On 14 May 2024, the Australian federal government handed down the Federal Budget 2024-25 which delivered an investment of AUD 22.7 billion over the next decade to build a Future Made in Australia.
The Future Made in Australia plan seeks to maximize the economic and industrial benefits of the move to a net zero transition, and secure Australia’s place in a changing global economic and strategic landscape. The agenda is now taking steps to encourage significant private sector investment into priority industries that are viewed as necessary to ensure Australia’s future prosperity.
National Interest Framework
As part of the Future Made in Australia plan, the government will create a Future Made in Australia Act and establish a National Interest Framework to guide the identification of priority industries and prudent investments in the national interest.
Five industries are aligned with the National Interest Framework as follows:
- Renewable hydrogen;
- Critical minerals processing;
- Green metals;
- Low carbon liquid fuels; and
- Clean energy manufacturing, including battery and solar panel supply chains.
New production tax incentives
The budget announced targeted production incentives to scale up priority industries. This will align tax incentives to investments in the national interest, target "green premiums" that are not yet reflected in market prices, and enable investment in economic resilience and security, including by shoring up and diversifying supply chains.
- An AUD 6.7 billion Hydrogen Production Tax Incentive will provide an incentive of AUD 2 per kilogram of renewable hydrogen produced for up to 10 years per project, between 2027–28 and 2039–40 for projects that reach final investment decisions by 2030. This will operate alongside the expanded Hydrogen Headstart program, which supports the early movers investing in the industry’s development.
- An AUD 7 billion Critical Minerals Production Tax Incentive will provide a production incentive valued at 10% of relevant processing and refining costs for Australia’s 31 critical minerals. This incentive will also be applicable for up to 10 years per project, for production between 2027–28 and 2039–40 by projects that reach final investment decisions by 2030.
Both of these incentives will be subject to industry consulatation before their implementation.
Key industry funding measures
The budget introduced significant industry funding measures to support the identified priority industries under the National Interest Framework which include:
- AUD 1.7 billion Future Made in Australia Innovation Fund: Designed to drive innovation and commercialization of innovative technologies and facilities linked to priority sectors, including green metals, batteries, and low carbon fuels;
- AUD 1.5 billion ARENA funding: Supporting the commercialization of technologies that are critical to net zero over the next decade;
- AUD 1 billion Solar Sunshot Program: Intended to incentivize private investment in Australia's solar panel manufacturing capabilities;
- AUD 1.3 billion Hydrogen Headstart: Supporting early industry movers through an additional round of the Hydrogen Headstart program;
- AUD 523.2 million Battery Breakthrough Initiative: Aimed at promoting the development of battery manufacturing capabilities through targeted production incentives;
- AUD 1.2 billion Critical Minerals investment: Providing strategic investment in priority projects through the Critical Minerals Facility (AUD 655 million), Northern Australian Infrastructure Facility (AUD 400 million), and supporting the funding of pre‑feasibility studies for common user precincts; and
- AUD 165.7 million Defence Industry Development Grant program: Increasing the scale and competitiveness of the Australian defense industry.
Content provided by Deloitte Australia.
Liability limited by a scheme approved under Professional Standards Legislation.
Source: https://www.taxathand.com/article/34431/Australia/2024/Future-Made-in-Australia-key-incentives-and-funding-
