future Made in Australia Bill 2024, which the coalition is opposing. The hydrogen production tax credit runs until 2040 and does not commence until 2027. To be eligible for the future hydrogen production tax credit, a minimum requirement is for a business to have a production guarantee of origin certificate, which the coalition is also opposing. The tax credit is valued at $2 a kilo, and only green hydrogen is eligible. The critical minerals production tax credit also runs until 2040 and does not commence until 2027. The bill's interactions with other industry programs give the CER, the Department of Industry, Science and Resource and ARENA new roles in tax administration, including allowing the ATO to share protected tax data with these agencies. Foreign resident companies with an ABN and a permanent establishment who conduct eligible business through their Australian establishment will be eligible for these tax credits. The third schedule implements the Future Made in Australia agenda by allowing Indigenous Business Australia to leverage their capital to invest in First Nations communities' businesses by allowing them to borrow against their existing capital.

There are several issues, and they are wide-ranging. This bill embeds nebulous community benefit principles in the tax act. I've got some specific ideas about that, and I simply do not agree with it. The legislation makes eligibility for tax credits conditional on compliance with the community benefits principles, which sit alongside the National Interest Framework. Embedded in the legislation that establishes the National Interest Framework are the community benefit principles, which will be enforced by Future Made in Australia plans. These plans can be made by the Treasurer through regulation and will be enforceable. The community benefit principles embed First Nations procurement and union participation as requirements to access Future Made in Australia funding. Any participant seeking funding under the programs associated with the National Interest Framework will need to develop a Future Made in Australia plan. The BCA, among others, has highlighted that this risks duplicating the sort of embedded procurement processes in state governments that have empowered the CFMEU to monopolise tender markets.

Further, the policy largely doubles up on Labor's Australian Jobs Act 2013, which requires significant investment proposals of $500 million or more to develop an Australian industry participation plan, which is administered and monitored by the department of industry. The coalition opposed this bill back in 2013 on the basis that it added red tape and compliance costs, and the legislation is frequently cited as one of the biggest red tape impediments to investment proposals, along with EPBC approvals. With tax credits being tied to the community benefit principles, it is highly likely that things like businesses' EBA status will be a factor in their eligibility for a discount, and this is likely to be used as a further wedge by union negotiators in a bid to increase unionisation in the mining industry.

As I said earlier, we know there is a significant proposal in Gladstone. The greater Gladstone area has been nominated by the government as a future hydrogen hub, and we know that Stanwell corporation—which is, as I've said, a Queensland government owned corporation—is proposing to build a green hydrogen production facility at Gladstone, where they will use electrolysers—

Debate interrupted.

Mike Freelander (Macarthur, Australian Labor Party) Share this | Link to this | Hansard source

Order! I thank the member for Flynn, who will be able to speak in continuation at a later date.