Dean Smith (WA, Liberal Party, Shadow Assistant Minister for Competition, Charities and Treasury) Share this | Link to this | Hansard source

In the earlier part of the committee stage of this bill, I was using the opportunity to put on the record the themes which not just explain but justify the coalition's opposition to this legislation. We touched briefly on an explanation of the burdensome bureaucracy and inefficient spending. We talked briefly about the risks of permanent corporate welfare. I was also talking to the theme of the unclear and politicised community benefit principles, and it's this third point which I think is the most alarming. As I said in my second reading contribution, I hope that industry, in their enthusiasm for this initiative, pay very, very close attention to the real-time and practical application of these principles.

Fourthly, and importantly, we believe that this is selective tax relief and market distortion. The bill does not apply equally to all businesses. We argue that only select industries with strong political lobbies will benefit. It also excludes major sectors such as carbon capture, gas, blue hydrogen, uranium and nuclear power, despite their strategic importance to Australia's energy future and, importantly, it is absent of any of those coalition business initiatives that we have talked about. Our opposition also goes to the lack of transparency and economic viability. We argue that key decisions will bypass the National Interest Framework, raising concerns about lack of accountability in major funding allocations. We argue that it is the Treasurer and bureaucrats, not industry experts, who decide which sectors receive funding, leading to political interference.

Finally, the Productivity Commission and the Treasury themselves have not endorsed major elements of the plan, warning that it could divert resources from more productive sectors. On that point, I think it is very important that I share with the chamber this quote from the Productivity Commissioner herself. Danielle Wood has warned that this policy risks 'creating a class of businesses that is reliant on government subsidies', not an industry sector able to stand on its own two feet.

To re-emphasise what I think is the most critical point in this, I say that, in wanting to support industry, the government has chosen the wrong path. This is demonstrated by comments made by the Minerals Council of Australia. As early as April last year it talked about Australia's investment pipeline and the significant tens of billions of dollars that is being lost to Australia every year. In its statement at that time, the Minerals Council of Australia highlighted this fact:

The problem facing the industry is not a shortage of potential projects, but rather the challenging investment environment that has been created by poor policy settings.

It also said:

Australia's mining sector is grappling with unprecedented cost pressures, burdened by restrictive policies that are impacting the global competitiveness of our current operations, and thwarting investment in new projects.

It went on to say:

… the biggest bang for taxpayers' bucks is simply creating an operating environment that is conducive to growth, and attractive for investment; by lowering the cost of doing business in Australia.

That's the key point. The key measure of success for this legislation will be: does it lower the cost of doing business in Australia? We would argue that it leaves all of the most significant cost pressures—a rigid industrial relations system, duplicative environmental processes and poor access to land—unchanged. We think that this particular initiative is not only poorly designed but will not have the anticipated benefit.

I might just use this opportunity to formally move the amendment that is standing in my name, which is on sheet 3275, and to speak to that amendment. I seek leave to move the coalition's amendment.

Leave granted.

I move:

(1) Schedule 1, item 3, page 14 (after line 33), after subsection 421-45(1), insert:

(1A) However, the HPTO community benefit rules must not:

(a) specify the condition that, for a company to be entitled to a *hydrogen production tax offset for the income year:

(i) an enterprise agreement (within the meaning of the Fair Work Act 2009) must apply to both the employees of the company and an employee organisation (within the meaning of that Act); or

(ii) the company must establish and maintain a reconciliation action plan; or

(iii) the company must conduct consultation relating to the environmental impact of the company's activities, unless that consultation is already required by a law of the Commonwealth, a State or a Territory; or

(iv) the company must conduct consultation with First Nations communities, unless that consultation is already required by a law of the Commonwealth, a State or a Territory; or

(b) specify that the amount of a company's hydrogen production tax offset for the income year will be reduced in the circumstance where the company does not comply with any of the conditions mentioned in subparagraphs (a)(i) to (iv).

(2) Schedule 2, item 1, page 61 (after line 13), after subsection 419-145(1), insert:

(1A) However, the CMPTI community benefit rules must not:

(a) specify the condition that, for a company to be entitled to a *CMPTI production tax offset for the income year:

(i) an enterprise agreement (within the meaning of the Fair Work Act 2009) must apply to both the employees of the company and an employee organisation (within the meaning of that Act); or

(ii) the company must establish and maintain a reconciliation action plan; or

(iii) the company must conduct consultation relating to the environmental impact of the company's activities, unless that consultation is already required by a law of the Commonwealth, a State or a Territory; or

(iv) the company must conduct consultation with First Nations communities, unless that consultation is already required by a law of the Commonwealth, a State or a Territory; or

(b) specify that the amount of a company's CMPTI production tax offset for the income year will be reduced in the circumstance where the company does not comply with any of the conditions mentioned in subparagraphs (a)(i) to (iv).

The amendment seeks to establish much-needed clarity and structure around the community benefit principles and to mitigate what we argue are very obvious risks—risks that were identified at the Senate committee stage, risks that we believe have not yet been mitigated. This amendment amends the bill to ensure that the community benefit rules made in relation to both the hydrogen production tax offset and the critical minerals tax offset cannot specify (1) that an enterprise agreement within the meaning of the Fair Work Act 2009 must apply to both the employees of the company seeking a tax credit and an employee organisation; (2) that a company seeking a tax credit must establish a reconciliation action plan; (3) that the company must consult on the environmental impact of its activities, unless that consultation is already required by Commonwealth, state or territory law; and (4) that the company must consult with First Nations communities, unless, again, that consultation is already required by Commonwealth, state or territory law. To avoid any doubt, the amendment also provides that a company's share of the production tax credits cannot be reduced where these conditions are not complied with.

This amendment is aimed at mitigating against key concerns raised by the coalition in the second reading debate and coalition senators' dissenting report following the Senate Economics Legislation Committee's inquiry into the bill. As the bill stands, the community benefit principles are unclear, leaving companies to comply with vaguely defined criteria if they are to receive a tax credit. This uncertainty threatens confidence in this sector of the Australian economy, which is absolutely contrary to what the government says this bill does.

The community benefit principles are also liable to politicisation. The Treasurer has sole discretion over these community benefit principle requirements to be determined by regulation. There are genuine concerns that businesses may be forced into union agreements to qualify—that, in short, no union agreement means no tax credit. On that particular point, I invite the minister to clearly, categorically state that a company without a union agreement will not be penalised and will be in full receipt of this tax benefit. Further, businesses seeking to access these credits cannot be held hostage to the same principles that are embedded in Labor's entire Future Made in Australia plan.

Finally, the community benefit principles risk unnecessary and harmful duplication on environmental and Indigenous regulations and consultation. Although this applies nationally, it was raised as a particular concern for Western Australia, given the already significant regulatory standards in place in my home state, with the result being unwelcome delays and decreased competitiveness. Failure to comply with the community benefit principles will lead to a penalty in the form of a reduction in the tax credits available. To assist the minister, I think this goes to point 151 in the government's documents, but we'll come to that further in the committee stage.

At this point I think it's worth reiterating stakeholder views, primarily those of the Minerals Council of Australia and the Australian Chamber of Commerce and Industry. The Minerals Council of Australia made it very clear and noted concerns over duplication and regulatory burden in its inquiry submission. It said:

The Australian minerals industry produces critical minerals utilising world leading sustainability standards, including best practice environmental management and community engagement.

…   …   …

We understand that the requirement to comply with 'community benefit principles' is an overarching requirement of the Future Made in Australia Act. However, there are already extensive and rigorous approvals process that mining and mineral processing projects must adhere to makes this an unnecessary and duplicative feature of the CMPTI.

This view was echoed by the Australian Chamber of Commerce and Industry, which submitted:

The additional engagement processes required by the community benefit principles parallel existing requirements of the planning and approval process. This is simply adding a further layer of administration and compliance, without any clear benefit.

The risk here is abundantly clear, and the government and officials know the risk. It is that, in enforcing the community benefit principles, they are, in fact, obviously, creating and adding layers of bureaucracy in areas where regulation may currently already exist. We would argue that, rather than duplicating those regulatory requirements, those existing requirements should be repealed, and it is worth noting that, in asking the Treasury: 'Will the stock of regulation that sits around mining and resources projects be reduced as a result of the introduction of the community benefits principles?' no-one could give me a clear answer, and when an official can't give you a clear answer, the answer to that question is a no.

I also look forward to raising some questions that have been provided to me by the shadow minister for resources, Senator McDonald, if time allows. (Time expired)

Tim Ayres (NSW, Australian Labor Party, Assistant Minister for Trade) Share this | Link to this | Hansard source

The principal purposes of the bill are to lower costs for businesses, to make Australia a more competitive destination for particular categories of Australian manufacturing—this will be underpinned by the national interest principles that were in the first tranche of legislation—and to rebuild manufacturing in Australia. Senator Smith said that this does nothing to lower the cost of manufacturing. It precisely lowers that cost, because, for eligible businesses, it provides a tax credit that specifically lowers their costs. As you indicated in your contribution, there is a very strong level of enthusiasm from industry.

In relation to the community benefit principles, the principal purposes of the legislation are to encourage investment in manufacturing in Australia, to reward successful businesses who manufacture here with a production tax credit and to incentivise manufacturing production here in Australia. From the government's perspective and view, I would have thought it was uncontroversial that Australians would expect that, where support is provided, some community benefit would flow from that. The act sets out six community benefit principles: boosting investment in local communities; boosting investment in supply chains and skills; broadly, providing good jobs. They are uncontroversial matters. What the bill sets out is that, led by the Treasurer, there will be a process of consulting with industry, and with communities more broadly, to set the rules, which will be set in a disallowable instrument that will come before the Senate in due course.

Dean Smith (WA, Liberal Party, Shadow Assistant Minister for Competition, Charities and Treasury) Share this | Link to this | Hansard source

Has the government quantified the exact financial extent to which this bill will lower the costs for eligible projects, in particular in Western Australia, but also across other states and jurisdictions?

Tim Ayres (NSW, Australian Labor Party, Assistant Minister for Trade) Share this | Link to this | Hansard source

Yes. It's in the bill. The number is $2 per kilogram of hydrogen that is produced and, for critical minerals production tax credits, 10 per cent of the cost of their operations.

Dean Smith (WA, Liberal Party, Shadow Assistant Minister for Competition, Charities and Treasury) Share this | Link to this | Hansard source

Perhaps I should have put the question this way: has the government been able to quantify the economic benefit to be achieved through this tax credit, given the near unanimous views of stakeholders that the tax credit, in itself, is not the transformative element that is required to support industry; instead, that the transformative element is reform to rigid industrial relations laws, duplicative environmental processes and poor land access arrangements?

Tim Ayres (NSW, Australian Labor Party, Assistant Minister for Trade) Share this | Link to this | Hansard source

The benefit of the production tax credits and, I have to say, the incentives offered more broadly in the other Future Made in Australia package measures is that firms that otherwise would invest in production processes in other countries will invest in the Pilbara, in the Kwinana strip, in Central Queensland and in our great industrial regions, like the Hunter Valley, Portland and the Latrobe Valley in Victoria, and Northern Tasmania. These are firms that otherwise would have invested in the Middle East, China or other locations that are competing hard for foreign investment in manufacturing capability. That is the first set of advantages: very substantial investments in Australian manufacturing capability that will transform Australia's economy in the future.

Secondly it of course doesn't just have an economic rationale, while that is very important. It's seeking to secure Australia's future comparative advantage, which I know is a view that's not shared by the coalition. So, yes, it's about securing Australia's future comparative advantage but it's also about making sure that Australia is economically resilient and that we're diversifying the products and services that Australia exports to the world in our national interest. So there are a broad range of benefits and an overwhelming national interest imperative. I'm frankly shocked that, when questions go to our security and our future economic resilience, Mr Dutton and Mr Taylor's message to the people of Western Australia and to manufacturing workers and manufacturing firms is: we're not with you.

The Albanese government is backing manufacturing unashamedly, and you and your colleagues are basically sending the message 'don't bother knocking' to international investment and talking Australia's capability down. I'd hate for international investors to be listening to what Senator Smith has got to say about the capabilities of Australians and the competitiveness of Australian industry, but it's a common feature of the coalition talking points—talking Australia down and trying to push investment offshore.

Dean Smith (WA, Liberal Party, Shadow Assistant Minister for Competition, Charities and Treasury) Share this | Link to this | Hansard source

I think it's just worth noting that the party that I represent, the Liberal Party, is in fact the party of development in Western Australia. It's the home of people like Sir Ross McLarty, Sir David Brand, Sir Charles Court, later Richard Court and Colin Barnett. So the Liberal Party's legacy in terms of pro-industrial development and indeed downstream processing in Western Australia is that it's owned by us; it's not owned by the Labor Party. But, just to go to your point, Senator Ayres—in your opening remarks you again talked about Australia's security interest. You talked about the rapidly changing geopolitics in some of your earlier remarks. If the international environment and security considerations are so paramount, why is it that this tax credit is not available for two years?

Tim Ayres (NSW, Australian Labor Party, Assistant Minister for Trade) Share this | Link to this | Hansard source

I suppose, with the greatest respect, that what the question really reveals is a lack of understanding about the investment timelines of these kinds of projects. They're not small projects; they're very substantial manufacturing projects. Treasury estimates suggest that Australia will produce an additional amount of more than 2½ million tonnes of refined critical minerals output over the life of the policy. By 2039-40, the critical minerals production tax incentive will have supported estimated production of around 10 million tonnes of refined critical minerals. This is a substantial reindustrialisation of our economy. It is value-adding.

Our mining sector is very important for the Australian economy. It's very important for our industrial capability. Our mining capability is leading edge. Often people position our interest in future manufacturing and mining as if they are somehow mutually exclusive. The truth is it is absolutely in Australia's interest that we add more value here and capture more of the value here in Australia to build a stronger Australian economy, a stronger industrial capability, and that's what the critical minerals production tax incentive will deliver. Of course, there will be substantial economic benefit flows in supply chain terms and other terms from that kind of investment.

Dean Smith (WA, Liberal Party, Shadow Assistant Minister for Competition, Charities and Treasury) Share this | Link to this | Hansard source

What is the timeframe for setting the rules, and when will the rules be provided to the parliament by way of the delegated legislation?

Tim Ayres (NSW, Australian Labor Party, Assistant Minister for Trade) Share this | Link to this | Hansard source

As I said, these projects have very substantial lead times. The Treasurer will no doubt provide the disallowable instrument that I referred to, as soon as he can, to a future parliament, but we won't be rushing the process of engaging with industry. We'll be making sure not only that we've got the design right but that industry supports it and that it's a platform for the kind of investment that this bill will facilitate.

The only thing that will stop that process happening is the election of a Dutton government. Mr Dutton and the crowd over there have committed to tearing this legislation down, ripping this investment up. They are the greatest sovereign risk that Australian manufacturing faces. They're the show that pushed the car industry offshore. They had that character Mr Constance—who's now, as I understand it, the Liberal candidate for Gilmore—whose sole achievement in public office as a minister in New South Wales was to send thousands of good Australian jobs, in the Hunter Valley and the Illawarra in particular, offshore. He is a stone-cold job killer who wants to be in the parliament again, with that kind of legacy. Australian manufacturing will be threatened only if the election returns a Dutton government, which would tear down this very important package for our national future.

Dean Smith (WA, Liberal Party, Shadow Assistant Minister for Competition, Charities and Treasury) Share this | Link to this | Hansard source

In its prebudget submission, at page 24, the Minerals Council of Australia specifically talks about the application and making of rules around the community benefits principles. It states that its proposed actions, or reforms, are first to:

Remove the duplication of existing and separate legislative frameworks of industrial relations and taxation from the Community Benefits Principles—

and second to—

Review the intent of the Community Benefits Principles to ensure proponents and host communities are encouraged to develop sustainable localised approaches based on the needs of the host community.

It goes on to say:

However, the government's Community Benefits Principles in the FMIA (PTCOM) Bill cannot be used as an excuse to embed greater policy reach; and they should not create more costs to project proponents through regulatory duplication.

It then goes on to say:

… the Community Benefit Principles would place an unnecessary burden on project proponents by duplicating existing legislative measures. For example, managing tax affairs and mandatory pay and conditions already have existing legislative frameworks and their inclusion in the principles will create inefficiencies and duplicative costs.

How has the government mitigated those risks identified in the Minerals Council of Australia's prebudget submission dated 31 January this year?

Tim Ayres (NSW, Australian Labor Party, Assistant Minister for Trade) Share this | Link to this | Hansard source

That's why we've got an adult government that looks forward to engaging with the Minerals Council of Australia about the broader questions of design in terms of the community-benefit principles. We don't wander around the country looking for an argument with industry organisations, trade unions, local government, or states and territories; we think that pulling people together, not having a glass jaw about criticism and not having to agree on every issue are the way to get the best outcome for Australia and Australians. I'm very pleased that you've quoted from the Minerals Council. In the Senate inquiry, they were very deliberate about what they said. They said:

The MCA supports the critical minerals production tax incentive because it is a positive step towards attracting investment in the critical minerals industry.

We support the bill because the bill is going to help to reduce the cost of production for people that develop facilities downstream.

… we've got member companies that have existing downstream facilities—they've already invested—so they will benefit from the critical minerals production tax incentive when it commences on 1 July 2027. We've got a lot of other members that are mining the mineral-obviously, that's not eligible for the critical minerals production tax incentive—and they're in consideration of whether they will go to downstream processing as well. This will assist with the decision-making.

We've got the Australian mining industry out there making it absolutely clear that they support the bill. We've got manufacturers making it absolutely clear that this will make the difference. This will make the difference for Western Australia in particular. It is a source of embarrassment that your side of politics persists in talking Australia down—this carping negativity, this nastiness about Australian manufacturing on the east coast and dead quiet in Perth. Mr Dutton and Mr Taylor are silent as the tomb in the Pilbara but big on the yabber on this when they're over here on the east coast, hoping that people in Western Australia, Central Queensland and the Hunter don't hear them.

Dean Smith (WA, Liberal Party, Shadow Assistant Minister for Competition, Charities and Treasury) Share this | Link to this | Hansard source

I think I was on the Senate committee inquiry, so your revelation about the attitude of the Minerals Council of Australia is not news to me, but I think what you and the government choose to ignore is what I would characterise as at the heavily caveated points made by organisations like the Minerals Council of Australia, AMEC and others. What they are saying is that the transformative effect, if it is to be achieved, is not through the tax credit but by tackling these other imposts which escalate project costs. That is what they are saying. What we are saying is: not only are those project costs undeniably increased as a result of rigidity in the industrial relations market, duplicative environmental processes and poor access to land; in addition to all of those additional project costs, which the government is not interested in tackling, the government is now adding a layer in the form of the community-benefit principles. In evidence to the committee, Treasury officials would not concede or acknowledge that there would be any reduction in any other regulation that is already covered or that is proposed to be covered in the community-benefit principles. So I totally understand how industry is excited about a tax credit. Why wouldn't they be? That is the normal style of operating a business when the government puts a lucrative financial offer in front of it. What we're saying is that the approach is wrong because it doesn't tackle—it doesn't even seek to go near tackling—the key contributing factors to high project costs for manufacturing and minerals processing in this country.

More than that, not only do you not want to tackle those fundamental issues; you're now adding on top of that the community benefit principle rules, which eligible companies must get through before they get to the tax credit. The explanatory memorandum makes it very clear at 1.51 that, if an organisation should fail or not meet the community benefit principles, or if a company does not comply with specified requirements in the rules, the offset that a company is entitled to for an income year is reduced by a proportion. Not only are you adding to the regulatory burden, which everyone says is too great and driving up project costs; you're then adding a set of new regulations in the form of the community benefit principles, and, if an organisation doesn't comply with them, they get penalised. That is what we're objecting to.

This is not transformative. This does not go to the heart of the issue of high project costs faced by Australian industry. That's the key point here. To be fair, in all of the comments from the Minerals Council of Australia, AMEC and others, support for the tax credit—we don't dispute it is clear—is heavily caveated by their view and proposition that more needs to be done on other issues. In this bill, recognition of that is completely absent. Indeed, in its broader policy agenda, much of what the government seeks to do exacerbates the problem; it doesn't improve it. Minister, if a company does not have a union agreement that satisfies the Treasurer, will their tax credit be reduced, or can it be reduced?

Tim Ayres (NSW, Australian Labor Party, Assistant Minister for Trade) Share this | Link to this | Hansard source

I think you've misrepresented the position of industry. What industry is saying is, 'Pass the bill.' Your team had a decade in office to tackle all the problems you say are there. And what happened? Wages in these sectors fell. Jobs were forced offshore. There was disinvestment in Australian manufacturing and, indeed, in the energy sector. The community benefit principles, as set out in the act, will be worked through by the Treasurer over the fullness of time in a way that meets the needs of industry in what I would have thought was an uncontroversial proposition and supports investment in the supply chain in local communities and in good blue-collar jobs. That's anathema, I know, to the Liberals and Nationals. That's what the community benefit principles will deliver. They will be there in a disallowable instrument for the Senate to scrutinise.

I have to say—this sudden concern about industry support and assistance comes from a mob who proposed to spend $600 billion in a publicly funded nuclear reactor plan which would deliver four per cent of Australia's electricity needs. Honestly, as I'm sure my good friend Senator Linda White would have said if she had heard this, how much can a koala bear? Honestly, the hypocrisy of that proposition and the gainsaying of the national interest—you should front up in Western Australia and say the same thing. I look forward to the Senate's support.

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

Order! Pursuant to the order agreed to earlier today, the time for the consideration of this bill has expired.

Andrew McLachlan (SA, Deputy-President) Share this | Link to this | Hansard source

The question is that the Committee of the Whole amendments on sheet 3275, moved by Senator Dean Smith, be agreed to.

Andrew McLachlan (SA, Deputy-President) Share this | Link to this | Hansard source

The question before the committee is that the Australian Greens amendments on sheet 3262, circulated earlier, be agreed to.

Australian Greens circulated amendments—

(1) Schedule 2, item 1, page 37 (line 32), before "Each of", insert "(1)".

(2) Schedule 2, item 1, page 39 (after line 19), at the end of section 419-15, add:

(2) The regulations must not prescribe uranium for the purposes of paragraph (1)(zf).

Andrew McLachlan (SA, Deputy-President) Share this | Link to this | Hansard source

The question now is that Senator Van's amendments on sheet 3256, circulated earlier, be agreed to.

Senator Van's circulated amendments—

(1) Clause 2, page 3 (after table item 4), insert:

(2) Schedule 1, item 4, page 24 (line 27), after "section 421-40" insert "and 421A-25".

(3) Page 67 (after line 3), after Schedule 2, insert:

Schedule 2A — Low carbon liquid fuel production tax incentive

Part 1 — Main amendments

Income Tax Assessment Act 1997

1 Section 13-1 (after table item headed "losses")

Insert:

2 Section 67-23 (after table item 27)

Insert:

3 Before Division 420

Insert:

Division 421A — Low carbon liquid fuel production tax incentive

Table of Subdivisions

Guide to Division 421A

421A-A Tax offset for low carbon liquid fuel produced in Australia

421A-B Certification of production profiles

421A-C Other matters

421A-1 What this Division is about

A company may be entitled to a refundable tax offset in respect of low carbon liquid fuel produced in Australia between the start of 1 July 2027 and the end of 30 June 2040.

One requirement for entitlement to the offset is that the company must have created a certificate (called a PGO certificate) that relates to the low carbon liquid fuel. The certificate is created under the Future Made in Australia (Guarantee of Origin) Act 2024 and it must be registered under that Act.

The following types of low carbon liquid fuel are eligible:

The amount of the tax offset is $1 per whole litre of low carbon liquid fuel for renewable diesel and $2 per whole litre of low carbon liquid fuel for other kinds of low carbon liquid fuel (though this may be reduced in certain circumstances).

Subdivision 421A-A — Tax offset for low carbon liquid fuel produced in Australia

Table of sections

421A-5 Company entitled to refundable tax offset for low carbon liquid fuel produced in Australia

421A-10 Amount of low carbon liquid fuel production tax offset

421A-15 Initial reconciliation period for registered PGO certificate

421A-20 Correction notice for registered PGO certificate

421A-25 LCLFPTO community benefit rules

421A-5 Company entitled to refundable tax offset for low carbon liquid fuel produced in Australia

(1) A company is entitled to a *tax offset under this section (the low carbon liquid fuel production tax offset) for an income year in respect of a litre of low carbon liquid fuel produced in Australia during the income year if:

(a) the income year:

(i) starts on or after 1 July 2027; and

(ii) ends before 1 July 2040; and

(b) there is a *registered PGO certificate that relates to the litre of low carbon liquid fuel and which states:

(i) that the litre of low carbon liquid fuel was produced at a particular facility that is specified in a *production profile, in accordance with a particular *production pathway that is specified in that production profile; and

(ii) that the greenhouse gases emitted in relation to the litre of low carbon liquid fuel calculated after undertaking an emissions lifecycle analysis is less than or equal to the amount determined by the Clean Energy Regulator under subsection (4); and

(c) at the time when the litre of low carbon liquid fuel was produced, the production profile mentioned in subparagraph (b)(i) of this subsection was certified in relation to the facility and the production pathway under Subdivision 421A-B; and

(d) the *initial reconciliation period for the PGO certificate has ended (see section 421A-15); and

(e) no *correction notice for the PGO certificate is in force (see section 421A-20); and

(f) the company satisfies the requirements in subsection (2) of this section.

Note 1: For paragraph (c), when a production profile is certified, or a certification of a production profile is revoked, under Subdivision 421A-B, the certification or revocation may have retrospective effect.

Note 2: The low carbon liquid fuel production tax offset is a refundable tax offset (see section 67-23).

(2) The company satisfies the requirements in this subsection if:

(a) the company is a *constitutional corporation; and

(b) the company was the person who created the *registered PGO certificate under the Future Made in Australia (Guarantee of Origin) Act 2024; and

(c) the company created the PGO certificate in the course of carrying on an enterprise in the indirect tax zone; and

(d) at each time when the company carries on that enterprise in the indirect tax zone during the income year, either:

(i) the company is an Australian resident and has an *ABN; or

(ii) the company is a foreign resident and has a *permanent establishment in Australia and an ABN; and

(e) the company is not an *exempt entity; and

(f) if *LCLFPTO community benefit rules under paragraph 421A-15(1)(a) of this Act apply to the company for the income year—the company meets the conditions specified in those rules.

(3) In subsection (2), carried on in the indirect tax zone and indirect tax zone have the same meaning as in the *GST Act.

(4) The Clean Energy Regulator must, by legislative instrument, determine an amount for the purposes of subparagraph 421A-5(1)(b)(ii).

421A-10 Amount of low carbon liquid fuel production tax offset

(1) If a company is entitled to the *low carbon liquid fuel production tax offset for an income year in respect of one or more litres of low carbon liquid fuel, the amount of the offset for the income year is:

(a) for low carbon liquid fuel that is renewable diesel—$1 in respect of each whole litre of low carbon liquid fuel; or

(b) for sustainable aviation fuel—$2 in respect of each whole litre of low carbon liquid fuel; or

(c) for other kinds of low carbon liquid fuel—$2 in respect of each whole litre of low carbon liquid fuel.

(2) However, if:

(a) LCLFPTO community benefit rules under paragraph 421A-15(1)(b) apply to the company for the income year; and

(b) circumstances specified in those rules exist for the company;

then the amount of the *low carbon liquid fuel production tax offset is reduced by the proportion specified in those rules for those circumstances.

421A-15 Initial reconciliation period for registered PGO certificate

(1) The initial reconciliation period for a *registered PGO certificate is the period that:

(a) starts immediately after the end of the financial year (the registration year for the certificate) in which the certificate was registered; and

(b) ends at the time specified by subsection (2) or (3), whichever is later.

(2) If:

(a) a person is given a statement under section 60 of the Future Made in Australia (Guarantee of Origin Act) 2024; and

(b) the statement relates to PGO certificate activity (within the meaning of that Act) in connection with the *registered PGO certificate in the registration year for the certificate;

then the time specified by this subsection is the latest time by which such person is required, under section 61 of that Act, to give the Clean Energy Regulator a declaration in relation to such a statement.

Note: If more than one person is given such a statement, different people may be required to give the Clean Energy Regulator declarations by different times. The time specified by this subsection is the latest of those times.

(3) If:

(a) a person is given a statement under section 60 of the Future Made in Australia (Guarantee of Origin Act) 2024 (the Guarantee of Origin Act); and

(b) the statement relates to PGO certificate activity (within the meaning of the Guarantee of Origin Act) in connection with the *registered PGO certificate in the registration year for the certificate; and

(c) after the end of the registration year, and at or before the time specified by subsection (2) of this section, the person gives the Clean Energy Regulator declarations and information of the kind mentioned in paragraph 61(b) of the Guarantee of Origin Act; and

(d) the declarations include a declaration that particular information stated in the registered PGO certificate is not accurate or complete;

then the time specified by this subsection is the latest time at which the Clean Energy Regulator may decide, under section 62 of the Guarantee of the Origin Act, to correct the registered PGO certificate in response to declarations and information given by a person as mentioned in paragraphs (c) and (d) of this subsection.

Note: If more than one person gives the Clean Energy Regulator declarations and information as mentioned in paragraphs (c) and (d) of this subsection then, for each such set of declarations and information, there will be a last time at which the Clean Energy Regulator may correct the PGO certificate in response to that set of declarations and information. The time specified by this subsection is the latest of those last times.

421A-20 Correction notice for registered PGO certificate

(1) The Clean Energy Regulator must issue a notice (a correction notice) for a *registered PGO certificate that relates to a litre of low carbon liquid fuel if:

(a) the *initial reconciliation period for the PGO certificate has ended;and

(b) the PGO certificate states that the greenhouse gases emitted in relation to the litre of low carbon liquid fuel calculated after undertaking an emissions lifecycle analysis is less than or equal to the amount determined by the Clean Energy Regulator under subsection 421A-5(4); and

(c) the Clean Energy Regulator is satisfied that the condition in paragraph (b) is not met.

(2) The *correction notice must state that the Clean Energy Regulator is satisfied that the condition in paragraph (1) is not met.

(3) The *correction notice is in force until it is revoked under subsection (4).

Revocation of correction notice

(4) The Clean Energy Regulator may, in writing, revoke a *correction notice for a *registered PGO certificate that relates to a litre of low carbon liquid fuel if the Clean Energy Regulator is satisfied that:

(a) the *initial reconciliation period for the PGO certificate had not ended at the time when the correction notice was issued, and that period has still not ended; or

(b) the PGO certificate does not state that the condition in paragraph (1)(b) is met in relation to the litre of low carbon liquid fuel; or

(c) the condition in paragraph (1)(b) is met in relation to the litre of low carbon liquid fuel.

Copies of correction notice and revocation

(5) If the Clean Energy Regulator:

(a) issues a *correction notice under subsection (1) for a *registered PGO certificate that relates to a litre of low carbon liquid fuel; or

(b) revokes such a correction notice under subsection (4);

then the Clean Energy Regulator must give copies of the correction notice or the revocation to the following:

(c) each person who is, at the time the correction notice is issued or revoked, the *holder of a *registered production profile that specifies the facility at which the low carbon liquid fuel was produced;

(d) the Commissioner.

Other matters

(6) Subsection (1) and paragraph (4)(c) do not impose a duty on the Clean Energy Regulator to:

(a) seek information about whether the conditions in subparagraphs (1)(b)(i) and (ii) are met; or

(b) consider whether the Clean Energy Regulator is satisfied that those conditions are, or are not, met.

(7) The issuing of a *correction notice for a *registered PGO certificate does not have any effect on the content or status of the PGO certificate under the Future Made in Australia (Guarantee of Origin Act) 2024.

421A-25 LCLFPTO community benefit rules

(1) The Minister may, by legislative instrument, make the following rules (the LCLFPTOcommunity benefit rules):

(a) rules that:

(i) apply to companies within a specified class for an income year; and

(ii) specify conditions that must be met for such a company to be entitled to a *low carbon liquid fuel production tax offset for the income year;

(b) rules that:

(i) apply to companies within a specified class for an income year; and

(ii) specify circumstances that, if they exist for such a company, will reduce the amount of the company's low carbon liquid fuel production tax offset for the income year by a specified proportion.

Note: For subparagraph (b)(ii), different proportions may be specified for different circumstances (see subsection 33(3A) of the Acts Interpretation Act 1901).

(2) In making the *LCLFPTO community benefit rules, the Minister must have regard to the community benefit principles (within the meaning of subsection 10(3) of the Future Made in Australia Act 2024).

(3) When having regard to those principles, the Minister is to treat the *low carbon liquid fuel production tax offset as if it were Future Made in Australia support (within the meaning of the Future Made in Australia Act 2024).

(4) This section does not apply if the Future Made in Australia Act 2024 has not commenced.

Subdivision 421A-B — Certification of production profiles

Table of sections

421A-30 Application for certification

421A-35 Certification of production profile

421A-40 Revocation of certification

421A-45 Requests for further information etc.

421A-30 Application for certification

(1) The *holder of a *registered production profile for low carbon liquid fuel may apply to the Clean Energy Regulator for the profile to be certified:

(a) in relation to a particular facility, and a particular *production pathway, specified in the profile; and

(b) from a particular time.

(2) The time specified in the application, as mentioned in paragraph (1)(b), must not be later than the start of the day when the application is made (and may be any time before the start of that day).

(3) The application is taken not to be made unless:

(a) it is in a form (if any) prescribed under subsection (5); and

(b) it is accompanied by any information, documents or other materials prescribed under subsection (5); and

(c) without limiting paragraphs (a) and (b) of this subsection—it is accompanied by an eligibility statement for the *registered production profile that relates to the facility and the *production pathway.

(4) For the purposes of paragraph (3)(c), an eligibility statement for the *registered production profile that relates to the facility and the *production pathway is a statement by the *holder of the profile to the effect that there are reasonable grounds to believe that, if the profile is certified, a company will be entitled to the *low carbon liquid fuel production tax offset for an income year in respect of one or more litres of low carbon liquid fuel produced at the facility in accordance with the production pathway.

(5) The Clean Energy Regulator may, by notifiable instrument, do any of the following:

(a) prescribe a form for the purposes of paragraph (3)(a);

(b) prescribe information, documents or other materials for the purposes of paragraph (3)(b).

421A-35 Certification of production profile

Certification

(1) If:

(a) the Clean Energy Regulator receives an application for a *registered production profile to be certified in relation to a facility and a *production pathway from a particular time (the start time); and

(b) the Clean Energy Regulator is satisfied that a condition prescribed under subsection (3) (if any) was met at the start time, and has continued to be met since that time.

then:

(c) Clean Energy Regulator must, in writing, certify the registered production profile in relation to the facility and the production pathway; and

(d) the instrument of certification must state that the certification has effect from the start time.

Exception failure to provide information etc.

(2) However, the Clean Energy Regulator may refuse to certify a *registered production profile under subsection (1) if:

(a) the Clean Energy Regulator has given the *holder of the production profile a notice under section 421A-45(1) that relates to the application for certification, requesting that the holder give the Clean Energy Regulator specified information, documents or other materials before a specified time; and

(b) the holder of the production profile does not comply with the request before the specified time.

Conditions

(3) For the purposes of paragraph (1)(b), the Clean Energy Regulator may:

(a) by legislative instrument, determine a condition for the certification of a *registered production profile in a specified class of *registered production profiles; or

(b) by written notice given to the *holder of a *registered production profile, determine a condition for the certification of the *registered production profile.

Notification of certification

(4) If the Clean Energy Regulator certifies a *registered production profile with effect from a particular time (the start time), the Clean Energy Regulator must notify the following of the certification:

(a) the person who applied under section 421A-30 for the certification;

(b) the person who was the *holder of the production profile at the start time;

(c) each person who was a holder of the production profile at any time between:

(i) the start time; and

(ii) the time when the instrument of certification is made;

(d) the Commissioner.

No duty to seek information about eligibility statement

(5) This section does not impose a duty on the Clean Energy Regulator to seek information relevant to assessing whether the eligibility statement for the *registered production profile is incorrect that goes beyond:

(a) information possessed by the Clean Energy Regulator at the time when the Clean Energy Regulator received the application for certification of the registered production profile; and

(b) information that was contained in, or that accompanied, that application.

421A-40 Revocation of certification

(1) This section applies if a *production profile has been certified in relation to a facility and a *production pathway with effect from a particular time (the original start time).

Revocation substantive grounds

(2) The Clean Energy Regulator may, in writing, revoke the certification if:

(a) on or after the original start time, the registration of the *production profile is suspended, cancelled or surrendered under the Future Made in Australia (Guarantee of Origin) Act 2024; or

(b) there is a time, on or after the original start time, when a condition prescribed under subsection 421A-40(3) of this Act (if any) is not met in relation to the facility and the *production pathway; or

(c) at the time when the instrument of revocation is made, the Clean Energy Regulator reasonably believes that the eligibility statement for the production profile that accompanied the application for certification(see paragraph 421-60(3)(c)) is incorrect.

(3) A revocation under subsection (2) has effect from the time (the new end time for the certification) specified in the instrument of revocation, which must be:

(a) if the certification is revoked under paragraph (2)(a)—the time when the registration of the *production profile was suspended, cancelled or surrendered; or

(b) if the certification is revoked under paragraph (2)(b)—the earliest time, on or after the original start time, when the condition in subsection 421A-35(3) is not met in relation to the facility and the *production pathway; or

(c) if the certification is revoked under paragraph (2)(c)—no earlier than the time when the instrument of revocation is made.

Note: If the certification is revoked under paragraph (2)(a) or (b), the revocation will have retrospective effect.

Revocation failure to provide information etc.

(4) In addition, the Clean Energy Regulator may, in writing, revoke the certification if:

(a) the Clean Energy Regulator has given the *holder of the *production profile a notice under subsection 421A-45(2) that relates to the certification, requesting that the holder give the Clean Energy Regulator specified information, documents or other materials before a specified time; and

(b) the holder of the production profile does not comply with the request before the specified time.

(5) A revocation under subsection (4) has effect from the time (also the new end time for the certification) specified in the instrument of revocation, which must not be before the time specified in the notice mentioned in paragraph (4)(a).

Note: A revocation under subsection (4) may be given retrospective effect.

Consequences of revocation

(6) If the new end time for the certification is the same as the original start time, then the certification is taken never to have been in effect.

(7) If the new end time for the certification is later than the original start time, then:

(a) the certification is taken to have been in effect for the period that:

(i) begins at the original start time; and

(ii) ends at the new end time; and

(b) the certification is taken not to have been in effect after the new end time.

Note: The operation of subsections (6) and (7) may affect whether paragraph 421A-5(1)(c) (which sets out a condition for entitlement to the low carbon liquid fuel production tax offset) is satisfied in a particular case.

(8) If a certification of a *production profile that relates to a particular facility and *production pathway is revoked, that does not prevent:

(a) an application later being made for a new certification of the production profile, including a certification that relates to the same facility and production pathway; or

(b) the Clean Energy Regulator subsequently issuing such a new certification of the production profile.

Notification of revocation

(9) If the Clean Energy Regulator revokes a certification of a *production profile, the Clean Energy Regulator must notify the following of the revocation:

(a) the person who was the *holder of the production profile at the original start time for the certification;

(b) each person who was a holder of the production profile at any time between:

(i) the original start time for the certification; and

(ii) the time when the instrument of revocation is made;

(c) the Commissioner.

421A-45 Requests for further information etc.

Request before certification

(1) If the Clean Energy Regulator has received an application for a *registered production profile to be certified, the Clean Energy Regulator may, before making a decision about whether to certify the profile under section 421A-35, give a written notice to the *holder of the profile:

(a) requesting that the holder give the Clean Energy Regulator, before a specified time, specified information, documents or other materials that are relevant to making that decision; and

(b) stating that, if the request is not complied with before the specified time, the Clean Energy Regulator may refuse to certify the production profile.

Request after certification

(2) If the Clean Energy Regulator has certified a *registered production profile under section 421A-35, the Clean Energy Regulator may give a written notice to the *holder of the profile:

(a) requesting that the holder give the Clean Energy Regulator, before a specified time, specified information, documents or other materials that are relevant to deciding whether to revoke the certification under subsection 421A-40(2) (revocation on substantive grounds); and

(b) stating that, if the request is not complied with before the specified time, the Clean Energy Regulator may revoke the certification.

Subdivision 421A-C — Other matters

Table of sections

421A-50 Review of decisions by the Administrative Review Tribunal

421A-55 Information sharing

421A-60 Period for amending assessments

421A-50 Review of decisions by the Administrative Review Tribunal

Applications may be made to the *ART for review of the following decisions made by the Clean Energy Regulator:

(a) a decision under subsection 421A-35(1) to issue a *correction notice;

(b) a decision under subsection 421A-35(4) to revoke a correction notice;

(c) a decision under section 421A-20 to certify a *registered production profile;

(d) a decision under section 421A-20 not to certify a registered production profile (after an application to certify the profile has been made under section 421A-30);

(e) a decision under section 421A-40 to revoke a certification of a *production profile.

421A-55 Information sharing

(1) Each of the following regulators:

(a) the Clean Energy Regulator;

(b) the Commissioner;

may request the other regulator to provide them with information held by the other regulator that is reasonably necessary or convenient for the requesting regulator's administration of this Division.

(2) The other regulator must comply with the request.

Note: The request could be an ad hoc or standing request, and the information requested could be general or specific.

421A-60 Period for amending assessments

Section 170 of the Income Tax Assessment Act 1936 does not prevent the amendment of an entity's assessment for the purposes of giving effect to this Division for an income year if:

(a) the Clean Energy Regulator:

(i) issues, or revokes, a *correction notice under section 421A-20; or

(ii) makes an instrument under section 421A-40 revoking a certification of a *production profile, with effect from a specified time (which may be different from the time when the instrument is made); and

(b) as a result, there is a change to:

(i) whether the entity is entitled to a *low carbon liquid fuel production tax offset for the income year; or

(ii) the amount of low carbon liquid fuel production tax offset that the entity is entitled to for the income year; and

(c) the amendment of the entity's assessment is made during the period of 4 years starting on the day when the Clean Energy Regulator issues or revokes the correction notice, or makes the instrument revoking the certification of the production profile.

Note: Section 170 of the Income Tax Assessment Act 1936 specifies the periods within which assessments may be amended.

4 Subsection 995-1(1)

Insert:

LCLFPTO community benefit rules (short for "low carbon liquid fuel production tax offset community benefit rules") means the rules made under section 421A-25.

low carbon liquid fuel production tax offset has the meaning giving by subsection 421A-5(1).

low carbon liquid fuel:

(a) means a liquid fuel derived from renewable, waste, or other low-carbon sources; and

(b) includes sustainable aviation fuel, renewable diesel, biofuels, synthetic fuels, and fuels produced from captured carbon but does not include fossil fuel-derived liquid fuel.

Taxation Administration Act 1953

5 In the appropriate position in Part IA

Insert:

3M Reporting of information about low carbon liquid fuel production tax offset

(1) This section applies to an entity in relation to an income year if, according to information the entity gave the Commissioner, the entity is entitled under Division 421A of the Income Tax Assessment Act 1997 to a tax offset for the income year.

(2) The Commissioner must, as soon as practicable after the second 30 June after the financial year corresponding to the income year, make publicly available the information mentioned in subsection (3).

(3) The information is as follows:

(a) the entity's name;

(b) the entity's ABN or, if the first information the entity gave the Commissioner indicating the entity's entitlement to the tax offset does not include the entity's ABN but does include the entity's ACN (within the meaning of the Corporations Act 2001), the entity's ACN;

(c) the sum of the amounts of the tax offsets that the entity is entitled to under Division 421A of the Income Tax Assessment Act 1997 for the income year, where the amount of each tax offset is worked out according to the first information that the entity gave the Commissioner indicating the entity's entitlement to the tax offset.

(4) Subsection (5) applies if:

(a) the entity gives the Commissioner notice, in the approved form, that the information mentioned in subsection (3) contains an error; and

(b) the notice contains information that corrects the error.

(5) The Commissioner may at any time make the information mentioned in paragraph (4)(b) publicly available, in accordance with subsection (2), in order to correct the error.

(6) To avoid doubt, if the Commissioner considers that information made publicly available under subsection (2) fails to reflect all of the information required to be made publicly available under that subsection, the Commissioner may at any time make publicly available other information in order to remedy the failure.

(7) An expression used in this section and in the Income Tax Assessment Act 1997 has the same meaning in this section as in that Act.

Question negatived.

Bill, as amended, agreed to.

Bill reported with amendments; report adopted.