The next era of prosperity is the centrepiece of a “future made in Australia” budget that seeks to get more value out of critical commodities.
Tax breaks for the critical minerals sector are part of the “growth agenda” announced by Treasurer Jim Chalmers on Tuesday as Australia catches up with rivals to attract investment in clean energy and battery supply chains.
“Our $22.7 billion Future Made in Australia package will help make us an indispensable part of the global economy,” Dr Chalmers told parliament as he handed down the 2024/25 federal budget.
He said the budget would “forge a new economy and a new generation of prosperity” to make Australians the primary beneficiaries in “a world of churn and change”.
A Critical Minerals Production Tax Incentive of 10 per cent of relevant processing and refining costs for Australia’s 31 critical minerals will cost the budget $7 billion over the medium term.
Trying to get investors over the line on developing new value-adding facilities in a break from the old “dig and ship” economy, the tax incentive will cover critical minerals processed and refined between 2027/28 and 2039/40.
Laws will also create a “front door” for investors and set conditions to ensure investors benefiting from Australian incentives are also using local businesses, developing workforces and supporting communities, Dr Chalmers said.
The national interest framework will help to run the ruler over projects and channel taxpayer-funded investment to the processing and refining of critical minerals on “economic resilience and security” grounds.
Other winners under the framework to be administered by Treasury are the manufacturing of clean energy technologies, renewable hydrogen that also gets a boost from new production tax credits, green metals and low-carbon liquid fuels.
The nation has abundant reserves of critical minerals and rare earths that are essential for manufacturing solar panels, wind turbines, electric vehicle batteries and energy storage, as well as advanced communications and defence technologies.
Australia can improve the resilience of supply chains and needs to realise the full value of its natural resources with more processing and refining, Resources Minister Madeleine King said.
The budget included $1 million for a pilot educational program to detect, prevent and mitigate foreign interference in the critical minerals sector.
Some $14.3 million will support work on global rules on unfair trade practices and benchmarks for a green premium in sustainably mined and processed critical minerals.
