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Federal government budget hones in on ‘Future Made in Australia’ policy

Future Made In Australia

Last week’s budget saw the federal government release new details about its ambitious Future Made in Australia (FMIA) policy, with $22.7 billion allocated to a number of initiatives over the next 10 years.

Investments will focus on five key industries: renewable hydrogen, critical minerals processing, green metals, low carbon liquid fuels, and clean energy manufacturing including battery and solar panel supply chains.

The government will create a Future Made in Australia Act and establish a National Interest Framework – consisting of a ‘net zero transformation’ stream and an ‘economic security and resilience’ stream – to guide the identification of priority industries and prudent investments.

Amongst the FMIA package sits the Hydrogen Production Tax Incentive, which the government says will make Australia’s pipeline of hydrogen projects ‘commercial sooner’, at an estimated cost of $6.7 billion over a decade. The budget will also expand the Hydrogen Headstart program by $1.3 billion.

The government will invest $8.8 billion over the next 10 years to add more value to Australian resources and strengthen critical minerals supply chains, including a production tax incentive for processing and refining critical minerals at an estimated cost of $7 billion.

The production tax incentives for hydrogen and critical minerals are due to start in 2027.

It will also commit up to $1.2 billion in strategic critical minerals projects through the Critical Minerals Facility and the Northern Australia Infrastructure Facility, and pre‑feasibility studies for common user precincts.

A $1.5 billion spend is allocated to manufacturing clean energy technologies, which will include the $1 billion Solar Sunshot and $523.2 million Battery Breakthrough Initiative, while there will be $641.4 million in targeted support for small businesses.

The budget will also establish the $1.7 billion Future Made in Australia Innovation Fund, which the government says will ‘accelerate growth of new industries’, and deliver a 10‑year extension of funding to the Australian Renewable Energy Agency.

On the topic of net zero, $399 million will be invested to establish the Net Zero Economy Authority and support the economy‑wide net zero transformation.

Treasurer Jim Chalmers said that the world is facing its biggest transformation since the Industrial Revolution.

“Australian energy can power it, Australian resources can build it, Australia’s regions can drive it, Australian researchers can shape it and Australian workers can thrive in it,” Chalmers said in his budget speech.

“Our $22.7 billion Future Made in Australia package will help make us an indispensable part of the global economy.

“If we hang back, the chance for a new generation of jobs and prosperity will pass us by – and we’ll be poorer and more vulnerable as a consequence.”

However, Opposition Leader Peter Dutton has criticised the budget’s production tax incentives, saying the Coalition is not in support of Labor’s plans.

“Those projects should be able to stand alone and we support them, but not with taxpayers’ money, splashing billions of dollars at a time when the government has created an economic crisis for families and a housing crisis for millions of Australians,” he said.

Effectively, for procurement, this is a buy local Australian policy which brings its own restrictions and challenges. After all, it’s hard to be a world class business if you only buy in Australia.

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